Staiger, M. v. Holohan, K. , 2014 Pa. Super. 200 ( 2014 )

J-A15028-14
2014 Pa. Super. 200
MICHAEL STAIGER IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellant
v.
KEVIN HOLOHAN, 200 EAST AIRY
STREET, LLC AND GREEN AND AIRY
LAUNDROMAT, LLC
Appellee No. 3152 EDA 2013
Appeal from the Judgment Entered December 24, 2013
In the Court of Common Pleas of Montgomery County
Civil Division at No(s): 2006-30412
BEFORE: PANELLA, J., LAZARUS, J., and JENKINS, J.
OPINION BY LAZARUS, J.: FILED SEPTEMBER 17, 2014
Michael Staiger appeals from the judgment entered on December 24,
2013, in the Court of Common Pleas of Montgomery County, which denied
his post-trial motion to remove the judgment of nonsuit entered against him
on April 3, 2012. After careful review, we reverse and remand for the trial
court to hold a new trial.
Staiger and Kevin Holohan are business partners, each fifty-percent
members of two limited liability companies, Appellants 200 E. Airy, LLC and
Green & Airy Laundromat, LLC. Staiger provided $165,000 in start-up
capital for 200 E. Airy, LLC. According to an investment agreement signed
by the parties on May 26, 2003, this start-up capital amount was to be
repaid to Staiger within four years. On May 30, 2003, Staiger and Holohan
formed 200 E. Airy, LLC and executed an operating agreement for the
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purpose of developing the property at 200 E. Airy Street, Norristown,
Pennsylvania. The parties renovated the property for the operation of a
laundromat and convenience store. On December 23, 2004, after the
renovation had been completed, Staiger and Holohan formed Green and
Airy, LLC for the purpose of operating the laundromat. The operating
agreement for Green and Airy, LLC and the operating agreement for 200 E.
Airy, LLC contain identical language indicating that the members have the
authority to make business decisions and the decisions of a majority are
controlling.
Staiger and Holohan signed a management agreement for Green and
Airy, LLC on May 13, 2005, which provided that an unnamed LLC of
five years, then continue for two additional five-year periods. However, the
business relationship between Staiger and Holohan deteriorated, such that in
2006 they exchanged emails in which they agreed to dissolve their
partnership. Despite agreeing they did not wish to continue doing business
together, the parties were unsuccessful in negotiating a buy-out agreement.
Since then, Holohan has unilaterally operated the LLCs, to the extent that
refused to repay Staiger for his initial investment. Holohan also hired legal
counsel for the LLCs and caused the LLCs to pay for his personal legal fees
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On January 16, 2007, Staiger commenced the instant action by filing a
complaint seeking judicial dissolution of the LLCs. The LLCs were declared
to be indispensable parties by order dated March 25, 2010, and, thereafter,
Staiger joined the LLCs as additional defendants to the action. On January
17, 2012, Staiger filed a motion for summary judgment. Without ruling on
the motion, the trial court commenced a bench trial on April 2, 2012. After
Staiger presented his evidence, Holohan moved for a nonsuit, which the trial
court granted.
Staiger then filed a post-trial motion seeking to remove the nonsuit.
post-
motion for summary judgment, appointing a liquidating trustee to sell and
and disposition of the assets and payment of the creditors, the LLCs were to
be dissolved pursuant to 15 Pa.C.S. § 8972. The trial court held in favor of
Staiger because the parties could not agree on business decisions in
unilaterally manage the [LLCs] and exclude [Staiger] from any management
Opinion, 12/13/12, at 9.
Holohan appealed on October 16, 2012, and this Court held that the
grant of the summary judgment motion was a nullity and remanded the
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matter to the trial court.1 Thereafter, the trial court issued an order on
November 4, 2013, d -trial motion and reinstating the
judgment of nonsuit. The trial court simply abandoned its earlier holding,
finding that because the entities are profitable, mere disagreement between
the business partners does not warrant dissolution of the LLCs. Staiger filed
-trial
motion seeking removal of the nonsuit and judgment in favor of judicial
dissolution of the LLCs.2
Our standard of review of the denial of a motion to remove a nonsuit is
well-established. Nonsuit is properly entered where it is clear that the
plaintiff has not established a cause of action or right to relief. Pa.R.C.P.
