CALLAS v. CALLAS et al
OPINION. Signed by Judge John Michael Vazquez on 8/4/2021. (qa, )
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UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
Not for Publication
WILLIAM DEAN CALLAS,
PENNY CALLAS, GEORGE CALLAS, AND
YVONNE CALLAS IN THEIR CAPACITIES
AS THE CO-EXECUTORS OF THE ESTATE
OF CONSTANTINE CALLAS,
Civil Action No. 14-7486
John Michael Vazquez, U.S.D.J.
This case arises out of a dispute between Plaintiff and the executors of his father’s estate,
his siblings. Currently pending before the Court are the parties’ motions for summary judgment,
D.E. 309, D.E. 301, and Defendants’ motion to dismiss pursuant to Fed. R. Civ. P 12(b)(1) and
Fed. R. Civ. P 12(b)(7), D.E. 307. The motions were decided without oral argument pursuant to
Federal Rule of Civil Procedure 78 and Local Civil Rule 78.1. The Court has considered the
parties’ submissions 1 and, for the reasons discussed below, the motions are denied.
Plaintiff’s brief in support of his motion for summary judgment is referred to as “Pl. Br.,” D.E.
309-1; Defendants’ opposition is referred to as “Def. Opp.” D.E. 319; Plaintiff’s reply in further
support of his motion for summary judgment is referred to as “Pl. Reply,” D.E. 335; Defendants’
brief in support of their motion for summary judgment is referred to as “Def. Br.,” D.E. 302;
Plaintiff’s opposition is referred to as “Pl. Opp.,” D.E. 324; Defendants’ reply in further support
of their motion for summary judgment is referred to as “Def. Reply,” D.E. 333; Defendants’ brief
in support of their motion to dismiss is referred to as “MTD Br.,” D.E. 308; Plaintiff’s brief in
opposition is referred to as “MTD Opp.,” D.E. 320; Defendants’ reply brief in support of their
motion to dismiss is referred to as “MTD Reply,” D.E. 334.
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The Court included extensive factual backgrounds in its prior opinions in this matter, which
are incorporated by reference here. See e.g., D.E. 181. The Court highlights the following factual
assertions as relevant to the current motions.
Plaintiff brought this action against Defendants, the executors of the estate of his late father
(the “Estate”), Constantine Callas (“Constantine”), to settle a dispute over the value of
Constantine’s ownership interest in a real estate holding company, Coffee Associates LLC (the
“LLC”). See generally Compl. Plaintiff and his father were the only members of the LLC, which
is governed by an operating agreement (“Operating Agreement” or “the Agreement”). Def.
RSOMF ¶ 9. The LLC’s primary asset is real estate known as 178 Old River Road (f/k/a/ River
Road) Edgewater, New Jersey 07020 (the “Property”). Id. ¶¶ 5, 10, and 11. A company called
Coffee Associates, Inc. (“Coffee Associates”) currently leases the Property from the LLC “as an
industrial site to roast, sell, and distribute coffee.” Def. RSOMF ¶¶ 1, 12. Plaintiff is the sole
owner of Coffee Associates. Pl. RSOMF ¶ 11 (admitting that Plaintiff became “the sole owner of
the Coffee Business[.]”); see also D.E. 311 at 2, ¶ 5 (Plaintiff testifying that “[s]ince 2002, I have
been the sole owner of Coffee Associates.”). Before his passing, Constantine held a 40% interest
in the LLC, and Plaintiff held a 60% interest. Id. ¶ 9; Pl. RSOMF ¶ 8.
The facts are derived from Plaintiff’s Complaint (“Compl.”), D.E. 1; Defendant’s Amended
Answer, Separate Defenses, Counterclaim and Jury Demand (“AA”), D.E. 17; Plaintiffs’
Statement of Undisputed Material Facts (“Pl. SOMF”), D.E. 247-1, D.E. 309-2; Defendants’
Responsive Statement of Material Facts in Support of its Opposition to Plaintiffs’ Motion For
Summary Judgment (“Def. RSOMF”), D.E. 248-1; D.E. 310-3; Defendants’ Statement of Material
Facts (“Def. SOMF”), D.E. 246-1, D.E. 303, D.E. 319-6; and Plaintiffs’ Response to Defendant’s
Statement of Material Facts (“Pl. RSOMF”), D.E. 249-1, D.E. 323.
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The Operating Agreement contains provisions dealing with death of a member.
Specifically, Section 14.2 of the Operating Agreement provides, in part, that “for a period of one
(1) year following the Date of Disability or Death, [a] Disabled Person or Deceased Person has the
right to sell to each member the Interest owned by the Disabled Member or Deceased Member on
the terms and conditions set forth in this agreement.” D.E. 21-2 at 27 3. The Operating Agreement
specifies that this right “shall be exercised, if at all, by the giving of a written notice (the “Put
Notice”) by such a Disabled Member or the personal representative of the Deceased Member at
any time from and after the Date of Disability or Death through one (1) year from the Date of
Disability or Death.” D.E. 21-2 at 27 4; Def. RSOMF ¶ 20. Once a Put Notice is issued “such
member (or his Personal Representative) shall be obligated to sell, and the other Members shall be
obligated to buy all, and not less than all, of the Interest of such Deceased Member or Disabled
Member.” D.E. 21-2 at 27; Def. RSOMF ¶ 20.
The Operating Agreement further provides for the calculation of the value of an interest in
the LLC sold pursuant to a Put Notice:
[T]he purchase price for each LLC interest shall be eighty (80%)
percent of the base purchase price as calculated in Section 14.4 of
this Agreement using an Applicable Valuation Date as of the Date
of Disability or Death, and such purchase shall be effected in the
manner and upon the terms and conditions set forth in Section 14.5
of this Agreement.
Unless otherwise stated, page numbers for exhibits are assigned based on the page numbers
generated by the Court’s electronic filing system.
Neither party appears to contest the accuracy or authenticity of the “Operating Agreement of
Coffee Associates, LLC” attached as Exhibit A to the February 25, 2015, Declaration of Joel M.
Silverstein at D.E. 21-2. Indeed, Defendants appear to have submitted the Operating Agreement
as Exhibit 8 to Declaration of Yvonne Callas, see D.E. 305 at 7, ¶ 25, D.E. 305-8, in support of
their motion for summary judgment. The same Operating Agreement is also submitted as Exhibit
2 to the Certification of William Dean Callas, D.E. 311-2. Accordingly, there is no dispute that
the terms of the LLC’s Operating Agreement are accurately reflected in the “Operating Agreement
of Coffee Associates, LLC” located at D.E. 21-2 and D.E. 311-2.
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D.E. 21-2 at 27; Def. RSOMF ¶ 21. Section 1.3 of the Operating Agreement defines “Applicable
Valuation Date” to mean “either the Date of Disability or Death.” D.E. 21-2 at 5. “Date of
Disability or Death” means “the date on which there is a Deceased Member or Disabled Person.”
