MAXWELL, J., for the Court:
¶ 1. The members of a Mississippi law firm, operating as a professional limited liability company, voted unanimously to expel one of their fellow members, David L. Martindale. Under the terms of the firm's operating agreement, upon expulsion of a member, the remaining members were required to either (1) dissolve the company or (2) pay the terminated member $1,100 for each percentage point of membership interest owned. The remaining members voted to pay Martindale $19,800 for his eighteen-percent interest rather than dissolve the firm. The firm then filed for declaratory relief, alleging it had satisfied its contractual obligations to Martindale. The chancellor agreed and granted summary judgment in the firm's favor. While Martindale argues the result is unjust and that the chancellor had equitable powers to provide him a more favorable figure, we find the firm followed the unambiguous terms of its operating agreement when paying Martin his membership interest upon expulsion. We find no error in the chancellor's grant of summary judgment in the law firm's favor and affirm.
¶ 2. David L. Martindale practiced law in Laurel, Mississippi, with Hortman Harlow Bassi Robinson & McDaniel PLLC for approximately fourteen years. Martindale was a member of the firm in 2006 when it undertook the representation of Billy Jack McDaniel, a plaintiff injured in an oil-field accident in Texas.
¶ 3. Hortman Harlow's operating agreement provided for the expulsion of any member by a unanimous vote of the other members. Upon expulsion of a member, the operating agreement instructed the remaining members to either (1) dissolve the company or (2) pay the terminated member $1,100 for each percentage point of membership interest he or she owned. On February 24, 2009, the law firm notified Martindale of his expulsion by a unanimous vote of the other members. The firm elected not to dissolve the company, but rather, as permitted by the operating agreement, tendered Martindale a check for $19,800, representing his eighteen-percent membership interest. Martindale refused to accept the check, claiming $19,800 did not reflect his fair share of the law firm.
¶ 4. On May 6, 2009, Hortman Harlow filed for declaratory relief in the Jones County Chancery Court, alleging it had fulfilled its contractual obligations to Martindale under the operating agreement. Martindale counterclaimed, seeking the
¶ 5. Hortman Harlow then moved for partial summary judgment with respect to its claim for declaratory relief and Martindale's non-tort counterclaims. At issue was whether the operating agreement provided Martindale's exclusive remedy for payment after his expulsion. The chancery court found the language of the agreement clear and unambiguous and granted partial summary judgment in Hortman Harlow's favor.
¶ 6. We conduct a de novo review of a trial court's grant or denial of a motion for summary judgment. Lewallen v. Slawson, 822 So.2d 236, 237 (¶ 6) (Miss.2002) (citations omitted). Summary judgment is proper "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." M.R.C.P. 56(c). In determining the propriety of summary judgment, we view the facts in the light most favorable to the nonmovant. Robinson v. Singing River Hosp. Sys., 732 So.2d 204, 207 (¶ 12) (Miss. 1999).
¶ 7. Because Martindale did not challenge the firm's contractual authority to terminate his membership, we need not consider whether Martindale's expulsion was proper. Instead, our inquiry is limited to deciding whether Hortman Harlow satisfied its contractual obligations to Martindale after his expulsion. Specifically, we must decide if sections 9.2(a) and 9.5 of the law firm's operating agreement provided Martindale's exclusive right to payment after his expulsion.
¶ 8. Section 9.5 of Hortman Harlow's operating agreement states: "Upon the termination of a Member's Membership Interest under Section 9.1(b) ..., the other Members may elect either (1) to pay an amount equal to the terminated Members [sic] points as calculated pursuant to Section 9.2(a) less any debt to the company; or (2) to dissolve the Company...." Section 9.2(a) provides the payment formula for a terminated member's interest in the law firm: "The terminating Member shall receive an amount equal to One Thousand One Hundred and No/100 Dollars ($1,100.00), multiplied by each percentage point of Membership Interest owned by the terminating Member as set forth on Schedule "B" in lieu of his positive capital account balance...."
¶ 9. In Mississippi, "an LLC operating agreement is a contract" and
¶ 10. However, in summary-judgment cases, reviewing courts must focus solely on the first step of the analysis and determine whether the contract is ambiguous. If it is not, the "parties are bound by the language of the instrument." Delta Pride Catfish, Inc. v. Home Ins. Co., 697 So.2d 400, 404 (Miss.1997) (quoting Cherry v. Anthony, Gibbs, Sage, 501 So.2d 416, 419 (Miss.1987)). But if the contract's terms are ambiguous or subject to more than one interpretation, summary judgment must be reversed and the case should proceed to trial. Royer Homes, 857 So.2d at 752 (¶ 8).
