Beware Greeks Bearing Gifts

 

Beware Greeks Bearing Gifts

      Today marks the anniversary of the traditional Fall of Troy in 1184 B.C., thereby bringing to its culmination the Trojan War.

      The Fall of Troy is not recounted in Homer’s Iliad, the iconic epic, it rather covering only a period of ten days to two weeks within the supposed ten-year span of the war.  The Fall of Troy through the subterfuge of the Trojan Horse is briefly mentioned in the Odyssey and is referenced in several other Greek sources.  The story would not find, however, its full development until Virgil’s Aeneid.

      Some modern historians have attempted to explain the story as an analogy, suggesting that an earthquake – Poseidon, whose portfolio included horses, was as well the god of earthquakes – was the reason for the fall of Troy’s walls.  I, for one, would rather retain the literal interpretation.

      Regardless it is a great story, especially the fall of Achilles to Paris after the former killed Hector.  Speaking of which, the movie Troy misstated the story, likely because they wanted to keep Brad Pitt on the screen.  Achilles was killed before the fall of Troy; he never entered the city.

            Some might consider the Trojan War to be ancient history.  It’s all matter of perspective.  At the time of the Fall of Troy the Egyptian civilization had been flourishing already for 2000 years.

Kentucky’s COVID-19 Anti-Liability Law

 

Kentucky’s COVID-19 Anti-Liability Law

Kentucky’s Senate Bill 5, passed by both chambers of the General Assembly and effective notwithstanding the absence of a signature from the Governor, provides broad protection to businesses against allegations that employees and customers contracted the COVID-19 virus thereat.

My law partners Harry Dadds and Benjamin Fiechter have published a review of this new statute; HERE IS A LINK to that review.

The Corporate Transparency Act

 

The Corporate Transparency Act

Previously on the SKO website I published an introduction to the Corporate Transparency Act (the "CTA") and its requirements that most small businesses report to a new federal database information on “beneficial owners.”  HERE IS A LINK to that introduction.

Last Friday a significantly longer and more detailed review to the CTA and its challenges was published by Business Law Today, a publication of the Section of Business Law of the American Bar Association.  That article, authored by Scott Ludwig, Laurie Smiley, Bob Downes and myself, is titled The Corporate Transparency Act – Preparing for the Federal Database of Beneficial Ownership Information; HERE IS A LINK to that article.

Remembering “Big” Lew Kaster

 

Remembering “Big” Lew Kaster

         In November, 2015, we lost “Big” Lew Kaster.  He was a giant of the bar, and a great friend and mentor. Today would have been his 89^th birthday.  HERE IS A LINK to what was posted shortly after his untimely passing.

A Collection of Important Guidance on LLC Law: CC Operations

A Collection of Important Guidance on LLC Law:  CC Operations

      In a decision from the U.S. Bankruptcy Court for the Western District of Kentucky, the court was called upon to determine whether certain members of an LLC, it being in bankruptcy, owed to the LLC fiduciary duties. Applying KRS § 275.170(4) which provides, inter alia, that in a manager-managed LLC the members, as members, do not owe fiduciary duties, and the section generally, which allows fiduciary duties to be modified or eliminated in a written operating agreement, it was held that the defendants in the action, the LLC’s members, owed no fiduciary duties. In addition, the court applied the express terms of the operating agreement waiving any liability for breach of a fiduciary or other duty. In re: CC Operations, LLC (Wheatley v. McCarty), Case No. 17-33389-THF, Adv. No. 19-03034-THF, 2020 WL 1970509 (Bankr.  W.D. Ky. April 23, 2020).

      CC Operations, LLC, the debtor in bankruptcy, was a Kentucky limited liability company that, in its articles of organization, elected to the “manager-managed.” Throughout the LLCs existence, while from time to time there had been other members, Chris McCarty and Lewis Pomerance were members, but not managers, of the company. After the company suffered a variety of setbacks, it filed for bankruptcy protection. In this suit, the trustee sought to hold McCarty and Pomerance liable for a variety of claims including breach of fiduciary duty, a variety of theories of fraudulent transfer and piercing the veil.

KRS § 275.170 Says What It Means and Means What It Says

      As “Defendants were only members of the LLC, and in Kentucky, a member of a manager-managed LLC does not owe fiduciary duties to the LLC or its members”, citing KRS § 275.170(4);

Because Debtor’s Amended and Restated Operating Agreement provided that CC Operations was a manager-managed LLC managed by someone other than Defendants, this Court finds further statutory grounds to reject the contention that Defendants, as members, owed any fiduciary duty to CC Operations at any point in time. 

The Operating Agreement Waived Liability

      Addressing liability for the alleged fiduciary duty violations, the Court found that the operating agreements at issue (there were an original and an amended agreement, although the trustee contested whether the amended agreement was properly adopted) waived any fiduciary duties. Specifically, Section 10.2 of the operating agreement provided:

Members of the Company will not be liable to the Company or the other Members for monetary damages for conduct as Members except to the extent the [LLC Act] ... prohibits elimination or limitation of member liability. (bracketed language and ellipses in original).

       In furtherance of KRS § 275.180(1), which as described by the Court provides that “‘A written operating agreement may … [e]liminate or limit the personal liability of a member or manager for breach of any duty provided for in KRS § 275.170.”’, the Court held this language sufficient to have waived any fiduciary duties that might have otherwise been owed the LLC. The Court did clarify, later in its opinion, that this waiver was technically of liability for breach of duties, rather than waiver of the duties themselves.

Adverse Domination Does Not Apply in LLCs

      Turning to the various allegedly improper transfers, with the exception of one tax distribution, the court found that all of the other alleged fraudulent transfers, if indeed fraudulent, had taken place outside the applicable statute of limitations, either two years under the Bankruptcy Code or five years under Kentucky fraudulent conveyance law. Where the trustee had sought to toll the statutes by virtue of the doctrine of adverse domination, the court found that it is applicable to LLCs nor applied outside the discovery rule context.

Adverse domination, a doctrine that tolls the statute of limitation when tortfeasors dominate and control a corporation so as to prevent the corporation from bringing a timely claim against them, is “merely a corollary of the discovery rule, applied in the corporate context.” Notably, the present case deals with an LLC rather than a corporation; this Court is unaware of any Kentucky decision applying the theory of adverse domination to LLCs, and other courts have expressly held that the theory is inapplicable in the LLC context.

      As to the assertion that adverse domination should toll the statute of limitations with respect to any claim for breach of fiduciary duty (and necessarily setting aside the court’s determination that no duties were owed by the individual defendants), the Court wrote:

The Court notes that adverse domination would also not toll the limitations period for any untimely breach of fiduciary duty claims. Under Kentucky law, the doctrine of “adverse domination” does not toll the statute of limitations for breach of fiduciary duty claims, because the “discovery rule” does not apply to claims for breach of fiduciary duty. 