D.E. 21-2 at 7. “Deceased Member” means “the death of a Member during the term of this
Agreement.” D.E. 21-2 at 7. Section 14.4 of the Operating Agreement provides the method for
calculating the “Base Purchase Price”: “[t]he base purchase price for the Interest being sold by
such Member selling all of his Interest shall be the Valuation Purchase Price, multiplied by the
LLC percentage interest being sold.” D.E. 21-2 at 29; Def. RSOMF ¶ 22. “Valuation Purchase
Price” means the following:
“[T]he purchase price for a LLC interest as of the Applicable
Valuation Date equal to the sum of (i) and (ii) and (iii) below:
(i) The Appraised Value as of the Applicable Valuation Date
of all real property interest owned by the LLC, whether such
ownership interest is direct or indirect through a partnership or other
(ii) The agreed upon fair market value as of the Applicable
Valuation Date of all other tangible and/or intangible personal
property (including stocks, bonds and other financial instruments)
owned by the LLC; less
(iii) The amount of all liabilities of the LLC, and all
liabilities secured by property owned by the LLC, whether such
ownership interest is direct or indirect through a partnership or other
entity, to the extent not already taken into account above.
D.E. 21-2 at 10; Def. RSOMF ¶ 23.
Constantine passed away on February 23, 2013. Def. RSOMF ¶ 16. Penny Callas, George
Callas, and Yvonne Callas – Plaintiff’s siblings and Constantine’s children – are the co-executors
of the Estate. Def. RSOMF ¶ 17; Pl. RSOMF ¶ 3 (admitting that “George Callas, Yvonne Callas,
and Penny Callas are all co-executors of the Estate and, together with Plaintiff, are the children of
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Constantine Callas.”). On February 1, 2014, the Estate sent Plaintiff a Put Notice as defined in the
Operating Agreement. Def. RSOMF ¶ 20. There is no dispute that the “Applicable Valuation
Date,” as defined in the Operating Agreement, is “February 23, 2013: the Date of Constantine’s
Death.” Def. RSOMF ¶ 21. Plaintiff has sent the executors three appraisals for the Property, with
valuations between $2,100,000.00 to $2,700,000.00. Def. RSOMF ¶¶ 18, 25, and 26. Plaintiff
proposed to use the $2,700,000.00 appraisal for purposes of calculating the purchase price of
Constantine’s LLC interest. Def. RSOMF ¶ 27. However, the “parties disagree factually . . . as
to the Appraised Value of the Property.” Def. RSOMF ¶ 34.
Plaintiff filed his Complaint on December 2, 2014, alleging three causes of action (1)
Anticipatory Breach and Repudiation of the Operating Agreement; (2) Breach of the Implied
Covenant of Good Faith and Fair Dealing; and (3) Specific Performance. D.E. 1; Def. RSOMF ¶
29. Defendants filed their Amended Answer, Separate Defenses, Counterclaims, and Jury Demand
on January 27, 2015. See generally AA; Def. RSOMF ¶ 31. Defendants’ Counterclaims similarly
assert claims for breach of contract, breach of the implied warranty and good faith and fair dealing,
and for specific performance.
AA ¶¶ 47-54, 55-60, and 69-73.
Defendants also assert
Counterclaims for breach of fiduciary duty, id. ¶¶ 61-68, accounting, id. ¶¶ 74-77, and member
oppression, id. ¶¶ 78-80. Defendants’ Counterclaims generally assert that Plaintiff, acting for both
the LLC and Coffee Associates, entered into new leases for the Property that unfairly benefited
Coffee Associates, id. ¶¶ 14-22, that Plaintiff, acting for Coffee Associates, failed to pay rent due
the LLC, id. ¶ 65, and that Plaintiff stopped making distributions from the LLC upon Constantine’s
passing, id. ¶¶ 24-25.
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On June 21, 2019, Defendants requested leave to file a motion for summary judgment,
accompanied by their statement of material facts. D.E. 246, D.E. 246-1. Plaintiff also filed a
request for leave to file for summary judgment. D.E. 247, D.E. 247-1. Both parties filed letters in
opposition and submitted their responsive statement of material facts. D.E. 248, D.E. 249.
Plaintiff sought leave to file for summary judgment as to all his affirmative claims and for summary
judgment as to Counts One, Two, Three, Four, Five, and Six of Defendants’ Counterclaims. D.E.
247. Defendants sought leave to file for summary judgment as to Counts One, Two, Three, and
Six of their Counterclaims and for summary judgment against Counts One, Two, and Three of
Plaintiff’s Complaint. D.E. 246. Defendants also requested leave to file a “motion to dismiss for
lack of subject-matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1) . . . and/or to dismiss for
failure to join a party under Rule 19 pursuant to Fed. R. Civ. P. 12(b)(7).” Id. The Court granted
the parties’ leave to file their respective motions. D.E. 292. The present motions followed. 5
STANDARD OF REVIEW
Fed R. Civ. P. 12(b)(1)
In deciding a Fed R. Civ. P. 12(b)(1) motion as to lack of subject-matter jurisdiction, a
court must first determine whether the party presents a facial or factual attack because the
distinction determines how the pleading is reviewed. A facial attack “contests the sufficiency of
the complaint because of a defect on its face,” whereas a factual attack “asserts that the factual
underpinnings of the basis for jurisdiction fails to comport with the jurisdictional prerequisites.”
In addition, on April 9, 2021, Defendants filed a letter requesting the Court to strike certain
exhibits attached the certification Plaintiff filed with his Reply brief in further support of his
motion for summary judgment. D.E. 340. Plaintiff filed opposition, D.E. 342, to which
Defendants replied, D.E. 343.
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Elbeco Inc. v. Nat’l Ret. Fund, 128 F. Supp. 3d 849, 854 (E.D. Pa. 2015) (quoting Moore v. Angie’s
List, Inc., 118 F. Supp. 3d 802, 806 (E.D. Pa. 2015)). Where a 12(b)(1) motion attacks the
complaint on its face and does not contest the facts alleged by the non-moving party, the 12(b)(1)
motion is treated “like a 12(b)(6) motion” and the Court must “consider the allegations of the
complaint as true.” T.L. by & through Latisha G. v. Pennsylvania Leadership Charter Sch., 224 F.
Supp. 3d 421, 429 (E.D. Pa. 2016) (citing Hartig Drug Co. Inc. v. Senju Pharm. Co., 836 F.3d
261, 268 (3d Cir. 2016)). Factual attacks, in contrast, argue that subject-matter jurisdiction is
improper “because the facts of the case . . . do not support the asserted jurisdiction.” Evanston,
2019 WL 1916203, at *2 (quoting Const. Party of Pennsylvania v. Aichele, 757 F.3d 347, 358 (3d
Cir. 2014)). As to factual attacks, courts are permitted “to weigh and consider evidence ‘outside
the pleadings’ to decide whether subject matter jurisdiction is proper.” Id. Regardless of whether
the attack is facial or factual, “the Plaintiff has the burden to prove that the Court has jurisdiction.”
