Danial Selario, etc. v. Cynthia Sullivan, 0271234

Background

Sisters Cynthia Sullivan, Nicola Brintzenhofe, and others conducted family business ventures through various LLCs to operate Curves for Women and Massage Envy franchises.
The Curves franchises were run through SiS Company, LLC, and Shanicdy Company, LLC, with differing membership and agreements over time; Brintzenhofe was usually the main financial backer.
The four sisters began operating Massage Envy clinics, referring to themselves as partners but without a written partnership agreement; Brintzenhofe provided most of the capital, sometimes characterized as loans.
A falling out led Sullivan and her daughter Mahar to leave the Massage Envy venture in 2010. Negotiations for a buyout failed, and disputes over profits, distributions, and accounting ensued.
Multiple lawsuits were filed over partnership accounting, entitlement to proceeds, and dissolution of the business entities, later consolidated for trial; both partnership and LLC law were at issue.
Circuit court rulings included a finding of partnership for Massage Envy (entitling partners to an accounting) and strict compliance with LLC statutes for Curves, but there were errors in remedies and calculations, leading to appeals by both sides.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether prior dismissal barred the partnership accounting claim (res judicata)	Accounting claim not previously dismissed, partnership dissolved, so entitled to settlement	Claim identical to dismissed claim, so barred by res judicata	Not barred; facts and pleadings materially different
Timeliness of accounting claim (statute of limitations)	No winding up completed, so action timely	Dissociation triggered limitations period, claim late	Action timely as winding up not completed
Whether LLCs created by Brintzenhofe were partnership assets	LLCs intended as partnership property; parties' intent controls	LLCs not partnership property; formed in Brintzenhofe’s name	LLCs were partnership assets due to parties’ intent and actions
Proper settlement of partnership accounts and damages calculation	Circuit court’s double counting led to inaccurate awards	Circuit court failed to properly account for loans/capital accounts	Circuit court erred; must settle all accounts and avoid double counting
Personal liability of Selario	Selario benefitted from wrongful distributions, so liable jointly/severally	Only sued in representative capacity, not personally; no finding of wrongdoing	Not personally liable; only as trustee/executor
Buyout claim by dissociated partners	Dismissal of buyout claim as time-barred error	Dissolution of partnership precludes buyout claim	Dismissal affirmed; buyout remedy unavailable once partnership dissolved
Application of LLC Act vs. Partnership Act remedies	Entitled to repayment under partnership-like equitable principles	Limited to remedies in LLC Act, only per pleadings/statute	Circuit court erred by granting unpleaded/unavailable LLC remedies

Key Cases Cited

Roark v. Hicks, 234 Va. 470 (Va. 1987) (statute of limitations in partnership winding up actions runs only after winding-up is complete)
McCulley v. Brooks & Co. Gen. Contrs., Inc., 295 Va. 583 (Va. 2018) (one is not bound by a judgment in personam unless a party to the suit)
Comtois v. Rogers, 282 Va. 289 (Va. 2011) (requirement that court must determine and settle all partner accounts in an equitable partnership accounting)
Klingstein v. Rockingham Nat’l Bank, 165 Va. 275 (Va. 1935) (intent of parties governs whether property is partnership property; relevance of common law presumptions)
Ted Lansing Supply Co. v. Royal Aluminum & Constr. Corp., 221 Va. 1139 (Va. 1981) (courts cannot award relief outside the pleadings)
Belvin’s Ex’rs v. French, 84 Va. 81 (Va. 1887) (personal liability for wrongful acts may attach when properly pleaded)
Isbell v. Com. Inv. Assocs., 273 Va. 605 (Va. 2007) (statutes abrogate common law only where terms directly and irreconcilably opposed)