Piercing is a Remedy and Not a Cause of Action

      The trustee’s complaint against McCarty and Pomerance set forth a count for “piercing the veil” to, in effect, hold them individually liable for certain claims against CC Operations and other business entities. This count was rejected on two bases. First, it was noted that “veil-piercing is a remedy for enforcement of a judgment and not an independent cause of action in and of itself, a distinction Trustee does not dispute. Kentucky does not permit veil-piercing as a means of consolidating entities to try and create assets for the debtor company, which is what Trustee apparently seeks to do.” In addition, the Court found that the necessary precedents of a piercing claim, namely “both an ‘egregious failure to follow corporate formalities,’ and ‘a high degree of control over the corporation’s day to day operations and decisions,’” were absent.  Rather:

Trustee fails to establish any such level of control or egregious action by either Defendant; on the contrary, Trustee’s complaint acknowledges that CC Operations had an operating agreement in place, filed separate tax returns, maintained a separate bank account, prepared separate financial statements, and produced regular annual reports, suggesting corporate formalities were indeed followed.

Trustee at no point alleges that either McCarty or Pomerance possessed a controlling membership interest in CC Operations, managed or supervised the LLC or its employees, or was in any way responsible for or involved in its daily operations. Assuming all allegations in the complaint to be true, the evidence of either and “egregious failure to follow corporate formalities” or “a high degree of control over the corporation’s day to day operations and decisions” by either Defendant remains tenuous and inadequately set forth. 

As a point of disclosure, this writer and Stoll Keenon Ogden represented Chris McCarty in this litigation. 

Business Law Associations Institute

The 2021 Business Law Associations Institute

 

       With CJ Donald of SKO’s Lexington office, this morning I presented at the UK CLE/KBA Section of Business Law seminar, the 2021 Business Associations Law Institute. We addressed topics including the Business Court Docket of the Jefferson County Circuit Court, the federal Corporate Transparency Act and a variety of recent decisions from across the country including decisions from Delaware and here in Kentucky.

Charging Orders and Foreign LLCs

 

Charging Orders and Foreign LLCs

A recurring issue in LLC law is whether a court has the capacity to issue a charging order as to the LLC interests of the judgment-debtor when the LLC that issued those interests is not of itself subject to the jurisdiction of the court.  Consider a court sitting in Jefferson County, Kentucky. The judgment debtor, domiciled in Kentucky, holds a membership interest in an LLC that is organized in Colorado; the LLC is not a party to the lawsuit.  Can the Jefferson Circuit Court issue a charging order as to the judgment-debtor’s interest in the Colorado LLC?  The courts disagree as illustrated by a pair of recent decisions.

   In Oberg v. Lowe, 2021 WL 495043 (D. Kan. Jan. 4, 2021), the court cited Professor Carter Bishop (Id., note 7, citing Carter G. Bishop, LLC Charging Orders: A Jurisdictional & Governing Law Quagmire, 12 No. 3 Bus. Ent. 14, 21 (May/June 2010)) for the proposition that there are “three ways a court can have jurisdiction to enter an LLC charging order: (1) Personal jurisdiction over the member, (2) In rem jurisdiction over the LLC membership interest to be charged, or (3) Personal jurisdiction over the LLC itself.”  On that basis it was recommended that the court had jurisdiction to issue the requested charging orders in that “Defendant is a citizen of Kansas. If Defendant were not a citizen of Kansas, the Court would have in rem jurisdiction over his interests in the various limited liability company interests, all of which were formed in Kansas.” 2021 WL 495043, *2 (footnotes omitted).

In contrast is the decision rendered in Steamfitters Union, Local 420 Welfare Fund v. Direct Air, LLC, 2020 WL 6131163 (E.D. Pa. Oct. 10, 2020),  wherein the court sitting in Pennsylvania determined it did not have jurisdiction to enter a charging order as to the judgment-debtors interests in a New Jersey LLC. See also id. at note 18 (suggesting that the judgment-creditors could domesticate the judgment in New Jersey and from a court in that state request the charging order). The judgment-creditors argued the Pennsylvania court had that capacity:

 The question is whether a Pennsylvania court can charge a transferable interest in a New Jersey limited liability company. The plaintiffs contend that jurisdiction over a foreign limited liability company is not required to enter a charging order against its members’ transferable interests. They argue that because we have personal jurisdiction over SCST’s members, our jurisdiction over them extends to their personal property, wherever it is located. They rationalize that because a judgment creditor, as transferee, obtains only limited rights of a member, the charging order will affect only the member’s transferable rights and will not affect SCST itself.

See id. at *3.  Notwithstanding this invitation the court found that the New Jersey LLC did not have minimum contacts with Pennsylvania sufficient to assert jurisdiction, and on the basis the requested charging order was denied.  Id. at *6 (“Because we lack authority under the PULLCA to charge the defendants’ transferable interests in the New Jersey limited liability company over which we have no jurisdiction, we shall deny the plaintiffs’ motion for entry of a charging order.”).

 

 

The Death of Pope Formosus

 

The Death of Pope Formosus

Yesterday marked the anniversary of the death, in 896, of Pope Formosus. All else being equal, this relatively obscure pope would be known only to scholars of the Carolingian age. He would, however, subsequent to his death, become rather well-known consequent to the Cadaver Synod.

Formosus was a diplomat on behalf of the Papacy. When a dispute arose as to who should be appointed Holy Roman Emperor (Charles the Bald or Louis the German), Pope John VIII sided with Charles; apparently Formosus was a partisan of Louis. This disagreement led to Formosus self-exiling himself from Rome. When told to return he did not, at which point he was stripped of his priestly office and excommunicated. The excommunication was lifted by Pope Marinus I, successor you John VIII.

Formosus would be elected to the Holy See in 891. His papacy was embroiled in disputes as to who should be the Patriarch of Constantinople and challenges to the then sitting Holy Roman Emperor Guy of Spoleto.

Formosus was succeeded by Boniface VI (Pope for some fifteen days in April of 896), who was in turn succeeded by Stephen VI. And that is where things got weird.  Stephen’s election to the Papacy was supported by Guy of Spoleto, who of course Formosus was against.  Convening the “Cadaver Synod,” Formosus was ordered exhumed from his grave and his corpse was clothed in papal vestments.  Through a deacon appointed to defend him, the deceased Formosus was called upon to defend himself against a variety of charges involving ecclesiastical authority.  When found guilty the papal vestments were torn from his body, three fingers of his right hand were amputated, his papal actions declared void ab initio, and the corpse thrown into the Tiber.  Eventually the corpse would be located and re-interred in (old) St. Peter’s Basilica. 

The public reaction was extreme; Pope Stephen VI was first imprisoned and then strangled to death.  By December of 897 a new Pope, Theodore II, annulled the Cadaver Synod.  As well the trial of a corpse was forbidden.

