Corporate – LLC – Member Contributions – Handwritten Note

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Clary v. Borrell (Lawyers Weekly No. 011-082-12, 12 pp.) (Thomas E. Huff, J.) (John C. Few, Ch.J., concurring) Appealed from Richland County Circuit Court. (Alison Renee Lee, J.) S.C. App. Full-text opinion.

Holding: A short, handwritten note from defendant did not satisfy the LLC operating agreement’s provisions for requiring a member to make a capital contribution.

We affirm summary judgment for defendant.

The two parties were the only members of Tug Properties, LLC. Tug was not profitable, and the parties decided to wind it down.

According to plaintiff, defendant hand-wrote him a note that read, “Jeff, when the accounts are settled if I owe you I will pay you.”

Pursuant to Tug’s operating agreement, in order for defendant to be required to make a subsequent contribution, he, along with plaintiff, as 100 percent of the members of Tug, must have made a determination that a cash contribution was necessary, and defendant, as a member, must have been notified of the need for the subsequent capital contribution, with such notice including “a statement in reasonable detail of the proposed uses of the Capital Contributions and a date …  before which the Capital Contributions must be made.”

The note, purportedly signed by defendant, is addressed to “Jeff” and not the LLC. This handwritten note fails to comply with the requirements of the operating agreement, as (1) there is no indication that the parties agreed that it was necessary to make a subsequent capital contribution, (2) there is nothing to show that defendant was notified of the need for a subsequent capital contribution or the date by which it had to be made, and (3) there is no statement whatsoever detailing the proposed uses of any necessary capital contribution.

As to plaintiff’s alternative assertion that the note constitutes “a blanket acquiescence in and for payment of the debts,” thereby qualifying as a contract in and of itself that has been breached, this argument was never raised to nor ruled on by the trial court and therefore is not preserved for review.

We likewise assign no importance to plaintiff’s contention that his affidavit, along with certain documents he presented, showed defendant personally guaranteed loans on behalf of Tug, obtained personal loans, and assumed a debt of Tug, thereby showing defendant contributed more than the initial capital contribution to Tug, as we find they have no effect on this matter. We fail to discern how previous contributions by defendant have any effect on plaintiff’s allegation that defendant failed to make subsequent capital contributions in compliance with the operating agreement.

Affirmed.

Concurrence

(Few, Ch.J.) I would resolve this appeal summarily under Rule 220(b)(1), SCACR. There is no evidence in the record to support a conclusion that the handwritten note signed by defendant obligated him to make additional capital contributions. We need not address the second issue on appeal.