SUPERIOR COURT OF THE VIRGIN ISLANDS
DIVISION OF ST THOMAS AND ST JOHN
DR TYLUR ARVIDSON and DR TYGUE ARVIDSON )
)CASE NO ST 16 CV 410
Plaintiffs ) Cite as 2020 VI SUPER 48
)
)
V )
)
DR WILLIAM BUCHAR and VI CHIROPRACTIC LLC )
)
Defendants )
“—J
MEMORANDUM OPINION
111 Before the Court is Defendant s fully briefed Motion for Partial Summary Judgment asserting
that the Plaintiffs breach of fiduciary duty claim must fail as a matter of law because the Plaintiffs failed
to show that they incurred harm in the form of damages Because Defendants have failed to prove that no
genuine issue of material fact exists regarding the harm element of the Arvidsons’ claim, the motion is
denied
Factual and Procedural History
112 A more detailed rendering ofthe facts giving iise to this lawsuit was piovided in the Court s June
6 2018 Memorandum Opinion Ultimately, this is a dispute between business partners who entered into
discussions to dissolve their business venture, V l Chiropractic, LLC, upon their inability to decide how
their chiropractic practice should be managed and operated During these discussions and the ensuing
incomplete dissolution process relations further deteriorated
113 As a result, on July 12 2016, Tyhir and Tygue Arvidson initiated this suit against William
Buchar ‘ After filing a First Amended Complaint and completing motions practice the Arvidsons claim
Buchar breached his fiduciary duties to them by failing to execute the dissolution ofV l Chiropractic in
an effort to lower the market value ofthe Arvidsons shares during buy out negotiations They also ask
this Couit to dissolve the LLC Z
114 In response, Buchar filed counterclaims grounded in contract and tort Buchar asserts the
Arvidsons breached their contiactual duties under the LLC 5 Operating Agreement and the covenant of
good faith and fair dealing, intentionally interfered with prospective business relations slandered him,
and were unjustly enriched 3
l Pls Compl
7 Pls Fiist Am Vellfied Compl
’Def 5 Second Am Countereompl
Alyrdran at a! v Buchw Ll ul 2020 VI SUPER 48
Case No ST 1(kCV410
Memorandum Opinion, March 24 2020
Page 2 of 13
Summary Judgment Standard
115 Motions for summary judgment are governed by V I R Civ P 56 which provides that the Court
must “grant summary judgment if the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law "‘ A factual dispute is deemed genuine if
the evidence is such that a reasonablejury could return a verdict for the nonmoving party[ ] 5 and a fact
is material only where it ‘might affect the outcome ofthe suit under the governing law[ pa [T]hc party
moving for summaryjudgment possesses the initial burden ofidentifying evidence indicating that there is
an absence of any issue of material fact 7 If the moving party does so the burden shifts to the non
moving party to present affirmative evidence front which a Jury might reasonably return a verdict in [its]
favor ‘3 But, ‘ [i]fa moving party fails to carry its initial burden ofproduction, the nonmoving party has
no obligation to produce anything, even ifthe nonmoving party would have the ultimate burden of
persuasion at trial 5' A party asserting that a fact cannot be or is genuinely disputed must support the
assertion by (i) citing to particular parts ofmaterials in the record including depositions documents,
electronically stored information, affidavits or declarations, stipulations (including those made for
purposes of the motion only), admissions interrogatory answers, or other materials, or (ii) showing that
the materials cited do not establish the absence or presence of a genuine dispute or that an adverse party
cannot produce admissible evidence to support the fact 1“
116 ”The [C]ourt must credit all reasonable inferences from the evidence on record in favor of the
nonmoving party in considering whether there are any disputed issues ofrnaterial fact ’“ and must take
the non moving party's eonflictrng allegations as true if supported by proper proots ‘2 Further, the Court
should not weigh the evidence, make eredrbility determinations, or draw legitimate inferences from the
facts when ruling upon sumrnaryjudgntent nrotions because these are the functions ofthejury ‘3 The
Court's role in deciding a motion for surrrmary judgment is not to determine truth, but rather to detemrine
‘ VI R (.rv P 56(a)
5 Greene v V! Wale; undl’aner Co 65 VI 67 73 (VI Super Ct 2016) (quoting Anita/Jan v Liberty Lobby
Inc 477 U S 242 2480986))
5 William: t Untrech mp 50 VI 191 194 (V I 2008) (quotingAnde/ion 477 U S at 248)
7 UnrtedCoIp 64 VI at 309 (VI 2016) (quoting ann v Mar/1n 54 VI 379 391 (VI 2010)) (Citations
omitted)
x Hawkins v ("emu 66 V l 112 (V I Super Ct 2017) (citation and quotation marks omitted)
’ United C07}; 64 VI at 309 10 (citing Mar an 54 VI at 391) (quotation marks omitted)
‘0 V I R Civ P 56(c)(1)
” Wullersv Waller: 60VI 768 794 (VI 2014)(citing Bmdv Anltllei YachtingServr [m 57 VI 354 358