 

 

The Sine Qui Non of the Charging Order is Asset Segregation, Not “Pick Your Partner”

 

The Sine Qua Non of the Charging Order is Asset Segregation, Not “Pick Your Partner”

It is not uncommon for courts to focus upon the in personam delectus (a/k/a “pick your partner”) principle as the basis for the charging order, and to the discount the charging order in the single-member LLC context.  See, e.g., AOK Property Investments, LLC v. Boudreaux, 308 So.3d 1214, 1216 (La. Ct. App. 5^th Cir. Dec. 9, 2020) (“The trial court found that the charging order statute is not relevant in a single-member LLC. The court reasoned that there are no other members to protect in a single-member LLC when a creditor attempts to seize the entire membership interest, and a single-member judgment-debtor’s membership interest should not be shielded from seizure by a judgment creditor.”).  This focus is improper.  Charging orders exist not to protect in personam delectus, but rather the treatment of an LLC, even a single member LLC, as a legal entity separate and apart from its member(s).

The beginning point of the analysis is that an LLC is a legal entity distinct and apart from its member(s).  The LLC owns its property for itself (not on behalf of the members as a nominee) and has its own debts and obligations (i.e., asset segregation).  The second point is that an assignee of a membership interest does not succeed to management of the LLC.  If a creditor of a member were able to seize the debtor’s membership interest that creditor would not succeed to a voice in the LLC’s management.  Rather, that control would continue to be vested in the members. Different LLC acts have different treatments of the debtor-member in that situation, but none afford that involuntary assignee management rights in the LLC. 

 A straight-forward (well, as straight-forward as anything can be when discussing charging orders) application of the LLC act demonstrates the fallacy of this reliance.  Assume a single member LLC in which the judgment-debtor is that sole member.  Assume as well that the sole asset of the LLC is $1 million in cash, and amount which happens to be the amount of the judgment.  However, the LLC has trade debts of $500,000.  Even if the judgment-creditor can gain control of the LLC, he or she cannot apply the LLC’s $1 million to satisfaction of the judgment.  Rather, that $1 million is an asset of the LLC, and its assets must be applied first to the satisfaction of its debts and obligations.  Nothing about the charging order allows the LLC to make distributions that will impair the claims of its creditors.  Further, the judgment-creditor’s charging order lien on distributions made to the judgment-debtor is not a lien on the LLC’s assets or give rise to the capacity to compel that those assets be distributed in satisfaction of the judgment even as the creditors do have the ability to compel the LLC to satisfy their claims from that same pool of assets.

The Unfortunate Mixing of the Obligation to Qualify to Transact Business and the Obligation to File an Assumed Name

 

The Unfortunate Mixing of the Obligation to Qualify to Transact Business and the Obligation to File an Assumed Name

            In a December, 2020, decision, the Court of Appeals treated as inter-changeable the assumed name statute and the obligation of a foreign entity to qualify to transact business. Barber v. Topgolf USA Louisville, LLC, No. 2019-CA- 1112-MR, 2020 WL 7919028 (Ky. App. Dec. 18, 2020).  They are however, distinct statutes that address different issues.

            On February 19, 2018, Topgolf applied for the necessary permits to open a facility in the Oxmoor mall. The initial application was filed in the name of “Topgolf USA Louisville, LLC.” There was not, however, as of the filing of the application on LLC of that name. Some nine months later that name was filed as an assumed name of Topgolf USA Ky1, LLC, a Delaware LLC that had qualified to transact business in Kentucky in 2017. In the course of hearings over the land use applications Topgolf representative would identify the misnaming as a “result of a miscommunication,” although the mistake continued after it was first identified.

            Regardless, Topgolf’s application was confirmed and then upheld by the trial court. In this appeal the opponents to the project would claim Topgolf was “not legally in existence and, thus, could not participate in the litigation.” (2020 WL 7419028, *6) and that Topgolf’s “application was illegal ab initio became applicants Topgolf and GGP, Inc., had not registered with the Kentucky Secretary of State. See KRS 14A.9-010(1).” Id

And it was here that the wheels came off.  KRS 14A.9-010 addresses the obligation of a foreign entity that is “transacting business” in Kentucky to qualify to do so with the Secretary of State.  What the opinion never does is assess whether filing a land use application is of itself “transacting business”; hence its ab initio application to Topgolf remains an open question. But the confusion within the four corners of the opinion arose immediately after the reference to KRS 14A.9-010, where it recited:

We disagree with the residents that the circuit court acted erroneously. “[T]he purpose of the assumed name statute is to inform members of the public, including appellants, of the identity of persons doing business under an assumed name. It could not be disputed that for lawful use, including litigation, the statute imposes a duty to provide such information.”  Munday v. Mayfair Diagnostic Laboratory, 831 S.W.2d 912, 915 (Ky. 1992). In Munday, however, the Court held that “appellees’ failure to file the certificate denied appellants information which was essential to the commencement of litigation.” Id. (emphasis added). That is not the argument here, and, even if it were, the residents fell short in their burden of proving that Topgolf and GGP, Inc., actively concealed their true identities to cause the residents to file their appeals out of time. Cf., Emberton v. GMRI, Inc., 299 S.W.3d 565, 575 (Ky. 2009). In fact, the residents were unaware of the lack of compliance with KRS 14A.9-010(1) and did not argue this issue before the administrative bodies. Accordingly, the circuit court held that the residents forfeited this argument on appeal to the circuit court because it was not a preserved issue. See City of Louisville v. Kavanaugh, 495 S.W.2d 502, 505 (Ky. 1973). Topgolf has since cured its defect. GGP, Inc., is now known as Brookfield Property REIT, Inc. It, too, had complied with the statute prior to the circuit court hearing.

The court treats the qualification to transact business under the Business Entity Filing Act as being synonymous with the filing of an assumed name. But they are not. They are distinct statutes that are applicable in different situations. The requirement of qualify to transact business (KRS § 14A.9-010) is triggered when a non-Kentucky organized entity is transacting business in Kentucky. In contrast, the assumed name statute (KRS § 365.015) is triggered when a natural person, a domestic business entity or a foreign entity is doing business other than under its “real name.” 

There is no basis for challenging to the decision to grant the necessary permits based upon either the failure to qualify to transact business before filing the application or the failure to have an assumed name of record.  As to the former, the statute defines the consequences of a failure to qualify, namely the inability to “maintain” a legal action, and a failure to raise the issue creates a waiver.   As for a failure to register an assumed name, the Munday decision sets to consequence, namely an extension of the statute of limitations for claims against that organization. See Munday v. Mayfair Diagnostic Lab, 891 S.W.2d 912 (Ky. 1992); see also Thompson v. Otis Elevator Co., No. 3:10-CV-139-DW, 2012 BL 172602 (W.D. Ky. July 12, 2012).  Note also that with a single narrow exception a foreign entity is not required to qualify to transact business as a pre-condition to filing an assumed name. See also Margaret Walton and Thomas Rutledge, The Kentucky Assumed Name Statute, Bench & Bar Hot Topics at 3 (Sept. 27, 2017). Simply put the two statutes address different issues; unfortunately, the Topgolf decision treated them as being inter-changeable.

