P.D.2000, L.L.C. v. First Financial Planners, Inc.

California resident Ray Sulka developed information systems and implemented computer-technology advancements for customers. Sulka was also a financial planner who became a registered agent for First Financial Planners, Inc. (FFP) (defendant), a Missouri corporation Roy Henry founded and controlled. Henry contracted with Sulka to evaluate FFP’s computer needs and structure and create a plan for improvements. After Sulka submitted his report, Sulka and Henry executed a second agreement. Henry signed as president of FFP, while Sulka signed as president of P.D.2000, L.L.C. (plaintiff), a company Sulka incorporated two and a half months later. The agreement was titled “Independent Contractor Agreement” and said P.D.2000 would develop security, financial planning, and intranet-communication systems for FFP for $25,000 per month. The contract said FPP explicitly acknowledged that P.D.2000 was forming as a limited-liability company in Nevada. Sulka began developing the systems immediately after signing the contract, moved to St. Louis, and signed a one-year lease. FFP made the first two monthly payments using checks payable to “Sulka West,” then terminated the contract without paying the termination fee. Eleven days later, Sulka filed P.D.2000’s articles of incorporation in Nevada and executed a formal ratification of all Sulka’s pre-incorporation activities. P.D.2000 then sued FFP to recover the termination fee. At trial, FFP’s only defense was that P.D.2000 lacked capacity to enforce the contract. The jury found for P.D.2000 and assessed damages at $300,000, resulting in a judgment of $359,745 with costs and interest. FFP appealed solely on the ground that the trial court should have directed a verdict or entered judgment notwithstanding the verdict because P.D.2000 lacked capacity to enforce the contract.