United States District Court, E.D. Louisiana
ORDER AND REASONS
E. FALLON UNITED STATES DISTRICT JUDGE
before the Court are cross motions for summary judgment. On
the one hand, Defendant requests the Court to affirm a
corporation board's vote to remove Plaintiff as a
manager. Rec. Doc. 39. On the other hand, Plaintiff asks the
Court to void the corporation board's vote to remove her
as a manager, arguing that Defendant did not garner the
necessary threshold vote for her termination. Rec. Doc. 47.
The Court held oral argument on the instant matter on January
31, 2018. Having considered the parties' arguments,
submissions, and applicable law, the Court now issues this
Order and Reasons.
case arises from a disagreement between the co-managers of
Ragweed, LLC (“Ragweed”), in which Plaintiff now
requests the Court to dissolve the corporation. Rec. Doc. 1.
Ragweed was established by Deborah and Eli Tullis, Sr., who
distributed shares in the company among their children and
various heirs. Rec. Doc. 1 at 7. Plaintiff Rachael Gambel, a
Louisiana resident, is (or was) a manager-member of Ragweed,
a Louisiana company. Rec. Doc. 1 at 3. Defendant Eli W.
Tullis, Jr., an Illinois resident, is also a manager-member
of Ragweed. Rec. Doc. 1 at 3.
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 a LLC governed by the
company's Articles of Organization. Rec. Doc. 1 at 1-2.
The company has no operating agreement. Rec. Doc. 1 at 2. The
Articles of Organization specifically prohibits members from
receiving distributions upon withdrawal or resignation from
the company. Rec. Doc. 1 at 6. Members who wish to cease
involvement in the company may transfer their shares to
another member. Rec. Doc. 1 at 6.
dispute arose between Plaintiff and Defendant concerning the
distribution of the company's assets. Plaintiff agreed to
distribute assets to any member who requested. Defendant,
however, disagreed, citing the objection of Eli Tullis Sr.
and his desire to provide his family with investment
shares-not cash. Rec. Doc. 1 at 2, 7; Rec. Doc. 39-1 at 4.
Vote to Dissolve Ragweed
January 2017, Plaintiff called for a special member meeting
where 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.
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 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.
in April 2017, Plaintiff initiated this lawsuit, seeking a
declaratory judgment that Ragweed was dissolved by consent of
its members and that she may distribute the company's
funds and wind up its affairs. Rec. Doc. 1 at 15, 16.
Plaintiff argues that the company was properly dissolved
based on the vote at the January 2017 special member meeting.
See Rec. Doc. 1 at 2-3. Alternatively, Plaintiff
avers that judicial dissolution should be appropriate if the
Court were to find the special member meeting did not achieve
that effect. Rec. Doc. 6 at 17. Defendant filed a motion to
dismiss, arguing that 18 of the 25 members did not wish to
dissolve the company and that the votes at the January 2017
special member meeting were not valid. Rec. Doc. 5-1 at 1.
August 2017, the Court granted in part Defendant's motion
to dismiss. The Court held that Ragweed was not effectively
and legally dissolved in January 2017 because the Secretary
of State had not issued a certificate of dissolution as
required by state law. The Court held: “To legally
terminate a Louisiana LLC, the company must adopt articles of
dissolution (La. Rev. Stat. § 12:1339), liquidate the
company's business (La. Rev. Stat. § 12:1336), adopt
a certificate of dissolution (La. Rev. Stat. § 1340),
and file those articles and certificate with the Louisiana
Secretary of State (La. Rev. Stat. §§
1339-40).” Afterward, the LLC must obtain a certificate
of dissolution from the Secretary of State. The issue
remains, however, as to whether judicial dissolution is
Vote to Remove Plaintiff as Co-Manager
the Court's determination regarding the company's
status, on October 4, 2017, a special meeting was held by
Ragweed's members to consider whether Plaintiff should be
removed as manager. Rec. Doc. 39-1 at 1. Eighteen of 25
members, who hold 72-percent of Ragweed's membership
interest, voted to remove Plaintiff as a ...