 

The Beginning of the End for the Middle Ages

 

The Beginning of the End for the Middle Ages

            Some scholars date the end of the Middle Ages to May 29, 1453, and the fall of Constantinople to the Ottoman forces of Mehmed II.  Obviously, this is an arbitrary date.  But still, accepting its validity, today marks the anniversary of the beginning of the end.  On this day in 1453 Mehmed’s forces began the siege of the city.

The Passing of Eleanor of Aquitaine

The Passing of Eleanor of Aquitaine

      Today marks the anniversary of the death, in 1204, of Eleanor of Aquitaine.  By any measure employed, she led an incredible life.

      Heir to more of what we today think of as France than was the then king of France, she would both marry and then divorce Louis VII, King of France. In between the marriage and divorce she would go on a crusade to the Holy Land.  Louis, who had originally been trained for a career in the church and became heir to the French throne only upon his brother Phillip’s death, was not tolerant of what we would today refer to as her high-spirited ways.  Allegations that, while in the Holy Land, she had an affair with her uncle have never been substantiated.

      After divorcing Louis on grounds of consanguinity, she married Henry of Anjou, the heir (consequent to the settlement of the Anarchy in which King Stephen agreed that the son of Empress Matilda would inherit) to the English throne (he was as well Duke of Normandy). Upon his ascension to the English throne there was created, by personal union, the Angevin Empire.  Had she predeceased Henry, Eleanor’s lands would have been claimed by him.  History, however, enjoys a good twist, and Eleanor significantly outlived Henry.

      Eleanor was the mother of three English kings, the first Henry III, Richard (the Lionheart) I and John. Admittedly, one can quibble as to whether this Henry III was ever king. He was crowned during his father Henry II’s lifetime in an effort to secure the succession. He would never, however, sit upon the throne as a sole monarch as he predeceased his father. Richard, in his own right, was king of England. Sadly, so was John, to this day identified by the moniker “Bad King John.”

      But back to Henry III.  Having been crowned king of England, but deprived of significant lands, income or authority, he bristled at being a showpiece. In concert with his brothers, the then King of France and the King of Scotland, he led a revolt against his father. It was ultimately put down, whereafter Henry II kept Henry III on a short leash. Still, he did not merely keep Eleanor on a leash. Rather, for 16 years, he kept her prisoner including in the castle at Old Sarum.

      The Angevin Empire would substantially fall under Bad King John; he simply did not have the wherewithal to hold together its far flung properties.

      Aside from these historic notes, Eleanor’s influence continues to this day. At her court in Aquitaine they played the relatively recently imported game of chess, it having arrived from the Middle East. Eleanor, however, took umbrage at one of the rules and had it changed. Prior to Eleanor’s intervention, the rules of chess provided that the king was the most powerful character while the queen had a circumscribed range. Eleanor decreed, it is said, that those roles be reversed. Her rule continues to this day.

While Amy Kelly’s Eleanor of Aquitaine and the Four Kings and Marion Meade’s Eleanor of Aquitaine continue to be authoritative biographies, Ralph Turner’s Eleanor of Aquitaine: Queen of Franc, Queen of England is the more modern review of her life.

LLCs Do Not Have Families

 

LLCs Do Not Have Families

        Last year, I reported on the decision from a New York trial court to the effect, ultimately, that LLCs do not have families. That decision was Bell Stell 7 Park Ave. LLC v. Seven Park Avenue Corp., 2019 WL 7421760 (Sup. Ct. New York County Dec. 23, 2019); HERE is a link to that review.

        That decision has now been upheld. See Bell Stell 7 Park Ave. LLC v. Seven Park Avenue Corp., 190 A.D.3d 632, 2021 N.Y. Slip Op. 00487, 2021 WL 278142 (N.Y. Sup. Ct. App Div. 1^st Dept. Jan. 28, 2020).

Forcible Detainer Action Dismissed For Having Been Filed By a Non-Attorney

 

Forcible Detainer Action Dismissed For Having Been Filed By a Non-Attorney

       In this 2020 decision, the Court of Appeals considered whether a forcible detainer (eviction) proceeding could take place when the landlord LLC did not retain an attorney to bring the answer. Because an LLC may appear only through a licensed attorney the action was dismissed. Phillips v. M & M Corbin Properties, LLC, 593 S.W.3d 525 (Ky. App. 2020).

         Finding that the eviction as granted by the district court and affirmed by the circuit court were improper, the Court of Appeals held:

Because M&M Properties, LLC is an LLC, the district court should have dismissed its detainer petition against Phillips because it was not filed by an attorney licensed to practice law in Kentucky.

LLCs and Title Insurance; Transferring Ownership to an LLC May Void Your Title Insurance

LLCs and Title Insurance; Transferring Ownership to an LLC May Void Your Title Insurance

It is common advice that real property should be held in an LLC.  Basis for this advice includes that it is easier to transfer LLC interests than it is an interest in the real estate, and the limited liability protects the ultimate owners from potential claims arising from property ownership. A decision from California cautions to keep an eye on the title insurance when making those transfers.

            In Pak v. First American Title Insurance Co., No. B297647, 2020 WL 6886551 (Cal. App. 2 Dist., 2020), the individual property owners (the Paks), at the time of purchase in 2003, acquired a title insurance policy.  In 2008 they formed an LLC and quit claim deeded of the property to the LLC.  In 2018, when a title problem, namely a parking easement, arose, the Paks made a claim on the insurer.  The insurer successfully argued that “because the quitclaim deed to the LLC divested the Paks of any estate or interest in the Property, and the policy’s coverage – which only continued in favor of an insured so long as the insured retained an estate or interest in the land-had lapsed.” The court would hold that “Because it is well established that a limited liability company is an independent legal entity and the members of such a company have no interest, much less a fee interest, in the company's property, the transfer of the Property to the LLC triggered Condition 2 and terminated the Policy.” Id., *3. “Pak’s efforts to “unring the bell” by revoking the quitclaim deeds was found to be ineffective:

The Paks argue that even if coverage was terminated when they signed the quitclaim deed, their subsequent agreement with the LLC to rescind the deed means they have maintained an unbroken interest in the Property since its purchase. While the Paks are correct that rescission extinguishes a contract and restores the parties to their former positions, they carry this principle past its breaking point by effectively contending their agreement to rescind the quitclaim deed reverses all consequences of their original agreement. That is not the case.

