McGee v. Best

IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

April 4, 2002 Session

PATRICK MCGEE v. TIMOTHY BEST, ET AL.

A Direct Appeal from the Chancery Court for Davidson County

No. 99-3-1 The Honorable Irvin H. Kilcrease, Jr., Chancellor

No. M2001-01365-COA-R3-CV - Filed June 18, 2002

This case involves the termination of membership and employment of a member of an LLC.

The terminated member and employee filed suit against the LLC and the other members thereof

alleging breach of contract, breach of covenant of good faith and fair dealing, breach of fiduciary

duty, civil conspiracy, unfair competition, fraud, and misrepresentation. The trial court granted

defendants’ motion for judgment on the pleadings as to all claims except the claim for breach of

contract and breach of the covenant of good faith and fair dealing. Thereafter, the trial court granted

defendants’ motion for summary judgment on the remaining two claims. Plaintiff appeals. We

affirm, modify, reverse in part, and remand.

Tenn. R. Civ. P. 3; Appeal as of Right; Judgment of the Chancery Court Affirmed,

Modified, Reversed in Part, and Remanded

W. FRANK CRAWFORD , P.J., W.S., delivered the opinion of the court, in which ALAN E. HIGHERS,

J. and DAVID R. FARMER , J., joined.

G. Kline Preston, IV, Nashville for Appellant, Patrick McGee

Tim K. Garrett, Nashville, For Appellees, Timothy Best, Robert Frank, David Ingram, Ingram

Entertainment, Inc., and McGee, Best, Frank & Ingram LLC

OPINION

On January 4, 1999, the plaintiff, Patrick McGee (hereinafter “McGee”), filed a “Complaint

and Application for Extraordinary Relief” in the Chancery Court for Davidson County, Tennessee

against the defendants, Timothy Best (hereinafter “Best”), Robert Frank (hereinafter “Frank”), David

Ingram (hereinafter “Ingram”), Ingram Entertainment, Inc. (hereinafter “IEI”) and McGee, Best,

Frank and Ingram LLC (hereinafter “MBF&I”), alleging a violation of the LLC Operating Agreement

and the Tennessee Limited Liability Act; breach of contract; breach of fiduciary duty; and breach

of the covenant of good faith and fair dealing.

McGee avers in the complaint that in January of 1997, he, along with Frank, Best and K. K.

Wiseman, formed the Nashville, Tennessee advertising firm of McGee, Best, Frank & Wiseman, and

he owned more than a 50% interest. The complaint states that McGee had been the president of

another advertising firm prior to the formation of McGee, Best, Frank and Wiseman. In May of

1997, the members of McGee, Best, Frank & Wiseman converted the firm into an LLC, and IEI

joined as a member with David Ingram, acting as the representative of IEI and as an officer of the

LLC. After the formation of the LLC, the ownership interests were as follows: McGee owned a 33

1/3% membership share; IEI owned a 33 1/3% membership share and Frank and Best each owned

a 16 2/3% membership share. The LLC name was then changed to McGee, Best, Frank & Ingram,

LLC.

The complaint avers that the members executed an “Operating Agreement” on April 22,

1997, which provides in pertinent part:

1.1 Formation. The Members hereby form a limited liability

company pursuant to the Tennessee Limited Liability

Company Act (the “Act”).

1.2 Name. The name of the limited liability company shall be

McGee, Best, Frank & Ingram LLC (the “Company”).

* * *

5.4 Termination of Employment for Cause. In the event any

Member employed by the LLC commits an act described in

the definition of “Cause” in Section 10.4(f), such Member’s

employment by the LLC may be terminated by a vote of the

other Members holding at least 70% of the remaining

Membership Interests.

* * *

5.7 No Exclusive Duty. Except as otherwise specifically

provided below, each officer or Member may have other

business interests and may engage in other activities in

addition to those relating to the LLC. Neither the LLC nor

any Member shall have any right to share or participate in

such other investments or activities of any other Member

based on the fact that each are members of the LLC. No

Member shall incur any liability to any other Member or the

LLC as a result of engaging in any other business or venture.

Notwithstanding the foregoing, the Members shall not have

other business interests and may not engage in activities

-2-

which compete in any respect, directly or indirectly, with the

business of the Company or which would represent a conflict

of interest; provided, however, that Ingram Entertainment Inc.

may continue to own, operate and manage Ingram Design

Group, Inc., its in-house ad agency, and/or any successors to

Ingram Design Group Inc.

6.4 Action Without a Meeting. Action required or permitted to

be taken at a meeting of the Members may be taken without

a meeting if the action is evidenced by one or more written

consents describing the action taken, signed by the Members

holding a majority of the Membership voting power entitled

to vote (or any greater proportion required by this Agreement,

the Articles, or the Act) and delivered to the Secretary of the

Company for filing with the Company records.

* * *

10.4 Option to Purchase Upon Termination of Employment. In

the event that the employment of any Member who is a full-

time employee of the Company is terminated, the Company

shall have the option to purchase the Membership Interest of

the terminated Member for the Formula Value (as defined in

(e) below) of the terminated Member’s Membership Interest

(as shown on the books of the Company as at the end of the

month in which the event occurs which gives rise to the

Company’s option), all in accordance with the following

terms and conditions:

* * *

(e) Formula Value. The “Formula Value” of a

Member’s Membership Interest shall mean the greater

of (i) or (ii) below; provided, however, that in the

event the Member’s employment is terminated for

“Cause” (as hereinafter defined), the “Formula Value”

of such Member’s Membership Interest shall mean the

lesser of (i) or (ii) below:

(i) the amount of the capital account

attributable to that Membership

Interest; or

-3-

(ii) three times the average of the

amount of income allocated or

allocable to that Membership Interest

(under Section 4.1 (a)) during each of

the three preceding 12 month periods

(or, if less than 36 months, such

shorter period during which such

Member had such Membership

Interest).

(f) Definition of Cause. Only for purposes of this

Section 10.4 and Section 5.4 hereof, “Cause” shall

mean any act that is materially inimical to the best

interests of the Company and that constitutes on the

part of the Member personal dishonesty, willful

misconduct, breach of fiduciary duty involving

personal profit, intentional failure to perform stated

duties, or willful violation of any law, governmental

rule or regulation.

* * *

12.5 Binding Effect. Except as herein otherwise provided to the

contrary, this Agreement shall be binding upon, and inure to

the benefit of, the Members and their respective heirs,

executors, administrators, successors, transferees and assigns.

