~) STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss CIVIL ACTION DOCKET NO. PORsc;;:v,-1):446 (__JflW'- arm- I u;~/4' PAUL BEAUDRY, individually and obo NORTHERN MAINE TRANSPORT, LLC,
Plaintiffs
v. DECISION AND ORDER ALAN HARDING, ESQ and HARDING LAW OFFICES,
Defendants and STATE OF 1\!~~\INE ell ~)11-< .... ( . .I '1 '' . '1,. . (~' ~•lr's t..•.t \ (1 ~r,tc·.t:l v .... · · • ' : . '
TYLER HALLETT, MAR 13 2014 Party in Interest RECEtVED
FACTUALANDPROCEDURALBACKGROUND
This action alleging professional negligence (Count I) and breach of fiduciary
duty (Count II) is before the court on defendants' motion for summary judgment.
Defendants move for summary judgment on both counts on the grounds that Paul
Beaudry (Beaudry) lacks the capacity or the authority to assert a claim on behalf of
Northern Maine Transport, LLC (NMT), and Beaudry has no individual claim against the
defendants that could arise from the litigation or settlement of an action that existed
between NMT and OneBeacon America Insurance Co. (OneBeacon) and that arose from
a claim belonging solely to NMT.
NMT filed a lawsuit against One Beacon and sought recovery of property
insurance proceeds pursuant to an insurance policy issued to NMT, after business property ofNMT was destroyed by fire. No individual claims were asserted by Beaudry
or Tyler Hallett (Hallett). NMT's Articles of Organization were filed on September 18,
2002, listing Richard L. Currier, Esq. as NMT's registered agent and Tyler Halleet as the
manager. NMT was administratively dissolved on September 28, 2009.
NMT and OneBeacon mediated the case on March 14, 2011 in Bangor, Maine.
Harding attended the mediation as part of his representation ofNMT in the litigation.
Both of NMT' s two co-equal owners/managers, Beaudry and Hallett, attended the
mediation. Beaudry left the mediation before it was completed. Before he left, he told
Harding and Hallett "to do whatever you want to do" or "do whatever you need to do."
The mediation conference resulted in a settlement that was mutually agreeable to NMT,
Hallett and OneBeacon, and those terms were reduced to writing by Attorney Peter
Marchesi (Marchesi), counsel for OneBeacon. Hallett accepted the settlement offer on
behalf ofNMT. The parties then gathered together in one conference room and reached
Beaudry by telephone. Marchesi read the hand-written settlement agreement to Beaudry
over the speaker phone. Beaudry expressed his agreement to the settlement terms and let
Hallett and Harding sign the settlement agreement for NMT and Beaudry.
Beaudry refused to honor the settlement agreement and OneBeacon filed a
counterclaim against NMT for breach of contract. The lawsuit, although originally filed
in Aroostook County Superior Court, OneBeacon removed the action to the United States
District Court for the District of Maine. Harding twice sought additional time for NMT to
respond because Hallett and Beaudry did not agree as to how to respond. Finally, Harding
filed a motion to withdraw which was granted. He was subpoenaed to testify as a witness
on the motion to enforce the settlement agreement. U.S. Magistrate Judge Margaret J.
2 Kravchuk resolved the motion to enforce on October 19,2011, ruling that Beaudry
expressed his agreement to the settlement terms and his agreement let Hallett and
Harding sign the settlement agreement for him. A Stipulation of Dismissal was filed with
the federal court on December 21, 2011.
Beaudry filed this complaint on or about October 9, 2012. Hallett objects to
Beaudry's filing this law suit on behalf ofNMT and against Harding and Harding's Law
Office.
