Print
More News

Tidewater Equity Partners Appears Close To Reaching Lawsuit Settlement

By Johanna Cano, posted May 29, 2019
Wilmington-headquartered Tidewater Equity Partners, its founder Merrette Moore and Moore’s father, William, appear close to reaching a settlement on a more-than-yearlong lawsuit on how the Moores managed their investment firm Lookout Capital.

This month, parties agreed to a settlement in a lawsuit that accused the Moores and Tidewater of mismanaging Lookout and using Lookout to gain deals for Tidewater.

The settlement with the Lookout members, if approved by the N.C. Business Court, would require the Moores to pay $750,000 to Lookout and resign as managers of that firm and its connected entities.

Tidewater, which has Merrette Moore as its managing partner, announced the opening of its Wilmington headquarters in May 2017 and focuses on small, family-owned health care businesses as well as innovation consulting.

Efforts to reach Merrette Moore for comment on the decision to agree to a settlement and for updates on current Tidewater projects were not successful as of Wednesday afternoon.

Lookout Capital is a Raleigh-based early-stage investment firm founded by the Moores in 2010 that has a focus on health care, software and digital media companies.

Soon after Tidewater opened its Wilmington headquarters, the firm had already garnered two projects: $3.1 million in venture capital for Durham-based Phononic and $6.5 million in private equity funds for South Atlantic Packaging.

However, a lawsuit filed on Nov. 13, 2017, alleged that after Merrette Moore founded Tidewater, he took steps to wind down Lookout’s investment activities, undermine its credibility and move its investors, assets and business opportunities to Tidewater, according to the complaint.

The lawsuit alleged that Lookout members have been "misled, misinformed and ultimately fleeced due to the unsuitability, mismanagement and self-dealing of Lookout's father and son managers," the lawsuit stated.

“The Moores’ tenure as managers of Lookout has been characterized by inattentiveness, poor business decisions and a marked disregard for their fiduciary duties to Lookout,” stated the complaint.

In the case, the Moores and Tidewater representatives have denied the allegations made by the plaintiffs.

Tidewater filed a motion to dismiss all claims against it for "lack of subject matter jurisdiction, contending that the derivative plaintiffs lacked standing," court documents stated. 

"Defendants vigorously dispute the validity of these claims and contend that the facts revealed in discovery and the law controlling derivative claims support the dismissal of plaintiff's claims in their entirety," the settlement brief filing stated.

Lookout members John Kane and Michael O’Donnell were the original plaintiffs in the lawsuit on behalf of Lookout until O’Donnell was designated by the court as the most suitable representative for Lookout members.

One central part of their complaint is the formation of Tidewater, which the plaintiff alleged conflicts with Lookout due to similarities in their investment structures and for being under the same leadership of Merrette Moore.

“…assets and opportunities include at least four investments which were either originated or diligenced by Lookout, only to be usurped and closed by Tidewater, and marketed by Merrette Moore as ‘Tidewater deals,’” stated the complaint.

During the year-and-a-half of court proceedings, the court dismissed two motions, including a claim against the Moores and Tidewater for “unfair” and “deceptive” practices and another against Tidewater for aiding and assisting breach of fiduciary duty.

After two mediation sessions, both O’Donnell and the defendants agreed on a settlement on May 8 to clear all claims in the case.

Attorneys Paul Sun Jr., of Ellis & Winters, represented O’Donnell; Marla Bowman, of Ward and Smith, represented the Moores; and Alan Parry, of Parry Tyndall White, represented Tidewater.

Bowman and Parry declined to comment on the settlement, and Sun did not respond to a request for comment as of Wednesday afternoon.

According to a brief in support of a motion to approve the settlement, O’Donnell stated that he believed a settlement was in Lookout’s best interest and that the payment should be distributed by a new Lookout manager.

Tidewater’s Wilmington office was previously at tekMountain until December 2017. The firm's current office is at 1985 Eastwood Road.

In August 2017 the firm announced its first exit with the acquisition of InfaCare Pharmaceutical Corp. by Mallinckrodt Pharmaceuticals, a biopharma company. Tidewater’s initial involvement with InfaCare came via investment by Lookout Capital, according to a release.

According to filings with the Securities and Exchange Commission, Tidewater raised $300,000 in equity in October 2018, $1.36 million from 19 investors in September 2017, $6.4 million in equity in March 2017 and $830,000 in 2016.
Ico insights

INSIGHTS

SPONSORS' CONTENT
Deedee gasch

Analyzing the Wrongful Death Lawsuit Against Tiger Woods, His Bar, and His Girlfriend: A Lawyer’s Perspective

Deedee Gasch - Cranfill Sumner & Hartzog LLP
Headshot2

Supply Chain Education and the State of the Industry

Dani Somers - North Carolina Wesleyan
Mc2 56882

2019 Homebuilding Market Demand & Pricing

Scott Byers - Majestic Kitchen & Bath Creations

Trending News

At Mayfaire, New Physical Therapy Facility Throws Out Insurance Model

Cece Nunn - Jun 24, 2019

Renting Continues To Get More Expensive In Wilmington, Data Shows

Cece Nunn - Jun 24, 2019

Brunswick Home Sales Close To Last Year's Levels In May, Realtors Report

Cece Nunn - Jun 24, 2019

In The Current Issue

Hampton Inn & Suites Opens In Southport

The city of Southport has a new hotel. Hampton Inn & Suites Southport, 4820 Port Loop Road, opened earlier this spring and features 88 guest...


Info Junkie: Claire Holroyd

Find out which apps and tech are used by Skilly-do CEO and co-founder Clarie Holroyd, whose product is an online toolkit that promotes early...


Roof Products Firm Back On Top

During Hurricane Florence last year, between 8 to 10 inches of water flooded the GAF Burgaw facility, causing damage to the building, finish...

Book On Business

The 2019 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

Power Breakfast - The H Word (June 13, 2019)
2019 WilmingtonBiz Expo Keynote Lunch - CEO, nCino, Pierre Naude`
Health Care Heroes 2018