The Georgia Court of Appeals has affirmed a jury's verdict against William T. Mullally, ordering him to pay nearly $2 million to CU Capital Market Solutions, LLC (CMS) for breach of contract, breach of fiduciary duty, and negligent misrepresentation. This ruling, filed on June 5, 2026, follows a complex legal battle involving restrictive covenants in an operating agreement and accusations of Mullally diverting business from CMS to his own companies.
The case, noted as A26A0564, is significant for both Mullally and CMS, as it highlights the enforceability of restrictive covenants in business agreements and the responsibilities partners owe to one another. The court's decision reinforces the importance of adhering to contractual obligations and the potential consequences of breaching such agreements.
Background
The dispute began when Mullally, along with partners Lewis N. Lester, Sr. and Robert Colvin, formed CMS to provide consulting services to credit unions. Each partner held an equal share in the business, which was established under an operating agreement that included restrictive covenants, such as non-compete and non-solicitation clauses.
After resigning from CMS in January 2020, Mullally retained his membership units but soon faced a cease and desist letter from CMS regarding the restrictive covenants. In response, Mullally filed a complaint seeking to declare these covenants void. CMS countered with claims against Mullally for breach of contract, fiduciary duty, and negligent misrepresentation, leading to a jury trial that ultimately found in favor of CMS.
The Ruling
The Court of Appeals upheld the jury's verdict, which awarded CMS a total of $1,932,817.45 in damages. The jury found that Mullally had breached the non-compete and non-solicitation clauses of the operating agreement, as well as his fiduciary duties to CMS. The court noted, "When there is opinion evidence, circumstantial evidence, presumptions of fact, or evidence subject to more than one reasonable construction, the appellate courts shall carefully scrutinize the grant of a directed verdict, because such evidence may be construed as providing the 'any evidence' creating a jury question."
The court emphasized that the evidence presented at trial, including financial records and testimonies from Mullally's former partners, supported the jury's findings. The ruling highlighted that CMS had indeed suffered significant financial losses due to Mullally's actions, which included diverting business from CMS to his own companies.
Impact
This ruling has important implications for businesses and individuals involved in partnerships. It reinforces the enforceability of restrictive covenants in operating agreements and clarifies the responsibilities partners have towards each other. The court's decision serves as a reminder that breaching fiduciary duties can lead to substantial financial repercussions.
Moreover, the ruling may influence future cases involving similar contractual disputes, particularly those involving non-compete and non-solicitation clauses. Businesses may feel more secure in enforcing these agreements, knowing that courts are likely to uphold them when there is sufficient evidence of breach and resulting damages.
What's Next
It is unclear whether Mullally plans to appeal the decision to a higher court. The court filing did not indicate any pending related cases. As it stands, Mullally will need to comply with the judgment and pay the awarded damages to CMS.