Case Title: WYOMING.COM, LLC V. E. MICHAEL LIEBERMAN

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2005-04-12T00:00:00Z

Document:
WYOMING.COM, LLC V. E. MICHAEL LIEBERMAN2005 WY 42109 P.3d 883Case Number: 04-122Decided: 04/12/2005
I

 
 
APRIL 
TERM, A.D. 2005

 
 
                                                                                                            

 
 
WYOMING.COM, 
LLC,

 
 
Appellant

(Defendant),

 
 
v.

 
 
E. 
MICHAEL LIEBERMAN,

 
 
Appellee

(Plaintiff).

 
 
 
 
Appeal from theDistrictCourtofFremontCounty

 
 

Representing 
Appellant:

Alexander 
K. Davison, Wendy Curtis Palen, and Terry W. Connolly of Patton & Davison, 
Cheyenne, Wyoming

 
 

Representing 
Appellee:

William 
D. Bagley of Bagley, Karpan, Rose & White, LLC, Cheyenne, Wyoming

 
 
Before 
HILL, C.J., and GOLDEN, KITE, and VOIGT, JJ., and BRACKLEY, 
D.J.

 
 

GOLDEN, 
J., 
delivers the opinion of the Court; KITE, J., files a specially concurring 
opinion; BRACKLEY, D.J., files a dissenting 
opinion.

  

GOLDEN, 
Justice.

 
 

[¶1]          
This is 
the third appeal generated from this litigation.  After Lieberman v. Wyoming.com 
LLC, 2004 WY 1, 82 P.3d 274 (Wyo. 2004) ("Lieberman II") was 
published, both parties filed with the district court their respective versions 
of a final order.  The district 
court ultimately decided to adopt the order presented by E. Michael 
Lieberman.  Wyoming.com LLC 
("Wyoming.com"1) is appealing the content of the 
order entered by the district court.  
Wyoming.com protests that the order of the district court does not 
properly reflect the holdings of this Court in Lieberman II.  Finding that the order of the district 
court does not substantially comply with the decision and mandate of this Court 
in Lieberman II, we reverse and remand with directions. 

 
 
 
 
ISSUE

 
 

[¶2]          
Wyoming.com 
requests this Court to review whether the district court's order on remand 
substantially complies with the mandate and opinion of this Court in 
Lieberman II.

 
 
 
 
FACTS

 
 

[¶3]          
Lieberman 
was a member of Wyoming.com.  He 
withdrew as a member but not as an equity interest holder.  Because the parties could not agree upon 
the financial consequences of Lieberman's withdrawal as a member, Wyoming.com 
filed a petition for a declaratory judgment requesting the district court 
determine the financial rights and obligations of the parties, if any, upon the 
withdrawal of a member.  Upon 
review, this Court determined that Lieberman retained his ownership interest in 
Wyoming.com despite his withdrawal as a member.  The operating agreements presented to 
this Court revealed that the parties never agreed that a buyout would be 
required when a member withdrew.  
The governing Wyoming statutes contain no provision that 
might fill this gap and provide for a buyout upon the withdrawal of a 
member.  Given this void, 
Lieberman II held that there are no further rights or obligations that 
can be judicially declared with regard to the equity interest of Lieberman 
beyond the fact that Lieberman retains his equity 
interest.

 
 

[¶4]          
Upon 
remand, both parties submitted respective drafts of a final order for the 
action.  Eventually, the district 
court entered the following order, as drafted by Lieberman:2

The 
above cause having been appealed and reversed in Lieberman v. Wyoming.Com, 2004 
WY.1 [sic] decided on January 13, 2004 and on January 28, 2004 remanded with 
specific directions, this Court, now being fully advised, FINDS THAT E. Michael 
Lieberman maintains his equity interest in Wyoming.com unaffected by his 
termination as its Vice-President February 27, 1998 and his withdrawal from 
participation in the management of the company.  There has been no divestment of his 
equity rights as an owner of the business known on February 27, 1998, as 
Wyoming.com LLC, it is, therefore

ORDERED 
that (1) the prior decision of the District Court in the above captioned cause 
is reversed, (2) that E. Michael Lieberman is and remains owner of his equity of 
the business known on February 27, 1998 as Wyoming.com LLC with all of the 
rights and responsibilities attendant thereto, and (3) that the [sic] 
Wyoming.com and its management take immediate steps to implement this 
Order.

