Bluewater Logistics Llc v. Williford
| Decision Date | 27 January 2011 |
| Docket Number | No. 2008–CT–00250–SCT.,2008–CT–00250–SCT. |
| Parties | BLUEWATER LOGISTICS, LLC, Bluewater Bay LLC, Patricia L. Mosser, Marquetta Smith and Michael J. Floyd.v.James Stewart WILLIFORD, Jr. |
| Court | Mississippi Supreme Court |
OPINION TEXT STARTS HERE
Robert R. Marshall, attorney for appellants.L. Clark Hicks, Jr., Hattiesburg, attorney for appellee.EN BANC.
ON WRIT OF CERTIORARI
¶ 1. The four individual parties to this litigation formed two member-managed limited liability companies (LLCs) to operate a business known as Bluewater. The three defendants locked out the plaintiff (literally and figuratively) and notified him they were exercising a provision in both LLCs' operating agreements that allowed them to buy his twenty-five percent interest in Bluewater. After he sued them in chancery court, they changed their minds about buying him out, but insisted that “his firing as an employee [was] affirmed and confirmed.” The chancellor—finding the plaintiff was entitled to the fair-market value of his interest in Bluewater—entered judgment against the LLCs and the individual defendants. The defendants claim that, because they withdrew their offer to purchase the plaintiff's interest, the chancellor had no authority to force them to buy him out, and that there was no basis for individual liability.
¶ 2. Under Mississippi law, every member of a member-managed LLC is entitled to participate in managing the business. But even after the defendants claim they had changed their minds about buying the plaintiff's interest in Bluewater, they continued to insist that he was “fired” and could have no part in managing the business. The chancellor held this conduct was a willful, grossly negligent breach of contract. And because the operating agreements provided for individual liability in cases of willful, grossly negligent conduct, the chancellor entered judgment against the individual defendants. We cannot say the chancellor abused his discretion, so we affirm—in part. But because the chancellor incorrectly stated he had no authority to award attorney fees to the plaintiff; and because—without determining a reasonable rate of interest—he awarded post-judgment interest at the “statutory rate,” we remand for a hearing on those issues.
¶ 3. James Williford Jr., Patricia Mosser, Marquetta Smith, and Michael Floyd formed two Mississippi limited liability companies—Bluewater Bay, LLC, and Bluewater Logistics, LLC,—to bid on lucrative government contracts related to the aftermath of Hurricane Katrina.
¶ 4. After Bluewater had completed more than $5 million in contracts, and with more than $1 million in payments due from the government, Smith called Williford (who was working in Louisiana) to inform him that she, Mosser, and Floyd—as a “super majority” of seventy-five percent of the Bluewater ownership—had exercised their right under the operating agreements to buy him out. Williford returned to the Bluewater offices the next day and found the locks on the company offices had been changed. He then received from the Bluewater LLCs a formal notice that, as of January 31, 2006, his status as a “partner” of Bluewater had been “terminated”; that he was to “cease and desist from performing any business” on behalf of the company; and that he would be paid “one-quarter of the fair market value” of the companies.
¶ 5. Williford sued both LLCs and the three individual, super-majority members (“Defendants”). In addition to damages, he asked for injunctive relief to protect his interest in the LLCs, and to prevent the three super-majority members from improperly ousting him.
¶ 6. On February 15, 2006, the chancellor held a hearing on the injunction issues. Counsel for Defendants told the chancellor that Bluewater's certified public accountant (CPA), John Havard
is now working on the amount and we anticipate a closing will be set on that in the next week or two.... The company and the other members are entitled to fire him and fire him they did, separate and apart.... He's going to get his share of the corporation; it's going to be tendered to him.... They fired him and they don't want him back.... The 75% ownership can stop his salary. They can stop his benefits. They can do anything they want to do.
¶ 7. The chancellor granted a preliminary injunction and appointed Havard to “oversee the financial affairs of the LLCs.” The court ordered that Havard was to have “unlimited access to the financial records of the company on the premises” and that the records “may be made available to the plaintiff.” The court's order further provided:
The defendants may continue with the normal operations of business and payment of expenses in the ordinary course of business so long as the CPA is aware of and approves of the regular operating expenses by signature.... No members of the LLCs may pay themselves salaries, distributions, draws, expense reimbursements, or any other funds or income of any kind without court approval. Any accounts or other income currently possessed by the LLCs may be used for payment of owed expenses per CPA approval, but will not be used for payment to the members absent court approval.
¶ 8. On April 10, 2006, Williford's counsel posted a letter to Havard, asking about the financial information the chancellor had ordered produced. Havard replied that he had, more than a month earlier, requested “a list of the pending jobs, the current status, and projected gross profit of these jobs (if awarded) as well as the status at January 31, 2006,” but that he had “yet to receive that information back.”