Bd. of Trs. of Trucking Emps of N. Jersey Welfare Fund, Inc. v. Caliber Auto Transfer, Inc., No.
09-6447, 2010 WL 2521091, at *8 (D.N.J. June 11, 2010) (quoting Petruska v. Gannon Univ., 462
F.3d 294, 302 (3d Cir. 2006)).
Here, Defendants’ arguments primarily rely on matters outside the Complaint.
generally D.E. 308. Accordingly, the Court construes Defendants’ motion as a factual attack. As
a result, the Court will consider and weigh evidence beyond the pleadings to determine whether it
has jurisdiction. Gould Elecs. Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000), holding
modified by Simon v. United States, 341 F.3d 193 (3d Cir. 2003).
Fed R. Civ. P. 12(b)(7)
Under Fed. R. Civ. P. 12(b)(7), a court may dismiss an action for “failure to join a party
under Rule 19.” Fed R. Civ. P. 19 “sets out the circumstances under which it is necessary to join
an absent party and, if joinder of that party is not feasible, the factors for determining whether the
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absent party is indispensable to the action.” US Tech Sols., Inc. v. eTeam, Inc., No. CV 17-1107SDW-LDW, 2017 WL 3535022, at *2 (D.N.J. Aug. 16, 2017). “[I]n pursuing a Rule 12(b)(7)
motion to dismiss, the moving party bears the burden of showing that the absent party is both
necessary and indispensable under Rule 19.” Id. (citing Disabled in Action of Pennsylvania v. Se.
Pennsylvania Transp. Auth., 635 F.3d 87, 97 (3d Cir. 2011)). “In considering a motion under Rule
12(b)(7), the court must accept the factual allegations in the complaint as true and view those
allegations in the light most favorable to the non-moving party.” Id. However, “when making a
determination pursuant to Federal Rule of Civil Procedure 19, a court may consider evidence
outside of the pleadings.” M&B IP Analysts, LLC v. Cortica-US, Inc., No. CV190429ESSCM,
2020 WL 3411027, at *2 (D.N.J. June 22, 2020) (citing Mediterranean Shipping Co. (USA) Inc.
v. Shandex Corp., No. CV 16-2595-CCC-JBC, 2017 WL 1129593, at *2 (D.N.J. Mar. 23, 2017)).
A moving party is entitled to summary judgment where “the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a). A fact in dispute is material when it “might affect the outcome of the suit
under the governing law” and is genuine “if the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Disputes over irrelevant or unnecessary facts will not preclude granting a motion for summary
judgment. Id. “In considering a motion for summary judgment, a district court may not make
credibility determinations or engage in any weighing of the evidence; instead, the nonmoving
party’s evidence ‘is to be believed and all justifiable inferences are to be drawn in his favor.’”
Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at
255)). A court’s role in deciding a motion for summary judgment is not to evaluate the evidence
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and decide the truth of the matter but rather “to determine whether there is a genuine issue for
trial.” Anderson, 477 U.S. at 249.
A party moving for summary judgment has the initial burden of showing the basis for its
motion and must demonstrate that there is an absence of a genuine issue of material fact. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). After the moving party adequately supports its motion,
the burden shifts to the nonmoving party to “go beyond the pleadings and by her own affidavits,
or by the depositions, answers to interrogatories, and admissions on file, designate specific facts
showing that there is a genuine issue for trial.” Id. at 324 (internal quotation marks omitted). To
withstand a properly supported motion for summary judgment, the nonmoving party must identify
specific facts and affirmative evidence that contradict the moving party. Anderson, 477 U.S. at
250. “[I]f the non-movant’s evidence is merely ‘colorable’ or is ‘not significantly probative,’ the
court may grant summary judgment.” Messa v. Omaha Prop. & Cas. Ins. Co., 122 F. Supp. 2d
523, 528 (D.N.J. 2000) (quoting Anderson, 477 U.S. at 249-50)).
Ultimately, there is “no genuine issue as to any material fact” if a party “fails to make a
showing sufficient to establish the existence of an element essential to that party’s case.” Celotex
Corp., 477 U.S. at 322. “If reasonable minds could differ as to the import of the evidence,”
however, summary judgment is not appropriate. See Anderson, 477 U.S. at 250-51.
Motion to Dismiss
Defendants argue in passing that the Complaint’s allegations as to diversity are insufficient.
MTD Br. at 10. 28 U.S.C. § 1332(a)(1) provides in part that “[t]he district courts shall have
original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value
of $75,000, exclusive of interest and costs, and is between-- (1) citizens of different States[.]” In
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addition, “the legal representative of the estate of a decedent shall be deemed to be a citizen only
of the same State as the decedent[.]” 28 U.S.C. § 1332(c)(2). Here, the Complaint alleges Plaintiff
is a New Jersey resident and that all three Defendants are executors of the Estate and that
Constantine, the decedent, “was a Florida resident at the time of his death on February 23, 2013.”
Compl. ¶¶ 2-4. Notably, Defendants merely point to a purported pleading deficiency but do not
claim that Constantine was a citizen of a state other than Florida at the time of his passing. The
relevant inquiry is whether Plaintiff and Constantine were, in fact, citizens of different states. As
to that question, Defendants’ answer admitted Plaintiff’s allegation that Plaintiff and Defendants
were citizens of different states under 28 U.S.C. § 1332(c)(2). AA ¶ 5. Defendants further admit
in their motion that “Constantine was a Florida domiciliary at the time of his death, and so the
Estate and its executors have a Florida domicile for diversity purposes.” MTD Br. at 15. And
Plaintiff submitted a declaration that establishes his New Jersey citizenship. D.E. 320-7 at 1, ¶¶
2-3. Plaintiff met his burden in showing that diversity exists.
Defendants next argue the case should be dismissed because the Estate is a member of the
LLC and that the LLC is a necessary party to this case under Fed. R. Civ. P. 19 whose joinder –
either as a Plaintiff or Defendant – would destroy diversity. See Br. at 13. Plaintiff responds that
(1) the Estate is not a member of the LLC and therefore its joinder, if necessary, would not break
diversity; and (2) the LLC is not a necessary or indispensable party under Rule 19. MTD Opp. at
In relevant part, Rule 19 provides as follows:
(a) Persons Required to Be Joined if Feasible.
(1) Required Party. A person who is subject to service of
process and whose joinder will not deprive the court of
subject-matter jurisdiction must be joined as a party if:
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(A) in that person’s absence, the court cannot accord
complete relief among existing parties; or
(B) that person claims an interest relating to the
subject of the action and is so situated that disposing
of the action in the person's absence may:
(i) as a practical matter impair or impede the
person's ability to protect the interest; or
(ii) leave an existing party subject to a
substantial risk of incurring double, multiple,
or otherwise inconsistent obligations because
of the interest.
