Friday, May 19, 2017

The Fall and Execution of Anne Boleyn

The Fall and Execution of Anne Boleyn



      Today, May 19, marks the anniversary of the execution in 1536 of Anne Boleyn on spurious charges of adultery and therefore (by one argument) treason.  While she would be included in Foxe’s Book of Martyrs, a 16th century effort at Protestant hagiography, all indications are that Anne died a Catholic; it is difficult to otherwise understand her request that the Eucharist be placed in her chambers at the Tower of London in the days before her execution.

      It was a convoluted process that brought Anne to execution.

      Previously, Henry VIII had been married to Catherine of Aragon.  That marriage would ultimately sour on the fact that only one of the children of Henry and Catherine survived infancy, that being Mary.  England was not, it was feared, ready to be ruled by a queen.  The only example of it doing so, that being the reign of the Empress Matilda (daughter of King Henry I) was referred to as the “Anarchy.”  Seeking to perpetuate the dynasty and avoid the possibility of civil war after his death, Henry pursued the Divorce (it was actually what we would refer to today as an annulment) so that he could marry Anne Boleyn.

      The Divorce could not easily be had consequent to at least a pair of factors.  Initially, on theological grounds, the basis for the Divorce was weak.  Second, Eleanor’s nephew, Charles V, was King of both Spain and the Netherlands and as well Holy Roman Emperor.  He was able to delay any decision on the Divorce, thereby depriving Henry of the one thing he did not have, namely time.  Ultimately, Henry would schism the English church from Roman communion (an act which earned for Henry his very own bull of excommunication).  The marriage to Catherine of Aragon was then annulled by Thomas Cramer, Archbishop of Canterbury. Now “single,” Henry proceeded to marry Anne Boleyn.  She, already pregnant at the time of the marriage, would be the mother of Elizabeth.  Elizabeth would be their only child.  Henry was now in no better position than he was before; two potential female heirs to the throne did not address the perceived need for a male heir.  Anne’s fortunes would ultimately be destroyed consequent to a series of events whose genesis is still greatly debated, but it is clear that the charges of adultery and incest for which she was convicted and executed were entirely fabricated.  Regardless, by some means Thomas Cromwell (now famous consequent to Wolf Hall and Bring Up the Bodies, both by Hilary Mantel) was told to make it happen, and he did.

      On April 30, 1536 Mark Smeaton, a court musician and hanger-on, was arrested, this being the first overt step in Cromwell’s plan to bring down Anne Boleyn.  According to one source, Cromwell had Smeaton brought to his own house and there tortured him.  Eventually, Smeaton would be racked and confess to have committed adultery with Anne Boleyn.  Some five additional men would be arrested on similar grounds. One of them, Wyatt, was not ultimately charged.

      The first trial (albeit indirect) of Anne Boleyn took place on May 12, 1536.  Anne, however, was not a participant in the trial.  Rather, at this trial each of Mark Smeaton, Henry Norris, William Brereton and Francis Weston were charged with multiple acts of adultery with the Queen.  Sadly, no transcript of the proceedings, if made (and that is doubtful), survives.  All were found guilty, thereby sealing Anne’s fate.  She did not attend the trial; rather, at that time she was confined in the Tower of London.  Her father, Thomas Boleyn, did sit on the jury – his vote in favor of their conviction sealed the fate of his children.

      On May 15, 1536, Anne Boleyn as well as her brother George were tried on allegations of adultery and incest.  As to Anne, the conclusion of this “trial” was a foregone conclusion.  Four of the men with whom Anne was accused of having engaged in adultery, Mark Smeaton, Henry Norris, William Brereton and Francis Weston, had already been convicted on May 12, and, so goes the adage, it does take two to tango.  George was convicted on the charges against him.

      Although some incomplete notes of this trial do survive, sadly no transcript is available; it would no doubt make interesting reading.  It is clear that both Anne and then George (George’s trial was separate and held after that of Anne) denied all charges against them.  Those denials (as well as the expected denials of the other men charged with having committed adultery with Anne) must be accepted at face value.  As has been demonstrated by several scholars, most conclusively Eric Ives, the author of the definitive biography of Anne, she and her various co-conspirators could not have been guilty of the charges made – even with the incomplete records available to us today, it can be demonstrated that in numerous instances Anne and a particular gentleman were charged with having committed adultery at a particular time and place when, in fact, either or both of them were at a different place or even two difference places.  The truth, however, was not the issue; the outcome of the trial was a foregone conclusion before it ever started.  Henry was tired of Anne, and Cromwell had been charged to bring about her fall. End of story.

      On May 14, Cramner, Archbishop of Canterbury, had declared the marriage of Henry and Anne to have been invalid ab initio, possibly (the papers as to his determination have been lost) on the basis of her prior contract of marriage to Henry Percy the son of the then Fifth Earl of Northumberland (this Henry would be the Sixth Earl). An alternative basis was that Mary Boleyn, Anne's sister, had been Henry's mistress, and on that basis the marriage could have been invalid based upon consangruity. Regardless as to why, Anne would not die as the Queen of England, having never been validly married to Henry, and their daughter Elizabeth (the future Queen Elizabeth I) was rendered illegitimate.

      All of Mark Smeaton, Henry Norris, William Brereton and Francis Weston, along with George Boleyn, would be executed on May 17.  Anne’s death would not take place until May 19.

      Famously, Anne was executed not with the traditional English ax, but rather by a French swordsman. I have never found a satisfactory explanation as to why the swordsman was requested over the axeman; Friedmann (another biographer of Anne) suggested, and Ives admits it as a possibility, that it was at Anne’s request, she desiring the French manner of execution in light of her having been raised in the French court. There is, however, a problem of chronology. Anne was consigned to the Tower on May 2, her alleged partners in adultery (other than her brother George) were tried on May 12, and she was tried on May 15.  The swordsman, normally resident in Calais, may have been ordered to come to England before Anne’s trial. If so, there is further evidence that the trials were for show and the verdicts were pre-determined; even though her trial had not yet taken place, the manner of her dispatch may have already been selected.  Still she came out ahead (no pun intended); her sentence was commuted to beheading – the regular sentence for a woman convicted of treason was burning at the stake.

      Anne was buried in St. Peter ad Vincula, the church on the grounds of the Tower of London.  There she joined Sir (now Saint) Thomas More, another of Henry’s victims, executed in 1535.

