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