Zieman v. Zieman Speegle, LLC

          Appeal from Mobile Circuit Court (CV-14-229)

          SELLERS, JUSTICE.

         Jerome E. Speegle and Anthony M. Hoffman, two members of Zieman Speegle, LLC, a law firm based in Mobile ("the law firm"), filed a petition in the Mobile Circuit Court ("the trial court") requesting that the trial court approve the dissolution of the law firm. See § 10A-5A-7.01(d), Ala. Code 1975 (allowing a member of a limited-liability company to apply to a circuit court for an order dissolving the limited-liability company). Thomas T. Zieman, Jr., previously a member of the law firm, appeared in the action, asserting a counterclaim against the law firm and a third-party complaint against Speegle and Hoffman. Without holding a hearing, the trial court entered a summary judgment on Zieman's counterclaim and third-party complaint in favor of the law firm, Speegle, and Hoffman. The trial court also identified the equity-holding members of the law firm and provided for the distribution of the assets of the law firm. Because we hold that the trial court should have held a hearing, we reverse the trial court's judgment and remand the case for further proceedings.

         Facts and Procedural History

         The law firm was established in 1994. On October 23, 2014, Speegle and Hoffman, following Zieman's withdrawal from the firm on October 17, 2014, filed their petition for approval of dissolution of the law firm. It is undisputed that Zieman, Speegle, and Hoffman were equity-holding members of the law firm at all relevant times. There is a factual dispute, however, regarding whether an additional attorney, Steele Holman, was an equity-holding member. Speegle and Hoffman claim that he was, while Zieman claims that he was not.^[1]

         After Speegle and Hoffman filed their petition, the trial court entered an order stating that the law firm was deemed dissolved as of October 18, 2014. The trial court also authorized Speegle and Hoffman to wind up the business affairs of the law firm, and it set a deadline for former and current members of the law firm to object to the dissolution or to its authorization of Speegle and Hoffman to wind up affairs.

         In September 2015, Speegle and Hoffman filed a status report indicating that the process of winding up the law firm was ongoing. Shortly thereafter, Zieman filed a motion requesting an accounting to identify the law firm's debts, liquid assets, and accounts receivable. He also requested information regarding contingency-fee and hourly rate matters that were pending when the dissolution petition was filed and information supporting Speegle and Hoffman's position that Holman was an equity-holding member of the law firm. Later, Zieman submitted discovery requests to the law firm seeking information regarding former clients of the law firm who, after the date of dissolution, had become clients of a new firm that had been formed by Speegle and Hoffman. Eventually, Zieman filed a motion requesting that the trial court compel the law firm to respond to his discovery requests.

         In July 2016, Speegle and Hoffman filed a motion for approval of a proposed disbursement of law-firm assets to the former members of the law firm. In that motion, Speegle and Hoffman represented that they had "provided to all parties the accounting for the liquidation for [the law firm] ... from the date of dissolution to the date of [the] motion, which includes initial cash in bank, disbursements to pay debts and expenses, and statement of cash on hand and uncollected receivables."

         Thereafter, Zieman filed a motion to appoint a neutral third party to take over the responsibility of winding up the affairs of the law firm. He asserted that Speegle and Hoffman had not fully responded to his requests for discovery regarding the law firm's assets and client matters pending on the date of dissolution.

         Zieman also submitted a filing styled as an answer, a counterclaim, and a third-party complaint, in which he averred that the law firm was not ripe for dissolution because, he claimed, the law firm had not provided Zieman with a sufficient accounting. According to Zieman, the law firm, Speegle, and Hoffman had failed to produce information and records "relating to the open client matters and ongoing business of the [law firm] at the time of dissolution in order to evaluate the [law firm's] assets and Zieman's value of those assets." Based on that allegation and others, Zieman asserted a counterclaim against the law firm alleging "minority shareholder suppression" and stating:

"[The law firm] owes Zieman a duty to act fairly with respect to his minority interest and not to act to the detriment of that minority interest.

"[The law firm] has engaged in a course of action to oppress and squeeze out Zieman as a minority shareholder by failing to provide Zieman with documents necessary to properly evaluate his interest in [the law firm]; by failing to provide Zieman with financial statements and other information he has a right to receive; by engaging in acts designed to freeze Zieman out of [the law firm] rather than give him his fair share of his investment; and denying Zieman any return on his equity while refusing to buy-out Zieman's shares for fair value.

"Zieman has repeatedly requested documents necessary to evaluate his interest in the [law firm], and the [law firm] continues to act with a reckless, intentional or deliberate disregard to withhold such information from Zieman"

         Against Speegle and Hoffman individually, Zieman asserted a third-party complaint alleging breach of fiduciary ...