(VI 2012) and M1 Hall) burdens Cm an; rn/tcnon Inc v Ton/mm); a] Mount Holly 658 F 3d 375 381 (3d Cir
201 1))
' Summon v Golden Rerorlr LLLP 56 V I 597 605 (V I 2012) (citations and quotation marks omitted)
” W/lllanu 50 V I at 197 (citing Anderson 477 U S at 255)
AI'VIdSOVl a a] v Buchw e! a! 2020 VI SUPER 48
Case No ST 16 CV410
Memorandum Opinion March 24 2020
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whether a factual dispute exists that warrants trial on the merits “ The Court must deny summary
judgment where a factual dispute exists15 and must grant summaryjudgment ifthe non moving party
cannot establish an essential element of its claim ‘5
Analysis
117 Buchar argues that (I) because V I Chiropractic was not dissolved, as the Arvidsons initially
alleged in their Original Complaint and because it remains in good standing, the Arvidsons suffered no
damages ’ with regard to the breach of fiduciary duty claim ‘7 (2) the Operating Agreement precludes
Buchar from incurring liability in executing his managerial duties for the LLC and (3) 13 V I C § 1303
prevents Buchar from incurring liability
A The incomplete dissolution ofV I Chiropractic does not prevent the Arvidsons from
fulfilling the harm element
SIB The Virgin Islands Limited Liability Act controls the claims of Virgin Islands LLC members and
managers against other members and managers ofthe same LLC "‘ Specifically 13 V I C § 1409(h)(2)
(4) establish that managers in manager managed LLCs owe fiduciary duties to other LLC members and
the LLC Referring to 13 V I C § 1409(b) (d) 13 V l C §1409 (h)(2) provides that a manager [Ufa
manager managed LLC] is held to the same standards of conduct prescribed for members in member
managed LLCs, namely, managers owe the duty of loyalty the duty of care, and the obligation of good
faith and fair dealing ‘9 Similarly under Section l409(h)(3) the same fiduciary duties apply to LLC
members ‘who pursuant to [their] operating agreement excicise[] some or all of the rights of a manager in
the management and conduct oi the [LLC s] business "" But 13 V I C § 1409(h)(4) indicates that a
managei is relieved of liability imp0sed by law for violation ofthe standards prescribed by subsections
of this section to the extent 0/th managerial authority (IL/Lgalcd In the members by the operating
agrccment 7‘
” Hawkins 66 VI at 117 (Citing Williams 50 VI at 195)
'5 M ”1 (Citing may Ch! 15mm v Swim} Isle shopping Center 52 v1 410 423 (VI 2009))
” See (timer Corp v Cullen 477 U S 317 322 23 (1986) (explaining that sumniaiyJudgment is mandated
against a party who fails to make a showing sufficient to establish the existence of an element essential to that
pai‘ry‘s ease and on which that party will bear the burden ol'proofat tiial )
*7 Def 5 Reply to P15 Opp to Def s Mot Summ J 2
‘3 See Title 13 Chapter 15 ofthe Virgin Islands Code Subchaptei IV Relations ofMembeis to Each Other and to
Limited Liability Company (establishing the statutes that govern rights obligations, and duties that govern
iclations between individuals who are members and managers of the same LLC) Cumpm e to Chapter 15 ofthe
Virgin Islands Code Subchaptcr III Relations ofMembers and Managers to Persons Dealing with Limited
Liability Company (establishing iights obligations and duties that govein relations between individuals who are
members or managers of an LLC and those individuals or entities who are not part ofthe same LLC e g creditors)
”‘13VlC § 1409mm
Z“13VIC §1409(li)(3)
' 13 V I ( § 1409 (h)(4) (emphasis added)
Arv/dauri e! a! v Ericka; at a] 2020 VI SUPFR 48
Case No ST lEkCV410
Memorandum Opinion March 24 2020
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119 Here the V I Chiropractic Operating Agreement establishes that Buchar is the LLC s Manager 2’
Further the Operating Agreement requires the Arvidsons’ to perform consulting services in a fashion
akin to employees in an employer employee relationship 7‘ Neither party argues the contrary
110 The standards governing LLC fiduciary duties are found in 13 V I C § 1409(1)) (c) and (d)
which define the duties of loyalty,” care ’5 and good faith and fair dealing ’5 respectively when
addressing the duty ofloyalty, 13 V I C § l409(b)(l), in pertinent part requires managers ofmanager
managed LLCs
to account to the company and to hold as trustee for it any property,
profit, or benefit derived by the [manager] in the conduct or winding
up of the company's business or derived from a rise by the [manager]
ofthe company s property including the appropriation ofa
company s opportunity 17
Title 13 V IC § 1409(e) makes clear that a manager 5 duty ofeare is owed to the LLC and its other
members in [the course of] the [manager 5] conduct of and winding up ofthe company’s business, ’3 but
requires only that the manager “refrain[] from engaging in grossly negligent or reckless conduct,
