B&S MS Holdings, LLC v. Jill Landrum
302 So.3d 605
Miss.2020Background:
- Livingston Holdings, LLC formed in 2010; operating agreement (effective Jan. 1, 2010) contained a broad arbitration clause and an express waiver of members’ rights to seek judicial dissolution or partition.
- Membership shifted by amendment (July 25, 2014): B&S MS Holdings, LLC (B&S) acquired a 51% interest; Jill Landrum held 49%.
- B&S filed a chancery-court petition (Feb. 2018) seeking judicial dissolution under Miss. Code § 79-29-803(1), alleging irreconcilable differences, conflicts, and fraud tied to third-party dealings.
- Jill moved to compel arbitration under the operating agreement; B&S argued the LLC Act (specifically § 79-29-123(3)(m) and § 79-29-803(1)) forbids contracting away a court’s power to decree dissolution in these circumstances.
- The chancery court compelled arbitration under § 79-29-1211 (members may agree to arbitrate); the Mississippi Supreme Court affirmed. A dissent contended the statutes prohibit waiver of court dissolution power and would have reversed.
Issues:
| Issue | Plaintiff's Argument (B&S) | Defendant's Argument (Landrum) | Held |
|---|---|---|---|
| Whether the trial court erred by ordering arbitration under the operating agreement | The LLC Act forbids an operating agreement from varying a court’s power to decree dissolution under § 79-29-803(1); B&S’s statutory right to seek judicial dissolution cannot be waived | Members validly contracted to arbitrate disputes and waived dissolution suits in the operating agreement; § 79-29-1211 permits agreeing to arbitrate internal LLC matters | Court: No error — arbitration enforceable; operating agreement and waiver valid and control (majority opinion) |
| Whether judicial dissolution is outside the arbitration clause’s scope | Judicial dissolution under statute is an independent statutory remedy and does not arise from the operating agreement, so it is not subject to arbitration | The operating agreement expressly addresses dissolution (majority vote) and contains a broad arbitration clause and a waiver of dissolution rights; dissolution therefore falls within arbitration | Court: Dissolution falls within the operating agreement’s arbitration clause and waiver; arbitration applies |
Key Cases Cited
- Harrison Cty. Commercial Lot, LLC v. H. Gordon Myrick, Inc., 107 So. 3d 943 (Miss. 2013) (Mississippi law favors valid arbitration agreements)
- Smith v. Express Check Advance of Miss., LLC, 153 So. 3d 601 (Miss. 2014) (arbitration agreements enforceable under Federal Arbitration Act principles)
- Rogers-Dabbs Chevrolet-Hummer, Inc. v. Blakeney, 950 So. 2d 170 (Miss. 2007) (motion to compel arbitration reviewed de novo)
- Venture Sales, LLC v. Perkins, 86 So. 3d 910 (Miss. 2012) (judicial dissolution is an extraordinary remedy and granted sparingly)
- Bluewater Logistics, LLC v. Williford, 55 So. 3d 148 (Miss. 2011) (an LLC operating agreement is a contract governed by contract law)
- IP Timberlands Operating Co., Ltd. v. Denmiss Corp., 726 So. 2d 96 (Miss. 1998) (courts respect parties’ pre-dispute agreements to arbitrate)
- Merchs. & Farmers Bank of Kosciusko v. State ex rel. Moore, 651 So. 2d 1060 (Miss. 1995) (clear, unambiguous contracts must be enforced)