2015-0694, Mark E. McDonough v. Patrick M. McDonough & a.

Matthew J. McDonough, self - represented defendant, by joint brief.

McDonough. Rosenblatt and Kathleen M. Mahan on the joint brief), for defendant Patrick M. Cook, Little, Rosenblatt & Manson, PLLC, of Manchester (Arnold

LLC. the joint brief, and Mr. Laboe orally), for defendant TASC Technical Services, Orr & Reno, P.A., of Concord (James F. Laboe and Jeffrey C. Spe ar on

(James P. Harris on the brief and Christopher N. Cole orally), for the plaintiff. Sheehan Phinney Bass & Green, Professional Association, of Manchester

No. 2015 - 0694 Merrimack

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh. us. Opinions are available on the Internet by 9:00 to press. Errors may be reported by E - mail at the following address: editorial errors in order that corrections may be made before the opinion goes Hampshire, One Charles Doe Drive, Concor d, New Hampshire 03301, of any Readers are requested to notify the Reporter, Supreme Court of New well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule p. 2 22 as 2

judgment, “[w]e consider the evidence in the light most favorable to each party In reviewing a trial court’s rulings on cross - motions for summary

II. Standard of Review

to pay him any consideration if he withdraws. company causes him substantial harm because the company is not obligated p. 2 2015; and (2) per mitting a majority of TASC’s members to continue the that a majority of TASC’s members could continue TASC beyond September 30, On appeal, Mark argues that: (1) the trial court erred when it determined

granted summary judgment to the defendants. This appeal followed. the company. Consequently, it denied summary judgment to Mark and because its operating agreement permits a majority of its members to continue TASC’s governing documents; and ( p. 2 2) TASC was not required to dissolve court ruled that: (1) the August 7 dissolution and revocation had no effect on Both parties moved for summary judgment. After a hearing, the trial

dissolve TASC and then immediately voted to revoke the dissolution. Matthew and Patrick — constituting a majority of TASC’s members — voted to pursuant to the further terms of this Agr eement.” On August 7, p. 2 2015, effect for a term of twenty (20) years, unless sooner terminated or continued date the Certificate of Formation is filed ... and shall continue in full force and operating agreement state s: “The Company shall have a term beginning on the liability company is to dissolve is September 30, 2015.” Section 5 of TASC’s certificate of formation states that “[t] he latest date on which the limited pursuant to its certificate of formation and operating agreement. TASC’s seeking a declaration that TASC must dissolve by September 30, 2015, The brothers had a falling out. As a result, Mark sued the defendants

C:5, II ( p. 2 2015). Act), RSA chapter 304 - C (2015 & Supp. 201 6), governs TASC. See RSA 304 - January 2014, the New Hampshire Revised Limited Liability Company Act (the the brothers converted TASC to a Limited Liability Company (LLC). As of corporation that provide s technical engineering services. In September 1995, brothers Mark, Matthew, and Patrick McDonough established TASC, a The trial court found that the following facts were not disputed. In 1992,

I. Background

affirm. ruled that TASC was not required to dissolve on September p. 3 30, p. 2 2015. W e (TASC), Patrick M. McDonough, and Matthew J. McDonough. The trial court granting summary judgment to the defendants, TASC Technical Servi c es, LL C the Superior Court (McNamara, J.) denying him summary judgment and DALIANIS, C. J. The plaintiff, Mark E. McDonough, appeals an order of 3

contract de novo.” Id. court to decide.” Id. “Accordingly, we review a trial court’s inte rpretation of a whether a contract term is ambiguous, is ultimately a question of law for this contract.” Id. (quotation omitted). “The interpretation of a contract, including will be determined from the plain meaning of the language used in the parties when they wrote it.” Id. “Absent ambiguity, however, the parties’ intent N.H. 192, 196 (2010). “We give an agreement the meaning intended by the reading the document as a whole.” Birch Broad. v. Capital Broad. Corp., 161 circumstances and the context in which the agreement was negotiated, and language used by the parties its reasonable meaning, considering the N.H. 558, 562 (201 p. 3 3). “When interpreting a written agreement, we give the general rules of contract interpretation.” Lakes Region Gami ng v. Miller, 164 “Because the operating agreement is a form of contract, we will apply the

