Black Water Management LLC v. Sprenkle et al, No. 3:2015cv00365 - Document 15 (E.D. Va. 2015)
Court Description: MEMORANDUM OPINION. Signed by District Judge James R. Spencer on 8/27/2015. (jsmi, )
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Black Water Management LLC v. Sprenkle et al Doc. 15 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF VIRGINIA RICHMOND DIVISION BLACK WATER MANAGEMENT LLC, Plaintiff, Civil Action No. 3:15-CV-365 v. MARK D. SPRENKLE, et al., Defendants. MEMORAN D U M OPIN ION THIS MATTER is before the Court on a Motion to Dism iss for Lack of Subject Matter J urisdiction (“Motion”) (ECF No. 8), filed by Defendant Steve Vorlop (“Vorlop”). Plaintiff filed a response in opposition on August 13, 20 15 (“Opp’n Mem .”) (ECF No. 13). Vorlop subsequently filed a reply on August 19, 20 15 (“Reply Mem .”) (ECF No. 14). The parties have not requested a hearing on this m atter, and the Court finds that oral argum ent is unnecessary. See E.D. Va. Loc. Civ. R. 7(J ). For the reasons that follow, the Court DENIES the Motion. I. BACKGROU N D a. Fa ct u a l Ba ck g r o u n d This action arises from an alleged agreem ent between J acob A. Schur (“Schur”) and Defendant Mark D. Sprenkle (“Sprenkle”) to establish Blackwater Managem ent LLC (“BWM LLC” or the “Com pany” or “Plaintiff”), a talent m anagem ent com pany specializing in representing m usical talent. On J une 19, 20 0 8, Schur and Sprenkle signed 1 the Operating Agreem ent for BWM LLC (hereinafter, the “Operating Agreem ent”).2 To gain ownership rights in BWM LLC, the agreem ent required Schur to invest $ 34,675.0 0 in cash and Sprenkle to assign two m anagem ent contracts, one with J esse Harper and one with Colin Healy and the J et Skis. 1 Schur 2 allegedly drafted the Operating Agreem ent him self. The Operating Agreem ent is attached to Plaintiff’s Com plaint as Exhibit A. 1 Dockets.Justia.com (See Operating agreem ent, Ex. A.) Schur m ade an initial investm ent of $ 49,675.0 0 . Sprenkle, however, allegedly failed to assign any contracts to the Com pany. Contrary to what he told Schur, Sprenkle had no artist m anagem ent contracts to assign and he actively concealed the nonexistence of these contracts from Schur. Sprenkle allegedly did not care whether he had an ownership interest in BWM LLC, nor was he concerned with the success of BWM LLC. Instead, he wanted BWM LLC to “bankroll” his expenses. Sprenkle also allegedly planned to exploit for his benefit any business opportunities m ade available through his affiliation with Schur and BWM LLC. Sprenkle convinced the other defendants to aid him in his efforts. Schur brought actions in state court in his personal capacity against Sprenkle and the other defendants to discover the truth and recover the significant dam ages caused by the conspirator’s acts and om issions. Schur learned through the testim ony of the artists with whom Sprenkle claim ed to have m anagem ent contracts that Sprenkle never possessed rights in any artist m anagem ent contract at the tim e he purported to assign those contracts to BWM LLC. b . Pr o ce d u r a l Ba ck g r o u n d Plaintiff filed the present action on J une 16, 20 15 “to vindicate its rights against these Defendants who conspired and colluded to strip it of its assets and destroy its contractual relationships and business expectancies.” (ECF No. 1, “Com plaint,” at ¶ 6.) The seven-count Com plaint nam es the following nine defendants: Sprenkle; Colin Healy3 ; Kevin Healy; TBT Network LLC d/ b/ a Tim Be Told, Tim othy Ouyang (“Ouyang”) 4 , Luan Nguyen (“Nguyen”) 5, J acob J am es “J im ” Carism a Barredo (“Barredo”) 6 , Andrew Daniel Chae (“Chae”) 7 (individually and collectively, “TBT”); and Vorlop 8 . The Com plaint alleges: (1) Declaratory J udgm ent (Against 3 Colin Healy is a m usician and was at one time the “front m an” of the rock band Colin Healy & the J etskis. 4 Ouyang is a m usician and the front m an of the band TBT. 5 Nguyen was a guitarist with TBT. 6 Barredo was the drum m er of TBT. 7 Chae is a guitarist with TBT. 8 Vorlop is a friend of TBT who was serving as their road m anager. 