¶ 11. Our review for ambiguity requires that we consider the express wording of the contract as a whole. Babin, 37 So.3d at 48 (¶ 8). We must "accept the plain meaning of a contract as the intent of the parties where no ambiguity exists." A & F Props., LLC v. Madison Cnty. Bd. of Supervisors, 933 So.2d 296, 301 (¶ 12) (Miss.2006) (quoting Ferrara, 919 So.2d at 882 (¶ 13)). "The mere fact that the parties disagree about the meaning of a provision of a contract does not make the contract ambiguous as a matter of law." Delta Pride Catfish, 697 So.2d at 404.
¶ 12. Here, the plain language of section 9.5 enumerates that when Hortman Harlow expels a member, the remaining members may either (1) pay the terminated member an amount calculated under the formula in section 9.2(a) or (2) dissolve the law firm and share the liquidation proceeds with all members, including the terminated member. Section 9.2(a) then provides that a terminated member shall receive $1,100 for each "percentage point of membership interest owned by the terminated member." This payment is tendered "in lieu of [a terminated member's] positive capital account balance." We find the only reasonable interpretation of sections 9.2(a) and 9.5 is that the parties intended for these sections to provide a member's exclusive right to compensation upon his or her expulsion.
¶ 13. While these provisions are clear and unambiguous, Martindale insists sections 9.2(a) and 9.5 were not the only sections of the operating agreement concerning payment to an expelled member. He argues section 13.10 incorporates additional "rights and remedies," which the chancery court erroneously failed to consider. Section 13.10 states, in pertinent part: "[R]ights and remedies [under this agreement] are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise." Martindale suggests the chancellor "failed to give life and meaning to [his] express rights and remedies by `Law' or `Otherwise.'" He argues Mississippi Code Annotated section 79-29-306(3)(a) (repealed 2010);
¶ 14. Under section 79-29-306(3)(a), "A court of equity may enforce a limited liability company agreement by injunction or by such other relief that the court in its discretion determines to be fair and appropriate in the circumstances." (Emphasis added). Martindale argues this statute granted the chancellor authority to look past the unambiguous LLC agreement to somehow craft him an additional and more favorable equitable remedy. But such an assertion ignores one of the basic principals of contract law — that when a "contract is unambiguous, the `parties are bound by the language of the instrument.'" Delta Pride Catfish, 697 So.2d at 404 (quoting Cherry, 501 So.2d at 419).
¶ 15. While section 79-29-306(3)(a) grants chancellors the discretion to fashion appropriate equitable relief, such as enforcement of an LLC agreement or money damages, we find there must be some sort of breach or other hindrance with the enforceability of an LLC agreement to trigger this equitable power. Otherwise, chancellors are not authorized to disregard the unambiguous terms of an LLC operating agreement that have been enforced to the letter by the remaining members.
¶ 16. We disagree with Martindale's assessment that the supreme court's recent decision in Williford authorized the chancellor here to equitably determine the fair market value of his membership interest — rather than limit his review to the express provisions of the operating agreement's
¶ 17. Unlike the minority member in Williford, Martindale has not shown the other members of Hortman Harlow breached the law firm's operating agreement or failed to enforce it. The law firm enforced the contract as written, tendering Martindale payment as contemplated by the operating agreement he freely entered. And there is no suggestion that the firm members exceeded the bounds of the LLC agreement when voting unanimously to terminate him. Absent any breach, we find neither section 79-29-306(3)(a) nor Williford affords Martindale any additional relief.
¶ 18. Martindale next suggests the chancellor "abused [his] discretion and applied an erroneous legal standard by failing to require [Hortman Harlow] to treat [Martindale] in an `intrinsically fair' manner." The doctrine of "intrinsic fairness," was first recognized by the Mississippi Supreme Court in Fought, 543 So.2d at 171. In Fought, the court held that actions of a majority stockholder toward a minority shareholder in a closely held corporation must be "intrinsically fair" when that majority stockholder stands to benefit as controlling stockholder. Id. Although Fought dealt only with closely held corporations, "the rationale of Fought applies with equal force" to limited liability companies. Williford, 55 So.3d at 161 (¶ 51).
