Court Opinion

ID: 8375158
Source: CourtListenerOpinion
Date Created: 2022-10-21 14:03:55.781206+00
Date Added: 2024-06-11T16:46:30.013530
License: Public Domain

RENDERED: OCTOBER 14, 2022; 10:00 A.M.
                   NOT TO BE PUBLISHED

           Commonwealth of Kentucky
                   Court of Appeals
                     NO. 2021-CA-0511-MR

KENNETH RAYMOND SCHOMP
AND QUALITY LOGISTICS, LLC                           APPELLANTS

            APPEAL FROM FAYETTE CIRCUIT COURT
v.          HONORABLE LUCY A. VANMETER, JUDGE
                   ACTION NO. 18-CI-04270

WILLIAM O. HOLTON, IV,
INDIVIDUALLY AND
DERIVATIVELY ON BEHALF OF
QUALITY LOGISTICS, LLC                                 APPELLEE

AND

                     NO. 2021-CA-0557-MR

WILLIAM O. HOLTON, IV,
INDIVIDUALLY AND
DERIVATIVELY ON BEHALF OF
QUALITY LOGISTICS, LLC                       CROSS-APPELLANT

         CROSS-APPEAL FROM FAYETTE CIRCUIT COURT
v.         HONORABLE LUCY A. VANMETER, JUDGE
                   ACTION NO. 18-CI-04270
KENNETH RAYMOND SCHOMP
AND QUALITY LOGISTICS, LLC                                   CROSS-APPELLEES

                                    OPINION
                                   AFFIRMING

                                  ** ** ** ** **

BEFORE: CLAYTON, CHIEF JUDGE; COMBS AND JONES, JUDGES.

JONES, JUDGE: Following a bench trial, the Fayette Circuit Court entered a final

judgment in favor of William O. Holton, IV with respect to the value of his prior

interest in Quality Logistics, LLC. The parties appealed, and their appeals were

consolidated. Having reviewed the record and being otherwise sufficiently advised

in the law, we affirm.

                                 I. BACKGROUND

             Kenneth Raymond Schomp founded Quality Logistics LLC (“QL”), a

transportation brokerage company, in 2011. Approximately two years later, he

hired William O. Holton, IV. In 2014, Schomp and Holton entered into an

incentive agreement whereby Holton was able to acquire an ownership interest in

QL. By January 2017, Holton had acquired 40 ownership units in QL making him

a 30.769% owner of the business. The remaining units were owned by Schomp.

Sometime around 2018, Schomp and Holton became increasingly dissatisfied with

one another. Ultimately, Schomp, as the majority owner, decided to terminate

                                        -2-
Holton and force a buy-out of Holton’s QL units pursuant to QL’s Second

Amended Operating Agreement (“OA”).

              On November 2, 2018, QL, by and through Schomp, notified Holton

in writing of its decision to terminate Holton’s employment. Further, QL indicated

that because Holton’s termination was a “Disqualifying Event” pursuant to Section

8.e. of the OA, it was also exercising its right to “require the purchase” of Holton’s

shares in accordance with Section 8.d., which sets forth the method for determining

the value of QL and the outstanding units. Pursuant to these two sections, Schomp,

to whom QL had assigned its rights, notified Holton he would purchase Holton’s

40 units in QL for a total appraised value of $884,559.

              Holton refused to sell his units at the price quoted in Schomp’s letter

and took issue with how the units had been appraised. He later notified Schomp

that his own appraiser, Calvin Cranfill, had assigned his units a substantially higher

value. After Schomp refused to purchase the units at the higher value, Holton filed

the underlying suit in Fayette Circuit Court against Schomp and QL.1 In his suit,

Holton sought a declaratory judgment regarding the value of his units of QL.

Over the next several years, the litigation focused heavily on how to interpret and

apply the two key provisions of the OA, Sections 8.d. and 8.e.

1
   We recognize that Holton’s suit named both Schomp and QL as defendants and that both are
likewise named as parties in the appeal and cross-appeal. However, in the remainder of this
Opinion we refer to them collectively as “Schomp” when discussing the underlying suit and the
present appeals.

                                             -3-
            Section 8.e., entitled “Disposition of Units Upon Disqualifying

Event,” provides:

            The Company shall have the right to purchase, and the
            Member shall have the right to require the Company to
            purchase, the Member’s interest in the Company, upon or
            anytime after the Managing Member reasonably
            determines that a Disqualifying Event has occurred with
            respect to that Member. A Disqualifying Event for a
            Member shall be: (i) the termination for any reason,
            voluntary of [sic] involuntary, of employment by the
            Member with the Company; (ii) breach of this
            Agreement by the Member; (iii) any breach by the
            Member of any other agreement between the Member
            and the Company; or (iv) any failure to guaranty
            obligations of the company as determined by the
            Managing Member. However, if the Disqualifying Event
            is a result of death of the Member, the provisions of
            Section 8.d. shall apply in lieu of this provision.
            Notwithstanding the foregoing, in the event of a
            Disqualifying Event of the Managing Member, the
            Managing Member shall not be required to sell the
            Managing Member’s interest, and such interest shall
            remain owned by the Managing Member. A Member or
            the Company wishing to exercise its right to purchase or
            require the purchase under this provision shall give
            notice in writing to the Company and the other Members.
            The purchase price shall be the fair market value of the
            interest as determined by the procedure set forth in
            Section 8.d., without reference to insurance. The
            purchase price shall be paid, and the interest transferred,
            within sixty (60) days of the notice. At the option of the
            purchaser, the purchase price may be paid by tendering
            25% of the purchase price to the selling Member, at
            which tiem [sic] the Member’s interest shall be deemed
            tranfered [sic], with a promissory note for payment of the
            balance of the purchase price over a three-year period,
            with equal installments to be paid quarterly without
            interest. The Company may assign its right or obligation

                                        -4-
            to purchase to another Member or a third party, in the
            Company’s sole discretion as determined by the
            Managing Member.

(Emphasis added.)