2 Sprenkle) (Count One); (2) Conspiracy to Tortiously Interfere With Contract and/ or Business Expectancies (All Defendants) (Count Two); (3) Conspiracy to Breach Fiduciary Duties (All Defendants) (Count Three); (4) Conspiracy to Convert Assets of BMW LLC (All Defendants) (Count Four); (5) Conversion (Against Sprenkle) (Count Five); (6) Breach of Contract (Against TBT and Colin Healy) (Count Six); and (7) Accounting (Against TBT, Colin Healy, and Sprenkle) (Count Seven). Defendant Steve Vorlop (“Vorlop”) was served on J uly 9, 20 15. (ECF No. 6). He then tim ely filed the present Motion on J uly 30 , 20 15, seeking to dism iss the action for lack of subject m atter jurisdiction.9 II. LEGAL STAN D ARD Federal Rule of Civil Procedure 12(b)(1) allows a defendant to m ove for dism issal of a claim when the court lacks subject m atter jurisdiction over the action. The Court m ust dism iss the action if it determ ines at any tim e that it lacks subject-m atter jurisdiction. Fed. R. Civ. P. 12(h)(3). Under Rule 12(b)(1), the plaintiff bears the burden of proving that jurisdiction exists in federal court. Richm ond, Fredericksburg & Potom ac R.R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991). “In determ ining whether jurisdiction exists, the district court is to regard to the pleadings’ allegations as m ere evidence on the issue, and m ay consider evidence outside the pleadings without converting the proceeding to one for sum m ary judgm ent.” Id. (citations om itted). The Court should apply the sam e stan dard as it does in a m otion for sum m ary judgm ent: “the nonm oving party m ust set forth specific facts beyond the pleadings to show that a genuine issue of m aterial fact exists.” Id. (citations om itted). The district court m ust then weigh the evidence to determ ine whether jurisdiction is proper. Adam s v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). A court should grant a Rule 12(b)(1) m otion to dism iss if the m aterial 9 The rem aining Defendants, except Sprenkle, executed waivers of service. (ECF No. 11.) Their respective responses to the Com plaint are due on August 31, 20 15. (Id.) 3 jurisdictional facts are known and the m oving party is entitled to prevail as a m atter of law. Richm ond, Fredericksburg & Potom ac R.R. Co., 945 F.2d at 768. III. D ISCU SSION “Federal courts are courts of lim ited jurisdiction . . . [and] possess only that power authorized by the Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am ., 511 U.S. 375, 377 (1994). For exam ple, federal district courts have original jurisdiction pursuant to 28 U.S.C. § 1332 over civil actions where the am ount in controversy exceeds $ 75,0 0 0 and the m atter is between citizens of different states, also known as “diversity jurisdiction.” In order to m aintain an action based upon diversity jurisdiction, com plete diversity between the plaintiffs and defendants m ust exist at the tim e the com plaint is filed. Martinez v. Duke Energy Corp., 130 F. App’x 629, 634 (4th Cir. 20 0 5). “Com plete diversity” m eans “that the citizenship of every plaintiff m ust be different from the citizenship of every defendant.” Cent. W . Va. Energy Co., Inc. v. Mountain State Carbon, LLC, 636 F.3d 10 1, 10 3 (4th Cir. 20 11) (citation om itted). For purposes of determ ining citizenship, a natural person is deem ed a citizen of the State in which he or she is dom iciled, see Axel Johnson, Inc. v. Carroll Carolina Oil Co., Inc., 145 F.3d 660 , 663 (4th Cir. 1998), while the citizenship of a lim ited liability com pany is determ ined by the citizenship of all of its m em bers, Cent. W . Va. Energy Co., Inc., 636 F.3d at 10 3. Here, Plaintiff brings this action pursuant to 28 U.S.C. § 1332, claim ing there is com plete diversity between Plaintiff and Defendants, and the am ount in controversy exceeds $ 75,0 0 0 . (Com pl. at ¶ 9.) Plaintiff defines the citizenship of each of the parties as follows: BWM LLC: “[A]n unincorporated entity organized under the laws of the Com m onwealth of Virginia.” (Id. at ¶ 11.) Schur: A resident of Colorado. (Id. at ¶ 12.) 