intentional misconduct or a knowing violation oflaw ’9 Finally, 13 V I C § 1409(d) indicates that a
manager‘ shall discharge [his] duties to [his LLC] and its other members under this chapter or under the
[LLC 5] operating agreement and exercise any rights consistently with the obligation of good faith and
fair dealing 1“
fill] Outside ofthcse provisions the Virgin Islands Code provides no further guidance Similarly, no
Virgin Island Supreme Court precedent addresses a breach of fiduciary duty claim in an LLC context
Fortuitously another Judge on this coun conducted a Banks” analysis of the breach of fiduciary duty
cause of action in bbner v Pclrahan ’7 Finding its research, reasoning and conclusion sound the Court
adopts them here Under Elmer the Restatement (Second) of Torts § 874 represents the soundest rule
for establishing a breach of fiduciary duty claim in the Virgin Islands “3 Section 874 states that, [o]ne
* VI Chiropractic Operating Agreement Clause 3 7( Manager means Dr William L Buchar or the party or
parties then acting in that capacity ) Clause e. 1 ( The name ofthe Manager IV William L Buchdr )
’5 VI Chiropractic Operating Agreement Lxhibit B See also Aiyidsan v BllL‘hlII Case No ST 16 (.V 410 2019
VI LEXIS 122 W 34 39 W53 56 (VI Super Ct September II 2019)
413VIC§1409(b)
z13VIC§1409[c)
b13vrc §1409(a)
713 VIC § l409(b)(1)
2" 13 VIC § 1409(e)
“13VIC§1409(c)
3" 13 VIC § 1409M)
5' Bank.) v Intenutmrml Rental and Leasing Coip 55 V I 967 (VI 2011)
J Case No ST 14 CV 537 2018 VI LEXIS 80 (VI Super Ct Aug 14 2018)
‘3 M at *15 (quoting Guardian)
Aunt/son et [If v Buchar 21 a! 2020 VI SUPER 48
Cast. No ST 1&CV410
Memorandum Opinion March 24 2020
Page 5 ofll
standing in a fiduciary relation with another is subject to liability to the other for harm resulting from a
breach of fiduciary duty imposed by the relation 34
1112 Elmer also determined that a plaintiff asserting a claim of breach of fiduciary duty must provide
the following four elements (1) that a fiduciary relationship exists (2) that the fiduciary breached the
duty imposed by said relationship, (3) that the plaintiff must have been harmed, and (4) that the
fiduciary s breach was the proximate cause of said harm ”
fill} A fiduciary relation exists between two persons when one ofthem is under a duty to act for or to
give advice for the benefit of another upon matters within the scope of the relation’ ’5 Some fiduciary
relations such as those of tmstee and beneficiary, principal and agent[ I and director and corporation are
the subject of a considerable group of substantive rules of law 37 However, a survey of case law
originating from this jurisdiction fails to reveal precedent addressing a breach of fiduciary duty in the
LLC context, or even an analogous case addressing the cause of action in a partnership context
W4 In their Original Complaint, the Arvidsons alleged that by filing for dissolution ofV I
Chiropractic Buchar breached his fiduciary duties owed to them as members of V I Chiropractic 1” In
his initial Motion for Summary Judgment, Buchar argued that this Court should grant summary judgment
in his favor because the LLC dissolution of which the Arvidsons complained never occurred and as a
result, it was undisputed that they could not fulfill the harm clement required for a successful breach of
fiduciary duty claim ”I In response the Arvidsons filed a First Amended Complaint in which they still
maintain their breach of fiduciary duty cause of action against Buchar 4“ However they now allege
26 Buchar as manager of the Company owed certain fiduciary
obligations to the Arvidsons who are members ofthe Company
27 Buchar s Indication was that he Wat ging to dissolve the Company
and IhL actions he took in initiating dissolution ofIhL Company were for
the sole purpose afredming the price the Arvidsonr could demand for
their interest in the Company Buchar acted in his own self interest to
Plaintiffs detriment which violated Buchar‘s fiduciary obligations to the
Arvidsons as members of the Company
28 Buchar having pruvlilzd formal notice ofdissolution did not
disclose he had not dissolved the Company until sometime after thefiling
ofthe original Complaint
29 Buchar s action violated the duty of good faith and fair dealing
because, among other things Plaintiffs relied on Buchar 5 Notice of
Dissolution in the filing of their complaint and then were compelled to
3‘ Restatement (Second) of Torts § 874 ( 1979)
5’ Guardian [nsmanee (a i Khalil 64 VI 3 18 (VI Super Ct 2012)
"‘ Id
‘7 Restatement (Second) of Torts § 874 Reporter 5 Notes
“ Original Cempl
3" Def 5 Mot Summ J l S
4" First Am Cempl
AWN/tan at a! v Buchm at a! 2020 V1 SUPFR 48
Case No ST 1&CV410
Memorandum Opinion March 24 2020
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conduct discovery to detennine the true status of the Company as the
only official paperwork stated it would be dissolved in thirty (30) days
