Gambel v. Tullis
ORDER & REASONS that Defendant's 39 Motion for Partial Summary Judgment is GRANTED. IT IS FURTHER ORDERED that Plaintiff's 47 Motion for Summary Judgment is DENIED. IT IS FURTHER ORDERED that Plaintiff may file an opposition to the Courts Rule 56(f)(3) sua sponte notice within 30 days from the issuance of this Order. If Plaintiff files such a brief, Defendant may file a reply within 10 days. If Plaintiff fails to file a timely brief, the Court will issue an Order granting summary judgment to Defendant, and this case will be dismissed. Signed by Judge Eldon E. Fallon on 2/7/18. (dno)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ELI W. TULLIS, JR.
SECTION “L” (4)
ORDER AND REASONS
Pending before the Court are cross motions for summary judgment. On the one hand,
Defendant requests the Court to affirm a corporation board’s vote to remove Plaintiff as a manager.
Rec. Doc. 39. On the other hand, Plaintiff asks the Court to void the corporation board’s vote to
remove her as a manager, arguing that Defendant did not garner the necessary threshold vote for
her termination. Rec. Doc. 47. The Court held oral argument on the instant matter on January 31,
2018. Having considered the parties’ arguments, submissions, and applicable law, the Court now
issues this Order and Reasons.
This case arises from a disagreement between the co-managers of Ragweed, LLC
(“Ragweed”), in which Plaintiff now requests the Court to dissolve the corporation. Rec. Doc. 1.
Ragweed was established by Deborah and Eli Tullis, Sr., who distributed shares in the company
among their children and various heirs. Rec. Doc. 1 at 7. Plaintiff Rachael Gambel, a Louisiana
resident, is (or was) a manager-member of Ragweed, a Louisiana company. Rec. Doc. 1 at 3.
Defendant Eli W. Tullis, Jr., an Illinois resident, is also a manager-member of Ragweed. Rec.
Doc. 1 at 3.
Ragweed is an investment vehicle with mostly cash assets that Plaintiff invested and
managed for the benefit of the members. Rec. Doc. 1 at 6. Ragweed is a LLC governed by the
company’s Articles of Organization. Rec. Doc. 1 at 1-2. The company has no operating
agreement. Rec. Doc. 1 at 2. The Articles of Organization specifically prohibits members from
receiving distributions upon withdrawal or resignation from the company. Rec. Doc. 1 at 6.
Members who wish to cease involvement in the company may transfer their shares to another
member. Rec. Doc. 1 at 6.
A dispute arose between Plaintiff and Defendant concerning the distribution of the
company’s assets. Plaintiff agreed to distribute assets to any member who requested. Defendant,
however, disagreed, citing the objection of Eli Tullis Sr. and his desire to provide his family with
investment shares—not cash. Rec. Doc. 1 at 2, 7; Rec. Doc. 39-1 at 4.
Vote to Dissolve Ragweed
In January 2017, Plaintiff called for a special member meeting where the company’s
members voted, in proportion to their percentage of shares and some by proxy, to dissolve the
company. Rec. Doc. 1 at 2.
In March 2017, however, Defendant continued to object to the dissolution of the company
and—with majority support of Ragweed’s members—voted to nullify the January vote. Rec. Doc.
1 at 2. Plaintiff believes she is authorized and obligated to dissolve the company and distribute
the funds as a result of the January special member meeting vote. Rec. Doc. 1 at 11.
Thus, in April 2017, Plaintiff initiated this lawsuit, seeking a declaratory judgment that
Ragweed was dissolved by consent of its members and that she may distribute the company’s
funds and wind up its affairs. Rec. Doc. 1 at 15, 16. Plaintiff argues that the company was properly
dissolved based on the vote at the January 2017 special member meeting. See Rec. Doc. 1 at 2-3.
Alternatively, Plaintiff avers that judicial dissolution should be appropriate if the Court were to
find the special member meeting did not achieve that effect. Rec. Doc. 6 at 17. Defendant filed a
motion to dismiss, arguing that 18 of the 25 members did not wish to dissolve the company and
that the votes at the January 2017 special member meeting were not valid. Rec. Doc. 5-1 at 1.
