It should be crystal clear to anyone that has read this thread (or her other threads about this case) that Stoid is not prepared to entertain any suggestions that what she has done is legally unsound, and that she will entirely discount or ignore any evidence or argument that she could be wrong. You’re beating your head against a wall here. The appeal is over and done. Trying to prove to her that she’s wrong is now useless. Barn door open, horse gone.
It’s pretty clear to me from what I’ve read of this case that her chances of succeeding on her appeal are slim to none. That’s only based on the information she has provided without hearing anything from the other side. Anyone who files a 13,000 word brief on what appears to be a relatively simple legal issue is probably not understanding what is legally material and relevant. It’s also pretty clear that the ghosts of all dead Supreme Court justices could convene in her living room and explain to her why she is wrong, and she would continue to insist that they weren’t reading the cases carefully enough, or that they ignored the evidence, or that they were evil or stupid or out to get her.
Stoid, I hope for your sake that your appeal is successful, but I really think you need to prepare yourself in case it’s not. You really need to move on from this.
VERY quick glance at the thread, I’ve been way too obsessed here and I have to come back later, but this was easy to throw at you.
Over the course of this case I wrote a petition for writ of mandate to try and stop the auction sale after she denied my (YES< WRITTEN…More explanation on that later) Motion To Stay Dissolution, and I wrote two petitions for writs of supersedeas. A year apart.
The only thing I could copy quickly was the TOC for the mandate , the others fall apart the minute I paste, so I will have to mess with them
But the mandate writ is directly about the LLC issue anyway, soo…
(summarily denied, of course, I was braced for that, only 5% of petitions are granted review in a very good year…)
The MANDATE petition asking to stop the LLC auction sale of assets:
I really resisted teh long titling thing in the writ peition, I got on board a little better for the appeal. I’ll try to put that up later… rushing out.
You may have already discussed this, but what actually happened to GDI’s assets anyway? All that happens when an LLC is dissolved is that somewhere a piece of paper in the Secretary of State’s office gets stamped “CANCELLED.” But the servers, the office furniture, the trademark in “RetroRaunch”, the porno images themselves … what became of all that?
I’ve caught up, as well as reviewed. I’m going to post some stripped down answers and information in successive posts.
Regarding Legal Argument
I have only learned to do what my experience in this case, which has been my teacher, taught me to do. I refer to my observation of my attorneys and the opposing attorney, who both cited authority consistently, as well as the judge herself, who both requested authority and offered it herself the great majority of the time. “Do you have an authority for that?” was a question I heard many times.
All this was in addition to my educating myself with practice guides, treatises, annotated statutes, and legal encylopedias, as well as, of course, the very authorities themselves, reviewing court opinions.
Nowhere did I see or read that authority-free debate was the preferred and more effective way to make a compelling legal argument, so I find any assertions to that effect extremely surprising, even shocking.
Of course I understand that in trial, on your feet, there isn’t a great deal of citing going on. But in California, if you want the court to do anything at all, you pretty much better be ready with your memorandum of points and authorities or forget it.
And I would respectfully disagree with anyone who would argue that citation to authority is optional or even merely of questionable value in appellate law. If nothing else I think the courts would find it insulting to learn that any attorney thought so, it would be tantamount to an opinion that the courts themselves are superfluous. If their opinions are not binding, important, and necessary…why bother?
PART ONE The Writ of Mandate Part 1
I. Introduction
A. The Issue
This petition asks this Court to answer a basic question: “Does the statutory election (and motion) to avoid the judicial dissolution of a Limited Liability Company, as provided for in California Corporations Code §17351 (b) (1) and (2) , have any kind of timing limitation or requirement, apart from needing to take place at some point before the dissolution is actually completed?"
The answer really is no more complicated than “yes” or “no,” but the ramifications of the answer are enormous for the Petitioner. One answer puts her on the path to rebuilding her business and her life after already destructive litigation. The other answer takes that damage to next level, leaving her with no career, no livelihood, no home, and no foundation upon which to build a future or from which to recover from so much loss.
B. Summary of the case
Petitioner seeks expedited writ relief and an immediate stay in this issue of first impression for the Court, because without such intervention, Petitioner’s livelihood will be irretrievably lost to her on Monday, June 30, 2008. Two separate events are scheduled to occur on that day, one of which this Court has the power to stop. The other is not subject to this Court’s jurisdiction, but granting of the Petitioner’s prayer will mitigate the damage considerably.
Petitioner is a 50% owner of the Limited Liability GDI, LLC, (hereinafter “GDI”), which has been ordered dissolved under Corporations Code 17351, et seq. The real party in interest/Plaintiff, Mr. Ex (hereinafter “Plaintiff), owns the remaining 50%, and he sought the dissolution.