Id., *6.  See also Kevin Brodehl, Title Insurance Booby Traps in the LLC Jungle, The LLC Jungle (March 21, 2021), available at https://thellcjungle.com/2021/03/title-insurance-booby-traps-in-the-llc-jungle/.

Judicial Dissolution of Trio of LLCs Awarded Notwithstanding the Absence of “Deadlock”

 

Judicial Dissolution of Trio of LLCs Awarded Notwithstanding
the Absence of “Deadlock”

In a summer, 2020 decision, the Court of Appeals reversed the trial court and awarded judicial dissolution of three LLCs (the trial court had denied judicial dissolution of two of the three) were it was clear that the two equal members could not and would not cooperate with respect to management of the LLCs. Unbridled Holdings, LLC v. Carter, 607 S.W.3d 188 (Ky. App. 2020).

Arvin and Carter were the two members of three LLCs, Southern Tax Services, LLC, Kentucky Property Management, LLC and Unbridled Holdings LLC. Each LLC was member managed, and each had unilateral authority with respect to “the ordinary and day-to-day decisions concerning the business affairs” of the LLC. Through the summer of 2015, Arvin manage the day-to-day operations, when the relationship between the two of them broke down over a personal dispute not otherwise related to either company. Arvin wanted to terminate the relationship embodied in the three LLCs, but the operating agreements of each company require the consent of both members to dissolve. Perhaps not surprisingly in light of the breakdown of the personal relationship between the two of them, Carter would not grant consent to dissolution. In consequence, Arvin brought an action for judicial dissolution of the three LLCs.

Arvin based his claim for judicial dissolution on the assertion that it is no longer “reasonably practicable” for he and Carter to operate the LLCs. In each instance, the purpose provision as set forth in the operating agreements enabled each LLC to engage in “all transactions of any or all lawful business for which limited liability companies may be formed under the laws of the State of Kentucky.” While the trial court ordered the dissolution of Southern Tax Services, judicial dissolution of the two other LLCs was denied, the trial court reasoning that there existed no deadlock because the operating agreement enabled each member, acting unilaterally, to carry on the business and affairs of the LLCs. Arvin appealed, arguing that deadlock is not a precondition to judicial dissolution and that doing so would modify the statutory standard of impracticability into a standard of impossibility.

The appellate court noted that the state legislature did not define “not reasonably practicable” and that there were no published cases in Kentucky interpreting the standard. The court looked to decisions in other states, but noted that there was no one definition or standard. Curiously there was no reference made to Blue Equity Holdings Kentucky, LLC v. Cobalt Riverfront Properties, 2019 WL 4127610 (Ky. App. 2019), wherein the “not reasonably practicable” standard was discussed. The court agreed with Arvin that the statute could not mean that it must be impossible to carry on business – if it did, the legislature would have used the word “impossible” instead of “not reasonably practicable.” It was also noted that decisions in other states generally found the standard to be met by circumstances short of general deadlock, and that the Kentucky legislature must not have meant to require deadlock or, again, it would have used the word deadlock.

“Having extensively surveyed case law from other jurisdictions, we believe the ‘not reasonably practicable’ standard requires the trial court to conduct a multifaceted analysis which takes into account a number of different factors that goes well beyond whether there is a technical deadlock.”

The court referenced Gagne v. Gagne, the Colorado case that first considered the “not reasonably practicable” standard under Colorado law, which also stated that impossibility is not required and then laid out several factors to consider. The factors the court in Gagne identified are:

§  Whether the management of the entity is unable or unwilling reasonably to permit or promote the purposes for which the company was formed;

§  Whether a member or manager has engaged in misconduct ;

§  Whether the members have clearly reached an inability to work with one another to pursue the company’s goals;

§  Whether there is deadlock between the members;

§  Whether the operating agreement provides a means of navigating around any such deadlock;

§  Whether, due to the company’s financial position, there is still a business to operate;

§  Whether continuing the company is financially feasible.

The Unbridled court adopted the multifactor approach, indicating it provided the proper amount of flexibility and discretion to order dissolution even in cases that fall short of deadlock or complete frustration of or total impossibility to carry out the purpose of the company. The court then vacated the trial court’s decision and remanded the case to the lower court to determine, based on a new framework developed by the appellate court, whether the impracticability standard had been met.

 

So Ends Gloriana

So Ends Gloriana

      Today marks the anniversary of the death, in 1603, of Queen Elizabeth I of England.  The last of the Tudor monarchs, it was under them, and particularly under Elizabeth, that England moved from being a relative backwater to a European power; her father Henry VIII’s view that England was a power able to shift the European stage by joining with alternatively Spain, France and/or the Holy Roman Empire was not based upon reality (with the Holy Roman Empire and Spain being linked in Charles V, there were two powers in Europe; that combined kingdom and France). Not bad for a family whose claim upon the throne was at best tenuous; the great Tudor historian G.R. Elton described that Tudors as being “a political solution to a dynastic problem.”

      Elizabeth was succeeded by James I (being already James VI of Scotland), the great-grandson of her aunt Elizabeth Tudor who had married James IV of Scotland.

The Limits on What Is and Is Not Practicing Law

The Limits on What Is and Is Not Practicing Law

     A corporation, LLC or other legal entity, with a limited exception for small claims court, may appear in a Kentucky court only through an attorney.  A member or manager who is not an attorney may not argue the LLC’s case, and an officer of a corporation who is not an attorney may not argue the corporation’s case.  A recent decision from the Kentucky Court of Appeals considered what is, inter alia, arguing the corporation’s case.  Cabinet for Health and Family Services v. Appalachian Hospice Care, Inc., No. 2020-C-0684-MR, 2021 WL 407081 (Ky. App. Feb 5, 2021).

        Appalachian Hospice Care was assessed for Medicaid overpayments.  After exchanging information that resulted in a reduction in the alleged overpayment, and in response to an invitation from the Cabinet, Sharon Branham, Appalachian’s President, requested an “Administrative Hearing” as to the matters in dispute; that was on April 12, 2018..  The Cabinet reminded Appalachian that it needed to represented by an attorney at the hearing, and Appalachian hired counsel to do so.  A pre-hearing conference was held on August 1, 2018, in which Appalachian’s attorney participated.  The Administrative Hearing was then scheduled for February 25-27, 2019. But then, on January 15, 2019, the Cabinet:

[F]iled a motion to dismiss.  The Cabinet claimed that a non-lawyer may not request an administrative hearing on behalf of a corporation because it constitutes the unauthorized practice of law. The Cabinet argued that because Ms. Branham, Appellee’s CEO, was not a lawyer, it was unlawful for her to request a hearing. If the hearing request was unlawful, the Cabinet’s jurisdiction had not been timely invoked and the appeal of the alleged overpayment should be dismissed.

