[WSBARP] Judicial Dissolution of LLC (RCW 25.15.274) vs LLC provision prohibiting dissolution?

Fri Jan 19 11:36:47 PST 2018

Rob,

Under RCW 25.15.018(3)(k) [covering certain non-waivable provisions of the operating agreement], the operating agreement may not “[v]ary the power of a court to decree dissolution in the circumstances specified in RCW 25.15.274.  It also may not “[v]ary the requirement to wind up the limited liability company's business as specified in RCW 25.15.297 … and (5),” which appears to cover the second clause of the provision you cited.

Regarding the older case you mentioned, if the court relied on the second clause of 25.15.274 (given no deadlock) to permit dissolution only to let the other two members “retire,” I think that is questionable.  Of course, that is the reason for including a buy-sell type of provision in a multi-member operating agreement.

Bob Pampell

Robert Pampell, Attorney

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From: wsbarp-bounces at lists.wsbarppt.com [mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Rob Rowley
Sent: Friday, January 19, 2018 9:12 AM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Judicial Dissolution of LLC (RCW 25.15.274) vs LLC provision prohibiting dissolution?

Assume Washington LLC with real estate.  LLC operating agreement contains provision expressly waving right to court decree of dissolution.  “Each party hereby waives and renounces its right to seek a court order or dissolution or to seek the appointment by the court of a liquidator for the company.”

However, RCW 25.15.274 provides that a manager or member can seek judicial dissolution under certain facts.

RCW 25.15.274

Judicial dissolution.

On application by a member or manager the superior courts may order dissolution of a limited liability company whenever: (1) It is not reasonably practicable to carry on the limited liability company's activities in conformity with the certificate of formation and the limited liability company agreement; or (2) other circumstances render dissolution equitable.

About 10 years ago I defended an LLC member who had a 50% interest in a very successful commercial building against two members who wanted to retire and have the other 50%.  LLC operating agreement did not contain a provision that expressly waived the right to seek a judicial dissolution, but it had something similar.  The Superior Court judge ruled against my client and granted dissolution even though the company was quite profitable and not really deadlocked.  A couple of the members wanting to retire was sufficient ground to allow dissolution. That litigation was under the older status RCW 25.15.270.

Your thoughts?

Robert R. Rowley | Attorney at Law

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