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Stratienko v. Brock

Court of Appeals of Tennessee, Knoxville

July 13, 2017

ALEXANDER A. STRATIENKO, ET AL
v.
OSCAR H. BROCK, ET AL.

          Session Date: May 23, 2017

         Appeal from the Circuit Court for Hamilton County No. 12C1273, 13C867 Jerri Bryant, Chancellor [1]

         This is a jury case arising from the formation and management of a limited liability company. The jury determined that the Appellee developer was entitled to payment for his membership interest in the LLC. The jury also determined that the Appellant investor, his wife, and the LLC should indemnify the developer for the judgment relating to the lease of an adjacent lot. Because there is material evidence to support the jury's verdict, we affirm and remand.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed and Remanded.

          William H. Horton, Chattanooga, Tennessee, for the appellants, Alexander Stratienko, McNeal Properties, LLC, and Cardiac and Vascular Associates, P.C..

          Stephen S. Duggins, Chattanooga, Tennessee, for the appellee, Oscar Brock.

          Kenny Armstrong, J., delivered the opinion of the court, in which D. Michael Swiney, C.J., and John W. McClarty, J., joined.

          OPINION

          KENNY ARMSTRONG, JUDGE

         I. Background

         In approximately 2002, Dr. Alexander Stratienko, a cardiologist, expressed an interest in acquiring his own medical office building near the hospital. Dr. Stratienko and Mr. Oscar Brock, a real estate developer, discussed building an office complex, where

          Dr. Stratienko could have his office and rent out the other space. To this end, Dr. and Mrs. Lisa Stratienko, along with Mr. Brock made an offer to purchase undeveloped property near the hospital. The agreed purchase price was $185, 000. The property closed in May 2003, and the deed listed the Stratienkos as owners of a one-half interest and Mr. Brock as the owner of the other one-half interest.

         Dr. Stratienko's existing lease expired in 2007, and he wanted the new office completed by that time. The parties began the process of developing the property. By late 2005, the parties had agreed on a 30, 000 square foot office building. In August of 2006, Mr. Brock and the Stratienkos formed McNeal Properties, LLC ("McNeal") to own the property; the parties quitclaimed the property to McNeal in September of 2006. The initial operating agreement for McNeal listed Mr. Brock and the Stratienkos as owning 50% each. Mr. Brock was designated the chief manager in the operating agreement, which meant that he wrote checks from the McNeal account and handled the bookkeeping.

         Construction on the office space was completed in July of 2007. Dr. Stratienko moved his practice, Cardiac and Vascular Associates ("CVA"), into the second floor of the new office building. CVA entered into a lease agreement with McNeal on July 1, 2007. The Stratienkos insisted that they and CVA have a controlling interest in McNeal. Mr. Brock agreed, and the lease provided, that CVA would obtain a membership interest in McNeal after five years of leasing. On or about January 1, 2008, Mr. Brock emailed the Stratienkos' attorney an amended operating agreement that included CVA as a member, with the following ownership percentages: 37% to the Stratienkos, 37% to Mr. Brock, and 26% to CVA.

         As construction on the McNeal building was being completed, Dr. Stratienko expressed frustration about a large billboard on a neighboring lot that blocked the view of their building. The Stratienkos were also interested in the neighboring lot for overflow parking. Dr. Stratienko approached Mr. Brock about acquiring the property, and Mr. Brock contacted Wayne Peters, the representative over the trust that owned the property. Mr. Brock reported that Mr. Peters would not sell the lot, but would agree to a lease. Mr. Peters refused to enter into a lease agreement with McNeal, but agreed to enter into a lease agreement with Mr. Brock, who signed as the lessee. Mr. Brock ultimately entered into a fifteen year lease, which began on May 1, 2007 and gave ...


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