(2) Joinder by Court Order. If a person has not been joined
as required, the court must order that the person be made a
party. A person who refuses to join as a plaintiff may be
made either a defendant or, in a proper case, an involuntary
(3) Venue. If a joined party objects to venue and the joinder
would make venue improper, the court must dismiss that
(b) When Joinder Is Not Feasible. If a person who is required to be
joined if feasible cannot be joined, the court must determine
whether, in equity and good conscience, the action should proceed
among the existing parties or should be dismissed. The factors for
the court to consider include:
(1) the extent to which a judgment rendered in the person's
absence might prejudice that person or the existing parties;
(2) the extent to which any prejudice could be lessened or
(A) protective provisions in the judgment;
(B) shaping the relief; or
(C) other measures;
(3) whether a judgment rendered in the person’s absence
would be adequate; and
(4) whether the plaintiff would have an adequate remedy if
the action were dismissed for nonjoinder.
Fed. R. Civ. P. 19. The Court first “must determine whether the absent [party] should be joined
as [a] ‘necessary’ part[y] under Rule 19(a).” Gen. Refractories Co. v. First State Ins. Co., 500
F.3d 306, 312 (3d Cir. 2007). If the party should be joined “but [its] joinder is not feasible
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inasmuch as it would defeat diversity of citizenship” the Court “next must determine whether the
absent part[y] [is] ‘indispensable’ under Rule 19(b).” Id. If the party is deemed indispensable
under Rule 19(b) “the action cannot go forward.” Id.; see also Sun Chem. Corp. v. Am. Home
Assurance Co., No. CV 20-6252 (SRC), 2020 WL 5406171, at *5 (D.N.J. Sept. 9, 2020) (“If
joinder is required under Rule 19(a) but is not feasible, for instance because joinder would destroy
diversity jurisdiction, the court must determine whether the non-joined party is indispensable
under Rule 19(b).” (citing Gen. Refractories Co. v. First State Ins. Co., 500 F.3d at 312)).
Defendants rely on Weber v. King, 110 F. Supp. 2d 124, 125 (E.D.N.Y. 2000), Prader v.
Sci. Dynamics Corp., Civil Action No. 99-5303 (JBS), 2000 U.S. Dist. LEXIS 18666, at *1 (D.N.J.
Dec. 19, 2000), Hopkins v. Duckett, No. CIV A 02-5589 JCL, 2006 WL 3373784, at *8 (D.N.J.
Nov. 21, 2006) and Trademark Retail, Inc. v. Apple Glen Invs., LP, 196 F.R.D. 535, 542 (N.D.
Ind. 2000). Defendants claim these cases hold that an LLC is routinely found to be a necessary
party where the “members of a limited liability company are in conflict” and where “claims by a
member against a member arise out of the operating agreement.” MTD Br. at 1, 16.
The Court disagrees. In the cited cases, the courts found the LLCs to be necessary based
on an individualized analysis of the relevant Rule 19(a)(1) factors. In Weber, 110 F. Supp. 2d at
128, the court reasoned that the plaintiffs’– members of a non-party LLC – request to use the
LLC’s assets to pay down their personal debts over the objection of another member implicated
the interests of the LLC which could not be adequately represented due to the conflict among the
members. Id. The court in Trademark Retail, Inc., 196 F.R.D. at 540, found the non-joined LLC
to be a necessary party because the plaintiff’s complaint alleged the defendant had caused harm
to the LLC and had left the LLC without a manager. Id. See also Prader, Civil Action No. 995303 (JBS), 2000 U.S. Dist. LEXIS 18666, at *1 (analyzing Rule 19(a)(1) factors and finding
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LLC to be necessary party in part because “the contract at issue is undisputedly between [the LLC]
and [the Defendant].”); Hopkins, No. CIV A 02-5589 JCL, 2006 WL 3373784, at *8. Other courts
have rejected Rule 19 motions to join LLCs. Indeed, a court in this district concluded that an LLC
was not a necessary party in a dispute between its members over the sale of the defendant’s interest
in the LLC. Foster Owners Co. LLC v. Farrell, No. CIV. A. 14-5120 FSH, 2015 WL 778758, at
*5 (D.N.J. Feb. 24, 2015) (finding the LLC was not a necessary party under Rule 19(a)(1)(B)(i)
where the relevant agreements obligated the defendant to sell his interest in the LLC to a third
The cases make clear that the Court must conduct the Rule 19 analysis on a case-by-case
basis. See e.g., Trademark Retail, Inc., 196 F.R.D. at 539 (“If anything can be gleaned from the
foregoing, it is that Rule 19 requires examining the specifics to determine whether a party is in
fact necessary.”). But Defendants makes no attempt to analyze the relevant standards. At no point
in the briefing do Defendants explain which subsection of Rule 19(a) renders the LLC a necessary
party. Instead, Defendants spend most of their brief reciting the factual allegations in the
Complaint and AA and make no effort to discuss the relevant legal factors. Defendants also make
blanket statements that the case law requires the LLC’s joinder. As discussed, the cited authority
does not support Defendants’ wholesale position and Defendants have otherwise failed to conduct
any other, non-conclusory analysis as to the Rule 19(a) factors in arguing the LLC is a necessary
party. Accordingly, the Court finds that Defendants have not met their burden to show that the
LLC is a necessary party.
Defendants’ Rule 19 motion also miscomprehends the appropriate standard, ignoring the
required analysis under Rule 19(b). See Gen. Refractories Co., 500 F.3d 312. Defendants argue
“[t]he LLC must be joined and, since that cannot be done without destroying diversity, the action
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must be dismissed.” MTD Br. at 8; see also id. at 17 (“The LLC is a necessary party to this
litigation and its joinder destroys diversity. Thus, this Court lacks subject matter jurisdiction.”).
In essence, Defendants contend that a finding that a non-diverse party is necessary requires
dismissal of the action. This is incorrect. Assuming the LLC is necessary and that “[its] joinder
is not feasible inasmuch as it would defeat diversity of citizenship” Defendants were obligated to
conduct a Rule 19(b) analysis to show why the LLC is indispensable. See Gen. Refractories Co.,
500 F.3d 312. Defendants made no such showing. For that additional reason, Defendants’ motion
is denied. US Tech Sols., Inc., No. CV 17-1107-SDW-LDW, 2017 WL 3535022, at *2 (holding
that “[e]ven if th[e] Court found that the Absent Parties were required parties under Rule 19(a),
dismissal of Plaintiffs’ Amended Complaint would be inappropriate” because “[d]efendants make
only a conclusory argument regarding the Rule 19(b) requirements.”).