McGee further alleges in the complaint that Tri-Vision International LTD (hereinafter “Tri-

Vision”) is a client of MBF&I and is the exclusive licensee of the “v-chip”, which is an electronic

device designed to permit parents to control their children’s access to certain types of television

programming based on rating codes. The complaint states that IEI is the primary distributor of the

v-chip for Tri-Vision in the United States and that MBF&I has planned, produced and placed

advertising for Tri-Vision in various markets throughout the United States. McGee avers that Tri-

Vision is indebted to MBF&I in the amount of approximately $553,000 for the advertising services

and IEI is indebted to Tri-Vision in the amount of $750,000 for the delivery of v-chip products that

IEI will distribute. The complaint alleges that “IEI’s failure to pay that obligation has hampered Tri-

Vision’s ability to pay the monies it owes to the LLC.”

McGee further avers that IEI has directed MBF&I to reserve the entire Tri-Vision

indebtedness of $553,000 as a bad debt on the firm’s financial statements and that he was not

advised of this decision until after it was made. The complaint further alleges that the accrual of the

Tri-Vision account as a bad debt has created financial problems and states:

-4-

18. The conduct of IEI and Ingram in artificially creating and then

attempting to benefit from the LLC’s financial problem violates their

fiduciary duties owed to McGee and to the LLC. Additionally, IEI

has a conflict of interest and has violated member standards under

TCA § 48-240-102. Ingram and IEI have done so by failing to act in

good faith, prudently, and in the best interests of the LLC; they have

directed that the LLC accrue as a bad debt the monies owed by Tri-

Vision, when IEI has contributed to, if it has not actually caused, Tri-

Vision’s inability to pay the LLC by IEI’s own failure to pay Tri-

Vision the monies owed for the distribution of Tri-Vision’s v-chip

products.

The complaint further alleges that on December 31, 1998, Best, Frank and IEI executed a

document entitled “Action Taken on Written Consent of the Members of McGee, Best, Frank and

Ingram LLC,” which provides in pertinent part:

The undersigned members (the”Members”), being the holders

of 66 2/3% of the membership interests, and 100% of the membership

interests other than those held by Patrick McGee, of McGee, Best,

Frank & Ingram LLC, a Tennessee limited liability company (the

“Company”), do, as of this 31st day of December, 1998, hereby

consent to and take the following actions, as evidenced by their

signatures below:

WHEREAS, Patrick McGee, the Chief Manager and a

member of the Company (“McGee”), has committed acts described

within the definition of “Cause,” as set forth in Section 10.4(f) of the

Company’s Operating Agreement dated April 22, 1997 (the

“Operating Agreement”); and

WHEREAS, as a result of such acts, the Members believe it

is advisable and in the best interest of the Company to (i) remove

McGee from the office of Chief Manger of the Company, pursuant to

Section 5.13 of the Operating Agreement; (ii) terminate McGee’s

employment with the Company, pursuant to Section 5.4 of the

Operating Agreement; and (iii) purchase McGee’s membership

interest, pursuant to Section 10.4 of the Operating Agreement.

NOW, THEREFORE, BE IT RESOLVED, that the Members

hereby remove McGee from the office of Chief Manager of the

Company pursuant to Section 5.13 of the Operating Agreement, and

appoint Robert M. Frank to serve in his stead, until Robert M. Frank’s

successor is duly appointed by the company’s members;

-5-

RESOLVED FURTHER, that the Members hereby terminate

McGee’s employment with the Company pursuant to Section 5.4 of

the Operating Agreement;

RESOLVED FURTHER, that the Members hereby approve

the Company’s exercise of its option to purchase McGee’s 33 1/3%

membership interest in the Company, pursuant to the terms and

conditions of Section 10.4 of the Operating Agreement, and authorize

the Company’s officers, and each of them, to cause the Company to

pay McGee a purchase price for such interest equal to the Formula

Value (for Cause), as such term is defined in Section 10.4(e) of the

Operating Agreement, and to execute and deliver such documents and

take such actions, on behalf of the Company, as any of them may

deem appropriate to consummate the purchase of McGee’s

membership interest on the terms and conditions set forth in Section

10.4 of the Operating Agreement; and

RESOLVED FURTHER, that the Members hereby (i)

authorize the Company’s officers, and each of them, to execute,

deliver and/or file all such other documents, and to take all such other

actions, as such officers may deem necessary to accomplish the

foregoing; and (ii) ratify and approve all such actions previously

taken by the Members or the Company’s officers consistent with the

foregoing resolutions.

The complaint further avers that Best, Frank and IEI also sent McGee a letter dated December

31, 1998 which provides in pertinent part:

This letter is to advise you that, effective immediately, your

employment with McGee, Best, Frank & Ingram LLC (“the

Company”) is hereby terminated for cause as set forth in Section 5.4

of the Operating Agreement of the Company. You are hereby

relieved of any and all duties, rights and responsibilities as an

employee of the Company. This action also serves to relieve you of

your duties, rights and responsibilities as Chief Manager of the

Company. You are not to report to work on Monday, January 4 or at

any time thereafter.

As the attached document reflects, this action has been taken by vote

of the undersigned members of the Company, who represent all of the

remaining Membership Interests. Your termination is the result of

your actions which have been materially inimical to the best interests

of the Company and which constitute willful misconduct and

-6-

intentional failure to perform stated duties. More specifically, despite

instructions to the contrary and despite the requirements of the

Operating Agreement, you have taken actions without necessary

approval of other Members of the Company, in violation of Section

5.3. Your willful misconduct and intentional failure to perform stated

duties, for whatever reason, has undermined your ability to remain as

Chief Manager or as an employee of the Company.

On behalf of the Company, we also inform you that, in accordance

with Section 10.4 of the Operating Agreement, the Company hereby

exercises its option to purchase your Membership Interest. The

amount for which your Membership Interest will be purchased will

be determined in accordance with the Formula Value set forth in

Section 10.4(e) of the Operating Agreement. In accordance with

Section 10.4(d) of the Operating Agreement, we anticipate closing the

purchase of your Membership Interest by no later than January 31,

1999. We will contact you in the near future with an exact date for

that closing and with the exact amount of the purchase price in

accordance with the Formula Value.

We also wish to remind you of your obligations under an

Employment & Non-solicitation Agreement, which you signed and

which became effective January 1, 1998 and which we consider a

very important asset of the Company. We trust that you will abide by

your word and not conduct yourself in any manner that would be in

violation of that covenant.

