Court Opinion

ID: 2733814
Source: CourtListenerOpinion
Date Created: 2014-09-17 19:06:29.693141+00
Date Added: 2024-06-11T10:03:24.714702
License: Public Domain

J-A15028-14

                              2014 Pa. Super. 200

MICHAEL STAIGER                               IN THE SUPERIOR COURT OF
                                                    PENNSYLVANIA
                         Appellant

                    v.

KEVIN HOLOHAN, 200 EAST AIRY
STREET, LLC AND GREEN AND AIRY
LAUNDROMAT, LLC

                         Appellee                  No. 3152 EDA 2013

           Appeal from the Judgment Entered December 24, 2013
            In the Court of Common Pleas of Montgomery County
                     Civil Division at No(s): 2006-30412

BEFORE: PANELLA, J., LAZARUS, J., and JENKINS, J.

OPINION BY LAZARUS, J.:                      FILED SEPTEMBER 17, 2014

      Michael Staiger appeals from the judgment entered on December 24,

2013, in the Court of Common Pleas of Montgomery County, which denied

his post-trial motion to remove the judgment of nonsuit entered against him

on April 3, 2012. After careful review, we reverse and remand for the trial

court to hold a new trial.

      Staiger and Kevin Holohan are business partners, each fifty-percent

members of two limited liability companies, Appellants 200 E. Airy, LLC and

Green & Airy Laundromat, LLC.        Staiger provided $165,000 in start-up

capital for 200 E. Airy, LLC. According to an investment agreement signed

by the parties on May 26, 2003, this start-up capital amount was to be

repaid to Staiger within four years. On May 30, 2003, Staiger and Holohan

formed 200 E. Airy, LLC and executed an operating agreement for the
J-A15028-14

purpose of developing the property at 200 E. Airy Street, Norristown,

Pennsylvania.   The parties renovated the property for the operation of a

laundromat and convenience store.       On December 23, 2004, after the

renovation had been completed, Staiger and Holohan formed Green and

Airy, LLC for the purpose of operating the laundromat.        The operating

agreement for Green and Airy, LLC and the operating agreement for 200 E.

Airy, LLC contain identical language indicating that the members have the

authority to make business decisions and the decisions of a majority are

controlling.

      Staiger and Holohan signed a management agreement for Green and

Airy, LLC on May 13, 2005, which provided that an unnamed LLC of

five years, then continue for two additional five-year periods. However, the

business relationship between Staiger and Holohan deteriorated, such that in

2006 they exchanged emails in which they agreed to dissolve their

partnership. Despite agreeing they did not wish to continue doing business

together, the parties were unsuccessful in negotiating a buy-out agreement.

Since then, Holohan has unilaterally operated the LLCs, to the extent that

refused to repay Staiger for his initial investment. Holohan also hired legal

counsel for the LLCs and caused the LLCs to pay for his personal legal fees

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        On January 16, 2007, Staiger commenced the instant action by filing a

complaint seeking judicial dissolution of the LLCs. The LLCs were declared

to be indispensable parties by order dated March 25, 2010, and, thereafter,

Staiger joined the LLCs as additional defendants to the action. On January

17, 2012, Staiger filed a motion for summary judgment. Without ruling on

the motion, the trial court commenced a bench trial on April 2, 2012. After

Staiger presented his evidence, Holohan moved for a nonsuit, which the trial

court granted.

        Staiger then filed a post-trial motion seeking to remove the nonsuit.

post-

motion for summary judgment, appointing a liquidating trustee to sell and

and disposition of the assets and payment of the creditors, the LLCs were to

be dissolved pursuant to 15 Pa.C.S. § 8972. The trial court held in favor of

Staiger because the parties could not agree on business decisions in

unilaterally manage the [LLCs] and exclude [Staiger] from any management

                        Opinion, 12/13/12, at 9.

        Holohan appealed on October 16, 2012, and this Court held that the

grant of the summary judgment motion was a nullity and remanded the

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matter to the trial court.1       Thereafter, the trial court issued an order on

November 4, 2013, d                              -trial motion and reinstating the

judgment of nonsuit.       The trial court simply abandoned its earlier holding,

finding that because the entities are profitable, mere disagreement between

the business partners does not warrant dissolution of the LLCs. Staiger filed

                                                                             -trial

motion seeking removal of the nonsuit and judgment in favor of judicial

dissolution of the LLCs.2

       Our standard of review of the denial of a motion to remove a nonsuit is

well-established.      Nonsuit is properly entered where it is clear that the

plaintiff has not established a cause of action or right to relief.     Pa.R.C.P.