      Henry would marry Jane Seymour, his third wife, on May 30. She shortly thereafter became pregnant, ultimately delivering a son who would survive infancy.  That child was Edward VI.  Jane would die of complications from childbirth. While Henry would go on to marry three more times, namely to Anne of Cleves, Catherine Howard and Catherine Parr, none of them would have children by him. Edward VI would die, probably of tuberculosis, in his mid-teens.  Mary and then Elizabeth, the girls Henry feared could not rule, would in turn rule England.  As observed by Peter W. Hogg, Succession to the Throne, 33 Nat'l J. Const. L. 83 (2014):

 [W]hile Henry VIII was engaged in his obsessive quest for a male heir he could not know that his daughter Elizabeth by Anne Boleyn (the second of his six wives) was destined to become the greatest monarch England had ever known.  She became Elizabeth I (Good Queen Bess, as she was known), and ruled for 45 years (1558-1603, England's “golden age”).  Henry should have stopped worrying and settled down with Anne Boleyn instead of beheading her.

Monday, May 15, 2017

Additional Questions on 2017 Annual Reports to the Kentucky Secretary of State

Additional Questions on 2017 Annual Reports to the Kentucky Secretary of State
      Various companies, both those organized in Kentucky and those qualified to transact business in Kentucky, are now receiving their annual report forms from the Kentucky Secretary of State. There are some changes on the form of which you should be aware.
      But first, it is absolutely necessary that every company either organized in Kentucky or qualified to transact business in Kentucky properly complete and file the annual report. A domestic company that does not file its annual report will be subject to administrative dissolution. Foreign companies that do not file an annual report will have their certificate of authority to transact business in Kentucky revoked. While administrative dissolution can be cured, it will cost, at minimum, several hundred dollars to accomplish that task. Conversely, revocation of a certificate of authority is not subject to cure, and a new registration with the state will have to be accomplished. In either instance, it is far easier to complete and submit the annual report.
      On the annual report for corporations, the company secretary must be identified. Also, be sure the list of other officers and of the directors is up to date. As clarified on this year’s annual report form, if an LLC is manager-managed, the names and addresses of those managers must be set forth. If conversely the LLC is member-managed, it is not necessary to name any of the members.
      But back to those new questions. The 2017 annual report form includes a number of questions including the county(ies) in which the business operates, its size, whether it is woman, veteran or minority owned and its line of business. This information is being sought in order that the office of the Secretary of State will be better able to respond to questions. For example, a third party might request from them a listing of all of its veteran owned businesses. With this new information, the Secretary of State could respond to that inquiry.
      It is important to note, however, that all of these questions are optional; the annual report form will be complete and will be accepted even if some or none of these new questions are answered. Annual report forms are of public record, and any information you might disclose with respect to these new questions will likewise be publicly available.

The Trial of Anne Boleyn

The Trial of Anne Boleyn

      On this day in 1536, Anne Boleyn, as well as her brother George, was tried on allegations of adultery and incest.  The conclusion of the “trial” was a foregone conclusion.  On May 12, four of the men with whom Anne was accused of having engaged in adultery, Mark Smeaton, Henry Norris, William Brereton and Francis Weston, had already been convicted, and, so goes the adage, it does take two to tango. 

      Although some incomplete notes of the trial do survive, sadly no transcript is available; it would no doubt make interesting reading.  It is clear that both Anne and then George (George’s trial was separate and held after that of Anne) denied all charges against them.  Those denials (as well as the expected denials of the other men charged with having committed adultery with Anne) must be accepted at face value.  As has been demonstrated by several scholars, most conclusively Eric Ives, Anne and her various co-conspirators could not have been guilty of the charges made – even with the incomplete records available to us today, it can be demonstrated that in numerous instances Anne and a particular gentleman were charged with having committed adultery at a particular time and place when, in fact, either or both of them were at a different place or even two difference places.  The truth, however, was not the issue; the outcome of the trial was a foregone conclusion before it ever started.  Henry was tired of Anne, and Cromwell had been charged to bring about her fall. End of story.

      On May 14, Cramner, Archbishop of Canterbury, had declared the marriage of Henry and Anne to have been invalid ab initio, possibly (the papers as to his determination have been lost) on the basis of her prior contract of marriage to Henry Percy the son of the then Fifth Earl of Northumberland (this Henry would be the Sixth Earl). An alternative basis was that Mary Boleyn, Anne's sister, had been Henry's mistress, and on that basis the marriage could have been invalid based upon consangruity. Regardless as to why, Anne would not die as the Queen of England, having never been validly married to Henry, and their daughter Elizabeth (the future Queen Elizabeth I) was rendered illegitimate.

      All of Mark Smeaton, Henry Norris, William Brereton and Francis Weston, along with George Boleyn, would be executed on May 17.  Anne’s death would not take place until May 19.

Friday, May 12, 2017

Sixth Circuit Court of Appeals Rejects Substance Over Form Doctrine

Sixth Circuit Court of Appeals Rejects Substance Over Form Doctrine

        In a February, 2017 decision, the Sixth Circuit Court of Appeals rejected the application of the “substance-over-form” doctrine to reverse the effect of a tax minimization plan that was implemented in compliance with the Internal Revenue Code. In addition, the opinion has the benefit of citing Suetonius, The Twelve Caesars.  Summa Holdings, Inc. v. Commissioner of Internal Revenue, ____Fed.3d____, 2017 WL 631663 (6th Cir. Feb. 16, 2017).
       The tax planning at issue involved the payment of distributions from a “domestic international sales corporation” (DISC) to Roth Individual Retirement Accounts of certain of the manufacturing company’s shareholders. Suffice it to say that this tax planning technique is entirely permissible and does, initially, require payment of tax of the funds transferred to the Roth IRA. In this instance, however:
[T]he Commissioner balked. He acknowledged that the family had complied with the relevant provisions [of the Internal Revenue Code]. And he acknowledged that the purpose of the relevant provisions was to lower taxes. But he reasoned that the effect of these transactions was to evade contribution limits on Roth IRAs and applied the “substance-over-form doctrine” to recharacterize the transactions…
       That determination was upheld by the Tax Court, and this appeal to the Sixth Circuit followed.
        Rejecting this effort at re-characterization, the Six Circuit wrote:
Every word of the “substance-over-form doctrine,” at least as the Commissioner has used it here, should give pause. If the government can undo transactions that the terms of the Code expressly authorize, it's fair to ask what the point of making those terms accessible to the taxpayer and binding on the tax collector is. “Form” is “substance” when it comes to law. The words of law (it's form) determine its content (it's substance). How odd, then, to permit the tax collector to reverse the sequence - to allow him to determine the substance of a law and to make it govern “over” the written form of the law - and to call it a “doctrine” no less.
       From there the court would go on to determine that the use of the DISC/Roth IRA was permissible under the wording of the Internal Revenue Code, and could not be set aside by the Commissioner based upon some theory of abuse of the intent of the Internal Revenue Code.