DISCUSSION
1. Summary Judgment Standard
Summary judgment is appropriate where there are no genuine issues of material
fact and the moving party is entitled to judgment as a matter oflaw. M.R. Civ. P. 56(c);
see also Levine v. R.B.K. Caly Corp., 2001 ME 77, ~ 4, 770 A.2d 653. "A genuine issue
of material fact exists when there is sufficient evidence to require a fact-finder to choose
between competing versions of the truth at trial." Inkel v. Livingston, 2005 ME 42, ~ 4,
869 A.2d 745 (quoting Lever v. Acadia Hosp. Corp., 2004 ME 35, ~ 2, 845 A.2d 1178).
"A moving party's factual assertions may not be deemed admitted because of an improper
response unless those factual assertions are properly supported." Cach, LLC v. Kulas,
2011 ME 70, ~ 9, 21 A.3d 1015. A plaintiff wishing to avoid summary judgment must
present a prima facie case for the claim that he is asserting. Reliance Nat 'l Indem. v.
Knowles Indus. Servs. Corp., 2005 ME 29, ~ 9, 868 A.2d 220.
3 2. Capacity or Authority to Bring Suit on behalf ofNMT
NMT lacks the capacity to assert any claim against the defendants because an
LLC that has been administratively dissolved is barred by statute from prosecuting any
action and is solely limited to defending claims. 31 M.R.S. § 1592 (20 13). Subsection
4(C) provides that "[t]he administrative dissolution of a limited liability company under
this section does not impair ... [t]he right of the limited liability company to defend any
action, suit or proceeding in any court of this State." Subsection 4(C) expressly allows an
administratively dissolved LLC to defend a court action, but it does not state that an
administratively dissolved LLC may bring a lawsuit. This is to be compared to Section
1596(2)(B) which permits the commencement of a suit by or against an LLC that has
been voluntarily dissolved or dissolved throughjudicial dissolution.
Whether the court completes its analysis under the current version of Section
1592 or the prior Act, the provisions regarding administrative dissolution are the same.
Both the former and the current LLC Acts expressly allow an administratively dissolved
LLC to defend a court action, neither allows it the ability to prosecute one. The absence
ofNMT's legal capacity to bring suit is dispositive ofthe summary judgment inquiry
with respect to any claims belonging to NMT in this matter.
There is also nothing in either the LLC Act that allows a member or manager of
an administratively dissolved LLC to bring a suit on behalf of the LLC. The LLC Act
contains a provision that allows a member to bring a derivative action to enforce the
LLC's rights. See 31 M.R.S. § 1632 (2013). Beaudry has relied on this provision in his
complaint. (Pl.'s Compl. ,-[,-[ 108-09.) A closely held LLC however, such as NMT with
only two members, does not come within Section 1632. Under Section 1637, a member
4 of a closely held LLC may bring a derivative action as a direct action, but only
"if justice requires."
Justice does not require a direct claim here. First, as explained below, Beaudry
does not have an individual claim against the defendants because he has alleged no loss
that was personal to him. Second, court decisions from multiple jurisdictions reveal that
the "close corporation exception" (to the general requirement that an action for harm to a
business entity must be brought by the entity itself or as a derivative claim on behalf of
the entity) applies only in situations where the claims asserted are those brought by a
minority shareholder against majority shareholders for oppressive majority conduct. See
e.g., Richards v.
Free access — add to your briefcase to read the full text and ask questions with AI
~) STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss CIVIL ACTION DOCKET NO. PORsc;;:v,-1):446 (__JflW'- arm- I u;~/4' PAUL BEAUDRY, individually and obo NORTHERN MAINE TRANSPORT, LLC,
Plaintiffs
v. DECISION AND ORDER ALAN HARDING, ESQ and HARDING LAW OFFICES,
Defendants and STATE OF 1\!~~\INE ell ~)11-< .... ( . .I '1 '' . '1,. . (~' ~•lr's t..•.t \ (1 ~r,tc·.t:l v .... · · • ' : . '
TYLER HALLETT, MAR 13 2014 Party in Interest RECEtVED
FACTUALANDPROCEDURALBACKGROUND
This action alleging professional negligence (Count I) and breach of fiduciary
duty (Count II) is before the court on defendants' motion for summary judgment.
