Gagne v. Gagne

Outcome

Excerpt

Business Organizations—Limited Liability Companies—Judicial Dissolution—In-Kind Distribution. Paula and Richard Gagne are mother and son. They agreed to a joint business venture in which Paula would buy apartment complexes and Richard would manage them. They created limited liability companies (LLCs) to buy and manage the properties. After years of acrimony, Richard sued, seeking judicial dissolution of the four LLCs and a declaratory judgment as to the parties' respective rights and obligations concerning the LLCs. Ultimately, the trial court ordered dissolution and an in-kind distribution of assets, with Richard and Paula each receiving two of the apartment buildings. On appeal, Paula contended that the court erred, both legally and factually, in ordering dissolution of the LLCs. A limited liability company may be dissolved if it is established that it is not reasonably practicable to carry on its business. A party seeking judicial dissolution must establish that the managers and members of the company are unable to pursue the purposes for which the company was formed in a reasonable, sensible, and feasible manner. In determining whether a party seeking judicial dissolution has met this burden, the court must consider seven nonexclusive factors. Here, the record reflects that the district court expressly addressed each of the seven factors and concluded that the factors weighed heavily in favor of dissolution. Therefore, the district court didn't abuse its discretion in ordering dissolution. Paula also contended that the district court erred in ordering an in-kind distribution of the LLCs' assets, rather than ordering the assets sold and the resulting proceeds distributed to the members. Here, the operating agreements don't bar in-kind distributions, and the process ordered by the court was appropriate. Therefore, the district court didn't abuse its discretion by ordering an in-kind distribution of the LLCs' assets. Next, Paula argued that the district court erred