Prudence Holman Waters, etc. v. Meredith H. Lewis, etc.
1223234
Va. Ct. App.Apr 15, 2025Background
- The dispute involves family members and trusts over their respective interests in Holman Property, LLC, which owns a real estate asset (the Merrifield property).
- The Jane C. Holman Trust advanced approximately $717,000 (with interest) to Chris Holman, one of Jane’s children; how to account for the repayment of this advance is central to the case.
- In 2013, the parties signed a Distribution Agreement to manage distributions and liabilities, including Chris’s debt, but disagreed on whether it altered ownership shares or only distribution payments.
- The LLC's Operating Agreement restricts the transfer of membership interests and requires written consent of all non-assigning members to amend ownership percentages.
- The trial court found the Distribution Agreement did not change LLC ownership interests but only altered monthly distributions to repay the debt, determining the debt would be repaid by April 30, 2026.
- The Court of Appeals affirmed that the Distribution Agreement could not change LLC ownership under the operative contract but found the agreement to be ambiguous as to the repayment terms for Chris’s debt, requiring reconsideration with additional evidence.
Issues
| Issue | Plaintiff's Argument (Prudence) | Defendant's Argument (Meredith) | Held |
|---|---|---|---|
| Did the Distribution Agreement change LLC ownership? | Yes, Chris’s ownership was reduced to settle debt | No, it only reduced his monthly distributions, not equity | No, agreement did not change LLC ownership interest |
| Was the Distribution Agreement’s repayment scheme clear? | Yes, it unambiguously fixed timing for repayment | No, it lacked details and was ambiguous | Ambiguous; trial court erred by finding it unambiguous |
| Should parol evidence have been considered? | No, agreement is clear on its face | Yes, agreement can be read more than one way | Yes, ambiguity allows for parol evidence |
| Was the trial court correct on date debt would be repaid? | Yes, repayment by April 30, 2026 | No, agreement lacks basis for this specific date | No; remanded for reconsideration with parol evidence |
Key Cases Cited
- CSE, Inc. v. Kibby Welding, LLC, 77 Va. App. 795 (how to interpret a contract is a question of law, reviewed de novo)
- Landmark HHH, LLC v. Gi Hwa Park, 277 Va. 50 (contract interpretation; plain meaning rule, parol evidence inadmissible if unambiguous)
- Golding v. Floyd, 261 Va. 190 (parties' intent as expressed controls, not permitted to look beyond clear contract language)
- Nextel WIP Lease Corp. v. Saunders, 276 Va. 509 (definition of ambiguity in a contract)
- Langman v. Alumni Ass’n of the Univ. of Va., 247 Va. 491 (court's determination of contract ambiguity is a question of law)