DALIANIS, C.J.
The plaintiff, Mark E. McDonough, appeals an order of the Superior Court (
The trial court found that the following facts were not disputed. In 1992, brothers Mark, Matthew, and Patrick McDonough established TASC, a corporation that provides technical engineering services. In September 1995, the brothers converted TASC to a Limited Liability Company (LLC). As of January 2014, the New Hampshire Revised Limited Liability Company Act (the Act), RSA chapter 304-C (2015 & Supp. 2016), governs TASC.
The brothers had a falling out. As a result, Mark sued the defendants seeking a declaration that TASC must dissolve by September 30, 2015, pursuant to its certificate of formation and operating agreement. TASC's certificate of formation states that "[t]he latest date on which the limited liability company is to dissolve is September 30, 2015." Section 5 of TASC's operating agreement states: "The Company shall have a term beginning on the date the Certificate of Formation is filed ... and shall continue in full force and effect for a term of twenty (20) years, unless sooner terminated or continued pursuant to the further terms of this Agreement." On August 7, 2015, Matthew and Patrick — constituting a majority of TASC's members — voted to dissolve TASC and then immediately voted to revoke the dissolution.
Both parties moved for summary judgment. After a hearing, the trial court ruled that: (1) the August 7 dissolution and revocation had no effect on TASC's governing documents; and (2) TASC was not required to dissolve because its operating agreement permits a majority of its members to continue the company. Consequently,
On appeal, Mark argues that: (1) the trial court erred when it determined that a majority of TASC's members could continue TASC beyond September 30, 2015; and (2) permitting a majority of TASC's members to continue the company causes him substantial harm because the company is not obligated to pay him any consideration if he withdraws.
In reviewing a trial court's rulings on cross-motions for summary judgment, "[w]e consider the evidence in the light most favorable to each party in its capacity as the nonmoving party and, if no genuine issue of material fact exists, we determine whether the moving party is entitled to judgment as a matter of law."
TASC is governed by both its operating agreement and the Act.
"We review matters of statutory interpretation
"Because the operating agreement is a form of contract, we will apply the general rules of contract interpretation."
Mark first argues that TASC's operating agreement and the Act required the company to dissolve by September 30, 2015. We disagree.
The Act requires an LLC's members to dissolve the company as provided for in the company's operating agreement.
Mark argues that, unless amended, the plain language of TASC's operating agreement required dissolution by September 30, 2015. This argument, however, overlooks the language "unless sooner terminated or continued pursuant to the further terms of this Agreement." Although Mark is correct that the members could unanimously amend section 5 of TASC's operating agreement to remove or change the dissolution clause, that does not preclude other means of continuing TASC. If TASC's members had intended that the only means of continuing the company would be an amendment of section 5, they could have explicitly said so. Instead, they chose to more broadly state that TASC would exist for 20 years unless the company was "continued pursuant to the further terms of this Agreement."
In this case, TASC's operating agreement and the Act provide such a way for TASC's members to continue the company. Section 4 of TASC's operating agreement authorizes TASC to "have and exercise all powers now or hereafter conferred by [the Act]." This includes RSA 304-C:130, III (2015), which provides: "After the members have dissolved the limited liability company under RSA 304-C:129, I, they may revoke the dissolution at any time before completing the wind-up of the limited liability company." Thus, TASC's members have two means to avoid the effects of the September 30, 2015 dissolution. They can either revoke the dissolution pursuant to RSA 304-C:130, III, or unanimously amend section 5 of TASC's operating agreement.
Mark argues that a decision to revoke a dissolution pursuant to RSA 304-C:130, III also requires a unanimous vote. He asserts that because the legislature specifically included the word "majority" in RSA 304-C:130, I, the omission of that word in RSA 304-C:130, III demonstrates legislative intent that the phrase "the members" in paragraph III refers to all members of an LLC. Because accepting Mark's interpretation would require us to ignore the plain language of RSA 304-C:67, I (Supp. 2016), and add a unanimity requirement to RSA 304-C:130, III that is not present in the words of the statute, we conclude that a majority of members may revoke a dissolution pursuant to RSA 304-C:130, III.
RSA 304-C:130, I, is one of a number of provisions in RSA chapter 304-C specifying that certain member decisions must be made by a majority vote.
