Business Associations, Pages 1029โ€“1033

Dunbar Group, LLC v. Tignor

Supreme Court of Virginia, 2004

Facts:

Xpert, an LLC providing software to control telephone systems, was formed by Dunbar and Tignor, who each owned a 50% membership interest. Disputes eventually arose between Robertson, Dunbar's sole member and manager, and Tignor. Robertson informed Tignor that their working relationship was no longer possible and that they should sever ties. Robertson then sued Tignor, seeking an order "expelling and dissociating Tignor as a member of Xpert" because of misconduct like commingling funds. Tignor filed a request to dissolve the company because the disagreements made it unable to conduct its business.

Procedural History:

The chancellor ordered that Tignor be expelled and that Robertson continue to operate Xpert and provide monthly accountings to Tignor until its contract with Samsung was done, at which point Xpert was to dissolve.

Issue:

Should Tignor's expulsion trigger the dissolution of Xpert?

Reasoning:

Although Tignor had caused some problems in the company, there is no evidence showing that changing him from a manager to a passive investor would make it impracticable for Xpert to carry on its business. The chancellor even admitted such when he concluded that Xpert could continue to operate for an extended period of time until its Samsung contract ended.

Holding:

No, Tignor's expulsion should not trigger Xpert's dissolution. Tignor's expulsion affirmed; Xpert's dissolution reversed.