Paul Beaudry v. Alan Harding , 2014 Me. LEXIS 137 ( 2014 )

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2014 ME 126
Docket: Cum-14-150
Argued: October 9, 2014
Decided: November 13, 2014
Panel: SAUFLEY, C.J., and ALEXANDER, SILVER, MEAD, GORMAN, and HJELM, JJ.
PAUL BEAUDRY et al.
v.
ALAN HARDING et al.
SAUFLEY, C.J.
[¶1] Paul Beaudry, individually and purportedly on behalf of Northern
Maine Transport, LLC (NMT) appeals from a judgment of the Superior Court
(Cumberland County, Wheeler, J.) granting summary judgment to Alan Harding
and Hardings Law Offices. The court concluded that Beaudry lacks the legal
capacity to bring suit on behalf of an administratively dissolved LLC or
derivatively and that Beaudry has no individual claim because he suffered no
personal harm. Beaudry argues that Maine’s Limited Liability Company Act
specifically authorizes administratively dissolved LLCs to prosecute claims and
that justice requires us to treat his derivative claim as a direct claim. Because we
agree with the Superior Court that Maine law does not permit Beaudry to proceed
on behalf of NMT under these circumstances, through a derivative action or
individually, we affirm the judgment.
2
I. BACKGROUND
[¶2] NMT is a Maine limited liability company with only two members,
Paul Beaudry and Tyler Hallett. NMT was administratively dissolved on
September 28, 2009.
[¶3] Beaudry’s two-count complaint asserts claims against attorney Alan
Harding for professional negligence and breach of fiduciary duty in 2010, when
attorney Harding represented NMT and possibly Beaudry in facilitating a
settlement between NMT and OneBeacon American Insurance Company to
recover insurance proceeds after business property of NMT was destroyed by fire.
Although OneBeacon and NMT eventually settled, Beaudry refused to honor the
settlement agreement. In a separate matter, the United States District Court for the
District of Maine (Kravchuk, M.) enforced the settlement agreement against
Beaudry, finding that he had expressly agreed to the settlement terms.
[¶4] On October 9, 2012, Beaudry filed this action, individually and
purportedly on behalf of NMT, alleging that Beaudry would not have settled the
OneBeacon litigation had attorney Harding not committed legal malpractice. On
June 10, 2013, Harding moved for summary judgment on both counts of Beaudry’s
complaint, asserting that (1) Beaudry lacked the legal capacity to bring suit on
behalf of NMT because NMT was administratively dissolved and therefore could
not prosecute suits on its own behalf; (2) Beaudry lacked the legal capacity to
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bring a derivative suit because Maine law does not allow a member of a closely
held LLC to bring a derivative suit, he did not have the consent of his co-member
Hallett to bring suit on NMT’s behalf, and justice does not require the court to treat
the derivative suit as a direct claim; and (3) Beaudry had no basis to assert an
individual claim against Harding when the only harm alleged by Beaudry—the loss
of insurance proceeds pursuant to a policy issued to NMT—is not a harm that is
personal to Beaudry. On March 13, 2014, the Superior Court granted Harding’s
motion for summary judgment on both counts of Beaudry’s complaint. Beaudry
timely appealed pursuant to 14 M.R.S. § 1851 (2013) and M.R. App. P. 2(b)(3).
II. DISCUSSION
[¶5] We are unpersuaded by Beaudry’s argument that he is authorized to
bring a derivative claim, see 31 M.R.S. § 1637 (2013), or that he may bring an
individual claim when the only harm alleged is not a harm that is personal to him.
See 31 M.R.S. § 1631 (2013).1 We focus on Beaudry’s contention that Maine’s
Limited Liability Company Act specifically authorizes NMT, an administratively
dissolved LLC, to prosecute claims to collect NMT’s assets.2
1
Beaudry concedes that he “is not claiming that he has suffered any injuries personal to him other
than the insurance proceeds NMT would have received if Attorney Harding had not committed
malpractice.”