In sum, McGee alleges that the defendants violated the Operating Agreement, and the

Tennessee Limited Liability Act by purporting to terminate him without a meeting or the waiver of

a meeting. Furthermore, he avers that the defendants breached the agreement and their fiduciary duty

to the LLC and the covenant of good faith and fair dealing by purporting to terminate his

employment for “cause” when no cause existed and by attempting to acquire his membership

interest, without having any right to do so.

On February 4, 1999, the defendants filed an answer denying the material allegations of the

complaint and aver that in any event McGee was an employee at will by virtue of an “Employment

& Non-Solicitation Agreement,” which provides in pertinent part:

NOW, THEREFORE, in consideration of the premises and

covenants stated below, the parties agree as follows:

1. Term. This amended employment agreement is effective as of

January 01, 1998, and shall supersede any prior employment

-7-

agreements between Employee and MBF&I, written or oral, in all

respects. The new term of employment is for an indefinite term

commencing the effective date of this agreement stated immediately

above (the “Term”). This agreement shall continue indefinitely at the

will of either party unless and until terminated by either party upon no

less than 15 days notice unless for good cause in which event

termination by either party may be immediately.

* * *

6. Covenant Not To Compete. Employee agrees that for a period

of eighteen (18) months following termination of employment,

Employee shall not, directly or indirectly, in any territory or in any

manner or capacity, as agent, partner, officer, employee, sales person,

consultant, or otherwise, engage in any activity which solicits and/or

services any company which is or was ever a client or active prospect

of MBF&I termination (sic) of Employee’s employment with

MBF&I. In the event Employee violates the foregoing covenant, the

period of time shall be extended by the amount of time Employee was

in violation of same.

* * *

10. Violation of Agreement. Employee acknowledges that any

violation or threatened violation of these covenants will cause

immediately and irreparable injury to MBF&I, and that the remedies

at law for any such violation or threatened violation may be

inadequate, and that MBF&I shall, in addition to any other rights and

remedies available in law or in equity, be entitled to temporary and/or

permanent injunctive relief, and specific performance, without the

necessity of proving actual damages or posting bond. Additionally,

MBF&I shall be entitled to recover any damages it may have suffered

as a result of Employee’s breach of these covenants.

* * *

11. Miscellaneous. Employee represents that he/she is not a party

to any agreement which is in conflict with this Agreement and is free

to render the services contemplated herein. This Agreement shall be

constructed and enforced in accordance with Tennessee law, and any

action arising from this Agreement may be maintained in a court of

competent jurisdiction in Nashville, Tennessee or at MBF&I’s option,

where any breach occurs. MBF&I shall be entitled to recover its

-8-

expenses, including attorney fees, incurred as a result of any violation

of this Agreement by Employee.

The answer contains a counter-claim which was subsequently voluntarily dismissed.

Plaintiff also amended his complaint on February 25, 2000, which includes allegations of

breach of contract, breach of fiduciary duty, fraud and negligent misrepresentation. The amendment

to the complaint goes into great detail concerning the debt of IEI with Tri-Vision and the debt of Tri-

Vision to the LLC. In essence, the complaint alleges that IEI was aware of financial affairs and

conditions of the LLC and the fact that the LLC was owed a large amount of money by Tri-Vision.

McGee alleges that, without any agreement on his part, defendants reserved as a bad debt

approximately $200,000.00 which had the effect of reducing the assets on the balance sheet of the

LLC. McGee further avers that Ingram, acting on behalf of IEI, instructed the LLC to purchase

substantial media ads for the marketing of the V-Chip and that this was done by McGee on behalf

of the LLC, relying on IEI’s obligation to pay its debt to Tri-Vision. In essence, he alleges that IEI

failed to inform the LLC that it did not intend to honor its contractual obligation to Tri-Vision so that

Tri-Vision could pay the substantial amount owed the LLC. He avers that he objected to the writing

down of the Tri-Vision accounts receivable, which were in fact collectable, as later proved to be fact.

McGee states that the acts of IEI in relation to Tri-Vision matters were acts by IEI as a member of

the LLC and that the acts pursuant to Paragraphs 5.1 and 5.2 of the Operating Agreement constitute

a conflict of interest and, therefore, a breach of the provisions of Paragraph 5.7. The amendment

further avers that the acts of IEI and the other defendants constitute a breach of contract, breach of

fiduciary duty, and a breach of covenant of good faith and fair dealing, unfair competition and

conspiracy, and particularly alleges that the designation of the Tri-Vision account as a bad debt when

it was in fact collectable resulted in a loss to plaintiff. The amendment further alleges that the failure

of IEI to disclose the fact that it was not going to pay the contractual obligation operated as a fraud

on the LLC, and the LLC was induced to make media buys for the advertising program. In the

alternative, the amendment alleges that if there was not a deliberate fraud, it was at the very least a

negligent misrepresentation.

Defendants’ answer to the amended complaint admits the general averments of the complaint

concerning organization and membership of the LLC. The answer denies the allegations concerning

the Tri-Vision account and avers that the account is presently uncollectable. The remaining

allegations of the amended complaint are denied and issue is joined thereon.

On October 10, 2000, the defendants filed a motion for partial judgment on the pleadings,

stating in pertinent part:

4. Defendants submit that, based upon the pleadings already

in the record, Plaintiff cannot state (or has not stated) a claim upon

which relief can be granted with respect to the following causes of

action: breach of fiduciary duty, breach of covenant of good faith and

-9-

fair dealing, civil conspiracy, unfair competition, fraud, and negligent

misrepresentation.

After a hearing on November 3, 2000, the trial court filed its order on November 15, 2000,

granting the defendants’ motion for partial judgment on the pleadings and dismissing the plaintiff’s

following causes of action: breach of fiduciary duty; civil conspiracy; unfair competition, fraud and

misrepresentation. The trial court’s order provides in pertinent part:

IT IS, THEREFORE, ORDERED, ADJUDGED AND

DECREED that the following causes of action are dismissed and that,

as to these causes of action, Defendants’ motion is granted for the

following reasons:

1. Cause of Action for Breach of Fiduciary Duty. Plaintiff

has alleged that the Defendants breached their fiduciary duty to

Plaintiff in various ways. The Court finds that the Tennessee Limited

Liability Corporation Act (“the Tennessee LLC Act”) does not create

a fiduciary duty between members of an LLC. An LLC is a creature

of statute, and any duty which members owe must be set forth in the

statute. However, the Tennessee LLC Act does not create a fiduciary

duty between members of an LLC. Therefore, Plaintiff’s cause of

action based upon a fiduciary obligation owing to him individually

does not state a cause of action recognized under the Tennessee LLC

Act.