Plaintiff’s Motion for Summary Judgment
Plaintiff seeks summary judgment as to all his affirmative claims and as to all of
Defendants’ Counterclaims. D.E. See generally D.E. 309-1. The Court reviews each argument in
1. Plaintiff’s Motion as to Counts One, Two, and Three
of the Complaint
Plaintiff seeks summary judgment on Count One, anticipatory breach and repudiation of
the Operating Agreement; Count Two, breach of the implied covenant of good faith and fair
dealing; and Count Three, specific performance. The Court addresses Defendants’ arguments first.
In their opposition, Defendants’ request to supplement their “Rule 56.1 Statement to add fact
testimony from Calisto Bertin, an engineer as to the town of Edgewater’s actions to promote highrise residential development of the area surrounding the Property as well as the number of units
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that the existing zoning itself allowed as of 2013.” 6 Id. The Court previously considered, and
denied, this same request months ago. 7 Specifically, on November 12, 2020, Defendants filed a
letter requesting “permission to supplement their Statement with fact testimony of Calisto Bertin.”
D.E. 294. The Court denied this request. The Court reasoned that Defendants’ failure to disclose
Mr. Bertin “more than six years after this case began and two years after the close of fact
discovery” violated Fed. R. Civ. P. 26(a)(1)(A)(i) and (e)(1). D.E. 300 at 2, n. 1. The Court further
noted this late disclosure would prejudice Plaintiff and that Mr. Bertin’s testimony likely
constituted expert testimony. Id. at 3, n. 2. The Court also found that Defendants had failed to
show good cause under Fed. R. Civ. P 16(b)(4) to alter the scheduling order. Id. at 3. Defendants
have not moved to reconsider that order. Defendants’ current request is rejected for the same
reasons previously stated by the Court. 8 The Court denies Plaintiffs’ request to consider Mr.
Bertin’s testimony in opposition to Plaintiff’s motion for summary judgment.
Without leave of Court, Defendants submitted a “Supplemental Statement of Material Facts Not
In Dispute,” D.E. 319-7, a “Supplemental Declaration of Yvonne Callas,” D.E. 319-1, and other
exhibits, D.E. 319-2 – D.E. 319-6 not discussed in their initial Statement of Material Facts or
Responsive Statement of Material Facts. These submissions violate this Court’s Order that the
parties “shall refer to their [original] statement of undisputed material facts” and that “[t]he Court
will disregard any substantive changes to the parties’ statements of undisputed material facts.”
D.E. 292 at 2; id. at 2, n. 3. The Court therefore does not consider Defendants’ supplemental
statement, D.E. 319-7, and any evidence submitted contrary this Court’s previous Orders, D.E.
292, D.E. 300.
Defendants attempt to characterize their request as falling under L. Civ. R. 56.1’s provision for
rebuttal evidence. Def. Opp. at 4. However, there is no difference between this request and the
request for supplementation that Defendants made in November 2020, which the Court denied.
See D.E. 294 at 1 (requesting “permission to supplement Defendants’ R. 56.1 Statement of
Material Facts Not in Dispute” with “fact testimony from Calisto Bertin.”).
Defendants, through citation, imply that the Court’s local rules are invalid. See Def. Opp. at 45. The Court disagrees.
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The Court turns to Plaintiff’s arguments in favor of summary judgment. Plaintiff argues
that he is entitled to summary judgment on the contract-based claims because “Defendants have
no admissible evidence whatsoever to controvert the sufficiency of the $2.7 million valuation of
the Property on which Plaintiff offered to close.” Pl. Br. at 309-1. However, Plaintiff’s brief fails
to discuss the elements of each of his affirmative claims and provides no discussion as to how the
undisputed facts satisfy each element of his claims. Nor does Plaintiff cite to the relevant
contractual provision that he claims was breached. In addition, it is not clear to the Court that
Count Three of the Complaint, for specific performance, can stand as an independent cause of
action. Cotter v. Newark Hous. Auth., No. CIV 09-2347 (JAG), 2010 WL 1049930, at *5 (D.N.J.
Mar. 17, 2010), aff’d, 422 F. App’x 95 (3d Cir. 2011) (applying New Jersey law and finding that
“[s]pecific performance may not stand as a claim, independent from a breach of contract claim.
Instead, specific performance is an equitable remedy that may be granted by a court of equity in
its discretion, if there is no adequate remedy at law.”); ADP, LLC v. Capote, No. CV 151355JLLJAD, 2015 WL 13447655, at *1 (D.N.J. July 28, 2015) (applying New Jersey law and
ruling that “specific performance is a remedy, and not an independent cause of action.”). 9
Accordingly, the Court finds that Plaintiff has failed to meet his burden to show he “is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(a).
Plaintiff also appears to concede that material facts are in dispute. Specifically, Plaintiff
states that “the only genuine issue for trial determination [is] the relief to which Plaintiff is entitled,
most notably, the purchase price for Constantine’s Interest” in the LLC. Pl. Br. at 13. As best the
The Operating Agreement provides that “[t]his Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey.” D.E. 311-2; D.E. 21-2 at 8. And the
parties agree that New Jersey law governs. See Pl. Br. at 13, 17, and 20-24 (citing New Jersey
state court decisions and statutes); see Def. Br. at 8-13 (same).
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Court can discern, it appears that Plaintiff claims that Defendants breached the Operating
Agreement by failing to sell him Constantine’s interest in the LLC at the appropriate purchase
price (as calculated in accordance with Sections 1.24, 14.2, and 14.4 of the Operating Agreement)
by December 31, 2014. See e.g., Compl. ¶ 41; see D.E. 21-2 at 10, 27, and 29. Accordingly,
Plaintiff seemingly admits that the conflicting expert testimony creates a genuine disputed material
fact as to the price that the Defendants were obligated to sell Plaintiff Constantine’s LLC interest.10
For that additional reason, Plaintiff’s motion for summary judgment as to his affirmative claims is
2. Plaintiff’s Motion as to the First, Second, and Fourth
For the same reasons that the Court denied summary judgment as to Plaintiff’s affirmative
claims, the Court denies Plaintiff’s motion for summary judgment as to Defendants’ first, second,
and fourth Counterclaims. Plaintiff has failed to provide any analysis as to the elements of
Defendants’ Counterclaims and how the undisputed facts demonstrate that it is entitled to judgment
as a matter of law. In addition, Plaintiff admits that the applicable purchase price for Constantine’s
interest in the LLC remains a disputed fact. Pl. Br. at 13.
3. Plaintiff’s Motion as to the Third Counterclaim
Plaintiff moves for summary judgment as to Defendants’ third Counterclaim for breach of
fiduciary duty. Specifically, Plaintiff contends that it is entitled to summary judgment as to
Defendants’ assertions that Plaintiff breached his fiduciary duties by (1) attempting to purchase
In addition, the calculation of the purchase price for Constantine’s LLC interest is more complex
than simply determining the correct “Appraised Value” of the Property, as Plaintiff appears to
claim. See D.E. 311-2; D.E. 21-2 at 8, § 1.24; Pl. Reply at 9 (admitting the “Estate is undisputedly
entitled to full credit” for “receivables of the LLC” in the “calculation of the purchase price under
Article 14 of the Operating Agreement.”); Pl. Br. at 17 (same). Plaintiff made no attempt to
address this issue.
