Appellate Division Affirms Sale of Business as a Going Concern in Shareholder Dispute

Posted by Jay McDaniel on August 16, 2010

The last-minute motion of a 50-percent shareholder to prevent the sale of a business as part as part of an oppressed shareholder lawsuit was insufficient to block the receiver from proceeding with the transaction, according to a New Jersey appellate court.

The opinion in Georgiadis v. Georgiadis, Docket No.: A-4018-08 (App. Div. June 21, 2010) demonstrates the ability of a chancery judge to manage a business divorce and fashion an equitable remedy based on the facts of the case, and the deference that the appellate courts give to those decisions.

The lawsuit arose between two brothers who owned equal shares in a diner in Mountainside.  One of the brothers left the business to run another diner in Connecticut.  When that diner closed, his brother refused to let him return to the business in Mountainside and an oppressed shareholder action followed.  The defendant brother filed a counter claim and the case was tried in 2007.

The remedy provided the defendant – who still controlled the business – could purchase his brother’s shares within 90 days of the order, otherwise the business would be dissolved, the assets sold by a receiver and distributed in equal shares to the parties.

When the defendant failed to buy his brother’s interest, a receiver was appointed and an offer of $1.35 million was received.  The defendant then offered to buy the plaintiff’s interest for $412,255, and when that was rejected moved to compel the purchase for the amount that the plaintiff would receive less deductions claimed by the defendant.

The trial court denied the motion, holding that the time to make such a purchase of the defendant’s interest had long since passed.  Defendant appealed, arguing that the trial judge had failed to fashion a remedy that would permit the defendant to retain the business.  Although courts are hesitant to force the sale of a going concern when one of the parties wants to continue to operate the business, in this case the application came too late.

In affirming the trial court's decision, the appellate division concluded that equity did not require the trial judge to provide the defendant to buy out his brother’s interest.

An Early Cost-Benefit Analysis in Business Breakups Will Keep Dispute in Perspective

Posted by Jay McDaniel on August 13, 2010

When one or more of the owners of a business think it is time to get divorced, the decision in invariably accompanied by hard feelings.  As most clients ultimately learn, the courts are incapable of resolving emotional issues.  But they deal pretty well with money – which is why it makes sense to find out how much is at stake in the fight that is likely to ensue.  Save the emotions for therapy; money is what the case is about.

The Pitfalls of Misinformation

My experience is that most clients are pretty thoroughly misinformed about the “fair value” of their business as well as their individual interests.  Not infrequently, clients will presume that the high price-to-earnings ratio that one may find in the market of publicly traded stocks will apply equally to their closely held business.  Not so.  Others will fail to recognize the effect that the unusually high salaries paid to the owners will likely have in inflating the value of the business.

Lawyers, meanwhile, have a tendency to assume that their client knows the real value of the business and may make judgments and assessments without enough information.  And as we discussed in a recent post, the most confident of us at the bar are also the most likely to overestimate the return that we can secure for our client.  Thus, objective, even if incomplete, information about the value of a business is critical to effective decision making.

There are any number of variables that are unique to the process of formally valuing a business.  These are ordinarily well beyond the expertise of the accountant who prepares the tax returns or audits the books, so it makes sense to bring in a consultant early to do an informal valuation.  Doing so lets lawyer and client make informed judgments about the resources that should be devoted to this dispute.

Making an Educated Investment

Once we know the value of company, we can make some intelligent decisions about how to proceed to maximize the return.  We take a hard look at the costs of the litigation, direct and indirect: attorney’s fees, expert’s fees, disbursements, lost productivity or income.  With this information, a client can make informed choices about the litigation strategy.

For example, when the costs of litigation are factored in, the offer made by one of the parties may be more attractive.  Long-term litigation may be detrimental to the income of the principals.  In some cases, the party that will ultimately pay the purchase price will have to make some hard decisions about funding the settlement.

Sometimes both sides want to keep the business.  At other times, one person simply wants to be cashed out.  The parties may want – or need to – consider the sale of the business as a going concern or dissolution and distribution to the assets.  Even the “go-no go” decision of whether to file a lawsuit can be implicated.  If there is not much good will in the business and the operating agreement does not prohibit withdrawal, it might make more economic for a client to quit and start a new business that competes with the old.

