978-1285770178 Case Printout Case CPC-03-06 Part 1

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Miss.,2011.
Bluewater Logistics, LLC v. Williford
55 So.3d 148 Supreme Court of Mississippi.
Background: Ousted limited liability company (LLC) member brought action against remaining members, request-
ing that he be allowed to remain a member of the LLCs. After remaining members decided to grant the request, the
Chancery Court, Forrest County, Johnny Lee Williams, J., awarded damages to ousted member. LLCs and remain-
page-pf2
30 Appeal and Error
the Court concludes that the chancellor abused his or her discretion, and no reasonable chancellor could have come
to the same factual conclusions.
[3] Appeal and Error 30 847(1)
On review of chancellor's decision, the Supreme Court's duty requires it in every case to be as careful and as
sensitive to error as it can be.
[4] Constitutional Law 92 2974
[5] Appeal and Error 30 842(2)
30 Appeal and Error
30XVI Review
30XVI(A) Scope, Standards, and Extent, in General
[6] Corporations and Business Organizations 101 3642(7)
101 Corporations and Business Organizations
page-pf3
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
101XV Unincorporated Business Organizations
101XV(E) Limited Liability Companies
101k3632 Members, Owners, and Shareholders
101k3642 Actions
101k3642(7) k. Pleading. Most Cited Cases
(Formerly 241Ek45 Limited Liability Companies)
Ousted limited liability company (LLC) member's complaint against remaining members and LLCs was suffi-
cient to put them on notice that ousted member was seeking monetary relief, where complaint was titled “Complaint
for Preliminary and Permanent Injunction and Damages,” complaint's opening paragraph stated that ousted member
was seeking damages, another paragraph alleged the ouster was unlawful, “warranting equitable and monetary re-
[7] Corporations and Business Organizations 101 3642(9)
101 Corporations and Business Organizations
101XV Unincorporated Business Organizations
101XV(E) Limited Liability Companies
[8] Contracts 95 249
95 Contracts
95IV Rescission and Abandonment
156III(B) Grounds of Estoppel
156k82 Representations
156k85 k. Future events; promissory estoppel. Most Cited Cases
While equitable principles ordinarily are not applied under contract law, it is not unheard of, as rescission is an
equitable remedy available in certain contract cases, and promissory estoppel is a quasi-contract remedy.
page-pf4
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
95II Construction and Operation
95II(C) Subject-Matter
95k206 k. Legal remedies and proceedings. Most Cited Cases
The Legislature is free to establish, as a matter of substantive law, any contract remedy it finds appropriate.
101k3637 k. Rights and liabilities as to other members, owners, or shareholders in general. Most Cited
Cases
(Formerly 241Ek25 Limited Liability Companies)
Remaining limited liability company (LLC) members, who essentially froze out ousted member and prohibited
him from participating in the LLCs' business, were individually liable, on finding of willful and intentional breach of
101 Corporations and Business Organizations
101XV Unincorporated Business Organizations
101XV(E) Limited Liability Companies
101k3632 Members, Owners, and Shareholders
101k3641 k. Liability for acts and debts of company. Most Cited Cases
101 Corporations and Business Organizations
101XV Unincorporated Business Organizations
101XV(E) Limited Liability Companies
101k3617 Formation, Organization, and Existence
shares which later could be rescinded, remaining members did not tender payment for the shares at the time of the
page-pf5
ouster, and remaining members continued to insist that member was “fired” and could not be involved in any LLC
business, even though, pursuant to both statute and operating agreements, ousted member was entitled to participate
101XV(E) Limited Liability Companies
101k3617 Formation, Organization, and Existence
101k3621 k. Organizing documents; operating agreement. Most Cited Cases
(Formerly 241Ek14 Limited Liability Companies)
A limited liability company (LLC) operating agreement is contractual in nature and binding on the members of
95II(A) General Rules of Construction
95k172 k. Alternative stipulations and options. Most Cited Cases
An option contract gives a clear right to the option holder, regardless of the wishes of the option giver.
[15] Corporations and Business Organizations 101 3642(10)
101k3642(10) k. Costs and attorney fees. Most Cited Cases
(Formerly 241Ek45 Limited Liability Companies)
Chancellor had discretion to award reasonable attorney's fees to ousted limited liability company (LLC) mem-
ber, who prevailed on breach of contract claims and breach of fiduciary duty claims against LLCs and remaining
members, if such fees were factually warranted.
102k194.25 k. In general. Most Cited Cases
Costs 102 194.32
102 Costs
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page-pf7
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
LLCs and the individual defendants. The defendants claim that, because they withdrew their offer to purchase the
plaintiff's interest, the chancellor had no authority to force them to buy him out, and that there was no basis for indi-
vidual liability.
¶ 2. Under Mississippi law, every member of a member-managed LLC is entitled to participate in managing the
business. But even after the defendants claim they had changed their minds about buying the plaintiff's interest in
mand for a hearing on those issues.