¶ 19. We agree the majority members owed Martindale a duty to act in an "intrinsically fair" manner, but find no indication they breached this duty in administering his proper payout under the contract. Martindale does not claim his termination was in bad faith, only that the remaining members violated their duty of intrinsic fairness to him in enforcing the operating agreement's payout provision without considering the market value of his membership interest. The law firm expelled and paid Martindale in line with the clear terms of its operating agreement. "With limited exceptions, persons enjoy the freedom to contract. When they do, they are bound by the terms of their contracts." Titan Indem. Co. v. Hood, 895 So.2d 138, 147 (¶ 41) (Miss.2004). While Martindale's payout is meager in light of the large settlement after his expulsion, we find Martindale received what he initially bargained for under the firm's operating agreement.
¶ 20. Martindale also argues Hortman Harlow's failure to pay him the
¶ 21. A professional limited liability company must acquire the membership interests of disqualified members. Miss. Code Ann. § 79-29-911(1) (Supp.2011). "If a price for the membership interest is established in accordance with the certificate of formation or written operating agreement or by private agreement, that price controls." Miss.Code Ann. § 79-29-911(2) (Supp.2011). In compliance with section 79-29-911, Hortman Harlow's operating agreement specifically provided a formula to determine an expelled member's interest. By opting against dissolution and instead tendering Martindale a check for $19,800, the law firm acted as authorized by its operating agreement. Because Hortman Harlow could not have acted in bad faith by exercising a contractual right, we find the firm did not breach its implied duty of good faith and fair dealing under the operating agreement. See Limbert, 998 So.2d at 999 (¶ 14). Thus, we find summary judgment was properly granted in Hortman Harlow's favor.
¶ 22. Martindale next claims the chancellor abused his discretion by not making findings of fact on his counterclaims for declaratory judgment, judicial dissolution, and breach of good faith and fair dealing. We disagree.
¶ 23. Mississippi Rule of Civil Procedure 52(a) provides: "In all actions tried upon the facts without a jury the court may, and shall upon the request of any party to the suit or when required by these rules, find the facts specially and state separately its conclusions of law thereon, and judgment shall be entered accordingly." But a trial court need not make findings of fact on a motion for summary judgment, unless requested by a party under Rule 52(a). Harmon v. Regions Bank, 961 So.2d 693, 700 (¶ 24) (Miss.2007). "Even though evidence may be received by way of sworn affidavits, deposition testimony, and other such evidence, a Rule 56 summary judgment hearing is not an action `tried upon the facts without a jury' so as to trigger Rule 52 applicability." Id.
¶ 24. Martindale did not request additional findings of fact under Rule 52(a). And although the chancellor had no requirement to make factual findings, his findings of fact were more than adequate
¶ 25.
BARNES, ROBERTS, CARLTON, RUSSELL AND FAIR, JJ., CONCUR. GRIFFIS, P.J., DISSENTS WITH SEPARATE WRITTEN OPINION, JOINED BY LEE, C.J., AND ISHEE, J. IRVING, P.J., NOT PARTICIPATING.
GRIFFIS, P.J., dissenting:
¶ 26. The majority finds that the only reasonable interpretation of section 9.5 is that the parties intended for this section to provide a member's exclusive right to compensation upon expulsion. I disagree and respectfully dissent.
¶ 27. In Dalton v. Cellular South, Inc., 20 So.3d 1227, 1232 (¶ 10) (Miss.2009), the supreme court held:
The court then determined that "[t]he contract at issue contains termination clauses that lack clarity and that are not harmonious." Id. at 1233 (¶ 12). The court found "that the conflicts among the clauses create an ambiguity." Id.
¶ 28. I agree that a reasonable interpretation of section 9.5 is that the payment of $19,800, the amount "calculated pursuant to Section 9.2(a)," may be interpreted to provide the expelled member's exclusive right to compensation upon his expulsion. I dissent, however, because I find another reasonable interpretation. Therefore, I am of the opinion that this case should be reversed and remanded for the chancellor to consider the rules of contract interpretation.
¶ 29. The relevant sections of the agreement provide:
¶ 30. We must interpret section 9.5. This section gives the remaining members a choice. They must choose to either pay Martindale $19,800 or dissolve and liquidate the company. If they chose to dissolve, then the company would be liquidated. All assets would be valued, sold and distributed to the members based on their percentage of ownership. Upon liquidation, Martindale, and each of the other members, would thereby receive full payment for their "Membership Interest."