Petitioner seeks first a writ of prohibition or other stay to prevent the court-ordered sale of the assets of GDI, scheduled for Monday, June 30, 2008, at 8:30 a.m. The “assets” consist of only one thing: the website business that the Petitioner developed jointly with Plaintiff in 1997, and which has been her career and livelihood ever since.
Petitioner also seeks a writ of mandate to compel the Respondent Court (hereinafter at times referred to as “the lower court”) to follow the mandatory procedures set forth in California Corporations Code §17351: Immediately grant Petitioner’s motion to stop the dissolution of GDI via the statutory buyout provision, which permits Petitioner to purchase Plaintiff’s membership interest in the LLC for fair market value. The Receiver determined the value to be $XXX, and the parties agreed to that, as noted by the lower court in the ruling denying the motion.
The lower court denied the motion based on a faulty interpretation of the statute, finding that the election to avoid dissolution “does not apply after a judgment has been entered on the issue of dissolution.” No such limitation is in the language, and corporation case law, which is directly analogous to the LLC statutes and constitutes the only decisional law available, states precisely the reverse. Petitioner requested judicial notice of those very cases and the analogous statutes several weeks prior to the lower court’s ruling. (Hence the issue being one of first impression; Limited Liability Companies have only existed in California since 1994, so there are no cases that speak to the dissolution provisions of the Code. Given the popularity of the form, decisions specific to LLCs would be a welcome addition to the casebooks.)
-redact-
Petitioner has been trying to stop the dissolution since the trial ended in January, and has arrived at end of the rope; writ relief is her only avenue for justice.
Petitioner asks this court to give expedited consideration of this matter de novo and issue a peremptory writ directing the trial court to immediately grant the Petitioner’s motion and order Plaintiff to transfer his membership interest in GDI to Petitioner upon receipt of payment, exactly as outlined in the statute.
Petitioner also asks this court to issue a writ of prohibition or otherwise stay any actions by any and all parties in response to the loss of the merchant account, including but not limited to contacting the membership. REDACTED STATEMENT OF FACTS FOR THE DOPE:
On January 10, 2008, following three days of trial, Respondent Court issued its verdict orally, Ex. 3, finding deadlock, Ex 3, Pg 22-23, and ordering dissolution of the LLC under California Corporations Code 17351, et seq.
In giving the verdict, the lower court stated that it was Petitioner’s right, under Corporations Code 17351 (b) (1), to avoid the just-ordered dissolution by purchasing Plaintiff’s membership interest. Ex 3, Pg 22, 24
After lengthy discussion with, and initiated by Plaintiff’s counsel, (who began by telling Respondent Court that the statute did not define who could be “the purchaser,” , Pg 27, Ln 21-23 (top) when it fact it does so unambiguously, see page 3 above, footnote 1 – the purchasers are the non-moving parties), the lower court reversed itself and ordered the sale of the assets of the LLC to the highest bidder, as Plaintiff requested, and disregarded the statutory provisions for avoiding the dissolution entirely Ex 3, Pg 26-32
The judgment had not yet been entered on February 29, when Petitioner filed multiple motions as one Ex. 4, Pg 45 (Motion for Reconsideration, pg 47, Motion to Vacate,pg 54 Motion for a New Trial, pg 54,and Request for the Court on Its Own Motion to Set Aside Its Own Orders, pg 55), all of which sought, as respectfully as possible, to help the lower court recognize the fundamental errors in its rulings.
A true and correct copy of the Defendant/Petitioner’s reply to Plaintiff’s opposition to the Motion to Vacate, which breaks down the language of the statute, is attached as Exhibit 6.
On March 25, three days before the scheduled hearing on the Petitioner’s Motions and 75 days after the verdict had been given, the lower court finally entered the interlocutory judgment for dissolution, which included the following passage:
On March 26, a status conference was held. The lower court had issued a tentative ruling on the Petitioner’s Motions, denying all of them on technical grounds and awarding sanctions against Petitioner’s attorney. Ex. 25. On March 28, the hearing on the motions was held, at which Petitioner’s attorney argued to the lower court that the motions should have been considered on the merits.
In preparation for selling the business according to the Respondent Court’s judgment, the Receiver valued the website business owned by the LLC, which constitutes all the value in the LLC itself, at $XXX. The Receiver emailed both parties April 18, asking if they agreed with the valuation. Plaintiff indicated that the value was “fine.” Ex 9, Pg 138
On April 19, Petitioner notified Plaintiff by certified mail that she accepted his agreement with the valuation of $XXX and was therefore electing to stop the dissolution via buyout of 50% membership interest
On April 21, Petitioner filed a Request for Judicial Notice and Declaration Regarding Election to Avoid Dissolution via Statutory Buyout, attached as Exhibit 11, Pg 140. What she asked to be noticed were the dissolution statutes for LLCs, corps and partnerships, the decisional law associated with the buyout provision that showed it to be manadatory if requested by the non-moving party, and laws regarding statutory construction.