In August 2017, the Court granted in part Defendant’s motion to dismiss. The Court held
that Ragweed was not effectively and legally dissolved in January 2017 because the Secretary of
State had not issued a certificate of dissolution as required by state law. The Court held: “To
legally terminate a Louisiana LLC, the company must adopt articles of dissolution (La. Rev. Stat.
§ 12:1339), liquidate the company’s business (La. Rev. Stat. § 12:1336), adopt a certificate of
dissolution (La. Rev. Stat. § 1340), and file those articles and certificate with the Louisiana
Secretary of State (La. Rev. Stat. §§ 1339-40).” Afterward, the LLC must obtain a certificate of
dissolution from the Secretary of State. The issue remains, however, as to whether judicial
dissolution is warranted.
Vote to Remove Plaintiff as Co-Manager
Following the Court’s determination regarding the company’s status, on October 4, 2017,
a special meeting was held by Ragweed’s members to consider whether Plaintiff should be
removed as manager. Rec. Doc. 39-1 at 1. Eighteen of 25 members, who hold 72-percent of
Ragweed’s membership interest, voted to remove Plaintiff as a co-manager of Ragweed. Only
Plaintiff and Plaintiff’s husband, children and sister dissented.
After this vote, Plaintiff amended her complaint, alleging her removal was improper and
contradicted the company’s Articles of Organization. See Rec. Doc. 35 at 3. Specifically, she
argues that she cannot be removed without 75-percent of the vote because she is expressly named
as a co-manager in the Articles of Organization. Thus, according to Plaintiff, her removal amounts
to an amendment of the Articles, which requires a vote of 75-percent of the members.
Before the Court are cross motions for summary judgment concerning the issue of
Plaintiff’s removal as a co-manager. Defendant moves for partial summary judgment to dismiss
the claims in Plaintiff’s supplemental and amended complaint. Rec. Doc. 39. Defendant argues
that Plaintiff’s removal was proper because 18 out of 25 members, who hold 72-percent of
Ragweed’s membership interest, voted to remove Plaintiff. Rec. Doc. 39 at 2. Meanwhile,
Plaintiff moves for partial summary judgment, arguing that she can only be removed with a vote
of 75-percent or more membership interests, and thus her removal should be nulled and voided.
Rec. Doc. 47.
Summary judgment is appropriate when “the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no genuine issue as to any material fact and
that the movant is entitled to judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986) (citing Fed. R. Civ. P. 56(c)); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.
1994). When assessing whether a dispute as to any material fact exists, the Court considers “all
of the evidence in the record but refrains from making credibility determinations or weighing the
evidence.” Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d 395, 398 (5th
Under Federal Rule of Civil Procedure 56(c), the moving party bears the initial burden of
“informing the district court of the basis for its motion, and identifying those portions of [the
record] which it believes demonstrate the absence of a genuine issue of material fact.” Celotex,
477 U.S. at 322. When the moving party has met its Rule 56(c) burden, “[t]he non-movant cannot
avoid summary judgment . . . by merely making ‘conclusory allegations’ or ‘unsubstantiated
assertions.’” Calbillo v. Cavender Oldsmobile, Inc., 288 F.3d 721, 725 (5th Cir. 2002) (quoting
Little, 37 F.3d at 1075). “The mere existence of a scintilla of evidence in support of the plaintiff's
position will be insufficient; there must be evidence on which the jury could reasonably find for
the plaintiff.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 253 (1986). All reasonable
inferences are drawn in favor of the nonmoving party, but a party cannot defeat summary judgment
with conclusory allegations or unsubstantiated assertions. Little, 37 F.3d at 1075. A court
ultimately must be satisfied that “a reasonable jury could not return a verdict for the nonmoving
party.” Delta, 530 F.3d at 399.