Id., *2. Not surprisingly Appalachian disagreed, but the hearing officer and then the Cabinet dismissed the overpayment appeal on the basis that the request for the hearing was not properly made, i.e., through an attorney.  On Appalachian’s appeal to the Franklin Circuit Court those determinations were rejected. 

On October 21, 2019, … the Franklin Circuit Court reversed the final order entered by the Secretary. The court held that simply requesting a hearing was not the practice of law, and it was proper for Appellee’s CEO to request the hearing. The court also held that the Cabinet should be estopped from seeking dismissal because it did not inform Appellee an attorney was required to request a hearing. The court also noted that it had presided over appeals of Medicaid decisions in the past and took judicial notice that the Cabinet had never before taken the position that an attorney for a corporation must be the one to request a hearing. This appeal followed. 

Id. Affirming the Franklin Circuit Court, the Court of Appeals reviewed and distinguished the authorities relied upon by the Cabinet in its argument that requesting a hearing is the practice of law. Rather:

After examining the above cases and KBA opinion, as well as the definition for the practice of law, we conclude that Appellee’s CEO was not engaged in the practice of law when she requested a hearing. Writing and sending the letter did not require any special legal knowledge and did not give out any legal advice. Any adult with the ability to read and write could have requested a hearing. The request did not need to be in any special format, other than to be in writing, or be written on a specific form. The request was not sent to a court of law and was not required to follow the rules of civil procedure. The Cabinet informed Appellee that all it needed to do to request a hearing was to send a letter to specific Cabinet departments. It then freely gave the necessary mailing addresses to Appellee. Sending this request required no special skill; therefore, it cannot be considered the practice of law.

Id., *5.

An LLC’s Member May Not Bring Suit on the Franchise Agreement In Which the LLC Was the Franchisee

 An LLC’s Member May Not Bring Suit on the Franchise Agreement In Which the LLC Was the Franchisee

It is axiomatic that an LLC and its member(s) are legally separate and distinct from one another.  In this 2021 decision of the Kentucky Court of Appeals this rule was applied when the sole member of an LLC sought to on her own name bring suit on a franchise agreement into which her LLC had entered.  Mouanda v. Jani-King International, No. 2019-CA-1594-MR, 2021 WL 406317 (Ky. App. Feb. 5, 2021).

            Constance Mouanda was the sole member of The Matsoumou’s LLC (the “Company”).  The Company entered into a franchise agreement for the Jani-King system from Cardinal Franchising, Inc. (“Cardinal”), a master-franchisee, in February, 2018.  In 2019 she brought suit alleging she was fraudulently induced to enter into the franchise agreement, asserting as well that the structure was used to improperly deprive her of classification as an employee without the benefit of minimum wage.  Cardinal responded with a motion to dismiss:

It argued that she lacked standing to bring this cause of action because the franchise agreement was between Cardinal as the franchisor and The Matsoumou’s, LLC as the franchisee. Mouanda, individually, did not have a contractual relationship with Cardinal and therefore could not bring suit against it. In addition, Cardinal asserted that Mouanda was an independent contractor performing work for her LLC. Therefore, she was not an employee, and Cardinal was not her employer. Cardinal also argued that Mouanda failed to plead her fraud claim with particularity. In the accompanying memorandum, Cardinal pointed out that the LLC had been incorporated on November 11, 2017, well before the franchise agreement was signed. The franchise agreement contained provisions in which Mouanda acknowledged that she was an independent contractor and that no employment taxes would be withheld by Cardinal.

Id., *3.  The complaint was dismissed without prejudice for lack of standing.

            Affirming the trial court and adopting its application of Andrew v. Turner, 413 S.W.3d 272 (Ky. 2013), the Court of Appeals held she lacked standing to bring the suit:

The proper plaintiff for this complaint should have been The Matsoumou’s, LLC, the named franchisee in the franchise agreement with Cardinal.

Id., *6.

More on LLCs and Their Members are Separate and Distinct

 

More on LLCs and Their Members are Separate and Distinct

            In this 2021 decision the Kentucky Court of Appeals was focused upon whether Cabinet for Health and Family Services has the authority to issue an enforceable subpoena to a person not resident in Kentucky.  In the course of answering “no” the court addressed the distinction between an LLC and its members.  Brightmore Home Care of Kentucky LLC v. Cabinet for Health and Family Services, No. 2019-CA-1409-MR, 2021 WL 222729 (Ky. App. Jan. 22, 2021).

            In connection with a certificate of need hearing, the Cabinet issued subpoenas to the two members of Brightside, it being the applicant.  Those subpoenas were served on Brightside’s registered agent. Finding the Cabinet did not have authority to issue to subpoenas, the court as well noted that the service through the LLC’s registered agent was ineffective.

“Finally, serving a subpoena on an LLC, or its agent, is not the same as serving a subpoena on a member of that LLC.  LLCs and their members are separate and distinct entities.”, citing Turner v. Andrew, 413 S.W.3d 272 (Ky. 2013).

Personal Liability of Corporate Officers for Black Lung Benefits Affirmed Even as Veil of Insurer Not Pierced

 

Personal Liability of Corporate Officers for Black Lung Benefits
 Affirmed Even as Veil of Insurer Not Pierced

      In a March, 2021, decision from the U.S. District Court for the Eastern District of Kentucky, the court addressed the personal liability of corporate officers for black lung benefits. With respect to the mine operator, it was held that the officers of the mining company are personally liable thereon. In contrast, its insurer, which had not paid on the policy, would not be pierced to hold the officers of the insurer personally liable upon the claim. Templeton v. Apollo Fuels, Inc., No. 6:19-CV-71-REW, 2021 WL 920982 (E.D. Ky. March 10, 2021).

      Templeton had been granted an award of black lung benefits, including a lump sum for past benefits owed and attorneys’ fees. Neither Debra Lynn Coal, Inc. (“DLC”) nor Apollo Fuels, Inc. (“AFI”) satisfied the claim (AFI was the insurer), and this case arose.

      Applying the Black Lung Benefits Act (the “BLBA”), notwithstanding having purchased insurance thereon, the court noted that the obligation to make payments under the BLBA is on the operator, and the acquisition of insurance thereon does not absolve it of that ultimate responsibility. From there, the BLBA, its § 933(d)(1), “assesses personal liability on certain corporate officers if the employer required to secure benefits fails to do so.” quoting Donovan v. McKee, 669F. Supp. 138, 139 (S.D. W. Va. 1987), aff’d, 845 F.2d 70 (4^th Cir. 1988). This liability extends to the president, the secretary and the treasurer of the operator. Based upon that authority, the court granted the plaintiff’s motion to hold each of the president and the secretary/treasurer of DLC liable for the benefits due and owing.