30 Buchar’s actions benefitted himselfto the detriment ofthe Arvidsons,
minority owners of the Company without any justifiable business
purpose
31 Although the Arvidsons eould have sold their membership interests
in the Company to a third party on the open market as an alternative to
selling to Buchar Buchar by noticing the dISXD/UIIOI’I oflhe C umpany
Initially appropriated that Opportunity for home/fin the detriment of the
A: vrdrom, and when they discovered the company was not actually
dissolved, they were no longer in a reasonable position to sell their
interests
32 Buchar appropriated the Arvidsons opportunity for selling the
Company to him by indicating that he was unilaterally electing to
dissolve the Company
33 Buchar s conduct constitutes intentional misconduct because he
knowingly violated his fiduciary obligations to the Arvidsons despite
having the advice of counsel at all times
34 Buchar’s breach of fiduciary obligations also includes his failure to
cause the Company to issue K 15 as the Company is required to do
35 thchar 3 Hula/ion ofhii fiduciary obligarianr to [he Arvidsons
caused the Arvidsons damage in an minim! In In shown at trial 4‘
1115 As noted, the Arvidsons allege that Buchar s actions violate[d] the duty of good faith and fair
dealing 1“ and other language from the First Amended Complaint indicates that the Arvidsons intend to
bring breach ofthe duty ofloyalty‘” and breach ofthe duty of care“ claims as well
1116 Because Buchar limits his motion’s attack to the harm element set out in the Restatement
(Second) ofTorts § 874, the Court will limit its analysis to that element as well In support ofthe harm
element in their First Amended Complaint the Arvidsons now allege that Buchar (1) ‘rednc[ed] the price
the Arvidsons could demand for their interest in the Company ‘5 (2) benefitted himselfto the detriment
ot the Arvrdsons minority owners of the Company, ’4“ (3) prevented “the Arvidsons [from selling] their
membership interests in the Company to a third party on the open market as an alternative to selling to
Buchar [thereby] appropriate[ing] that opportunity for himself [and placing them in an un]reasonab1e
position to sell their interests, "7 (4) appropriated the Arvidsons opportunity for selling the Company to
“ First Am Compl W 26 35
4 m 11 29
4‘ I11 1] 31 ( Buchar by noticing the dissolution ofthe Company Initially appropriated that opportunity for himself
to the detriment oftlie Arvidsons and when they discovered the company was not actually dissolved they were no
longer in a reasonable position to sell their interests )
” Id 11 33 ( Buchar s conduct constitutes intentional misconduct because he knowingly violated his fiduciary
obligations to the Aivrdsons )
‘5 Id 27
“‘ Id 30
47 Id 3]
AI when at a! i Buchar at a! 2020 VI SUPER 48
Case No ST 16 CVAIO
Memorandum Opinion March 24 2020
Page 7 of 13
him by unilaterally indicating that he would dissolve the LLC ”‘ and (5) ‘ fail[ed] to cause the
Company to issue K Is ‘9
ii 17 By amcnding their Complaint the Arvidsons made new allegations which demonstrate that
Buchar has failed to establish that no genuine issue of material fact exists regarding the harm element
Buchar did not file a restyled Motion for Summary Judgment that responds to the five different types of
harm allegcd the First Amended Complaint‘s allegations nor to the changed nature ofthe Arvidsons‘
claim Instead, Buchar filed a Reply in response to the Arvidsons Opposition Motion that addressed the
Arvidsons First Amended Complaint In it, Buchar still maintains that he is entitled to summary
judgment because V I Chiropractic was never dissolved)0 and continues by contending that the
Arvidsons First Amended Complaint fails to allege the Arvidsons suffered damages and fails to define
what those damages are or could be Ultimately, Buchar unpersuasively concludes as a result this lack
of damages defeats their claim )' This particular argument is unavailing
1MB Further one ofthe more hotly contested issues of fact in this dispute is whether the Arvidsons
made additional capital contributions to V l Chiropractic in the latter part of2015 In this Coon 5 March
l0, 2020, Memorandum Opinion the Court addressed the issue of whether to disallow evidence which
could possibly show at trial whether the Plaintiffs made additional capital contributions after V I
Chiropractie’s initial founding )7 Because this evidence has not been deemed inadmissible a genuine
dispute exists regarding whether the Arvidsons made additional capital contributions and, more
importantly gained larger ownership percentages of V I Chiropractic an issue of fact direetly impacting
the determination of monetary damages at trial
{[19 Buchar also argues in his Reply that because V I Chiropractic was never dissolved, [P]laintiffs
financial interest remains viable 5’ However the only evidence Buchar submits in support oi this