Louisiana Revised Statutes § 12:1313
Louisiana Revised Statutes § 12:1313 governs the election and removal of managers of
limited liability companies in Louisiana. Under § 1313(2), “any or all managers may be removed
by a vote of a majority of the members, with or without cause, at a meeting called expressly for
At issue is whether Plaintiff was properly removed as co-manager under § 12:1313. Under
§ 1313, managers of a corporation may be removed by a majority vote “unless otherwise provided
in the articles of organization.” La. R.S. 12:1313. The clear language of the statute indicates that
managers may be removed or elected by a majority unless another method is provided by the
articles or operating agreement. In other words, for § 1313 to not apply, the company’s Articles
of Organization would have to provide another method for removing or electing managers.
Indeed, Louisiana courts have determined that § 1313 does not apply in cases where the
Articles of Organization explicitly designates the process for removal. For instance, in Metro City
Redevelopment Coalition, Inc. v. Brockman, an amendment to the company’s Articles of
Organization explicitly stated: “Members, by vote of Members holding at least thirty three percent
(33%) of the Percentages then held by Members . . . may remove the President then acting.” 143
So.3d 495, 502 (La. Ct. App. 1 Cir. 2014). In that case, a majority membership vote was not
necessary to remove its president: 33-percent was sufficient. Id. at 501.
Furthermore, in David Mortuary, LLC v. David, the Louisiana Court of Appeal for the
Third Circuit found that § 1313 applied when a company’s Articles of Organization stated that
managers “shall serve until his or her resignation or removal.” 194 So.3d 826, 830 (La. Ct. App. 3
Cir. 2016). In David, even though the co-manager was named in the Articles of Organization, the
court held that the board only needed a majority vote to remove a co-manager under § 1313. See
In this case, Defendant argues summary judgment is proper because there is no genuine
dispute concerning Plaintiff’s removal and suggests that Plaintiff’s argument is without legal merit.
Rec. Doc. 39. Defendant further argues that Louisiana Revised Statute § 12:1313, which governs
the election and removal of managers of limited liability companies, applies. Rec. Doc. 39-1 at 2.
Defendant says that because over 60-percent of the membership interests voted to remove Plaintiff,
the requirements of the statute were met. Rec. Doc. 39-1 at 12. Additionally, Defendant highlights
that both he and Plaintiff are named as initial managers in the company’s Articles of Organization.
Rec. Doc. 39-1 at 10. Defendant argues this designation merely means they were the first to serve
as managers of the company, and does not grant them special immunity or heightened standard for
removal. Rec. Doc. 39-1 at 10.
Plaintiff, however, suggests that Louisiana Revised Statute § 12:1313 does not apply in
this case. Rec. Doc. 47. Plaintiff argues that the statutes governing limited liability companies
only apply when the company documents do not address the issue. Rec. Doc. 47-1 at 1. Plaintiff
asserts that Ragweed’s Articles of Organization addresses the issue of removal with regards to her.
Rec. Doc. 47-1 at 9. Because Plaintiff is named in the Articles, she claims that an amendment to
the Articles vote is required for her removal, a vote that requires at least 75-percent of its
Article III of the company’s Articles of Organization states:
The Company shall be managed by Managers, initially Eli W.
Tullis, Jr. and Rachael Tullis Gamble, and the Managers shall be
elected by the Members as provided in the operating agreement of
Rec. Doc. 39-4 at 4. Ragweed has no operating agreement. Additionally, the Articles of
Organization provide a mechanism for the amendment process in Article VII, which states:
The approval of Members holding seventy-five percent (75%) of the
outstanding Shares entitled to vote shall be required to amend these
articles of organization.
Rec. Doc. 39-4 at 5. Plaintiff avers that the process enumerated in this amendment process should
apply to the process of removing her as a manager. Furthermore, at oral argument, Plaintiff
represented to the Court that an intention of the late-Deborah Tullis, who created Ragweed with
the elder Tullis, is to create a higher threshold to replace the managers, so her daughter from a past
marriage—Ms. Gambel—would be afforded more protection from removal. Plaintiff believes that
an amendment to the Articles of Organization would be necessary for removing either of the initial
mangers named in the Articles of Organization—herself or Defendant. Because a 75-percent
super-majority was not obtained for the vote, she argues that she was improperly removed.