On April 24, a status conference was held, Ex. 12, at which the Respondent Court indicated that the papers filed by Petitioner were being considered Ex. 12, Pg 158, Ln 7and suggested that a formal motion of some kind should be made.
Also at that status conference, Plaintiff’s counsel argued against hiring appraisers, Pg 151-153, and stated that his client had agreed to the $XXX valuation. Pg 151, Ln 23
On April 30, 2008, Petitioner made an Ex Parte motion to shorten time for hearing her Motion to Stay Dissolution Pending Purchase of Member Interest, Confirmation of Appraisal, and Termination of Receiver. Ex 13, Pg 160. The hearing was set for May 9.
On May 8, the lower court issued a tentative ruling, finding that “Corporations Code 17351 (b) permits a party to avoid a dissolution when the case is pending.” And therefore does not apply after judgment has been rendered. The lower court found Petitioner’s motion therefore “untimely”. Ex 16, Pg 205
At the hearing on May 9, Petitioner argued to the Court that the finding of untimeliness was not reflected anywhere in the law. Ex 17, Pg 206. Petitioner cited three cases, pursuant to Corporations Code 2000, Pg 208-209, which is virtually identical to the LLC statute, and made two additional arguments for the interpretation of timing. Plaintiff’s counsel did speak but did not offer any argument whatsoever regarding the interpretation of the statute. Ex 17, Pg 210, 211
On May 13, the tentative ruling, lacking any modification, was entered as the final ruling on the motion. Ex 18, 215
On May 21, 2008, Petitioner filed a Notice of Appeal, appealing from all parts of the March 25 judgment. Ex 19, 217
On June 16, 2008, the Receiver made an Ex Parte motion for the Court to set a Court Confirmation hearing date Ex 20 to confirm the Receiver’s overbid procedure for the planned purchase of the business by Plaintiff. The lower court did not sign the Receiver’s order, instead telling the Receiver that it would first be necessary to determine the right legal authority for holding the auction/sale.The Receiver had indicated a partition statute as the governing authority, and the lower court considered that statute improper for the sale of the LLC’s assets. Ex 20, Pg 223
At the status conference on Friday, Ex 29, June 20, Respondent Court made the order for the sale of the business to take place on Monday, June 30.There was no mention of a decision as to what legal authority would govern the sale, or any other changes that had been made from the Receiver’s first request.
B. Petitioner’s Beneficial Interest and Need for Writ Relief.
Unless Petitioner’s statutory right to stop the dissolution of the LLC is recognized and restored to her, and she saves the business itself from the pending ruin arising out of the merchant-account problem, she will be left genuinely destitute. She has been without any meaningful income since the verdict in January and has exhausted her resources while educating herself about the law and acting as her own attorney. Without her business, she will lose her home no matter what the end result of her appeal of the partition judgment, because she will no longer have a means to satisfy the mortgage.
This writ is absolutely crucial to the Petitioner’s most basic survival; to call it “irreparable harm” is restraint. She has absolutely no way of stopping this train except to beseech this Court to exercise its very special powers to do so. Memorandum of Points and Authorities
A. Standard of Review (de novo)
These facts are undisputed: Plaintiff believed himself to be ill-treated by Petitioner and elected to seek dissolution to solve his problem. It was his right to do so, he exercised it, and he was granted what he asked for and what the law allows.
The wisdom or necessity of that choice lies outside the scope of this petition. Plaintiff’s motives for seeking dissolution are not at issue and not relevant, and Petitioner stipulates in advance to his unhappiness and his belief in his need to seek the dissolution.
The only thing at issue for this Court to decide is the law itself. What does it say, what does it mean, and is it within the jurisdiction of the lower court do anything differently than the statute dictates?
“… the matter is purely a question of law, the standard of review is not whether discretion was appropriately exercised, but whether the statute was correctly construed. [citations] Garamendi v. Exec. Life Ins. Co., 17 Cal. App. 4th 504, 512 (Cal. App. 2d Dist. 1993)
B. Analysis of the Applicable Law, Corp Code 17351
**1. Purpose of Buyout Provisions**
Plaintiff made the decision to turn to the law for his relief, and the law has given it. The provision for avoidance of dissolution via buyout of the moving party’s interest is an integral and crucial component of the very relief he sought and has received.
The buyout provision is not unique to California, far from it. It is patterned after the American Bar Association’s Model Corporations Act, which provides a legal blueprint for the states’ legislatures, resulting in an unsurprising similarity of statutes throughout the country. (Not to mention the rest of the world, where similar laws are plentiful.)