230.1. In determining whether the plaintiff has established a right to relief,

          [t]he plaintiff must be allowed the benefit of all favorable
          evidence and reasonable inferences arising therefrom, and
____________________________________________

1
 Staiger v. Holohan, 82 A.3d 1081 (Pa. Super. 2013) (unpublished
memorandum).
2
  As this Court noted in
Employees v. Mid-Atlantic Promotions, Inc., 856 A.2d 102 (Pa. Super.
2004):

       Such an order is interlocutory and generally not immediately
       appealable. Rather, it is the subsequent judgment that is the
       appealable order. A final judgment entered during the pendency
       of an appeal, however is sufficient to perfect appellate
       jurisdiction.

Id. at 104 n.2 (citations omitted). In light of the entry of final judgment on
December 24, 2013, we have jurisdiction over this appeal.

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         any conflicts in the evidence must be resolved in favor of
         the plaintiff. Further, [i]t has been long settled that a
         compulsory nonsuit can only be granted in cases where it
         is clear that a cause of action has not been established.
         However[,] where it is clear a cause of action has not been
         established, a compulsory nonsuit is proper. We must,
         therefore, review the evidence to determine whether the
         order entering judgment of compulsory nonsuit was
         proper.

Braun v. Target Corp.

will reverse an order denying a motion to remove a nonsuit only if the court

abused its discretion or made an erro            Brinich v. Jencka, 757 A.2d
388, 402 (Pa. Super. 2000).

      Instantly, the right to relief Staiger sought to establish involved

judicial dissolution of the jointly-owned LLCs.     If a member applies for

                                    dissolution of a limited liability company

whenever it is not reasonably practicable to carry on the business in

LLC is a relatively new legal entity in Pennsylvania, there is a dearth of cases

the dissolution of limited partnerships and is one of the grounds for

dissolving a general partnership. See 15 Pa.C.S. § 8972, committee cmt.;

15 Pa.C.S. § 8354.

from the management of the partnership business or possession of the

partnership property is undoubtedly ground                         Herman v.

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Pepper, 166 A. 587 (Pa. 1933).                 Holohan, nevertheless, relies on the

business will not be dissolved merely because of friction among the

partners; it will not interfere to determine which contending faction is more

             Potter v. Brown, 195 A. 901, 904 (Pa. 1938).              However, in

Potter, the partnership was being operated according to its operating

agreement, which specified that management of the business was to be

controlled by one partner, Henry I. Brown, Sr. The court refused to grant

they are unable to exercise the direction over partnership affairs that they

feel is their due, the reason is to be found primarily in the partnership

                                                                                Id.

The partnership was operating according to the agreed-upon terms, and,

thus, dissolution was not warranted.3
____________________________________________

3
  Holohan asserts that the investment and management agreements vested
him with exclusive authority to manage the LLCs.       The investment

Properties, is responsible for managing the day-to-day affairs of 200 E. Airy,
LLC. It does not, however, alter how major business decisions are to be

and Airy Laundromat, LLC, and an unnamed LLC. However, because the
parties were not identical to the parties involved in the LLCs in the instant
matter, the agreement does not supersede the LLC operating agreements.
Furthermore, this matter proceeded to trial, and the arguments Holohan
makes regarding contractual provisions that could have potentially altered
the management of the LLCs are appropriate for the trial context. At best,
(Footnote Continued Next Page)

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      In contrast, the operating agreements for the LLCs in this matter

require a majority vote of the members to make business decisions. Here,

Staiger and Holohan are each fifty-percent owners, such that when they

disagree, the result is a deadlock and decisions cannot be made pursuant to

the   operating        agreement.         Further,    Staiger     presented   evidence

demonstrating that Holohan has consistently made unilateral management

decisions, excluding Staiger           from the      process    completely.   Holohan

independently hired legal counsel for the LLCs and caused the LLCs to pay

Furthermore, Staiger alleges he has not been repaid for his initial investment

of $165,000 and currently is receiving no return on his investment in the

businesses even though they are profitable.                Thus, Staiger presented

evidence indicating that he has been wrongfully excluded from managing the

LLCs, which is grounds for dissolution. Herman, supra.

      Based upon our review of the evidence Staiger presented, we find that

he demonstrated that grounds exist for dissolution of the LLCs and, thus,

established a right to relief. Braun, supra. Therefore, the trial court erred

in granting a nonsuit. Brinich, supra.                 Accordingly, we reverse the

judgment of nonsuit and remand for a new trial.

                       _______________________
(Footnote Continued)

are irrelevant with respect to whether Staiger has established a right to
relief.

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      Judgment    reversed.   Remanded   for   new   trial.   Jurisdiction

relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 9/17/2014

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