Mont. Food, LLC v. Todosijevic

• Decision Date: 25 February 2015
• Docket Number: No. S–14–0150.,S–14–0150.
• Citation: 2015 WY 26,344 P.3d 751
• Parties: MONTANA FOOD, LLC, a Wyoming limited liability company, Appellant (Defendant), v. Milan TODOSIJEVIC, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

344 P.3d 751

2015 WY 26

MONTANA FOOD, LLC, a Wyoming limited liability company, Appellant (Defendant)

v.Milan TODOSIJEVIC, Appellee (Plaintiff).

No. S–14–0150.

Supreme Court of Wyoming.

Feb. 25, 2015.

Representing Appellant: Matthew D. Kaufman and Marianne K. Shanor of Hathaway & Kunz, P.C., Cheyenne, Wyoming. Argument by Mr. Kaufman.

Representing Appellee: James R. Salisbury and Anthony M. Reyes of Riske & Salisbury, P.C., Cheyenne, Wyoming. Argument by Mr. Salisbury.

Before BURKE, C.J., and HILL, KITE and FOX, JJ., and DAY, D.J.

Opinion

KITE, Justice.

[¶ 1] Milan Todosijevic and Daniel Vukov each owned a 50% interest in Montana Food, LLC (the LLC). Believing that he had made significantly greater capital contributions to the LLC over time than Mr. Todosijevic, Mr. Vukov adjusted the ownership interests to reflect a 99.7% interest in him and a .28% interest in Mr. Todosijevic. Mr. Todosijevic filed an action against Mr. Vukov and the LLC claiming, among other things, that Mr. Vukov did not have the authority to adjust the members' ownership interests.¹ The LLC sought summary judgment as to all of Mr. Todosijevic's claims. Mr. Todosijevic filed a cross motion for summary judgment seeking a ruling that as a matter of law Mr. Vukov did not have the authority to adjust the ownership interests. The district court agreed and granted Mr. Todosijevic's motion. The LLC appealed, claiming the district court erred in ruling that as a matter of law Mr. Vukov had no authority to adjust membership interests. We find no error and affirm.

ISSUE

[¶ 2] The LLC states the issue for our determination as follows:

Did the district court improperly find Montana Food, LLC did not have the authority to adjust the membership interests of its members to reflect capital contributions?

FACTS

[¶ 3] The LLC is a limited liability company organized under the laws of the State of Wyoming and listing its principal place of business in Laramie County, Wyoming.² During 2010, Mr. Todosijevic and Mr. Vukov, who are residents of Belgrade, Serbia, each held a 50% membership interest in the LLC.³

The LLC organized several subsidiaries in Belgrade, including Delbin Investments, MD, LTD (Delbin). The LLC and its subsidiaries invested in buildings located in Belgrade with an eye toward developing them.

[¶ 4] The LLC's articles of organization provided that the LLC was manager-managed and named Maksim Stajcer, who was not a member of the LLC, as the manager. The articles of organization also provided that after the initial capital contribution of $10,000, “[a]dditional contributions shall be made at such times and in such amounts as may be agreed upon by the Members as provided in the Operating Agreement.” In late 2010, Mr. Vukov became concerned that he was the only member making additional contributions. He retained counsel in Serbia to investigate. The investigation apparently showed that Mr. Vukov had contributed 1,260,600 Euros while Mr. Todosijevic had made no additional contributions. Mr. Vukov issued a notice of meeting indicating that he wished to address the issue of capital contributions by the members as provided in the articles of organization and propose that any member who did not contribute to the LLC's capital would be subject to a reduction of his ownership interest. Mr. Todosijevic claimed he did not receive the notice. In any event, he did not attend. At the meeting, Mr. Vukov adopted and approved resolutions showing his capital contribution of 1,260,600 Euros, increasing his ownership interest to 99.72% and reducing Mr. Todosijevic's interest to 0.28%. Thereafter, Mr. Vukov amended the articles of organization by naming himself and his wife as the new managers of the LLC.

