Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Dermon-Warner Properties, LLC v. Warner

Court of Appeals of Tennessee, Jackson

December 19, 2017

DERMON-WARNER PROPERTIES, LLC
v.
STEVE H. WARNER

          Session September 20, 2017

         Appeal from the Chancery Court for Shelby County No. CH-12-0976 Jim Kyle, Chancellor.

         A member of a limited-liability company withdrew from the company with a deficit in his capital account. The company filed suit against the withdrawing member on the ground that he had an obligation to repay the deficit amount. The withdrawing member filed a counter-complaint arguing that the company was estopped from collecting the debt because the debt had been forgiven. Thereafter, the parties filed cross-motions for summary judgment. The trial court denied the withdrawing member's motion and granted the company's motion, finding that the withdrawing member failed to prove that the company forgave the debt. The withdrawing member appealed. We affirm the trial court's decision.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

          Robert L.J. Spence, Jr., and Andrew Mark Horvath, Memphis, Tennessee, for the appellant, Steve H. Warner.

          Louis Jay Miller, Memphis, Tennessee, and Jerry Alan Schatz, Germantown, Tennessee, for the appellee, Dermon-Warner Properties, LLC.

          Andy D. Bennett, J., delivered the opinion of the Court, in which J. Steven Stafford, P.J., W.S., and Brandon O. Gibson, J., joined.

          OPINION

          ANDY D. BENNETT, JUDGE.

         Factual and Procedural Background

         Dermon-Warner Properties, LLC ("DWP") is a Tennessee limited-liability company that was formed on August 28, 1997 for the purpose of managing commercial and residential properties. It consisted of two members, Dave Dermon Co. and Steve H. Warner. Both members owned a fifty percent interest in DWP.

         DWP established and maintained a capital account for each member pursuant to its operating agreement. Concerning the capital accounts, Article 4.1 of the operating agreement provided, in pertinent part, as follows:

Capital Accounts. In general, each Capital Account shall be credited with the amount of each Member's Contributed Capital and each Member's share of Net Profits. Each Member's Capital Account shall be debited with that Member's share of Net Losses and with the amount of all distributions made by the Company to that Member.

         The operating agreement also addressed the treatment of capital accounts in the event a member withdrew from DWP. Article 9.5 provided:

Withdrawal. A Member may withdraw from the Company for any reason after ninety (90) days' written notice to the Company and remaining Members. The Company shall pay to such Withdrawing Member an amount equal to the value of such Withdrawing Member's Capital Account balance as of his date of withdrawal . . . within six (6) months of the determination of such amount.

         On December 31, 2010, Mr. Warner withdrew as a member of DWP with a negative balance in his capital account in the amount of $399, 657.00. Mr. Warner did not pay DWP the negative balance in his capital account when he withdrew from the company. In 2011, Mr. Warner received an Internal Revenue Service ("IRS") Schedule K-1 Form issued by DWP depicting income to him in the amount of the capital ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.