263 So. 3d 655
Miss.2018Background
- Three attorneys (Grenfell, Sledge, Stevens) executed a Supplement to Partnership Agreement effective Jan. 1, 2014 allocating fee shares progressively from 50% to 100% to the fee-generating partner and requiring 1/3 share of common office expenses.
- The Supplement included a withdrawal/retirement clause addressing fee division for cases after a member’s departure and a one-sentence dispute-resolution clause: “Any dispute or decision related to this agreement or partnership shall be settled by a majority vote of the partners.”
- An Amended Supplement (Apr. 30, 2014) clarified treatment of pre-Jan. 2014 individual cases (50% to the generating partner; 25% to each other partner).
- Sledge withdrew effective Aug. 4, 2015; Grenfell and Stevens executed a Joint Resolution (without Sledge’s signature) applying the dispute-resolution clause to allow Sledge to keep 100% of fees for his caseload as of withdrawal (with exceptions) and to split specified disputed cases three ways.
- Sledge sued seeking accounting, declaratory relief, and damages; the chancery court granted summary judgment to the firm, held the dispute-resolution provision binding on Sledge (even post-withdrawal) and enforced the Joint Resolution; Sledge appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court erred in dismissing Sledge’s original complaint for an accounting | Sledge: original complaint properly pled an accounting and dismissal was erroneous; asks reinstatement | Firm: amended complaint superseded the original; procedural default | Court: original complaint was superseded by amended complaint and dismissal is not reviewable (moot) |
| Whether the Supplement’s dispute-resolution clause bound Sledge after withdrawal | Sledge: withdrawal terminated governance rights under LLC Act; as a non-member he could not be bound by post-withdrawal majority votes | Firm: operating agreement may modify statutory default; dispute-resolution clause applies to disputes about withdrawal and fee division | Court: clause is enforceable and constitutes an exception permitted by the Act; Sledge remained bound by it and the Joint Resolution |
| Whether contract law and LLC Act principles invalidate enforcement of the Joint Resolution against a withdrawn member | Sledge: contract interpretation and statute show a withdrawn member cannot be forced to accept majority decisions after leaving | Firm: contract language is unambiguous and applies to disputes covering withdrawal; parties intended clause to cover exactly this scenario | Court: contract is unambiguous as written; parole evidence not needed; the clause applies to disputes over withdrawal and is enforceable under contract principles and the Act |
Key Cases Cited
- In re Guardianship of Duckett, 991 So. 2d 1165 (Miss. 2008) (standard of review for summary judgment)
- Tellus Operating Grp., LLC v. Texas Petroleum Inv. Co., 105 So. 3d 274 (Miss. 2012) (declaratory-judgment conclusions of law reviewed de novo)
- King v. Dogan, 31 F.3d 344 (5th Cir. 1994) (an amended complaint supersedes the original pleading)
- Sanderson Farms, Inc. v. Gatlin, 848 So. 2d 828 (Miss. 2003) (two-step analysis for enforceability and scope of dispute-resolution provisions)
- Epperson v. SOUTHBank, 93 So. 3d 10 (Miss. 2012) (unambiguous contracts are enforced as written; parole evidence excluded)
- Delta Pride Catfish, Inc. v. Home Ins. Co., 697 So. 2d 400 (Miss. 1997) (disagreement about terms does not itself create ambiguity)
- Turner v. Terry, 799 So. 2d 25 (Miss. 2001) (contract interpretation principles; intent from wording of contract)
- Fails v. Jefferson Davis Cty. Pub. Sch. Bd., 95 So. 3d 1223 (Miss. 2012) (mootness where controversy expired at time of review)