Kenneth A. Parigin v. M. Shane Mills
E2016-00640-COA-R3-CV
| Tenn. Ct. App. | Mar 16, 2017Background
- The Zone, LLC was formed by filing articles listing two members, but no signed operating agreement was ever finalized; membership and ownership became disputed among founders.
- Mills claims he conceived the business and was an original member owning two-thirds based on contributions of ideas and promised funds/equipment; others (Parigin, Wheatley, Landers) dispute his membership claim.
- Parigin contributed $217,370 (memo: 33 1/3%); Wheatley contributed $50,000 shortly before opening and participated in management; Landers declined to invest and left.
- Draft operating-agreement materials allocated shares contingent on cash/equipment contributions and referenced ‘‘sweat equity’’; Mills signed an unsigned draft but did not make the alleged $180,000 cash plus equipment contribution the others say he promised.
- The chancery court found Mills promised $180,000 plus equipment but did not contribute it, held Parigin and Wheatley were members (81.3% and 18.7%) and that Mills had a 0% interest; judgment was affirmed on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the appeal is timely / trial court post-judgment motions tolled appeal deadline | Parigin/Wheatley: Mills’s post-judgment filings were reiterative and shouldn’t toll the appeal period | Mills: His Tenn. R. Civ. P. 59.04 motion properly tolled the appeal deadline | Court: Mills’s Rule 59.04 motion was substantive (challenged finalization); appeal was timely and court has jurisdiction |
| Whether Mills is a member of The Zone | Parigin/Wheatley: Membership required the agreed monetary/equipment contribution; Mills did not contribute, so he is not a member | Mills: He was an original member by formation and by contributing ideas/sweat equity; LLC formation alone makes him a member | Court: Evidence supports trial court that membership was contingent on $180,000+equipment; Mills made no such contribution and holds 0% membership |
| Whether trial court made sufficient findings under Tenn. R. Civ. P. 52.01 | Parigin/Wheatley: Findings were adequate to disclose reasons for conclusion | Mills: Findings were insufficient; trial court failed to apply the LLC Act | Court: Findings were sufficient; trial court’s factual findings are not clearly erroneous; legal conclusions reviewed de novo and affirmed |
| Applicability of Tennessee LLC Act to resolve membership dispute | Parigin/Wheatley: Statutory roadmap doesn’t resolve disputes where members weren’t identified; evidentiary findings control | Mills: Trial court should have applied the LLC Act to recognize him as an original member | Court: LLC Act provides defaults but cannot resolve parties’ contradictory understandings here; court relied on evidentiary findings and affirmed outcome |
Key Cases Cited
- Gooding v. Gooding, 477 S.W.3d 774 (Tenn. Ct. App. 2015) (standards for sufficiency of trial-court factual findings)
- Lovlace v. Copley, 418 S.W.3d 1 (Tenn. 2013) (trial findings must show steps to ultimate conclusions)
- Blair v. Brownson, 197 S.W.3d 681 (Tenn. 2006) (deference to trial court in non-jury cases; standard of review)
- Whaley v. Perkins, 197 S.W.3d 665 (Tenn. 2006) (de novo review of legal conclusions)
- Tennessee Farmers Mut. Ins. Co. v. Farmer, 970 S.W.2d 453 (Tenn. 1998) (substance of post-judgment motion controls tolling of appeal period)
- Vaccarella v. Vaccarella, 49 S.W.3d 307 (Tenn. Ct. App. 2001) (permitted grounds for Rule 59.04 motions)
- Bradley v. McLeod, 984 S.W.2d 929 (Tenn. Ct. App. 1998) (limitations on relitigation via post-judgment motions)
- Harris v. Chern, 33 S.W.3d 741 (Tenn. 2000) (purpose and scope of Rule 59.04 motions)