10 Sprenkle: A resident of the Com m onwealth of Virginia. (Id. at ¶ 13.) 10 Vorlop notes that he contests Schur’s citizenship as a com plaint filed in the Circuit Court of the City of Richm ond lists Schur’s address in Alexandria, Virginia, and he alleges he is a resident of Fairfax County, Virginia. However, because Schur’s citizenship status is irrelevant to deciding the instant Motion, Vorlop accepts Schur’s citizenship allegations. (See Mem . in Supp. of Mot. at 2.) 4 Colin Healy: A resident of the Com m onwealth of Virginia. (Id. at ¶ 14.) Kevin Healy: A resident of the Com m onwealth of Virginia. (Id. at ¶ 15.) Ouyang: A resident of California. (Id. at 16.) Nguyen: A resident of the Com m onwealth of Virginia. (Id. at ¶ 17.) Barredo: A resident of Washington, D.C. (Id. at ¶ 18.) Chae: A resident of California. (Id. at ¶ 19.) Vorlop: A resident of the Com m onwealth of Virginia. (Id. at ¶ 20 .) Plaintiff alleges that Schur is the sole m em ber of BWM LLC. (Id. at ¶ 12.) If this allegation is true, then com plete diversity exists as BWM LLC will be deem ed a citizen of Colorado. See Cent. W . Va. Energy Co., Inc., 636 F.3d at 10 3. However, Vorlop argues that Schur is not the only m em ber of BWM LLC. Instead Vorlop contends that both Schur an d Sprenkle were and are m em bers. If the evidence supports Vorlop’s allegations, and Sprenkle is a m em ber of BWM LLC, then BMW LLC will be considered a citizen of both Colorado and Virginia, destroying com plete diversity am ong the parties. Thus, the Court m ust determ ine if Sprenkle is a m em ber of BWM LLC. (i) Plain Language of the Operating Agreem ent In m aking this determ ination, the Court will begin with the plain language of the Operating Agreem ent. See Am . Spirit Ins. Co. v. Ow ens, 541 S.E.2d 553, 555 (Va. 20 0 1) (citation om itted) (“[W]here the term s of the contract are clear and unam biguous, we will construe those term s according to their plain m eaning.”). Specifically, the Court should first determ ine whether the plain language conditions m em bership in BWM LLC upon m aking the contributions listed in Exhibit A to the Operating Agreem ent. Plaintiff argues that the plain language of the Operating Agreem ent (as well as Virginia precedent) com m and the conclusion that Sprenkle was required to m ake a “m andatory initial contribution” in order to becom e a m em ber of BWM LLC. (See Opp’n Mem . at 5.) Because Sprenkle allegedly failed to m ake his contribution, he never acquired 5 an ownership interest in BWM LLC. (See Com pl. at ¶ 87) (citing Va. Code § 13.1-10 38.111). Vorlop, on the other hand, argues that there is no language in the Operating Agreem ent that m akes the prom ised contributions a “condition to m em bership.” (Mem . in Supp. of Mot. at 5.) The Court will address each of the relevant provisions of the Operating Agreem ent that are raised by the parties in their pleadings. (1) Paragraph 2.1 of the Operating Agreem ent Paragraph 2.1 of the Operating Agreem ent notes, “The initial capital and interest in artists to be contributed by the Managing Mem bers is evidenced by EXHIBIT ‘A’ and shall not exceed that am ount.” (Operating Agreem ent at ¶ 2.1.) Exhibit A lists Sprenkle and Schur as Managing Mem bers. (Id. at Ex. A.) Sprenkle’s contribution is listed as follows: J esse Harper, Colin Healy and the J et Skis, 50 .0 0 % Managem ent of Old School Freight Train. (Id.) Sprenkle’s “percentage of m em bership interest” is listed as 50 .0 0 %. (Id.) Plaintiff interprets paragraph 2.1 and Exhibit A of the Operating Agreem ent as m eaning that “the initial capital to be contributed by Sprenkle in exchange for his 50 % interest were the Artist Contracts he claim ed to have prior to the execution of the Operating Agreem ent.” (Opp’n Mem . at 6) (second em phasis added). “Thus, [Plaintiff argues,] the language of the Operatin g Agreem ent expresses a m andatory requirem ent . . . that Sprenkle m ake an initial capital contribution to obtain his stated 50 % interest