Background
Wayne and Susan Masterman were the sole members of Port Midway, LLC, which operated the Goose and Gander restaurant on property leased from Snakeman Properties, LLC. Port Midway sued Snakeman for breach of the lease in 2019.
While the litigation was pending, the Mastermans signed a purchase agreement, effective June 1, 2022, with Robert Carter. The Fayette Circuit Court found that the agreement transferred the Mastermans’ ownership of Port Midway to Carter. Carter then sought to settle the landlord dispute and supported dismissal of the litigation, while the Mastermans objected and appealed the resulting dismissal order.
The Court’s Holding
The Kentucky Court of Appeals affirmed. Reviewing the contract de novo, the court held that the purchase agreement was unambiguous and enforceable. Its title identified the transaction as involving “Goose & Gander / Port Midway LLC,” which were names for the same legal entity, and the Mastermans signed the agreement in their own names. Because they owned Port Midway rather than its assets individually, the agreement conveyed their ownership of the LLC to Carter. The court therefore declined to consider extrinsic evidence of a different intent and rejected the Mastermans’ lack-of-mutual-assent argument.
The court also held that Carter acquired Port Midway’s tangible and intangible property, including its cause of action against Snakeman. The Mastermans consequently had no judicially recognizable interest in that claim and, as former members, lacked authority under KRS 275.335(1)(a) to direct litigation on the LLC’s behalf. The Court of Appeals further declined to consider their request for rescission based on Carter’s alleged breach because that relief had not been preserved and would require an original action in a circuit court.
Key Takeaways
- An unambiguous written agreement is interpreted from its four corners, without extrinsic evidence offered to create an ambiguity.
- The Mastermans’ signed agreement transferred their ownership of Port Midway to Carter, despite their claimed subjective intent to sell only the restaurant operation or assets.
- After selling the LLC, the former members lacked standing and statutory authority to continue controlling the LLC’s lease litigation.
Why It Matters
The decision underscores that an LLC ownership transfer can also transfer control over pending company litigation and the claims being asserted. Former members generally cannot continue directing those claims after divesting their interests.
It also illustrates the procedural limits of an appeal: a party seeking rescission for an alleged post-agreement breach must properly present that claim in an original circuit-court action rather than ask an appellate court to decide it in the first instance.