The avoidance of dissolution via buyout is often referred to in law articles as “the buyout right,” but whose right is it? The remaining parties’ right to buy out the dissenting party? The dissenting party’s right to buy out the company? Actually, it is referring to, in this case, Plaintiff’s right, as the “oppressed” or otherwise unhappy member of the LLC (or partner in the partnership, or shareholder of the corporation) to be bought out, to be released from his ties to the business entity that he no longer wishes to be involved in, and to receive the value of his member interest when he exits, which, without that legal protection, might otherwise remain tied up and unavailable to him.
“The drafters deliberately left to judicial discretion the application of
these standards to specific circumstances and further observed: The
court should be cautious in the application of these grounds so as to
limit them to genuine abuse rather than instances of acceptable tactics
in a power struggle for control of a corporation. A few states have
added terms like “unfair prejudice”’ to illegality, oppression, and
fraud by those in power as grounds for ordering dissolution (or, in the
alternative, a less drastic remedy such as buyout of the minority
shareholder’s holdings).”
Ibid.
The law has provided the Plaintiff the right to demand the dissolution as a means of releasing himself and by doing so claim his equity from the company. If the remaining members (partners, shareholders) don’t want to have the entity dissolved, they must see to it that the unhappy member is properly compensated for his membership, not simply booted out in the cold, or they lose as well. The law has done its best to be fair to everyone, to balance the tables.
2. The Lower Court’s Interpretation was Erroneous
California Corporations Code §17351 reads, in pertinent part:
_deleted- - we know
California Corporations Code § 15 reads in its entirety as follows:
“Shall” is mandatory and “may” is permissive.
The lower court has finally (re)acknowledged the plain meaning of the statute, Ex 18… What remains is for this Court to remind the Respondent Court of the rules regarding statutory construction, as the court said: ] Eaton v. State Water Rights Board:
In matters having to do with corporations (and other business entities) the Court’s powers are created entirely by statute, and as such those powers are limited by statute as well. :
If there is any question remaining about the legislature’s intention that the LLC statutes should be interpreted the same way as the longstanding corporations statute, it was answered this year, when the Corporations Code statutes pertaining to partnerships were revised to align just as closely with the LLC statutes as the LLC statutes align with the corporations statutes. It would be perverse to think that the Legislature intended them to be interpreted differently:
Therefore we can safely look to the decisions that have been made in the past, regarding Corporations Code 2000, to find the answers.
What becomes apparent is that the laws regarding dissolution of corporations are so clear and unambiguous, and have been so over such a long period of time, that the appellate courts have had very few occasions to settle disputes in their application. Over the last 75 years, there appears to be only a handful of cases that have anything whatsoever to do with the statutes pertaining to dissolution, and nearly all of them revolve around disputes about the valuation of the shares.
Even so, questions of timing of the election to stop dissolution via buyout that weren’t actually asked were answered, at any rate, in three cases. In Merlino v. Fresno Macaroni Mfg. Co. the issue of timing was decided unequivocally:
In 1985, Ronald v. 4-C’s Elec. Packaging reaffirmed the 1944 Merlino ruling:
And in 1994, in Ovadia v. Abdullah, the reviewing court determined that
This statement doesn’t say anything about timing per se, but by making the invocation of the statute conditional on an actual dissolution, the implication is clear.
Petitioner asks this Court to make it clear to the lower court, as well as all the future LLC members who will surely be litigating these issues, what these courts have been saying the statute means and has meant since FDR was president: An unhappy member of a business can sue to dissolve, and if the remaining members want to stop it, they must pay the member seeking dissolution for his interest. Most importantly for the Petitioner: They can do it at any time before the dissolution is completed. Exactly as provided in the Corporations Code.
C: Judicial Dissolution the same as Corporate Election to Dissolve
The petitioner adds these two arguments to the existing case law for this Court to consider, if needed: First, the corporations statutes necessarily refer to voluntary and involuntary elections by shareholders , as that is the most common manner in which dissolution is initiated in a corporation. The Petitioner submits that judicial solution is effectively the same as such elections by shareholders in many respects, but this one specifically: that the buyout provision becomes available upon the election, which is functionally equivalent to a judicial decree. In both cases, the dissolution has been triggered before the buyout provision can be or is normally invoked.
D. Winding Up Implies Dissolution Underway
Second, the language of the statute is specific. Statutory interpretation demands that all the words of a statute be considered as meaningful, thoughtfully intended by the legislature. Corporations Code 17351 refers to the election for buyout to stop the “winding up” and dissolution. “Winding up” is a term which has a very specific meaning in corporate law; winding up comes at the very end. The petitioner submits that by using this language, the legislature clearly contemplated the buyout provision being invoked at any time before the dissolution is effectively completed.