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the estate’s interest at a “depressed value”; (2) failing to distribute rent received from Coffee
Associates to the Estate; (3) failing to permit Defendants to review the books and records of the
LLC; (4) causing the LLC to enter into the an unfair lease; and (5) failing to timely account for
and pay rent due from Coffee Associates to the LLC. Pl. Br. at 14.
As to the first allegation, Plaintiff argues that he is entitled to summary judgment that he
did not attempt to purchase Constantine’s interest in the LLC at a depressed value for the reasons
set forth in his motion for summary judgment as to the contract-based claims and counterclaims.
Pl. Br. at 14. Specifically, Plaintiff contends that the “$2.7 million Appraised Value of the Property
Plaintiff agreed to use in calculating the total purchase price . . . was not depressed.” Id. However,
as noted above, Plaintiff has seemingly acknowledged that disputed material facts existed as to the
correct purchase price for Constantine’s interest in the LLC. See e.g., id. at 13 (“[T]he only
genuine issue for trial determination . . . is . . . the purchase price for Constantine’s Interest[.]”).
The Court denies summary judgment on this ground.
Defendants’ allegation that Plaintiff attempted to purchase Constantine’s interest at a
“depressed value” survives Plaintiff’s motion for summary judgment. In addition, with the
exception of one reference to the applicable statute of limitations, Plaintiff has not cited any legal
authority in support of his arguments for summary judgment as to Defendants’ Counterclaims for
breach of fiduciary duty. See Pl. Br. 14-18. Thus, even if Plaintiff is correct as to the remaining
issues, the Court cannot conclude as a matter of law that Defendants’ surviving allegation could
not constitute a breach of fiduciary duty. Plaintiff’s motion for summary judgment as to the third
Counterclaim is denied.
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4. Plaintiff’s Motion as to the Fifth Counterclaim
Plaintiff next moves for summary judgment as to Defendants’ fifth Counterclaim, for an
accounting “with respect to Constantine Callas’ membership interest in [the LLC].” AA ¶ 77.
Similar to Plaintiff’s other arguments, Plaintiff does not cite to any legal authority in support of its
argument. Plaintiff argues that Defendants’ counterclaim for an accounting “is obviated by
discovery Defendants sought and received in this action.” Pl. Br. at 18. However, Plaintiff
provides no authority in support. Similarly, Plaintiff argues that “the requested accounting is
subsumed in the calculation . . . of the purchase price, which includes a specified portion not only
of the Appraised Value of the Property, but also of a balance sheet calculation of assets and
liabilities of the LLC.” Pl. Br. at 19. Again, Plaintiff provides no authority in support.
Plaintiff further argues that Defendants’ allegations that Plaintiff “may have” oppressed
the rights of Constantine in his declining years is “contradicted by the undisputed evidence that . .
. Plaintiff has not ‘since his father’s death . . treated unfairly or oppressed’ Defendants or the
Estate.” Pl. Br. at 18. For this argument Plaintiff relies exclusively on his previous arguments
made in support of his motion for summary judgment as to the contract claims and Defendants’
breach of fiduciary duty Counterclaims. Id. Plaintiff also provides no legal authority in support.
For example, Plaintiff argues that Defendants’ claim that Plaintiff improperly caused the LLC to
enter into an unfavorable lease with Coffee Associates is time barred under the applicable statute
of limitations. Pl. Br. at 16-17. Plaintiff admits that the challenged lease was entered into, Pl.
RSOMF ¶ 45, and that he signed the lease on behalf of both Coffee Associates and the LLC. Id.
Plaintiff claims that these acts could not support a claim for breach of fiduciary duty because the
statute of limitations has lapsed. However, as to Defendants’ claim for an accounting, Plaintiff’s
brief provides no authority or analysis as to the applicable statute of limitations. And Plaintiff also
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fails to provide any authority stating such conduct could never, as a matter of law, support a claim
for an accounting. Plaintiff’s summary judgment motion as the fifth Counterclaim is denied.
5. Plaintiff’s Motion as to the Sixth Counterclaim
Plaintiff moves for summary judgment as to Defendants’ sixth Counterclaim, Pl. Br. at 1925, for member oppression. The counterclaim alleges that Plaintiff “has engaged in conduct
intended to oppress, and which does oppress, the Estate as a minority member of [the LLC].” AA
¶ 79. Plaintiff advances three arguments in support of summary judgment: (1) that New Jersey’s
Revised Uniform Limited Liability Company Act (“RULLCA”) 11, N.J. Stat. Ann. § 42:2C-1, et.
seq., provides that the terms of the Operating Agreement control the subject of the parties’ dispute
and therefore the Counterclaim; (2) Defendants’ exercise of the Put Option to sell Constantine’s
interest in the LLC left them without standing to pursue any rights in the LLC except to review the
purchase price for Constantine’s interest; and (3) that the uncontroverted evidence establishes that
there has been no oppression. See Pl. Br. at 19.
Defendants first argue that “every year since Constantine’s death [Plaintiff] has sent to
Yvonne Callas, as Co-Executor, a K-1 for Constantine’s membership interest in the LLC.” Def.
Opp. at 22. From this, Defendants surmise that “a K-1 is only sent to an equity participant in the
LLC.” Id. However, these arguments rely on evidence not previously submitted with Defendants
Responsive Statement of Material Facts or Statement of Material Facts. See D.E. 319-1 at 2, ¶ 5;
D.E. 319-7 ¶ 13. As discussed above, the Court does not consider such evidence as the submissions
violate this Court’s Order that the parties “shall refer to their [original] statement of undisputed
The parties concede that RULLCA governs here. Pl. Br. at 20; Def. Opp. at 21; see also IE Test,
LLC v. Carroll, 226 N.J. 166, 177, 140 A.3d 1268, 1275, n. 3 (N.J. 2016) (“All LLCs in New
Jersey are now subject to the RULLCA.”).
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material facts” and that “[t]he Court will disregard any substantive changes to the parties’
statements of undisputed material facts.” D.E. 292 at 2; id. at 2, n. 3.
