DILLARD, Judge.
Pinnacle Benning, LLC ("Pinnacle") and Clark Pinnacle Benning LLC ("CPB"), by and through Pinnacle, appeal the trial court's dismissal of a complaint against Clark Realty Capital, LLC ("Clark Realty"), and Clark Benning, LLC ("Clark Benning") (referred to collectively as "Clark"). Pinnacle contends that the trial court erred by (1) dismissing a count for declaratory judgment, (2) dismissing a count for a derivative action for failure to make a formal demand to file suit, and (3) dismissing the complaint without allowing Pinnacle to amend same. For the reasons set forth infra, we affirm the trial court's dismissal of Pinnacle's complaint but remand for the entry of an order specifying that these counts be dismissed without prejudice.
The undisputed record shows that CPB is a limited-liability company that is the managing member of Fort Benning Family Communities, LLC (FBFC).
Pinnacle filed a complaint against Clark in September 2010, alleging that Pinnacle and CPB are entities that were set up to operate a military housing project at Fort Benning, Georgia, as part of a joint venture entered into by Clark Realty and American Management Services, a nonparty affiliate of Pinnacle. Pinnacle further alleged that, due to the corporate structure, Clark Realty controlled both CPB and FBFC and, therefore, Clark Realty "must exercise its good faith business judgment on behalf of both entities as a whole, creating inherent conflicts, especially when acting as FBFC in a fashion adverse to Pinnacle's interests as the property manager at Fort Benning."
After describing various and sundry allegations of impropriety with regard to related entities and joint ventures, the complaint contended that "Clark is using its control over [CPB] and FBFC to execute a private vendetta against Pinnacle that is solely to [Clark's] financial benefit, and in derogation of the rights and interests of Pinnacle, the Joint Venture, [CPB], FBFC, the Army and
In response to these alleged wrongdoings, Pinnacle sought to audit Clark's books and records, pursuant to Section 3.11 of CPB's operating agreement, which provides that
And Pinnacle claims that after sending the necessary written notice to Clark that it intended to exercise this right, Clark responded "by emailing a limited set of documents consisting of the Operating Agreements, the LLC formation agreements and the LLC tax returns for [CPB]." But according to Pinnacle, this response was insufficient to satisfy its rights under the operating agreement. Pinnacle further alleged that Clark ignored a subsequent letter indicating that Pinnacle had selected an independent third party to audit the books and records.
The remainder of Pinnacle's complaint contained three counts, only two of which are at issue in this appeal.
The second count of the complaint alleged that Clark
Thus, Pinnacle sought (1) "a full accounting of the costs to the Company resulting from Clark Realty's conflicts of interest and breaches of duty" and (2) relevant refunds to CPB and FBFC from Clark Realty. In this count, Pinnacle also explained that it had not made a demand upon CPB to commence the cause of action because doing so would have been futile for a number of reasons, including that it "would in essence be asking Clark Realty, as the Clark Manager of [CPB], to authorize and commence suit against itself.. . ."
Thereafter, Clark moved to dismiss Pinnacle's complaint with prejudice for failure to state a claim upon which relief can be granted,
At the outset, we note that "[w]e review de novo a trial court's ruling on a motion to dismiss."
1. Pinnacle first contends that the trial court erred by dismissing its count for declaratory judgment with regard to its right to audit Clark's books and records. We disagree.
As detailed supra, Pinnacle alleged that Clark was in breach of the operating agreement by refusing to allow Pinnacle to inspect and audit all books and records, including those pertaining to Clark's role as managing member of FBFC, when Clark responded "by emailing a limited set of documents consisting of the Operating Agreements, the LLC formation agreements and the LLC tax returns for [CPB]." Accordingly, Pinnacle sought a declaration that the relevant section of the operating agreement entitled Pinnacle to same. But the trial court held, and we agree, that Pinnacle did not seek guidance as to future actions but instead sought a determination as to whether Clark had already breached a contractual obligation by denying Pinnacle the rights afforded by the operating agreement.
It is well established that under the Declaratory Judgment Act,
In this regard, a party seeking declaratory judgment "must show facts or circumstances whereby it is in a position of uncertainty or insecurity because of a dispute and of having to take some future action which is properly incident to its alleged right, and which future action without direction from the court might reasonably jeopardize its interest."
And here, because the alleged rights of the parties have already accrued—Pinnacle has attempted to audit all of Clark's books and records and maintains that it has the right to do so, but Clark has refused Pinnacle access to all but certain documents—there is no future action upon which the trial court may provide direction on this particular issue.
Thus, the trial court did not err in dismissing Pinnacle's count for declaratory judgment.
Nevertheless, as detailed supra,
2. Pinnacle next contends that the trial court erred by dismissing the derivative action due to Pinnacle's failure to make a formal demand upon CPB to bring the suit itself. We disagree.
Pinnacle argues that (1) the futility doctrine should apply to the statutory demand requirement, (2) Pinnacle should be deemed as having cured any defect or having actually satisfied this procedural requirement, and (3) the claims raised by Pinnacle included direct claims it was entitled to raise in its own name.
(a) Satisfaction of the Demand Requirement. OCGA § 14-11-801 provides that a member of a limited-liability corporation may commence a derivative action if five conditions are met,
As previously noted by this Court with regard to the derivative-action provisions related to business corporations, "[e]arlier versions of the Business Corporation Code permitted a shareholder to be excused from the demand requirement if he alleged what efforts he had made to secure initiation of the action by the directors, or why such efforts had not been made."
We so hold despite Pinnacle's argument that it "cured" any procedural defect by contemporaneously filing a demand letter with its response to the motion to dismiss. Despite the trial court's nonconsideration of this argument, Pinnacle contends that the trial court should have stayed the proceedings after Pinnacle filed a demand letter on February 16, 2011. But we reject Pinnacle's assertion because the statute explicitly requires that 90 days expire between the time a demand is made and when an action is commenced,
Finally, we do not address Pinnacle's argument that pre-complaint letters to Clark should be deemed as having satisfied the demand requirement. Pinnacle first raised this argument in its response to Clark's motion to dismiss, attaching copies of the purported "demand" letters. Clark then urged the trial court to disregard Pinnacle's argument and the attached letters so as not to convert the motion to dismiss into a motion for summary judgment.
As with the declaratory-judgment action discussed in Division 1, the trial court's dismissal of Pinnacle's action was actually due to a lack of subject-matter jurisdiction based upon Pinnacle's failure to meet a procedural prerequisite prior to filing suit.
Nevertheless, despite holding that the trial court properly dismissed this count, as with Division 1,
(b) Derivative vs. Direct Action. Pinnacle next argues that even in the absence of a demand, the trial court should have permitted its claim to proceed as a direct action. However, Pinnacle did not make this argument below; and it is well established that "[w]e are limited to considering only those grounds raised and ruled on below by the trial court and may not consider a basis for appeal not presented at the trial level."
3. Finally, Pinnacle argues that the trial court should have permitted it to amend its complaint rather than dismissing same. However, no pretrial order appears in the record before us, which left Pinnacle free to amend its complaint until the entry of same.
Nevertheless, we note that because we remand to the trial court for the entry of an order specifying that Pinnacle's declaratory-judgment count and derivative-action count have been dismissed without prejudice for lack of subject-matter jurisdiction, Pinnacle would be permitted to recommence its action.
Accordingly, for all the foregoing reasons, we affirm the trial court's dismissal of Pinnacle's complaint but remand for the entry of an order dismissing these counts without prejudice.
Judgment affirmed and case remanded with direction.
MIKELL, P.J., and BOGGS, J., concur.