Getting the ‘Back of the Envelop’ Appraisal

I typically recommend that clients engage a certified business appraiser very early in the case.  (You want to get someone who has the credentials to testify later if necessary.)  Appraisal has its own fact-finding procedures and standards, so you cannot expect anything approaching a final valuation report.

Nonetheless, the consultant who should be able to evaluate the assets and cash flow of the business.  The consultant typically will research the discount rate (rate of return required by a prospective purchaser) and come up with a value based on the businesses’ cash flow.  A relatively detailed description of the business provided by my client, recent tax returns and copies of income statements and balance sheets are usually sufficient for this purpose.

The question of what goes into a valuation is beyond the scope of this post.  I wrote something recently (post here).  Peter Mahler’s blog www.nybusinessdivorce.com also has some very informative posts concerning New York corporations.  Although New Jersey law is a bit different in certain respects, most of the information is of universal application.

Lawyer Confidence May Be Poor Indicator of Results

Posted by Jay McDaniel on August 11, 2010

Lawyers must evaluate cases and try to predict the most likely outcome.  To be successful, to attract and win clients, they must do so with confidence. A recent study of the accuracy of those predictions, however, reveals that lawyers are often overconfident and overly optimistic in their assessments of a client's case.

A recent study published in Psychology, Public Policy and Law revealed that the more confidence a lawyer expressed in his or her ability to achieve a possible result, the more likely he or she was to be fail to achieve those results.  You can read the full article here (Insightful or Wishful - Lawyers Ability to Predict Case Outcomes.pdf).

The lesson appears to be that clients might want to maintain some skepticism about the results that the supremely confident lawyer predicts, even as they recognize that the statistics don't tell the whole story.  The lawyer who doesn't believe in a case, or who lacks confidence will have a difficult time being the zealous advocate that is the touchstone of an effective litigator.  We may not meet our lofty goals as often, but that is not to say that we don't do better for our clients when we are confident in the cause.  In our next post, we'll take a look at predicting the outcome in a business dispute case.

How Important Is The Lawyer's Prediction?

When choosing and working with a lawyer, we all look for someone that we believe can achieve the results that we want.  And we are attracted to the lawyer who both exudes and inspires confidence.  (I look for the same thing when I have to hire a lawyer.  The fact that I have a law degree doesn't make much difference when I am the client.)  We aren't likely to be attracted to a lawyer who is equivocal and uncertain about a successful outcome.

We will make decisions based on the lawyer's assessment, important decisions. To sue or not to sue.  To settle.  To pursue the extra deposition or conduct additional discovery.  We want and need to believe in the lawyer's judgment and expertise.  It is difficult to pursue a litigation strategy when the lawyer isn't confident in its success.

Our need to believe, however, might be contrary to reality.  This study indicated that there is a negative correlation between the confidence of the lawyer and his or her ability to predict the outcome.

The Statistical Evidence

In a study taken primarily among civil litigators, the researchers found that the lawyers who were the most confident about the results they expected to achieve were also more likely to fail to achieve those results.  At the same time, those lawyers who were less confident were more to likely to exceed their expectations.  Women were slightly more accurate than men.  And, perhaps most surprisingly, years of experience did not seem to affect the results.

The researchers conducted surveys of lawyers concerning matters that were expected to be tried within 6-12 months.  They asked the lawyers to define the "win situation in terms of your minimum goal for the outcome of the case."  The lawyers where then asked to give the probabily that they would achieve the outcome.  The researchers then went back and determined the actual results of the matters to see how they compared to the lawyers' predictions.

Most of the lawyers said they were 45-65 percent confident of achieving the outcome that they predicted.  These lawyers were generally accurate in their predictions, particularly among those where were 46-55 percent of the outcome.  But as the lawyers "confidence interval" exceeded 65 percent, the accuracy of their predictions deteriorated.  The most confident lawyers as a group failed to achieve their predictions about 20 percent of the time.

The least confident lawyers as a group did significantly better than their estimates, according to the researchers.  In fact those who were less than 50 percent confident underestimated the results as often as they were accurate.

Lawyers Are a Stubborn Lot

The researchers tried to determine whether the lawyers would be influenced by other factors.  The predictions and confidence levels of the lawyers did not change significantly as the case got closer to trial.  Nor were the lawyers likely to revise their predictions - or be significantly less confident - when asked to think through the negative aspects of their cases.