Plaintiff claims that the terms of the Operating Agreement supersede RULLCA because
“the terms of the Operating Agreement specifically address the subject of the parties’ dispute in
this case – the consequences of Defendants’ put of Constantine’s interest in the LLC[.]” Pl. Br. at
20. Plaintiff is correct that RULLCA provides that where there is an operating agreement, “the
operating agreement governs . . . relations among the members as members and between the
members and the limited liability company.” N.J. Stat. Ann. 42:2C–11a(1); see also Foster
Owners Co. LLC v. Farrell, No. 14–5120, 2015 WL 778758, at *1 n. 2 (D.N.J. Feb. 24, 2015)
(analyzing the relationships between members of a limited liability company pursuant to its
operating agreement). However, N.J. Stat. Ann. 42:2C-11c(7) continues that “[a]n operating
agreement may not: . . . vary the power of a court to decree dissolution in the circumstances
specified in paragraphs (4) and (5) of subsection a. of section 48 of this act.” Paragraphs (4) and
(5) of subsection a. of Section 48 of RULLCA provide as follows:
A limited liability company is dissolved, and its activities shall be
wound up, upon the occurrence of any of the following:
(4) on application by a member, the entry by the Superior Court
of an order dissolving the company on the grounds that:
(a) the conduct of all or substantially all of the company’s
activities is unlawful; or
(b) it is not reasonably practicable to carry on the company’s
activities in conformity with one or both of the certificate of
formation and the operating agreement; or
(5) on application by a member, the entry by the Superior Court
of an order dissolving the company on the grounds that the
managers or those members in control of the company:
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(a) have acted, are acting, or will act in a manner that is
illegal or fraudulent; or
(b) have acted or are acting in a manner that is oppressive
and was, is, or will be directly harmful to the applicant.
N.J. Stat. Ann. § 42:2C-48a(4)-(5). Plaintiff concedes that Defendants’ member oppression claim
is brought under N.J. Stat. Ann. § 42:2C-48a(5)(b). Accordingly, Plaintiff’s assertion that the
Operating Agreement overrides Defendants’ member oppression claim is incorrect.
Plaintiff next argues that N.J. Stat. Ann. § 42:2C-48a(5)(b) only permits suits by a
“member” of an LLC and that Defendants do not have standing because “neither they nor the
Estate became a ‘member’ of the LLC, or even sought such membership.” Pl. Br. at 22. As an
initial matter, it does not appear that Defendants are asserting their claim as transferees of an
interest in the LLC. Rather, the Defendants are asserting their claim on behalf of the Estate as
executors thereof. AA ¶ 79 (alleging Plaintiff “engaged in conduct intended to oppress, and which
does oppress, the Estate as a minority member of [the LLC].”). Plaintiff appears to be correct that
a member oppression suit may only be initiated by a “member.” See N.J. Stat. Ann. § 42:2C48a(5)(b) (“[O]n application by a member . . .”). And Defendants do not contest this, see Def.
Opp. at 23. Thus, the question is whether the Estate is a member of the LLC.
The parties agree that the Operating Agreement governs this inquiry. Plaintiff asserts that
Constantine’s death resulted in a “Transfer” of Constantine’s interest under the Operating
Agreement and that transferees do not become “Members” of the LLC unless admitted to the
membership consistent with Section 10.3 of the Operating Agreement.
Pl. Br. at 22-23.
Defendants argue that a deceased member is a “Member” as defined in the Operating Agreement.
Def. Opp. at 23. Specifically, Defendants reply that “[t]he Operating Agreement repeatedly
describes a ‘Deceased Member’ as a Member.” Def. Opp. at 23.
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“The principal goal of contract interpretation is to ‘ascertain and effectuate the objectively
manifested intentions of the contracting parties.’” Heffron v. Adamar of N.J., Inc., 270 F. Supp.
2d 562, 570 (D.N.J. 2003) (quoting Pacitti v. Macy’s, 193 F.3d 766, 773 (3d Cir. 1999)). In
determining the “objective intent” of the parties, the first step is to determine “whether the relevant
terms and provisions of the contract are clear or ambiguous.” Id. The determination of whether a
contract or a specific term therein is clear or ambiguous is a question of law for the court to decide.
Nevets C.M., Inc. v. Nissho Iwai Am. Corp., 726 F. Supp. 525, 531 (D.N.J. 1989). An ambiguity
exists if a contract is “susceptible to two reasonably alternative interpretations.” Id. Generally,
the interpretation of ambiguous contract terms is a question of fact. Id. In determining the
objective intent of the parties, “the terms of the contract must be given their plain and ordinary
meaning.” Kaufman v. Provident Life & Cas. Ins. Co., 828 F. Supp. 275, 283 (D.N.J. 1992), aff'd,
993 F.2d 877 (3d Cir. 1993) (internal quotation marks omitted).
In the Operating Agreement, “Members” are defined as follows:
[T]he persons who own Interests in the LLC or, with respect to any
transfer of all or any portion of an Interest pursuant to Article X, the
transferor of such Interest, unless and until the transferee thereof is
admitted as a Member to the extent of the Interest transferred
pursuant to Section 10.3. The initial Members are the persons listed
on Schedule A.
D.E. 311-2 at 6, § 1.18. The Operating Agreement defines a “Transfer” as follows:
Any disposition of an interest in the LLC by a Member (including,
without limitation, gifts, sales, assignments, pledges, encumbrances,
bequests, and all other inter vivos or testamentary dispositions)
whether voluntary or involuntary, or whether pursuant to court order
or by operation of law.
Id. at 8, § 1.23. Article 10 governs the “Transferability of LLC Interests.” Section 10.1 of that
Article provides that “the Transfer of any LLC Interest, except as specifically provided in this
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Agreement, shall be null and void except if such Transfer is made with the consent of all other
Members.” Id. at 18, § 10.1. Section 10.2 of Article 10 goes on to identify “Permitted Transfers”:
(a) any Member and his or her Permitted Transferees 12 may Transfer
all or part of his or her or their Interests in the LLC among
(b) Interests in the LLC held by any custodian or guardian for any
minor issue of a Member, or held by a trustee or trustees for the
benefit of such minor issue, may be Transferred to such issue upon
the attainment of the age of majority (or such later date as may be
provided by the terms of the trust), or may be Transferred to a
successor custodian, guardian or trustee.
Id. at 18, § 10.2. Section 10.3 of Article 10 governs “Transferee’s Rights.” That section provides
that a transferee of an “Interest” in the LLC
[s]hall receive and hold the Interest in the LLC so transferred subject
to the terms and conditions of this Agreement as though a party
hereto, and no Transfer of the whole or any portion of such LLC
interest shall be made to such transferee . . . and such transferee shall
not become a substituted member in the LLC, unless and until such
transferee is approved by all other Members and he or she executes
and delivers to the Management Committee a counterpart of this
Agreement, and such other instruments and documents as the
Management Committee deems necessary or desirable, evidencing
such transferee’s agreement to be bound by all of the terms and
conditions of this Agreement.
Id. at 18, § 10.2.
“Permitted Transferees” is defined in the Operating Agreement to mean a Member’s
(i) spouse, (ii) any of his or her adult issue, (iii) custodians or
guardians for his or her minor issue, provided that each such
guardian or custodian shall be an individual who is either such
Member, his or her spouse or any of his or her adult issue, and (iv)
trusts of which each and all of the income beneficiaries and the
remaindermen shall be members of the group composed of such
Member, his or her spouse and his or her issue.