Monday, May 8, 2017

Effort to Compel Publication Rejected

Effort to Compel Publication Rejected

      In a recent decision from the Kentucky Court of Appeals, it affirmed a trial court dismissal of a compliant seeking an order that the Courier-Journal must publish certain allegations Flint v. Gannett Co., Inc., No.2016-CA-000046-MR, 2017 WL 1103021 (March 24, 2017).

      Flint filed suit against the Courier-Journal seeking an order that it publish his allegations of legislative corruption.  The trial court dismissed the action.

On this appeal, the Court of Appeals determined, based upon settled Supreme Court decisions on the scope of the First Amendment law, that a court cannot order a newspaper to publish particular materials.  On that basis the dismissal of the complaint was affirmed.

Based upon Flint’s repeated filing of suits and conduct including filing suit against judges that rule against him,  the Court of Appeals ordered that he pay Gannett’s costs.

Administratively Dissolved California LLC May Not Appeal Adverse Tax Ruling

Administratively Dissolved California LLC May Not Appeal Adverse Tax Ruling

      In a recent decision, a California State Court of Appeal rejected an effort by an administratively dissolved LLC to appeal an adverse decision against it. Creditors Adjustment Bureau, Inc. v. Big Valley Cold Storage LLC, 2017 WL 1076371 (Cal. App. 5th Dist. Feb. 22, 2017).
      Creditors Adjustment Bureau, Inc. (“CAA”) was awarded a default judgment against Big Valley Cold Storage LLC (“Big Valley”). Initially, after CAA filed its complaint, Big Valley Cold Storage sought to answer, but it's response to the complaint was rejected on the basis that it had not paid a filing fee and as well filed an answer without representation by an attorney. Ultimately, a default judgment was entered against Big Valley. Some six months later, Big Valley would retain counsel, who was unsuccessful in seeking to have the default judgment set aside. Specifically, CAA alleged that as the Franchise Tax Board had suspended Big Valley’s status as an LLC, it lacked the capacity to defend the action or to prosecute an appeal. From there, the appeal followed.
      On appeal, Creditors Adjustment was successful in arguing that, as Big Valley had been administratively dissolved consequent to its failure to pay taxes, it lacked the capacity to bring an appeal of the default judgment. Specifically, under California law:
In support of its request for dismissal of the appeal, plaintiff presented a printout from the Secretary of State’s Web site, showing that Big Valley is currently suspended by the Franchise Tax Board (the Board) and the Secretary of State.  The Board may suspend the powers, rights and privileges of a limited liability company that fails to pay its taxes or fails to file a required tax return.  (Rev. & Tax. Code, §§ 23301, 23301.5, 23302, 23305.5, subd. (a)(2).) The Secretary of State may suspend the company’s powers, rights and privileges if the company fails to file the required statement of information with the Secretary of State. (Corp. Code, §§ 17702.09, 17713.10.)
A corporation or other entity that has had its powers suspended for failure to pay its taxes lacks the legal capacity to prosecute or defend a civil action, or to appeal from an adverse judgment.  (Bourhis v. Lord 92013) 56 Cal.4th 320, 324; Tabarrejo v. Superior Court (2014) 232 Cal.App.4th 849, 861-862.) “The same rule applies when a corporation fails to file the required statement of information.” (Friends of Shingle Springs Interchange, Inc. v. County of El Dorado (2011) 200 Cal.App.4th 1470, 1486 (Friends).) The suspended entity may, however, be sued and have a default judgment entered against it. (Grell v. Laci Le Beau Corp. (1999) 73 Cal.App.4th 1300, 1306.)
The policy underlying the statutory provisions regarding failure to comply with the tax statutes is “ ‘to prohibit the delinquent corporation from enjoying the ordinary privileges of a going concern, in order that some pressure will be brought to bear to force the payment of taxes.’ ” (Peacock Hill Assn. v. Peacock Lagoon Constr. Co. (1972) 8 Cal.3d 369, 371.) The delinquent entity may revive its powers by complying with the applicable statutory requirements and, in the case of the failure to pay taxes or file a tax return, obtaining a certificate of reviver from the Board. (Rev. & Tax Code, § 23305; Corp. Code, § 17713.10, subd. (d).) Once its powers are revived, the corporation or other entity may again sue and defend in court. (Friends, supra, 200 Cal.App.4th at p. 1486.)
      Of course, similar result would not happen in Kentucky. Initially, the Kentucky Department of Revenue does not have the authority to effect the administrative dissolution of a business organization. Rather, that capacity is reserved exclusively to the Secretary of State. Second, under Kentucky law, a company that has been dissolved, whether voluntarily, administratively or judicially, continues to be a business organization with the capacity to initiate and defend all legal actions. See, e.g., KRS § 275.300(4)(a)-(b).

Saturday, May 6, 2017

The Sack of Rome and the Papal Swiss Guard

The Sack of Rome and the Papal Swiss Guard

        Today marks the anniversary of the Sack of Rome in 1527 by troops of Charles V,  Holy Roman Emperor.

        Since the late 15th Century Italy (or at least the region we today identify as Italy – the notion of the region as a nation was long in the future) had been repeatedly invaded by forces from Northern Europe, each seeking to claim dominion over one area or another. Rival claimants to the crown of Naples caused as much trouble as did anything, but economic rivalry between for example Genoa and Venice did nothing to calm the waters.  Pope Alexander VI gave command of the papal army to his son/nephew (which is a matter of dispute) Cesare in order to bring some order, and Pope Julius II would actually don armor and lead his army into battle, again in an effort to bring some stability to the situation.  While Erasmus would condemn Julius for doing so, he did ignore the fact that the targeted cities surrendered to him.

        But back to the Sack of Rome.  Charles’ forces were at this point battling the League of Cognac, it being comprised of France, Milan, Venice, Florence and the Papal States (keeping track of the various Leagues through the Italian Wars is a troubling task; the League of Cambrai was initially formed against Venice by the Papacy, France, Spain and the Holy Roman Empire. Later the initial members would be allied against France with Venice as an ally. Later Venice and France would be against the Papacy, Spain and the Holy Roman Empire). After a significant victory over the French army the troops were restive in that they had not been paid – most were mercenary. Pillaging Rome would be a way of paying the troops. The city was not well defended, although its formidable walls did need to be and were breached.  Their commander having fallen in the course of the attack, discipline immediately broke down among the troops, and a sack of over three days began.