2. Cause of Action for Civil Conspiracy. In the Amended

Complaint, Plaintiff makes mention in only one phrase of an

allegation of a civil conspiracy. Amended Company at ¶ 85. Plaintiff

apparently bases his cause of action for civil conspiracy upon that

allegation alone because the Court is unable to find in the Amended

Complaint other facts or allegations upon which such cause of action

is based. The Court finds that the Amended Complaint is not

sufficient in this regard because it does not set forth the facts upon

which the cause of action for civil conspiracy is based and fails to

inform Defendants of the basis for this cause of action.

3. Cause of Action for Unfair Competition. Plaintiff alleges

that the Defendants engaged in unfair competition. However, the

Court finds that the Amended Complaint is not sufficient in setting

forth this cause of action because it does not set forth the facts upon

which the cause of action is based and fails to inform Defendants of

the basis for this cause of action.

-10-

4. Causes of Action for Fraud and Misrepresentation.

Plaintiff alleges the causes of action of fraud and misrepresentation.

Plaintiff alleges that certain information was withheld from him –

either intentionally or negligently – and that this information was

material in the manner by which he conducted the affairs of the LLC.

Plaintiff does not allege that he conducted his own personal affairs in

reliance upon any such material information or that he obligated

himself personally in reliance thereon. Plaintiff does allege that he

was injured personally, see Amended Complaint at ¶ 94, but such

alleged injury appears to be derivative. To the extent that Plaintiff

relies upon a derivative injury, the Plaintiff cannot present such

causes of action in his own name because he lacks individual standing

to do so.

However, Plaintiff may be claiming that his personal injury

was his termination from employment. If so, such injury certainly is

personal and not derivative, but that claim arises out of the

employment relationship and does not create a cause of action for

fraud or misrepresentation. That is, the Plaintiff’s employment

relationship is in the nature of a contractual relationship and

Plaintiff’s allegation that such termination was wrongful does not

elevate the claim to one of fraud and/or misrepresentation.1 The

contractual employment relationship defines the duties of the parties

thereto and if allegedly breached, the cause of action lies in contract

and not in fraud and/or misrepresentation.

Defendants’ Motion for Partial Judgment on the Pleadings

with respect to the remaining causes of action which were included

in the Motion - namely the cause of action for breach of contract

under Section 5.7 of the Operating Agreement and the cause of action

for breach of the covenant of good faith and fair dealing - is denied.

All other matters are reserved.

On December 13, 2000, the plaintiff filed a motion for interlocutory appeal as to his claim

for breach of fiduciary duty and the trial court denied this motion by order filed January 24, 2001.

On February 12, 2001, defendants moved for summary judgment as to the plaintiff’s

remaining claims of breach of contract and breach of the covenant of good faith and fair dealing.

1

The trial court recognized that the nature of the employm ent relationship - whether an “at-will” relationship

or whether Plaintiff could be terminated only for “cause” - is a matter of dispute.

-11-

After a hearing on April 27, 2001, the trial court filed its “Memorandum Order” on May 7, 2001,

which provides:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

1. In ruling on a motion for summary judgment, the Court

must begin its analysis by determining whether the moving party has

satisfied its burden of showing the absence of a genuine issue of

material fact. If so, the Court then must determine whether the party

opposing the motion has come forward to show that there is a genuine

issue of material fact which would require a trial. See generally

Tenn.R.Civ.P. 56. In assessing whether a fact is material, the Court

considers the substantive law supporting the causes of action upon

which Plaintiff seeks relief. To determine whether a dispute as to a

fact is genuine, the Court determines whether a reasonable juror could

find for the Plaintiff on that fact given the entire record, but without

making any credibility determinations. In this assessment, the Court

must make all reasonable inferences in favor of the non-moving party.

2. Plaintiff is a former employee and member of Defendant

McGee, Best, Frank & Ingram LLC (“MBFI” or “the LLC”). He

alleges that Defendants breached the Operating Agreement of the

LLC when they terminated his employment and when they took

action without a meeting under Section 6.4 of the Operating

Agreement. Plaintiff’s remaining claims are as follows: (a)

Defendants wrongfully terminated his employment in violation of the

Operating Agreement, (b) Defendants took corporate action without

a meeting in violation of the Operating Agreement, (c) Defendants

engaged in certain activities which constituted a “conflict of interest”

in violation of the Operating Agreement, and (d) Defendants breached

the implied covenant of good faith and fair dealing with respect to the

Operating Agreement.

3. In January 1997, Plaintiff, along with Tim Best (“Best”),

Bobby Frank (“Frank”), and Ms. K. K. Wiseman, formed an

advertising agency known as McGee, Best, Frank & Wiseman, LLC.

In February 1997, Ms. Wiseman resigned, and, in April 1997, Ingram

Entertainment Inc. (“IEI”) joined the LLC, which became known as

MBFI.

4. Membership Interests among the four (4) members were as

follows: Plaintiff owned 33 1/3%; IEI owned 33 1/3%; Frank owned

16 2/3%; and Best owned 16 2/3%. Plaintiff was appointed Chief

-12-

Manager, with responsibility for the day-to-day operation of the

company, and Frank and David Ingram (“Ingram”) became the

Secretary and Vice-President, respectively.

5. On April 22, 1997, the members of MBFI signed an

Operating Agreement. The Operating Agreement contemplates that

the LLC’s individual members – Plaintiff, Frank and Best – would be

employees of the LLC.

6. In January 1998, Plaintiff signed an Employment & Non-

Solicitation Agreement (“the Employment Agreement”). However,

in filings before this Court, in discovery responses, and in his

deposition testimony, Plaintiff has taken the position that this

Employment Agreement is invalid and unenforceable. Without ruling

on the validity of the Employment Agreement, the Court finds that

the Plaintiff is estopped from now asserting any claim pursuant to the

Employment Agreement.

7. In the parties’ respective motion papers, there is much

discussion regarding the business relationship between IEI and Tri-

Vision International LTD (“Tri-Vision”) as a result of IEI’s

distribution of the “v-chip,” one of Tri-Vision’s products. There also

is much discussion regarding the business relationship between MBFI

and Tri-Vision as a result of MBFI’s advertising services relating to

the sale of this same product. Likewise, there is much discussion

regarding Tri-Vision’s payment history with MBFI. The Court finds

this historical discussion helpful to understanding the circumstance

which led to the Plaintiff’s termination of employment. However, the

Court does not find the facts relating to these business relationships

as material given the substantive law supporting Plaintiff’s causes of

action before the Court.

