Meads v. Driggers

CourtCalifornia Court of Appeal
DecidedSeptember 4, 2025
DocketC099765
StatusPublished

This text of Meads v. Driggers (Meads v. Driggers) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Meads v. Driggers, (Cal. Ct. App. 2025).

Opinion

Filed 9/4/25 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Siskiyou) ----

STEVEN MEADS et al., C099765

Plaintiffs, Cross-defendants and (Super. Ct. No. CVCV22-721) Respondents,

v.

JED DRIGGERS et al.,

Defendants, Cross-complainants and Appellants.

APPEAL from a judgment of the Superior Court of Siskiyou County, Karen Dixon, Judge. Affirmed.

Dohn R. Henion for Defendants, Cross-complainants and Appellants.

Carr, Kennedy, Peterson & Frost, Randall C. Nelson and Patrick M. Hensleigh for Plaintiffs, Cross-defendants and Respondents.

The issue in this appeal is whether a cross-complaint filed by Jed Driggers and Afterburner, LLC, against Steven Meads and Penny Lipking-Meads was properly dismissed pursuant to Code of Civil Procedure section 425.16, also known as the anti-

1 SLAPP statute. 1 A so-called SLAPP suit is subject to dismissal unless the plaintiff or cross-complainant can demonstrate there is probability it will prevail on the challenged claims; in this case, resolution of that issue depends on whether a limited liability company’s members may agree to waive their right to seek judicial dissolution in certain statutorily defined circumstances. We conclude they may not, which also means the cross-complainants cannot demonstrate a probability of prevailing on their claims. We thus affirm the trial court’s order striking the cross-complaint. FACTUAL AND PROCEDURAL BACKGROUND For many years, Steven Meads and Penny Lipking-Meads (collectively, the Meadses) owned and operated a business that included liquor sales, a service station, and a convenience store. They ran the business as a sole proprietorship and lived off the income it generated. In 2010, the Meadses met Driggers and ultimately agreed to partner with him to expand and operate the business. The parties agreed the Meadses would contribute their liquor license, the goodwill of the business, certain personal property, the real property on which the business was run, and cash, and Driggers would contribute his “know-how” and “initial operating capital.” The Meadses would receive 49 percent of the net profits from the business, and Driggers would receive 51 percent. Driggers told the Meadses that, while the business was expanding, they would receive monthly income from the business as a draw, and once the business was up and running in three to five years, “each party would simply take their portion of the profits from the business.”

1 SLAPP stands for strategic litigation against public participation (see Navellier v. Sletten (2002) 29 Cal.4th 82, 85 & fn. 1 (Navellier)), and a SLAPP suit is one that contains claims “arising from” the defendant’s (or, in this case, cross-defendant’s) exercise of the constitutional right to free speech or to petition the government for the redress of grievances (Code Civ. Proc., § 425.16, subd. (b)(1)).

2 Driggers hired an attorney to prepare the documents necessary to effectuate the parties’ agreements, and the Meadses signed each document without seeking the advice of their own counsel because they trusted Driggers. Among other things, the documents created Afterburner, LLC (the LLC), to run the business. The Meadses and Driggers were members of the LLC, and Driggers also was the manager. In late 2011, the business was expanded and began operating under a new name. A decade later, the Meadses contend Driggers had improperly diverted monies from the business that should have been considered profits and split accordingly. In July 2022, they filed a lawsuit against Driggers and the LLC that included a cause of action seeking to dissolve the LLC.2 In support of the dissolution cause of action the Meadses alleged (1) it was no longer reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement, (2) dissolution was reasonably necessary to protect their rights or interests, and (3) those in control of the LLC (i.e., Driggers) had been guilty of or knowingly countenanced fraud, mismanagement, or abuse of authority. As discussed in more detail below, a court may dissolve a limited liability company in all of these circumstances pursuant to an action filed by a member. (See Corp. Code, former § 17351, subd. (a); Corp. Code, § 17707.03, subds. (a), (b).) Driggers and the LLC (collectively referred to as Driggers) filed a cross-complaint against the Meadses for breach of contract and breach of fiduciary duty, and it is the cross-complaint that is the subject of this appeal. Both causes of action in the cross- complaint were based on a provision in the LLC’s operating agreement that stated the LLC shall be dissolved only upon the occurrence of one of two “Events of Dissolution”—(1) “The vote of the Members” to dissolve the LLC, or (2) “The

2 The complaint included eight other causes of action against Driggers and two other defendants. The other causes of action and defendants are not relevant to the issues presented in this appeal and we thus do not discuss them.

3 bankruptcy or insolvency of the LLC.” The provision also stated, “Notwithstanding anything in Cal. Corp. Code §§ 17350 and 17351 to the contrary, the foregoing Events of Dissolution are the exclusive events which may cause the LLC to dissolve. Each of the Members hereby agrees not to take any other voluntary action that would cause the LLC to dissolve, notwithstanding any provision of the [Beverly-Killea Limited Liability Company] Act to the contrary.” (Italics added.) (We will discuss Corp. Code, former §§ 17350 & 17351 and the Beverly-Killea Limited Liability Company Act below.) Driggers refers to this provision as the “waiver” provision, because it effectively waives the right to seek judicial dissolution in statutorily defined circumstances, and we will generally refer to it as the waiver provision as well. In a nutshell, Driggers claimed the Meadses breached both the operating agreement and their fiduciary duties by filing a lawsuit seeking to dissolve the LLC in violation of their agreement “not to take any . . . voluntary action that would cause the LLC to dissolve.” The Meadses filed a motion to strike the cross-complaint pursuant to the anti- SLAPP statute, arguing it arose out of their right to petition the government for redress of grievances, and Driggers could not demonstrate a probability of prevailing because the waiver provision was unlawful and/or violated public policy. 3 Driggers opposed the motion, arguing the waiver provision was lawful. The trial court granted the motion and ordered the cross-complaint stricken. At the hearing on the motion, the trial court stated it found the cross-complaint was based on protected activity, and also stated, “I am not finding that there is a probability that Mr. Driggers would prevail on the claim. [¶] . . . I am not finding that he won’t, but I believe that the Court is required to make a weighing of the probability. I’m finding at this point

3 The Meadses also argued the cross-complaint was barred by the litigation privilege, and they repeat that argument here. Given our conclusion in this case, we need not and do not address this argument.

4 it’s equal.” The trial court thereafter issued a short written order finding: (1) “The cross- complaint . . . arises out of cross-defendants’ filing of the complaint, which is an act in furtherance of their right of petition”; and (2) “Cross-defendants have not proven they have a probability of prevailing on the merits [of] the cross-complaint.” Driggers filed a timely notice of appeal.

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Meads v. Driggers, Counsel Stack Legal Research, https://law.counselstack.com/opinion/meads-v-driggers-calctapp-2025.