Ott v. Monroe

719 S.E.2d 309 (2011)

Facts

Admiral Dewey Monroe, Jr. (F) and his wife Lou Ann Monroe (D) formed a Virginia limited liability company, L&J Holdings, LLC, which was governed by an operating agreement they executed in April 2003. F and D were the sole members and that they held an 80% membership interest and a 20% membership interest, respectively. D would be the managing member and Joseph G. Monroe (Joseph) would serve as the successor managing member in the event of her death, disability, removal, or resignation. Paragraph 2 of the Agreement stated: no Member shall transfer his membership or ownership, or any portion or interest thereof, to any non-Member person, without the written consent of all other Members, except by death, intestacy, devise, or otherwise by operation of law.' Paragraph 10(B) provided that '[n]o Member shall, directly or indirectly, transfer, sell, give, encumber, assign, pledge, or otherwise deal with or dispose of all or any part of his Membership Interest now owned or subsequently acquired by him, other than as provided for in this Agreement.' Paragraph 10(C) provided that, Paragraph 10(B) notwithstanding, 'any Member . . . may transfer all or any portion of the Member's Interest at any time to ... other Members [or] the spouse, children or other descendants of any Member.' F died in 2004. F bequeathed his entire estate to his daughter, P. P asserted that F's bequest transferred his membership in the Company to her. D responded that P had inherited only F's right to share in profits and losses of the Company and to receive distributions to which he would be entitled.  P filed a complaint seeking declaratory judgment that she had inherited f's full membership in the Company and Ds had been validly removed from their positions. Ds demurrered. The court held that F was dissociated from the Company upon his death by operation of Code § 13.1-1040.1(7)(a), and only the right to share profits and losses and to receive distributions survived to be inherited by P. D appealed.