¶ 9. On June 7, 2006, still without the financial information, Williford's counsel filed a motion to compel compliance with the chancellor's prior order. Defendants' counsel responded:
I am meeting with my clients later this week and we will determine all the issues then, but in the meantime for your information, I am informed that they no longer wish to purchase Mr. Williford's shares.
¶ 10. On June 26, 2006, following a June 21, 2006, conference with the parties, the chancellor entered an order compelling the defendants to provide the information “within twenty (20) days of the conference.” The court also replaced Havard with Nancy Carpenter, CPA, “as the accountant to oversee the financial affairs of the LLC defendants.”
¶ 11. On July 20, 2006, Carpenter requested information from both Williford and the defendants. Having received no response from Defendants by August 10, Carpenter reported to the court:
To date I have received information from Mr. Williford, however; the other parties have not provided any information. I have talked with [defendants' counsel] who advised information would be forthcoming. I have called and sent facsimile correspondence to [defendants' counsel] and have been unable to talk with him this week.
¶ 12. On August 16, 2006, Defendants served what purported to be responses to Williford's discovery requests. However, the responses were evasive and provided virtually no information. For instance, the first interrogatory and response stated:
¶ 13. In a letter to Defendants' counsel yet again requesting the court-ordered information, Williford's counsel—referring to the evaluation Carpenter was to provide—stated: Defendants' counsel responded on August 21:
I met with the three stockholders in Bluewater last week. Based on that meeting, let me reiterate what I had already told you: The offer to purchase Mr. Williford's stock is withdrawn. His firing as an employee is affirmed and confirmed.
Since there is no offer to purchase his stock and since there is no requirement that the stock be purchased, an evaluation of the LLC is irrelevant and [there] is no necessity for Nancy [Carpenter] to evaluate anything, so at this point I need not take up the issues of the information requested by her and confidentiality. The answer to your query and statement: ( ) is NO. As an aside, I am not much interested in what you think; but aside from that fact, not only does the best interest of the shareholders have nothing to do with this litigation, an evaluation by Nancy [Carpenter] is unnecessary, useless, and irrelevant because the offer to purchase Mr. Williford's stock is withdrawn.
(Emphasis in original.)
¶ 14. Defendants' counsel followed up the letter with a motion asking the court to dissolve, in part, the preliminary injunction. The primary argument was that, because defendants had withdrawn their offer to purchase Williford's stock, the suit was moot. The motion also claimed: “A minority shareholder has no right to dictate or oversee or affect the operation of an LLC.”
¶ 15. On August 23, 2006—having received neither the court-ordered information nor proper responses to discovery—Williford's counsel filed a motion for contempt and for an order compelling Defendants to provide the requested, court-ordered, information. On September 11, 2006, the chancellor entered an agreed order temporarily staying all proceedings. The order stated that the parties had agreed to a procedure for appraisal of the LLCs; that the court's previous orders were still in effect; and that Defendants were to provide the information Carpenter previously had requested. Specifically, Defendants were to provide her “any and all other financial records, as s...
To continue reading
Request your trial
-
Phillips Bros., Kilby Brake Fisheries, LLC v. Winstead
...4 as a distinctly individual and direct cause of action, separate from a derivative action. See, e.g., Bluewater Logistics, LLC v. Williford, 55 So.3d 148 (Miss.2011); Missala Marine Serv., Inc. v. Odom, 861 So.2d 290 (Miss.2003); Fought v. Morris, 543 So.2d 167 (Miss.1989); Cook v. Wallot,......
-
Learmonth v. Sears, Roebuck & Co.
...remedy would be to prohibit the legislature from enacting practically any change to substantive law. Cf. Bluewater Logistics, LLC v. Williford, 55 So.3d 148, 159 (Miss.2011) (en banc) (“[T]he Legislature is free to establish, as a matter of substantive law, any contract remedy it finds appr......
-
Watson Labs., Inc. v. State
...a party's proposed findings of fact was subject to ‘heightened scrutiny’ " was abandoned by the Court in Bluewater Logistics, LLC v. Williford , 55 So.3d 148, 156–7 (Miss. 2011). Watson attempts to distinguish Burnham by explaining that Brooks v. Brooks , 652 So.2d 1113, 1118 (Miss. 1995), ......
-
In re Rules Procedure
...trial court adopts verbatim a party's proposed findings of fact, will be reviewed for abuse of discretion. Bluewater Logistics, LLC v. Williford, 55 So. 3d 148, 157 (Miss. 2011).See also the Uniform Chancery Court Rules regarding findings by the court.Rule 53. Masters, Referees and Commissi......