as a m anaging m em ber.” (Id.) (em phasis added). Plaintiff highlights the auxiliary verb “to be,” and argues that such verb establishes a m andatory obligation upon Sprenkle. (Id. at 6– 7.) However, the Court disagrees with Plaintiff’s interpretation. Contrary to Plaintiff’s argum ent, paragraph 2.1 does not “establish[] a m andatory obligation that Sprenkle assign the Artist Contracts listed in Exhibit A as consideration for his defined m em bership interest.” (Opp’n Mem . at 6– 7) (em phasis added). In other words, while 11 Va. Code § 13.1-10 38.1(A)(1) states: “[A] person m ay becom e a m em ber in a limited liability com pany . . . in the case of a person acquiring a mem bership interest directly from the lim ited liability com pany, upon com pliance w ith an operating agreem ent . . . .” (em phasis added). 6 the Operating Agreem ent m ay be read as requiring each Managing Mem ber to m ake the contributions listed in Exhibit A, the Operating Agreem ent does not condition the Managing Mem bers’ m em bership interest on such contributions. If the parties wished to condition m em bership in BWM LLC upon the defined contributions, the parties should have so stated in the Operating Agreem ent. See Chaudhary v. Broad, 60 Va. Cir. 128, 20 0 2 WL 18 31990 , at *2 (Va. Cir. Ct. J uly 25, 20 0 2) (“The clear language of the Operating Agreem ents require[d] as a condition of m em bership the paym ent of the $ 50 ,0 0 0 . . . contribution.”) 12 ; see also 1 R IBSTEIN AND KEATINGE ON LTD. LIAB. COS. § 5.7 (J une 20 15) (“One who fails to m ake an agreed contribution nevertheless is a m em ber unless the agreem ent provides otherwise.”). For exam ple, in McDonald v. M iller, No. 0 0 AP-994, 20 0 1 WL 30 0 736 (Ohio Ct. App. Mar. 29, 20 0 1), the operating agreem ent for a lim ited liability com pany provided that “[e]ach Mem ber shall contribute $ 5,0 0 0 as the initial Capital Contribution.” Id. at *1. Appellee claim ed that the $ 5,0 0 0 capital contribution was a m andatory condition precedent to m em bership. Id. at *2. Appellant adm itted that he did not m ake the $ 5,0 0 0 capital contribution. Id. Thus, the Court faced “[t]he narrow issue . . . [of] whether appellant was a m em ber of [the lim ited liability com pany].” Id. at *4. The Court first noted that appellant was listed as a m em ber of the lim ited liability com pany. Id. (“Article III, Section I states that ‘[t]he nam es and addresses of the Mem bers are as follows . . . .’”). The Court then stated: The phrase ‘each Mem ber shall contribute $ 5,0 0 0 ’ presupposes that the person contributing the $ 5,0 0 0 is already a m em ber. If the intent of this provision was 12 Plaintiff asserts that “[t]he reasoning of Chaudhary fits this case to a T” in part because “[t]he Operating Agreem ent [like the one in Chaudhary ] contains a m andatory term requiring an initial contribution of Sprenkle’s ‘interest in artists.’” (Opp’n Mem . at 10 .) However, the operating agreement in Chaudhary explicitly conditioned membership upon paym ent of a capital contribution. See 20 0 2 WL 1831990 , at *1– 2 (“Each m em ber hereby acknowledges that he has irrevocably subscribed for the issuance and sale of a Membership Interest . . . upon the term s and conditions and in consideration of the capital contributions specified in this Agreem ent.”). No such explicit condition exists here. In addition, Plaintiff cites Flores v. Murray , 20 0 7 WL 30 34512 (N.J . Super. Ct. App. Div. Oct. 19, 20 0 7) in support of its argum ent that because Sprenkle failed to m ake the required contribution, he never becam e a m em ber of BWM LLC. (See Opp’n Mem . at 10 .) However, the operating agreem ent in Flores “personally obligate[d] defendant to ‘contribute the $ 20 0 ,0 0 0 investm ent within a six m onth period ending in March of 20 0 4 or forfeit his shares and ownership in [the lim ited liability com pany].’” Id. at *10 . No sim ilar provision exists in the Operating Agreem ent presently at issue. 