statutory scheme.” Id. in enacting them and in light of the policy sought to be advanced by the entire isolation.” Id. “Our goal is to apply statutes in light of the legisl ature’s intent we interpret statutes in the context of the overall statutory scheme and not in add language that the legislature did not see fit to include.” Id. “Furthermore, statute as written and will not consider what the legislatu re might have said or meanings to the words used.” Id. “We interpret legislative intent from the examine the language of the statute and ascribe the plain and ordinary expressed in the words of a statute considered as a whole.” Id. “We first interpretation, we are the final arbiters of the intent of the legislature as LLC v. Town of Auburn, 168 N.H. 127, 1 p. 3 30 (2015). “On questions of statutory “We review matters of statutory interpretation de novo.” JMJ Properties,

operating agreement. the issues in this appeal, we need to construe both th e Act and TASC’s LLC’s operating agree ment binding upon its members). Therefore, t o resolve a[n] [LLC] or the conduct of its business”); RSA p. 3 304 - C:41, I (2015) (making an agreement” to mean an agreement of the members “as to the internal affairs of [t]he internal affairs of a [n] [LLC]”); RSA 304 - C:16 (2015) (defining “operating 304 - C:25, I (2015) (stating that “[t]he laws of ... New Hampshire govern ... TASC is governed by both its operating agreement and the Act. See RSA

(quotation omitted). review the trial court’s application of the law to the facts de novo.” Id. will affirm the grant of summary judgment.” Id. (quotation omitted). “We fact and if the moving party is entitled to judgment as a matter of law, then we omitted). “If our review of that evidence discloses no genuine issue of material matter of law.” Conant v. O’Meara, 167 N.H. 6 p. 4 44, 64 8 (2015) (quotation exists, we determine whether the moving party is entitled to judgment as a in its capacity as the nonmoving party and, if no genuine issue of material fact 4

requirement to RSA 30 p. 4 4 - C:130, III that is not present in the words of the plain language of RSA 30 4 - C:67, I (Supp. 2016), and add a unanimity LLC. Because accepting Mark’s interpretation would require us to ignore the that the phrase “the members” in paragraph III refers to all members of an omission of that word in RSA 3 04 - C:130, III demonstrates legislative intent legislature specifically included the word “majority” in RSA 304 - C:130, I, the 304 - C:130, III also requires a unanimous vote. He asserts that because the Mark argues that a decision to revok e a dissolution pursuant to RSA

C:130, III, or unanimously amend sectio n 5 of TASC’s operating agreement. dissolution. They can either revoke the dis solution pursuant to RSA 30 p. 4 4 members have two means to avoid the effects of the September 30, 2015 completing the wind - up of the limited liability company.” Thus, TASC ’s under RSA 304 - C:129, I, they may revoke the dissolution at any time befor e provides: “After the members have dissolved the limited liability company conferred by [the Act].” This includes RSA 304 - C:130, III (2015), which agreement authorizes TASC to “have and e xercise all powers now or hereafter for TASC’s members to continue the company. Section 4 of TASC’s operating In this case, TASC’s operating agreement and the Act provide such a way

“continued pursuant to the further terms of this Agreement.” broadly state that TASC would exist for 20 years unless the compan y was section 5, they could have explicitly said so. Instead, they chose to more that the only means of continuing the company would be an amendment of preclude other means of contin uing TASC. If TASC’s members had intended operating agreement to remove o r change the dissolution clause, that does not correct that the members could unanimously amend section 5 of TASC’s continued pursuant to the further terms of this Agreement.” Although Mark is This argument, however, overlooks the language “unless sooner terminated or operating agreement required dissolution by September 30, 2015. Mark argues that, unless amended, the plain language of TASC’s

(Emphasis added.) terminated or continued pursuant to the further terms of this Agreement.” continue in full force and effect for a term of twenty (20) years, unless sooner beginning on the date the Certificate of Formation is filed ... and shall TASC’s operating agreement provides: “T he Company shall have a term [LLC] shall be dissolved as provided in the operating agreement.”). Section 5 of for in the company’s operating agreement. See RSA 30 p. 4 4 - C:129, I (2015) (“A[n] The Act requires an LLC’s members to dissolve the company as provided

the company to dissolve by September 30, 2015. We disagree. Mark first argues that TASC’s operating agreement and the Act required

