This blog, written by Thomas E. Rutledge, focuses primarily on business entity law in Kentucky. Postings on contract law, contractual and statutory construction, and the entity law of other jurisdictions appear as well. There may as well be some random discussions of classical, medieval and renaissance history.
Today marks the 953nd anniversary of the
Battle of Hastings.
1066 has already been a tumultuous year
in England. On January 5, Edward the Confessor died, leaving the English throne
to Harold Godwinson (King Harold II). Harold’s family, the Godwins, were the most
powerful in England. Harold was himself an earl and as well the father-in-law
to Edward the Confessor, the latter having been married to Harold’s daughter
Edith. William of Normandy, also known as William the Bastard, claimed that he
had been designated as Edward’s successor and that Harold had once promised him
that he, Harold, disclaimed any right to the throne, leaving it instead to
William. In addition, Harold Hardrada of Norway asserted a claim to the English
Sometime in September, Harold Hardrada
had landed his troops in the north of England. After fast marching his troops
north, the army of Harold Godwinson met the invading army of Harold Hardrada
(supported by Tostig Godwinson, Harold’s brother) at the Battle of Stamford Bridge
(HERE IS A LINK to a posting on those events). The invading army was defeated,
and Hardrada was killed. Learning of William’s invasion in the south, Harold
had to turn his army around and fast march it south in order to respond to this
new threat. Those forced marches were some 240 miles each way.
For reasons that have baffled many
historians, Harold, upon arriving in London, quickly turned his troops, already
exhausted from the march, toward Hastings. He did this notwithstanding that
reinforcements were due to arrive the following day. Still, Harold led his
forces towards William’s beachhead, leaving word for the reinforcements to
catch up as soon as possible. Those reinforcements included the archers.
The Battle of Hastings proper (there was
an earlier skirmish) probably began around 11 in the morning. Through most of
the day the forces of Harold prevailed – his forces fought as a phalanx,
andattacks on the shield wall were not
effective.In addition, the Norman
archers were not effective firing up-hill. Harold holding his own against
William would have been for Harold a win. As observed by Frank McLynn in 1066-The
Year of Three Battles:
he had only to hold out until nightfall when reinforcements were certain to
arrive; he could play for a draw but William had to have a win.
The Norman infantry having failed to
break through, William sent in his calvary. Attacking uphill, they did not have
the force necessary to break through. William’s flank (the Breton forces)
started to fail and William was unhorsed and rumored to be dead. Thinking (it
would appear) thatthings were going in
their favor, Harold’s forces began an advance downhill, their shield wall
still intact and functionally invulnerable. But then the advance lost its
momentum, perhaps due to the death of its leader Leofwine, Harold’s brother.
William’s forces pushed back and in order Harold’s forces reversed themselves
back uphill. It was then a battle of attrition, and the Norman invaders were
lost at a lower rate than were Harold’s forces. A combined archery and armored
calvary assault finally broke the shield wall, and the battle dissolved into a melee between small units. Harold and the remaining troops around him
were attacked and Harold fell to multiple sword blows and a lance through his
Maybe an hour after Harold fell,
reinforcements, including additional housecarls, arrived.
The accepted, albeit almost certainly
apocryphal, story is that Harold fell after being struck in the eye with an
arrow. The Bayeux Tapestry may be interpreted as saying such. However, the
“King Harold was killed” heading is over two figures (neither wearing a crown),
one with an arrow in his eye and the other being struck down by a sword. If the
former is meant to be Harold, the famous arrow in the eye as depicted in the
Bayeux Tapestry may be a later invention. It is not mentioned in the earliest accounts
of the battle. In addition, in medieval iconography, an arrow in the eye is the
punishment afforded a perjurer. Having gone against his oath to leave the
throne to William, some might have felt it poetic justice, even if not based in
Christmas William was crowned King of England and was in Westminster Abbey
accepting pledges of fealty from England’s mobility. Still, the next two
decades of his reign would see numerous rebellions and challenges, including
one from his own son Robert.
As for the Bayeux Tapestry itself, HERE IS A LINK is an animated (and translated) version.
