Opinion ID: 1887503
Heading Depth: 3
Heading Rank: 1

Heading: Olson's Fair-Value Claim

Text: Olson contends that Viking owes him the fair value of his equity interest, and that we must remand this fair value claim for a new trial. Under Section 18-604 of the Delaware LLC Act, a resigning member of an LLC is entitled to receive... the fair value of such member's limited liability company interest, unless the LLC agreement provides otherwise. [18] Under 6 Del. C. § 17-604, a withdrawing partner of a limited partnership is entitled to receive ... the fair value of such partner's partnership interest, unless the partnership agreement provides otherwise. Olson admits that the founders originally agreed that a departing member would only receive his cap and comp. Thus, for Olson to succeed on his fair-value claim, he had to prove that the founders amended their original cap and comp agreement. The Vice Chancellor found that the founders never superseded the original cap and comp agreement. The evidence substantially supporting this finding includes that the founders agreed on the cap and comp principle because of their experience at Tiger; all the long-form and short-form operating agreements adhere to the cap and comp principle; the founders never signed the draft Founders agreement that contained the earnout provision; the founders did not discuss the earnout provision when they renegotiated their compensation percentages; Olson could have left Viking immediately after the renegotiation with a substantial amount of additional money, yet without obligation to confer any additional corresponding benefit to Viking; Olson told Cahill on several occasions that Viking's founders were only entitled to their cap and comp upon departing from Viking; all three Viking founders told Cahill that they never agreed to an earnout; no one discussed the Founders agreement or the earnout provision, even though Cahill listed Founders on the management committee meeting agendas for several months; Smith testified that he believed that the Viking founders never agreed to an earnout and or finalized the draft Founders operating agreement; Olson did not list on his 2003 and 2004 personal financial statements the value of the equity that he now claims to have in the Viking enterprise; and Olson did not bring up the alleged earnout until August 29, 2005, when Halvorsen and Ott told him that he could not return to Viking. Very little, if any, evidenceoutside of Olson's testimonyindicates that Viking's founders departed from the cap and comp agreement. Olson claims that, by granting summary judgment on Olson's contract claim, the Vice Chancellor prevented only consideration of the evidence supporting Olson's fair-value claim. Olson bases his argument on the fact that the Vice Chancellor's post-trial opinion does not discuss the liquidation agreement or the testimony related to it. Olson contends that the liquidation agreement, which the founders signed, evidences the founders' decision not to surrender their equity interests. Granting summary judgment on Olson's contract claim did not affect the Vice Chancellor's consideration of Olson's fair-value claim. Nor did that ruling prevent Olson from introducing any evidence at trial. In fact, Olson attempted to prove, and the Vice Chancellor addressed in his post-trial opinion, the existence of an earnout or other equity-distribution scheme that departed from the parties' cap and comp agreement. Although the Vice Chancellor did not discuss the liquidation agreement specifically in his post-trial opinion, that fact offers little, if any, support for Olson's claim that the founders agreed to an equity payout. The liquidation agreement merely refers to the operating committees and agreements. [19] The Vice Chancellor did not limit Olson's use of the liquidation agreement at trial. Therefore, we uphold the Vice Chancellor's findings that the Viking founders never departed from the original cap and comp agreement and that Viking does not owe Olson an equity payout. These findings were not clearly erroneous.