The Court begins with the basics. Here, Plaintiff urges the Court to embark on a factfinding expedition to decipher the late-Deborah Tullis’s intent in establishing Ragweed with her
husband and her purpose of setting a higher threshold for removal of Ms. Gambel. The intent of
the parties, however, is relevant only when a document is ambiguous.
As the Louisiana Civil Code provides, where “the words of a contract are clear and explicit
and lead to no absurd consequences, no further interpretation may be made in search of the parties’
intent.” La. Civ. Code art. 2046. Ragweed’s Articles of Organization are interpreted under
Louisiana’s well-settled law governing contracts. See LSA R.S. §12:1304(A). “Contracts have
the effect of law for the parties and the interpretation of a contract is the determination of the
common intent of the parties.” Andersen v. Succession of Bergeron, 217 So.3d 1248, 1256 (La.
App. 1 Cir. 4/12/17) (citations omitted). The First Circuit Court of Appeal recently held in
Andersen v. Succession of Bergeron that the interpretation of an LLC’s articles of organization is
subject to the rules of contract interpretation to determine the parties’ intent:
The reasonable intention of the parties to a contract is to be sought
by examining the words of the contract itself, and not assumed.
When the words of a contract are clear and explicit and lead to no
absurd consequences, no further interpretation may be made in
search of the parties’ intent. Common intent is determined,
therefore, in accordance with the general, ordinary, plain, and
popular meaning of the words used in the contract. Accordingly,
when a clause in a contract is clear and unambiguous, the letter of
that clause should not be disregarded under the pretext of pursuing
its spirit, as it is not the duty of the courts to bend the meaning of
the words of a contract into harmony with a supposed reasonable
intention of the parties.
Andersen, 217 So.3d at 1256-57. “Most importantly, a contract must be interpreted in a commonsense fashion, according to the words of the contract their common and usual significance.” Id. at
1257. If a contract provision is susceptible to different meanings, Louisiana courts will interpret
it to have “a meaning that renders the provision effective, and not with one that renders it
ineffective.” Id. “Each provision in a contract must be interpreted in light of the other provisions
so that each is given the meaning suggested by the contract as a whole.” Id.
Here, by its plain language, Ragweed’s Articles of Organization appoints Plaintiff and
Defendant as initial managers—not permanent managers.
Plaintiff’s argument ignores the
prevailing meaning of the word “initially” as it is used in Ragweed’s Articles. The generally
prevailing meaning of the word “initially” is clear. As Defendant points out, “initially,” the adverb
form of “initial,” means “at the beginning,” “of or relating to the beginning,” “incipient,” “placed
Dictionary (https://www.merriam-webster.com/dictionary/initial). The Articles of Organization
states that “the Company shall be managed by Managers, initially Eli W. Tullis, Jr. and Rachael
Tullis Gambel . . . .” Nothing in the Articles suggest that Plaintiff or Defendant are accorded
heightened standard for their removal: they serve as managers, and like any other manager, are
subject to removal as provided by § 1313 or otherwise enunciated in a company’s Articles of
Organization or operating agreement.
The Court’s interpretation comports with existing corporate law and practice. Under
Louisiana law, a newly-formed limited liability company must select initial managers, and must
submit the names and “municipal addresses” of each initial manager to the Louisiana secretary of
state in either its articles of organization, initial report or a supplementary report. See La. Rev.
Stat. § 12:1305(E)(4); see also La. Rev. Stat. § 12:1312(D) (noting that a company’s initial
managers may be listed in its articles). A Louisiana LLC is not required to name its initial
managers in its articles of organization, but it may do so, and the law is devoid of any suggestion
that this confers any special status or immunity upon those initial managers. See La. Rev. Stat.
§ 1305(C)(2) (articles of organization “may set forth . . . [a] statement of whether and to what
extent the limited liability company will be managed by managers.”); see also La. Rev. Stat.
Plaintiff attempts to force an argument to protect her manager status, but existing corporate
practice and law simply do not support her effort. And Plaintiff has not presented any case or
persuasive argument to support her posture. In fact, this Court finds that her interpretation would
lead to absurd results.
