Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Rose Goodyear Properties, LLC. v. NBA Enterprises Limited Partnership

Court of Appeals of Arizona, First Division

August 5, 2014

ROSE GOODYEAR PROPERTIES, LLC, an Arizona limited liability company, Plaintiff/Appellant,
v.
NBA ENTERPRISES LIMITED PARTNERSHIP, an Arizona limited partnership; KING COTTON, INC., an Arizona corporation; HOHOKAM ACRES LIMITED PARTNERSHIP, an Arizona limited partnership; HOHOKAM SUN, LLC, an Arizona limited liability company; and HANBA, LLC, an Arizona limited liability company, Defendants/Appellees, and ABEL COMMERCIAL VENTURES, LLC, an Arizona limited liability company, Nominal Defendant/Appellee.

Appeal from the Superior Court in Maricopa County No. CV2010-015284 The Honorable John A. Buttrick, Judge, Retired

The Rose Law Group, P.C., Scottsdale By Samuel J. Doncaster Counsel for Plaintiff/Appellant

McCabe O'Donnell, P.A., Phoenix By Joseph I. McCabe, Clifford J. Roth Counsel for Defendants/Appellees

Simbro & Stanley, PLC, Scottsdale By Robert P. Simbro Counsel for Nominal Defendant/Appellee

Judge Randall M. Howe delivered the opinion of the Court, in which Presiding Judge Peter B. Swann and Chief Judge Diane M. Johnsen joined.

OPINION

Randall M. Howe Judge

¶1 This case addresses two issues: first, the capacity of a dissolved limited liability company ("LLC") to sue to collect its assets; second, the requirements that a member of an LLC must satisfy before filing a derivative action on behalf of an LLC. We hold that a dissolved LLC has the capacity to sue to collect its assets as part of its efforts to wind up its business and affairs. We also hold that before a member of an LLC can file a derivative suit on behalf of the LLC, the member must make an unambiguous demand that the LLC file suit.

FACTUAL AND PROCEDURAL HISTORY

¶2 Rose Goodyear Properties ("Rose"), NBA Enterprises, and Hohokam Acres formed an LLC, Abel Commercial Ventures ("Abel"), in 2005. Abel's purpose was to develop certain real property for investment or sale. Rose owned 27.56% of Abel, NBA 36.22%, and Hohokam 36.22%. The members appointed Civica Development, LLC as Abel's manager.

¶3 Abel borrowed $2, 000, 000 secured by a deed of trust on real property and lent the funds to Hohokam and NBA, Abel's majority members. After Abel defaulted on the loan, the property securing the debt was sold at a trustee's sale for $1, 050, 000. Abel was then sued for the $1, 055, 445.64 deficiency.

¶4 During this time, Rose and Civica had business management disputes with NBA and Hohokam, and Civica was removed as Abel's manager. Rose demanded that a new manager be appointed, but NBA and Hohokam took no action for several months, until March 2009, when they formed a new LLC, Hanba, and appointed it as Abel's manager.

¶5 Rose filed a complaint, later amended, alleging six counts: Count 1, a derivative claim for breach of contract against NBA, Hohokam, and their general partners based on NBA and Hohokam's failure to repay the loans from Abel; Count 2, direct and derivative claims against NBA, Hohokam, their general partners, and Hanba for breaches of fiduciary duty based upon duties owed to Abel and Rose as Abel's minority member; Count 3, a direct claim for breach of contract against NBA, Hohokam, and their general partners for refusing to arbitrate and for breaching their fiduciary duty; Count 4, a direct breach of contract claim against NBA, Hohokam, and their general partners for breach of the implied covenant of good faith and fair dealing; Count 5, a direct tort claim against NBA, Hohokam, and their general partners for breach of the implied covenant of good faith and fair dealing; and Count 6, direct and derivative claims for declaratory and injunctive relief against NBA, Hohokam, and Hanba to require Abel to hire conflict-free counsel and to reinstate Civica as Abel's manager. Abel was named as a nominal defendant. After filing the complaint, Rose's statutory agent resigned and Rose did not appoint a new statutory agent. Because Rose failed to maintain a statutory agent, the Arizona Corporation Commission dissolved Rose on September 16, 2010.

¶6 The defendants moved to dismiss the amended complaint, arguing that all the claims should be dismissed because the complaint was not verified and did not join indispensable parties. They also argued that the derivative claims should be dismissed because Rose had failed to make a demand on Abel's manager to file suit before commencing litigation and had failed to adequately allege Rose's efforts to make Abel file suit. They attached to their motion several exhibits, one of which was a letter dated February 25, 2010, from Rose's counsel about the loan dispute.

¶7 Rose opposed the motion, noting that with the exception of the argument regarding joining indispensable parties, the motion to dismiss applied only to the derivative claims and not the direct claims. Rose argued that the complaint did not need to be verified and no indispensable party had been omitted. Regarding the derivative claims, Rose argued that it had made a sufficient demand that Abel's ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.