The English like to claim that the Norman
Invasion was the last invasion of England. This is not true. For example,
during the Barons War, a French force invaded and had control of a significant
portion of southern England, and the Isle of Wight was invaded in 1545. But the
Norman Conquest is the last successful invasion of England.
of the birthday, in 1630, of Sophia of Hanover, sometimes referred
to as Sophia of the Palatinate. Probably
you have never
heard of her. She is, however, the reason the current British
royal family is what it is.
In the late
18th century, the succession to the British throne was in controversy. The direct lines were childless. The most adjacent lines were Catholic, and the political decision
had been made that only a Protestant could
sit on the throne. Under "An Act for the Further Limitation
of the Crown and Better Securing the Rights and Liberties of the Subject ,” better known as the “Act of Settlement
of 1701,” the line of succession was placed upon a cadet line of descendents of
James I, they being a Protestant. The Act of Settlement declared
in part that:
Therefore for a further Provision of the
Succession of the Crown in the Protestant Line We Your Majesties most dutifull
and Loyall Subjects the Lords Spirituall and Temporall and Commons in this
present Parliament assembled do beseech Your Majesty that it may be enacted and
declared and be it enacted and declared by the Kings most Excellent Majesty by
and with the Advice and Consent of the Lords Spirituall and Temporall and
Commons in this present Parliament assembled and by the Authority of the same
That the most Excellent Princess Sophia Electress and Dutchess Dowager of
Hannover Daughter of the most Excellent Princess Elizabeth late Queen of
Bohemia Daughter of our late Sovereign Lord King James the First of happy
Memory be and is hereby declared to be the next in Succession in the Protestant
Line to the Imperiall Crown and Dignity of the forsaid Realms of England France
and Ireland with the Dominions and Territories thereunto belonging after His
Majesty and the Princess Anne of Denmark and in Default of Issue of the said
Princess Anne and of His Majesty respectively.(12
and 13 Will 3 C. 2).
die two months too soon to ever become the queen of England. Rather, the crown would be placed on the head of her son, George I, the first of the house of Hanover to sit on the English throne. It is from Sophia that the current British
II claim succession to
Today marks the anniversary of the widespread arrest in 1307 throughout France of the members of the Order of Poor Fellow-Soldiers of Christ and Temple of Solomon, better known as the Knights Templar.
Founded shortly after the First Crusade as a monastic order, the mission of the Templars was to provide protection to pilgrims coming to the Holy Land and otherwise protect the Latin Kingdom. Eventually, the Order developed a rather sophisticated banking organization. For example, one proposing to travel from England to the Holy Land could deposit funds with the Templars in England, receiving in return what was essentially a letter of credit against which the individual could make withdrawals as they travelled through Europe and ultimately to the Holy Lands. The military component of the Order, although not large in actual numbers (never more than 1,500 to 2,000 knights), was considered highly effective – after the Battle of Hattin, Saladin ordered the execution of all captured Templars.
With the eventual loss of the Holy Land territories by the turn of the 14th century, the Templars were without a reason for existence. At the same time, Philip IV of France, anxious to address a depleted royal treasury by expropriating Templar property and as well exterminate his substantial debts to the Order, fabricated numerous salacious allegations against the Templars, leading to their mass arrest on October 13, 1307. Ultimately Pope Clement V, then resident in Avignon and largely a pawn of the French crown, issued a bull directing that Templars, wherever located, should be arrested. The remnants of the Order, other than those executed on spurious charges of heresy, were eventually either pensioned or absorbed into other military orders such as the Knights Hospitaller or the Teutonic Knights
A papal finding (a/k/a the Chinon parchment) determined that the Templars were not guilty of the many charges against them including idolatry and heresy. Their actual failing was having lost their mission while being at least perceived as being wealthy while a king needed funds. Those assertions are in many instances questionable – a detailed review of the inventories of the English properties of the order demonstrated a far less than extravagant lifestyle. Although the Templars would be found innocent of heresy, as a political concession the Order was dissolved in 1312, its properties turned over to the Knights Hospitaller.
