United States District Court, E.D. Louisiana
RACHAEL T. GAMBEL
ELI W. TULLIS, JR.
ORDER AND REASONS
E. FALLON UNITED STATES DISTRICT JUDGE
the Court is Defendant Eli W. Tullis, Jr.'s motion to
dismiss. Rec. Doc. 5. Plaintiff opposes the motion. Rec. Doc.
6. The Court held oral argument on the matter on July 19,
2017. Having considered Defendants arguments, submissions,
and the applicable law, the Court now issues this Order and
cases arises from a disagreement between the co-managers of
Ragweed, LLC (“Ragweed”) regarding whether the
company was dissolved by consent of its members. Rec. Doc. 1.
Plaintiff Rachael T. Gambel, a Louisiana resident, is a
manager-member of Ragweed, a Louisiana company. Rec. Doc. 1
at 3. Defendant Eli W. Tullis, Jr., an Illinois resident, is
also a member-manager of Ragweed. Rec. Doc. 1 at 3. Ragweed
was established by Debroah and Eli Tullis, Sr., who
distributed shares of the company among their children and
various heirs. Rec. Doc. 1 at 7.
is an investment vehicle with mostly cash assets that
Plaintiff invested and managed for the benefit of the
members. Rec. Doc. 1 at 6. Ragweed is not governed by an
operating agreement, but the company's Articles of
Organization specifically prohibits a member from receiving a
distribution upon withdrawal or resignation from the company.
Rec. Doc. 1 at 6. A member who wishes to cease involvement in
the company may transfer his or her shares to another member.
Rec. Doc. 1 at 6.
agreed to a distribution of the company's assets to any
member who requested one. Rec. Doc. 1 at 2; Rec. Doc. 6 at 2.
Defendant disagreed with the distribution, citing the
objection of the elder Tullis. Rec. Doc. 1 at 7. In January
2017, Plaintiff called for a special member meeting at which
the company's members voted, in proportion to their
percentage of shares and some by proxy, to dissolve the
company. Rec. Doc. 1 at 2. In March 2017, however, Defendant
continued to object to the dissolution of the company and,
with majority support of Ragweed's members, voted to
nullify the January vote. Rec. Doc. 1 at 2. Plaintiff
believes that she is authorized and obligated to dissolve the
company and distribute the funds as a result of the January
special member meeting vote. Rec. Doc. 1 at 11.
argues that Louisiana law prevents Defendant from blocking
dissolution of the company and the distribution of its funds
after members voted in January. Rec. Doc. 1 at 13. Plaintiff
seeks a declaratory judgment from this Court that Ragweed was
dissolved during the special member meeting in January 2017.
Rec. Doc. 1 at 13. Plaintiff asserts that because Ragweed has
no written operating agreement, it can be dissolved with the
consent of its members through a majority vote. Rec. Doc. 1
at 12 (citing LSA R.S. § 1334 (2) and LSA R.S. §
12:1318B. (1)). Plaintiff further contents that
Defendant's resolution attempting to nullify the vote is
ineffective because neither Ragweed's Articles of
Organization nor Louisiana law allows a manager or member to
adopt a resolution nullifying an earlier dissolution vote.
Rec. Doc. 1 at 13. Plaintiff seeks a declaration that the
company was dissolved by consent of its members, such that
she may distribute the company's funds and wind up its
affairs. Rec. Doc. 1 at 15, 16. Alternatively, Plaintiff
seeks judicial dissolution of Ragweed pursuant to Louisiana
Revised Statute § 12:1335, which allows for a court to
dissolve a limited liability company when it is no longer
reasonably practical for the company to continue conducting
business in accordance with its articles of organization.
Rec. Doc. 1 at 13-15.
Defendant's Motion to Dismiss
proffers three arguments in support of a motion to dismiss.
First, Defendants moves to dismiss Plaintiff's claim,
alleging that she failed to adequately plead facts that
demonstrate her authority to dissolve Ragweed. Rec. Doc. 5 at
1. Second, Defendant alleges that judicial dissolution is
unwarranted because Plaintiff failed to adequately show that
the members of Ragweed are in deadlock. Rec. Doc. 5-1 at 23.