       Conversely, the court would not hold the president of AFI, the insurer, personally liable on the amounts due and owing. While § 933(d)(1) may have impose liability upon the operator’s officers, there existed no statutory equivalent with respect to an insurer. The court as well observed “A court should be reluctant to pierce the corporate veil absent a clear directive.”

IRS and Kentucky Shift Individual Income Tax Return Deadlines from April 15 to May 17

 

IRS and Kentucky Shift Individual Income Tax Return Deadlines from April 15 to May 17

 

        On Wednesday of this week the Internal Revenue Service announced that the deadline for submission of individual tax returns would be delayed from April 15 to May 17. HERE IS A LINK  to the announcement.

     On Thursday the Kentucky Revenue Department followed suit and delayed the Kentucky income tax return from April 15 to May 17.  HERE IS A LINK to that announcement.

     As of now we await word from the Indiana Department of Revenue as to whether they will be following the IRS’ lead.

Deadline for Submission of Individual Tax Returns Shifted from April 15 to May 17

 

Deadline for Submission of Individual Tax Returns Shifted from April 15 to May 17

       Yesterday the IRS announced that the April 15 deadline for the submission (absent an application for an extension) of individual tax returns for the year ended December 31, 2020, has been shifted from April 15 to May 17, 2021

      HERE IS A LINK to IR-2021-59, March 17, 2021, it making this announcement.

The Statute of Frauds Does Not Apply to the Formation of a Partnership to Develop Real Property

 The Statute of Frauds Does Not Apply to the Formation of a Partnership to Develop Real Property

         In this 2021 decision, the court considered and rejected a pair of arguments that a complaint asserting the existence of a partnership should be dismissed. Initially, the defendants’ argument that the Statute of Frauds barred the formation of the partnership was rejected.  Second, the plaintiff’s assertion of the elements of a partnership was found sufficient.  Haymaker Dev. Co., LLC v. C.M. Gatton, Civil Action No. 5: 20-478-DCR, 2021 WL 297128 (E.D. Ky. Jan. 28, 2021).

         The alleged partnership (or joint venture [as if there is a distinction]) related to the purchase and development of real property.  The Statute of Frauds (KRS § 371.010) “generally requires contracts conveying or transferring an interest in real property to be in writing.” Id., *4. The court would hold, however, that this rule is inapplicable as to the formation of a partnership.

Indeed, an oral agreement to enter a partnership or joint venture for the purpose of dealing in real estate may be enforced even though it is not in writing. Jones v. Nickell, 179 S.W.2d 195, 196-97 (Ky. 1944). See also Garth v. Davis & Johnson, 85 S.W. 692, 692 (Ky. 1905) (“An agreement to become partners in dealing in real estate is neither a contract to buy nor a contract to sell real estate as between the parties to it. As far as the formation of the co-partnership is concerned, the title to real estate is no wise affected by the making of the agreement. The terms of the agreement, the mutual undertakings by the partners as between themselves as to what each will contribute, and the interests of each in the profits of their undertaking, are matters not necessarily affected by the statute.”).

As to the defense that the plaintiff had not sufficiently plead the elements of a partnership, the court found that the standard for defeating a motion to dismiss was satisfied.

The defendants contend that Haymaker has not alleged sufficient facts to demonstrate that the parties agreed to engage in a partnership or joint venture. To determine whether it has, it is necessary to define these terms. A partnership is the association of two or more persons to carry on as co-owners of a business for profit, whether or not the persons intend to form a partnership. K.R.S. § 362.1-202(1). “A joint venture is a special type of partnership, which Kentucky courts have defined as ‘an informal association or two or more persons, partaking of the nature of a partnership, usually, but not always, limited to a single transaction in which the participants combine their money, efforts, skill, and knowledge for gain, with each sharing in the expenses and profits or losses.” CASS JV, LLC v. Host Intern., Inc., 2014 WL 3955366 (W.D. Ky. Aug. 13, 2014) (quoting Roethke v. Sanger, 68 S.W. 3d 352, 364 (Ky. 2001)). A joint venture is treated like an informal partnership and is governed by principles of partnership law in that venture partners owe fiduciary duties to one another and the joint venture. Id. (citing Abbott v. Chesley, 413 S.W.3d 589, 604-04 (Ky. 2013)).

 

There is no bright-line test for determining whether a partnership exists. Instead, each case is assessed individually based on the totality of the circumstances. Thale v. Collector Imports, LLC, 2008 WL 4386769, at *3 (W.D. Ky. Sept. 23, 2008). Kentucky courts have considered the following factors: sharing of profits and losses; community of property; and control over the conduct of the business. See Roy C. Whayne Supply Co. v. McGowan, 280 S.W. 491, 493 (Ky. 1926); see also K.R.S. § 362.180. Kentucky case law contemplates that whether a partnership exists is a question of fact to be determined by a jury. Thale, 2008 WL 4386769, at *4 (collecting cases).

 

At this stage of the litigation, Haymaker has alleged sufficient facts to establish that Haymaker, Gatton, and the Trust entered into a partnership or joint venture to develop Hamburg and Coventry. Specifically, Haymaker contends that it negotiated purchases of property on behalf of the Trust, which the Trust then purchased and held on behalf of the partnership or joint venture.4 According to Haymaker, the parties agreed that the Trust would then convey the property to Haymaker as it was developed. In addition, Haymaker alleges that it put forth substantial effort and resources in developing the property. Upon sale of the property, the parties would share the profits.

 

Id., *5.

The Worst Decision of Marcus Aurelius Comes Home to Roost

 

The Worst Decision of Marcus Aurelius Comes Home to Roost

      Today marks the anniversary of the death in 180 of the great Roman Emperor Marcus Aurelius.  It is as well the date upon which his worst decision was inflicted upon the world.

      There is no question that Marcus was a great emperor.  In fact he is the only emperor to have written a book, namely the Meditations, that to this day remains in print (while Caesar's Gaelic Wars remain a staple of classes in both Latin and military history, Caesar was never emperor).  Marcus was one (and the last) of a string of excellent emperors.  After the tragedy that was Nero and the tumult of the Flavians (Vespasian, Titus and Domitian), the emperors of the Nervan-Antonian dynasty had consistently been effective leaders.  This had been largely achieved by the sitting emperor adopting his heir.  This path avoided the deficiency of restricting passage of control to only natural heirs, necessarily limiting the pool of possible successors; the Flavians had been lucky in this regard, but they were only two generations – the father Vespasian to his son Titus and then upon his death the throne went to his brother Domitian.  Hadrian was only a cousin to his predecessor Trajan. While Hadrian would in turn adopt Antoninus Pius, it does not appear they were related to one another.  It is reported that a condition imposed by Hadrian on Antoninius’ adoption was that he in turn adopt Marcus Aurelius.

