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Sherwood Park Business Center, LLC v. Taggart

Court of Appeals of Oregon

March 19, 2014

SHERWOOD PARK BUSINESS CENTER, LLC, an Oregon limited liability company, Plaintiff-Respondent Cross-Respondent,
v.
BRAD TAGGART, an individual, Defendant-Respondent Cross-Appellant, BT OF SHERWOOD, LLC, an Oregon limited liability company, Defendant-Appellant Cross-Respondent, and JOHN BERMAN, an individual, Defendant. BT OF SHERWOOD, LLC, an Oregon limited liability company, Counterclaim Plaintiff-Appellant Cross-Respondent, and JOHN HOFFARD OF SHERWOOD LLC, an Oregon limited liability company, Counterclaim Plaintiff,
v.
TERRY W. EMMERT, an individual; KEITH JEHNKE, an individual; and SHERWOOD PARK BUSINESS CENTER, LLC, an Oregon limited liability company, Counterclaim Defendants-Respondents Cross-Respondents

Argued and Submitted: June 4, 2013.

Page 552

Washington County Circuit Court. C08554CV. Donald R. Letourneau, Judge.

John M. Berman argued the cause and filed the briefs for appellant-cross-respondent.

John M. Berman argued the cause and filed the briefs for respondent-cross-appellant.

George W. Kelly argued the cause and filed the briefs for respondents-cross-respondents.

Before Ortega, Presiding Judge, and Hadlock, Judge, and Norby, Judge pro tempore.

OPINION

Page 553

[261 Or.App. 611] HADLOCK, J.

This case arises out of a series of transactions in which a member of Sherwood Park Business Center, LLC (SPBC), Brad Taggart, attempted to transfer his interest in that company to BT of Sherwood, LLC (BT). Taggart later transferred interests in BT to attorney John Berman.[1] As a result, by the end of July 2008, BT was wholly owned by Berman; BT, in turn, purported to own a 25 percent interest in SPBC. Eventually, SPBC brought this action requesting, among other things, that the court expel Taggart from SPBC, declare invalid Taggart's attempted transfer of his interest in SPBC to BT, declare that BT had no interest in SPBC, and unwind the transactions between Taggart and BT. BT brought counterclaims against SPBC as well as claims against two of its members--Terry Emmert and Keith Jehnke.[2] As relevant here, BT asserted that Emmert and Jehnke owed it a fiduciary obligation and had breached that obligation. SPBC, Emmert, and Jehnke then responded with additional claims of their own.[3] After a bench trial, the court made findings of fact and conclusions of law and, ultimately, entered a general judgment declaring that Taggart's attempted transfer of his interest in SPBC to BT was null and void, expelling Taggart from SPBC effective January 1, 2008, permitting Emmert and Jehnke to purchase Taggart's 25 percent interest in SPBC, and declaring that defendants were not entitled to distributions or allocations of profits or losses of SPBC since 2008. As to BT's contention that Emmert and Jehnke had breached their fiduciary obligations to BT, the court concluded that Emmert or Jehnke owed no fiduciary obligation to BT and that, even if they had such an obligation, they did not breach it. It [261 Or.App. 612] dismissed all the remaining claims and counterclaims with prejudice.[4]

On appeal, defendants challenge the trial court's judgment. In particular, they challenge (1) the trial court's ruling that Taggart's transfer to BT is void; (2) the court's expulsion of Taggart effective January 1, 2008; and (3) the court's determination that Emmert and Jehnke did not have a fiduciary obligation or, if they did, that they did not breach that obligation. In addition, on cross-appeal, Taggart asserts that, even if the court properly expelled him from SPBC, it improperly calculated the buyout amount for his 25 percent interest in SPBC. As explained below, we reject all of those challenges and affirm the trial court's judgment.

I. LEGAL FRAMEWORK

Because the parties' dispute focuses on the law--both contractual and statutory--that governs various interests in SPBC, we describe the pertinent legal provisions in some detail. SPBC is a limited liability company that was formed in 1999 to develop a small office complex. Under ORS chapter 63, which relates to Oregon limited liability companies, and the company's operating agreement, the interests of SPBC's members in the LLC are not freely transferrable. Section 11 of the operating agreement governs the

Page 554

transfer of membership interests. Under Section 11.1(b), " [a] Member may not sell any portion of his or her member interest without first offering in writing to sell such interest to the other Members at a price to be determined by the offering Member." If the other members decide to purchase the interest, under Section 11.1(b)(1), they may complete the purchase by making a payment of twenty percent of the purchase price, with the balance of the purchase price payable " in sixty (60) equal ...


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