Holland v. Burke

Richard Holland (plaintiff) became a wealthy man by working in finance before retiring to a slow-paced city to work in real estate. Holland met Sean Burke, Phillip Mossy, and David Silva (the other members) (defendants), who all had restaurant experience. The men purchased a property and turned it into a restaurant. They formed Red Inn, LLC (the LLC) to own the property and a corporation to operate the restaurant. The men executed an operating agreement that limited the members’ rights to transfer their interests, set forth procedures to remove officers, and allowed any member to obtain an audit of the LLC’s books at his own expense. Thereafter, the men traveled to Mexico a few times using the LLC’s funds. The restaurant performed well. Accordingly, the LLC purchased another property to operate as a restaurant through a separate corporation. The relationship between Holland and the other members eventually broke down. Holland grew dissatisfied with working long hours for a low salary and with the other members’ business philosophy. Nevertheless, the other members made more trips to Mexico without Holland. Holland approached the other members with several proposals to leave the LLC. However, the proposals did not comply with the operating agreement, involved a buyout of Holland’s interest for a high price, and proposed dividing the business in two, which the other shareholders opposed. The other shareholders voted to remove Holland as an officer and terminated his employment. Holland retained his interest in the LLC. None of the entities had ever declared dividends. Holland sued the other shareholders for improperly removing him as an officer, improperly terminating his employment, and converting corporate funds. Holland also sought an accounting.