        The Pontifical Swiss Guard, created only in 1506 under Pope Julius II, rose to the occasion. Of its then number of 189, 147 would fall defending Pope Clement VII, affording him time to take refuge in the Castel Sant’Angelo (Hadrian’s Mausoleum). In recognition of this event, new members of the Pontifical Swiss Guard are sworn in on May 6.  Earlier today, in the continuation of that tradition, Pope Francis I officiated at the swearing in of a number of new Swiss Guards.

           There was in 2013 an event unique to the Guard, namely the recognition of a Pope’s retirement. Benedict XVI left the Vatican as Pope, flying to the Castle Gandolfo. The Swiss Guard accompanied him to the castle and there stood guard. When the moment his resignation became effective, and Benedict became not Pope but Pope Emeritus, the Guards left their station at the castle and returned to Rome. While the Vatican has its security forces, and they no doubt continued to provide protection for Benedict, the Swiss Guard serve the Pope.

        Of course this was not the only sack of Rome – it had fallen many times in its long history. It fell to the Normans in 1084, in 546 by the Ostrogoths, in 455 by the Vandals, in 410 by the Visigoths and in 387 BC by the Gauls.

Lender Liability Claims Rejected

Lender Liability Claims Rejected
      In a recent decision from the Kentucky Court of Appeals, it affirmed the trial court's determination that a variety of claims against a lender, namely breach of fiduciary duty, tortious interference with contractual relations and intentional infliction of emotional distress, should be dismissed. Seeger Enterprises, Inc. v. Town & Country Bank and Trust Company, No. 2015-CA-0011-MR, 2017 WL 1290631 (Ky. App. April 7, 2017).
      Seeger owned several pieces of property that were mortgaged to Town and Country Bank. In order to pay off those obligations, Seeger and his realtor began discussions with Hayden for a purchase/sale. It was alleged as well that they reached agreement as to the price, $1,650,000, but that agreement was never reduced to writing. When a written agreement was ultimately prepared and tendered to Hayden, he refused to sign it. The property was ultimately sold at a master commissioner sale with Town & Country the buyer for a price of $800,000. In the course of foreclosure, Seeger brought the claims that would ultimately be dismissed. The case went to trial, and after two days of evidence Town & Country was granted a directed verdict on those counterclaims.
Tortious Interference with Contractual Relationships
      The Court of Appeals affirmed the dismissal of this count based upon the absence of an enforceable contract. Hayden never signed the contract, and an oral agreement for the purchase of real estate is unenforceable under the statute of frauds. See KRS § 371.010. There being no contract with which to interfere, a claim for tortious interference automatically failed.
Breach of Fiduciary Duty
      After noting that, in most situations, a bank does not stand in the fiduciary relationship with its customers, it was observed that “Kentucky law permitted the trial court to impose a fiduciary duty upon Town & Country only if evidence at trial created the reasonable inference that it profited at Seeger's expense. Finding that Seeger had not introduced any evidence in support of the existence of fiduciary duties, the directed verdict against that claim was affirmed.”
Intentional Infliction of Emotional Distress
      The directed verdict on this count was affirmed on the basis that Seeger had not raised it in his initial brief, the court applying the rule that new matters may not be raised in life.
Amendment of the Pleadings
      The court also affirmed the denial of an amendment of the pleadings to include a new claim for tortious interference with prospective business advantage on the basis that
To have permitted the addition of such a distinct claim at the latest possible stage of trial would have deprived Town & Country of any ability to present distinct and directly responsive evidence in defense of the new claim.

Friday, April 14, 2017

Deeds and the “Full Names” of the Grantor and Grantee

Deeds and the “Full Names” of the Grantor and Grantee


      In 2016, the Kentucky General Assembly passed amendments to the statute governing deeds, adding a requirement that deeds set forth the “full name” of the grantor and the grantee.  See KRS § 382.135. All that is well and good, but the statute did not define what is the “full name.”  By way of example, must the name of a natural person include any middle name, and must it be spelled out?  Is a “Jr.” a required element of a name?

      Amendments approved by the 2017 General Assembly address this question. 

      For natural persons, the “full name” will be determined under the same rules as are utilized under the UCC. See KRS § 355.9-503. Typically this will be the name as set forth on the person’s driver’s license. Otherwise it will be the first given name and surname.

      For business entities, the “full name” will be determined by applying the rules set forth in the assumed name statute.  See KRS § 365.015.  As such, for a domestic corporation, the “full name” will be the name set forth in the articles of incorporation.  With respect to a foreign LLC qualified to transact business under a fictitious name, the “full name” will be that fictitious name.

       This amendment is set forth in SB 235, legislation sponsored by Senator Morgan McGarvey. This amendment will be effective as of June 29, 2017.

      My thanks to my law partner, Tony Schnell, who first brought this problem to my attention.


Wednesday, April 12, 2017

The First Fall of Constantinople

The First Fall of Constantinople

      Today marks the anniversary of the fall, in 1204, of Constantinople, one of the only two times that its famed walls would ever be breached. 
      Constantinople, after having been re-founded by the Emperor Constantine, was protected, on at least the landside, by an initial wall.  The city subsequently expanded and it was in the early 5th century that the famous double Theodosian Wall was constructed.  Over the years, these walls would deflect attacks ranging from the army of Attila the Hun to several long-term sieges by various Muslim forces.  They would fall, ultimately, to a western Crusader army. 
      The Fourth Crusade intended, by means of an assault from the sea, to capture Egypt and thereby create a land base from which to again take possession of the Holy Lands and particularly Jerusalem; the few coastal cities remaining in the Crusader’s states were simply insufficient as a logistics base from which to act.  From the start essentially nothing went to plan.  Venice had been offered a significant contract to build and equip a fleet to move the Crusader army, its price calculated on a per capita basis.  Venice, a preeminent trading venture, essentially stopped all activities for two years in order to perform its part of the agreement.  When, however, time came for the Crusader army to depart, its numbers were significantly smaller than had been planned.  Those Crusaders who were present simply did not have the wherewithal to satisfy their end of the bargain.  After significant haggling, the reduced army departed, traveling first not to Egypt but rather to Zara, a city in the Adriatic that had earlier revolted again Venetian control.  Part of the army’s debt to the Venetians would be satisfied by bringing Zara to heal.  This action earned the Crusader army an excommunication issued by the Pope.
      Having now picked up a particularly weak claimant to the Byzantine throne, one who assured the Crusaders and the Venetians that he would be welcomed with open arms if returned to Constantinople, the fleet headed for Constantinople.  Needless to say, the Emperor was not pleased to find the fleet pulled up before the walls of his city, especially accompanied by a claimant to the throne.  Relations between the Byzantine authorities and the Crusaders/Venetians started off bad and essentially only got worse.  Ultimately, the fleet and the army would attack Constantinople and breach its walls, an event that for centuries forms a major iconographic event in Venice’s history. One means of entry were "flying bridges" mounted on the masts of the Venetian galleys - they sailed up next to the seaward walls and over-hanged the walls, then men at arms and knights climbed up the masts and walked over what must have been a precarious bridge. The city would fall and suffer a three day sack. The bronze horses that are featured on St. Marks Cathedral in Venice were part of the incalculable possessions stripped in the course of the sack. Ultimately one of the Crusader chiefs, Baldwin, would be placed upon the throne of Constantinople.
      The so-called “Latin Kingdom” in Constantinople would survive for only fifty-seven years when it would fall, the throne again taken by the Greeks.  However, the Latin Kingdom seriously weakened the Byzantine Empire, setting it up for its ultimate fall in 1453 to the Islamic Ottoman forces under Mehmet II.