            Section 8.d. provides the method for calculating the fair market value

of a member’s ownership units as follows:

            Death of a Member. Upon the death of a Member, the
            Member’s estate or beneficiary or beneficiaries, as the
            case may be, shall be entitled to receive from the
            Company, in exchange for all of the deceased Member’s
            Ownership Interest, the fair market value of the deceased
            Member’s Ownership Interest, adjusted for profits and
            losses to the date of death. Fair market value may be
            determined informally by a vote of the holders of a
            Majority Interest of all Units of Membership then
            outstanding and entitled to vote, or by the written assent
            of such Members. In the absence of an informal
            agreement as to fair market value, the Managing Member
            shall hire an appraiser to determine fair market value.
            The cost of any appraisal shall be deducted from the fair
            market value to which the deceased Member’s estate or
            beneficiary or beneficiaries is or are entitled. In the event
            that the Company has purchased insurance on the life of
            the deceased Member, (i) the fair market value shall be
            the value provided to the insurer; and (ii) the proceeds
            from such insurance, to the extent they are based on such
            fair market value (that is, not including additional
            amounts for which insurance may be obtained) shall be
            used to purchase the deceased Member’s interest, which
            proceeds shall be paid to the estate or beneficiaries of the
            deceased member within 60 days of receipt of such
            proceeds from the insurer. In the event no such insurance
            exists, the Company may elect, by written notice to the
            deceased Member’s estate or beneficiary or beneficiaries,
            within thirty (30) days after the Member’s death, to
            purchase the deceased Member’s Ownership Interest

                                        -5-
             over a one-year (1 year) period, in four (4) equal
             installments, with the first installment being due sixty
             (60) days after the Member’s date of death. Prior to the
             completion of any such purchase, the Member’s estate or
             beneficiary or beneficiaries shall have no right to become
             a Member or to participate in the management of the
             business and affairs of the Company as a Member, and
             shall only have the rights of an Assignee and be entitled
             only to receive the share of profits and the return of
             capital to which the deceased Member would otherwise
             have been entitled. Notwithstanding the foregoing, in the
             event of the death of the Managing Member, the
             Company shall not be required to sell the Managing
             Member’s interest, and such interest shall thereafter
             continue in the estate (and ultimately the beneficiaries) of
             the Managing Member.

             Broadly summarized, the circuit court was tasked with interpreting

Sections 8.d. and 8.e. consistently with both the explicit terms of the OA and the

implied covenant of good faith and fair dealing. It did so by adjudicating several

dispositive motions and conducting a bench trial. Ultimately, the circuit court

concluded that the fair market value of Holton’s outstanding shares was

$1,804,878, a substantially higher sum than Schomp had originally proposed. The

circuit court added prejudgment interest at the rate of 8%, compounded annually

from January 1, 2019, until paid, for a total judgment in Holton’s favor of

$2,150,889, as of April 10, 2021. This appeal and cross-appeal followed.

                                         -6-
                                 II. STANDARD OF REVIEW

                This is an appeal from a bench trial. The factual findings of the trial

court will not be set aside unless clearly erroneous. CR2 52.01. Although we grant

a high degree of deference to factual findings, “appellate review of legal

determinations and conclusions from a bench trial is de novo.” Barber v. Bradley,

505 S.W.3d 749, 754 (Ky. 2016).

                         III. CROSS-APPEAL NO. 2021-CA-0557

                The arguments Holton puts forth in cross-appeal No. 2021-CA-05573

concern: (1) the circuit court’s interpretation of the nature of his right to dispute

QL’s appraisals of his ownership units, pursuant to Sections 8.d. and 8.e. of the

OA; and (2) the circuit court’s ultimate decision to accept an appraisal by John

Herring as an adequate valuation of his units’ fair market value.

           A. The nature of Holton’s right to dispute any of QL’s appraisals

                Schomp’s initial position throughout much of the underlying

proceedings – as outlined in a motion for partial dismissal he filed on January 3,

2019 – was that the “procedure set forth in Section 8.d.” entitled him to hire

anyone he deemed an “appraiser” to give Holton’s units any “fair market value,”

2
    Kentucky Rule of Civil Procedure.
3
   Although unusual, we begin our review with the cross-appeal, rather than the appeal, because
its arguments require a more thorough consideration of the facts of the case. In addition, we
determined that arguments made in the cross-appeal could affect and possibly moot the
arguments made in the appeal.

                                              -7-
and to require Holton to sell at that price.4 Schomp insisted the explicit language

of Sections 8.d. and 8.e. provided Holton no means for contesting how his units

were valued or for resisting their sale.

               Holton, on the other hand, argued he had a right to contest QL’s

appraisal. He also argued that Sections 8.d. and 8.e. – which provided that Schomp

could hire “an appraiser” – at most gave Schomp the right to hire only the first of a

possible succession of appraisers. Holton reasoned that if the circuit court

ultimately determined the appraiser Schomp hired was unqualified or had

otherwise acted inappropriately in conducting the initial appraisal, Sections 8.d.

and 8.e. entitled the circuit court to consider any other relevant evidence (including

his own appraisal from Calvin Cranfill regarding his units’ value) and to conduct a

de novo review of the value of his ownership units.

               The circuit court resolved these issues over the course of two separate

orders. First, in a December 23, 2020 order of partial summary judgment, it

explained:

                      PECO[5] concerned a similar valuation dispute. In
               that case, the operating agreement provided the company

4
  In ascertaining the “fair market value” of Holton’s units, Schomp did not attempt to utilize his
authority as the majority unit holder, pursuant to Sections 8.d. and 8.e., to determine fair market
value “informally” by vote – which, based solely upon the explicit language of those provisions,
would have entailed only Schomp’s vote on a valuation that only Schomp created. Accordingly,
any effect that the implied duty of good faith and fair dealing would have had upon that aspect of
Sections 8.d. and 8.e. is a non-issue.

                                               -8-
             “must engage at its cost ‘a nationally recognized
             valuation firm . . . to determine the Fair Market Value of
             the Put Units as determined by the Valuation Firm in
             accordance with this Agreement . . .’” Id. at *2. The
             operating agreement specifically set out the formula to be
             used by the valuation firm and stated the parties “shall be
             bound by the determination of the Valuation Firm . . .
             pursuant to this Section 9.2(b) and the terms of this
             Agreement.” Id. at *4.

                  In PECO, the Court noted there are three
             conceptual levels of judicial review of appraisals that
             may be used in an operating agreement:

                    First, the parties could agree to de novo
                    judicial review, with the calculated
                    valuation merely acting as a starting point
                    for the reviewing court in case of a dispute.
                    Second, as an intermediate level of review,
                    the parties could choose to appoint an
                    appraiser to determine a valuation, and
                    designate that appraiser as an arbitrator
                    should the parties disagree on the
                    valuation, with review of the appraiser’s
                    decision limited to whatever statutory or
                    private regime is chosen to govern the
                    arbitration. Third, the parties could agree
                    to a regime in which the appraiser’s
                    valuation is final, thereby precluding
                    judicial or any other form of review of the
                    appraiser’s substantive determination of
                    value. The rationale for this final option is
                    captured in a rhetorical question the
                    Chancellor posed in Senior Housing:[6]

5
  PECO Logistics, LLC v. Walnut Inv. Partners, L.P., No. CV 9978-CB, 2015 WL 9488249
(Del. Ch. Dec. 30, 2015).
6
 Senior Housing Capital, LLC v. SHP Senior Housing Fund, LLC, No. CIV.A. 4586-CS, 2013
WL 1955012 (Del. Ch. May 13, 2013).

