It’s Business, And It’s Personal

Business dispute over aborted joint venture goes to trial

On Behalf of | Oct 22, 2014 | Business Contracts & Disputes |

A North Carolina business, like one in any other state, will have business disputes and legal cases that develop unavoidably, and that require an effective and satisfactory resolution. One general kind of business dispute that arises relatively regularly are those that involve two businesses joining together for some kind of joint enterprise or buy-out deal. When it results in irresolvable bickering or doesn’t get off the ground, business litigation may follow. 

There is a case like that now being litigated in a state court proceeding. A larger company that makes hardware, PNY Technologies, entered into an agreement with a smaller company, Silicon Valley Solutions,  that markets customized memory chips. The  deal included the implication that SVS would deliver the Cisco Systems account. SVS had been selling chips to Cisco.

However, SVS had an outside company making the chips but the company bowed out. SVS thus had a strong motivation to get PNY to make the chips in a collaborative effort. The head of SVS was given a lucrative payout in the agreement with PNY. Within six months, however, SVS had not recovered its Cisco business. 

PNY eventually fired the former CEO of SVS for not delivering any new business. PNY cut off and revoked the $1.5 million remaining payout to him. SVS sued and the case is coming up for trial shortly, unless there’s a settlement beforehand. Because the two corporate heads negotiated the deal by email, this case will involve examination of voluminous emails between the two companies and between the two leaders.

The general principles and procedures of the case would be the same in North Carolina as in other states. The case boils down to a breach of contract claim in which the former CEO of SVS is claiming that he is entitled to the fruits of the bargain that was made. PNY claims that SVS misrepresented the situation with Cisco and the economic health of SVS. The case may turn on which CEO the jury believes regarding this bitter business dispute.

Source:, “Start-up CEO Takes PNY to Trial Over Soured Deal“, Marisa Kendall, Oct. 15, 2014