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Parker v. U.S. Trust Co.
30 A.3d 147
D.C.
2011
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Background

  • HEB LLC is a DC LLC created to hold real property, governed by a 1996 Operating Agreement that contemplated three members but only Bealer and Parker signed.
  • Exhibit A lists Bealer as 33 1/3% and Parker/Parker as 33 1/3% as tenants by the entirety; Kirchiro did not sign and is undisputedly not a member.
  • Paragraph 15(a)(i) provides dissolution on a member's death unless within 90 days the remaining voting members elect to continue the LLC, with at least two members required.
  • Bealer died January 9, 2003; U.S. Trust was appointed executor of his estate.
  • Parker allegedly executed a January 30, 2003 Amendment purporting to transfer half of her interest to Parker and elect to continue HEB LLC; later communications claimed exercise of continuing rights.
  • Trial court granted summary judgment for U.S. Trust, holding the Parkers were a single member due to tenants by the entirety, thus unable to elect to continue operations; Parkers appealed.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Who counts as a member under the Operating Agreement? Parkers are two members despite tenancy by entirety. Parkers, as a unit via tenancy by the entirety, constitute one member only. Ambiguous term; genuine issue of material fact; remand to determine who is a member.
Does tenancy by the entirety affect membership status in an LLC? Tenancy by the entirety can give two distinct interests and thus two members. Tenants by the entirety share a unitary interest; counts as one member. Ambiguous; both interpretations reasonable; remand to resolve.
What effect, if any, does the January 30, 2003 Amendment have on membership and continuation rights? Amendment could transfer half of Parker's interest and support a valid election to continue. Amendment either ineffective or not clearly admissible; does not defeat unitary interest. Remand to address authenticity/admissibility and impact on membership/election.

Key Cases Cited

  • Holland v. Hannan, 456 A.2d 807 (D.C. 1983) (contract ambiguity is a question of law)
  • Gryce v. Lavine, 675 A.2d 67 (D.C. 1996) (ambiguity and factfinder role in contract interpretation)
  • Nat'l Trade Prods. v. Info. Dev. Corp., 728 A.2d 106 (D.C. 1999) (ambiguity requires genuine issue of material fact)
  • 2200 M St. LLC v. Mackell, 940 A.2d 143 (D.C. 2007) (contract interpretation guided by applicable Act provisions)
  • Fairclaw v. Forrest, 130 F.2d 829 (D.C. App. 1942) (tenants by the entireties – indivisible interests; joint ownership concepts)
  • Arbesman v. Winer, 468 A.2d 633 (Md. 1983) (tenants by the entireties – team theory in ownership)
Read the full case

Case Details

Case Name: Parker v. U.S. Trust Co.
Court Name: District of Columbia Court of Appeals
Date Published: Oct 27, 2011
Citation: 30 A.3d 147
Docket Number: 07-CV-850
Court Abbreviation: D.C.