BACKGROUND FACTS AND PROCEEDINGS
3. James Williford Jr., Patricia Mosser, Marquetta Smith, and Michael Floyd formed two Mississippi limited
liability companiesBluewater Bay, LLC, and Bluewater Logistics, LLC,to bid on lucrative government con-
tracts related to the aftermath of Hurricane Katrina.
and desist from performing any business” on behalf of the company; and that he would be paid “one-quarter of the
fair market value” of the companies.
5. Williford sued both LLCs and the three individual, super-majority members (“Defendants”). In addition to
damages, he asked for injunctive relief to protect his interest in the LLCs, and to prevent the three super-majority
members from improperly ousting him.
his share of the corporation; it's going to be tendered to him.... They fired him and they don't want him back....
The 75% ownership can stop his salary. They can stop his benefits. They can do anything they want to do.
7. The chancellor granted a preliminary injunction and appointed Havard to “oversee the financial affairs of
the LLCs.” The court ordered that Havard was to have “unlimited access to the financial records of the company on
the premises” and that the records “may be made available to the plaintiff.” The court's order further provided:
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page-pf9
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
uation of the LLC is irrelevant and [there] is no necessity for Nancy [Carpenter] to evaluate anything, so at this
point I need not take up the issues of the information requested by her and confidentiality. The answer to your
query and statement: (“... and I think it would be in the best interest of all the shareholders to see her evaluation.
Do you agree? ....”) is NO. As an aside, I am not much interested in what you think; but aside from that fact, not
only does the best interest of the shareholders have nothing to do with this litigation, an evaluation by Nancy
[Carpenter] is unnecessary, useless, and irrelevant because the offer to purchase Mr. Williford's stock is with-
drawn.
(Emphasis in original.)
14. Defendants' counsel followed up the letter with a motion asking the court to dissolve, in part, the prelimi-
nary injunction. The primary argument was that, because defendants had withdrawn their offer to purchase Willi-
quested, court-ordered, information. On September 11, 2006, the chancellor entered an agreed order temporarily
staying all proceedings. The order stated that the parties had agreed to a procedure for appraisal of the LLCs; that the
court's previous orders were still in effect; and that Defendants were to provide the information Carpenter previously
had requested. Specifically, Defendants were to provide her “any and all other financial records, as she deems nec-
essary, to determine a fair market value of the Bluewater entities.”
17. When the chancellor heard the motion on February 6, Carpenter's testimony clearly established that De-
fendants had failed to comply with discovery and the court's previous orders. On one occasion during the hearing,
the chancellorreferring to documents that had not been providedvented his frustration to the defendants' coun-
sel:
And for any party to make a promise to this court that they're going to in good faithand I'm troubled by it
the sanction on February 12, as ordered, Defendants waited until February 16, and then filed a motion requesting the
court to “set aside, alter or amend” its February 8, 2007, order.
March 8, 2007, Hearing
19. Williford's counsel responded by filing another motion for sanctions, informing the court that the sanc-
page-pfa
30 Appeal and Error
the Court concludes that the chancellor abused his or her discretion, and no reasonable chancellor could have come
to the same factual conclusions.
[3] Appeal and Error 30 847(1)
On review of chancellor's decision, the Supreme Court's duty requires it in every case to be as careful and as
sensitive to error as it can be.
[4] Constitutional Law 92 2974
[5] Appeal and Error 30 842(2)
30 Appeal and Error
30XVI Review
30XVI(A) Scope, Standards, and Extent, in General
[6] Corporations and Business Organizations 101 3642(7)
101 Corporations and Business Organizations
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
101XV Unincorporated Business Organizations
101XV(E) Limited Liability Companies
101k3632 Members, Owners, and Shareholders
101k3642 Actions
101k3642(7) k. Pleading. Most Cited Cases
(Formerly 241Ek45 Limited Liability Companies)
Ousted limited liability company (LLC) member's complaint against remaining members and LLCs was suffi-
cient to put them on notice that ousted member was seeking monetary relief, where complaint was titled “Complaint
for Preliminary and Permanent Injunction and Damages,” complaint's opening paragraph stated that ousted member
was seeking damages, another paragraph alleged the ouster was unlawful, “warranting equitable and monetary re-
[7] Corporations and Business Organizations 101 3642(9)
101 Corporations and Business Organizations
101XV Unincorporated Business Organizations
101XV(E) Limited Liability Companies
[8] Contracts 95 249
95 Contracts
95IV Rescission and Abandonment
156III(B) Grounds of Estoppel
156k82 Representations
156k85 k. Future events; promissory estoppel. Most Cited Cases
While equitable principles ordinarily are not applied under contract law, it is not unheard of, as rescission is an
equitable remedy available in certain contract cases, and promissory estoppel is a quasi-contract remedy.
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
95II Construction and Operation
95II(C) Subject-Matter
95k206 k. Legal remedies and proceedings. Most Cited Cases
The Legislature is free to establish, as a matter of substantive law, any contract remedy it finds appropriate.
