Washington Potato Company v. J.R. Simplot Company

FILED
NOT FOR PUBLICATION
FEB 27 2019
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
WASHINGTON POTATO COMPANY, No. 18-35098
Plaintiff-counter-claim- D.C. No. 4:17-cv-05032-RMP
defendant-Appellee,
v. MEMORANDUM*
J.R. SIMPLOT COMPANY,
Defendant-counter-claimant-
plaintiff-Appellant,
v.
OREGON POTATO COMPANY,
Third-party-defendant.
Appeal from the United States District Court
for the Eastern District of Washington
Rosanna Malouf Peterson, District Judge, Presiding
Argued and Submitted February 4, 2019
Seattle, Washington
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: IKUTA and CHRISTEN, Circuit Judges, and CHOE-GROVES,** Judge.
J.R. Simplot Company (Simplot) appeals the district court’s grant of partial
summary judgment to Washington Potato Company (WPC) based on the district
court’s conclusion that WPC lawfully exercised its option to purchase Simplot’s
one-half interest in Pasco Processing, LLC under the provisions governing
Deadlock in the Amended and Restated Limited Liability Company Operating
Agreement (Agreement).1 The district court certified its order granting partial
summary judgment to WPC as final under Rule 54(b) of the Federal Rules of Civil
Procedure. We thus have jurisdiction over this appeal under 28 U.S.C. § 1291.
We affirm the district court.
Although the Members must agree on Capital Contributions, the Agreement
makes clear that the Members “shall vote their respective Percentage Interests
through the Board of Members.” Pursuant to this provision, Members approve of
Capital Contributions through the Board of Members. The affirmative vote of a
majority of the Board of Members is necessary for an action under Section 6.9.
Therefore, a Deadlock arises under Section 12.13 of the Agreement when the
**
The Honorable Jennifer Choe-Groves, Judge for the United States
Court of International Trade, sitting by designation.
1
The Agreement capitalizes defined terms. We use the same capitalization
as the Agreement in this disposition.
2
Board of Members does not approve setting requirements for additional Capital
Contributions because of a Tie Vote.
Even if a vote of the Board of Members is not the exclusive means through
which Members may act with respect to the obligation to make further Capital
Contributions, see, e.g., Section 3.4, read in the context of the Agreement as a
whole, Section 5.2(l) provides that the Manager may set requirements for Capital
Contributions with the written approval of the Board of Members when those
Capital Contributions have not been “approved in the Annual Business Plan and/or
agreed to by the Members and Board of Members.” We do not read Section 5.2(l)
as precluding the Manager from setting such requirements in all cases, because
such a reading would render the phrase “without the written approval of the Board
of Members” superfluous. Because Section 5.2(l) concerns only the Board’s
authority to approve the Manager’s actions, our interpretation of Section 5.2(l)
does not make other provisions in the Agreement that require the Board of
Members’s approval superfluous. Therefore, because the affirmative vote of a
majority of the Board of Members is necessary for an action under Section 6.9, a
Deadlock arises under Section 12.13 of the Agreement when the Board of
Members does not approve granting the Manager the authority to set requirements
for additional Capital Contributions under Section 5.2(l) because of a Tie Vote.
3
This interpretation is consistent with Section 3.4 of the Agreement. While
Section 3.4 provides that Members are not “obligated to make any further Capital
Contributions, unless all Members agree in writing on the terms upon, and the
proportions in which, such Capital Contributions will be contributed,” that
provision is subject to the proviso “[e]xcept as otherwise provided herein,” which
would include the provisions in Section 5.2(l).
It is undisputed that the other provisions required for a Deadlock to occur
under Sections 12.13 and 9.5 were fulfilled.
AFFIRMED.
4