DocketNumber: No. 1 CA-SA 18-0231
Citation Numbers: 436 P.3d 491, 246 Ariz. 168
Judges: Campbell
Filed Date: 1/22/2019
Status: Precedential
Modified Date: 7/19/2022
¶1 The question addressed in this special action is whether Arizona Revised Statutes ("A.R.S.") section 29-785(A) mandates that an action for the involuntary judicial dissolution of a limited liability company be brought in the county in which the LLC's known place of business is located. We accept special-action jurisdiction and grant relief, holding that the statute does not limit venue to the county which contains an LLC's known place of business.
BACKGROUND
¶2 This case arises from a conflict over various business and financial matters among *494a group of siblings and their families involving jointly owned and managed companies and properties. Pishit Patel ("Petitioner") filed suit against members of his family, including Nilay Patel and Mayank Patel ("Respondents"), and various other entities in the Maricopa County Superior Court. In his second amended complaint, Petitioner alleged, in relevant part, that Respondents misused operating funds from Sammy's Island, LLC-a business he formed to operate a mobile home and RV park. Petitioner's complaint asked the court to determine the ownership interests of Sammy's Island and to appoint a receiver, and included claims for an accounting, breach of contract, fraudulent nondisclosure, breach of fiduciary duty, civil conspiracy, conversion, civil racketeering, and unjust enrichment.
¶3 Respondents denied all of Petitioner's claims and filed counterclaims. They alleged that, together, they owned 50 percent of the membership interests in Sammy's Island, while Petitioner effectively owned the other 50 percent. Respondents' counterclaims included breach of contract, conversion, defamation, false light, breach of fiduciary duty, and breach of the duty of good faith and fair dealing.
¶4 The same day Respondents filed their answer and counterclaims in Maricopa County, they also filed a complaint against Petitioner in the Mohave County Superior Court. Their complaint included claims for breach of contract, accounting, conversion and aiding and abetting, injunctive and declaratory relief, and for the judicial dissolution of Sammy's Island under A.R.S. § 29-785, again alleging that Respondents together had a 50 percent ownership interest in Sammy's Island and that Petitioner's actions had made it impossible to continue operating the company.
¶5 Petitioner filed a motion for abatement in Mohave County, arguing that substantially identical claims were already pending in Maricopa County. In their response, Respondents argued that pursuant to A.R.S. § 29-785, Mohave County was the "exclusive" forum with "subject matter jurisdiction" to resolve the judicial dissolution and related claims. The Mohave County Superior Court denied Petitioner's motion for abatement, ruling that the statute does not allow for "concurrent jurisdiction [between counties] in the dissolution claim." Petitioner then filed a petition for special action with this court.
¶6 After the petition for special action, response, and reply were filed, Respondents filed a notice to supplement the record to inform this court they were voluntarily dismissing their counterclaims relating to Sammy's Island in the Maricopa County action. They argued this voluntary dismissal of certain claims meant there were "no longer any claims related to Sammy's Island ... remaining in the Maricopa County [a]ction," rendering moot the issue before us.
DISCUSSION
¶7 Petitioner argues the Mohave County Superior Court erred by ruling that A.R.S. § 29-785(A) does not allow for "concurrent jurisdiction in the judicial dissolution claim." The Mohave County Superior Court ruled that regardless of whether the Mohave claims were sufficiently identical to the Maricopa claims to warrant abatement, the statute does not permit the judicial dissolution claim to be raised anywhere else but Mohave County. We agree with Petitioner that the superior court erred.
¶8 Because the question raised by this special action-whether the statute mandates the exclusive forum in which an action for the involuntary judicial dissolution of an LLC may be raised-is a purely legal question and a matter of first impression, we accept special action jurisdiction. See Glenn H. v. Hoskins ,
¶9 First, we address Respondents' contention that their notice to supplement the record before us renders this issue moot. See, e.g. , Lord v. City of Tucson ,
¶10 Next, we turn to the interpretation of A.R.S. § 29-785(A), which states: "On application by or for a member, the superior court in the county in which the known place of business of the limited liability company is located may decree dissolution of a limited liability company" if the court makes certain findings. The Mohave County Superior Court erred in ruling that this statute does not allow for "concurrent jurisdiction in the judicial dissolution claim." Instead, the statute merely provides a preferred venue for such claims.
¶11 Pursuant to Article 6, Section 13 of the Arizona Constitution, "the superior courts constitute a single court composed of all the judges in every county." Sil-Flo Corp. v. Bowen ,
¶12 "To determine a statute's meaning, we look first to its text." State v. Burbey,
¶13 "Although convenience to the defendant is ... the first consideration in establishing venue, venue may be changed when necessary" to secure to parties fair and impartial trials of causes, to promote the convenience of witnesses and the ends of justice, or for other good and sufficient cause, to be determined by the court. Yarbrough v. Montoya-Paez ,
¶14 In explaining its ruling on the Petitioner's motion for abatement, the Mohave County Superior Court found that "the parties are the same" in the Mohave and Maricopa County actions, but the record is unclear on whether the court found the remainder of the Allen test satisfied. Because we conclude that A.R.S. § 29-785(A) is a venue statute and does not create any bar to abatement, we remand for such a determination.
CONCLUSION
¶15 For the foregoing reasons, we vacate the Mohave County Superior Court's denial of Petitioner's motion for abatement and remand for a ruling in accordance with this opinion.