The concept of naming an LLC’s initial management arises from
Louisiana’s business corporation statutes. Louisiana’s LLC law generally draws on the state’s
corporate statutes, but is designed to offer less formality and more flexibility to Louisiana entities.
8 La. Civ. L. Treatise, Business Organizations § 44:1 (“most of the filing and other secretary-ofstate-related rules came, with only minor changes, from the former Louisiana Business
Corporation Law.”). The corporate statutes clearly anticipate that entities will name their initial
management in their formation articles, and contain no indication that this action undercuts the
company’s ability to later remove those named individuals. See La. Rev. Stat. § 12:1-202(B)(1).
Louisiana corporate law specifically allows companies to name their “initial directors”—the
corporate equivalent of initial managers in the LLC context—in the corporation’s articles of
incorporation. Id. By doing so, the company does not confer any permanent or special status upon
these initial directors solely by naming them in the corporation’s articles. See La. Rev. Stat. § 12:1808 (outlining broad shareholder removal power over directors). In fact, the law anticipates that
these initial directors will serve limited terms, regardless of whether they are named in the
company’s articles. See La. Rev. Stat. § 12:1-805(A). To apply Plaintiff’s interpretation would
give initial managers more protection and power than intended.
Because Ragweed’s Articles of Organization does not provide for a process to remove
managers, this Court concludes that § 1313 applies here. Accordingly, Ragweed’s October 2017
board vote to remove Plaintiff as a co-manager is valid: only a majority vote was needed.
RULE 56(F)(3) SUA SPONTE NOTICE
Under the current version of Federal Rule of Civil Procedure 56(f), effective December
2010, a district court may grant summary judgment sua sponte. See Fed. R. Civ. P. 56(f).
Specifically, Rule 56(f)(3) permits a court to grant summary judgment on its own after identifying
for the parties material facts that may not be genuinely in dispute after giving notice of its intent
to do so and a reasonable time for parties to respond. Id.
As the Court noted in its August 2017 Order and Reasons, the only issue that remains is
whether judicial dissolution of Ragweed is warranted. See generally Rec. Doc. 15. Louisiana
Revised Statute § 12:1335 provides for judicial dissolution of a limited liability company when
“[o]n application by or for a member, any court of competent jurisdiction may decree dissolution
of a limited liability company whenever it is not reasonably practicable to carry on the business in
conformity with the articles of organization or operating agreement.” Plaintiff’s reason for seeking
judicial dissolution is the inability of the co-managers to decide whether the company should be
Now, because Plaintiff is no longer a manager and Defendant is the sole manager of
Ragweed, the Court believes that judicial dissolution is not available as a remedy. Accordingly,
the Court hereby notifies the parties that it is considering granting summary judgment sua sponte
to Defendant pursuant to Rule 56(f)(3) because there is no longer irreconcilable differences
between the co-managers such that it is “not reasonably practicable to carry on the business” of
Ragweed. Plaintiff may file an opposition brief, no later than 30 days from the issuance of this
Order. If Plaintiff files such a brief, Defendant may file a reply within 10 days. If Plaintiff fails
to file a timely brief, then the Court will issue an Order granting summary judgment to Defendant.
Based on the foregoing, accordingly,
IT IS ORDERED that Defendant’s motion for partial summary judgment (Rec. Doc. 39)
is hereby GRANTED.
IT IS FURTHER ORDERED that Plaintiff’s motion for partial summary judgment (Rec.
Doc. 47) is hereby DENIED.
IT IS FURTHER ORDERED that Plaintiff may file an opposition to the Court’s Rule
56(f)(3) sua sponte notice within 30 days from the issuance of this Order. If Plaintiff files such a
brief, Defendant may file a reply within 10 days. If Plaintiff fails to file a timely brief, the Court
will issue an Order granting summary judgment to Defendant, and this case will be dismissed.
New Orleans, Louisiana, this 7th day of February, 2018.
ELDON E. FALLON
United States District Judge
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