230.1. In determining whether the plaintiff has established a right to relief,
[t]he plaintiff must be allowed the benefit of all favorable
evidence and reasonable inferences arising therefrom, and
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1
Staiger v. Holohan, 82 A.3d 1081 (Pa. Super. 2013) (unpublished
memorandum).
2
As this Court noted in
Employees v. Mid-Atlantic Promotions, Inc., 856 A.2d 102 (Pa. Super.
2004):
Such an order is interlocutory and generally not immediately
appealable. Rather, it is the subsequent judgment that is the
appealable order. A final judgment entered during the pendency
of an appeal, however is sufficient to perfect appellate
jurisdiction.
Id. at 104 n.2 (citations omitted). In light of the entry of final judgment on
December 24, 2013, we have jurisdiction over this appeal.
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any conflicts in the evidence must be resolved in favor of
the plaintiff. Further, [i]t has been long settled that a
compulsory nonsuit can only be granted in cases where it
is clear that a cause of action has not been established.
However[,] where it is clear a cause of action has not been
established, a compulsory nonsuit is proper. We must,
therefore, review the evidence to determine whether the
order entering judgment of compulsory nonsuit was
proper.
Braun v. Target Corp.
will reverse an order denying a motion to remove a nonsuit only if the court
abused its discretion or made an erro Brinich v. Jencka, 757 A.2d
388, 402 (Pa. Super. 2000).
Instantly, the right to relief Staiger sought to establish involved
judicial dissolution of the jointly-owned LLCs. If a member applies for
dissolution of a limited liability company
whenever it is not reasonably practicable to carry on the business in
LLC is a relatively new legal entity in Pennsylvania, there is a dearth of cases
the dissolution of limited partnerships and is one of the grounds for
dissolving a general partnership. See 15 Pa.C.S. § 8972, committee cmt.;
15 Pa.C.S. § 8354.
from the management of the partnership business or possession of the
partnership property is undoubtedly ground Herman v.
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Pepper, 166 A. 587 (Pa. 1933). Holohan, nevertheless, relies on the
business will not be dissolved merely because of friction among the
partners; it will not interfere to determine which contending faction is more
Potter v. Brown, 195 A. 901, 904 (Pa. 1938). However, in
Potter, the partnership was being operated according to its operating
agreement, which specified that management of the business was to be
controlled by one partner, Henry I. Brown, Sr. The court refused to grant
they are unable to exercise the direction over partnership affairs that they
feel is their due, the reason is to be found primarily in the partnership
Id.
The partnership was operating according to the agreed-upon terms, and,
thus, dissolution was not warranted.3
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3
Holohan asserts that the investment and management agreements vested
him with exclusive authority to manage the LLCs. The investment
Properties, is responsible for managing the day-to-day affairs of 200 E. Airy,
LLC. It does not, however, alter how major business decisions are to be
and Airy Laundromat, LLC, and an unnamed LLC. However, because the
parties were not identical to the parties involved in the LLCs in the instant
matter, the agreement does not supersede the LLC operating agreements.
Furthermore, this matter proceeded to trial, and the arguments Holohan
makes regarding contractual provisions that could have potentially altered
the management of the LLCs are appropriate for the trial context. At best,
(Footnote Continued Next Page)
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In contrast, the operating agreements for the LLCs in this matter
require a majority vote of the members to make business decisions. Here,
Staiger and Holohan are each fifty-percent owners, such that when they
disagree, the result is a deadlock and decisions cannot be made pursuant to
the operating agreement. Further, Staiger presented evidence
demonstrating that Holohan has consistently made unilateral management
decisions, excluding Staiger from the process completely. Holohan
independently hired legal counsel for the LLCs and caused the LLCs to pay
Furthermore, Staiger alleges he has not been repaid for his initial investment
of $165,000 and currently is receiving no return on his investment in the
businesses even though they are profitable. Thus, Staiger presented
evidence indicating that he has been wrongfully excluded from managing the
LLCs, which is grounds for dissolution. Herman, supra.
Based upon our review of the evidence Staiger presented, we find that
he demonstrated that grounds exist for dissolution of the LLCs and, thus,
established a right to relief. Braun, supra. Therefore, the trial court erred
in granting a nonsuit. Brinich, supra. Accordingly, we reverse the
judgment of nonsuit and remand for a new trial.
_______________________
(Footnote Continued)
are irrelevant with respect to whether Staiger has established a right to
relief.
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Judgment reversed. Remanded for new trial. Jurisdiction
relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 9/17/2014
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