                                          -9-
      ‘When parties contractually decide to have
      a qualified expert with relevant credentials
      make a determination of value without any
      indication that the expert’s judgment is
      subject to judicial review, on what basis
      would it make sense to infer that the parties
      intended to have a law-trained judge do a
      de novo review of the expert’s
      determination?’

Id. at *10 (emphasis added). The PECO court held the
parties, by agreeing to be “bound” by the appraisal, chose
the third method which does not provide for judicial
review. In other words, the Court would not second
guess the judgment calls made by the appraiser. Id. at
*10.

       However, the PECO court noted there is an
implicit duty of good faith and fair dealing such that even
parties who agree to be “bound” by an appraisal may
seek judicial review to ensure the “appraiser’s
determination was the product of good faith, independent
judgment.” Id. at *11. The Court explained the scope of
judicial review as follows:

      Even in this [third] scenario . . . it is not the
      case that a party bound by an appraiser’s
      determination has no procedural
      protections. In such a scenario, it is a
      contractual expectation that the appraiser
      make a good faith, independent judgment
      about value to set the contractual input. If
      one of the parties to the contract takes
      action to taint the appraisal process – for
      example, by providing the appraiser with
      false financial statements – a court can of
      course protect the injured party. Such
      judicial review would not, however, involve
      second-guessing the good faith judgment of
      the appraiser or examining the appraiser’s

                            -10-
      valuation judgments for consistency with a
      judge’s understanding of relevant corporate
      finance principles. It would instead involve
      a judge determining that a party had
      breached the contract’s implied covenant
      of good faith and fair dealing, and that this
      breach, as its proximate result, deprived the
      appraiser’s work of contractual integrity.
      Thus, judicial review is not unavailable,
      but is restricted to considering a claim that
      the appraisal is unworthy of respect
      because it does not, as a result of
      contractual wrongdoing, represent the
      genuine impartial judgment on value that
      the contract contemplates.

Id. (emphasis added).

       In Leach v. Princeton Surgiplex, LLC, 2013 WL
2436045 (N.J. Super. Ct. App. Div. June 6, 2013), the
Court similarly held “[i]mplied in the operating
agreement must be an understanding that the appraiser
will utilize accepted professional norms and that a party
to the operating agreement reserves the right to challenge
the appraisal’s results upon the appraiser’s failure to
conform to accepted standards.” Id. at *3. The Court
further explained:

      [S]uch a contractual provision [regarding
      fair market valuation] does not eliminate
      all grounds for attacking the appraiser’s
      methodology or results.

                        *** *** ***

      First, we discern from plaintiff’s arguments
      that he contends it would frustrate the
      purpose of the buy-out provisions to assume
      those provisions preclude any inquiry into
      the appraiser’s methods, the information

                           -11-
      considered by the appraiser, the calculations
      made, or the conclusions drawn by the
      appraiser, even though the agreement does
      not contain any provisions for questioning of
      the appraisal. We agree. The operating
      agreement expressly designates the appraiser
      (or its substitute) and directs a determination
      of Surgiplex’s fair market value. It cannot
      be seriously argued that the appraiser is
      entitled to determine fair market value by
      spinning a wheel or flipping a coin, or that
      the appraiser may consider less than all
      relevant evidence, or that no party could
      question a mathematical error in the
      appraiser’s calculations. Implied in the
      operating agreement must be an
      understanding that the appraiser will
      utilize accepted professional norms and
      that a party to the operating agreement
      reserves the right to challenge the
      appraisal’s results upon the appraiser’s
      failure to conform to accepted standards.

Id. at *2 (emphasis added). See also Leone v. Owsley,
810 F.3d 1149, 1155 (10th Cir. 2015) (holding, “at the
time the parties entered into the Operating Agreement
they clearly would have expected a ‘good faith’ valuation
of their ownership interests would require the Managers
to refrain from taking action that would result in an
unreasonably low figure. Focusing on the express
contractual provision, one would expect the same fidelity
at the time of the valuation.”)

       In the subject OA, the parties agreed the “purchase
price shall be the fair market value of the interest as
determined by the procedure set forth in Section 8.d.” In
turn, Section 8.d. provides “the Managing Member shall
hire an appraiser to determine fair market value.”

                           -12-
                    By employing the mandatory “shall,” the parties
             agreed to be bound by the appraisal of the firm selected
             by the Managing Member. The plain language of the OA
             does not contemplate de novo judicial review.
             Accordingly, the Court will not second-guess the good
             faith judgment of the appraiser. However, implied in the
             OA is a duty of good faith and fair dealing.

             The circuit court also rejected Holton’s additional argument that

Sections 8.d. and 8.e. entitled it to conduct a de novo review of the value of his

ownership units if it ultimately determined the first appraiser was unqualified or

had otherwise acted inappropriately in conducting the appraisal. In a subsequent

order of April 1, 2021, in which the circuit court rendered its post-trial findings of

fact and conclusions of law, the circuit court concluded the OA “does not prohibit

[Schomp and QL] from proffering an alternative opinion in the context of Holton’s

legal challenge.”

             To be clear, there is now no dispute among the parties that the first

appraisal Schomp commissioned relative to this matter (from Daniel King) was

entitled to the deferential level of review described by the circuit court, set forth

above; and that the circuit court otherwise properly applied the law, and properly

interpreted Sections 8.d. and 8.e. of the OA, in rejecting it; indeed, no one asserts

any argument to the contrary. Why the circuit court rejected King’s appraisal will

be a subject of greater discussion later in this Opinion, in the context of a separate

                                          -13-
issue involving prejudgment and post-judgment interest raised by Schomp in

appeal No. 2021-CA-0511.