Friday, March 31, 2017

Mistaken Identity of Capacity Does Not Eliminate Ability to Bind LLC

Mistaken Identity of Capacity Does Not Eliminate Ability to Bind LLC

      In a decision from California, the court consider whether the failure to correctly identify the role in which a person signed a document rendered the agreement unenforceable. In this instance, the court answered “no.” Western Surety Co. v. La. Cumbre Office Partners, LLC, 2017 Cal. App. LEXIS 77 (2017).
      In this instance, there was an LLC (“Manager LLC”) that itself was the manager of another LLC (“Managed LLC”). The Manager LLC was in turn managed by a natural person (“Person”). When, however, Person signed a document on behalf of the Managed LLC, he incorrectly identified himself as its managing member rather than the managing member of its manager. The question under consideration is whether Managed LLC on whose behalf the document had been executed was bound.
A      pplying language from California's prior LLC Act (although it is worth noting that the same language appears in the current Act), the court found that Managed LLC was properly bound notwithstanding the fact that Person had incorrectly indicated that he was the manager of the LLC.

Wednesday, March 29, 2017

Sixth Circuit Court of Appeals Applies Law Allowing Employee to Keep Handgun in Car on Company Property; Once Removed From the Car the Protection was Eliminated

Sixth Circuit Court of Appeals Applies Law Allowing Employee to Keep Handgun in Car on Company Property; Once Removed From the Car the Protection was Eliminated

      In a decision rendered earlier this month by the Sixth Circuit Court of Appeals, it applied the Kentucky statute providing that an employee is entitled to possess a handgun on company property so long as that gun is kept in the car. In this case, an employee removed the gun from the car, and thereby moving himself outside of the law’s protection.  Holly v. UPS Supply Chain Solutions,, Inc., No. 16-5337 (6th Cir March 2, 2017).
      Holly was an employee of UPS Supply Chain Solutions. One day, while driving to work, he experienced car troubles. His manager gave him permission to leave work and take the vehicle to a repair shop, sending along another member of management to drive Holly back to work.
       Holly’s car, however, contained a handgun in the center console. “Because Holly did not want to leave his handgun in the car while it was at the shop, he asked a subordinate employee, Kenneth Moore (who was working at the time, if he could store the gun in Moore's vehicle while it was being repaired. Moore agreed, and, in the UPS SCS parking lot, Holly removed the gun from his car and placed it in Moore's.” Slip op. at 2. Moore, however, became uncomfortable with the idea of having the gun in his car, and reported it to a supervisor. Later, UPS security became aware of the incident and ultimately terminated Holly's employment. One of the bases for that termination was his request that Moore do him a favor on company time, a rationale later expanded to include “that the reasons for Holly’s termination were: (1) misusing company time; (2) exhibiting poor decision-making skills; (3) putting a subordinate in an awkward and potentially risky position; and (4) general performance issues.” Holly then brought suit on the basis that his termination violated Kentucky's public policy as set forth in KRS §§ 527.020 and 237.106. The former statute provides in part:
No person, public or private, shall prohibit a person licensed to carry a concealed deadly weapon from possessing a firearm, ammunition, or both, or other deadly weapon in his or her vehicle in compliance with the provisions of KRS 237.110 and 237.115.
       In turn, KRS § 237.110 provides, in part, that a private employer “may not prohibit employees or other persons holding a concealed deadly weapons license from carrying concealed deadly weapons, or ammunition, or both in vehicles owned by the employee.” The majority of the Sixth Circuit panel (Judge Rogers would file a dissent) found the statute inapplicable in that the gun at issue was not in Holly's vehicle, but rather had been transferred to Moore's. Hence, in effect, rather than on having a handgun in his own vehicle at the employer's worksite, Holly had his own handgun in Moore's vehicle, and in that action the statute did not protect.

“Surface” Deed Found to Convey all Mineral Rights Except Specifically Excepted Coal

“Surface” Deed Found to Convey all Mineral Rights Except Specifically Excepted Coal

      In a decision earlier this month from the Kentucky Court of Appeals, notwithstanding that the subject deed referred to a conveyance of the “surface” of the property, based upon its particular wording, it was held that the “surface” deed conveyed all mineral rights except the expressly excepted coal rights. Potter v. Blue Flame Energy Corp., No. 2015-CA-000873-MR (Ky. App. March 3, 2017).
      At this stage of this long-running dispute, the question was whether all subsurface mineral rights had been conveyed by a prior deed or, in the alternative, had only the coal rights been conveyed, leaving to the holders of the surface rights title to the oil and gas under the subject property. The trial court, granting summary judgment, had held that only the surface rights had been conveyed, without any mineral rights. The Court of Appeals would reverse that determination.
      Focusing upon the language separately treating the rights to coal and affording as well the “usual mining rights… for removal of same,” it was held that the retained rights were only to the coal estate and nothing more. Ultimately, the subject deed severed the coal estate from the balance of the property, and had no impact upon the oil, gas and other mineral rights. On that basis the rights to the non-coal mineral rights went with the expressly addressed surface estate.