 
 
Lieberman 
filed a motion for discovery after this order was entered, seeking discovery not 
only from Wyoming.com but also from its successor in interest (specifically 
naming "Wyoming.com," referring to the corporation, as the successor).  The district court initially granted 
Lieberman's motion to compel discovery.  
Wyoming.com filed a motion for reconsideration, and the district court, 
without giving any specific reason, granted Wyoming.com's motion and vacated the 
order to compel. 

 
 

[¶5]          
Wyoming.com, 
believing the above order of the district court does not substantially comply 
with the holding of this Court in Lieberman II, filed a motion pursuant 
to W.R.C.P. 59 to alter or amend judgment.  
The district court denied the motion.  Wyoming.com then filed this appeal, 
continuing to argue that this order does not substantially comply with the 
findings of this Court in Lieberman II.

 
 
 
 
DISCUSSION

 
 

[¶6]          
Initially, 
it must be noted that Lieberman challenges the jurisdiction of this Court to 
hear this appeal on the grounds that it is only a motion for reconsideration in 
disguise; the time for a motion for reconsideration having long past.  We disagree with this characterization 
of the instant appeal.  Wyoming.com 
is not challenging the substantive holdings of this Court in Lieberman 
II.  Wyoming.com is only 
challenging whether the resulting order of the district court substantially 
complies with the mandate and opinion in Lieberman II.3  

 
 

[¶7]          
Having 
decided this Court has jurisdiction to review the order of the district court, 
we find the order does not substantially comply with the opinion and mandate of 
Lieberman II.  The main flaw 
with the order is that it does not dismiss the underlying petition.  The only question at issue in this 
action for declaratory judgment regards the potential effects of Lieberman's 
withdrawal as a member on his equity interest.  In Lieberman II, this Court, in 
answering the specific issues raised, determined that the operating agreements 
reflect that Lieberman possesses an equity interest in Wyoming.com.  2004 WY 1, ¶16, 82 P.3d 274, ¶16. 
Lieberman II further held that Lieberman's withdrawal as a member, in and 
of itself, did not trigger any further financial rights or obligations from 
either party.  Id. at 
¶17.

 
 

[¶8]          
More 
specifically, Lieberman II held that no provision exists either in 
Wyoming 
statutes or the operating agreements of Wyoming.com requiring any particular 
disposition of a member's equity interest upon his withdrawal as a member. 
 Thus, Wyoming.com could not 
legally force Lieberman to sell his equity interest at any particular value, and 
Lieberman could not force Wyoming.com to buy his equity interest at any 
particular value.  This answered the 
question presented by Wyoming.com in its petition for declaratory judgment.  While not explicitly stated in the 
opinion, with the question answered, nothing remains but to dismiss the 
underlying petition.  No further 
proceedings are required to resolve this action.  Thus, any order entered pursuant to the 
mandate and opinion of this Court must include dismissal of the underlying 
petition.

 
 

[¶9]          
The 
actions of Lieberman immediately following the entry of the order, as well as 
his argument on appeal, clearly reveal that he believes the action to be 
continuing and somehow jurisdiction has been acquired over the successor in 
interest of Wyoming.com and the order applies to such successor.4   His attempt to pursue discovery of 
financial documents of Wyoming.com LLC and its successor in interest after the 
entry of the order obviously is based upon this belief.  On appeal, Lieberman argues that, under 
the current status of the case, "the needed declaration of the parties' rights 
requires further proceedings, so the District Court will know what has occurred 
in the Company since 1998 that affects those rights."  His error, however, is that the original 
question brought in the petition filed by Wyoming.com in no way relates to 
anything that has happened since the filing of the petition that might affect 
the rights of an equity interest holder.  
This basic procedural framework has never changed.  Lieberman's attempt to obtain 
information regarding "what has occurred in the Company since 1998 that affects" 
the equity interest he held in Wyoming.com LLC at the time he withdrew as a 
member, while understandable, has no place in the current 
action.

 
 
 
 
CONCLUSION

 
 

[¶10]      
This 
action can be summed up fairly easily.  
Lieberman withdrew as a member of Wyoming.com.  The parties were uncertain of the 
financial consequences of such withdrawal so Wyoming.com filed a petition for 
declaratory judgment asking solely for a declaration of the financial rights and 
obligations of the parties, if any, upon the withdrawal of a member.  The judicial answer to that question is 
that the withdrawing member simply retains his equity interest.  The member's withdrawal does not trigger 
any forced buyout procedure of the withdrawing member's equity.  

