Microcomputer Engineering Services LLC v. Michael Meer, Barry R. Lee
Published: Dec. 17, 2002 | Result Date: Jul. 10, 2002 | Filing Date: Jan. 1, 1900 |Case number: 12000305456 Arbitration – $0
Facts
In August 1995, Articles of Organization were filed for MES, a limited liability company in which Barry Lee and
Michael Meer each held a 50 percent interest. Concurrent with filing the Articles, Lee and Meer each executed
an Operating Agreement governing operations of MES, and a Buy-Sell Agreement governing transfers of
ownership in MES. The Buy-Sell Agreement provided for the purchase price for the departing memberÆs
interest to be established by the managers as of the date of the event triggering the sale. Additionally, it
provided for the transferee of the interest to be substituted in place of the departing member on any debt
guaranteed by the departing member, and to indemnify the departing member if the debt could not be assigned.
It also provided for an award of attorneys fee to the prevailing party in a dispute about its terms or enforcement.
In early September 1999, Meer orally advised Lee that Meer would resign at yearÆs end. On Nov. 19, 1999,
Meer wrote Lee rejecting LeeÆs request for a controlling share, and instead offering to sell MeerÆs interest to
Lee in exchange for $3,000 plus certain property and indemnification against the firmÆs debt. Lee responded
with his own letter of Nov. 20, 1999, rejecting MeerÆs Nov. 19, proposal, citing Sections 7 and 8 of the Buy-
Sell Agreement.
Meer left the firm as of Dec. 31, 1999. Dan Ryan, a CPA hired by Lee, drafted a new Buyout Agreement,
which neither Lee nor Meer signed, citing their dissatisfaction with particular terms of the Agreement. In
connection with this, Ryan prepared his Fair Market Valuation of MES as of Dec. 31, 1999. Ryan valued
MeerÆs interest in the firm at $21,558 and LeeÆs at $21,737. The parties agreed to this valuation. There is no
dispute that Meer paid $5,000 on the capital account.
MES commenced this action as the plaintiff against Meer and Lee seeking to recover $21,558 from Meer for
breach of the MembersÆ Agreement and alleging that MeerÆs failure to pay forced MES to dissolve with a
negative value of $107,000.
The defendant Lee claimed that MES was forced to close its doors by MeerÆs failure to pay the $16,000
balance needed to zero out of his negative capital account. Lee sought an order requiring Meer to repay
personal expenses, reimburse his negative capital account in the amount of at least $38,275, to assume half of
MESÆ bank debts, and to pay half of MESÆ expenses incurred between Dec. 31, 1999 and Oct. 1, 2000.
Meer offered uncontroverted evidence that between June 2001 and January 2002 he
spent $16,589 in personal funds to pay debts owed by MES as principal obligor (Meer was a
guarantor of these debts). Related cross-complaints were filed.
Damages
MES debts (approximately $29,340), and Meer's attorney's fees and costs ($50,314).
Other Information
The partiesÆ liabilities are governed by the original Buy Sell Agreement which both parties signed and which remained in effect. All other agreements are not binding. MeerÆs interest in MES was valued as of Dec. 31, 1999, triggered by his resignation. Lee was required to take over all of MeerÆs share of the company debt and expenditures after Dec. 31, 1999, and for its negative equity as of September 2000. Meer was obliged under the Buy-Sell agreement to pay the balance due to replenish his capital account as of December 1999, that is $16,558. Meer is entitled to an offset for the $15,589 of MES debts he paid after leaving the firm. Lee is obliged under the Buy-Sell Agreement to endeavor to have Meer released from all liability for MESÆs obligations and to indemnify Meer against such liability to the extent Lee is unable to have Meer released. Meer was awarded attorney fees in the amount of $50,314.
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