Business Associations Keyed to Hamilton
Lieberman v. Wyoming.com LLC
Facts
Lieberman (Defendant) was a member of Wyoming.com LLC (Plaintiff), credited with a 40 percent equity interest and a $20,000 capital contribution. Following his termination as an employee, Defendant tendered his withdrawal from the LLC (Plaintiff), which the remaining members accepted. The remaining members also decided to continue the LLC (Plaintiff), not dissolve it. Defendant then demanded the immediate return of “his share of the current value of the company,” estimating the value of his share at $400,000, “based on a recent offer from the Majority Shareholder.” The Plaintiff offered Defendant his stated capital contribution of $20,000, but he declined to accept, claiming he was entitled to more than this amount. The Plaintiff then brought a declaratory judgment action, and the trial court ruled that Defendant had the right to demand the return of only his stated capital contribution, $20,000, which was ordered by the court to be paid in cash. The court also ruled that the LLC (Plaintiff) was not in a state of dissolution. Defendant appealed, and the state’s highest court, in Lieberman I, 11 P.3d 353 (Wyo. 2000), affirmed the trial court on its dissolution ruling, but held that because the state’s LLC statute did not address the financial consequences of a member’s withdrawal, but only the withdrawal of a member’s capital contribution, Defendant was entitled to the return of his capital contribution, regardless of his status as a member of Wyoming.com (Plaintiff). However, since Defendant expected more, the court remanded the case “because it is unclear what, became of Lieberman’s ownership or equity interest (as represented by a membership certificate)” requiring further proceedings “for a full declaration of the parties’ rights.” On remand, the trial court and the parties operated under the assumption that Defendant had withdrawn as an equity owner and that his equity interest needed to be valued and returned to him. The Plaintiff maintained that under Wyoming.com’s (Plaintiff) operating agreement, it owed Defendant only the value of his capital account on the date of his withdrawal, which, at that time, had a negative value. The trial court agreed and granted summary judgment to Plaintiff, ordering the liquidation of Defendant’s equity interest. The states highest court granted review.
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