Wednesday, November 13, 2019

Missouri Court of Appeals Addresses “For Himself” as to Reorganization and Disassociation

Missouri Court of Appeals Addresses “For Himself” as to Reorganization and Disassociation

In a January, 2019 decision of the Missouri Court of Appeals, Nicolazzi v. Bone, No. ED 106292, 2018 WL 6052144, 564 S.W.3d 364 (Mo. Ct. App. Div. 4 Nov. 20, 2018), it sent back to the trial court the question of Nicolazzi had withdrawn from the LLC by the act of filing a lawsuit addressing in part the LLC’s composition.  As do many LLC Acts, that of Missouri, at § 347.123(4)(c), identifies the events of withdrawal as including:

Unless otherwise provided in the operating agreement whereby specific consent of all members at the time, the member … files a petition or answer seeking for himself any reorganization, arrangement, composition, readjustment, liquidation or similar relief under any statute, law or regulation.

The Court of Appeals wrote that, notwithstanding the question needs to be resolved by the trial court:

We remand this case with instructions for the trial court to determine whether [Nicolazzi’s] filing of his petition constitutes an “event of withdrawal” pursuant to § 347.123(4)(c).

HERE IS A LINK to my review of that earlier decision.

In this follow on decision, Nicolazzi v. Bone, ___ S.W.3d ___, 2019 WL 5700365, *4 (Mo. Ct. App. Eastern Dist. November 5, 2019), it was held that the provision addresses the member, and not the LLC, a determination that is consistent with the decisions of a number of other jurisdictions.  The court wrote:

Our exhaustive multi-jurisdictional review demonstrates that courts interpreting statutes with nearly identical language have rejected the argument that a person’s membership automatically is relinquished when the individual member seeks reorganization or dissolution of the LLC rather than for itself.

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