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Hampton Island Founders v. Liberty Cap.

The trial court abused its discretion in issuing an injunction that failed to maintain the parties' status quo.

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The primary question for decision in this appeal is whether the trial court abused its discretion in granting a temporary injunction which prohibited plaintiff from engaging in “any act which would have the effect” of contesting the voting rights of investors in plaintiff’s member entities, when those investors wanted to use their votes to gain control of plaintiff and dismiss this lawsuit. Under the facts of this case, we answer this question affirmatively. Wade Shealy arranged to purchase and develop land for a residential retreat on Hampton Island. To accomplish his goals, he formed Hampton Island Founders LLC “Founders”, the plaintiff in this case. Founders is comprised of four legal entities which were also formed by Shealy: Hampton Island Preservation Properties Inc. “HIPP”, Hampton Island Preservation Investments LLC “HIPI”, Hampton Island Preservation LLC HIP”, and South Hampton Island Preservation Properties LLC “SHIPP”. Each of the four member entities has an equal voice in determining who controls and manages Founders. Thus, whoever controls three of these four member entities can take control of Founders.

When Founders was formed, Shealy controlled and managed each of the four member entities; he also controlled and managed Founders.

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