Facts

Three Bell Capital LLC, formed in 2011 by Jonathan Porter, provides wealth management services to primarily tech professionals and entrepreneurial communities. Sean Snyder joined Three Bell Capital in 2012, and became a member of the LLC, before relations soured between him and Porter, along with other members of the company.

Snyder eventually departed in 2015 to form a new wealth management company, and described his departure at the time as "voluntary." At that time Three Bell Capital's remaining members exercised an optional buy-out of Snyder's interest in Three Bell Capital. Over the latter action, Snyder filed suit, which was sent to arbitration, against Three Bell and its individual members.

Snyder contended that Three Bell and its members improperly exercised the buy-out because, under the operating agreement's terms, Snyder was not an employee as defined under the operating agreement, and therefore his departure was not a triggering event allowing the option buy-out. He further contended that the amount of money paid for his interest, $12,768.60, was much lower than the amount he deems appropriate, $1.2 million. In the alternative, Snyder contended that he remains a member of the company and is entitled to distributions from the time of his departure, an amount totaling $352,000.

Plaintiff asserted causes of action for, inter alia, breach of the LLC's operating agreement, conversion, fraud, and unjust enrichment.

Porter and the other LLC's members contended that Snyder qualified as an employee under the terms of the operating agreement because he was a full-time working and that its exercise of the buy-out was proper.

Result

The arbitrator found the LLC's buy-out appropriate, in light of the nature of Snyder's departure and the terms of the operating agreement. The arbitrator also found that though Snyder's conduct during the dispute did not rise to the level of extortion it did constitute conduct that barred his recovery of any money based on the defense of unclean hands. Parties were ordered to split the costs of the arbitration.