 
 

[¶11]      
As 
specifically applied to this case, Lieberman simply retains his equity interest 
and nothing further is required of either party as a direct result of 
Lieberman's withdrawal as a member.  
Wyoming.com is not required to buy Lieberman's equity interest at 
Lieberman's asking price, and Lieberman is not required to sell his equity 
interest back to Wyoming.com at any specified buyout price.  With the question answered, the petition 
should be dismissed.  The order of 
the district court is reversed, and the case is remanded for the entry of an 
order consistent herewith.

 
 
 
 
  

KITE, 
Justice, specially concurring.

 
 
[¶12]   I concur with the result reached by 
the majority in this matter solely because it is mandated by Lieberman v. 
Wyoming.com LLC, 2004 WY 1, 82 P.3d 274 (Wyo. 2004).  I joined Justice Lehman's dissenting 
opinion in that case because I found it more appropriate to allow a minority 
interest owner in an LLC a mechanism to realize the value of his equity 
interest.  Given the majority's 
ruling that Mr. Lieberman owns an equity interest, but neither the operating 
agreement nor the statute provide a method for him to realize the value of that 
interest, there is nothing left for the district court to order Wyoming.com LLC 
to do.  Consequently, the order at 
issue in this case exceeded this Court's mandate.  However, I suspect this is not the end 
of the story.  We have not had the 
occasion to address Mr. Lieberman's rights as a minority owner in the LLC nor 
the obligations of the LLC to him as a minority interest owner.  Those rights and responsibilities in the 
context of other forms of business organizations are well developed and may 
provide guidance in the realm of the LLC.  
See Harvey Gelb, Fiduciary Duties and Dissolution in the 
Closely Held Business, 3 Wyo. L. Rev. 547 (2003); Sandra K. Miller, 
What Standards of Conduct Should Apply to Members and Managers of Limited 
Liability Companies?  68 
St. 
John's L. 
Rev. 21 (1994); and Franklin A. Gevurtz, Squeeze-outs and Freeze-outs in 
Limited Liability Companies, 73 Wash. U.L.Q. 497 
(1995).

 
 
 
 
  
BRACKLEY, 
D.J., dissenting.

            

[¶13]      
I 
am concerned the majority's third decision does not give the parties necessary 
direction on how to resolve their disputes.  Therefore, I must respectfully 
dissent.  I would dismiss this third 
appeal as premature and remand the case back to the trial court to determine the 
precise nature of Lieberman's equity interest and remedies that may be 
available.

 

[¶14]      
Lieberman 
II 
remanded this matter to the trial court "for a declaration of the parties' 
rights."  2004 WY 1, ¶19, 82 P.3d 274, ¶19.  The "Order Upon Remand" 
entered by the trial court herein acknowledged this Court's ruling and ordered 
Wyoming.com LLC to do the same.  
Instead of officially recognizing Lieberman's equity interest and 
documenting how the LLC intended on treating Lieberman in the future  
Wyoming.com appealed.  The appeal 
has the practical effect of "freezing out" Lieberman.  Because of the unwarranted or premature 
appeal, Lieberman was prohibited from discovery and/or pursuing a specific 
remedy in the trial court; and the District Court was prohibited from deciding 
and adjudicating proper remedies.

 
 
 
 

FOOTNOTES

1Wyoming.com 
requests this Court refer to it as Wyoming.com LLC in order to distinguish it 
from Wyoming.com, a Wyoming corporation, into which Wyoming.com 
LLC has allegedly merged.  
Wyoming.com Inc. has not been made a party to these proceedings.  The only party of record is Wyoming.com 
LLC.  Therefore, there is no need to 
make the distinction requested by Wyoming.com LLC.

2The 
caption of the order inadvertently became inverted, e.g., Lieberman v. 
Wyoming.com LLC instead of Wyoming.com LLC v. Lieberman.  We assume this oversight will be 
corrected upon remand.

3We do 
note that this action would have been more properly raised as a writ of 
mandamus, but since the district court has had the opportunity to consider this 
issue, first when choosing between proposed orders, and then when it ruled on 
this issue in the context of Wyoming.com's motion to alter or amend judgment, we 
accept this appeal in its current form.  
This is not without precedent.  
Under almost identical circumstances, this Court has previously decided 
an appeal without comment as to the procedural posture of the appeal.  See Sanders v. Gregory, 
652 P.2d 25 (Wyo. 1982) (direct appeal of content of order 
of trial court entered pursuant to remand from this 
Court).

4Since 
the corporation is not a party to these proceedings it is impossible for the 
order to refer to the corporation.  
Any argument by Lieberman to the contrary is 
frivolous.