contention is an email chain showing(1) the Arvidsons’ counsel requested a copy ofV I Chiropractic 5
certificate of dissolution from Buchar s counsel in 2016, nearly a year prior to filing this lawsuit and (2)
Buchar s counsel‘s two sentence response stating that You should get a response next week We Iiave
not filed for dissolution 5* As a result this argument is also unavaiIing
H20 First the email chain fails to definitively show that Buchar would not or did not inland to file for
dissolution Instead by prefaeing the statement that no dissolution had been completed with a statement
infonning the Arvidsons‘ counsel that he should get a response next week, Buchar s counsel lefl open
‘3 1d 32
W [d 34
5° Def s Reply to P1: ow to Defs Mot Summ J 1 2
’ Id 2
Anade i Buchar Case No ST 16 CV 410 2020 VI SUPER 36 1M] 19 57 (VI Super Ct March 10 2020)
>1 Def s Reply to PIs Opp to Defs Mot Sumrn J 2
”J Def s Reply to Pls Opposition to Def s Mot Sumin I Exh A
Arvldatm e! a! v Buchal L111, 2020 VI SUPER 48
Case No ST lflCVAth
Memorandum Opinion» March 24, 2020
Page 8 of 13
the possibility that the Arvidsons and their counsel would see a certificate of dissolution the following
week Further because Buchar was the only individual empowered by the Operating Agreement to
initiate and complete a dissolution the Arvidsons had even more reason to expect a response from
Buchai s counsel regarding dissolution because they could not execute the dissolution themselves
{[21 Second the email chain does nothing to bolster Buchai s claim that the Arvidsons lack damages
or an ability to prove damages or that, with an incomplete dissolution the Arvidsons’ financial interest
remains viable
1122 Third and more important to the determination of this motion the email chain fails to Show the
absence of a genuine issue of material fact regarding the existence of the types of harm the Arvidsons
complain ot in their First Amended Complaint In his Reply, Buchar posits that because V l
Chiropractic was never dissolved ‘plaintiffs‘ financial interest remain[ed] viable ‘5 However, the email
fails to simultaneously submit new evidence proving a lack of harm In order to respond to the Arvidsons
allegations in their First Amended Complaint addressing harm the email and Buchar’s Reply needed to
show the Arvidsons did no! incur an injury, loss, or detriment It also needed to show ifor how the
plaintiffs financial interest remain[ed] viable due to Buchar 5 failure to dissolve V l Chiropractic
Instead, the email fails to respond to the Arvidsons‘ new allegations addressing harm and merely
reiterates the argument he made in his Motion for Summary Judgment Further the parties still dispute
the percentages ofV I Chiiopractic owned by the respective parties
1123 As the movant, Buchar bore the burden ofproving the absence ofa genuine issue of material fact
regarding the Arvidsons lack of harin due to V I Chiropractie’s incomplete dissolution When it became
evident that Plaintiffs would not have suffered harm m the way they originally alleged the Arvidsons
responded to Buehar 5 Motion for Summary Judgment by amending their Complaint to contend that harm
flowed from an incomplete LLC dissolution Having done so the burden shified back to Buchar,’6 who
instead of demonstrating the Arvidsons lack of harm regurgitates the same argument he made in his
initial motion and relies on an email that fails to show how Buchar’s failure to dissolve V I Chiropractic
led to an absence of harm to the Arvidsons under the theory advanced in their Original Complaint, much
less that oftheir First Amended Complaint Since Buchal failed to Show how the LLC s continued
3 Id 2
‘6 The allegations efharm to which Buchar needed to respond in his Reply were (1) reducing the price the
Arvidsons could demand for their interest in the Company (2) benefit[ing] himself to the detrlment ofthc
Arvidsons minority owners of the Company [3) preventlng the Arvidsons [from selling] their membership
interests in the Company to a third party on the open market as an alternative to selling to Buchar [therein]
appropriatenng] that opportunity for himself [and placing them in an un]reasonable position to sell their interests
(4) appropriate[ing] the Arvidsons opportunity for selling the Company to him by unilaterally indicating that he
would dissolve the LLC and (5) fail[ing] to cause the Company to issue K ls First Am Coinpl W 27 30 31
32 and 34
Alvidson at a! v Buchm 2111/ 2020 VI SUPER 48
Case No ST lfrCV~410
Mcmoiandum Opinion, March 24, 2020
Page 9 of 13
existence resulted in the Arvidsons‘ financial interests remain[ing] viable," Buchar failed to meet his
summary judgment burden
The V I Chiropractic Operating Agreement does not preclude all liability for Buchar in his
capacity as Manager of V l Chiropractic
W4 Second, Buchar’s argument asserts that provisions in the Operating Agreement prevent his being