Defendants move for summary judgment on both counts on the grounds that Paul
Beaudry (Beaudry) lacks the capacity or the authority to assert a claim on behalf of
Northern Maine Transport, LLC (NMT), and Beaudry has no individual claim against the
defendants that could arise from the litigation or settlement of an action that existed
between NMT and OneBeacon America Insurance Co. (OneBeacon) and that arose from
a claim belonging solely to NMT.
NMT filed a lawsuit against One Beacon and sought recovery of property
insurance proceeds pursuant to an insurance policy issued to NMT, after business property ofNMT was destroyed by fire. No individual claims were asserted by Beaudry
or Tyler Hallett (Hallett). NMT's Articles of Organization were filed on September 18,
2002, listing Richard L. Currier, Esq. as NMT's registered agent and Tyler Halleet as the
manager. NMT was administratively dissolved on September 28, 2009.
NMT and OneBeacon mediated the case on March 14, 2011 in Bangor, Maine.
Harding attended the mediation as part of his representation ofNMT in the litigation.
Both of NMT' s two co-equal owners/managers, Beaudry and Hallett, attended the
mediation. Beaudry left the mediation before it was completed. Before he left, he told
Harding and Hallett "to do whatever you want to do" or "do whatever you need to do."
The mediation conference resulted in a settlement that was mutually agreeable to NMT,
Hallett and OneBeacon, and those terms were reduced to writing by Attorney Peter
Marchesi (Marchesi), counsel for OneBeacon. Hallett accepted the settlement offer on
behalf ofNMT. The parties then gathered together in one conference room and reached
Beaudry by telephone. Marchesi read the hand-written settlement agreement to Beaudry
over the speaker phone. Beaudry expressed his agreement to the settlement terms and let
Hallett and Harding sign the settlement agreement for NMT and Beaudry.
Beaudry refused to honor the settlement agreement and OneBeacon filed a
counterclaim against NMT for breach of contract. The lawsuit, although originally filed
in Aroostook County Superior Court, OneBeacon removed the action to the United States
District Court for the District of Maine. Harding twice sought additional time for NMT to
respond because Hallett and Beaudry did not agree as to how to respond. Finally, Harding
filed a motion to withdraw which was granted. He was subpoenaed to testify as a witness
on the motion to enforce the settlement agreement. U.S. Magistrate Judge Margaret J.
2 Kravchuk resolved the motion to enforce on October 19,2011, ruling that Beaudry
expressed his agreement to the settlement terms and his agreement let Hallett and
Harding sign the settlement agreement for him. A Stipulation of Dismissal was filed with
the federal court on December 21, 2011.
Beaudry filed this complaint on or about October 9, 2012. Hallett objects to
Beaudry's filing this law suit on behalf ofNMT and against Harding and Harding's Law
Office.
DISCUSSION
1. Summary Judgment Standard
Summary judgment is appropriate where there are no genuine issues of material
fact and the moving party is entitled to judgment as a matter oflaw. M.R. Civ. P. 56(c);
see also Levine v. R.B.K. Caly Corp., 2001 ME 77, ~ 4, 770 A.2d 653. "A genuine issue
of material fact exists when there is sufficient evidence to require a fact-finder to choose
between competing versions of the truth at trial." Inkel v. Livingston, 2005 ME 42, ~ 4,
869 A.2d 745 (quoting Lever v. Acadia Hosp. Corp., 2004 ME 35, ~ 2, 845 A.2d 1178).
"A moving party's factual assertions may not be deemed admitted because of an improper
response unless those factual assertions are properly supported." Cach, LLC v. Kulas,
2011 ME 70, ~ 9, 21 A.3d 1015. A plaintiff wishing to avoid summary judgment must
present a prima facie case for the claim that he is asserting. Reliance Nat 'l Indem. v.
Knowles Indus. Servs. Corp., 2005 ME 29, ~ 9, 868 A.2d 220.
