In 1984, Oliver and three others merged their respective entities and founded CHG, a closely-held corporation that they treated as a partnership. After one later retired, Oliver and two others remained. They were equal shareholders of CHG and all were officers and directors of CHG.
The founders created Combined to act as CHG’s primary business. Combined was a manager-managed LLC that specialized in helping manufacturers place products with retailers for sale to consumers. About 64% of Combined was owned by CHG, and the remaining shares were divided among various junior partners. CHG was Combined’s manager and vested with sole and exclusive authority to manage and control the company’s affairs.
Combined’s operating agreement mandated retirement at the end of the fiscal year in which the founders attained the age of 70. For Oliver, this was December 31, 2012. In anticipation of his retirement, Oliver began making plans in 2011 to transition control over his major accounts to Combined. The transition process caused dissention among the three CHG shareholders. In addition, Oliver uncovered evidence of mismanagement of Combined by the other shareholders, which, along with declining sales, led him to question the viability of the company and its ability to fund his retirement payout. He presented this evidence to two key junior partners in November 2012.
All three left the company on January 1, 2013 and immediately commenced operation of a new entity, Signature Sales and Marketing. By January 19, 2013, all of the accounts belonging to the three had moved to Signature. Unable to reach an amicable agreement regarding the breakup of Combined, the parties filed suit against one another. Among other things, Combined and CHG...