8. There is no dispute that, by December 1998, MBFI had a

significant account receivable by which Tri-Vision owed MBFI

approximately $553,000.00. On December 21, 1998, a meeting was

held among the members, at the offices of IEI, regarding MBFI’s

financial condition and its impact on the members’ working

relationships. The discussions in that meeting and soon thereafter

further complicated the working relationships among the members.

9. On December 25, 1998, in a telephone conversation with

Tom Lunn, representing IEI, Best and Frank discussed their dilemma.

In response to Lunn’s inquiry how they wanted to proceed, Best and

-13-

Frank told Lunn that they thought it best to proceed with the LLC

without Mr. McGee. On the very next day, December 26, Mr. Frank

informed Plaintiff of their decision, which action was later finalized

on December 31, in a formal consent, signed by these three members,

agreeing to take action without a meeting, and terminated the

employment of Plaintiff.

10. Plaintiff was provided an official notice, effective

December 31, 1998, that his employment was terminated.

11. On Plaintiff’s claim that the termination of his

employment was a breach of the Operating Agreement because there

was no “cause” for termination, the Court CONCLUDES that

plaintiff cannot establish such cause of action as a matter of law. In

order for Plaintiff to establish his claim, he must first show that he

could only be terminated for cause. Otherwise, his wrongful

termination claim cannot survive. In Tennessee, a contract of

employment for an indefinite term is a contract at will and can be

terminated by either party, at any time, either with or without cause.

Rose v. Tipton County Pub.Works Dep’t., 953 S.W.2d 690, 691

(Tenn. Ct. App. 1997); Bringle v. Methodist Hosp., 701 S.W.2d 622,

625 (Tenn. Ct. App. 1985). In fact, in Tennessee, there is a

presumption that an employee is an employee at will. Rose, 953

S.W.2d at 691-92. Here, there is no provision in the Operating

Agreement which guarantees Plaintiff, or any other

Member/Employee, a specific term or duration of employment.

There also is no provision in the Operating Agreement, or any other

agreement in the record, which provides that Plaintiff could be

terminated only for cause. As a matter of law, Plaintiff was an

employee at will. Plaintiff’s breach of contract claim, premised

solely upon his view that he could be terminated only for cause, fails

as a matter of law.

12. On Plaintiff’s allegations that the Defendants’ action

without meeting violated the Operating Agreement and the Tennessee

Limited Liability Company Act, the Court CONCLUDES that the

Plaintiff cannot establish this claim as a matter of law. Section 6.4 of

the Operating Agreement provides:

Action required or permitted to be taken at a meeting

of the Members may be taken without a meeting if the

action is evidenced by one or more written consents

describing the action taken, signed by the Members

-14-

holding a majority of the membership voting power

entitled to vote (or any greater proportion required by

this Agreement, the Articles, or the Act). . . .

Operating Agreement, § 6.4. In order to determine “the Membership

voting power entitled to vote” on the issue of Plaintiff’s termination,

the Court again looks to the Operating Agreement, which provides

that a member’s employment may be terminated “for cause” by a

“vote of the other Members holding at least 70% of the remaining

Membership Interests.” Operating Agreement, § 5.4 (emphasis

added). Thus, in this instance, the “Membership Interests,” voted

100% to take action without a meeting and to terminate Plaintiff’s

employment.

13. On Plaintiff’s breach of contract claim based upon an

alleged “conflict of interest” in violation of the Operating Agreement,

the Court CONCLUDES that the Plaintiff has abandoned that claim

based upon Plaintiff’s responsive papers, which do not address this

issue. Since that aspect of the motion is not opposed, the Court finds

that there is no genuine issue of material fact on that claim and grants

Defendants’ motion dismissing it.

14. On Plaintiff’s claim for breach of the implied covenant of

good faith and fair dealing, the Court CONCLUDES that Plaintiff

cannot establish that claim as a matter of law. The Court must look

to the terms of a contract to determine the standard by which good

faith is measured. Wallace v. National Bank of Commerce, 938

S.W.2d 684 (Tenn. 1996). The performance of a contract according

to its terms cannot be characterized as bad faith. TSC Industries,

Inc. v. Tomlin, 743 S.W.2d 169, 173 (Tenn. Ct. App. 1987). Here,

since the Operating Agreement allowed the very actions which

Defendants took in terminating Plaintiff’s employment, Plaintiff

cannot state a claim for breach of the implied covenant of good faith

and fair dealing.

15. The Court further finds and concludes that Defendant

David Ingram is not a proper Defendant. Mr. Ingram was not a party

to the Operating Agreement.

16. WHEREFORE, the Court finds that there is no genuine

issue of any material fact on Plaintiff’s various claims and that

Defendants are entitled to judgment as a matter of law.

-15-

IT IS SO ORDERED. This matter is dismissed in its entirety.

Costs are assessed against Plaintiff for which execution may issue.

On May 30, 2001, the defendants moved for discretionary costs and by order filed July 2,

2001, the trial court awarded defendants their discretionary costs in the amount of $1,871.00.

The plaintiff appeals and presents the following seven (7) issues as stated in his brief:

I. Whether the trial court erred in granting the defendants’ motion for

summary judgment and in dismissing the plaintiff’s cause of action

for breach of contract.

II. Whether the trial court erred in dismissing the plaintiff’s action for

breach of the covenant of good faith and fair dealing.

III. Whether the trial court erred in dismissing the plaintiff’s causes

of action for breach of fiduciary duty.

IV. Whether the trial court erred in dismissing the cause of action for

civil conspiracy.

V. Whether the trial court erred in dismissing the plaintiff’s causes

of action for fraud and negligent misrepresentation.

VI. Whether the trial court erred in dismissing the plaintiff’s causes

of action for unfair competition.

VII. Discretionary Costs.

We have summarized these seven (7) issues into two (2) main issues.

One main issue for review is whether the trial court erred in granting the defendants’ motion

for partial judgment on the pleadings dismissing the plaintiff’s claims for breach of fiduciary duty;

civil conspiracy; unfair competition; and fraud and misrepresentation.