E. The Lower Court’s Judgment was Abuse of Discretion
The Respondent Court did not arrive at its judgment by any apparent analysis of the law which logically led to the interpretation of the May 9 ruling Ex. 17, Pg 206, or even of the Interlocutory Judgment of March 25. Ex 7, Pg 129. The process which led to the judgment has been preserved, as it occurred in the courtroom on the last day of trial. Ex 3, Pg28
The lower court began with a perfect understanding of the statute just cited, and gave the verdict in accordance with it, as can be readily ascertained from the record. Ex 3, Pg 26, Ln 8 (bottom of page)
The conversation that followed, between the Respondent Court and Plaintiff’s counsel appears on pages 26-32 of Ex. 3. Parsing what is being said is, to put it gently, a challenge. The petitioner, along with at least five different attorneys, has poured over it word by word. No one of those people has yet been able to define or describe the fundamental legal reasoning at the heart of that interaction which explains the resulting judgment.
The record reflects from the day of the verdict to today, that Plaintiff wants to buy the business… he managed to convince the lower court not to bend the rules, but to break them completely, and Petitioner submits that this can’t be allowed to stand. Whatever the complaint, the prayer, the plan, the fact is that it is not his right. It is the Petitioner’s.
The judgment itself, as it was finally entered, doesn’t even seem to follow the mysterious logic of that conversation, in that it says the following things:
Page 132, Paragraph 3
It’s obviously an error, but Petitioner doesn’t presume to say whether it is merely clerical in using the pronoun “her” or more fundamental than that.
Petitioner asks this Court, learned as it is, to examine the judgment in its entirety. Petitioner submits that this Court will find the judgment is internally inconsistent and illogical, from which nothing reliable can be discerned, given that the respondent Court has decreed in all instances that it shall review and decide down the line who will be able to buy what. Pg. 135, para 1
Given the very plain language of the applicable statute, the lower Court’s initial understanding of that statute, Petitioner submits to this Court that this judgment is capricious, and an abuse of discretion which the lower court does not even possess, since its power is completely statutory in this instance.
The record before this Court as to these matters is as complete as Petitioner can make it, and she submits again that there is no legal, nor even equitable foundation for the interpretations and judgments made by the lower court in this matter.
** Valuation Basis**
The only other matter of concern to the Petitioner is the value. As the exhibits reveal, Plaintiff stated in writing, to a representative of the Court (the Receiver), that he was fine with a value of $XXX. In Ex 9, Pg 138the status conference of XX, his attorney argued against bringing in any appraisers EX CITE and reiterated that his client had agreed to the $XXX figure EX CITE. The lower court has clearly acknowledged the mutual stipulation in open court by both parties to this figure. The transcripts show that on the subject of appraisers, all parties to the action have consistently agreed that is a wildly expensive and unnecessary indulgence that the parties can in no way afford EX CITE, and which will not produce a number appreciably different than the $XXX figure. EX CITE
This company and this business are teetering on the brink of total collapse right now and can afford nothing. Any gain in the valuation would be lost in the expenses of determining it. The time it would take to do all that would take the parties deep into July or beyond, at which point the merchant account will be dead and either the billing will have been suspended or switched to the last-ditch third-party solution, and the business wouldn’t be earning enough to pay its server fees.
Petitioner submits that having agreed to the $XXX0 figure in writing and to the Court, and given the lower court’s recognition of that, Plaintiff’s own argument applies to him as well, and he is is effectively estopped from arguing for any further appraisals of the value of the business.
E**? Peremptory Writ in the First Instance**
In Hensley v. Superior Court of Sacramento County, the reviewing court found that the Petitioner’s right to relief was so clear that there was no reason to take any further argument. Petitioner submits the same is true here.
As this matter is exclusively and narrowly about the tiniest sliver of an unambiguous statute which the lower court has otherwise acknowledged to be the law, it represents the perfect example of an issue that qualifies most clearly not only for writ relief, but for the exceptional relief of a peremptory writ granted in the first instance, without delay. Petitioner has been fighting for this right since January, and that time has wreaked havoc on her credit, her business, and her health.
The Petitioner has provided complete transcripts and every pleading that in any way argues or speaks to the interpretation of the statute. It is plain that she has been bashing away at this windmill for months with every tool and she can find, and the Respondent Court and Plaintiff have been completely aware of her efforts. All the parties have had many opportunities to produce evidence that the Petitioner’s interpretation of the statute is in any way faulty, and none has emerged.
There is no case, opinion, treatise or other evidence giving any weight to the lower court’s finding that the buyout provision can only be invoked prior to judgment EX CITE, and there is an abundance of evidence showing such an interpretation is completely wrong. EX CITE With all due respect to the lower court, this is an abuse of discretion:
The lower court itself stated in giving the verdict that Petitioner could invoke the buyout provision! EX CITE There has been no evidence of any kind in the months ensuing that the lower court’s original words were a mistake.
