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Gambel v. Tullis

United States District Court, E.D. Louisiana

February 7, 2018

RACHAEL GAMBEL
v.
ELI W. TULLIS, JR.

         SECTION “L” (4)

          ORDER AND REASONS

          ELDON E. FALLON UNITED STATES DISTRICT JUDGE

         Pending 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.

         I. BACKGROUND

         This 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.

         Ragweed 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.

         A 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.

         A. Vote to Dissolve Ragweed

         In 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.

         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 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.

         Thus, 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.

         In 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 warranted.

         B. Vote to Remove Plaintiff as Co-Manager

         Following 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 ...


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