When a motion for judgment on the pleadings is made by the defendant, it is in effect a

motion to dismiss for failure to state a claim upon which relief can be granted. 3 Nancy F. MacLean

& Bradley A. MacLean, Tennessee Practice 190 (2nd ed.1989). A motion to dismiss for failure to

state a claim upon which relief can be granted is the equivalent of a demurrer under our former

common law procedure. Cornpropst v. Sloan, 528 S.W.2d 188, 190 (Tenn. 1975). Such a motion

admits the truth of all relevant and material averments in the complaint but asserts that such facts

cannot constitute a cause of action. Id. In considering whether to dismiss a complaint for failure

to state a claim upon which relief can be granted, the court should construe the complaint liberally

-16-

in favor of the plaintiff taking all of the allegations of fact therein as true. Humphries v. West End

Terrace, Inc., 795 S.W.2d 128, 130 (Tenn. Ct. App. 1990). A complaint should not be dismissed

upon such a motion " 'unless it appears beyond doubt that the plaintiff can prove no set of facts in

support of [the] claim that would entitle [the plaintiff] to relief' ". Id. (quoting Fuerst v. Methodist

Hosp. South, 566 S.W.2d 847, 848 (Tenn. 1978)). In the instant case, the complaint seeks recovery

based on a written instrument and a determination of the meaning of the instrument is a question of

law. Therefore, our review of the trial court's order is de novo on the record before this Court.

Warren v. Estate of Kirk, 954 S.W.2d 722, 723 (Tenn. 1997).

The second main issue for review is whether the trial court erred in granting the defendants’

motion for summary judgment dismissing the plaintiff’s claims for breach of contract and breach of

covenant of good faith and fair dealing.

A motion for summary judgment should be granted when the movant demonstrates that there

are no genuine issues of material fact and that the moving party is entitled to a judgment as a matter

of law. Tenn. R. Civ. P. 56.04. The party moving for summary judgment bears the burden of

demonstrating that no genuine issue of material fact exists. Bain v. Wells, 936 S.W.2d 618, 622

(Tenn. 1997). On a motion for summary judgment, the court must take the strongest legitimate view

of the evidence in favor of the nonmoving party, allow all reasonable inferences in favor of that

party, and discard all countervailing evidence. Id. In Byrd v. Hall, 847 S.W.2d 208 (Tenn. 1993),

our Supreme Court stated:

Once it is shown by the moving party that there is no genuine

issue of material fact, the nonmoving party must then demonstrate, by

affidavits or discovery materials, that there is a genuine, material fact

dispute to warrant a trial. In this regard, Rule 56.05 [now Rule 56.06]

provides that the nonmoving party cannot simply rely upon his

pleadings but must set forth specific facts showing that there is a

genuine issue of material fact for trial.

Id. at 211 (citations omitted) (emphasis in original).

Summary judgment is only appropriate when the facts and the legal conclusions drawn from

the facts reasonably permit only one conclusion. Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn.

1995). Since only questions of law are involved, there is no presumption of correctness regarding

a trial court's grant of summary judgment. Bain, 936 S.W.2d at 622. Therefore, our review of the

trial court’s grant of summary judgment is de novo on the record before this Court. Warren v. Estate

of Kirk, 954 S.W.2d at 723.

In Warren v. Metropolitan Gov’t of Nashville & Davidson County, 955 S.W.2d 618 (Tenn.

Ct. App. 1997), we discussed the role of a Court in interpreting a contract:

-17-

Courts are to interpret and enforce the contract as written, according

to its plain terms. Petty v. Sloan, 197 Tenn. 630, 277 S.W.2d 355,

358 (1955); Home Beneficial Ass'n v. White, 180 Tenn. 585, 177

S.W.2d 545, 546 (1944). We are precluded from making new

contracts for the parties by adding or deleting provisions. Central

Adjustment Bureau, Inc. v. Ingram, 678 S.W.2d 28, 37 (Tenn.

1984); Shell Oil Co. v. Prescott, 398 F.2d 592 (6th Cir.1968). When

clear contract language reveals the intent of the parties, there is no

need to apply rules of construction. An ambiguity does not arise in

a contract merely because the parties may differ as to interpretation

of certain of its provisions. Oman Constr. Co. v. Tennessee Valley

Auth., 486 F.Supp. 375 (M.D.Tenn.1979). A contract is ambiguous

only when it is of uncertain meaning and may fairly be understood in

more ways than one; a strained construction may not be placed on the

language used to find an ambiguity where none exists. Empress

Health & Beauty Spa, Inc. v. Turner, 503 S.W.2d 188, 190-91

(Tenn.1973). We are to consider the agreement as a whole in

determining whether the meaning of the contract is clear or

ambiguous. Gredig v. Tennessee Farmers Mut. Ins. Co., 891

S.W.2d 909, 912 (Tenn. Ct. App.1994). If a contract is plain and

unambiguous, the meaning thereof is a question of law for the court.

Petty v. Sloan, 277 S.W.2d at 358.

Id. at 622-23.

Furthermore, the rule has been well established in this state that a contract of employment

for an indefinite term is a contract at will and can be terminated by either party at any time without

cause. Randolph v. Dominion Bank of Middle Tennessee, 826 S.W.2d 477, 478 (Tenn. Ct. App.

1991)(citing Graves v. Anchor Wire Corp., 692 S.W.2d 420 (Tenn. Ct. App. 1985). In Payne v.

Western & Atl. Ry. Co., 81 Tenn. 507 (1884), the Supreme Court said:

All may dismiss their employees at will, be they many or few, for

good cause, for no cause or even for cause morally wrong without

being thereby guilty of legal wrong.

Randolph v. Dominion Bank of Middle Tennessee, 826 S.W.2d at 478 (quoting Payne v. Western

& Atl. Ry. Co., 81 Tenn. at 519-520); see also Harney v. Meadowbrook Nursing Center, 784

S.W.2d 921, 922 (Tenn. 1990).

We will now address the appellant’s first main issue.

BREACH OF FIDUCIARY DUTY

-18-

The plaintiff argues that the trial court erroneously held that the plaintiff’s claims based upon

an alleged breach of fiduciary duty owed to him individually by the other members must fail as a

matter of law because there is no fiduciary duty between, or among, individual members of a Limited

Liability Corporation. We disagree. Tenn. Code Ann. § 48-240-102(a) (2002) provides:

(a) FIDUCIARY DUTY OF MEMBERS OF

MEMBER-MANAGED LLC. Except as provided in the articles or

operating agreement, every member of a member-managed LLC must

account to the LLC for any benefit, and hold as trustee for it any

profits derived by the member without the consent of the other

members from any transaction connected with the formation, conduct,

or liquidation of the LLC or from any use by the member of its

property including, but not limited to, confidential or proprietary

information of the LLC or other matters entrusted to the member as

a result of such person's status as a member.

