Nicolazzi v. Bone
564 S.W.3d 364
| Mo. Ct. App. | 2018Background
- Appellant (Nicolazzi) and Respondent (Bone) formed Young in Spirit Adult Day Care, LLC in 2005 and signed an operating agreement naming them as equal members. Appendix A set initial capital contributions of $50,000 each but contained no payment deadline.
- Respondent performed managerial/nursing duties; Appellant handled client services. Over time Respondent increased operational duties while Appellant’s role diminished and employees assumed many of his tasks.
- Accounting evidence conflicted: Respondent’s CPA (Sailor) testified Appellant contributed ~$31,065 total (short of $50,000); Appellant and his expert (Burchett) claimed much larger contributions. Trial court credited Sailor.
- In spring 2011 Appellant discussed selling his LLC interest with a third party without Respondent’s written consent. Appellant stopped participating in operations April 30, 2011. Respondent formed a new corporation and informed Appellant she would dissolve the LLC.
- Respondent counterclaimed alleging breaches: failing to make capital contribution, failing managerial duties, soliciting sale without consent, and fraudulent misrepresentation. Trial court found breaches for capital and solicitation, concluded Appellant had withdrawn, held Respondent was sole member, and entered judgment for Respondent.
- On appeal the court affirmed the breach for failure to make the capital contribution, reversed the finding that solicitation breached the agreement, reversed the finding that Appellant withdrew before suit, and remanded to decide whether filing the petition constituted withdrawal under statute and, if so, to determine fair value of Appellant’s interest.
Issues
| Issue | Nicolazzi's Argument | Bone's Argument | Held |
|---|---|---|---|
| Whether Appellant breached ¶3 (capital contribution) | He paid required initial capital; trial finding against him was against weight of evidence | He failed to make required $50,000 initial contribution within a reasonable time | Court: Affirmed breach — trial court credibility finding (CPA over Appellant) supported conclusion Appellant did not meet $50,000 requirement |
| Whether Appellant breached ¶7 (transfer prohibition) by soliciting buyer | Discussion/solicitation amounted to breach because it evinced intent to transfer without consent | Operating agreement prohibits actual transfer/assignment without written consent, not mere solicitation | Court: Reversed — solicitation alone is not one of the prohibited acts listed in ¶7; trial court misapplied contract by inserting a prohibition not written in the agreement |
| Whether Appellant’s pre-suit conduct constituted statutory "withdrawal" | His failure to contribute, attempted sale, and ceasing participation were events of withdrawal | Operating agreement is silent on withdrawal; statutory withdrawal events did not occur pre-suit (no 90-day notice, no statutorily enumerated event) | Court: Reversed — trial court misapplied §§347.121/.123; pre-suit actions did not constitute withdrawal under the agreement or statute |
| Whether filing the petition effected withdrawal and required valuation | Filing suit did not withdraw him | Filing the petition may be an event of withdrawal under §347.123(4)(c); if so, fair value must be determined as of filing date | Court: Remanded — trial court to decide if petition filing constituted withdrawal under §347.123(4)(c); if yes, determine fair value under §347.103.2 |
Key Cases Cited
- Ivie v. Smith, 439 S.W.3d 189 (Mo. banc 2014) (standard of review in court-tried cases)
- Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976) (review standard for bench trials)
- McGuire v. Lindsay, 496 S.W.3d 599 (Mo. App. E.D. 2016) (operating agreements interpreted under contract principles)
- Health Care Found. of Greater Kansas City v. HM Acquisition, LLC, 507 S.W.3d 646 (Mo. App. W.D. 2017) (ascertaining parties' intent when construing agreements)
- Nooter Corp. v. Allianz Underwriters Ins. Co., 536 S.W.3d 251 (Mo. App. E.D. 2017) (courts may not insert contractual terms absent clear agreement)
- Miken Tech., Inc. v. Traffic Law Headquarters, P.C., 494 S.W.3d 609 (Mo. App. E.D. 2016) (where no time is fixed, law implies a reasonable time to perform)