Opinion ID: 2320129
Heading Depth: 1
Heading Rank: 5

Heading: The Estate's interpretation

Text: We must next consider whether U.S. Trust's interpretation of the Operating Agreement, on behalf of Mr. Bealer's Estate, is also reasonable. See Gryce, 675 A.2d at 69 (explaining that court must inquire whether both parties' interpretations of the contract are reasonable). The Operating Agreement provides, [u]nless named in this Agreement or otherwise admitted to the Company in accordance with the terms of the Agreement, no person or entity shall be considered a Member. (Paragraph 12(c)). U.S. Trust argues that Mr. Parker is not a member of HEB LLC because he is not listed on the signature page of the Operating Agreement and did not sign it. Because Mr. Parker's name appears in Exhibit A of the Operating Agreement only in connection with his joint ownership, as Tenant by the Entirety, of the one-third interest held by his wife, U.S. Trust relies on the well-established principle that tenants by the entireties own a unitary interest in the whole property, to argue that each spouse should not be considered as having a separate interest in the company, with independent membership status. It argues that the Parkers, therefore, jointly constituted one Member and could not elect to continue operation of HEB LLC after Mr. Bealer's death because Section 15(a)(i) of the Operating Agreement requires that at least two members make that election. In addition to making this legal argument, U.S. Trust produced an affidavit signed by Mr. Bealer, dated April 25, 2000, which lists only Mr. Bealer and Ms. Parker as Members. As U.S. Trust correctly argues, the cases cited by the Parkers Fairclaw and Arbesman hold that tenants by the entireties share the same interest in the owned property and that their interests are equal and indivisible. See Fairclaw, 76 U.S.App.D.C. at 201, 130 F.2d at 833 (noting that each is entitled to the enjoyment and benefits of the whole and neither has a separate estate therein which may be subjected to a conveyance or execution); Arbesman, 468 A.2d at 637 (referring to a `team theory' approach to the tenancy by the entireties estate). Appellee's argument that the Parkers' interest should be understood in this manner, as constituting a single Member, is, we conclude, also reasonable. The unique characteristic of a tenancy by the entireties as matter of property law, however, does not necessarily resolve the question before the court: who is to be considered a member under the terms of the Operating Agreement. That issue is to be determined not by any individual party's subjective intent but, at least initially, from an objective reading of the Agreement itself. But where the operative term Member is not defined in the Agreement, and in addition there is an inconsistency between the members listed on the signature page and those listed in an exhibit that is incorporated into the Agreement, as here, the interpretive question necessarily requires reference to extrinsic criteria. In this case, those include the statutory definition of member that appellants claim would lead to the Parkers being considered two members, and the common law understanding that tenants by the entireties are for most purposes considered a unit. U.S. Trust does not argue against reading the term Member used in the Agreement in light of the statutory definitions of member and interest; rather, it disputes that the undivided nature of Mr. Parker's interest in the company would entitle him to be considered a member. [9] The Parkers, for their part, do not dispute that property held as a tenancy by the entireties is indivisible, but they argue that the manner in which property is held by spouses as tenants by the entireties and the interest each individual spouse has in that jointly held property are different concepts, and it is the latter that is relevant to the definition of Member. As we consider that both interpretations are reasonable, we conclude that the Operating Agreement is ambiguous, see Holland, 456 A.2d at 815, and remand the case so the issue whether Mr. Parker was a member at the time of Mr. Bealer's death can be submitted to the factfinder to determine, based on all the evidence, which interpretation is correct in light of the Agreement's language, structure and purpose. See Gryce, 675 A.2d at 67.