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Business Associations Keyed to Hwang, 3rd Ed.
Stephen Bushi, M.D. v. Sage Health Care, PLLC
Citation:
203 P.3d 694 (2009)Facts
In 1994, four licensed psychiatrists, including Dr. Stephen Bushi, formed Sage Health Care, PLLC, under Idaho’s Limited Liability Company Act, each contributing $2,000 for a 25% ownership interest. The operating agreement required consent of all but one member to amend its terms and specified limited grounds for involuntary dissociation, including bankruptcy, loss of professional license, ethical violations, inability to obtain liability insurance, or felony conviction. In 2005, the other members discovered that Bushi had borrowed approximately $45,000 on the company’s line of credit for personal expenses without authorization. Around the same time, Bushi began dating a nurse practitioner employed by Sage and joined a competing psychiatry group. In January 2006, the other members voted to amend the operating agreement to allow mandatory dissociation upon an affirmative vote of all but one member, then immediately voted to dissociate Bushi. The company’s accountant valued Bushi’s membership interest at $11,245 under the operating agreement’s formula, though members had previously valued their interests at $250,000 each when applying for the credit line.
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