An LLC and its Members Are Legally Distinct

An LLC and its Members Are Legally Distinct

      In a recent ruling from a trial court in Massachusetts, it was reiterated that an LLC is legally distinct from its members. In this instance, an LLC agreed that it would not bring a legal action absent certain predicate acts. This provision was held not applicable when the LLC’s members brought a similar action. Meunier v. Market Strategies, Inc., 1684CV01546-BLS2, 1684CV03592-BLS2 (Mass. Suffolk Ct. Sup. Ct. Feb. 23, 2017).
      Market Strategies, Inc. (“MSI”) purchased Cogent Research Holdings. In connection therewith, there were certain deferred and Contingent Payments to be made. The owners of Cogent Research apparently organized a holding company as the vehicle to which those new payments would be made, and the purchase agreement so provided. A subordination agreement made the contingent payments subordinate to certain loan obligations to existing lenders to MSI. That subordination agreement went on to provide that HoldCo “shall not … take any Enforcement Action with respect to” those deferred payments absent the prior written consent of the lender’s administrative agent.
      Ultimately, the members of HoldCo would sue MSI in their individual capacities, asserting they were third-party beneficiaries of the agreement pursuant to which Cogent was sold by MSI and that there had been a breach in the making of the Contingent Payments. In response, MSI sued HoldCo for breaching the covenant not to sue. HoldCo was not, however, a party to the suit brought by its members and for that reason a motion to dismiss was granted.
      The court found that:
The plain language of the covenant not to sue bars HoldCo, not its individual members, from filing suit to compel MSI to make the Deferred and Contingent payments. MSI does not allege that HoldCo itself is a refileable lawsuit or taken any other enforcement action in violation of its covenant not to sue. Neither the subordination agreement nor the purchase agreement contain a covenant barring Meunier, White, and the irrevocable trust from bringing suit in an attempt to compel MSI to pay over the Deferred Payment and Contingent Payment amounts to HoldCo.  Presumably, it never occurred to MSI that it needed such a covenant, since the purchase agreement specifies that those payments are owed to HoldCo, and not to the individual owners and members of Holdco. Nevertheless, the only covenant not to sue binds HoldCo. and not Meunier, White or the trust.

Tuesday, March 28, 2017

Louisiana Court Holds That Assignee Member Is Not a Member With Respect to Assigned Interests

Louisiana Court Holds That Assignee Member Is Not a Member With Respect to
Assigned Interests


      Every LLC Act, as a default rule, requires some threshold of the members to approve the admission of an assignee as a member in the company. Often left unaddressed is whether an assignment among the members results in (a) the assignee being, with respect to the assigned interest, treated as a member or (b) treats the assignee, with respect to the assigned interest, as an assignee. In an article recently published in the Journal of Passthrough Entities, I reviewed two decisions, one from Delaware and one from North Carolina.  Rutledge, Interest Assignments Among Members, J. Passthrough Entities (March/April 2017) 53; HERE IS A LINK to that article. The Delaware decision, Achaian, Inc. v. Leemon Family LLC, is of little assistance in that it is the interpretation of what can be fairly characterized as curious language in the subject limited liability company agreement.  25 A.3d 800 (Del. Ch. 2001). This case is also reviewed in J. William Callison, Achaian and interest transfers among existing partners and members, Research Handbook on Partnerships, LLCs and Alternative Forms of Business Organizations (Edward Elgar Publishing, 2015). In a similar vein, Ault v. Brady, 37 Fed. App, 222 (8th Cir. 2002), turned on the wording of the particular operating agreement at issue.   The second decision reviewed in that article is Blythe v. Bell, 2012 NCDC 60, 2012 WL 6163118 (N.C. Super. Dec. 10, 2012). The one advantage of the Blythe decision is that it interpreted essentially the default rules of the statute. In this decision, the North Carolina Business Court determined that upon an assignment of all of the interest from one incumbent member to another: (i) the management rights are fully conveyed to the assignee; (ii) the assignee may exercise the management rights related to the assigned interest.

      The recent decision from Louisiana, Bourbon Investments, LLC v. New Orleans Equity LLC,  207 So.3d 1088 (La. App. 4 Cir. 2016), came to the opposite conclusion as did the Blythe court. Curiously, the Blythe decision was not referenced by the Louisiana court.

This dispute arose out of a failed effort to acquire the famous Galatoire’s Restaurant (as well as a related restaurant in Baton Rouge). One of the issues in contention was whether the suit filed against the prior owners was legitimate turned on the question whether it had been validly approved. In support of the notion that there had not been valid approval of the lawsuit, the defendants pointed to certain interest transfers amongst the members of the plaintiff, claiming that required majority approval had not been received. In opposition, the plaintiffs “maintain[ed] that the general rule that requires unanimous consent for the transfer of full membership interest in an LLC does not apply where such transfer takes place between current member.” The LLC at issue not having a written operating agreement, the question turned on state law, the court observing that:

La. R.S. 12:1330 provides that a membership interest in a limited liability company is assignable, but such assignment entitles the assignee to only “receive such distribution or distributions, to share in such profits and losses, and to receive such allocation of income, gain, loss, deduction, credit, or similar item to which the assignor was entitled to the extent assigned.” La. R.S. 12:1332 provides that, except as otherwise provided in the articles of organization or in an operating agreement, “[a]n assignee of an interest in a limited liability company shall not become a member or participate in the management of the limited liability company unless the other members unanimously consent in writing.” The statute further states that an assignor continues to be a member unless and until the assignee becomes a member.

      Again, the plaintiff would argue “that the transfer restrictions set forth in La. R.S. 12:1332 apply only when the assignment is made to a third party who wishes to become a member of the LLC.” Rejecting this assertion, the court would find that:

The literal language of the statue does not support Plaintiffs’ interpretation of La. R.S. 12:1332.  The plain language of the statute requires unanimous written consent of all members for an assignee to become a member of or participate in the management of the LLC. The statute does not differentiate between a third party assignee and a current LLC member assignee.  The fact that the legislature did not draft a separate set of rules for membership transfers between current LLC members further supports the conclusion that the default transfer restrictions apply regardless of whether the assignee is a third party or a current member.

So there you have it. At least under the North Carolina LLC Act, an interest assignment among the members is not subject to the requirement of member approval to constitute the assignee as a member with respect to the assigned interest. In contrast, in Louisiana, the opposite is true, and the consent of the incumbent members is required to constitute a member with respect to an additional assigned interest.

      Several state statutes, with greater or lesser precision, address this point. Tennessee exempts the transfer of management rights among members from any requirement of consent from another member.  See Tenn. Code Ann. § 48-249-508(b)(1) (“A member may, without the consent of any other member, transfer governance rights to another member.”)  Utilizing a different statutory formula, the same result is dictated by the North Carolina LLC Act.