             However, in cross-appeal No. 2021-CA-0557, Holton argues the

circuit court erred in determining that a subsequent appraisal Schomp elected to

obtain (from John Herring) was also entitled to that deferential level of review. As

he did below, Holton asserts that the explicit language of the OA – stating Schomp

had the right to hire “an appraiser” – indicates that Schomp should not have had

any right to “a second bite at the appraisal apple.” In his view, since the circuit

court rejected the first appraisal, Schomp did not have the right to expect that any

subsequent appraisal he commissioned would be entitled to the same level of

deferential review. Instead, Holton asserts that in that situation, the circuit court

should have made a de novo determination of QL’s fair market value and should

not have afforded either of Schomp’s appraisals any sort of presumptive weight.

             Here, the explicit language of the OA was silent regarding whether

Holton had any means of contesting an appraisal. And, if he never had any means

of contesting an appraisal, Schomp would never have had any need to commission

more than one appraisal. Nevertheless, as the circuit court properly held, the

implied covenant of good faith and fair dealing did provide Holton a limited means

of contesting the appraisal of his units’ fair market value, consistent with the OA.

Indeed, absent any means of challenging Schomp’s appraisal, the “fair market

                                          -14-
value” mandate of the appraisal “procedure” of Sections 8.d. and 8.e. would have

been rendered superfluous; any “appraiser” Schomp commissioned could conduct

a valuation by simply flipping a coin or spinning a wheel, and those sections

would, as a practical matter, have amounted to nothing more than unenforceable

forfeiture provisions. See, e.g., Man O War Restaurants, Inc. v. Martin, 932

S.W.2d 366, 368 (Ky. 1996) (citations omitted) (“Equity detests forfeiture

provisions and frequently will find them unenforceable.”).

             In other words, providing Holton a means of contesting the

company’s first appraisal was certainly a term the parties would have agreed upon

during their original negotiations, had they thought to explicitly address that

matter. But this, in turn, begs the question Holton poses: If Holton successfully

contested the first appraisal, what about the second? Holton would have us

determine that once the first appraisal was rejected, he essentially stood on equal

ground with Schomp such that the circuit court was free to conduct its own

valuation of QL and to rely on any and all evidence it deemed competent in doing

so.

             This is where it is important to understand how an implied covenant

of good faith and fair dealing actually operates. The implied covenant generally

imposes on contractual parties “a duty to do everything necessary” to carry out

their contract. Farmers Bank and Trust Co. of Georgetown, Kentucky v. Willmott

                                         -15-
Hardwoods, Inc., 171 S.W.3d 4, 11 (Ky. 2005). To that end, it is a means of

implying terms which are essential to a determination of the rights and duties of

parties to a contract, which the parties would have agreed to during their original

negotiations if they had thought to explicitly address them. For example, when a

contract does not explicitly specify a time for performance, a “reasonable time” is

implied by virtue of the covenant. See Greg Coats Cars, Inc. v. Kasey, 576

S.W.2d 251, 252 (Ky. App. 1978).

             As the circuit court observed, nothing in the OA provided Holton any

right to have an appraiser of his choosing or to have the circuit court (sitting de

novo) value his shares in any binding way. Recall, the valuation procedure Holton

agreed to was for “the Managing Member” (Schomp) to “hire an appraiser to

determine fair market value,” per Section 8.d.; and, per Section 8.e., Holton further

agreed “[t]he purchase price shall be the fair market value of the interest as

determined by the procedure set forth in Section 8.d. without reference to

insurance.” (Emphasis added.) The overarching purpose of the limited review

process Holton was entitled to litigate was to determine whether Schomp had

fulfilled his duties relative to that valuation procedure, which entailed essentially

two overarching determinations from the circuit court: (1) whether Schomp had,

within the bounds of good faith and fair dealing, hired “an appraiser”; and (2)

                                         -16-
whether the appraiser, within the bounds of good faith and fair dealing, had

assigned a “fair market value” to Holton’s units.

             In other words, any judicial determination that Schomp failed to fulfill

either of those duties would not logically lead to the result advanced by Holton;

rather, it would merely indicate that Schomp had not, as of yet, fulfilled his duty to

“hire an appraiser to determine fair market value.” As stated, the circuit court

concluded the OA “does not prohibit Defendants from proffering an alternative

opinion in the context of Holton’s legal challenge.” If Schomp’s first appraisal

violated the duty of good faith and fair dealing, it would not have qualified as the

type of “appraisal” that the parties would have contemplated during their original

negotiations, had they thought to explicitly address that matter. Thus, it was

consistent with the parties’ bargain, as well as principles of specific performance,

to continue to recognize Schomp’s sole right to hire an appraiser to value Holton’s

units and to accord the subsequent appraisal the deference demanded by the

contract. Holton’s position is not grounded in the contract’s terms. Therefore, we

find no error with the circuit court’s decision to accord the second appraisal

deference.

                 B. The circuit court’s valuation of Holton’s units

             Again, Schomp ultimately had Holton’s units “appraised” twice –

once by Daniel King, QL’s longtime accountant, and several months afterward by

                                         -17-
John Herring. Utilizing the standard of review set forth above, the circuit court

accepted Herring’s appraisal as an adequate valuation of Holton’s ownership units.

Holton’s remaining argument in cross-appeal No. 2021-CA-0557 is that the circuit

court erred in doing so.

             In its April 1, 2021 order, the circuit court summarized the evidence

related to this argument in detail. In short, the circuit court recognized that QL

experienced significant growth from 2014 to 2017. For example, in 2014 QL had a

brokerage revenue of $6,655,635.79 and hired three new brokers. By 2018, it had

a brokerage revenue of $30,972,725.72 and hired eighteen new crew members. Its

gross profits in 2018 exceeded $72,000,000. Due to the nature of QL’s business,

its expenses were quite high. In addition to payroll, fuel, and carrier expenses, QL

regularly incurred expenses for travel, entertainment, and meals (collectively

referred to as travel-related expenses). The travel-related expenses were usually

charged on a company credit card by employees. In 2014, QL’s travel-related

expenses were $45,348. By 2018, the travel-related expenses had risen to

$467,341. While Holton acknowledged that approximately $180,000 of the travel-

related expenses were legitimate, he contended that QL’s employees regularly

abused the company credit card by charging personal items to the company, a

                                         -18-
practice which the company both tolerated and encouraged.7 QL’s poor record

keeping made it extraordinarily difficult to ascertain which of the travel-related

expenses were legitimate. For 2018, Schomp admitted that at least $148,252.30 in

personal expenses were claimed as “business expenses” on company financial

records. While Schomp claimed the remaining balance of $319,088.70 was for

legitimate business expenses, QL had no records to substantiate his claim.

