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Enterprise Diversified, Inc. v. Woodmont Lexington, LLC

Previously regarding Sitestar (now known as Enterprise Diversified or ENDI but still trading as SYTE), we had a post in 2016 about the activist takeover as well as an interview in Oddball Stocks Newsletter with the new management.

The company put out an 8-K today regarding a dispute with (and lawsuit filed against) the manager that took control of Mt. Melrose, LLC (its divested real estate division in Lexington, Kentucky) in July:
This morning, Wednesday, November 20, 2019, Enterprise Diversified, Inc. (the “Company”) filed a verified complaint in the Court of Chancery of the State of Delaware commencing a civil action against Woodmont Lexington, LLC, a Delaware limited liability company (“Woodmont”).

As previously reported in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 3, 2019, the Company had sold to Woodmont, on June 27, 2019, 65% of the Company’s membership interest in Mt Melrose, LLC, a Delaware limited liability company (“Mt Melrose”), which, as has been previously reported, owns and operates a portfolio of income-producing real estate in Lexington, Kentucky. Since the closing of the Mt Melrose transaction, Woodmont, by its representative, Tice Brown, has made repeated offers to buy out the Company’s remaining interest in Mt Melrose. Woodmont’s most recent offer was received by the Company, in writing, on November 11, 2019, with a deadline for acceptance of 9:00 a.m. Monday, November 18, 2019. All such offers have been rejected or not responded to by the Company, as being unfavorable, undesirable and not in the long-term best interests of the Company and its shareholders.

The present action was filed by the Company in response to repeated claims and demands and injurious conduct by Woodmont and its representative, Tice Brown. The Company is seeking, among other relief available, injunctive, declaratory and equitable relief against Woodmont, along with attorneys’ fees and expenses.
The LLC agreement between Woodmont Lexington, LLC and Enterprise Diversified, Inc. is available as an exhibit here. And here is the most recent investor presentation of ENDI, from November 14th.

The docket shows that Enterprise Diversified has filed a Verified Complaint for Injunctive Relief (Confidential Filing), a Motion for Temporary Restraining Order, and a Motion for Expedited Proceedings, as well as a Brief in Support of those Motions, plus various other documents like proposed Orders. Some of these documents were filed under seal, but the two motions can be seen below:

201911201503 by Nate Tobik on Scribd
The case is currently assigned to Delaware Court of Chancery Vice Chancellor J. Travis Laster. We read a lot of his decisions for the "Delaware Chancery Corner" section of the Oddball Stocks Newsletter - he is extremely sharp. 

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