In the Matter of a Mail Dispute Between: ) May 11, 1993 ) RICHARD F. SMITH ) ) and ) ) W. MICHAEL LOVERN ) P. S. Docket No. MD-177 APPEARANCE FOR DISPUTANT SMITH: Melvin J. Tublin, Esq. Poles, Tublin, Patestides & Stratakis 46 Trinity Place New York, NY 10006-2288 APPEARANCE FOR DISPUTANT LOVERN: W. Michael Lovern, Pro Se 5705 Windmier Circle Dallas, TX 75252-5008
This mail dispute matter has been docketed pursuant to Domestic Mail Manual ("DMM") § 153.72, which requires Regional Counsel to forward certain unresolved mail disputes to this Department for decision. The mail in dispute is addressed to National Teleprocessing, Inc., American Teledial Corp., or W. Michael Lovern, at 17210 Campbell Road, Suite 280, Dallas, TX 75252-5218.
Both Disputant Richard F. Smith ("Smith") and Disputant W. Michael Lovern ("Lovern") have filed submittals as required by 39 C.F.R. § 965.5 and Disputant Lovern has also filed a comment as permitted under 39 C.F.R. § 965.6. The following findings of fact and conclusions of law are based on the parties' submittals, Disputant Lovern's comment, the exhibits attached to the submittals and comments, and the documentation forwarded by the Office of Field Legal Services.
1. National Teleprocessing, Inc. ("NTI") and its affiliate company, American Teledial Corporation ("ATC"), (referred to collectively as "the Corporations") were incorporated in the state of Delaware in 1991. Initially, the Corporations had the following officers: Disputant Lovern was president, Disputant Smith was treasurer, and Melvin J. Tublin, Esq., ("Attorney Tublin") was secretary. All three individuals also became directors of the Corporations. Disputant Smith provided the initial capitalization and financing for the Corporations, primarily by means of loans from shipping companies he controlled. The stock of the Corporations was divided evenly between Disputants Smith and Lovern.
2. The Corporations were authorized to do business in the state of Texas and their corporate offices there were located at 17210 Campbell Road, Suite 280, Dallas, Texas 75252-5218, the address to which the disputed mail is addressed. Working out of that location, Disputant Lovern ran the day-to-day business of the Corporations and controlled their finances.1/ In the spring or summer of 1992, Disputant Lovern turned to Disputant Smith for money to finance a lawsuit in which ATC was involved. Subsequently, Attorney Tublin arranged for NTI to borrow $300,000 from a company named Eroica, S.A. ("Eroica") in exchange for Eroica receiving shares in NTI.
3. Some months later, Disputant Lovern represented that NTI needed to borrow additional funds to cover ATC's litigation costs. Disputants Lovern and Smith, and Attorney Tublin on behalf of Eroica, entered into a Stock Redemption Agreement ("the Agreement") which all of them signed on November 11, 1992.2/ Under the terms of the Agreement, Eroica, which by then owned a large majority of the stock of NTI, loaned a total of $500,000 to NTI. NTI agreed to pay back this sum by redeeming its shares according to a specified payment schedule. NTI and its officers also undertook a number of other obligations, such as paying a $155,000 corporate tax liability.
4. The Agreement also provided that in the event of any default in carrying out the terms of the Agreement, Eroica could, without notice, replace any officers or directors and take control of the Corporations. In apparent furtherance of this provision, Disputant Lovern signed undated resignations from his positions as president and director of the Corporations.
5. In December 1992, a dispute arose between Attorney Tublin and Disputant Smith on one side and Disputant Lovern on the other, over access to the financial records of the Corporations. On January 9, 1993, Attorney Tublin and/or Disputant Smith effectuated Disputant Lovern's resignations as a director and the president of the Corporations by causing that date to be affixed to his previously undated resignations.
6. On January 19, 1993, Attorney Tublin and Disputant Smith, meeting as the boards of directors of NTI and ATC, accepted Disputant Lovern's resignations. On that same date, Disputant Smith was appointed president of NTI and ATC.