held liable for acts he committed as Manager In his Motion, Buchar points specifically to Articles 6 l,
10 14 1 l4 6 15 l, and 15 2, to Show the managerial authority the Agreement giants to Buchar as
Manager ofVl Chiropractic, Articles 17, 18 l 18 2 and 18 3 to show Bucliar possessed exclusive
authority to initiate and finalize V l Chiropractic s dissolution and Articles 15 3 and 15 4 to show the
Agreement provrdes that Buchar is to be indemnified in instances where he incurred liability for acts
completed in his capacity as Manager ofV I Chiropractic ’7 In response, the Arvidsons argue that
provisions in the Agreement do not protect Buchar from liability when he commits acts “in bad faith ’ 53
Buchar replies that [P]laintiffs argue, without any factual or legal support, that [D]efendant s conduct
was performed ‘in bad faith’ ’° and that Buchar acted beyond the scope of his fiduciary duties [when]
handling business operations [Without] point[ing] to a single instance or example to support their
desire 5“
1i25 When interpreting a contract, the Court s task is not to reveal the subjective intentions of the
parties but what their words would mean in the mouth ofa normal speaker of English using them in the
ciicumstances in which they were used 5‘ In these instances the ‘ goal is to ascertain the intent ofthe
parties and give it effect [because] [t]hc cardinal principle of contract interpretation is that the intention of
the parties must prevail unless it is inconsistent with some established rule of law 52 The Court “will not
rcwute the contract or give it a construction that conflicts with the plain ordinary[,] and accepted
meaning of the words used “3
1126 The Agreement s provisions confer upon Buchar the authority to manage and operate V I
Chiropractic and to execute its dissolution While Articles Seventeen and Eighteen, the clauses
specifically addressing dissolution bestow upon Buchar, and Buchar alone the authority to initiate and
complete the dissolution process the Arvidsons’ claim is tor a breach of fiduciary duty Although this
particular breach of fiduciary duty claim arises from facts centering on an initiated but incomplete LLC
7Def s Mot Summ J 39 43
‘3 Pls Opp m Def s Mot Sllmm J 8 9
;:1[::1ef sReply to Pls Opp to Def sMot Summ I 3
:‘ Phillip v Monk Monsanto 56 VI 612 625 (VI 2017)
“‘ {fig/IMMEV Fireman : [nSltlflVlL‘L §uviccr 1m v CIGNA, 693 A 2d 1330 1339 (Pa Super Ct 1997)
Aiwdazm e: a! v Buchur 21 a] 2020 VI SUPER 48
Case No ST ioevaio
Memorandum Opinion March 24 2020
Page 10 of 13
dissolution Buchar’s alleged liability must arise from acts that contravene the fiduciary duty Buchar owes
to the Arvidsons and the liability that flows from those alleged contraventions Therefore out of the
laundry list of provisions to which Buchar points in his Motion for Summary Judgment the Court will
read the Agreement 5 indemnity provisions in tandem with the Agreement s dissolution provisions
1|Z7 Clause 15 3 provides
15 3 No Liability Neither the Manager, nor any employee, or any
agent ofthe Manger [sic], (including any shareholder, officer director or
manager ofa successor manger [sic] that is not an individual) will be
liable, responsible or accountable in damages or otherwise to the
Company or any Member for any action taken or failure to act on
behalf of the Company within the scope of the authority conferred on the
Manager by this Agreement or by law unless the action or omission was
performed or omitted fraudulently, in bad faith, or constituted gross
negligence (‘4
And Clause 15 4 indicates, in pan
15 4 Indemnification and Hold Harmless The Company will
indemnify and hold harmless the Manager (and its shareholders,
officers, direetois, employees, and agents, if any) and Dr William
Buchar, from and against any loss, expense damage, or injury
suffered or sustained by them by reason of any acts omissions, or
alleged acts or omissions arising out of the Manager’s or Dr William
L Buchar’s activities on behall of the Company This includes but is
not limited to any judgment award settlemenl, reasonable attomeys’
fees, and other e0sts or expenses incurred in connection with the defense
of any actual or threatened action, proceeding or claim, if the acts
omissions or alleged acts or omissions on which the actual or threatened
action, proceeding[,] or claim is based were for a purpose reasonably
believed to be in the best interests of the Company and were not
performed or omitted fraudulently in bad faith or as a result of gross
negligence by the party and were not in violation of the Manager’s
fiduciary obligation to the Company Any indemnification will only
be for the assets ofthe Company D
The language in these clauses is clear Indemnification will not be afforded under the Agreement when
indemnification arises from acts or omissions executed ‘ in bad faith
we Article 17 states