              Regarding the Herring appraisal, the circuit court’s summary was as

follows:

                   QL subsequently hired appraiser John Herring of
              Dean Dorton Allen Ford PLLC. Herring is a CPA and a
              member of the American Institute of CPAs (“AICPA”).

                     As to King’s Appraisal, Herring testified the
              capitalization of earnings method using the weighted
              averages should not have been used for the valuation of
              QL. Herring testified that methodology is appropriate
              only when a company has stable cash flow. Here, QL
              had experienced significant recent growth.

                    Herring used a discounted future net cash flow
              method. Because his methodology was tied to net
              revenue for 2018, it was necessary to begin with an
              accurate figure for net income.

                     In this case, Herring believed the 2018 expenses
              for travel and entertainment were “notable.” He testified
              the test for normalization is whether a private equity firm
              would pay the expenses for a business of this type.

7
  Schomp admitted that both he and his girlfriend charged personal expenses to the company
credit card. Holton likewise admitted that he was encouraged to charge personal expenses to the
company credit card. The evidence suggested other employees did so as well.

                                             -19-
Herring asked a “fairly standard question” of Schomp
regarding whether there were any non-business expenses
running through the business. At his request, Schomp
undertook a review of company credit card invoices for
2018 and, as set out above, allocated $148,252.30 of
claimed business expenditures to personal expenses
(although Schomp’s review was limited to the first three
quarters of 2018).

       Herring accepted Schomp’s analysis without
question and did not conduct an independent review or
perform any forensic analysis. Based on this
information, Herring made a normalizing adjustment of
$148,252 to the 2018 operating expenses. Plainly
speaking, Herring “added back” $148,252 to account for
personal expenses erroneously categorized as business
expenses.[FN] He applied discounts for lack of control
(20%) and lack of marketability (22.5%). Based on
these, and other, calculations, Herring valued Holton’s
interest at $1,645,544 (“Herring Appraisal”).

      [FN] Herring’s use of historical financial
      data was limited to 2018.

        During his testimony, Herring conceded that
Schomp’s review of business expenses was limited to the
first three quarters of 2018 and the figure of $148,252.30
almost certainly underreported the actual amount of
personal expenses deducted from QL profits. Herring
freely admitted that he “missed that in my analysis.”
During his testimony, Herring estimated personal
expenses for the last quarter of 2018 and amended his
estimate of fair market value to $1,689,803.

       Herring also modified his valuation by normalizing
Schomp’s salary to reflect that Schomp worked 50% of
the time. Making this adjustment amended his valuation
to $1,760.619.

                           -20-
                Normalizing both the 2018 expenses and
           Schomp’s salary yields an amended value of $1,804,878.

           Regarding the Cranfill appraisal, the circuit court’s summary was as

follows:

                 Holton retained Calvin D. Cranfill to perform an
           independent assessment of the value of Holton’s units.
           Cranfill is a CPA, a member of the AICPA, and has
           extensive experience in business valuation. Like
           Herring, Cranfill used a discounted future net cash flow
           method.

                  Unlike Herring, Cranfill normalized expenses for
           travel, entertainment and meals to a flat $50,000,
           resulting in normalization of 2018 expenses of $417,341
           instead of Herring’s $148,252. As Defendants point out,
           the amount of $50,000 is significantly less than Holton’s
           estimate of $180,000 for legitimate client development
           expenses.

                  Cranfill also normalized QL’s 2019 expenses
           related to travel, entertainment and meals (an adjustment
           of $900,757), personal automobiles (an adjustment of
           $50,000) and professional fees (an adjustment of
           $167,641). The total adjustment for 2019 expenses was
           $1,118,398.

                 Cranfill applied a discount for lack of control (30%
           to Herring’s 20%) and lack of marketability (10% to
           Herring’s 22.5%). Based on these calculations, Cranfill
           issued a written report on February 6, 2020 valuing
           Holton’s interest at $7,370,000.

                  Defendant pointed to two errors in Cranfill’s
           report, including a claimed 42% increase in growth for
           2018-2019 (Defendants assert this figure is actually
           8.76% and therefore discredits the assumed future growth

                                     -21-
             rates) and the use of a low-risk rate of 1.5 (Defendants
             assert this should be 3.5).

                   At trial, Cranfill amended his valuation to
             $6,400,000, although the Court does not believe the
             amended figure takes into account the allegedly incorrect
             low-risk rate.

                     Cranfill testified that if his normalized expenses
             are substituted into Herring’s report, using Herring’s
             discounts, then Holton’s interest has a value of
             $2,552,944. However, as Herring pointed out, Cranfill’s
             example is not based upon 2018 expense figures. Rather,
             it is keyed off Cranfill’s significant normalization
             adjustments for 2019 expenses. Applied over 2019-2023,
             this results in a normalization adjustment of
             approximately $1,000,000 each year.

                    Herring testified that the most significant
             differences between his valuation and Cranfill’s
             valuation were the treatment of revenue growth, cash
             flow growth, and discounts. Cranfill was more
             aggressive in estimating growth. Herring applied more
             significant discounts. Herring does not believe their
             differences in the normalization of expenses for 2018
             was as significant a factor.

(Internal citations to evidentiary record omitted.)

             As indicated, the circuit court ultimately determined that Herring’s

appraisal of QL’s fair market value, and his consequent valuation of Holton’s

ownership units, comported with the obligations of good faith and fair dealing.

Holton asserts the circuit court erred in doing so. He points out various errors,

most of which concern in one way or another the failure to properly account for all

the personal expenses charged to QL. He contends that Cranfill’s valuation is

                                         -22-
more accurate because he attempted to take into account personal expenses besides

those specifically identified by Schomp. Because Herring did not also do so,

Holton maintains that the circuit court should not have afforded his appraisal any

deference.

             As already discussed, Herring’s appraisal was entitled to a

presumptive level of deference pursuant to the OA. The circuit court could not

disregard Herring’s appraisal without some determination that it was in bad faith

(or the product of wrongdoing), as was the case with the King appraisal. The

circuit court explained:

             [T]he plain language of the OA does not contemplate de
             novo judicial review of the fair market valuation of the
             company. Accordingly, the Court will not second-guess
             the good faith judgment of the appraisers.

                   The purpose of the bench trial is to determine
             whether the King and Herring appraisals are the result of
             contractual wrongdoing or represent a genuine impartial
             judgment as to fair market value.