2
NMT was organized under the former LLC Act. 31 M.R.S. §§ 621, 622 (2009). The current LLC
Act applies “to all limited liability companies in existence on July 1, 2011,” except in circumstances not
present here. 31 M.R.S. § 1693(1) (2013). Because NMT still has a legal existence, the current LLC Act
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[¶6] When interpreting statutes, “[w]e examine the plain meaning of the
statutory language seeking to give effect to the legislative intent, and we construe
the statutory language to avoid absurd, illogical, or inconsistent results.” Cent. Me.
Power Co. v. Devereux Marine, Inc., 2013 ME 37, ¶ 8, 68 A.3d 1262 (quotation
marks omitted). In so doing, we “construe the whole statutory scheme of which
the section at issue forms a part so that a harmonious result, presumably the intent
of the legislature, may be achieved.” Id. (quotation marks omitted). Furthermore,
it is a fundamental principle of statutory construction “that a statute dealing with a
subject specifically prevails over another statute dealing with the same subject
generally.” Butler v. Killoran, 1998 ME 147, ¶ 11, 714 A.2d 129.
[¶7] Administratively dissolved LLCs are those that the Secretary of State
dissolves because the LLC fails to follow the procedures imposed by the Act, such
as paying mandatory fees and penalties or filing annual reports. See 31 M.R.S.
§ 1591 (2013). Section 1592 of the Act is entitled, “Procedure for and effect of
administrative dissolution of limited liability company” and provides that “[t]he
administrative dissolution of a limited liability company under this section does not
impair . . . [t]he right of the limited liability company to defend any action, suit, or
proceeding in any court of this State.” 31 M.R.S. § 1592(4)(C) (2013) (emphasis
applies. However, the provisions governing dissolution in the former and the current LLC Acts are
identical. Compare 31 M.R.S. § 1592(2) (2013), with 31 M.R.S. § 608-B(3) (2009).
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added). In contrast, section 1596, entitled “Effect of dissolution,” immediately
follows the section pertaining to voluntary and judicial dissolution—the dissolution
of an LLC through a stated happening in the LLC agreement, by the consent of all
the members, or on application to the Superior Court by a member or holder of a
transferable interest. Unlike section 1592 addressing administratively dissolved
LLCs, section 1596 provides that the dissolution of an LLC does not “[p]revent the
commencement of a proceeding by or against the limited liability company in its
limited liability name.” 31 M.R.S. § 1596(2)(B) (2013).
[¶8] Reading these sections in relation to the whole statutory scheme, the
more specific statute governing the effect of administrative dissolution is
controlling. See Butler, 1998 ME 147, ¶ 11, 714 A.2d 129. Thus, NMT, as an
administratively dissolved LLC, is not authorized to prosecute claims; it may only
defend claims. To interpret the Act otherwise would be to render subsections of
section 1592 superfluous. If the Legislature intended the effects of dissolution on
administratively dissolved LLCs to be identical to the effects of judicially or
voluntarily dissolved LLCs, there would be no reason for the Legislature to include
the provision that specifically sets forth the effects of administrative dissolution in
section 1592.3
3
The analysis is the same even if the LLC was dissolved under the prior act. Compare 31 M.R.S.
§ 608-B(4)(C) (2009) (stating that administrative dissolution does not impair “[t]he right of the domestic
limited liability company to defend any action, suit or proceeding in any court of this State”), with
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[¶9] As a matter of law, Beaudry is barred from bringing suit on behalf of
NMT—an administratively dissolved LLC—and the Superior Court did not err in
granting summary judgment in Harding’s favor.
The entry is:
Judgment affirmed.
On the briefs:
Michael J. Waxman, Esq., Portland, for appellant Paul Beaudry
Wendell G. Large, Esq., and Heidi J. Hart, Esq., Richardson,
Whitman, Large & Badger, Portland, for appellees Alan
Harding, et al.
At oral argument:
Michael J. Waxman, Esq., for appellant Paul Beaudry
Heidi J. Hart, Esq., for appellees Alan Harding, et al.
Cumberland County Superior Court docket number CV-2013-446
FOR CLERK REFERENCE ONLY
31 M.R.S. § 703(2) (2009) (following the sections pertaining to voluntary and judicial dissolution and
stating that “[u]pon dissolution of a limited liability company . . . the persons winding up a limited
liability company’s affairs . . . may prosecute and defend suits”).