Notwithstanding the efforts of numerous modern authors, the Templars did not possess the Holy Grail, irrespective of whether that was a physical cup or, as suggested in one particularly fanciful book, an oblique reference to Mary Magdalene and, ultimately, the line of Merovingian kings. Ignore the movies as well – Guy de Lusignan was not, as “The Kingdom of Heaven” would have you believe, a Templar. A well written introduction to the history is The Templars by Piers Paul Read. The books by Malcolm Barber are as well worthwhile.
Philip IV's moniker is “the Fair”; who says history does not have a sense of irony?
The Claim to Be Wrongly Excluded
As a Member Precludes
In a recent decision from New York, there was considered the consequences, for the purposes of federal diversity
of a claim that the plaintiff had been wrongly excluded
as a member in the LLC. Giving credence to that assertion,diversity jurisdiction
did not exist and the suit was dismissed. Dykstra v. 6069321
Canada, Inc., 1:19-CV-688-GHW, 2019 WL 4688726 (S.D.N.Y. Sept. 25, 2019).
For purposes of federal diversity
a limited liability company
has the citizenship of
each of its members. This rule has the effect of keeping most lawsuits involving LLCs
out of federal
court, particularly when
the lawsuit involves an inter-se dispute between
the LLC and one of its members. If the plaintiff member
is a citizen of jurisdiction X, then the LLC is also a citizen of jurisdiction X, and diversity jurisdiction
does not exist.
In this instance, Dykstra asserted that he was, but had improperly been
excluded from, membership in a defendant LLC, Rebound Marketing, LLC. Giving credence to Dykstra’s claim, namely that he should be a member of Rebound Marketing
Dykstra’s citizenship, it was determined
the suit should be dismissed.
In the course of its analysis, it was held that Rebound was
not a nominal
party to the action, but that genuine and substantial relief
had been sought against
A recent New Jersey decision affirmed the
appointment of a receiver for an LLC. However, the opinion does not make clear
the status of the plaintiff in seeking the appointment of that receiver. Mastin v. 74-76 & 78-80 Carmer Avenue
Associates, LLC, Docket No. A-5196-17T1, 2019 WL 4230696 (N.J. App. Div.
Sept. 6, 2019).
Most of this decision is focused upon the
efforts by Salvatore Milazzo to seek a constructive trust so as to protect his
purported interests in connection with the appointment of a receiver and ultimate
dissolution of this LLC. Based upon prior statements that he had made that he
had no interest in the LLC, the court denied the remedy of a constructive
trust. In doing so, it is well affirmed the trial court's grant of a receiver
for the LLC.
Salvatore and his wife had three children,
Thomas, Bartolomeo and Josephine. Thomas was at one time married to Mastin, the
plaintiff in this action. In the course of their divorce, by court order his
one-third interest in the LLC was transferred to Mastin in satisfaction of
outstanding child support obligations. Mastin requested the receiver, who is
charged to among other things manage the company and arrange for the sale of
its assets, on the basis that Thomas’ siblings had, notwithstanding the
transfer of his interest, operated the company for their own benefit and his
with, apparently, no payments being made in support of his children.
[T]here is ample
evidence (including Salvatore's admissions) that Josephine Russo and Salvatore
Milazzo mismanaged and misappropriated the LLC's assets over the past two
decades. The pair flouted the court order conveying Thomas Milazzo’s one-third
interest in the LLC to plaintiff (for the benefit of his own children) by
failing to make a single distribution to plaintiff, while wrongfully
distributing LLC profits to Thomas. They also diverted at least $70,000 to
Salvatore for his personal use. This gross mismanagement and abuse of the trust
of the other members more than justified the judge’s appointment of a receiver.
2019 WL 4230696, *3.
All that is well and good, but there is an open
question as to how we got here. Perhaps this is addressed in the decision of
the trial court, which is not available on Westlaw. The question is what is Mastin’s
(the plaintiff’s) status to seek the appointment of a receiver and the ultimate
dissolution of the company. New Jersey’s current LLC Act, adopted in 2013, does
not directly address the appointment of a receiver for an LLC. An action for
judicial dissolution may be brought by a member. But in most circumstances, a
transferee pursuant to an order of the court in connection with a
divorce/child-support would be an assignee, not a substitute member. Generally
speaking, an assignee would not have the capacity to seek the appointment of a
receiver, and under the New Jersey LLC Act does not have the capacity to move
for judicial dissolution.
