The Tennessee Supreme Court recently rejected a manufacturer’s effort to set aside a $900,000 jury verdict for a former distributor’s shareholders for want of standing and jurisdiction. Houghton v. Malibu Boats, LLC, 2025 WL 2971436 (Tenn. Oct. 22, 2025).
Brett and Ceree Houghton, the sole shareholders of Great Wakes Boating, Inc., a Tennessee boat dealership, individually sued manufacturer Malibu Boats, LLC for intentional misrepresentation, fraudulent concealment, and promissory fraud. Great Wakes went out of business after Malibu declined to renew Great Wakes’ dealer agreement. As a result, Great Wakes lost considerable value including foreclosures of its real property. A jury awarded the Houghtons $900,000 for the loss of equity in real property owned by Great Wakes. Malibu moved for judgment notwithstanding the verdict or a new trial, asserting for the first time that the Houghtons lacked standing because Great Wakes, not the Houghtons, owned the foreclosed property, and the trial court thus lacked jurisdiction. The trial court agreed and set aside the verdict. On appeal, the Tennessee Court of Appeals held that shareholders may file suit in their own name and concluded that because shareholder standing limitations are not jurisdictional, Malibu waived the issue by not raising it until the hearing on its post-trial motion. Malibu appealed to the Supreme Court.
The Supreme Court affirmed the judgment of the Court of Appeals. The Court considered constitutional standing under the Tennessee Constitution, statutory standing, shareholder standing, and principles of forfeiture. The Supreme Court held that the Houghtons’ shareholder interests in Great Wakes’ lost value implicated cognizable private property rights and that Malibu’s alleged tortious conduct invaded such interests. Accordingly, the Houghtons suffered an injury in law and had constitutional standing for their individual claims. The Supreme Court further held that the Houghtons had individual statutory standing even though Great Wakes may have had its own available causes of action. With respect to Malibu’s attack on the Houghtons’ shareholder standing, the Supreme Court held that any such challenge was not jurisdictional and therefore subject to waiver. And the Supreme Court further held that Malibu waived any such challenge by waiting until after the jury’s verdict to raise it.
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