See NC LLC Act § 57D-5-04(b): [A] transferee of an ownership interest [(a term of art defined to mean all of the rights and obligations (economic, management, and others) of an interest owner in a LLC] or portion thereof who is or becomes a member has to the extent transferred to the transferee (i) the rights and powers and is subject to the restrictions and liabilities of a member under the operating agreement and this Chapter with respect to the transferred ownership interest….” (emphasis added).

The new Pennsylvania LLC Act, albeit in a rather cryptic formula, likewise exempts an assignment among members from any requirement of consent. See 15 Pa. C.S. § 8851(b) (“Only right that may be transferred. – A person may not transfer to a person not a member any rights in a limited liability company other than a transferable interest.”) See also Pa. Drafting Committee Comment:

This section is patterned after Uniform Limited Liability Company Act (2006) (Last Amended 2013) § 501.  Absent a contrary provision in the operating agreement or the consent of the members, a “transferable interest” is the only interest in a limited liability company that can be transferred to a non-member.  See 15 Pa.C.S. § 8852.  As to whether a member may transfer governance rights to a fellow member, the question is moot absent a provision in the operating agreement changing the default rule, see 5 Pa..S. § 8847(b)(2), allocating governance rights per capita. In the default mode, a member’s transfer of governance rights to another member: (i) does not increase the transferee’s governance rights; (ii) eliminates the transferor’s governance rights; and (iii) thereby changes the denominator but not the numerator in calculating governance rights.


Thanks to Bill Callison, Joan Heminway, Warren Kean and Lisa Jacobs for leads on various cases and the Louisiana decision           

Wednesday, March 15, 2017

Beware the Ides of March

Beware the Ides of March

“Et tu, Brute?”

        Today, the Ides of March, marks the anniversary of the assassination of Julius Caesar in 44 B.C. Caesar was famously assassinated at a meeting of the Roman Senate after having (almost certainly apocryphally) been warned to “Beware the Ides of March.” He was presented with a written warning of the conspiracy against him as he was walking to the Senate meeting, but seems to have never read the warning. Although stabbed twenty-three times by the various conspirators, only one wound was fatal.

            Caesar’s murder by members of the Senate (but not Cicero – the conspirators were unsure he had the stomach for such an act) was premised upon the notion that they were somehow preserving liberty for Rome; after the deed they paraded through the streets shouting “liberty.”  This against the fear that Caesar sought to be king, an especially galling notion in light of Rome having (at least as part of its foundation myth) having been ruled by kings and then thrown them off.  Still, at this stage Caesar had been appointed by the Senate Dictator for Life.  It seems this subset of the Senate sought to undo what the whole Senate had approved.

         “Liberty” was not to be had. Caesar’s death unleashed upon the tottering Roman Republic the Second Civil War of Caesar’s heir Octavian (later to be Caesar Augustus) and his compatriot Marc Antony (Lepidus, the third member of the Second Triumvirate, was a place holder) against the assassins and their various supporters. The night before the assignation a conscious decision had been made to not as well target Marc Antony.  In retrospect the assassins would regret that determination.

Assassins Brutus and Cassius (Gaius Cassius Longinus) would each commit suicide after losing a phase of the Battle of Philippi (notwithstanding the presentation in the HBO series “Rome,” they actually died on different days).  Cicero (who as noted above was not himself part of the conspiracy) would be executed as part of the proscriptions after the victory of the Second Triumvirate.

Still later Octavian and Antony would turn on one another, Antony’s forces being routed at Actium.  Octavian would go on to be the first Roman emperor, Caesar Augustus.

         But back to Caesar’s dying words. “Et tu Brute” is not recorded by any classical historian – it is a quote from Shakespeare. Plutarch, who was born exactly 100 years after the assassination, reports that Caesar said nothing after the attack began in earnest. Suetonius wrote that others reported his last words to be “καὶ σύ, τέκνον” (Greek still being the lingua franca of the Romans), transliterated as “Kai su, teknon” or “You also child,” addressed to Brutus (that is Marcus Junius Brutus the Younger, not to be confused with Decimus Junius Brutus, another party to the assignation). There were rumors, later reported by Plutarch (Suetonius is silent on the topic) that Caesar was in fact Brutus’ father – it was known that Brutus’ mother Servilia was Caesar’s mistress.  Still that would appear to be something of a stretch; Caesar was 16 at the time of Brutus' conception; Servilla was at that time 28. 
      For anyone watching the “Spartacus” series, while the sources do not exclude Caesar's participation in the war against Spartacus (i.e., the “Third Servile War”), they provide no details of that participation.  Ergo, the details of Caesar's actions as recounted are pure fiction.

Thursday, March 9, 2017

No Valid Claim Against Bank Where it Made Bank Secrecy Act Reports

No Valid Claim Against Bank Where it Made Bank Secrecy Act Reports

      In a decision rendered early last month by the Kentucky Court of Appeals, it rejected claims by bank customers that, when the bank made reports required by the Bank Secrecy Act relating to suspicious activities, the bank could be held liable to its customers. Rather, the court found that the bank enjoyed absolute immunity. Ventura v. Central Bank, No. 2015-CA-001407-MR, 2017 WL 461256 (Ky. App. Feb. 3, 2017).
      The Venturas own and operate Miguel’s Pizza and Rock Climbing Shop, a fixture of the rock climbing community in Kentucky's Red River Gorge. Central Bank, which handled the Ventura’s accounts, had made reports based upon the apparent manipulation of cash deposits. Special cash transaction reporting obligations arise when $10,000 or more is deposited. Additional rules under the Bank Secrecy Act require reporting if it appears that a bank customer is manipulating their deposits such as by making repeated deposits just below the $10,000 threshold. Eventually Central Bank would close the Ventura’s account. The Venturas were indicted on charges of violating the Bank Secrecy Act, but ultimately were acquitted by a jury. Thereafter, they filed this action against Central Bank, asserting a variety of claims based upon the reports that the bank had filed as required by the Bank Secrecy Act.
      The trial court, based upon the safe harbor preemption provided by the Bank Secrecy Act, dismissed the complaint, and this appeal followed. The Court of Appeals would likewise find that Central Bank employed absolute immunity from the claims being made. Specifically, the Bank Secrecy Act provides:
Any financial institution that makes a voluntary disclosure of any possible violation of law or regulation to a government agency or makes a disclosure pursuant to this subsection or any other authority, and any director, officer, employee, or agent of such institution who makes, or requires another to make any such disclosure, shall not be liable to any person under any law or regulation of the United States, any constitution, law or regulation of any State or political subdivision of any State, or under any contract or other legally enforceable agreement (including any arbitration agreement), for such disclosure or for any failure to provide notice of such disclosure to the person who is the subject of such disclosure or any other person identified in the disclosure.
Based thereon, there could be no claim against the bank.