      Marcus broke with this approach, appointing his natural son Commodus as his heir (Commodus was appointed co-emperor some three years before Marcus' death). He was a disaster.  A man of apparently no character, he is described by Aelius Lampridius as “even from his earliest years he was base and dishonorable. and cruel and lewd, defiled of mouth, moreover, and debauched.”   A megalomanic, he took to fighting in the gladiatorial games.  Of course he always won; it did not hurt that he secretly directed that his opponents be given dulled weapons.  Meantime he ignored the operation of the Empire, leaving decisions to his chamberlain and other officials.  He did, however, both order a devaluing of the currency and imposed excessive taxes.  Gibbons, in his monumental The History of the Decline and Fall of the Roman Empire, dated the decline of the Roman Empire from Commodus.

      Eventually Commodus was assassinated.  There was, however, no natural heir to the position of Emperor, and his death would be followed by the “Year of Five Emperors.”

      Had Marcus Aurelius followed the path of the other Nervan-Antonian emperors and adopted as his heir a proven leader, the path of the Roman Empire would well have been substantially different.  But he did not. Such decisions are the stuff of history.

      In closing, contra the movie “Gladiator,” Marcus Aurelius was not killed by Commodus.  Rather, he died of natural causes (it has been suggested that an unidentified plague was involved), possibly in Pannonia (what is now Serbia).  Commodus was not killed in the gladiatorial games, but rather was assassinated  in 192 by being strangled.

Personal Liability of Corporate Officers for Black Lung Benefits Affirmed Even as Veil of Insurer Not Pierced

 

Personal Liability of Corporate Officers for Black Lung Benefits
 Affirmed Even as Veil of Insurer Not Pierced

       In a March, 2021, decision from the U.S. District Court for the Eastern District of Kentucky, the court addressed the personal liability of corporate officers for black lung benefits. With respect to the mine operator, it was held that the officers of the mining company are personally liable thereon. In contrast, its insurer, which had not paid on the policy, would not be pierced to hold the officers of the insurer personally liable upon the claim. Templeton v. Apollo Fuels, Inc., No. 6:19-CV-71-REW, 2021 WL 920982 (E.D. Ky. March 10, 2021).

       Templeton had been granted an award of black lung benefits, including a lump sum for past benefits owed and attorneys’ fees. Neither Debra Lynn Coal, Inc. (“DLC”) nor Apollo Fuels, Inc. (“AFI”) satisfied the claim (AFI was the insurer), and this case arose.

       Applying the Black Lung Benefits Act (the “BLBA”), notwithstanding having purchased insurance thereon, the court noted that the obligation to make payments under the BLBA is on the operator, and the acquisition of insurance thereon does not absolve it of that ultimate responsibility. From there, the BLBA, its § 933(d)(1), “assesses personal liability on certain corporate officers if the employer required to secure benefits fails to do so.” quoting Donovan v. McKee, 669 F. Supp. 138, 139 (S.D. W. Va. 1987), aff’d, 845 F.2d 70 (4^th Cir. 1988). This liability extends to the president, the secretary and the treasurer of the operator. Based upon that authority, the court granted the plaintiff’s motion to hold each of the president and the secretary/treasurer of DLC liable for the benefits due and owing.

        Conversely, the court would not hold the president of AFI, the insurer, personally liable on the amounts due and owing. While § 933(d)(1) may have impose liability upon the operator’s officers, there existed no statutory equivalent with respect to an insurer. The court as well observed “A court should be reluctant to pierce the corporate veil absent a clear directive.”

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.” According to Seutonius, The Lives of the Twelve Caesars, “When a note revealing the plot was handed him by some one on the way, he put it with others which he held in his left hand, intending to read them presently.”  Marc Antony (not “Anthony”), to whom the plot had been divulged, tried to intercept Caesar, but he was himself intercepted. As for the Beware the Ides of March warning, Seutonius wrote: “Again, when he [Caesar] was offering sacrifice, the soothsayer Spurinna warned him to beware of danger, which would come not later than the ides of March.  …. [H]e entered the House [the Theater of Pompey] in defiance of portents, laughing at Spurinna and calling him a false prophet, because the ides of March were come without bringing him harm. Spurinna replied that they had of a truth come, but they had not gone.”

        Although stabbed twenty-three times by the various conspirators, only one wound was fatal (hence the occasional description of the assassination as the ultimate group project). At the time of his death he was 56, and by some measures was among the richest men to have ever lived.

      Caesar rose to power out of the First Civil War that resulted from the dissolution of the First Triumvirate, it comprised of Caesar, Pompey (a/k/a Pompey Magnus) and Crassus. Crassus was killed in 53 b.c. when as Governor of Syria he invaded Parthia (the invasion was for Rome a disaster).  The relationship between Caesar and Pompey fell apart over personal differences, and Pompey was killed in 48 b.c. when he fled in Egypt

        Caesar’s murder by members of the Senate (some 60 senators were part of the plot, 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 been, at least as part of its foundation myth, ruled by kings and then thrown them off.  Still, at this stage Caesar had been appointed Dictator for Life (Dictator Perpetuo) by the Senate.  It seems this subset of the Senate sought to undo what the whole Senate had approved.

      As set forth in Adrian Goldsworthy’s biography of Caesar titled (surprisingly) Caesar:

The conspirators spoke of liberty, and believed that this could only be restored by removing Caesar. Most, perhaps all, thought they were acting for the good of the entire Republic. With Caesar dead the normal institutions of the State ought to function properly again and Rome could be guided by the Senate and freely elected magistrates. To show that this was their sole aim they decided they would kill the dictator but no one else, including his fellow consul and close associate Antony. Brutus is said to have persuaded them to accept this, against the advice of some of the more pragmatic conspirators.

      The huddled masses of Rome were less worried about Republican principles than they were with the loss of Caesar’s largess and the interruption of public work programs that provided desperately needed employment. As recounted by Nicolaus of Damascus in his Life of Augustus, “Even their [The assassin’s] houses were besieged by the people, not under any leader, but the populace itself was enraged on account of the murder of Caesar, of whom they were fond, and especially when they had seen his bloody garment and newly slain body brought to burial when they had forced their way into the Forum and had there interred it.”

      “Liberty” was not to be had. Caesar’s death unleashed upon the tottering Roman Republic the Second Civil War of Caesar’s heir Octavian (18 years old at the time of Caesar’s death and later to be Caesar Augustus) and Marc Antony (Lepidus, the third member of the Second Triumvirate, was a place holder) against the assassins and their various supporters. Octavian and Antony were not friends. Rather, applying the adage “the enemy of my enemy is my friend,” they were joined in opposition to Caesar’s assassins and little else. Regardless, the decision of the night before the assignation to not as well target Marc Antony, in retrospect, was no doubt regretted.

      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 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 who watched 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 portrayal of Caesar's actions are pure fiction.