7 to m ake m em bership conditional upon the paym ent of $ 5,0 0 0 , it is not apparent from the plain language of the docum ent. Additionally, there is no tim e requirem ent designated in the agreem ent when a m em ber is required to m ake the capital contribution. Id. The Court concluded that the plain language of the operating agreem ent established that appellant was a m em ber of the lim ited liability com pany at som e point in tim e. Id. Sim ilar to the operating agreem ent in McDonald, the Operating Agreem ent in the present case first lists Sprenkle and Schur as Managing Mem bers of BWM LLC. (See Operating Agreem ent at ¶ 1.1.) (“The Managing Mem bers, as listed on EXIHIBIT ‘A’ attached hereto, hereby form a lim ited liability com pany nam ed Black Water Managem ent LLC . . . under and pursuant to the laws of the Com m onwealth of Virginia.”). The Operating Agreem ent then requires the Managing Mem bers to provide the initial capital and interest in artists as defined in Exhibit A. (Id. at ¶ 2.1.) The Operating Agreem ent thus “presupposes” that the person m aking the initial contributions is already a m em ber. Moreover, like McDonald, the Operating Agreem ent here does not designate when a m em ber is required to m ake these contributions. Thus, paragraph 2.1 does not sustain Vorlop’s argum ent in support of his Motion to Dism iss. To the contrary, this section of the Operating Agreem ent supports the conclusion that Sprenkle was, at least at som e point, a m em ber of BWM LLC. (2) Paragraph 2.4 of the Operating Agreem ent Next, Vorlop highlights paragraph 2.4 of the Operating Agreem ent. To understand this paragraph of the Operating Agreem ent, the Court m ust note the full context in which it lies. Article II of the Operating Agreem ent notes, in part: Contributions and Distributions 2.1 The initial capital and interest in artists to be contributed by the Managing Mem bers is evidenced by EXHIBIT ‘A’ and shall not exceed that am ount . . . . 2.2 Additional capital contributions m ay be required as determ ined by the Managing Mem bers from tim e to tim e. 8 2.3 A prom ise by a Mem ber 13 to m ake a contribution to the Com pany m ust be set out in writing and signed by the Mem ber. 2.4 A Mem ber or a Mem ber’s representative or successor is obligated to m ake the contributions outlined above notwithstanding the Mem ber’s death, disability, or other changes in circum stances. 2.5 The m em bership interests in the Com pany shall be as listed on EXHIBIT ‘A’ attached hereto. Based on the language set forth in paragraph 2.4, Vorlop argues that “[i]f the alleged failure of Sprenkle to m ake the contribution were [sic] ipso facto fatal to his m em bership status, he could have no successor and there would be no reason to im pose contribution liability on the successor to his m em bership interest.” (Mem . in Supp of Mot. at 5.) In response, Plaintiff contends that Vorlop’s “assertion lacks all m erit because paragraph 2.4 does not speak to the initial contributions of the Managing Mem bers,” but rather “relates to ‘[a]dditional capital contributions’ that ‘m ay be required [of all Mem bers] by the Managing Mem bers from tim e to tim e.’” (Opp’n Mem . at 8) (citing Operating Agreem ent at ¶ 2.2). Based on the Court’s reading, paragraph 2.4 is hopelessly vague. It sim ply refers to “the contributions outlined above,” which could im plicate either the initial contributions in paragraph 2.1 or the additional capital contributions in paragraph 2.2. Thus, paragraph 2.4 fails to provide the best support for either party’s argum ent. (3) Paragraph 12.9 of the Operating Agreem ent In its opposition, Plaintiff highlights paragraph 12.9 of the Operating Agreem ent, which states: “A capital contribution by a Mem ber in proportion to his m em bership interest will ensure that the Mem ber retains his proportion of ownership in the Com pany. In the event a Mem ber cannot or chooses not to contribute capital in proportion to his m em bership interest, his proportional m em bership interest shall be reduced to reflect the am ount of capital he actually contributed.” (Operating Agreem ent at ¶ 12.9.) Plaintiff