Jonathan Abelmann and Richard B. Greiwe v. Bryan Granum

• Court: Court of Chancery of Delaware
• Decided: November 15, 2016
• Docket: 12041-VCMR
• Status: Published

Opinion

COURT OF CHANCERY OF THE STATE OF DELAWARE

TAMIKA R. MONTGOMERY-REEVES Leonard L. Williams Justice Center VICE CHANCELLOR 500 N. King Street, Suite 11400 Wilmington, Delaware 19801-3734

Date Submitted: October 7, 2016 Date Decided: November 15, 2016

Richard L. Renck William A. Hazeltine Oderah C. Nwaeze Sullivan Hazeltine Allinson LLC Duane Morris LLP 901 North Market Street, Suite 1300 222 Delaware Avenue, Suite 1600 Wilmington, DE 19801 Wilmington, DE 19801

RE: Jonathan Abelmann and Richard B. Greiwe v. Bryan Granum, et al. Civil Action No. 12041-VCMR

Dear Counsel:

This Letter Opinion addresses plaintiffs’ motion for judgment on the

pleadings and petition for judicial dissolution. For the reasons stated below, the

motion is granted.

On February 24, 2016, Jonathan Abelmann (“Abelmann”) and Richard B.

Greiwe (“Greiwe,” together with Abelmann, “Petitioners”) filed a verified petition

(the “Petition”) for judicial dissolution of NAP Partners, LLC (the “Company” or

“NAP Partners”). On April 6, 2016, Bryan Granum (“Granum”) and Element

NYC, LLC (“Element,” collectively with Granum, “Respondents”), filed their Abelmann v. Granum C.A. No. 12041-VCMR November 15, 2016 Page 2 of 4

verified answer and affirmative defenses to the petition (the “Answer”). On May

11, 2016, Petitioners filed a motion for judgment on the pleadings (“Motion”). On

June 13, 2016, Respondents filed their opposition to the motion for judgment on

the pleadings (“Opposition”). On October 7, 2016, the Court held oral argument

on the Motion.

A court may grant a motion for judgment on the pleadings under Court of

Chancery Rule 12(c) when, accepting as true and drawing all reasonable inferences

from the nonmoving party’s well-pleaded facts, the Court finds that “there is no

material fact in dispute and the moving party is entitled to judgment under the

law.”1 Under Section 18-802 of Chapter 6 of the Delaware Code, a member or

manager may apply to the court for dissolution of a limited liability company

“whenever it is not reasonably practicable to carry on the business in conformity 2 with a limited liability company agreement.” Judicial dissolution is a

discretionary remedy and is “granted sparingly.” 3 The remedy may be granted

1 In re Seneca Invs. LLC, 2008 WL 4329230, at *2 (Del. Ch. Sept. 23, 2008) (quoting Warner Commc’ns Inc. v. Chris-Craft Indus. Inc., 583 A.2d 962, 965 (Del. Ch.1989), aff’d, 567 A.2d 419 (Del. 1989)). 2 6 Del. C. § 18-802. 3 Meyer Natural Foods LLC v. Duff, 2015 WL 3746283, at *3 (Del. Ch. June 4, 2015) (quoting Wiggs v. Summit Midstream P’rs, 2013 WL 1286180, at *12 (Del. Ch. Mar. 28, 2013). Abelmann v. Granum C.A. No. 12041-VCMR November 15, 2016 Page 3 of 4

when there is a deadlock “that prevent[s] the entity from operating and where the

defined purpose of the entity [is] fulfilled or impossible to carry out.”4

Here, both parties agree that Petitioners have standing to bring the Petition,

that the Company is at a deadlock, and that the entity should be dissolved. 5

Respondents’ only argument against the judicial dissolution is that it may prejudice

Element in a civil action currently pending in California state court. Respondents

therefore request that the Court use its discretion to delay dissolution until after

that matter is resolved. Petitioners argue that any delay in dissolution may affect

the damages awarded in any potential recovery under the California action.6

At argument, Petitioners stated they are not opposed to an order that

dissolves the entity on the condition that Petitioners cannot use the non-existence

of the entity as a defense or to challenge Respondents’ standing to bring the

California action once the entity is dissolved.7 While Respondents agree to certain

conditions preventing them from using the dissolution as a sword in the California

4 Id. (quoting In re Seneca Invs. LLC, 970 A.2d 259, 262 (Del. Ch. 2008)). 5 Resp’t Opp’n Br. 1 (stating Petitioners are members and managers of NAP Partners); Oral Arg. Tr. 11. 6 Oral Arg. Tr. 6. 7 Id. at 13. Abelmann v. Granum C.A. No. 12041-VCMR November 15, 2016 Page 4 of 4

action, they ask that the dissolution not foreclose argument in the California action

over any damages or mitigation thereof. While the Court expresses no opinion on

the merits or validity of any potential argument regarding damages, the request is a

reasonable one.

I grant the motion for judgment on the pleadings, subject to the conditions

that the Petitioners may not use the dissolution of the company as a pretext for any

challenge to the validity of the California action or Element’s standing to prosecute

that action. This ruling, however, does not preclude any argument by the

Petitioners regarding the end date for mitigation of damages in the California

action.

Parties shall submit a joint implementing form of order within ten days of

the date of this letter.

IT IS SO ORDERED.

Sincerely,

/s/Tamika Montgomery-Reeves

Vice Chancellor

TMR/jp