The opinions of the lawyers after the matter had been resolved also were not subject to major revisions.  Sixty-five percent of the more confident lawyers said they were pleased or very pleased with the outcome, although lawyers achieved their goals in only 57 percent of their cases.  When asked why the cases had failed to meet their predictions, the most frequently given response related to factual and evidentiary issues, the next most cited reason was "witness problems," followed by "client problems."  The least cited reason was attorney performance, including the performance of adversary counsel.

The Non-Scientific Assumptions

What is missing from the research is whether the overconfident lawyer does better for his or her clients than the lawyer who lacks confidence.  In other words, on a similar set of facts, will the client achieve a better net result with the confident lawyer or the not-so-confident lawyer.  In my opinion, the lawyer that is confident becomes a leader among the other lawyers or lawyers in the case, with the judge and with the jury.  There is a benefit to the client, however difficult it is to measure.

 

Limited Liability Company Subject to Claims By Former Managers Holding Membership Interests

Posted by Jay McDaniel on June 11, 2010

I often find myself counseling caution to business owners that want to use equity to reward or attract key employees.  The reason, quite simply, is that if the relationship sours, the employee not only has to be fired but you then have to deal -- at best -- with a disgruntled former employee as owner or, more likely, he or she likely will have to be bought out. 

It's Not Easy to Fire the Owner-Employee

To get a sense of how difficult these circumstances can be, let's look at Ross Holding and Management Co. v. Advance Realty Group (Ross Holding v. Advance Realty (Del).pdf), a case recently decided in Delaware construing New Jersey law.  Advance Realty Group managed real estate properties on the East Coast and awarded membership interests to key managers.  The managers received "Class A" general ownership units and "Class B" units reserved for management.  Reading between the lines of the opinion, it seems that a new investor came into the business and the old management team got their walking papers.

The departing managers redeemed their "B" units for cash and also signed general releases of any employment related claims.  The "A" units were carved out for later redemption.  When the redemption failed to happen, the former managers brought suit alleging various claims of wrongdoing and mismanagement.

Release Did Not Cover Claims Brought As Owners

Construing New Jersey law, the Court held that most of the claims would survive a motion to dismiss because they were brought not as former employees, but as holders of "A" units, including acts that allegedly occurred before the managers were let go.  The releases given by the former management team simply did not extend to their claims as equity holders.

Thus the current management of Advance Realty found itself subject to claims concerning the sale of properties, alleged self-dealing and the like.  Moreover, it likely discovered that the former management team knew far more about the business than would a passive investor, which would certainly make it more difficult to prevail.

Pitfalls of Equity Awards

When dealing with a small limited liability company, or a corporation for that matter, in which employment is bound up with ownership, you don't simply fire one of the owner-employees.  In many corporate oppressed shareholder cases, that termination amounts to per se oppression unless there are reqular dividend payments.  In limited liability companies, the rights may be less clear, but former employees can be well motivated and the litigation costs may be substantial.

There are a couple of approaches that one might take, none of them very satisfactory.  One is the use of a tiered equity structure - the so-called limited equity owners.  These un-owners are have some of the rights of owners (voting, ability to bind the business, etc.) but no right to participate in the upside of the business through equity.  The other way is to set the equity for the employee-owner in advance at a modest amount.  (I was once a limited equity owner of a law firm and my interest was worth the princely sum of $100.)

The better view is simply to beware.  You don't want to grant anyone equity unless you are willing to take on the burdens, and hopefully rewards, of having them as a full owner of the business.  In many cases, if it doesn't work out, the business will have the same headaches as it would if they were one of the founders.

 

Fiduciary Duties to Minority Interests in Operating Agreement Amendments

Posted by Jay McDaniel on June 11, 2010

Limited liability companies are creatures of contract, and the Operating Agreement is the Magna Carta of the business.  Because it is a contract, however, all of the members must consent to any changes to the Operating Agreement, which means that the holdout member has a veto.  In short, the minority rules on major changes.

The Minority Rule Problem

All of the members, save one, may agree that a change to an operating agreement is in the best interests of the business.  Yet that one holdout, for whatever reason, can veto the change because a contract cannot be changed unless all of the parties' to the original agreement consent.