argues that the plain language of that 13 Paragraph 5.1 of the Operating Agreement notes that there shall be two classes of Mem bers in BWM LLC: (1) Managing Members, and (2) Non-Managing Members. The term “Members” as used throughout the Operating Agreem ent “shall include both Non-Managing Members and Managing Members.” (Operating Agreem ent at ¶ 5.1) 9 paragraph m akes “a Mem ber’s interest . . . contingent upon and in direct proportion to the capital contributed by the LLC’s Mem bers.” (Opp’n Mem . at 9.) While the Court agrees that a m em ber’s interest will be in direct proportion to his contribution, the Court does not believe that the plain language of the Operating Agreem ent conditions m em bership upon the noted contributions. Rather, again, this paragraph appears to presuppose that such person is already a m em ber of BWM LLC. This conclusion is bolstered by Virginia law. Virginia Code § 13.1-10 23.1 m irrors the intent of paragraph 12.9 of the Operating Agreem ent. The Code provides that “[a] m em ber or m anager who fails to perform in accordance with, or to com ply with term s and conditions of, the operating agreem ent shall be subject to specified penalties or specified consequences . . . set forth in subsection D of § 13.1-10 27.” Va. Code § 13.1-10 23.1(A)(1). Virginia Code § 13.1-10 27(D) states in turn that “an operating agreem ent m ay provide in writing that the interest of any m em ber who fails to m ake any contribution that he is obligated to m ake shall be subject to specific penalties for, or specified consequences of, such failure,” including “reducing or elim inating the defaulting m em ber’s proportionate interest in a lim ited liability com pany .” Va. Code § 13.1-10 27(D) (em phasis added). Thus, paragraph 12.9 of the operating agreem ent sets forth a potential rem edy for breach of an operating agreem ent– not a condition precedent to obtaining m em bership. Based on the foregoing three provisions, the plain language of the Operating Agreem ent establishes that both Schur and Sprenkle were, at som e point, m em bers of BWM LLC. See McDonald, 20 0 1 WL 30 0 736, at *4. However, that being said, Plaintiff alleges that Sprenkle contributed absolutely no capital to the Com pany. (See Com pl. at ¶ 37; Opp’n Mem . at 9.) Assum ing arguendo that Plaintiff’s allegation is true, then Sprenkle’s proportional m em bership interest could be reduced to zero percent to reflect the am ount of capital he actually contributed. (See Operating Agreem ent at ¶ 12.9; Opp’n Mem . at 9.) Vorlop, as a “non-m em ber” of BWM LLC, recognizes that he “lacks the knowledge of whether either Mr. Sprenkle or Mr. Schur 10 perform ed their capital obligations to the Com pany.” (Reply Mem . at 7– 8.) Thus, the Court lacks sufficient evidence to know whether Sprenkle ever contributed as required by the Operating Agreem ent. The Court, therefore, is left guessing at whether Sprenkle was a m em ber of BWM LLC at the tim e the Com plaint was filed. See Row land v. Patterson, 852 F.2d 10 8, 112 (4th Cir. 1988) (citing cases) (“[D]iversity of citizenship is determ ined with reference to the date on which a com plaint is filed in federal court.”). Because m aterial jurisdictional facts are unknown at this point in tim e, the Court m ust deny Vorlop’s Motion. See Richm ond, Fredericksburg & Potom ac R.R. Co., 945 F.2d at 768 . (ii) Extrinsic Evidence Besides the plain language of the Operating Agreem ent, Vorlop also presents extrinsic evidence in support of his argum ent. (Mem . in Supp. of Mot. at 5– 9.) But Plaintiff argues that all Vorlop’s “proof” is irrelevant. (Opp’n Mem . at 11.) (1) Registered Agent First, Vorlop notes that the Operating Agreem ent m akes Sprenkle a registered agent of the Com pany. And “even as of [the date of the Motion’s] filing, Mr. Sprenkle rem ains registered agent of record for the com pany.” (Mem . in Supp. of Mot. at 7, Ex. H.) Vorlop argues that under Virginia law, Sprenkle could not have held that capacity if he were not a m em ber of BWM LLC. (Id. at 5.) But Plaintiff contends