3 2. Capacity or Authority to Bring Suit on behalf ofNMT
NMT lacks the capacity to assert any claim against the defendants because an
LLC that has been administratively dissolved is barred by statute from prosecuting any
action and is solely limited to defending claims. 31 M.R.S. § 1592 (20 13). Subsection
4(C) provides that "[t]he administrative dissolution of a limited liability company under
this section does not impair ... [t]he right of the limited liability company to defend any
action, suit or proceeding in any court of this State." Subsection 4(C) expressly allows an
administratively dissolved LLC to defend a court action, but it does not state that an
administratively dissolved LLC may bring a lawsuit. This is to be compared to Section
1596(2)(B) which permits the commencement of a suit by or against an LLC that has
been voluntarily dissolved or dissolved throughjudicial dissolution.
Whether the court completes its analysis under the current version of Section
1592 or the prior Act, the provisions regarding administrative dissolution are the same.
Both the former and the current LLC Acts expressly allow an administratively dissolved
LLC to defend a court action, neither allows it the ability to prosecute one. The absence
ofNMT's legal capacity to bring suit is dispositive ofthe summary judgment inquiry
with respect to any claims belonging to NMT in this matter.
There is also nothing in either the LLC Act that allows a member or manager of
an administratively dissolved LLC to bring a suit on behalf of the LLC. The LLC Act
contains a provision that allows a member to bring a derivative action to enforce the
LLC's rights. See 31 M.R.S. § 1632 (2013). Beaudry has relied on this provision in his
complaint. (Pl.'s Compl. ,-[,-[ 108-09.) A closely held LLC however, such as NMT with
only two members, does not come within Section 1632. Under Section 1637, a member
4 of a closely held LLC may bring a derivative action as a direct action, but only
"if justice requires."
Justice does not require a direct claim here. First, as explained below, Beaudry
does not have an individual claim against the defendants because he has alleged no loss
that was personal to him. Second, court decisions from multiple jurisdictions reveal that
the "close corporation exception" (to the general requirement that an action for harm to a
business entity must be brought by the entity itself or as a derivative claim on behalf of
the entity) applies only in situations where the claims asserted are those brought by a
minority shareholder against majority shareholders for oppressive majority conduct. See
e.g., Richards v. Bryan, 879 P.2d 638,646 (Kan. App. 1994); Banyan Inv. Co., LLC v.
Evans, 292 P.3d 698, 704 (Utah App. 2012); Schumacher v. Schumacher, 469 N.W.2d
793, 798 (N.D. 1991); Donahue v. Rodd Electrotype Co. ofNew England, Inc., 328
N.E.2d 505, 519 (Mass. 1975). Because this action is not a claim by a minority member
for oppressive majority conduct, justice does not require the allowance of a direct action
pursuant to 31 M.R.S. §1637(3).
Because neither Section 1632 nor 1637(3) applies, the court is left with a standard
corporate analysis. The consent of a majority of LLC members is required to decide any
matter within the "ordinary course of activities" of the company. 31 M.R.S. § 1556(2).
Unanimous consent is required for "any other act outside the ordinary course" of the
company's activities. !d. § 1556(3)(C). Because there were only two members ofNMT,
and Hallett did not consent to filing this suit, a majority of the LLC members did not
consent. Therefore, Beaudry lacked the authority to file suit on behalf ofNMT.
5 3. No Individual Claim
Finally, plaintiff's argument that he has an individual claim against Harding is
without merit. To determine whether the action is derivative or individual, courts look to
who suffered the harm and who would benefit from recovery. See, e.g., Kroupa v.
Garbus, 583 F. Supp. 2d 949, 952 (N.D. Ill. 2008). The underlying suit involved NMT's
recovery of insurance proceeds from OneBeacon. The LLC carried the insurance policy,
it filed suit against OneBeacon, and it ultimately settled the claim. Any recovery from
Harding's alleged malpractice would flow to NMT and not to Beaudry individually.
Indeed, Beaudry even acknowledges that "he has suffered no injuries personal to him
other than the insurance proceeds NMT would have recovered." Accordingly, Beaudry
has no personal claim in this case.
The entry is:
Defendant's motion for summary judgment is GRANTED on all counts of plaintiff's complaint.
oy ice, Superior Court
Plaintiffs-Michael Waxman Esq Defendants-Wendell Large Esq PII Hallett-Luke Rossignol Esq