The Manager, may initiate a dissolution of the Company in writing in
which case the affairs of the Company shall by wound up as soon as
is reasonably possible and all remaining aSsets divided as provided for
by this Agreement and other applicable provisions ofthe law lfthe
Manager intends to initiate the dissolution of the Company the Manager
6* VI Chiropractic Operating Agreement Clause 15 3 (emphasis added)
‘” VI Chiropractic Operating Agreement Clausc 15 A [emphasis added)
Arvidmn 2/ a! v 311L111” er a! 2020 VI SUPLR 48
Case No ST l(rCV~410
Memorandum Opinion Match 24 2020
Page 11 of [3
shall first so notify the Members and the Members shall have the right,
by written notice to the Manager within 10 days to invoke their right of
first negotiation hereunder to purchase the business If the Members
invoke such right the Manager and Members shall enter into good faith
exclusive negotiations for a period of up to 30 days thereafter for the sale
of the Manager s Interest to Members on mutually acceptable terms and
conditions The Manager shall not dissolve the Company during such
negotiation period If an agreement is not reached, the Manager may
continue with the dissolution of the Company Except as set forth in an
unalterable part of the Act, no Member may initiate dissolution of the
Company except if the Manager is deceased or legally
incapacitated 66
Title l3 ofthe Virgin Islands Code §l801 sets out that a limited liability company is dissolved, and its
business must be wound up upon the occurrence of any ofthe following events (1) an event specified in
the operating agreement “7
fil29 Buchai argues that no genuine issue of material fact exists with regard to whether Buchar
incurred liability due to his actions stemming from his incomplete dissolution ofV I Chiropractic by
pointing to provisions in the Agreement that purportedly grant Buchar exclusive authority over V I
Chiropractie’s management operation and dissolution However the dissolution provision to which
Buchar points states that when Buchar initiates the dissolution process ‘ the affairs ofthe Company shall
be wound up at mun as IS rcaranablyporrlble " In their Opposition the Arvidsons contend that
Buchar‘s ability to be indemnified by the LLC only exists as long as he has not committed the
complained of acts or omissions “in bad faith ‘ Further, the Arvidsons make new allegations in their First
Amended Complaint showing that a genuine issue of material fact exists as to whether Buchar did handle
the V I Chiropractic dissolution process ‘ in bad faith However when responding to the Arvidsons
counterarguments, Buehar fails to present new law, new evidence or even new allegations He only
repeats the Arvidsons’ arguments without explaining how no genuine issue of material tact exists
regarding whether Buchar s initiating an incomplete LLC dissolution fails to amount to an act or omission
pcrtormetl in bad faith in the context of the Agreement s language in Article 17 and the Virgin Islands
LLC Act 5 language in 13 V I C § 1801 By failing to point to evidence supporting his arguments
Buchar fails to meet his summary judgment burden with regard to this line of argument
Title 13 V I C § 1303 does not prevent Buchar from incurring liability for breaching a fiduciary
duty he owes to members within his own LLC
5" V I Chiiopraetie Operating Agreement Anicle 17 (emphasis added)
6713 VIC § 1801(1)
Alvidson e! a! v Bitthur at a] 2020 VI SUPER 48
Case No ST 1&CV~410
Memorandum Opinion March 24 2020
Page 12 of 13
1130 In his Motion, Buchai states that, as Manager of V I Chiropractic, he is endowed with specific
authorities and powers to conduct its business and posits that acts he commits in his managerial capacity
do not open him up to liability under the Virgin Islands Code To give this assertion and his Motion a
patina oflegitimacy, Bueliar quotes 3 V I C § 1303 in its entirety” and, in his Reply invokes Sullivan 1/
Sabharwal,‘q which applies the same concept as 13 VIC § 1303 7“ His reliance is misplaced
1131 Section 1303 falls under Chapter Fifteen Subchapter III of the Virgin Islands LLC Act a
subchapter which is entitled Relations of Members and Managers to Persons Dealing with [the] Limited
Liability Company ’ Subehapter III contains the statutes that govern instances in which members and
managers interact and incur liability to actors who are neither members nor managers of the same LLC 7'
Since it controls relations that LLC members and managers have with those outside of the LLC,
Subchapter 111 s precepts do not apply here
1132 In contrast, Subchaptcr IV of Chapter Fifteen is entitled “Relations of Members to Each Other
and to [the] Limited Liability Company " Subchapter IV embodies the statutes that apply in situations
and disputes centering on the relatmm between and among members and managers of the tame LLC,