¶ 31. The members chose not to dissolve the company. Instead, they chose to pay Martindale $19,800. What was this payment for? Was it compensation for Martindale's "Membership Interest?" Or, was it compensation for Martindale's relinquishment of the right to seek dissolution? I do not know. The payment allowed the remaining members to continue practicing law under the Hortman Harlow name without interruption, and without Martindale.
¶ 32. The agreement specifically states that the company will pay $19,800 to a member who retires or dies as payment "in lieu of his positive capital account balance." Section 9.2. More emphatically, the agreement states that the company will pay $19,800 to a member who voluntarily withdraws, and "[t]he payment shall be for the Member's Membership Interest." Section 9.6.
¶ 33. The language is slightly different for a member who becomes permanently disabled. For a disability, the operating agreement provides that "the disabled Member's Membership Interest shall be terminated[,] and such Member shall be entitled to receive the payments as provided under section 9.2 of this Agreement."
¶ 34. The language use in section 9.5 is different than the language used in sections 9.2, 9.4 or 9.6. The heading of section 9.5 is "Option to Dissolve." The heading of section 9.2 is "Payments to Terminated Members," section 9.4 is "Permanent Disability," and section 9.6 is "Payments Upon Withdrawal." If section 9.5 was intended to be the sole payment to an expelled member, I would expect the section to be titled "Payments upon Expulsion" or something similar.
(Emphasis added).
¶ 35. Section 9.5 does not state that it is payment "in lieu of his positive capital account balance" or for his "Membership Interest." Sections 9.2 and 9.6. The exclusion of such language indicates that section 9.5 could be reasonably interpreted as payment as consideration for the remaining member's decision to not seek dissolution. The expelled member would retain the right to his capital account.
¶ 36. In footnote 3, the majority argues that "section 9.5 specifically incorporates section 9.2(a)'s method for calculating an expelled member's payment. And section 9.2(a) expressly, and very clearly, provides that such payment is made `in lieu of a member's positive capital account.'" This language proves an ambiguity in the agreement.
¶ 37. Section 9.4 specifically incorporates section 9.2, yet section 9.5 does not. Section 9.4 states that a "disabled Member's Membership Interest shall be terminated and such Member shall be entitled to receive the payments as provided under Section 9.2 of this Agreement." (Emphasis added). Thus, a terminated disabled Member is entitled to receive $19,800 (section 9.2(a)), for his positive capital account balance, and an additional amount up to a total payment of $100,000 (section 9.2(b)), for his membership interest. Section 9.4 says that a disabled Member's interest is terminated, and he is to be paid "as provided under section 9.2" for "full payment of such Member's Membership Interest in the Company."
¶ 38. Section 9.5 uses completely different language. If section 9.5 said the expelled member was to be paid "as provided under section 9.2," I would agree with the majority. It does not. Instead, section 9.5 says, "Option to Dissolve. Upon the termination of a Member's Membership Interest under Section 9.1(b) ... the other Members may elect either (1) to pay an amount equal to the terminated Member[']s points as calculated pursuant to Section 9.2(a) less any debt to Company; or (2) to dissolve the Company...." Hence, the ambiguity and my dilemma.
¶ 39. The majority defines our difference of opinion in footnote 3. The majority adds language, not present in the agreement and not based on a reasonable inference, to reach its conclusion. I read only the words and language used by the parties in the agreement. I can only conclude that the agreement used different language for a reason. It is from the use of the language in section 9.4 ("as provided under Section 9.2") as opposed to the language in section 9.5 ("as calculated pursuant to Section 9.2(a)") that I find an ambiguity.
¶ 40. Under the agreement, each member's ownership interest is only in his or her capital account. The company's "property" is defined in section 1.9 as:
Schedule "A" defines "Capital Accounts" as:
(Brackets in original).
¶ 41. I recognize that the standard of review is de novo. I have viewed the facts in the light most favorable to Martindale, the nonmovant. Although I agree that the majority's interpretation is reasonable, I am of the opinion that there is more than one reasonable interpretation of section 9.5. I conclude that there is an ambiguity in the agreement. Thus, I am of the opinion that there is a genuine issue of a material fact in dispute, and Hortman Harlow is not entitled to a judgment as a matter of law. I would reverse the summary judgment and remand this case for further proceedings.
LEE, C.J., AND ISHEE, J., JOIN THIS OPINION.