The arguments have all been made, they are provided for this Court to examine in exhaustive detail. There are no mysteries here, except perhaps the mystery of why the Petitioner has been forced to fight so hard, in 2008, to invoke a right that has been on the books and asserted countless times by others without any contention, since before World War II.
If a writ can be “earned,” the Petitioner submits that she has certainly earned this one:
Petitioner prays for this Court to grant the peremptory writ in the first instance as soon as it possibly may, so that the Petitioner can apply herself to rebuilding her business before there is nothing left to build on after all the damage that has been done over these past months.:
Wholly apart from the organizational … um… choices you made, you have included a fair amount of absolutely irrelevant text:
It should have been simple…were fifty-fifty partners in every way for almost ten years: Engaged to be married … roommates and joint tenants on the house Stoid still calls home… In April 2005 Mr. Ex began questioning all those relationships, and it eventually led to his filing this action in September 2006… The litigation was undertaken in bad faith. The allegations in the complaint are so excessive, its function as a cudgel to beat Stoid into producing unjustified (and impossible) sums of money is not hard to see. And if that failed, it could be “re-purposed” to acquire for the Plaintiff the single meaningful asset of the LLC, which is the web business that the two developed together in 1997…
It’s as though you said to yourself, “The Court of Appeals needs to understand what happened to me: this was my lover, my partner, my fiancé! And look what he did to me!”
When someone has won a victory in the court below, it’s a rare case that’s going to get traction claiming on appeal that the winner undertook it in bad faith
None of this is intended as legal advice, and I’m not your lawyer, and you’re not my client. Obviously, you wrote what was important to you.
But this is not generally what appellate courts are interested in.
Ironically, I think Stoid could make a good case* that the trial court erred in not allowing her motion for a stay while she and her either negotiated her buyout of him or submitted it for appraisal. The key issue to have briefed on appeal was (1) whether the LLC dissolution section of the Cal. Corp. Code can be read in pari materia with the corporation dissolution section, and thus enable corporate dissolution case law to shed light on the LLC scenario; and (2) whether Fresno Macaroni and that other case she cites stand for the proposition that the buyout offer can be made following an order for dissolution but before liquidation and cashing out the creditors and equity holders of the entity.
These briefs, however, being all over the map as they are, don’t really make that case, alas.
*Not legal advice. Just saying that my initial reaction to all this material is that investigating this particular theme further would be my first order of business.
This is the one thing that I still don’t understand about this case:
Supposedly the single asset of this LLC is a website, right?
What difference does it make, at all, if Stoid buys the asset as part of a “buyout before dissolution” or part of a “receiver’s sale of the asset as part of a liquidation/winding-up/dissolution”
Say the website is worth 1,000,000.
Under the buyout before dissolution, she would pay 500,000 for it
Under the receiver’s sale, she would pay 1,000,000 for it, and get back, let’s say 475,000 (5% for receiver’s expenses and whatnot) - so she would pay out 525,000 for it.
like I’m still not seeing what the issue here is? That she felt like she was the only one who had a right to buy out the other LLC member, wheras at a receiver’s sale she could have been outbidded by her former LLC co-owner? I mean if that’s the reason, I would find it a bit questionable that LLC law would allow an LLC co-owner to effectively always get 100% of an LLC by this process:
Create a deadlock by refusing to cooperate
Effectively force the other LLC member to instigate dissolution proceedings
Then, by virtue of her being the non-moving party in the Dissolution action, get control of the company by buying out the other member - all the while that other member is helpless?
I don’t really know her website, but wouldn’t the object of the receiver be to maximize value for all parties? Sure, if it dragged on for months and years, he/she may not care to keep the website operational, but I’m talking like immediately after she’s getting adverse rulings and the receiver has been appointed, she should be in contact with him to preserve the enterprise, no?
basically, I mean I’m sure receivers have fiduciary duties, and if someone is telling a receiver “look, don’t cancel subscribers, I’ll buy it in 3 months and maximize everyone’s value” I can’t see a receiver not doing that.
Sure, but presumably the receiver would be obliged to offer Stoid’s subscribers whatever sexy time services the website was selling during those three months.
Much easier, I imagine, just to offer everyone a prorated refund and sell off the images and/or video the site hosted piecemeal.
I don’t know her website either, or what it did aside from some sort of artful porn thing, so this is of course speculation.