D.E. 311-2 at 7, § 1.21.
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The plain terms of the Operating Agreement are not as clear as either party claims.
Plaintiff’s claim is essentially that the death of a Member results in a “Transfer.” However, that
is not evident based on the definition of the term “Transfer” in the Operating Agreement, which
only indicates that “bequests, and all other inter vivos or testamentary dispositions” result in a
“Transfer.” Id. at 8, § 1.23. The implication of this language is that the creation of the Estate itself
is not a transfer, but that a disposition from the Estate to a third-party is. 13 Moreover, the definition
of the term Member does not necessarily indicate that the Estate is not a Member, because that
definition provides that “with respect to any transfer of all or any portion of an Interest pursuant
to Article X” a member is “the transferor of such interest.” Id. at 6, § 1.18. It is also unclear the
status of a deceased Member’s interest in the LLC when the Put Option has been exercised but the
sale of the deceased Member’s interest has not closed – as here. See Pl. Br. at 24.
Defendants’ interpretation is not convincing either. Defendants are correct that, at several
points, Article 14 of the Operating Agreement describes a deceased Member as owning an Interest
in the LLC. See D.E. 21-2; D.E. 311-2 at 24, § 14.1 (describing an “Interest owned by such
Deceased Member or Disabled Member.” (emphasis added)); D.E. 311-2 at 25, § 14.2 (stating that
“the Disabled Person or Deceased Person has the right to sell to each Member the Interest owned
by the Disabled Member or Deceased Member.” (emphasis added)); id. at 26, § 14.3 (“[T]he other
Members have the right to buy all, but not less than all of the Interest owned by the Deceased
Member or Disabled Member.”). However, the Operating Agreement’s use of the term “Deceased
In Reply, Plaintiff argues that the Estate and Constantine are separate, and that the Estate merely
has the authority to “exercise the right to put Constantine’s Interest . . . as the ‘personal
representative of a Deceased Member.’” Pl. Reply at 12. Plaintiff, again, provides no authority
in support. Even assuming that the argument is valid, Plaintiff cites no law indicating that, upon
his death, Constantine’s other rights in the LLC were extinguished such that his personal
representative could not assert a member oppression claim on his behalf.
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Member” in Article 14 is inconsistent with the definition of that term in Article 1. Article 1,
Section 1.9 of the Operating Agreement defines “Deceased Member” as an event – “the death of
a Member during the term of this Agreement” – not a type of person. Id. at 5, § 1.9. Moreover, it
is unclear whether Article 14 limits the rights of a deceased Member to the specific rights provided
under that article or whether a deceased Member retains the rights of an ordinary Member with the
additional rights provided under Article 14.
The Court finds that the Operating Agreement is ambiguous as to whether (1) the Estate of
a deceased Member remains a Member of the LLC and (2) whether a deceased Member maintains
the same rights as a living Member. “[W]here there is uncertainty, ambiguity or the need for parol
evidence in aid of interpretation, then the doubtful provision should be left to the jury.” Id.
Kristensons Petroleum, Inc. v. Explorer Mar. Cruises, LLC, No. CV 14-5683-BRM-TJB, 2018
WL 497070, at *6 (D.N.J. Jan. 22, 2018). Accordingly, Plaintiff’s motion based on the Estate’s
status as a Member of the LLC under the Operating Agreement is denied.
Plaintiff’s final argument in support of his motion for summary judgment is that no
oppression occurred. Pl. Br. at 25. Plaintiff’s argument is one sentence long and fails to provide
the elements of Defendants’ Counterclaim, the relevant undisputed facts, or any other analysis. Id.
Plaintiff has failed to meet his burden as to this argument.
Defendants’ Motion for Summary Judgment
Defendants move for summary judgment as to “their third counterclaim . . . and on their
sixth counterclaim.” D.E. 302 at 1. The Court addresses each argument in turn.
1. Defendants’ Motion as to their Third and Sixth
Defendants seek summary judgment as to their Counterclaim for breach of fiduciary duty
and their Counterclaim for member oppression. Def. Br. at 11. Plaintiff first asserts that the Estate
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is not a member of the LLC and therefore lacks standing to pursue such claims. Pl. Opp. at 5
(“[T]he Estate is not and never was a Member of the LLC.”). In reply, Defendants do not appear
to contest that membership in the LLC is a necessary predicate to their claims and instead argue
that the Estate is a Member of the LLC. Def. Reply 14 at 4. The Court has already determined that
(1) whether the Estate of a deceased Member remains a Member of the LLC and (2) whether a
deceased Member maintains the same rights as a living Member are issues for the jury. Because
resolution of those issues is central to Defendants’ motion for summary judgment on their third
Counterclaim, Defendants’ motion is denied.
Defendants do not appear to respond to Plaintiff’s argument that the member oppression
claims are also barred for lack of standing, Reply at 5, although it is clear that Plaintiff made the
argument. Pl. Opp. at 4; see also id. at 5; id. at 8-9. In addition, it appears that Defendants’
Counterclaim for member oppression is limited to Plaintiff’s conduct toward the Estate. See A.A.
¶ 79 (“William Callas has engaged in conduct intended to oppress, and which does oppress, the
Estate as a minority member of Coffee Associates LLC.”). Plaintiff’s argument as to standing
directly implicates the Estate’s status as a Member. As explained above, because the Operating
Agreement is ambiguous as to whether the Estate of a deceased Member remains a Member of the
LLC, the matter is left for a jury. Accordingly, Defendants’ motion for summary judgment as to
their sixth Counterclaim is also denied.
Defendants’ Motion to Strike
On April 9, 2021, by way of letter, Defendants requested that the Court not consider
Exhibits 1-4 and 13 to the Reply Certification of Plaintiff William Dean Callas, D.E. 336, in
The Court notes that several pages of Defendants’ reply brief appear in single line spacing, in
violation of L. Civ. R. 7.2(d).
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deciding the motions for summary judgment. D.E. 340. Specifically, Defendants argue that the
documents “were not produced in discovery despite their being within the scope of [Defendants’]
document requests,” id. at 1, and therefore should not be considered as part of the summary
judgment record. Plaintiff responds that the requested relief should be denied on several grounds,
including that Defendants’ letter constitutes “an unauthorized sur-reply.” D.E. 342. In resolving
the motions, the Court did not rely on the exhibits and testimony in question. Accordingly,
Defendants’ motion to strike is denied as moot.
For the foregoing reasons, the parties’ motions, D.E. 301, D.E. 307, D.E. 309, and D.E.
340, are denied. An appropriate Order accompanies this Opinion.
Date: August 4, 2021
John Michael Vazquez, U.S.D.J.
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