Peter A. Nilolazzi v. Laura L. Bone
ED107775
| Mo. Ct. App. | Nov 5, 2019Background
- Nicolazzi and Bone formed Young in Spirit Adult Daycare, LLC by operating agreement in 2005; the agreement contained no withdrawal provisions.
- In 2011 Nicolazzi sued for declaratory judgment, alleging Bone misused LLC funds and seeking an accounting and constructive trust.
- At trial the court ruled for Bone in 2017, finding Bone the sole remaining member and divesting Nicolazzi of his LLC interest.
- This Court previously affirmed most of the judgment but remanded to determine whether Nicolazzi’s filing of the declaratory-judgment petition constituted an involuntary “event of withdrawal” under Mo. Rev. Stat. § 347.123(4)(c).
- On remand the trial court, without hearing or explanation, held Nicolazzi’s petition did constitute withdrawal under § 347.123(4)(c).
- Nicolazzi appealed, arguing the trial court misapplied the statute; the Court of Appeals reversed and remanded with instructions consistent with its statutory interpretation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether filing a declaratory-judgment petition to determine LLC member status is an involuntary "event of withdrawal" under § 347.123(4)(c). | Nicolazzi: "for himself" targets a member who petitions to reorganize itself (typically an entity-member); a natural person seeking judicial determination of membership does not trigger withdrawal. | Bone: "for himself" means ‘‘for the member’s own benefit,’’ so Nicolazzi’s petition seeking relief that benefited him triggered withdrawal. | Court held filing the declaratory-judgment petition did NOT constitute withdrawal under § 347.123(4)(c); reversed the trial court’s withdrawal finding and remanded. |
Key Cases Cited
- Ivie v. Smith, 439 S.W.3d 189 (Mo. banc 2014) (sets primary rules for statutory interpretation).
- Pearson v. Koster, 367 S.W.3d 36 (Mo. banc 2012) (reviews de novo statutory questions).
- Nicolazzi v. Bone, 564 S.W.3d 364 (Mo. App. E.D. 2018) (prior appellate decision remanding to decide § 347.123(4)(c) withdrawal issue).
- Oliver v. Johanson, 329 F. Supp. 3d 684 (W.D. Ark. 2018) (holding member’s petition to dissolve LLC is not withdrawal under similarly worded statute).
- Crumpton v. Vick’s Mobile Homes, LLC, 779 S.E.2d 136 (Ga. Ct. App. 2015) (interpreting comparable statute and rejecting automatic withdrawal when member seeks LLC dissolution or accounting).
- Crouse v. Mineo, 658 S.E.2d 33 (N.C. Ct. App. 2008) (similar holding under North Carolina statute).
- St. Louis Cty. v. Prestige Travel, Inc., 344 S.W.3d 708 (Mo. banc 2011) (statutory language must be read in context).
- Am. Nat’l Prop. & Cas. Co. v. Ensz & Jester, P.C., 358 S.W.3d 75 (Mo. App. W.D. 2011) (courts should avoid interpretations that render statutes meaningless).
- Eureka VII LLC v. Niagara Falls Holdings LLC, 899 A.2d 95 (Del. Ch. 2006) (discusses protective purpose of involuntary-withdrawal provisions for member-character changes).