- Court
- New York Supreme Court, Appellate Division, First Department
- Case
- SJI Renewable Energy Ventures, LLC v. REV LNG, LLC
- Date
- June 4, 2026
- Slip Op. No.
- 2026 NY Slip Op 03519
Background
REV LNG, LLC (the Company) is a supplier and distributor of liquid natural gas, compressed gas, and renewable natural gas, which also services renewable natural gas production infrastructure at dairy farms. REV LNG Holdings, LLC (Holdings) originally owned 100% of the Company. In December 2020, SJI Renewable Energy Ventures, LLC (SJI Renewable) purchased a 35% interest for approximately $10.5 million, with an agreement to acquire the remaining interest if the Company achieved certain EBITDA-related financial milestones.
The parties’ fourth amended and restated LLC agreement governed the buyout process. Section 11.7 set forth a procedure requiring Holdings to provide a statement with its determination of Company EBITDA and a fair market value multiple (the FMV Multiple). If the parties disagreed on the FMV Calculation, they were to negotiate in good faith and, failing that, submit the dispute to appraisers. Holdings moved to compel SJI Renewable to engage in this appraisal process and to stay the action. Supreme Court, New York County (Andrew S. Borrok, J.), denied the motion. Holdings appealed.
Holding
The Appellate Division, First Department, unanimously affirmed the denial of Holdings’ motion, with costs. The Court held that, based on the unambiguous terms of the LLC agreement, the Section 11.7 dispute resolution process applied only to calculations regarding the FMV Multiple, not to the determination of Company EBITDA.
The panel focused on the defined term “FMV Calculation,” which under Section 11.7(a) encompassed only the “determination of the FMV Multiple.” Because the agreement separately defined and referenced Company EBITDA and FMV Multiple, there was no basis to conclude that the parties intended the EBITDA determination to fall within Section 11.7’s appraisal and dispute resolution framework. The agreement was governed by Pennsylvania law, and the Court applied principles of contract interpretation consistent with that state’s jurisprudence.
Takeaways
This decision illustrates the critical importance of precisely defining dispute resolution mechanisms in complex LLC agreements. The Court’s focus on the defined term “FMV Calculation” and its narrow scope demonstrates that New York courts will hold parties to the specific terms they negotiated, even when a broader reading might seem commercially logical. Practitioners drafting buyout provisions should ensure that each component of a multi-variable purchase price formula—here, EBITDA versus the fair market value multiple—is expressly included in any mandatory dispute resolution clause.
The ruling also demonstrates that courts will not expand appraisal or arbitration provisions beyond their expressly negotiated scope, even in sophisticated commercial agreements between well-represented parties.
Why It Matters
This case is significant for transactional attorneys and commercial litigators working with LLC operating agreements and complex buyout provisions. The distinction between components of a purchase price formula matters enormously when disputes arise. By limiting the appraisal process to the FMV Multiple alone, the Court effectively determined that disputes over EBITDA calculations must be resolved through litigation rather than through the contractual appraisal mechanism. This highlights the need for drafters to explicitly enumerate every variable subject to a particular dispute resolution pathway, or risk having portions of their pricing disputes resolved in a different forum than intended.