that “[a] represen tation in a docum ent that one is a registered agent does not grant one the necessary qualifications to hold validly the position of registered agent.” (Opp’n Mem . at 12.) Virginia Code § 13.1-10 15 requires that each lim ited liability com pany continuously m aintain a registered agent, who is either “a m em ber or m anager of the lim ited liability com pany.” Va. Code § 13.1-10 15(A)(2)(a) (em phasis added). The Code defines a m anager as “a person . . . designated by the m em bers of a lim ited liability com pany to m anage the lim ited liability com pany as provided in the . . . operating agreem ent.” Va. Code § 13.1-10 0 2. The Code then separately defines a “m em ber” as “a person that has been adm itted to m em bership in a 11 lim ited liability com pany as provided in § 13.1-10 38.1 and that has not ceased to be a m em ber.” Id. Thus, as Plaintiff argues, Sprenkle could validly qualify to serve as a registered agent if he established him self as a “m anager” of the Com pany, without necessarily being a m em ber of the Com pany. (See Opp’n Mem . at 12 n.3.) Therefore, the fact that Sprenkle is noted as BWM LLC’s registered agent is of no consequence in the present Motion. (2) Organizer Next, Vorlop highlights that Sprenkle is listed as the organizer of the Com pany per the records of the Virginia State Corporation Com m ission. (Mem . in Supp. of Mot. at 6, Ex. E.) The Virginia Code provides that “[o]ne or m ore persons m ay act as organizers of a lim ited liability com pany by signing and filing articles of organization with the Com m ission. Such person or persons need not be m em bers of the lim ited liability com pany after form ation has occurred.” Va. Code § 13.1-10 10 (em phasis added). Thus, Sprenkle’s status as an organizer clearly fails to resolve the present issue. (3) Additional Docum ents Vorlop further attaches a lim ited liability com pany resolution for First Market Bank, which was jointly executed by Sprenkle and Schur. (Mem . in Supp. of Mot. at 6, Ex. F.) He also attaches the 20 0 8 Blackwater Managem ent U.S. Return of Partnership Incom e, Form 10 65, which notes that Sprenkle and Schur each own 50 % of BWM LLC. (See id. at 6, Ex. G at p.2.) But, again, this extrinsic evidence does not answer the question of whether Sprenkle was a m em ber of the Com pany at the tim e the Com plaint was filed. See Row land, 852 F.2d at 112. (4) State Court Litigation Finally, the parties ardently contest the relevance of prior state court litigation. As background, Schur, proceeding pro se, filed suit in Richm ond Circuit Court against Sprenkle, TBT, and others to discover the truth and recover dam ages allegedly caused by the conspirator’s acts and om issions. (See Com pl. at ¶ 4; Opp’n Mem . at 3.) Sprenkle later countersued Schur in Henrico Circuit Court. (Opp’n Mem . at 3.) 12 In his present Motion, Vorlop highlights the fact that Schur previously claim ed he was never a m em ber of BWM LLC. (See Mem . in Supp. of Mot. at Ex. D, at ¶ 11.) 14 But, as Plaintiff notes, “the positions Schur took in earlier litigation regarding his m em bership interest in BWM [LLC] have no bearing in this action brought by BWM [LLC] because Vorlop adm its that Schur is a m em ber of BWM [LLC].” (Opp’n Mem . at 14) (citing Mem . in Supp. of Mot. at 9). The Court finds Vorlop’s argum ent regarding the prior state court litigation entirely irrelevant in decidin g whether Sprenkle is a m em ber of the Com pany. IV. CON CLU SION For the foregoing reasons, Vorlop’s Motion is DENIED. Let the Clerk send a copy of this Mem orandum Opinion to all counsel of record. An appropriate Order will issue. ________________/s/_____________ James R. Spencer Senior U. S. District Judge ENTERED this 27th_ _ _ day of August 20 15. 14 The Richm ond Circuit Court, however, concluded that “[t]here is no question that [Schur] and [Sprenkle] were legally associated; the Operating Agreem ent signed by both parties show[s] their legal association.” (Opp’n Mem . at Ex. 7.) 13
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