Cengage Advantage Books: Business Law Today, The Essentials 10th Edition by Roger LeRoy Miller

تمرين 4

Venture Sales, LLC v. Perkins
FACTS Walter Perkins, Gary Fordham, and David Thompson formed Venture Sales, LLC, to develop a subdivision in Petal, Mississippi. All three men contributed land and funds to Venture Sales, resulting in total holdings of 466 acres of land and about $158,000 in cash.
Perkins, an assistant coach for the Cleveland Browns, trusted Fordham and Thompson to develop the property. More than a decade later, however, Fordham and Thompson still had not done anything with the property, although they had developed at least two other subdivisions in the area. Fordham and Thompson suggested selling the property, but Perkins disagreed with the proposed listing price of $3.5 million. Perkins then sought a judicial dissolution of Venture Sales. Fordham and Thompson told the court that they did not know when they could develop the property and that they had been unable to get the additional funds that they needed to proceed. The trial court ordered the company dissolved. Fordham, Thompson, and Venture Sales appealed.
ISSUE Can Venture Sales be judicially dissolved?
DECISION Yes. The Mississippi Supreme Court affirmed the judgment of the trial court.
REASON Under Mississippi law, an LLC may be judicially dissolved if, among other reasons, "it is not reasonably practicable to carry on the business in conformity with... the limited liability company agreement." The statute does not explain when continuing an LLC is "not reasonably practicable." The court therefore followed decisions from other jurisdictions recognizing that dissolution is appropriate when an LLC "is not meeting the economic purpose for which it was established."
According to Venture Sales' operating agreement, the company's purpose was "to initially acquire, develop and [sell] commercial and residential properties near Petal, Forrest County, Mississippi." Nevertheless, more than a decade later, the LLC's property remained undeveloped. Fordham and Thompson pointed to a number of reasons, including the financial crisis and Hurricane Katrina. But regardless of the reasons, Fordham and Thompson lacked the funds needed to proceed and did not know when they could develop the property as planned. It was immaterial that Perkins had not agreed to other business opportunities, such as selling the property for $3.5 million. After all, Venture Sales was formed to develop a subdivision. Because the LLC was not meeting that purpose, dissolution was warranted.
CRITICAL THINKING-Legal Consideration Would dissolution be appropriate if the parties had formed a partnership rather than an LLC? Explain your answer.