Jurisdictional Discovery Awarded with Respect to Multi-Tier
In a recent decision from Minnesota,
jurisdictional discovery with respect to the citizenship of a defendant limited
partnership was awarded. Tim-Menn, Inc.
v. Tim Horton’s USA, Inc., Case No. 19-CV-409 (JNE/ECW), 2019 WL 2865600
(D. Minn. July 3, 2019).
The plaintiff in this action, Tim-Menn, is a
franchisee and area developer for Tim Horton’s Restaurants in Minnesota. Tim
Horton USA, Inc. (“THUSA”) is the franchisor for the US-based franchises of Tim
Horton’s. Restaurant Brands International Limited Partnership (“RBI”) is
apparently the parent of THUSA. What is the nature of any claims Tim-Menn might
have against RBI, the apparent shareholder of THUSA, is not detailed in this
At this juncture, the court had twice directed
the plaintiff to file information with respect to the citizenship of RBI. Having,
based upon the publicly available information, been unable to identify who are
the partners in RBI, and in that one of those partners was in turn a Brazilian/USA
investment firm with offices in Rio de Janeiro and New York City, the plaintiff
requested a stay and jurisdictional discovery so as to ascertain the
citizenship of RBI. That motion was resisted by the defendants, largely on
grounds of futility. Finding that the plaintiffs had “exhausted all publicly
available avenues to determine the identity of RBI’s partners and their
citizenship,” setting aside arguments on whether a valid claim had been made
until such time as they are presented on a motion to dismiss, discovery as to
RBI’s citizenship was allowed.
The opinion has an undercurrent of criticism of
defense counsel, it being suggested that if they would come forward with
information showing that the limited partnership has a Minnesota citizen, it
would be clear that diversity did not exist and the matter would be dismissed.
While the award of jurisdictional discovery
after the plaintiff had made a complete investigation of the publicly available
information bears similarities to the analysis undertaken in Lincoln Benefit Life Company v. AEI Life,
LLC, 2015 WL 5131423 (3rd Cir Sept. 2, 2015), that decision was
not cited in this opinion. HERE IS A LINKto my review of the Lincoln Benefit Life decision.
Bankruptcy Remote Provisions of LLC’s Operating Agreement Again Struck Down
In a recent decision from the Bankruptcy
Court for the Western District
of Kentucky, it was (again) held that provisions in an operating agreement intended to bar seeking protection under the Bankruptcy Code will not be enforced. In re Insight Terminal
Solutions, LLC, Case No. 19-32231(1)(11), 2019 Bankr. LEXIS 2949, 2019 WL 4640773
(Bankr. W.D. Ky. Sept. 23, 2019).
The debtors in this action, Insight Terminal Solutions, LLC and Insight Terminal Holdings, LLC, were each organized as a Delaware limited
liability company. After a loan from Autumn Wind Lending, LLC was going sideways, a “Bankruptcy Rights
Waiver” was entered into requiring, in effect, that Autumn Wind have
a veto right with respect to the debtors’ bankruptcy filing. Ultimately the debtors, without that approval, did file for bankruptcy protection, whereupon Autumn Windchallenged the
The filing would be upheld by the Bankruptcy Court.
Responding to Autumn Wind’s argument that the bankruptcy filings
was ineffective, the Court wrote that the waiver
of the right to seek bankruptcy is “against public policy and invalid.” In the support of this determination, the court cited a number of affiliates including In re Lexington
Hospitality Group, LLC, 577 B.R. 676, 683 (Bankr. E.D.
Ky. 2017), In Re Intervention
Energy Holdings, LLC, 553 B.R. 258 (Bankr. D.
Del. 2016) and In re Lake
PottawattamieResort LLC, 547 B.R. 899, 912 (Bankr. N.D. Ill. 2016).
While there is limited authority
to the contrary, this decision is one in a long line of courts striking down efforts by attorneys and their clients to by contract effect
a waiver of the right to seek protection
under the Bankruptcy Code.