Wednesday, March 8, 2017

Massachusetts Court Substantively Consolidates Corporation and Commonly Owned LLC

Massachusetts Court Substantively Consolidates Corporation and Commonly Owned LLC

      In a decision rendered last December, a Bankruptcy Court sitting in Massachusetts found, on the facts, that it could “substantively consolidate” the assets of the corporation, the debtor in bankruptcy, and a commonly owned LLC. In re Cameron Construction & Roofing Co., Inc. (Lassman v. Cameron Construction LLC), Case No. 14-13723-JNF, Adv. P. No. 15-1121, 2016 WL 7241337 (D. Mass. Dec. 14, 2016).
      Cameron Construction & Roofing Co. was, for all intents and purposes, in common ownership with Cameron Construction, LLC. When the corporation went into bankruptcy, the Trustee (Lassman) sought to bring into the bankruptcy Cameron Construction LLC and its assets.
      Cameron Construction LLC was the owner of the property out of which Cameron Construction & Roofing operated. Its articles of organization identified the purpose of the company as owning and managing real estate. It, however, went well beyond that, and had employees who were utilized in the corporation's construction and roofing activities. There was not, however, an employee leasing agreement with respect to those activities, and neither was there a signed lease for the use of the real property. Based on these and other activities indicating that the two ventures were not operated on arm’s-length terms, Lassman sought substantive consolidation.
      In response, it was argued that each company was duly organized, that the proper annual reports had been filed with the Massachusetts Secretary of State, and that each company filed its own income tax returns.
      The court would find that those distinctions were insufficient to preclude substantive consolidation. 2016 WL 7241337, *7. Specifically:
The Trustee demonstrated that there is a “substantial identity between the entities to be consolidated.” The common ownership and control of the Debtor and the Defendant by Cameron are admitted facts. The Debtor initially contributed $12,000 of capital for a 1% interest in the Defendant, whereas Cameron's contribution of $108,000 for a 99% interest in the Defendant was disproportionate. The capital structure was unfair to the Debtor, which should have been entitled to a greater percentage of ownership in the Defendant given its 10% capital contribution.
The Defendant did not engage in business in accordance with its business purpose as set forth in its Operating Agreement and Annual Report. It’s business went beyond the ownership, management and development of real estate. The Defendant’s seventeen employees worked exclusively for the Debtor in performing services in the Debtor’s business during 2011, 2012 and 2013. Thus, the work of the Defendant’s employees was outside the scope of the stated business purpose of the Defendant’s business as a real estate holding company. There was no formal sharing arrangement for the services provided by the Defendant’s employees to the Debtor.
The Debtor and the Defendant also did not have a written lease for the premises occupied by the Debtor. Funds were paid by the Debtor to the Defendant in denominated rent, but those amounts varied from year to year. The funds paid as “rent” were booked as payment of the work performed by the Defendant’s employees.
       While the court had been careful, earlier in the opinion, to distinguish substantive consolidation from piercing the veil, it also applied certain of the piercing factors as further evidence that substantive consolidation in this instance was appropriate.


Friday, March 3, 2017

Expulsion of Member for Being a Jerk Upheld; Effort to Re-characterize Relationship as a Partnership Rejected

Expulsion of Member for Being a Jerk Upheld;
Effort to Re-characterize Relationship as a Partnership Rejected

      In a decision rendered last year in Illinois, there was affirmed the trial court's determination that a member was expelled for cause. In addition, that same opinion affirmed a summary judgment to the effect that there existed no partnership amongst the members of an LLC. Herrick v. Jumpforward LLC, No. 1-15-3261, 2016 Il. App (1st) 153261-U (Aug. 29, 2016).
      Herrick, the plaintiff in this action, joined Jumpforward LLC (the “Company”) as a nonvoting member and at-will employee. The purpose of the Company was to develop a software application by which college coaches and athletes could better negotiate the recruitment process. The founders of the Company, one of whom had been Herrick's college roommate, were former college athletes familiar with the process. In the course of joining the venture, he represented that he had several years of experience in the utilization of several software packages that would be used in developing the web application for which the Company was organized. His initial 20% interest in the Company was structure as 1/3 vesting immediately, 1/3 vesting on the one year employment anniversary and the last 1/3 vesting on the second employment anniversary.
      The relationship was not successful. It ultimately came to pass that the representations as to experience with the various software packages were not true. In addition, Herrick did much of the work for the website using software packages that were not effective in achieving the stated aim.
      In addition to these technical failures to deliver, the plaintiff became  exceptionally difficult to work with in the Company, not responding to internal inquiries and as well refusing to respond to certain important outside customers.  He as well engaged in abusive communications to other employees, even after being admonished by more senior officers in the Company. Eventually, Herrick's employment with Jumpforward was terminated. Thereupon, the unvested portion of his interest in the Company was forfeited, and the balance, in accordance with the operating agreement, was redeemed. Herrick challenged both the validity of his termination and the redemption of his interest in the venture. Certain of his claims were dismissed on summary judgment, the balance were all resolved against him at trial. This appeal followed.
      The trial court, on summary judgment had dismissed Herrick's assertion that there existed a partnership between him and the defendants such that partnership duties should govern the propriety of the termination of their relationship. After reciting the components of a partnership, the court noted as well that, under controlling Illinois law “[a] complete, valid, written, contract merges and supersedes all prior and contemporaneous negotiations and agreements dealing with the same subject matter.” (Citation omitted). Applying this principle, the court found that the employment and operating agreements to which Herrick had entered both controlled the relationship and did not reflect the formation of a partnership. Rather, “[W]hen they memorialized the relationship in writing, they formed a limited liability company, and not a partnership.” 2016 Il. App. (1st) 153261-U,*9, ¶46.
      In addition, the court granted credence to the fact that the operating agreement cited that the parties thereto “disclaimed ‘any intent to form a partnership under the laws of any jurisdiction.’” Id., *10, ¶50.
      The Court of Appeals likewise upheld the trial court’s grant of summary judgment with respect to the plaintiff's claims for breach of fiduciary duty. Based upon various case authorities, but curiously without referencing the text of the Illinois LLC Act or any contrary language in the operating agreement, it found that there did not exist a fiduciary relationship between the plaintiff and either Jumpforward LLC or McCombs, the founder.
       The Court of Appeals also affirmed the determination that his termination had been for “cause.”