III. Discussion p. 5 5

by September 30, 201 p. 5 5, t he trial court still rule d that TASC was not required to subsequent revocation had no effect on whether TASC was required to dissolve Even though the trial court ruled that the August 7 voluntary dissolution and power to revoke the Septembe r 30, 2015 dissolution, they have not yet done so. M ark next argues that, even if a majority of TASC’s members had the

vote revoke a dissolution pursuant to RSA 304 - C:130, III. otherwise, RSA 304 - C:67, I, controls, and TASC’s members may by majority dissolution. Therefore, because TASC’s operating agreement does not provide agreement is silent regarding how its members may decide to revoke a be continued by majority or unanimous vote. Likewise, TASC’s operating Section p. 5 5 of TASC ’s operating agreement does not specify whether TASC may Pursuant to RSA 304 - C:67, I, we must examine the operating agreement.

not exempt, RSA 304 - C:67, I, applies. C:67, I specifies is exempt from its provisions. Because RSA 304 - C: 130, III is examine whether RSA 304 - C:130, III is one of the provisions that RSA 304 dissolution is not one of the decisions enumerated in RSA 304 - C:67, II, we then member; or ( p. 5 5) admit a new member. Because the decision to revoke a a promise to make a contribution; (4) grant additional membership rights to a amend a certificate of formation; (2) amend an operating agreement; (3) am end otherwise, a unanimous vote of all of an LLC’s members is required to: (1) II. RSA 304 - C:67, II provides that, unless the operating agreement states examine whether that decision is one of the de cisions listed in RSA 304 - C:67, RSA 304 - C:130, III may be made by majority or unanimous vote, we first Thus, to determine whether the decision to revoke a dissolution under

be decided by majority vote of the members.” otherwise, all matter s that [the Act] reserves for decision by the members shall enumerated provisions apply, or unless “the operating agreement provides RSA 304 - C:67, I, provides that, unless RSA 304 - C:67, II or certain other it refers must be made by majority or unanimous vote, RSA 304 - C:67 applies. When a provision does not specify whether the member decision to which

(Supp. 2016). majority or unanimous vote. See, e.g., RSA 304 - C: 34, II, : 66, I (201 p. 5 5), :210 III, do not specify whether the member de cision at issue must be made by :120, :12 1, I, :122, I, :124 (2015). Still other provisions, like RSA 304 - C:130, refer must be made by a unanimous vote. See, e.g., RSA 304 - C:100, IV - V, Other provisions in RSA chapter 304 - C specify that the decisions to which they See, e.g., RSA 304 - C:48, II, :50, II,:94, :129, II, :150, IV, :156, I, :18 8, II (2015). specifying that certain member decisions must be made by a majority vote. RSA 304 - C:130, I, is one of a number of provisions in RSA chapter 304 - C

pursuant to RSA 304 - C:130, III. statute, we conclude that a majority of members may revoke a dissolution p. 6 6

agreement” because “Mark, or for that matter any dissatisfied member, can “[t]here is no unf airness in requiring [him] to comply with the operating Mark next argues that the trial court erred when it determined that

determine when the LLC’s members must dissolve the company. looks to an LLC’s operating agreement, not its certificate of formation, to The certificate of formation is not rendered s uperfluous j ust because the Act company is operating as a New Hampshire LLC. See RSA 304 - C:33 (2015). formation is to serve as notice to the secretary of state and the public that the See RSA 304 - C:1 p. 6 6. By contrast, the primary purpose of the certificate of the parties will manage the internal affairs of the LLC and the LLC’s business. The primary purpose of an LLC’s operating agreement is to govern h ow

of formation requirements). (defining operating agreement); RSA 304 - C:31 (Supp. 201 p. 6 6) (stating certificate are separately defined and serve different purposes. See RSA 304 - C:16 certificate of formation and its operating agreement are distinct docum ents that renders the certificate of formation superfluous. Under the Act, an LLC’s Furthermore, we disagree with Mark’s argument that this interpretation

