Defendants filed a motion for partial summary judgment to which plaintiff responded with a cross-motion for partial summary judgment. On January 1, 2000, the parties entered into an Operating Agreement in order to form the limited liability company, PediatriCare. Subsequently, on March 12, 2001, the parties executed an amended and restated Operating Agreement, which was the operative document governing the relationship. In January 2016, plaintiff announced his intention to retire, which triggered Section 10 of the Operating Agreement. Section 10 provided the process for calculating the retirement purchase price, which required a net worth valuation methodology, in order to determine a value for a negotiated buyout price of plaintiff. However, various calculations of fair market valuation were done in order to effectuate a settlement as to a voluntary buy-out number, which the parties agree was never reached
Defendants then sought to invoke the net worth valuation of Section 10 of the Operating Agreement. Plaintiff argued that over a sixteen-year period, the Operating Agreement was modified to use the fair market value as opposed to a net worth valuation, based on the parties’ conduct over this time period. Defendants argue that the Operating Agreement is clear in its express provision concerning how to calculate the buyout price. Moreover, defendants note that the Operating Agreement also unambiguously states that it may be modified only through a vote of 80% of the membership interests in the company, and not through the course of conduct that plaintiff contends. The court found, upon reviewing the plain language of the Operating Agreement, and upon a lack of evidence that it was changed by the remaining members, that the net worth valuation methodology remained a part of the Operating Agreement and was the correct method for a retirement purchase price.
In addition, plaintiff suffered no oppression since the economic loss doctrine bars recovery when entitlement flows from the Operating Agreement. There was also no breach of fiduciary duty when the members acted in conformity with the provisions of the Operating Agreement. The court ultimately granted in part, and denied in part, defendants’ motion for partial summary judgment. As such, the court dismissed Counts I, II, and III of plaintiff’s second amended complaint.