To avoid minority rule, most operating agreements contain some provision permitting amendment by a majority or super-majority vote.  But does that mean that the members can treat amendments as arms length transactions in which they are free to vote as they choose?  Probably not.

You won't find any new Jersey cases on point, but a recent decision involving a Delaware LLC, decided by a court in California, provides some insight on how those issues are likely to be treated.

The Abbey Decision

In Abbey v. Fortune Drive Associates, LLC (Abbey v. Fortune Drive Associates.pdf), the LLC's operating agreement permitted amendment by majority vote.  The majority decided they would be better off without Mr. Abbey and amended the operating agreement to provide for termination of members by majority vote, the terms of the buyout and binding arbitration of termination disputes.  And, of course, immediately voted to terminate the plaintiff.  The LLC then commenced an arbitration, and litigation followed over whether the arbitration provision was enforceable.  The trial court stayed the arbitration.

On appeal the issue was whether the amendment, including the arbitration provision, was enforceable because the LLC in making the amendment had followed the procedures of its Operating Agreement.  While giving deference to the LLC's ability under Delaware law -- and New Jersey is no different -- to govern their relationship by contract, the California court held that different principles apply to amendments.  They key points of the decision included:

  • The broad freedom of members to structure the operating agreement does not mean that the members have the same broad authority to amend the agreement if the vote is less than unanimous.
  • Once the operating agreement has been executed, the members expectations constrain the changes that can be made without all of the members' consent.
  • The members are subject to fiduciary duties to each other in adopting amendments
  • The obligation of the parties to act in good faith and to deal fairly with each other limit the permissible scope of an amendment.

New Jersey LLCs

New Jersey's LLC Act contains a provision, N.J.S.A. 42:2b-22, modeled on the Delaware code allowing the members of an operating agreement to order their affairs by contract and giving broad discretion to the members to provide for amendments. 

And while the scope of the fiduciary duties owed between members of a limited liability company are still developing -- some commentators insist there are none -- it is not realistic to expect that a court would find that some level of loyalty is owed among the members.

New Jersey courts are solicitous of the rights of minority business owners and, given the broad powers of the courts to fashion an equitable remedy, it is unlikely that a wrong will go unremedied even if there is no explicit treatment of the issue in the LLC act. 

Members of an LLC also should bear in mind that New Jersey courts apply broad principles of good faith and fair dealing in contractual disputes when one party is being deprived of the benefit of its bargain in a contract.  Over-reaching behavior -- even in an arm's length commercial transaction and even in strict compliance with the terms of an agreement -- can still result in a damages award.

NJ Entire Controversy Doctrine Bars Claim That Former LLC Member Owns Factory

Posted by Jay McDaniel on May 28, 2010

Without John Murray, the former CEO of Crystex Composites, LLC, the Clifton manufactuer of composite materials would likely not exist.  It was Murray who bought the plant in a bankruptcy sale and ultimately ended up with nothing for his efforts.  Murray's failure, however, to assert that he was the rightful owner of the Crystex plant (Photo of Crystex Composites) was cut off by application of New Jersey's Entire Controversy Doctrine, which requires that any claim between the parties to a lawsuit be resolved in one action.

This case has a long history.  Murray put together a management team, investors, and arranged financing for the reborn Crystex in 2003, but he was ousted by the other members of the LLC in May 2004 after failing to make a capital contribution of $200,000.  Murray sued, alleging that his pledge of stock to secure a line of credit satisfied his obligation to the business and challenging his removal from the business.

The case went to trial in state court in 2006, with claims of misconduct by both sides.  Ultimately, the case turned the issue of whether a Memorandum of Understanding, by which Murray agreed to make his contribution by March 2004 or forfeit his interest, was enforceable.  Murray lost, with the court finding that he had "never acquired an interest in Crystex."  Murray appealed, but was unable to reverse the trial court's decision on the core issue of his ownership.  Opinion here.

Murray then filed suit in federal court, arguing that if he never had an interest in Crystex, as determined in the state court litigation, then the assets that he acquired personally in the backruptcy proceeding, belonged to him, not Crystex.  Copy of Complaint here.  Defendants successfully moved the federal court for summary judgment, arguing that New Jersey's Entire Controversy Doctrine, which requires litigation of all claims between the parties in one action, barred Murray's attempt to claim ownership of the property.  Opinion here.