                   Implied in the OA is a duty of good faith and fair
             dealing. Courts have established a variety of
             considerations relevant to the question of whether
             Defendants breached their duty of good faith and fair
             dealing, including the following:

                • Whether the “appraiser’s determination was the
                  product of a good faith, independent judgment.”
                  PECO Logistics, LLC v. Walnut Inv. Partners,
                  L.P., 2015 WL 9488249 at *11 (Del. Ch.
                  December 30, 2015). Included in this review is a
                  consideration of whether “one of the parties to the

                                        -23-
                    contract takes action to taint the appraisal process
                    – for example, by providing the appraiser with
                    false financial statements . . .” Id.

                 • Whether the appraisal is “unworthy of respect
                   because it does not, as a result of contractual
                   wrongdoing, represent the genuine impartial
                   judgment on value that the contract contemplates.”
                   Id.

                 • Whether the appraiser “utilize[d] accepted
                   professional norms . . .” Leach v. Princeton
                   Surgiplex, LLC, 2013 WL 2436045 at *2 (N.J.
                   Super. Ct. App. Div. June 6, 2013).

                 • Whether the appraiser considered “less than all
                   relevant evidence” or made a “mathematical
                   error.” Id. at *2.

                 • Whether the manager “[took] action that would
                   result in an unreasonably low figure.” Leone v.
                   Owsley, 810 F.3d 1149, 1155 (10th Cir. 2015).

             Accepting Herring’s appraisal under this standard, the circuit court

initially noted Holton’s concession that Herring had used a proper methodology –

the “discounted future net cash flow method” – in conducting his appraisal.

Further, in relevant part, it explained:

             [A] business valuation is not a mathematical equation for
             which there is only one right answer. Both Cranfill and
             Herring are experienced CPAs with plausible
             explanations for their opinions. Because the Court is not
             conducting a de novo review, it will not quibble with
             Herring’s value judgments, such as those related to the

                                           -24-
               SWOT[8] analysis or the particular discount percentages
               appropriate for this valuation.

                      Moreover, Herring’s decision not to deduct from
               net profits those expenses related to personal use
               automobiles was not bad faith and does not render his
               report unreliable. Although expenses related to personal
               use automobiles might have been treated improperly on
               the tax returns, the expenses are arguably part of
               employee compensation packages and, therefore, proper
               business expenses.

                       The primary issue relates to Herring’s acceptance
               of Schomp’s assessment, without forensic review, of the
               2018 business expenses for travel, entertainment and
               meals. Certainly, Herring’s first attempt at valuation in
               his written report did not consider all relevant
               information because it included business expenses for the
               last quarter of 2018 that were personal in nature.
               However, Herring admitted this error and adjusted his
               valuation. Further, he admitted that certain adjustments
               might be appropriate to account for Schomp’s reduced
               work schedule. With both of those adjustments, Herring
               testified Holton’s membership interest is valued at
               $1,804,878.

                      There remains an issue regarding whether the
               balance of $319,088.70 reflects legitimate travel, meals
               and entertainment expenses for 2018 or whether this
               constitutes false financial data such that Herring’s
               appraisal is tainted. The Court does not view the
               question as whether Schomp’s analysis was perfect.
               Rather, the Court views the question as whether

8
  Herring testified that as part of his process of appraising QL, he relied on his “general
knowledge of businesses” and “interviews with management” to conduct an analysis of QL’s
business-related strengths, weaknesses, opportunities, and threats (e.g., a “SWOT” analysis). He
further testified that, while it is reasonable to conduct such an analysis in this context, not every
appraiser does so as part of a valuation report.

                                                -25-
             Schomp’s review was reasonable and in good faith such
             that the data provided to Herring was reliable.

                    As to this issue, Schomp testified that having a
             successful logistics business requires a certain amount of
             client development and travel. Holton does not refute
             this basic proposition. According to Defendants and
             Cranfill, Holton admitted that amounts up to $180,000
             would be reasonable for such expenditures on an annual
             basis. In addition, the record is clear that QL used meals
             as incentives for its employees and was free with such
             expenses.

                    As it concerns his review for purposes of the
             Herring Appraisal, there is no affirmative evidence that
             Schomp intentionally failed to designate expenses that
             were personal in nature. Holton has raised questions, but
             has not, with any certainty, pointed to any specific charge
             that Schomp failed to categorize as personal in nature.
             Of course, QL’s total lack of documentation regarding
             these expenditures makes this inquiry difficult for both
             parties. As an owner of the business, Holton acquiesced
             in the practice of spending without accountability and is
             therefore partly accountable for the lack of
             documentation.

                    The bottom line is that, while Schomp’s review
             may not have been perfect, there is insufficient evidence
             to suggest that it was so lacking in good faith as to make
             the financial data provided to Herring unreliable.
             Accordingly, the Court concludes Herring’s valuation of
             $1,804,878 is reliable.

(Internal citations to evidentiary record omitted.)

             We find no error and have no need to add to the circuit court’s sound

analysis. The circuit court’s disposition in this respect was consistent with the

                                         -26-
language of the parties’ agreement, the evidence of record, and the circuit court’s

limited role of review in this matter.

             Having considered the substance of Holton’s arguments in cross-

appeal No. 2021-CA-0557, we are unable to conclude that the circuit court abused

its discretion or misapplied the law. While Holton quibbled with Herring’s

methodology and the expenses identified by Schomp, he failed to convince the

circuit court that Herring’s appraisal was the product of wrongdoing. Whether the

second appraisal was the product of wrongdoing was a factual question for the

circuit court. The evidence supports the circuit court’s conclusion and certainly

does not compel a contrary result.

                          IV. APPEAL NO. 2021-CA-0511

             We now turn to the direct appeal. While Schomp does not contest the

circuit court’s valuation, he does take issue with the circuit court’s decision to

award Holton pre- and post-judgment interest. The judgment provides, in relevant

part:

             2. The amount due from the Defendants [$1,804,878]
             shall bear interest at the rate of 8% compounded annually
             from January 1, 2019 until paid.

             3. The full sum owed for the purchase of Holton’s Units
             with accrued interest as of April 10, 2021 is $2,150,889.

             4. The interest shall continue to accrue at $461.42 per
             day until paid or a Final Judgment is entered.

                                         -27-
             5. Upon the entry of a Final Judgment, the sums then
             due to Holton shall accrue interest at 6% per annum,
             compounded annually.

             Schomp argues the circuit court abused its discretion in awarding any

interest on the judgment because Section 8.e. of the OA stated that the ownership

units would be paid for in “equal installments” and “quarterly without interest.”