(b) STANDARD OF CONDUCT. A member of a

member-managed LLC shall discharge such member's duties as a

member, including all duties as a member of a committee:

(1) In good faith;

(2) With the care an ordinarily prudent person in a like

position would exercise under similar circumstances;

and

(3) In a manner the member reasonably believes to be

in the best interest of the LLC.

Id.

The rule of statutory construction to which all others must yield is that the intention of the

legislature must prevail. Mangrum v. Owens, 917 S.W.2d 244, 246 (Tenn. Ct. App. 1995)(citing

Plough, Inc. v. Premier Pneumatics, Inc., 660 S.W.2d 495, 498 (Tenn. Ct. App. 1983); City of

Humboldt v. Morris, 579 S.W.2d 860, 863 (Tenn. Ct. App. 1978)). "[L]egislative intent or purpose

is to be ascertained primarily from the natural and ordinary meaning of the language used, when read

in the context of the entire statute, without any forced or subtle construction to limit or extend the

import of the language." Mangrum v. Owens, 917 S.W.2d at 246; (quoting Worrall v. Kroger Co.,

545 S.W.2d 736, 738 (Tenn. 1977)). The Court has a duty to construe a statute so that no part will

be inoperative, superfluous, void or insignificant. The Court must give effect to every word, phrase,

clause, and sentence of the Act in order to achieve the Legislature's intent, and it must construe a

statute so that no section will destroy another. Id. (citing City of Caryville v. Campbell County, 660

S.W.2d 510, 512 (Tenn. Ct. App. 1983); Tidwell v. Collins, 522 S.W.2d 674, 676 (Tenn. 1975).

-19-

The statute in question defines the fiduciary duty of members of a member-managed LLC

as one owing to the LLC, not to individual members. We cannot contravene the intent of the

Legislature. Therefore, we find that the trial court correctly dismissed the plaintiff’s cause of action

for breach of fiduciary duty.

CIVIL CONSPIRACY AND UNFAIR COMPETITION

The plaintiff argues that the trial court erred in dismissing the plaintiff’s causes of action for

civil conspiracy and unfair competition because those claims were not plead with specificity in the

plaintiff’s amended complaint. We disagree. Tennessee law provides that “[d]ismissal under

Tenn.R.Civ.P. 12.02(6) is warranted only when the alleged facts will not entitle the plaintiff to relief

or when the complaint is totally lacking in clarity and specificity.” 421 Corp. v. Metropolitan Gov’t.

of Nashville & Davidson County, 36 S.W.3d 469, 479 (Tenn. Ct. App. 2000)(citing Dobbs v.

Guenther, 846 S.W.2d 270, 273 (Tenn. Ct. App. 1992)). The plaintiff’s only mention of conspiracy

and unfair competition appears in the amended complaint as follows:

85. Plaintiff further alleges that the acts of IEI and the other

Defendants set forth herein constitutes breach of contract, breach of

fiduciary duty, breach of covenant of good faith and fair dealing,

unfair competition and conspiracy. (Emphasis added).

However, the plaintiff provided no facts upon which the causes of action for civil conspiracy and

unfair competition are based. As to civil conspiracy, this Court has stated that “[i]t is well-settled

that conspiracy claims must be pled with some degree of specificity and that vague and conclusory

allegations unsupported by material facts will not be sufficient to state such a claim under § 1983.”

Haynes v. Harris, No. 01A01-9810-CV-00518, 1999 WL 317946 at **2 (Tenn. Ct. App.

1999)(citing Gutierrez v. Lynch, 826 F.2d 1534, 1538 (6th Cir. 1987)). Furthermore, this Court has

recognized that although “the adoption of the Tennessee Rules of Civil Procedure greatly relaxed

the requirements as to pleadings, pleading of some facts giving rise to a claim for relief is still a

necessary requirement.” Jasper Engine & Transmission Exch. v. Mills, 911 S.W.2d 719, 720

(Tenn. Ct. App. 1995)(citing W & O Constr. Co. v. City of Smithville, 557 S.W.2d 920 (Tenn.

1997)).

Therefore, we find that the trial court correctly dismissed the plaintiff’s causes of action for

civil conspiracy and unfair competition.

FRAUD AND MISREPRESENTATION

The plaintiff argues that the trial court erred in dismissing the plaintiff’s claim for fraud and

misrepresentation because the plaintiff either had no standing to bring a derivative claim or the

plaintiff’s injury arose from a contractual relationship; not rising to the level of fraud or

misrepresentation. We disagree. As the trial court pointed out, “the plaintiff alleges that certain

information was withheld from him – either intentionally or negligently – and that this information

-20-

was material in the manner by which he conducted the affairs of the LLC. Plaintiff does not allege

that he conducted his own personal affairs in reliance upon any such material information or that he

obligated himself personally in reliance thereon.” Plaintiff’s amended complaint provides in

pertinent part:

94. The Plaintiff was relying on statements of employees of

IEI to conduct the affairs of MBF&I and these material omissions

caused Plaintiff to act in a manner that he otherwise would if he had

known the true state of affairs thereby damaging him and the LLC.

The plaintiff has, in essence, alleged a derivative claim, but at this point has no standing to

bring such a claim. In Bourne v. Williams, 633 S.W.2d 469 (Tenn. Ct. App. 1981), Judge Tomlin

of this Court said:

It has long been recognized that where a wrong to the

corporation was claimed by a stockholder, if the board of directors of

the corporation did not take steps to rectify the wrong, then a

stockholder could bring the action in the name of the corporation, for

the benefit of the corporation. This is the gravamen of a "derivative"

suit. 13 Fletcher, Cyc. Corp. sec. 5908 (perm. ed. 1980). See also

Opportunity Christian Church v. Washington Water Power Co.,

136 Wash. 116, 238 P. 641 (1925).

Bourne v. Williams, 633 S.W.2d at 471. However, the plaintiff has not proceeded in this manner.

Furthermore, the plaintiff’s amended complaint also alleges a personal injury as a result of certain

information being withheld from him. The plaintiff’s personal injury is, in essence, the plaintiff’s

termination from employment with MBF&I. However, as the trial court noted, “that claim arises out

of the employment relationship and does not create a cause of action for fraud or misrepresentation.”