I don’t think a receiver would be unable to “hire” former LLC owner/managers to keep the site a going concern, but yes, until one knows nitty-gritty details it’s speculative - i’m just rather harping on the notion that
a) it being the case that only the non-moving LLC member can buy out the other (while also being able to deadlock) is unjust and,
b) Stoid probably wasn’t doing herself any favors by running into court and filing 26 page writs of mandamus when she could’ve also been working with the receiver to effectuate a transfer of the business.
edit: [b1) my implication being here that I believe she was looking to get the business on the cheap by avoiding having to bid for the business with the other co-owner of the LLC by claiming that she was the only one that had a right to purchase the other LLC membership interests to the exclusion of any other LLC member. except by trying to save money, she lost in the process]
I guess everyone has an opinion, but I can’t begin to imagine why you would think that was irrelevant. The court has absolutely no idea who anyone is, what happened, or why. Are they supposed to guess?
I read the opinions of Scalia, Garner, and dozens of less well-known names to find out how this is done. I was suprised and please to learn that appellate justices, for the most part, can’t stand dry lists of facts - understandably so. Of course, one doesn’t want to appear overly emotional either.
When I first started researching, I read an essay with the following examples of how to write your brief. Three ways to ask the same question:
The last one cracks me up every time I read it, even two years later. (something about snuffing out a life in a searing flash just tickles my funnybone - if that’s wrong than I don’t wanna be right…) The first one makes me want to take a nap. The essay writer said of the first one that it “just sits there, arid and lifeless”. I tried to follow the example of the second.
Regarding Telling the Story
The writer, Jordan B. Cherrick (“a winner of the Missouri Bar Foundation’s David J. Dixon Appellate Advocacy Award for Outstanding Achievement in Appellate Practice” - sounds like an Oscar) also said the following:
**Bad Faith and the Skanky Opposition - Do I or Don’t I? **
I am very much (very much!) aware that referencing bad faith is very risky, as is spending any energy on the fact that opposing counsel is an evil, lying, sonofabitch scumbag. (This is the Dope, I can say it here) I know why, and for the most part I agree completely. I weighed the pros and cons, and I made choices. It is inescapably true that this nightmare arose directly out of the thoroughly unethical, unprofessional, and dishonest behavior, tactics and strategy of my ex’s lawyer. That is just a fact. If he’d prosecuted his client’s case honestly, none of this would have happened.
Did I make that my argument? Did I dwell and whine about it? No. Did I avoid any reference to it at all? No.
Another area of anguished decision making was how to deal with the perjury. But again, it was impossible to explain what happened effectively and clearly if I was going to try and pretend that everyone acted honestly. But I didn’t want to whine and dwell either. It was hard to find the balance.
And ultimately the ex lying wasn’t really the problem…it always came back to his lawyer. It was his lawyer doing 90% of the lying, because he lied about what his client testified to. His client would say “No, I never asked her to sell the house, I told her she could stay there and buy me out of it.” and his lawyer would say: “This court has heard my client testify that he repeatedly asked Ms. Stoid to sell the house and she refused.”
Then the judge found “Stoid refused to the sell the house after Ex asked her to”
How in hell can you appeal and ignore that? I found you can’t.
The bad faith issue, too. The whole thing happened because my ex got himself a “pitbull” (ex’s term) to get him what he wanted: RetroRaunch. His pitbull filed the complaint without ever believing it would go to trial. Ex told me that in no uncertain terms - what is that, if not bad faith?
Furthermore (and none of this is mentioned or argued in my brief, by the way -it’s part of the stuff I elected not to include because it would be too much.) his lawyer knew, from day one, exactly what his strategy was going to be if we actually did end up in trial. He knew how Corp §17351 worked, and he knew he wanted to find a way to avoid the deadly buyout provision. How do I know? The complaint tells it.
The caption: "COMPLAINT FOR PARTITION OF
REAL AND PERSONAL
PROPERTY. DISSOLUTION
OF BUSINESS ENTITY - LIMITED
PARTNERSHIP
The defendant: GDI, LLC
The second paragraph: Plaintiff is, informed and believes and thereon alleges that Defendant, GDI, LLC is a business entity, form unknown,
The third cause of action:
Those code sections refer to partnership law, which now works like LLCS and corps, but at the time the complaint was filed, worked very differently. No buyout for me.
So, Lawyers in the house: you gonna tell me that his lawyer didn’t know EXACTLY what he was intending to do? Especially in light of the fact that he actually DID it? (Convinced the judge to blow off the LLC buyout provision in favor of giving his client the opportunity to buy the business.)
There was an interesting tidbit in his lawyer’s bill (submitted to the court several times with oppositions and motions… very inappropriate, but also very interesting). He made a big deal in trial and after (read it above, it’s right here in this thread!) about how this auction sale of the assets was really fair, designed to create a level playing field, good for everyone, blah blah blah. And he got exactly what he asked for with no modifications at all. Plaintiff asked, plaintiff received.
Well, on the day the sale of the business to me became final, his lawyer billed him for almost two hours spent researching how he might be able to justify a temporary restraining order to stop the transfer to me. I’m kinda sorry he didn’t come up with some ridiculous thing and try to make it fly. That would have been fascinating.