We begin our analysis of this argument with the language of Section 8.e., which

provides, in relevant part, as follows:

             A Member or the Company wishing to exercise its right
             to purchase or require the purchase under this provision
             shall give notice in writing to the Company and the other
             Members. The purchase price shall be the fair market
             value of the interest as determined by the procedure set
             forth in Section 8.d., without reference to insurance.
             The purchase price shall be paid, and the interest
             transferred, within sixty (60) days of the notice. At
             the option of the purchaser, the purchase price may
             be paid by tendering 25% of the purchase price to the
             selling Member, at which tiem [sic] the Member’s
             interest shall be deemed transferred, with a
             promissory note for payment of the balance of the
             purchase price over a three-year period, with equal
             installments to be paid quarterly without interest.

(Bold emphasis added.)

             As Section 8.e. makes clear, QL’s liability for paying Holton the

“purchase price” of his ownership interest became an outstanding liability sixty

days after November 2, 2018, the date QL provided him “notice in writing” of its

intent to “require the purchase.” Id. The installment payment “option” was merely

                                          -28-
an alternative to paying the entire purchase price within sixty days after QL

provided written notice; it did not modify the “within sixty (60) days” language.

Accordingly, invoking the installment payment “option” required QL to tender

“25% of the purchase price” to Holton – along with a note for the remaining

balance – within sixty days after providing written notice of its intent to require the

purchase of his ownership units.

             With that said, the dispositive phrase is “purchase price,” which

Section 8.e. defines as “the fair market value of the interest as determined by the

procedure set forth in Section 8.d., without reference to insurance.” As the circuit

court correctly and exhaustively explained, Section 8.e. cannot be divorced from

the OA’s implied covenant of good faith and fair dealing. Accordingly, that

provision implicitly gave Holton the right to contest whether QL’s “tender,”

pursuant to any purported exercise of this “option,” was indeed a good faith

representation of the fair market value of his ownership units (e.g., the “purchase

price”). If it was not a good faith representation of the fair market value of his

ownership units, it follows that QL did not provide Holton the benefit of the

parties’ bargain, and consequently did not invoke the installment payment option.

             The circuit court did not memorialize in any written order why it

determined Holton was entitled to pre- and post-judgment interest, or why Holton

was entitled to it in the manner described in the April 14, 2021 judgment; nor did

                                         -29-
the parties ask it to do so. But the crux of the circuit court’s reasoning, as it

explained from the bench during the April 9, 2021 hearing on this issue, was that

QL could not be deemed under the circumstances of this case to have effectively

invoked the installment payment option:

             I did go back and look at the operating agreement. And,
             you know, they did bargain for 25% of fair market value
             within sixty days with a promissory note for the balance
             payable over three years without interest. That’s what
             they bargained for. But that’s not what Holton got. He
             didn’t get 25% of the fair market value because the court
             found that Schomp violated, or breached, this duty of
             good faith and fair dealing. He didn’t get installments
             over three years. So, it just seems to me that it’s
             inequitable to try to hold him to that provision of the
             contract that he bargained for three years without interest
             when in fact he didn’t get the benefit of that bargain . . . .

             Upon review, we agree with the circuit court’s conclusion. Here, all

that QL “tendered” to Holton within sixty days of providing him “notice in

writing” of its intent to “require the purchase” of his shares was 25% of the King

appraisal’s valuation of his shares, plus a promissory note for the remaining 75%

of that valuation. Below, the circuit court determined that King’s appraisal, and

QL’s reliance upon it to ascertain the fair market value of Holton’s ownership

units, breached the OA’s implied covenant of good faith and fair dealing. In

rejecting King’s appraisal on this basis the circuit court pointed out that King was

not a certified business evaluator and that his final appraisal was based, in part, on

false information relayed from Schomp. The circuit court further noted that King

                                          -30-
did not conduct his valuation using recognized methods relying instead on his own

research and experience, which he was unable to articulate. As explained by the

circuit court:

                 When the proper methodology is applied to financial data
                 normalized for QL’s use of revenue to pay personal
                 expenses, the valuation increases from $884,559 (King’s
                 Appraisal) to at least $1,645,544 (Herring’s Appraisal),
                 an amount nearly double King’s Appraisal.

                 Accordingly, the Court concludes King’s Appraisal is
                 unworthy of respect because it does not, as a result of
                 contractual wrongdoing, represent the genuine impartial
                 judgment on value that the Operating Agreement
                 contemplates.

                 Despite having conceded below that King’s appraisal was not

procured in good faith, Schomp argues on appeal that, as related to the award of

interest, the circuit court incorrectly determined that he breached the OA’s implied

covenant of good faith and fair dealing by attempting to require Holton, pursuant

to Sections 8.d. and 8.e., to sell his ownership units at a price based upon what the

King appraisal represented was his units’ “fair market value.”

                 Schomp’s argument in this vein is mutually exclusive. Schomp

conceded that the circuit court correctly determined that the fair market value of

Holton’s ownership units in QL was $1,804,878 – not King’s appraised value of

$884,559. The basis of the circuit court’s determination in that regard was that

Herring’s appraisal comported with the implied covenant of good faith and fair

                                           -31-
dealing, whereas King’s appraisal did not. Thus, Schomp effectively waived any

argument concerning the validity of King’s assessment. Alternatively, even if one

could parse and appeal the circuit court’s determination in this manner, the circuit

court’s determination would only be subject to review for clear error. CR 52.01.

The circuit court’s assessment of the evidence is consistent with the record, and we

find no error under that standard.

             Schomp also argues Holton should be “estopped” – insofar as it

relates to any award of pre- and post-judgment interest – from contending that it

breached the implied covenant of good faith and fair dealing because Holton also

used company credit cards for personal use. This argument fails because it was not

the fact of the personal expenses that breached the OA’s covenant of good faith

and fair dealing. Rather, it was the fact that Schomp knowingly procured a

valuation based, in part, on those expenses the effect of which was a devaluation of

QL. As the circuit court explained in its April 1, 2021 findings of fact and

conclusions of law, “Simply because Holton acquiesced and participated in this

behavior does not make personal expenses properly deductible from net profits for

the purpose of arriving at a fair market value of QL.”

             In short, what QL “tendered” to Holton “within sixty (60) days” of its

notice was not a good faith representation of the fair market value of Holton’s

ownership units (e.g., the “purchase price”). It follows that the circuit court’s

                                         -32-
assessment was correct: QL did not invoke the installment payment “option” of

Section 8.e., and accordingly had no right to pay the value of Holton’s shares in

“equal installments” and “quarterly without interest.”