101k3637 k. Rights and liabilities as to other members, owners, or shareholders in general. Most Cited
Cases
(Formerly 241Ek25 Limited Liability Companies)
Remaining limited liability company (LLC) members, who essentially froze out ousted member and prohibited
him from participating in the LLCs' business, were individually liable, on finding of willful and intentional breach of
101 Corporations and Business Organizations
101XV Unincorporated Business Organizations
101XV(E) Limited Liability Companies
101k3632 Members, Owners, and Shareholders
101k3641 k. Liability for acts and debts of company. Most Cited Cases
101 Corporations and Business Organizations
101XV Unincorporated Business Organizations
101XV(E) Limited Liability Companies
101k3617 Formation, Organization, and Existence
shares which later could be rescinded, remaining members did not tender payment for the shares at the time of the
ouster, and remaining members continued to insist that member was “fired” and could not be involved in any LLC
business, even though, pursuant to both statute and operating agreements, ousted member was entitled to participate
101XV(E) Limited Liability Companies
101k3617 Formation, Organization, and Existence
101k3621 k. Organizing documents; operating agreement. Most Cited Cases
(Formerly 241Ek14 Limited Liability Companies)
A limited liability company (LLC) operating agreement is contractual in nature and binding on the members of
95II(A) General Rules of Construction
95k172 k. Alternative stipulations and options. Most Cited Cases
An option contract gives a clear right to the option holder, regardless of the wishes of the option giver.
[15] Corporations and Business Organizations 101 3642(10)
101k3642(10) k. Costs and attorney fees. Most Cited Cases
(Formerly 241Ek45 Limited Liability Companies)
Chancellor had discretion to award reasonable attorney's fees to ousted limited liability company (LLC) mem-
ber, who prevailed on breach of contract claims and breach of fiduciary duty claims against LLCs and remaining
members, if such fees were factually warranted.
102k194.25 k. In general. Most Cited Cases
Costs 102 194.32
102 Costs
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
LLCs and the individual defendants. The defendants claim that, because they withdrew their offer to purchase the
plaintiff's interest, the chancellor had no authority to force them to buy him out, and that there was no basis for indi-
vidual liability.
¶ 2. Under Mississippi law, every member of a member-managed LLC is entitled to participate in managing the
business. But even after the defendants claim they had changed their minds about buying the plaintiff's interest in
mand for a hearing on those issues.
BACKGROUND FACTS AND PROCEEDINGS
3. James Williford Jr., Patricia Mosser, Marquetta Smith, and Michael Floyd formed two Mississippi limited
liability companiesBluewater Bay, LLC, and Bluewater Logistics, LLC,to bid on lucrative government con-
tracts related to the aftermath of Hurricane Katrina.
and desist from performing any business” on behalf of the company; and that he would be paid “one-quarter of the
fair market value” of the companies.
5. Williford sued both LLCs and the three individual, super-majority members (“Defendants”). In addition to
damages, he asked for injunctive relief to protect his interest in the LLCs, and to prevent the three super-majority
members from improperly ousting him.
his share of the corporation; it's going to be tendered to him.... They fired him and they don't want him back....
The 75% ownership can stop his salary. They can stop his benefits. They can do anything they want to do.
7. The chancellor granted a preliminary injunction and appointed Havard to “oversee the financial affairs of
the LLCs.” The court ordered that Havard was to have “unlimited access to the financial records of the company on
the premises” and that the records “may be made available to the plaintiff.” The court's order further provided:
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
uation of the LLC is irrelevant and [there] is no necessity for Nancy [Carpenter] to evaluate anything, so at this
point I need not take up the issues of the information requested by her and confidentiality. The answer to your
query and statement: (“... and I think it would be in the best interest of all the shareholders to see her evaluation.
Do you agree? ....”) is NO. As an aside, I am not much interested in what you think; but aside from that fact, not
only does the best interest of the shareholders have nothing to do with this litigation, an evaluation by Nancy
[Carpenter] is unnecessary, useless, and irrelevant because the offer to purchase Mr. Williford's stock is with-
drawn.
(Emphasis in original.)
14. Defendants' counsel followed up the letter with a motion asking the court to dissolve, in part, the prelimi-
nary injunction. The primary argument was that, because defendants had withdrawn their offer to purchase Willi-
quested, court-ordered, information. On September 11, 2006, the chancellor entered an agreed order temporarily
staying all proceedings. The order stated that the parties had agreed to a procedure for appraisal of the LLCs; that the
court's previous orders were still in effect; and that Defendants were to provide the information Carpenter previously
had requested. Specifically, Defendants were to provide her “any and all other financial records, as she deems nec-
essary, to determine a fair market value of the Bluewater entities.”
17. When the chancellor heard the motion on February 6, Carpenter's testimony clearly established that De-
fendants had failed to comply with discovery and the court's previous orders. On one occasion during the hearing,
the chancellorreferring to documents that had not been providedvented his frustration to the defendants' coun-
sel:
And for any party to make a promise to this court that they're going to in good faithand I'm troubled by it
the sanction on February 12, as ordered, Defendants waited until February 16, and then filed a motion requesting the
court to “set aside, alter or amend” its February 8, 2007, order.
March 8, 2007, Hearing
19. Williford's counsel responded by filing another motion for sanctions, informing the court that the sanc-

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