132 So. 3d 986
La. Ct. App.2013Background
- Robert Levendikis (TX) and Tony Jorio (LA) formed Ark-La-Tex Safety Showers, LLC with Levendikis 51% and Jorio 49% ownership; an Operating Agreement governed withdrawals and remedies.
- Dispute arose after Jorio unilaterally withdrew $25,000 from the LLC bank account on March 24, 2011; Levendikis alleged that withdrawal constituted Jorio’s withdrawal from the LLC in breach of the Agreement.
- Plaintiffs (Levendikis and the LLC) sued for declaratory relief (that Jorio had withdrawn), damages, injunctive relief, and fees; Jorio counterclaimed but later waived all claims except valuation of his 49% interest.
- Trial focused largely on valuation of LLC assets; court valued assets at $133,608.60, allocated 51% to Levendikis and 49% to Jorio, and reduced Jorio’s share by $25,000.
- The trial court denied plaintiffs’ request for a declaratory judgment that Jorio had withdrawn, finding plaintiffs failed to prove withdrawal; the court concluded both parties were "prevailing parties" under the Operating Agreement and awarded attorney fees to both, payable from LLC assets.
- On appeal, the court affirmed denial of the declaratory judgment and affirmed the attorney-fee award to Jorio but reversed the award to plaintiffs.
Issues
| Issue | Plaintiff's Argument (Levendikis) | Defendant's Argument (Jorio) | Held |
|---|---|---|---|
| Whether parties stipulated Jorio withdrew | Parties stipulated at trial that Jorio withdrew effective March 24, 2011; trial limited to valuation | There was no stipulation; Jorio denied withdrawing and said he remained a member | No express stipulation found; court allowed evidence and ruled no stipulation established |
| Whether Jorio withdrew as a member of the LLC | Withdrawal occurred when Jorio took $25,000 and ceased participation; that conduct shows withdrawal | Jorio denied intent to withdraw and claimed he was locked out; maintained 49% membership | Trial court’s factual finding that plaintiffs failed to prove withdrawal affirmed (no abuse of discretion) |
| Entitlement to attorney fees under Operating Agreement | Both sides waived most claims except valuation, so neither should be "prevailing party" entitled to fees | Operating Agreement awards fees to the prevailing party; Jorio prevailed on plaintiffs’ initial withdrawal/damages claim | Jorio prevailed on plaintiffs’ initial claim (they lost the withdrawal/damages claim) — fee award to Jorio affirmed; fee award to plaintiffs reversed |
| Payment of fees/costs from LLC assets | Plaintiffs argued parties effectively only litigated valuation so no prevailing party; fees should not be charged to LLC assets in plaintiffs’ favor | Agreement allows reasonable fees to prevailing party; court may assess fees against LLC under agreement | Court properly relied on contract for fee award to Jorio and ordered fees from LLC assets as to Jorio; award to plaintiffs reversed |
Key Cases Cited
- Billingsley v. City of Baton Rouge, 673 So.2d 300 (La. App. 1st Cir. 1996) (definition and nature of declaratory judgments)
- Becht v. Morgan Building & Spas, Inc., 843 So.2d 1109 (La. 2003) (stipulations bind parties and the court)
- R.J. D’Hemecourt Petroleum, Inc. v. McNamara, 444 So.2d 600 (La. 1983) (effect of stipulations at trial)
- Sher v. Lafayette Ins. Co., 988 So.2d 186 (La. 2008) (attorney fees are recoverable only where authorized by statute or contract)
- Clovelly Oil Co., LLC v. Midstates Petroleum Co., LLC, 112 So.3d 187 (La. 2013) (operating agreements are contractual and interpreted under contract law)