The recently resolved business ownership dispute between Shari Glazer and Aptos Labs brings home an essential but often overlooked piece of legal advice: putting everything in writing. There’s an adage among lawyers that if it’s not in writing, it didn’t happen. Unfortunately, Shari Glazer learned that lesson the hard way during her legal battle with Aptos Lab (Matonee, Inc.) and ex-business partner Mohammad Shaikh.
After working together for nearly a year to put together a new business venture, Mohammad parted ways with Shari and instead founded the business with a venture capital firm, AH Capital Management, LLC, and an engineer. Shari sued Mohammad and Matonee for breach of contract, fraud, and other legal claims. The legal battle raged for nearly a year before the parties agreed to put the business dispute to rest . Without a pre-formation agreement in writing and signed, Shari could not prove her case that the parties had agreed to certain terms.
BrewerLong has years of experience helping business owners navigate the complex and nuanced realm of corporate law. When parties are forming a new business, it is beneficial to write down the goals and terms in a pre-formation agreement or similar contract to ensure everyone is on the same page. Our team helps entrepreneurs protect their personal legal rights and investments at all stages of the business. Speak with an experienced business law attorney today.
Who Are the Parties to the Business Ownership Dispute?
The legal battle between Shari Glazer and Aptos Labs involves various parties. Before we launch into the legal analysis of the conflict, let’s go over who is part of the lawsuit.
Shari Glazer is the plaintiff in the lawsuit, along with her blockchain investment company, Swoon Capital, LLC. Shari is the CEO and founder of Kalos Labs, which provides consulting services to brands, especially in the area of blockchain and sports technology. Her family is also well-connected in the sports realm and owns professional football and soccer franchises.
The defendants in the lawsuit are Mohammad Shaikh and Matonee, also known as Aptos Labs. Mohammad Shaikh founded Aptos Labs with a venture capital firm called AH Capital Management and an engineer who used to work at Meta.
Shari named Matonee (Aptos Labs) as a “nominal defendant” because it would be impacted by the outcome of the lawsuit.
What Brought About the Ownership Dispute Between Shari and Mohammad?
Shari Glazer filed a legal complaint with the New York Supreme Court on March 1, 2022, seeking compensation for a breach of contract between herself and Mohammad Shaikh. In the document, she also made other allegations, such as fraud.
Unfortunately, the crux of the lawsuit between Shari and her ex-business partner is a failure to commit their plans to writing before taking serious steps (and forking over cash) to begin the business. According to the complaint, Mohammad and Shari had extensive meetings about the business months before Aptos Labs came into existence. Mohammad originally came onto the scene as a consultant under several restrictive agreements (such as a non-compete and non-disclosure contract). Initially, his job was to help Shari find potential opportunities in this space. She disclosed her confidential business plans to him, and as time went on, she says, they talked seriously about becoming 50-50 partners in the business.
Sadly, Shari says they discussed committing their agreement (e.g., a pre-formation contract) to writing and each retaining counsel to work out the terms, but it never occurred. Had they gone through with this plan, the lawsuit may not have happened, and Shari may not have been left in the dust.
Instead, the parties continued to expend time and resources in furtherance of their unspoken and legally undocumented agreement. In the lawsuit, Shari points to verbal conversations and text message exchanges, but without a binding legal agreement between her and Mohammad, she could not provide substantive proof that they had agreed to be equal business partners. Without this proof, the disagreement is just an unfortunate misunderstanding.
How Did the Lawsuit Involving Shari and Aptos Labs End?
The parties engaged in a nearly year-long legal battle regarding whether Mohammad fraudulently or illegally began the business without Shari. The parties engaged in what’s called discovery by interviewing key players (such as Shari) under oath (called a deposition) to understand what occurred. After many months of back and forth, the parties voluntarily dismissed the lawsuit by joint agreement, setting aside the legal battle and going their separate ways.
So, what is the takeaway from this private ownership dispute? Put it in writing early and often. Whether you are a new or seasoned entrepreneur, clarity is critical to protecting your legal rights and investment, even if the business doesn’t exist yet. If you would be upset if there was a misunderstanding about it, put it in writing and have everyone sign it.
From Shari’s perspective, they could have avoided much of the disagreement between her and Mohammad if they had taken the time to put their agreement in writing. Doing so would have helped ensure they were both on the same page and given Shari adequate legal recourse when the business did not go to plan as she believed it would.
Contact the Seasoned Business Attorneys at BrewerLong
Starting and running a business is hard to do on your own. There are many legal requirements to follow, and any move you make can expand or limit your liability. Our legal team can help demystify the process and guide your business throughout every stage. Trevor Brewer has been practicing law for nearly 20 years and has given presentations on many business topics, including “Business Formation & Protection.” If you are involved in a business ownership dispute, contact our team today to schedule a consultation.
This blog post is provided on an “as is” and “as available” basis as of the date of publication. We disclaim any duty to update or correct any information contained in this blog post, including errors, even if we are notified about them. To the fullest extent permitted by law, we disclaim all representations or warranties of any kind, express or implied with respect to the information contained in this blog post, including, but not limited to, warranties of merchantability, fitness for a particular purpose, title, non-infringement, accuracy, completeness, and timeliness. We will not be liable for damages of any kind arising from or in connection with your use of or reliance on this blog post, including, but not limited to, direct, indirect, incidental, consequential, and punitive damages. You agree to use this blog post at your own risk. Regarding your particular circumstances, we recommend that you consult your own legal counsel–hopefully BrewerLong.