** More on Briefwriting **
Different writer:
I did the best I could. I don’t doubt for a second that I did far from the best possible. But neither do I believe that I did a lousy job.
And I’m on a posting diet again. Impulse control. Easier to control the urge to read than the urge to respond, so forgive me for lagging behind the conversation.
RATS… I saw kimmy’s words and couldn’t stop! ARGH!
Done. In the writ rather extensively (I was sure that after asking for it you would have read it. Oh well…) somewhat less so in the appeal because the court in Dickson v. Rhemke had by that time done my work for me. Not to mention the court in Cotton v. Expo systems, which was a 2009 Corporations case that referenced Dickson v. Rehmke, the LLC case, for answers that had not previously been considered in corporate law.
If the courts of appeals themselves aren’t the “yes! They Can! We’re already doing it! Both ways, as a matter of fact!” answer to that question, I can’t imagine why any brief argument would be more of one! C’mon!
I guess they must, since they are used for the authority on whether their are timing restraints, apart from “any time prior to liquidation”
The question of “post judgment” buyout has never been considered in case law as an issue unto itself. Why would it be, when the buyout provision has been invoked post-judgment repeatedly without anyone complaining or questioning it? Thats kind of like asking “Does any case stand for the proposition that two people, once married, have the right to divorce?”
A la, as previously posted, and thoroughly ignored, Reese v. Darden, as described by Darden v. Superior Court (search thepage for “booya”)
After trial.
Judgment entered.
Decreeing dissolution.
Thereafter (After. AFTER. AFTER AFTER AFTER.)
Petitioner instituted proceedings (Started. First time. Acted AFTER judgment)
To purchase the stock and stay proceedings in the dissolution action.
An order was entered thereafter in accordance.
Despite poor Elysian’s absolute righteous certainty that I got it wrong, I got it exactly right. Reese got his judgment. AFTER that Darden invoked his right under the law to STOP the dissolution by buying Reese out. And the trial court thought nothing of it because it wasn’t unusual or questionable.
Jeez la freekinweez. It’s not at all obscure, all you have to do is pay attention and the answers are in front of you, why do you keep acting like it’s all some big undecided mystery?
Oh, and since it’s patently obvious that you didn’t even skim the big breakdown of Reese v. Darden, lemme do it quick and dirty, and if you think I’m wrong, it’s right here for you to show me. (IS Elysian still flopping around like a fish trying to do that? Can’t look yet…)
Darden was majority shareholder, Reese minority. Reese had lease/contract involving his right to buy a piece of property from the corp. (Lot 1)
Reese sued for, among other things, specific performance on the contract, letting buy Lot 1, and dissolution of the corp. In open court, he said he’d drop his specific performance cause of action if the dissolution was granted.
Accordingly, the court dismissed the SP cause, and entered judgment for dissolution of the corp, including a specific provision for Reese to be able to buy Lot 1 when the dissolution happened. (If, actually, the opinion says “in the event of”, as though there’s some question as to whether the order for dissolution will be carried out to completion - why would that be, do you suppose? Could it be that the dissolution was vulnerable to being stopped? Maybe by a provision in the law? Ya think?).
Then Darden invoked his right to buy Reese out and stop the dissolution, and the court said, no problem, you got it.
The effect of this would normally have been to prevent Reese from ever getting his hands on Lot 1. He’d sacrificed his cause of action for specific performance because a judgment of dissolution would have had the same effect: making the property available to him to buy, even apart from the trial court’s specific direction.
However, the court, trying to be nice and understanding what Darden’s election would mean, added an extra element to Darden’s election: he had to convey Lot 1 to Reese as part of the buyout.
Darden said screw you and appealed.
The court said he’s right, the court can’t add anything to the buyout provision. And that was when the court said that Reese was shit outta luck, and that he is presumed to have known that Darden could have done this, he shoulda thought of that before.
Elysian has been blindly insisting that Darden acted before the trial. If he had, the whole case doesn’t make any sense.
And on top of that… Darden filed a writ trying to make it all happen (details don’t matter) wherein, as previously posted, the court gives a brief description of the sequence of events… trial, judgment, election, stay.
And I continue to be fascinated at the way every single person in this thread continues to completely and utterly ignore the actual words of the actual judgment itself, which pre-date the “timing” ruling by 2 months, and are the actual words I am specifically appealing.
I think that’s pretty funny, actually, and proves two things:
The judgment is a piece of shit.
You kinda want to me to lose. Or at least, you want to tell me I will. So you are clinging to the only thing you think might possibly work, instead of considering the real judgment and what it means, (or doesn’t mean, since it’s illogical nonsense that is impossible to act upon.)
Anyone care to step up to the plate and give it a shot? Anyone?