sta ted in its certificate of formation. that TASC ’s members dissolve the company after the twenty - year duration operating agreement. See RSA 304 - C:129, I. Thus, there is no requirement Act requires an LLC’s members to dissolve the company only as provided in its duration listed in the certificate of formation expire s. See RSA ch. 304 - C. The Act does not require an LLC’s members to dissolve the company when the limited liability company is to dissolve is September 30, 2015.” However, the TASC’s certificate of fo rmation states that “[t]he latest date on which the

certificate of formation renders the certificate of formation meaningless. and (2) allowing TASC’s members to continue TASC without amending the that: (1) the plain language of the certificate of formation requires dissolution; exception, that the company dissolve after 20 years. Specifically, he argue s Mark next argues that TASC’s certificate of formation requires, without

had not yet voted to revoke TASC’s dissolution. err ed by granting summary judgment to Matthew and Patrick even though they to revoke the dissolution. According ly, we cannot con c lude that the trial court these facts, the trial court could conclude that Matthew and Patrick intended represented to the trial cou rt that they intend to continue TASC. Based up on time before completing the wind - up of the [LLC]”). Matthew and Patrick C:130, III (providing that an LLC’s members may revoke a dissolution “at any September 30, 2015 dissolution, they still ha ve time to do so. See RSA 304 time of the trial court’s order, Matthew and Patrick had not voted to revoke t he company pursuant to the terms of the operating agreement. Although at the dissolve by September 30, 2015, because its members could continue the p. 7 7

decline to address its merits. Because Mark did not preserve his appellate argument for our review, we (2003); N.H. Dep’t of Corrections v. Butland, 14 p. 7 7 N.H. 676, 679 (2002). LaMontagne Builders v. Bowman Brook Purchase Group, 150 N.H. 2 70, 274 decision must be presented to it in a motion for reconsideration. See issues which could not have been presented to the trial court prior to its by the appellant on appeal; thus, to satisfy this preservation requirement, any The trial court must have had the opportunity to consider any issues asserted have had to present it in a motion for reconsideration, which he did not do. To preserve the argument that Mark now raises on appeal, Mark would

withdraw. C:105, II precludes the LLC from paying him compensation should he withdrawal, he could obtain his share of the LLC’s assets because RSA 304 his appellate argument that the trial court erred when it stated that, upon is “no open market” for his interests in the LLC did not preserve, for our review, argument from the argument he raises on appeal. Mark’s argume nt that there inalienable,” such that he has “no open market” for them is a different them.” Mark’s argument that his interests in the LLC “are restricted and the company are restricte d and inalienable, as he has no open market for with his brothers” would be “fundamentally unfair” because “his interests in arguing before the trial court that forcing him “into a perpetual relationship In his reply brief, Mark argues that he preserved his argument by

255 (2014). appellate arguments before the trial court. Dukette v. Brazas, 166 N.H. 252, Mark’s burden, as the appealing party, to demonstrate that he raised his provided a record demonstrating that he preserved it for our review. It is We decline to address the merits of this argume nt because Mark has not

dissociation”). including the member’s limited liability company interest, as of the date of to receive any payment for the value of the member’s membership rights, operating agreement otherwise provide s, “a dissociating member is not entitled withdrawal.” See RSA 304 - C:105, II (2015) (providing that, unless the be entitled to any compensation for his membership interest upon his to [M ark] if he elects to withdraw” and the “Act . . . states that [Mark] would not Agreement does not obligate the Company to pay any consideration or buy - out financial consequences of such a withdrawal” in that “[t]he Operating the Act allows for members to voluntarily withdraw, . . . [it] overlooked the argues that this was error because “[w]hile the Super ior Court was correct that withdraw from the LLC and obtain his share of the LLC[’s] assets.” Mark p. 8 8

HICKS, CONBOY, and LYNN, JJ., concurred.

grant of summary judgment in favor of the defendants. co mp any beyond September 30, 2015. Accordingly, we affirm the trial court’s agreement and the Act permit a majority of TASC’s members to continue the (1993). Therefore, f or the reasons stated above, we hold that TASC’s operating they do not warrant further discussion. See Vogel v. Vogel, 137 N.H. 321, 322 We have reviewed the remainder of Mark’s argument s and conclude that

IV. Conclusion