Thus, to determine whether the decision to revoke a dissolution under RSA 304-C:130, III may be made by majority or unanimous vote, we first examine whether that decision is one of the decisions listed in RSA 304-C:67, II. RSA 304-C:67, II provides that, unless the operating agreement states otherwise, a unanimous vote of all of an LLC's members is required to: (1) amend a certificate of formation; (2) amend an operating agreement; (3) amend a promise to make a contribution; (4) grant additional membership rights to a member; or (5) admit a new member. Because the decision to revoke a dissolution is not one of the decisions enumerated in RSA 304-C:67, II, we then examine whether RSA 304-C:130, III is one of the provisions that RSA 304-C:67, I specifies is exempt from its provisions. Because RSA 304-C:130, III is not exempt, RSA 304-C:67, I, applies.
Pursuant to RSA 304-C:67, I, we must examine the operating agreement. Section 5 of TASC's operating agreement does not specify whether TASC may be continued by majority or unanimous vote. Likewise, TASC's operating agreement is silent regarding how its members may decide to revoke a dissolution. Therefore, because TASC's operating agreement does not provide otherwise, RSA 304-C:67, I, controls, and TASC's members may by majority vote revoke a dissolution pursuant to RSA 304-C:130, III.
Mark next argues that, even if a majority of TASC's members had the power to revoke the September 30, 2015 dissolution, they have not yet done so. Even though the trial court ruled that the August 7 voluntary dissolution and subsequent revocation had no effect on whether TASC was required to dissolve by September 30, 2015, the trial court still ruled that TASC was not required to dissolve by September 30, 2015, because its members could continue the company pursuant to the terms of the operating agreement. Although at the time of the trial court's order, Matthew and Patrick had not voted to revoke the September 30, 2015 dissolution, they still have time to do so.
Mark next argues that TASC's certificate of formation requires, without exception, that the company dissolve after 20 years. Specifically, he argues that: (1) the plain language of the certificate of formation requires dissolution; and (2) allowing TASC's members to continue TASC without amending the certificate of formation renders the certificate of formation meaningless.
TASC's certificate of formation states that "[t]he latest date on which the limited liability company is to dissolve is September 30, 2015." However, the Act does not require an LLC's members to dissolve the company when the duration listed in the
Furthermore, we disagree with Mark's argument that this interpretation renders the certificate of formation superfluous. Under the Act, an LLC's certificate of formation and its operating agreement are distinct documents that are separately defined and serve different purposes.
The primary purpose of an LLC's operating agreement is to govern how the parties will manage the internal affairs of the LLC and the LLC's business.
Mark next argues that the trial court erred when it determined that "[t]here is no unfairness in requiring [him] to comply with the operating agreement" because "Mark, or for that matter any dissatisfied member, can withdraw from the LLC and obtain his share of the LLC[`s] assets." Mark argues that this was error because "[w]hile the Superior Court was correct that the Act allows for members to voluntarily withdraw, ... [it] overlooked the financial consequences of such a withdrawal" in that "[t]he Operating Agreement does not obligate the Company to pay any consideration or buy-out to [Mark] if he elects to withdraw" and the "Act ... states that [Mark] would not be entitled to any compensation for his membership interest upon his withdrawal."
We decline to address the merits of this argument because Mark has not provided a record demonstrating that he preserved it for our review. It is Mark's burden, as the appealing party, to demonstrate that he raised his appellate arguments before the trial court.
In his reply brief, Mark argues that he preserved his argument by arguing before the trial court that forcing him "into a perpetual relationship with his brothers" would be "fundamentally unfair" because "his interests in the company are restricted and inalienable, as he has no open market for them." Mark's argument that his interests in the LLC "are restricted and inalienable," such that he has "no open market" for them is a different argument from the argument he raises on appeal. Mark's argument that there is "no open market" for his interests in the LLC did not preserve, for our review, his appellate argument that the trial court erred when it stated that, upon withdrawal, he could obtain his share of the LLC's assets because RSA 304-C:105, II precludes the LLC from paying him compensation should he withdraw.
To preserve the argument that Mark now raises on appeal, Mark would have had to present it in a motion for
We have reviewed the remainder of Mark's arguments and conclude that they do not warrant further discussion.
HICKS, CONBOY, and LYNN, JJ., concurred.