PITTSBURGH – A Pennsylvania litigator and former member of a prominent Pittsburgh law firm alleges that was denied compensation connected to his ownership interest in three related West Virginia limited liability companies after he resigned from the firm.
Christopher J. Regan filed suit in the U.S. District Court for the Western District of Pennsylvania on May 16 versus Bordas & Bordas, PLLC, Bordas Mineral Management, LLC and Wheelhouse Creative, LLC, all of Wheeling, W.Va.
“At times relevant to the allegations set forth in this complaint, Regan was a member of Bordas & Bordas, Bordas Mineral and Wheelhouse, with a percentage ownership interest in each entity. As to Bordas & Bordas, Regan’s percentage ownership interest was eighteen percent (18%). As to Bordas Mineral, Regan’s percentage ownership interest was ten percent (10%). As to Wheelhouse, Regan’s percentage ownership interest was eighteen percent (18%),” the suit says.
“At times relevant to the allegations set forth in this complaint, a written agreement entitled ‘Professional Limited Liability Operating Agreement of Bordas & Bordas, PLLC’, governed the affairs of Bordas & Bordas, the conduct of its business and relations among its members. When the Bordas & Bordas operating agreement was entered into on or about July 18, 2018, its members included Regan, James G. Bordas, Jr., Linda M. Bordas, Scott S. Blass, James G. Bordas, III and Geoffrey C. Brown. James G. Bordas, Jr. and Linda M. Bordas were designated as ‘Founding Members,’ having founded the predecessor of Bordas & Bordas.”
The suit continues that with respect to non-founding members such as Regan, the Bordas & Bordas operating agreement provides, in part, that any member who withdraws by voluntarily leaving Bordas & Bordas “shall be entitled to distribution of the balance of his or her capital account” and “shall not be entitled to any other form of compensation and shall have no further interest in [Bordas & Bordas] or any of its assets and/or income.”
Furthermore, the suit says that in contrast to Bordas & Bordas, there is no operating agreement or other agreement regulating and governing both the affairs of Bordas Mineral and Wheelhouse, the conduct of its business or relations among its members – and as such, there is no agreement addressing the distributional interest or other compensation to which a member of Bordas Mineral is entitled upon withdrawal by voluntarily leaving the company.
“In the absence of an agreement addressing compensation due a member upon his withdrawal and dissociation from an at-will West Virginia limited liability company such as Bordas Mineral and Wheelhouse, West Virginia Code Section 31B-7-701(a)(1) requires such company to purchase the member’s distributional interest ‘for its fair value determined as of the date of the member’s dissociation if the member’s dissociation does not result in a dissolution and winding up of the company’s business.’ In 2021, Regan rightfully gave notice of his express will and intent to withdraw and dissociate from Bordas & Bordas, Bordas Mineral and Wheelhouse, effective on a date to be determined. After discussion, Bordas & Bordas, Bordas Mineral and Wheelhouse preferred, and the parties ultimately agreed, that Regan’s withdrawal and dissociation would be effective Dec. 31, 2021,” the suit states.
“Notwithstanding Regan’s withdrawal and dissociation, Bordas & Bordas, Bordas Mineral and Wheelhouse have all continued to operate, with none of these entities dissolving or winding up its business. Notwithstanding the disputes described herein, Bordas & Bordas, Bordas Mineral and Wheelhouse have each refused to disclose to Regan full and complete documentation from which the distributional interests or other compensation to which Regan is entitled may be calculated in accordance with generally accepted accounting principles. The claims set forth hereafter arise out of a disagreement between Regan and the defendants resulting from Regan’s withdrawal and dissociation and each defendant’s failure to pay Regan the distributional interest to which he is entitled.”
For multiple counts of breaching the operating agreement, violating West Virginia’s Uniform Limited Liability Company Act and alternative claims for breaching of the operating or other agreement, the plaintiff is seeking damages including, but not necessarily limited to, such a sum as the evidence and application of generally-accepted accounting principles may demonstrate to be the effective value of his Wheelhouse Capital Account upon his withdrawal and dissociation from Wheelhouse; pre-judgment and post-judgment interest; attorney’s fees and other expenses reasonably incurred in connection with this dispute; plus additional or alternative relief as may be deemed appropriate under applicable law.
The plaintiff is represented by Avrum Levicoff of The Levicoff Law Firm, in Pittsburgh.
The defendants have not yet secured legal counsel.
U.S. District Court for the Western District of Pennsylvania case 2:23-cv-00822
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com