whether liability incurring or not 7’ Specifically, I} V I C § 1409 sets out the standards with which an
LLC member and an LLC manager must abide when performing their duties with regard to the LLC, and
takes care to establish that the duty ofloyalty, duty of care, and obligation of good faith and fair dealing
apply in LLC contexts When read with 13 V I C § 1410 13 V I C § 1409 delineates the causes of
action that may be brought by members and managers of LLCs against each other when one bieaches one
of the statute s named fiduciary duties
(’3 Mot Summ J 44 45
5" Case No 2016 21 2018 WL 5315198 (D VI Oct 26 2013) (finding that an LLC managing member could not
be held liable to the plaintiffin a personal injury negligence action due to principles sounding in personal injury
rather than LLC governance)
7" Def 5 Reply to Pls Opp to Def s Mot summ J 4
"59213 v i c § 1301 (establishing the principles ofagency that are to apply when members or managers while
eanying on in the ordinary course the company s business bind the LLC sign an instrument in the LLC s name
or sign and deliver an instrument transferring or affecting the LLC s interest in real property)' 13 VIC § 1302
(establishing that the LLC is liable for a loss or injury caused to a person or for a penalty incurred, as a result Ufa
wrongful act or omission or othei actionable conduct Ufa member 01 manager acting in the ordinary course of
business) and 13 V I C § 1303 (establishing that when the LLC incurs debts obligations or liabilities neither the
member nor the manager is personally responsible for those debts obligations or liabilities unless a member has so
specified he will take on the LLC s debt obligation or liability in a provision in the articles oforganizzition and has
consented in wiiting) These sections ofthe Virgin Islands LLC Act affect relations LLC members and managers
have with those outside ofthe LLC ofwhieh they are part
77 See 13 VIC §§ 1401 1411 (establishing the law that applies for LLC member contributions members
ieimburscment and remuneration from the LLC LLC management distributions members right to information
standards of conduct governing members and managers causes ofaction members may bring and the continuation
ofthe LLC after a specified teim) These sections ofthe Virgin Islands LLC Act affect relations LLC members and
managers have with other members and managers of the same LLC and the LLC itself
Aivltirnn e! a! v Elisha! at a! 2020 VI SUPER 48
Case No ST 16 CVAHO
Memorandum Opinion March 24 2020
Page 13 of 13
1133 Finally Sullivan v S‘abharwal ‘ addressed a factual scenario in which the managing member of
an LLC was sued by an individual who was not another member or manager ofthe same LLC for
personal injuries resulting from a fall the plaintiff had on the LLC s villa rental property 7‘ Its precepts do
not apply to the present dispute because the Arvidsons and Buchar are members of the same LLC and
their dispute does not sound in negligence and personal injury jurispmdenee Accordingly, Subehapter IV
ofthe Virgin Islands LLC Act controls Failing to Show how 13 V I C § 1303 and S'i/llivan demonstrate
the lack of a genuine issue of material fact with regard to the AiVidsons’ breach of fiduciary duty claim
Buchar fails to meet his summary judgment burden with regard to this argument as well
Conclusion
134 Accordingly because Buchar failed to show that no genuine issue ofmateiial fact exists
concerning the hann element ofthe Arvidsons breach of fiduciary duty claim, because the Operating
Agreement does not preclude all liability that Buchar may incur when acting in his capacity as Manager
of V l Chiropractic and because the Vii gin Islands Code does not prevent Buchar from incurring liability
in his capacity as Manager ofV I Chiropractic Buchar’s motion for partial summary judgment with
regard to the Arvidsons breach of fiduciary duty claim is denied An Order consistent with this opinion
shall issue
Dated March 28 2020
HON MICHAEL C DUNgTON
ATTEST Tamara Charles JUDGE OF THE SUPERIOR COURT
C1 the hurt / / OF THE VIRGIN ISLANDS
b. V
’ 1QY 0‘
A» I415
Lori B lyrics Tysln A
Court ' lerk Supervisor '/
v
73 Case No 2016 21 2018 WL 5315198 (D VI Oct 26 2018)
7‘ Sullivan 2018 WL at ‘1
SUPERIOR COURT OF THE VIRGIN ISLANDS
DIVISION OF ST THOMAS AND ST JOHN
DR TYLUR ARVIDSON and DR TYGUE ARVIDSON )
)CASE NO ST 16 CV 410
Plaintiffs, )
)
)
V )
)
DR WILLIAM BUCHAR and V I CHIROPRACTIC LLC )
)
Detendants )
_——_)
ORDER
The Court having issued a Memorandum Opinion on this date; consistent therewith it is
ORDERED that the Detendants Motion for Summary Judgment is DENIED and it is
ORDERED that copies of this Order and of the accompanying Memorandum Opinion shall
be directed to counsel of record
DATED Maich 28 2020
, 7*\E E T
MICHAEL C DUNSTON
JUDGE OF THE SUPERIOR COURT
T T Tamara Charles OF THE VIRGIN ISLANDS
C ‘Q the c. n / /
b A.“ , “I”
“HAL! 1141 At
Donna I Donova
Cou lerk Super sor , / /wx7