Dysart v. Dragpipe Saloon, LLC

In 2003, Raymond Meyers (defendant), Penney Weast, Troy Dysart (plaintiff), and Richard Heinrich (plaintiff) formed Dragpipe Saloon, LLC (Dragpipe) (defendant). Each member contributed $10,000 in exchange for a 25 percent membership interest. Dragpipe’s operating agreement stated that Dragpipe’s purpose was to engage in all lawful activities, including owning and holding real property. The agreement stated that Dragpipe could be dissolved by (1) the unanimous vote of all members or (2) judicial dissolution under the Uniform Limited Liability Company Act (ULLCA). The agreement also allowed individual members to voluntarily resign from membership and receive the fair value of their ownership interest. After formation, Dragpipe purchased 70 acres, building a bar and facilities on 18 acres and leasing the remainder to a farmer. The bar was open for only 10 days a year during a motorcycle rally. Dragpipe began making modest profits in 2015, 2016, and 2017. By that point, each member had invested $80,000 but had not yet received any income distributions. Dysart and Heinrich told Meyers and Patrick Kerwin (defendant), Weast’s successor, that they wanted to sell their membership interests. Meyers and Kerwin did not object. However, Dysart and Heinrich never sold their interests, nor did they exercise their right to voluntarily resign their membership. Instead, they petitioned for judicial dissolution of Dragpipe and the sale of Dragpipe’s assets. The trial court granted their request after concluding that Dragpipe’s economic purpose was unreasonably frustrated and that it was not reasonably practicable for Dragpipe to continue operating in conformity with its operating agreement. Meyers and Kerwin appealed.