Manion v. Nagin

Facts

Patrick Manion worked in the pleasure boat industry and in 1995 developed a plan to organize and operate a buying group of retail boat dealers called Boat Dealers’ Alliance (BDA). Manion contacted Stephen Nagin, who claimed expertise in representing buying groups. Nagin agreed to represent Manion in creating and running BDA, initially for $300 per hour, but they later agreed Nagin would charge $150 per hour plus receive 10% of BDA’s preferred stock. Nagin incorporated BDA in Florida despite Manion’s concerns about the venue. When Manion questioned how he could control BDA while owning only preferred stock with limited voting rights, Nagin assured him that his control was secured through the value of his preferred stock and a Management Agreement that supposedly guaranteed Manion’s position for twenty years. In 1999, BDA terminated Manion, and in subsequent arbitration, BDA successfully argued the termination was proper because Manion had acted in bad faith against BDA’s interests. At a BDA meeting after his termination, Manion discovered Nagin had asked BDA’s Finance Committee to search for additional grounds to justify his termination. When Manion asked Nagin who he was representing, Nagin responded that he represented BDA, though Manion had considered Nagin to be his personal lawyer until that point.