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Schauf v. Schauf

Court of Appeals of Louisiana, Second Circuit

April 25, 2018

PAUL SCHAUF Plaintiff-Appellee

          Appealed from the Sixth Judicial District Court for the Parish of Tensas, Louisiana Trial Court No. 23, 865 Honorable Michael E. Lancaster, Judge

          COTTON, BOLTON, HOYCHICK, & DOUGHTY By: M. Kyle Moore Counsel for Appellants

          BREAZEALE, SACHSE & WILSON, LLP By: Troy B. Villa Carroll Devillier, Jr. Sunny M. West Counsel for Appellee

          Before BROWN, COX, and STEPHENS, JJ.

          BROWN, C.J.

         This appeal arises from litigation concerning the dissolution of the Schauf Family LLC. Cross motions for summary judgment were filed. Defendants, three of the four owners, have appealed from a judgment in favor of plaintiff, Paul Schauf, a member and owner, rescinding the transfer of assets of the limited liability company and declaring null and void defendants' vote to dissolve the LLC, their appointment of a liquidator, and the transfer of the company. For the reasons set forth below, we reverse the the summary judgment ruling and remand for further proceedings.


         On January 24, 2001, the Schauf Family LLC was formed by Angela M. Schauf as a family business for herself and her four children, with her having ownership of 50% of the LLC and her four children each having an equally divided interest (12.5%) in the remainder of the LLC, subject to a usufruct in favor of herself. The four children were Peter T. Schauf, Paul M. Schauf, Mary Angela Schauf, and Kathryn L. Schauf. The five Schaufs executed an Operating Agreement ("OA") and all were members of the LLC. The only asset of the LLC is a tract of farm land presently being leased. Thereafter, the mother, Angela M. Schauf, died. Her 50% interest was divided equally among the four remaining members, resulting in each member owning a 25% interest in the LLC.

         Thereafter, two more members, Peter T. Schauf and Kathryn L. Schauf, died, leaving their interests to their respective spouses, Jo Ann Parker Schauf and Michael Shannon. Thus, at this time, there remained two original members in the LLC, plaintiff, Paul Schauf, and his sister, Mary Angela Schauf.

         Tensions developed between the parties. The three defendants, Jo Ann Parker Schauf, Michael Shannon, and Mary Angela Schauf, wanted to dissolve the LLC. They wanted to sell the LLC's asset and divide the proceeds equally among the four ownership interests, so they could be "out of the LLC." Plaintiff, Paul Schauf, twice refused to buy out defendants' interests.[1] Dissolution voting ballots were mailed to all owners of the LLC. Votes were collected 15 days later. Except for plaintiff, all voted to dissolve the LLC and appoint Jo Ann Parker Schauf, as liquidator. On June 8, 2016, after the vote for dissolution and appointment of Jo Ann as liquidator, defendants again offered plaintiff the opportunity to buy out the other members of the LLC, giving him until June 22, 2016, to respond. After that date passed with no response from plaintiff, defendants gave him notice that they were moving forward with the dissolution.

         On July 5, 2016, plaintiff, Paul Schauf, filed the instant lawsuit asking the trial court to declare null and void the appointment of a liquidator and defendants' vote to dissolve the LLC. According to plaintiff, the LLC must exist for 25 years before it can be dissolved under Article 4 of the Articles of Organization ("AO"), and two defendants, Jo Ann Parker Schauf and Michael Shannon, are not members but assignees of the LLC. Defendants answered the suit and filed a reconventional demand, claiming that their majority ownership rights in the LLC gave them voting power as indicated in Paragraph 6 of the OA, which was executed by plaintiff together with the deceased members at the time the LLC was formed, back on January 24, 2001. Defendants requested that the trial court recognize the validity of their majority vote to dissolve and wind up the entity. They also requested that they be allowed to grant authority to Jo Ann Parker Schauf, one of the defendants, to sell the assets of the LLC and distribute the proceeds to its owners.

         After the lawsuit and the reconventional demand were filed, the other original member, Mary Angela Schauf, died and defendants filed a motion for substitution of party, Jo Ann Parker Schauf, who was executrix of Mary Angela's estate. This motion also requested a preliminary injunction, and later a permanent injunction, prohibiting plaintiff, Paul Schauf, from taking further action.

         On September 1, 2016, a stipulated judgment was executed, wherein all parties agreed that no party involved in the current litigation or the LLC would take any action to change the status, interest, OA, or AO of the LLC, nor would they attempt to sell, convey, or encumber the property owned by the LLC in any way until there was a final resolution of this matter.

         The parties filed motions for summary judgment, agreeing that there is no dispute as to the material facts surrounding their rights. A hearing was held, with a stipulation that there was no factual dispute. The trial court granted plaintiff's motion for summary judgment, declaring null and void defendants' vote to liquidate, the appointment of a liquidator, and any transfer of assets of the LLC, and ordering the rescission of any such transfer. The trial court denied defendants' motion for summary judgment, declaring that they have no authority to dissolve ...

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