Jackson Jambalaya

 It appears the Sethi Civl War might be going behind closed doors.  

Dr. Sethi and his wife, Raksha, sued their son, Sandeep "Sunny" Sethi" in Madison County Chancery Court last week.  The three Sethis own R & S Holdings, LLC, Lodging America at Starkville, LLC, Trilogy Holdings, LLC, and Bumpers Drive-in of America, LLC.  

The plaintiffs claim Dr. Sethi owns 70% of R&S Holdings with Sunny and his mother each holding shares of 15%.  The complaint accuses the defendant of improperly amending the operating agreement to show he owned 90% of the company with his parents owning the remaining 10%.   Dr. Sethi and his wife claim their son did so without their permission.  

Once the agreement was fraudulently amended, alleges the complaint, Sunny transferred properties owned by R&S Holdings to companies he owned, leaving R&S Holdings with no assets.  The complaint claims he proceeded to encumber the properties once he assumed ownership of them. Hence the lawsuit.  

Madison County land records show Sunny Sethi transferred four properties from R&S Holdings to his companies: Bellamare Development, AOK Holdings LLC, and Lodging America at Gluckstadt, LLC.  He signed each transfer as managing member of R&S Holdings.  

The plaintiffs asked the Chancellor to enjoin Sunny Sethi from changing the operating agreements of their companies, transfer any properties owned by their companies,  and "encumbering" their properties. The Sethis also want the Court to block their son from withdrawing any funds from accounts held by their companies.  

information about the family's private businesses, none of which touches any matter of public concern. Mississippi law recognizes confidential commercial and financial information of this kind as the type ordinarily shielded from public disclosure. 

Sunny Sethi challenges his parents' claim he does not own 90% of R&S Holdings in the motion to seal: 

The core allegations of the Complaint — that Defendant is not the duly appointed Manager of R & S Holdings and that Plaintiffs together own 85% of the company — are directly contradicted by the parties' own signed governing documents, including the executed August 2017 Operating Agreement, a Unanimous Borrowing Resolution personally signed by both Plaintiffs in February 2022, and two property-sale resolutions from September 2024, each of which confirms Defendant as Manager and confirms a 90%/5%/5% ownership split. Although the Operating Agreement requires any dispute among the members to be resolved through negotiation, mediation, and arbitration — not public litigation — Plaintiffs filed this action in open court, naming their own son as Defendant, without ever sending a demand for mediation or arbitration.

The defendant accuses his parents of filing the lawsuit to "generate public attention and embarrassment" instead of trying to resolve a "legitimate business" dispute.  The plaintiffs do not allege specific examples of fraud but instead make "undated, unspecific accustaions of fraud" that could reach banks and businesses that have dealings with Sunny Sethi. 

The motion argues there is little legitimate public interest in the lawsuit  Since it involves private financial information, the Court should temporarily seal the case until a hearing can be held on whether a protective order should be issued. 

There is also the matter of the motion to compel arbitration.  The motion states: 

Any dispute or discomfort arising out of or in connection with this agreement, including disputes between or among the members, shall be settled by the negotiation, mediation and arbitration.” Both Plaintiffs are signatories to that Agreement.

Sunny Sethi took strong issue with his parents claims that he unilaterally changed the operating agreement in his favor.  

The executed Operating Agreement itself says otherwise. Part Four, Section 1 states: “The initial Manager is Sandeep K. Sethi.” Exhibit A, the Schedule of Members and Contributions to Capital dated August 28, 2017 and signed by all three parties, lists Sandeep Sethi at 90% ownership and Raksha Sethi and Dr. S.L. Sethi at 5% each. Nearly five years later, in February 2022, Dr. Sethi and Mrs. Sethi personally signed a Unanimous Borrowing Resolution for R & S Holdings reaffirming that identical 90%/5%/5% split and Sunny's role as Manager. Property-sale resolutions from September 2024, for two separate closings, restate the same split and the same management structure again.

The plaintiffs' recent behavior, argues Sunny, betrays their claims.  Dr. Sethi allegedly proposed through a family representative a separation of all family businesses (Separation, not settlement of all family business).  The proposal included an offer to pay Dr. Sethi and Raksha for their combined 10% ownership of the company.  The Seth's, asserts Sunny, can't have it both ways - recognizing Sunny as 90% owner and then claiming in court three months later he is a 15% owner.  

The motion contends such disputes should be adjudicated in arbitration, not a public court.   

The case is assigned to Madison County Chancellor James Walker.  Attorney Jeff Rawlings represents Sunny Sethi while Michael Simmons, Esq. represents Dr. Sethi and his wife. 

Kingfish note: It is understandable Sunny Sethi wants to keep the family's dirty laundry behind closed doors.  Such lawsuits are uncomfortable for all concerned.  However, business disputes are litigated every day in court - some commercial, some personal.  Leigh Bridges would probably love to have her case sealed.  So would Claiborne Frazier and all the parties in lawsuits reported on this website over the years.  

However, the law allows the Court to protect Sunny's interests without forging an iron mask.  The Chancellor can issue a protective order covering all financial and proprietary information while allowing pleadings to remain public.  

As for the motion to compel arbitration, if the operating agreement has an arbitration clause, then it should be enforced.  

Given Dr. Sethi's checkered history, Sunny might have a point or two? Checkered history?  Sethi, Dick Ambrosino, and Bob Montgomery dreamed up the Galleria Parkway public improvement district.  The PID defaulted on $30 million in bonds and Madison County was forced to make the bond payments until a court forced the bond insurer to pick up the payments.  He owned a bank, Heritage Bank, that failed and was taken over by FDIC.  Remember Panasia? 

Here is a theory. What is the opposite is true - Family members see Sunny Sethi's developments moving forward and suddenly want a piece of the action.  

There is probably much more to this story.