Martindale v. Hortman Harlow Bassi Robinson and McDaniel, PLLC


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Docket Number: 2010-CA-02077-COA
Linked Case(s): 2010-CA-02077-COA ; 2010-CT-02077-SCT

Court of Appeals: Opinion Link
Opinion Date: 10-02-2012
Opinion Author: Maxwell, J.
Holding: Affirmed

Additional Case Information: Topic: Contract - Limited liability company operating agreement - Right to additional payment - Additional remedies - Section 79-29-306(3)(a) - Section 79-29-911 - Implied covenant of good faith and fair dealing - Findings of fact - M.R.C.P. 52(a)
Judge(s) Concurring: Barnes, Roberts, Carlton, Russell and Fair, JJ.
Non Participating Judge(s): Irving, P.J.
Dissenting Author : Griffis, P.J.
Dissent Joined By : Lee, C.J., and Ishee, J.
Procedural History: Summary Judgment
Nature of the Case: CIVIL - CONTRACT

Trial Court: Date of Trial Judgment: 11-30-2010
Appealed from: Jones County Chancery Court
Judge: Sanford R. Steckler
Disposition: PARTIAL SUMMARY JUDGMENT GRANTED IN FAVOR OF APPELLEE
Case Number: 2009-0376

  Party Name: Attorney Name:   Brief(s) Available:
Appellant: David L. Martindale




CLYDE H. GUNN III, CHRISTOPHER C. VAN CLEAVE, DAVID NEIL HARRIS JR., WILLIAM CORBAN GUNN



 
  • Appellant #1 Brief

  • Appellee: Hortman Harlow Bassi Robinson and McDaniel, PLLC JOHN G. CORLEW, VIRGINIA T. MUNFORD  

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    Topic: Contract - Limited liability company operating agreement - Right to additional payment - Additional remedies - Section 79-29-306(3)(a) - Section 79-29-911 - Implied covenant of good faith and fair dealing - Findings of fact - M.R.C.P. 52(a)

    Summary of the Facts: The members of a Mississippi law firm, operating as a professional limited liability company, voted unanimously to expel one of their fellow members, David Martindale. Under the terms of the firm’s operating agreement, upon expulsion of a member, the remaining members were required to either dissolve the company or pay the terminated member $1,100 for each percentage point of membership interest owned. The remaining members voted to pay Martindale $19,800 for his eighteen-percent interest. The firm then filed for declaratory relief, alleging it had satisfied its contractual obligations to Martindale. Martindale counterclaimed, seeking the fair value of his membership interest as well as actual and punitive damages for assault, battery, and intentional infliction of emotional distress. After the firm had filed for declaratory relief, a case the firm had been handling settled, and the firm received approximately $7,655,000 in attorneys’ fees. The firm moved for partial summary judgment with respect to its claim for declaratory relief and Martindale’s non-tort counterclaims. At issue was whether the operating agreement provided Martindale’s exclusive remedy for payment after his expulsion. The chancellor granted partial summary judgment in the firm’s favor. Martindale appeals.

    Summary of Opinion Analysis: Issue 1: Right to additional payment In Mississippi, an LLC operating agreement is a contract. In summary-judgment cases, reviewing courts must determine whether the contract is ambiguous. If it is not, the parties are bound by the language of the instrument. If the contract’s terms are ambiguous or subject to more than one interpretation, the case should proceed to trial. Here, the plain language of section 9.5 of the operating agreement provides that when firm expels a member, the remaining members may either (1) pay the terminated member an amount calculated under the formula in section 9.2(a) or (2) dissolve the law firm and share the liquidation proceeds with all members, including the terminated member. Section 9.2(a) provides that a terminated member shall receive $1,100 for each “percentage point of membership interest owned by the terminated member.” This payment is tendered “in lieu of [a terminated member’s] positive capital account balance.” The only reasonable interpretation of sections 9.2(a) and 9.5 is that the parties intended for these sections to provide a member’s exclusive right to compensation upon his or her expulsion. Issue 2: Additional remedies Martindale argues that section 13.10 of the operating agreement incorporates additional “rights and remedies,” which the chancery court erroneously failed to consider. Section 13.10 states, in part: “[R]ights and remedies [under this agreement] are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise.” Martindale argues that section 79-29-306(3)(a) gave the chancellor authority to look past the LLC agreement to provide an additional and more favorable equitable remedy. However, when a contract is unambiguous, the parties are bound by its language. There must be some sort of breach or other hindrance with the enforceability of an LLC agreement to trigger the chancellor’s equitable power. Here, the law firm enforced the contract as written, tendering Martindale payment as contemplated by the operating agreement he had entered. While the majority members owed Martindale a duty to act in an intrinsically fair manner, there is no indication they breached this duty in administering his proper payout under the contract. Martindale also argues the firm’s failure to pay him the fair value of his interest breached the firm’s implied duty of good faith and fair dealing under the operating agreement. However, a party does not breach the implied covenant of good faith and fair dealing when the party took only those actions which were duly authorized by the contract. In compliance with section 79-29-911, the firm’s operating agreement specifically provided a formula to determine an expelled member’s interest, and the firm acted as authorized by its operating agreement. Issue 3: Findings of fact Martindale argues that the chancellor abused his discretion by not making findings of fact on his counterclaims for declaratory judgment, judicial dissolution, and breach of good faith and fair dealing. A trial court need not make findings of fact on a motion for summary judgment, unless requested by a party under M.R.C.P. 52(a). Martindale made no such request.


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