7. On January 20, 1993, Attorney Tublin, acting on behalf of Eroica, notified Disputant Lovern in writing that his resignations as president and director of the Corporations had been accepted. In the letter to Disputant Lovern, Attorney Tublin cited a number of alleged defaults under the Agreement as grounds for having removed him from his corporate positions.
8. On January 21, 1993, Disputant Lovern responded to the notice of his removal from office by sending letters to Disputant Smith, Attorney Tublin, Eroica, and one of Tublin's law partners, demanding information and documentation concerning Eroica and the decision to revoke his corporate authority. On that same day, Disputant Lovern sent two memos to Disputant Smith, referring to the efforts of Smith and Tublin over the last month to obtain financial information about the Corporations and demanding that they come to Texas for a face-to-face meeting with him.
9. On January 22, 1993, the Texas office of the Corporations was closed at the direction of Disputant Smith, who moved the offices of the Corporations to New York.
1. Section 153.41 of the Domestic Mail Manual provides that if disagreement arises as to where mail addressed to an organization, or "to an individual by name or title...at the address of the organization" should be delivered, "it must be delivered according to the order of the organization's president or equivalent official." In the instant case, Disputant Smith claims to be the president of the Corporations and Disputant Lovern contends that he was not properly removed from his corporate positions. According to Disputant Lovern, his resignations were obtained as part of a "scam" by Disputant Smith and Attorney Tublin to take over the Corporations and the potentially lucrative litigation in which they were involved.3/
2. Disputant Lovern has not produced any evidence, other than his own statements, to show that his resignations were improperly obtained. Disputant Lovern acknowledged in his submittal that he signed undated resignations as a condition for obtaining loans from Eroica. Moreover, the Agreement, which Disputant Lovern admittedly signed, provides, inter alia, that Eroica, the major shareholder and a substantial creditor of NTI, could remove any of NTI's officers if there was a default on any of the terms of the Agreement (Lovern submittal, exhibit c, ¶ 11).
3. In his January 20th letter to Disputant Lovern, Attorney Tublin, on behalf of Eroica, notified Disputant Lovern that he had been removed as a director and the president of the Corporations due to a number of defaults by NTI. While some of the alleged defaults relate to payment dates and conditions that are not included in the Agreement, Tublin does cite other defaults which correspond (albeit under different paragraph numbers) to requirements stated in the Agreement. Thus, Attorney Tublin cited the alleged failure of Disputant Lovern and the Corporations to pay a tax liability, to furnish a truthful monthly balance sheet, and to permit an examination of the finances of the Corporations.
4. Disputant Lovern does not specifically deny that he and the Corporations failed to pay the tax liability referred to in paragraph seven (7) of the Agreement. Furthermore, paragraph sixteen (16) of the Agreement incorporated a general requirement that each of the parties must perform any further acts and deliver all documents "reasonably necessary to carry out and implement the provisions and intent of this agreement." (Lovern submittal, exhibit c, ¶ 16.) Disputant Lovern's own evidence (Lovern submittal, exhibits d and e) shows that he was less than fully cooperative in providing financial information about the Corporations to Disputant Smith, who had arranged for the substantial loans underlying the Agreement, and to Attorney Tublin, who represented Eroica.
5. In any event, whether or not Disputant Lovern's resignations were valid, Disputant Smith and Attorney Tublin constituted the majority of the boards of directors of the Corporations. Relevant state law provides that officers of a corporation can be removed by the board of directors. See, Business Corporation Act, Tex. Rev. Stat. Ann., art. 2.43 (Vernon 1980) ; Del. Code Ann., tit. 8, § 142 (1991).
6. Accordingly, I find that Disputant Smith is the president of NTI and ATC and that the mail should be delivered in accordance with his instructions.
7. This decision determines the right to delivery of the mail in dispute, and not its ownership. In the event that any party receives mail clearly intended for another, that party is responsible for forwarding such mail to the intended party.
8. The attached proposed mail delivery order should be issued.
Judith A. Dowd Administrative Law Judge
1/ As far as the evidence shows, neither Disputant Smith nor Attorney Tublin took an active role in conducting the business of the Corporations, but left it entirely in the hands of Disputant Lovern.