Therefore, we find that the trial court correctly dismissed the plaintiff’s cause of action for

fraud and misrepresentation.

We will now address the appellant’s second main issue.

The plaintiff argues that the trial court erred in granting summary judgment to the defendants

on the plaintiff’s claim for breach of contract. The plaintiff argues that the defendants wrongfully

terminated plaintiff’s employment with MBF&I because defendants terminated plaintiff without

cause, without providing notice of fifteen days, and without a meeting. We disagree. We have

reviewed the record and agree with the trial court that the plaintiff was an employee-at-will because

“there is no provision in the Operating Agreement which guarantees Plaintiff, or any other

Member/Employee, a specific term or duration of employment. There also is no provision in the

Operating Agreement, or any other agreement in the record, which provides that Plaintiff could be

terminated only for cause.”

-21-

We also note that the plaintiff was provided written notice of his termination dated December

31, 1998, and that the “Employment & Non-Solicitation Agreement” signed by the plaintiff provides

in pertinent part:

1. Term. This amended employment agreement is effective

as of January 01, 1998, and shall supersede any prior employment

agreements between Employee and MBF&I, written or oral, in all

respects. The new term of employment is for an indefinite term

commencing the effective date of this agreement stated immediately

above (the “Term”). This agreement shall continue indefinitely at the

will of either party unless and until terminated by either party upon no

less than 15 days notice unless for good cause in which event

termination by either party may be immediately.

Furthermore, §6.4 of the Operating Agreement provides the following under the heading

“Action Without a Meeting”:

Action required or permitted to be taken at a meeting of the Members

may be taken without a meeting if the action is evidenced by one or

more written consents describing the action taken, signed by the

Members holding a majority of the Membership voting power entitled

to vote (or any greater proportion required by this Agreement, the

Articles, or the Act) and delivered to the Secretary of the Company

for filing with the Company records.

The plaintiff argues that the trial court erred in dismissing plaintiff’s claim for breach of

contract based on an alleged conflict of interest in violation of the Operating Agreement. We

disagree. As the trial court correctly pointed out, the Plaintiff abandoned this issue because he did

not oppose this issue in his response to defendants’ motion for summary judgment. The Tennessee

Rules of Civil Procedure provide in pertinent part:

Any party opposing the motion for summary judgment must,

not later than five days before the hearing, serve and file a response

to each fact set forth by the movant . . . .

Tenn. R. Civ. P. 56.03. As a general rule, questions not raised in the trial court will not be

entertained on appeal. See Lawrence v. Stanford, 655 S.W.2d 927, 929 (Tenn. 1983); see also City

of Lavergne v. Southern Silver, Inc., 872 S.W.2d 687, 691 (Tenn. Ct. App. 1993).

Therefore, after a review of the record, we find that the trial court correctly granted summary

judgment as to the plaintiff’s breach of contract claim to the extent that plaintiff was wrongfully

terminated. However, we find that there is a genuine issue of material fact as to whether there was

-22-

cause to terminate the plaintiff. This must be determined in order to properly value any interest the

plaintiff has in his former company.

The Operating Agreement provides in pertinent part:

10.4 Option to Purchase Upon Termination of Employment. In

the event that the employment of any Member who is a full-

time employee of the Company is terminated, the Company

shall have the option to purchase the Membership Interest of

the terminated Member for the Formula Value (as defined in

(e) below) of the terminated Member’s Membership Interest

(as shown on the books of the Company as at the end of the

month in which the event occurs which gives rise to the

Company’s option), all in accordance with the following

terms and conditions:

* * *

(e) Formula Value. The “Formula Value” of a

Member’s Membership Interest shall mean the greater

of (i) or (ii) below; provided, however, that in the

event the Member’s employment is terminated for

“Cause” (as hereinafter defined), the “Formula Value”

of such Member’s Membership Interest shall mean the

lesser of (i) or (ii) below:

(i) the amount of the capital account

attributable to that Membership

Interest; or

(ii) three times the average of the

amount of income allocated or

allocable to that Membership Interest

(under Section 4.1 (a)) during each of

the three preceding 12 month periods

(or, if less than 36 months, such

shorter period during which such

Member had such Membership

Interest).

(f) Definition of Cause. Only for purposes of this

Section 10.4 and Section 5.4 hereof, “Cause” shall

mean any act that is materially inimical to the best

-23-

interests of the Company and that constitutes on the

part of the Member personal dishonesty, willful

misconduct, breach of fiduciary duty involving

personal profit, intentional failure to perform stated

duties, or willful violation of any law, governmental

rule or regulation.

The plaintiff also argues that the trial court erred in dismissing the plaintiff’s action for

breach of the covenant of good faith and fair dealing because the performance of a contract according

to its terms cannot be characterized as bad faith. We disagree. There is no implied covenant of good

faith and fair dealing in an employee-at-will contract. See Randolph v. Dominion Bank of Middle

Tennessee, 826 S.W.2d at 479 (citing Whittaker v. Care-More, Inc., 621 S.W.2d 395 (Tenn. Ct.

App. 1981)). Therefore, the trial court correctly dismissed the plaintiff’s action for breach of the

covenant of good faith and fair dealing.

In the final analysis, this case boils down to a rather uncomplicated dispute controlled by the

employment contract and the Operating Agreement. As noted, the employment contract creates an

employment at will which can be terminated without cause. The Operating Agreement allows the

LLC to purchase the membership interest of a terminated employee. The only issue involved is

whether termination of the employment was for cause. This issue is only material to decide the value

of the membership interest of the terminated employee.

Accordingly, the trial court’s order granting summary judgment to defendant, David Ingram,

is affirmed. The trial court’s order granting the defendants’ motion for judgment on the pleadings

is affirmed. The trial court’s order granting the defendants’ motion for summary judgment on the

breach of contract claim and breach of contract of good faith and fair dealing claim is modified to

grant partial summary judgment to the defendants on the issue as to whether plaintiff’s employment

and membership were legally terminated. The case is remanded to the trial court for a determination

of whether plaintiff’s employment termination was with or without cause and to determine the proper

amount due to the plaintiff pursuant to the Operating Agreement. The trial court’s order granting

defendants’ discretionary costs is reversed to be reconsidered by the trial court in light of the further

proceedings required. Costs of the appeal are assessed one-half to plaintiff, Patrick McGee, and one-

half to defendants, Timothy Best, Robert Frank, and Ingram Entertainment, Inc.

__________________________________________

W. FRANK CRAWFORD, PRESIDING JUDGE, W.S.

-24-