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Davis v. Highland Coryell Ranch, LLC

Court of Appeals of Texas, Seventh District, Amarillo

June 18, 2019

MARK DAVIS, APPELLANT
v.
HIGHLAND CORYELL RANCH, LLC, APPELLEE

          On Appeal from the 13th District Court Navarro County, Texas Trial Court No. D12-21464-CV, Honorable James E. Lagomarsino, Presiding

          Before QUINN, C.J., and CAMPBELL and PARKER, JJ.

          OPINION

          Brian Quinn Chief Justice

         Again, we are asked to decide whether Mark Davis, a former member of Highland Coryell Ranch, LLC, may peruse various books and records of the company.[1] The parties initially broached the issue to us via an appeal from a summary judgment favoring Highland. See Davis v. Highland Coryell Ranch, LLC, No. 07-15-00269-CV, 2016 Tex.App. LEXIS 3138 (Tex. App.-Amarillo Mar. 18, 2018, pet. denied) (mem. op.). Due to the absence from the summary judgment record of pertinent company records, though, we were unable to provide them a substantive answer. Id. at *4-5 (stating that "[t]he summary judgment record before us does not contain the 'governing documents' of Highland. Without them, the trial court could not hold that Highland established, as a matter of law, that Davis was unentitled to view the records."). Upon remand, Highland filed a second summary judgment motion. Attached to it were the governing documents alluded to in our first opinion. The trial court granted the motion, thereby denying Davis opportunity to review the documents and disposing of his suit to access them. We reverse.

         Law of the Case

         A preliminary matter before us concerns the doctrine of law of the case. Davis argues that, through our prior opinion, we held that the statutes in play entitled him, as a matter of law, to review the records. Thus, our purported holding allegedly constitutes the law of the case, controls the outcome here, and requires reversal without further comment. We disagree.

         Per the doctrine of law of the case, questions of law decided on appeal to a court of last resort generally govern the case throughout its subsequent stages. State v. Riemer, No. 07-18-00002-CV, 2019 Tex.App. LEXIS 1801, at *5 (Tex. App.-Amarillo Mar. 7, 2019, no pet.). In other words, a court of appeals is ordinarily bound by its initial decision if there is a subsequent appeal in the same case. See Briscoe v. Goodmark Corp., 102 S.W.3d 714, 716 (Tex. 2003). Reconsideration of issues is not absolutely barred, however. Id. Indeed, whether to apply the doctrine is a discretionary matter. Id.; Riemer, 2019 Tex.App. LEXIS 1801, at *5. Examples of when discretion may be exercised legitimately to forgo application of the doctrine include situations where either the issues or facts presented in successive appeals substantially differ from those presented earlier, see Riemer, 2019 Tex.App. LEXIS 1801, at *5-6, and where the prior decision was clearly wrong. See Briscoe, 102 S.W.3d at 716-17. Highland argues, among other things, that if we did interpret the relevant statutes in a manner favorable to Davis, then we were clearly wrong. That, at the very least, is a sufficient reason to forgo the doctrine's application here. Simply put, a wrong decision is subject to correction.

         Additionally, our resolution of the prior appeal revolved around whether Highland established its entitlement to summary judgment as a matter of law based on the summary judgment record before the trial court. Though we alluded to statutes there that have continued relevance here, the central debate here differs from that there. As we observed in our initial opinion, the statutory definitions in play here were not cited or addressed by either party there. Davis, 2016 Tex.App. LEXIS 3138, at *3. So, the issue now before us differs in a substantive way.

         Given the foregoing circumstances, the doctrine raised by Davis does not control. We may proceed to substantively address that which neither party did previously.

         Former Member and Business Records

         Next, Highland is a limited liability company. Furthermore, no one disputes that Davis was one of two original members. Nor do the litigants dispute that he relinquished his interest in the company in 2005. Davis, 2016 Tex.App. LEXIS 3138, at *1. Furthermore, Davis requested of Highland various business records developed by the company while he was a member. Id. It apparently provided some but not others, and Davis sued to obtain those that were not given him. Highland moved for summary judgment, contending that, as an ex-member of the business, he had no right to them. The sole issue before us involves the right, if any, of a former member of a limited liability company to business records of the company. That is, can he be denied access simply because he is not a current member of the company?

         Per § 101.502(a) of the Texas Business Organizations Code, a member of a limited liability company or an assignee of a membership interest . . . or a representative of the member or assignee, on written request and for a proper purpose, may examine and copy at any reasonable time and at the member's or assignee's expense . . . [both] records required under Sections 3.151 and 101.501 . . . and . . . other information regarding the business, affairs, and financial condition of the company that is reasonable for the person to examine and copy." Tex. Bus. Orgs. Code Ann. § 101.502(a)(1), (2) (West 2012) (emphasis added); Davis, 2016 Tex.App. LEXIS 3138, at *2. Section 3.153 of the same Code further provides that "[e]ach owner or member . . . may examine the books and records of the filing entity maintained under Section 3.151 and other books and records . . . to the extent provided by the governing documents of the entity and the title of this code governing the filing entity." Tex. Bus. Orgs. Code Ann. § 3.153 (West 2012); Davis, 2016 Tex.App. LEXIS 3138, at *2.

         The same Code also defines a "member" of a limited liability company as "a person who is a member or has been admitted as a member in the limited liability company under its governing documents." Tex. Bus. Orgs. Code Ann. § 1 .002(53)(A) (emphasis added).[2]

          As can be seen from these provisions, the right to peruse the business records of a limited liability company is generally dependent upon membership in or being a "member" of the company. Furthermore, one is such a "member" if he "is a member" or "has been admitted as a member" under the company's governing documents. One recalling lessons from high school English classes would interpret the phrase "is a member" as denoting a present verb tense, that is, a verb tense requiring the person to be an existing member of the company. ...


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