[¶ 5] In late 2011, Mr. Todosijevic filed his complaint against the LLC and Mr. Vukov. Of the six causes of action contained in the complaint, this appeal concerns only Mr. Todosijevic's claim that Mr. Vukov improperly adjusted the members' ownership interests. The LLC filed a motion for summary judgment claiming there were no genuine issues of material fact as to any of Mr. Todosijevic's claims, including the claim that Mr. Vukov lacked the authority to adjust the members' ownership interests. The LLC asserted that after the initial $10,000 contribution the members were to make additional capital contributions. The LLC claimed that although Mr. Todosijevic represented that he was contributing additional funds, in fact only Mr. Vukov was making capital contributions. Upon learning that Mr. Todosijevic had made no contributions beyond the initial capital contribution, the LLC asserted Mr. Vukov properly gave Mr. Todosijevic notice of a meeting and his proposal to adjust the capital account and ownership percentages to reflect the reality of the amounts each member had contributed. When Mr. Todosijevic did not respond, the LLC asserted Mr. Vukov appropriately proceeded to execute a company resolution adjusting the capital account ownership percentages to reflect the members' actual contributions. The LLC asserted the claims against Mr. Vukov should be dismissed as a matter of law because under applicable Wyoming law, absent an agreement to the contrary, the management and return of profit in an LLC is determined by the members' respective capital contributions. The LLC contended that once it was established that Mr. Vukov had made additional contributions and Mr. Todosijevic had not, Mr. Vukov was justified as a matter of law in taking action to adjust the members' capital accounts.

[¶ 6] Mr. Todosijevic asserted the LLC was not entitled to summary judgment because Mr. Vukov was without authority to unilaterally dilute Mr. Todosijevic's ownership interest. He asserted that the consent of all members was required to change the members' ownership interests. He contended he was entitled to judgment as a matter of law on that issue.

[¶ 7] The district court found as a matter of law that Mr. Vukov, as an individual member, did not have contractual or statutory authority to adjust member ownership interests. In reaching that result, the district court looked first to the LLC's articles of organization and operating agreement. Finding that neither of those documents addressed the question of whether a member had the authority to adjust ownership interests, the district court turned to the Wyoming Limited Liability Company Act, Wyo. Stat. Ann. §§ 17–29–101 through 1105 LexisNexis 2011). It focused on § 17–29–407(c), which addresses management of LLCs and provides in relevant part:

(c) In a manager-managed limited liability company, unless the articles of organization or the operating agreement provide otherwise, the following rules apply:

(i) Except as otherwise expressly provided in this chapter, any matter relating to the activities of the company is decided exclusively by the managers;

(ii) Each manager has equal rights in the management and conduct of the activities of the company;

(iii) A difference arising among managers as to a matter in the ordinary course of the activities of the company may be decided by a majority of the managers;

(iv) The consent of all members is required to:

(A) Sell, lease, exchange or otherwise dispose of all, or substantially all, of the company's property, with or without the good will, outside the ordinary course of the company's activities;

(B) Approve a merger, conversion, continuance, transfer or domestication under article 10 of this chapter;

(C) Undertake any other act outside the ordinary course of the company's activities; and

(D) Amend the operating agreement.

(Emphasis added.)

[¶ 8] Finding that the articles of organization and the operating agreement clearly provided that the LLC is manager-managed, the district court concluded this subsection applied. Because the underlined language makes it clear that consent of all members is required to undertake any act outside the ordinary course of the LLC's activities, the district court concluded as a matter of law that Mr. Vukov did not have the statutory authority to change member ownership interests without the consent of Mr. Todosijevic. Implicit in the district court's holding is the finding that changing member ownership interests is an act outside the ordinary course of the LLC's activities. On this basis, the district court denied the LLC's motion for summary judgment on the issue of Mr. Vukov's authority to adjust ownership interests and granted Mr. Todosijevic's motion on that issue.

[¶ 9] The district court also concluded genuine issues of material fact existed on the claim against Mr. Vukov for breach of the implied covenant of good faith and fair dealing, and denied the LLC's motion as to that claim. Thereafter, Mr. Todosijevic filed a motion to dismiss the claim on the ground that it was not fiscally practicable to pursue it to trial. The district court granted the motion and dismissed the claim. The LLC appealed asserting that the district court's conclusion on summary judgment that Mr. Vukov had no authority to adjust the membership interests was incorrect.

STANDARD OF REVIEW

[¶ 10] The LLC appeals the district court's ruling on summary judgment that as a matter of law there was no contractual or statutory authority to support the actions taken to adjust the membership interests. Motions for summary judgment are made pursuant to Rule 56(c) of the Wyoming Rules of Civil Procedure, which requires that

[t]he judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

The standards we apply on review of a district court order granting summary judgment are well established:

We review a summary judgment in the same light as the district court, using the same materials and following the same standards. We examine the record from the vantage point most favorable to the party

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