Third, Defendant moves to dismiss Plaintiff's claims for
failure to join necessary and indispensable parties -
including Ragweed and other members. Rec. Doc. 5-1 at 4. Each
of these arguments will be set forth with more specificity in
Status of Ragweed
argues that Plaintiff failed to state a claim that warrants a
judicial declaration that Ragweed was dissolved by the
consent of its members. According to Defendant, Plaintiff
attempted to liquidate the company against the wishes of the
majority of members by invalidly obtaining proxy votes,
scheduling the special member meeting at an inconvenient time
and place, and failing to notify members of the meeting. Rec.
Doc. 5-1. Specifically, Defendant avers that Plaintiff never
obtained consent to dissolve the company because the proxies
held by Plaintiff and her sister were invalidly obtained from
a trustee rather than from the beneficiaries of the trust.
Rec. Doc. 5-1 at 3, 20. Defendant also argues that while
members can vote by proxy, a proxy vote is valid only so long
as it is not challenged before the vote occurs. Rec. Doc. 5-1
at 19 (citing La. Rev. Stat § 12:1318(E)(4)). Defendant
argues that the proxy votes were invalid because he
challenged their validity at the special member meeting
before the vote took place, and therefore Ragweed was not
dissolved by consent of its members. Rec. Doc. 5-1 at 20.
alternatively argues that even if the initial vote was valid,
the consent was withdrawn before she could effectively
dissolve the company. Rec. Doc. 5-1 at 18. Defendant notes
that the invalid consent was withdrawn when a majority of
members adopted a resolution in March to nullify the
approval. Rec. Doc. 5 at 3. Plaintiff never filed the
necessary paperwork to dissolve the company before the
resolution was issued: a certification of dissolution was
never issued by the Secretary of State. Rec. Doc. 5 at 3
(citing La. Rev. Stat. § 12:1340(C)). Because no such
certificate has been issued, nor have any of the requisite
steps for dissolution been completed, Defendant argues that
Ragweed remains in existence. R. Doc. 5-1 at 22.
contends that Plaintiff's claims are too vague to warrant
judicial dissolution of Ragweed. Rec. Doc. 5-1 at 4.
Defendant argues that the requirements for judicial
dissolution are narrowly prescribed, and Plaintiff's
complaint is too broad to justify the dramatic intervention
of the Court into the company's operation. Rec. Doc. 5-1
at 4. Noting that Plaintiff's sole reason for seeking
judicial dissolution is the inability of the co-managers to
decide whether the company should be dissolved, Defendant
argues that Plaintiff's conclusory allegations do not
warrant the intervention of the Court. Rec. Doc. 5-1 at 22.
Defendant also notes that while Louisiana courts have
judicially dissolved companies whose members are evenly split
over future operation, the majority of Ragweed members are
opposed to dissolution, and thus judicial dissolution is
inappropriate. Rec. Doc. 5-1 at 23.
Failure to Join
further argues that Plaintiff failed to join necessary and
indispensable parties pursuant to Rule 19 of the Federal
Rules of Civil Procedure. Rec. Doc. 5-1 at 4. In particular,
Defendant notes that Ragweed is a company with 25 members,
but only one member is named as a defendant in this suit.
Rec. Doc. 5-1 at 4. Defendant argues that Ragweed and the
other members are necessary parties, but because they would
destroy diversity jurisdiction, the action should be
dismissed by this court pursuant to Rule 12(b)(7) and Rule
19. Rec. Doc. 5-1 at 4. According to Defendant, Ragweed and
the additional members are necessary parties because it would
be impossible for this Court to provide complete relief
without them and because a judicial determination would
affect their interests. Rec. Doc. 5-1 at 24.
opposes Defendant's Rule 12(b)(6) motion and argues that
she has provided sufficient factual allegations to support
her claims. Rec. Doc. 6. First, Plaintiff alleges that
consent to dissolve the company was validly demonstrated at
the special member meeting, and that she sufficiently began
to wind up the company's affairs following the vote. Rec.
Doc. 6. Second, Plaintiff argues that the managerial
difficulties of operating Ragweed warrant judicial
dissolution. Rec. Doc. 6 at ...