               To be clear, this result does not punish Schomp for failing to perfectly

appraise Holton’s shares within a sixty-day period; nor does it apply an unfair

degree of hindsight to QL’s valuation. Rather, it is mandated because QL did not

provide Holton the benefit of their bargain – a point the circuit court emphasized.

Any unfairness Schomp perceives in this result is tempered by the highly

deferential standard of review he was accorded throughout these proceedings –

“good faith and fair dealing” in this matter was a relatively low bar. Furthermore,

it is also tempered by the fact that QL received the benefit of its bargain with

Holton on November 28, 2018, when it undisputedly received Holton’s ownership

interest.9 As of the date of this Opinion, Holton has received no payment from QL

9
   Below, Holton argued that QL’s attempted tender of 25% of a flawed appraisal was
insufficient to trigger a termination of his interest in the company, and that he remained an owner
of 30.77% of QL. The circuit court disagreed. In sum, the circuit court considered the language
of Section 8.e., that “The purchase price shall be paid, and the interest transferred, within sixty
(60) days of the notice.” It also considered these seemingly inflexible deadlines in conjunction
with the process it recognized was nevertheless available for Holton to challenge QL’s valuation
– a process it recognized could last well beyond sixty days. It held that giving effect to all of
these considerations meant further recognizing at least two propositions: (1) whether QL
actually paid Holton fair market value for his ownership units was a subject that could be
resolved in a process that could last well beyond sixty days; and (2) the resolution of that
“process” had no bearing upon when Holton’s ownership interest was effectively deemed
transferred. It accordingly determined Holton was divested of his ownership interest in QL as of
November 28, 2018. The circuit court’s determination in that regard is not an issue on appeal.

                                               -33-
whatsoever.10

                We are left, then, with what Section 8.e. provided in the event QL did

not exercise the installment payment option: “The purchase price shall be paid,

and the interest transferred, within sixty (60) days of the notice.” In other words,

the OA provided that regardless of what the fair market value of Holton’s

ownership units was or how long it took to determine, the fair market value of

Holton’s ownership units would be considered an outstanding obligation sixty days

after the notice. And in that event, Section 8.e. was silent regarding interest.

                Regarding the issue of post-judgment interest, QL’s sole argument

with respect to why the circuit court erred in applying the 6% rate expressed in

KRS11 360.040 is that subsection (3) of that statute precluded it. It provides:

                A judgment rendered on a contract, promissory note, or
                other written obligation shall bear interest at the interest
                rate established in that contract, promissory note, or other
                written obligation.

                As discussed previously, however, the OA “established” no rate of

interest and was otherwise silent regarding that issue under the circumstances.

10
   In his brief, Schomp complains it is Holton’s fault that he has received nothing to date
because Holton “rejected the initial 25% payment of the King valuation. And, as Holton has
made clear, even if Appellants had tendered 25% of the value determined by Herring, he still
would not have accepted it based on Cranfill’s overinflated pre-litigation valuations.” Schomp’s
complaint is disingenuous at best. Had Holton accepted QL’s tender of “the initial 25% payment
of the King valuation,” Schomp would have undoubtedly cited his acceptance as an accord and
satisfaction. Nothing precluded Schomp from unconditionally tendering to Holton the minimum
of what he agreed was owed to Holton, or from otherwise escrowing that amount.
11
     Kentucky Revised Statute.

                                             -34-
Accordingly, the circuit court lacked authority under KRS 360.040(3) to specify a

post-judgment interest rate other than 6%, and Schomp’s argument has no merit.

For parity of reasoning, see Service Financial Company v. Ware, 473 S.W.3d 98,

106 (Ky. App. 2015) (reasoning, under prior version of KRS 360.040, that a

judgment for liquidated damages based upon a contract specifying no rate of

interest could not deviate from the statutory post-judgment interest rate, which was

then 12%); see also Doyle v. Doyle, 549 S.W.3d 450, 456 (Ky. 2018) (“All

judgments bear interest. The amount of interest is mandated at the statutory rate

unless the claim is unliquidated or interest is provided for in a separate written

obligation.”).

             Regarding the issue of pre-judgment interest, the same analysis

applies to the rate specified by the circuit court: “Absent a contractually agreed

upon rate, the appropriate rate of interest is governed by statute. KRS 360.010

(setting the legal rate of interest in general) provides that the ‘legal rate of interest

is eight (8%) percent per annum.’” Reliable Mech., Inc. v. Naylor Indus. Servs.,

Inc., 125 S.W.3d 856, 857 (Ky. App. 2003) (internal footnote omitted).

             As to whether pre-judgment interest was warranted, the circuit court

made no determination in any written order of whether Holton’s damages were

liquidated or unliquidated; it was never pressed by the parties to make such a

determination; but for our purposes, it makes no difference. In the context of

                                           -35-
liquidated damages, “prejudgment interest follows as a matter of course.” Nucor

Corp. v. General Elec. Co., 812 S.W.2d 136, 141 (Ky. 1991).

             In the context of unliquidated damages, prejudgment interest may be

awarded if doing so is consistent with justice and equity. Id. at 143. Here, that

standard is met, because awarding Holton pre-judgment interest as of January 1,

2019, was consistent with giving him the benefit of his bargain with QL. “[J]ustice

and equity demand an allowance of interest to the injured party. Where under a

contract a debt is due at a certain time, both reason and authority say that it carries

interest from that time.” Friction Materials Co., Inc. v. Stinson, 833 S.W.2d 388,

392 (Ky. App. 1992) (citations omitted). As previously stated, the OA

contemplated that regardless of what the fair market value of Holton’s ownership

units was determined to be, or how long it might take to make that determination,

the fair market value of Holton’s ownership units would be considered an

outstanding obligation sixty days after November 2, 2018, when QL provided

written notice of its intent to require the purchase of his ownership units. January

1, 2019 – the date that the circuit court specified prejudgment interest began to

accrue – was sixty days after November 2, 2018.

                                   V. CONCLUSION

             For the reasons set forth above, we affirm the Fayette Circuit Court’s

judgment.

                                          -36-
           ALL CONCUR.

BRIEFS FOR                BRIEFS FOR APPELLEE/CROSS-
APPELLANTS/CROSS-         APPELLANT:
APPELLEES:
                          Thomas W. Miller
Brian M. Johnson          Lexington, Kentucky
Logan J. Mayfield
Lexington, Kentucky

                         -37-