Mooney, et al. v. Diversified Business Communications, et al. (Lawyers Weekly No. 09-014-18)

COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT. 1684CV03726-BLS2 1784CV03423-BLS2 ____________________ JOHN J. MOONEY, MORGAN WHEELOCK, JOHN SQUIRE, and MACGREGOR INVESTMENTS CORPORATION v. DIVERSIFIED BUSINESS COMMUNICATIONS; DBC PRI-MED, LLC; THEODORE WIRTH; KATHY WILLING; and OAKLEY DYER ____________________ MEMORANDUM AND ORDER ALLOWING CERTAIN DEFENDANTS’ MOTION TO COMPEL APPRAISAL The four plaintiffs were minority owners of defendant DBC Pri-Med LLC, which is a Delaware limited liability company. Defendant Diversified Business Communications is the majority member of Pri-Med. In January 2017 Pri-Med called all of Plaintiffs’ membership shares, as expressly permitted in § 13.1(a) of Pri-Med’s operating agreement. This LLC Agreement provided for an appraisal firm to be by the parties to determine the value of any called (or put) shares. That appraisal process has not yet begun because Plaintiffs have refused to agree upon an appraisal firm. Pri-Med and Diversified have moved for specific performance of the third-party appraisal provision. Plaintiffs John Mooney and Morgan Wheelock filed a written response stating that they “have no objection to an independent appraisal,” but asking the Court to establish a new process under which a special master would select the appraiser and schedule (and perhaps conduct) evidentiary hearings before the appraiser. Plaintiffs John Squire and Macgregor Investments Corporation filed a written response joining in the arguments by the Mooney Plaintiffs. At oral argument, however, the Squire Plaintiffs suddenly reversed course and asserted for the first time that no appraisal should be conducted, either ever or for now. Defendants have the better of these arguments. Under Delaware law Defendants are entitled to enforce the contractual appraisal process, subject only to limited judicial review of the appraiser’s final decision. It would be inappropriate for the Court to arrogate to a special master the power to select the appraisal firm or to schedule or conduct hearings. The Court will ALLOW the motion to compel. – 2 – The Court must apply Delaware law in deciding this motion. The parties agreed in § 15.5 of the LLC Agreement that this contract “shall be construed and enforced in accordance with the laws … of the State of Delaware.” The provision is enforceable. See Hodas v. Morin, 442 Mass. 544, 549–550 (2004) (“As a rule, ‘[w]here the parties have expressed a specific intent as to the governing law, Massachusetts courts will uphold the parties’ choice as long as the result is not contrary to public policy.’ ”) (quoting Steranko v. Inforex, Inc., 5 Mass. App. Ct. 253, 260 (1977). The appraisal provision of the LLC Agreement that Pri-Med and Diversified seek to enforce states as follows: In the event that the Company [i.e., DBC Pri-Med LLC] and the selling Employee Member fail to agree on a price for the selling Employee Member’s […]

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