In what is likely to be the end of this litigation, Murray's appeal to the Third Circuit Court of Appeals was rejected.  Murray argued that his claim to be the owner of the Crystex factory did not arise until the state trial court held that he had never acquired an interest in the business and that it was simply unfair to prevent him from purusing those claims now.  The Third Circuit disagreed (opinion here) holding that the wrongful act of possessing the property began in 2003 and that Murray was not an "uniformed litigant."  Murray's interest was in dispute at the time of the state court lawsuit and that as the plaintiff he had to know that that the lawsuit implicated his rights in the Crystex factory.  Because the same parties and factual allegations were involved, the Third Circuit held that Murray was obligated to raise his claim to ownership in the first state court action. 

It was a creative theory, but unfortunately for the plaintiff too late to be of use. 

A final note in the interest of full disclosure.  I represented John Murray in the earliest days of this case.  With the meeting scheduled to oust Murray, and the outcome already written on the wall, I had the brilliant, but unsuccessful idea, to bring a claim on behalf of Crystex itself seeking a TRO to enjoin the meeting.  As I was making my typically compelling arguments, adversary counsel's cell phone rang and he took the unusual step of answering it during oral argument.  It was a majority of the members calling, and I was fired.  The client came to the same conclusion some weeks later.

Exercise Care in Valuing Interests in New Jersey Business Breakups

Posted by Jay McDaniel on May 27, 2010

A court orders a business valuation in a matter involving an oppressed shareholder claim. The appraiser, carefully applying the standards of his profession, sends an engagement letter describing a fair market value determination.  The appraisal will value the enterprise as a whole, then apply minority and marketability discounts.  The selling shareholder is going to argue for discounts – they always do – but the report will have all the information necessary for a determination either way.

For the minority shareholder, this can be a trap. And it may be the wrong move to wait for the trial to fight out the discount issue and the battle over the definition of fair value should be fought as early in the case as possible.  Here are a few reasons why.

The appraiser is going to prepare a report based on the standards of the valuation industry and that standard is fair market value – what a willing buyer would pay a willing seller.  He is going to try to avoid the tough issue of whether any discounts should apply. The AICPA’s Statement on Standards for Valuation Services No. 1 relegates the definition of “fair value” to a single paragraph in an appendix as a matter determined by state law in judicial proceedings.  

While fair value can mean anything that the circumstances dictate, New Jersey courts will usually, but not always, interpret fair value as simply the seller’s proportionate share of the value of the whole.  In other words, no discounts.

The professional appraiser, however, will make a thorough analysis of the amounts of a minority – lack of control – and marketability – lack of a public market – for the different interests, but will not probe to whether the application of discounts creates a windfall for either party unless told to do so by the court.  And in the real world, once all of that work is placed in a professionally bound volume with charts and statistics, it is harder to argue that it should be ignored.  

Minority and control discounts, however, are reserved for the extraordinary case in which they are necessary to prevent an unfair result.  The presumption should be that the selling shareholder gets his or her proportionate share of the full value of the enterprise.  An opinion from the court-ordered expert that there is no economic unfairness in that result is going to carry a great deal of weight in the ordinary case.

There is no reason to wait for the eve of trial to go through the exercise of establishing that fair value does not require any discounts to the minority’s interest.  The seller is going to become fixed on the small number once it has been written down, making it all that much harder to resolve the case without a trial.  

Unless, of course, you're the seller.  In which case, I would just sit tight.  Maybe no one will notice.

Expelling a Member of a NJ Limited Liability Company

Posted by Jay McDaniel on May 26, 2010

Time was that the expulsion of a troublesome individual from a limited liability company or partnership generally meant that the business entity would have to be dissolved and either start over or be sold off.  Changes to partnership laws -- and the adoption of similar provisions in New Jersey's limited liability company -- make it possible to remove an LLC member without dissolution of the entity.

Unlike Delaware law -- on which New Jersey's LLC Act was modeled -- or New York law, New Jersey law includes a provision borrowed from partnership statutes that permits the involuntary dissociation of a member for wrongful conduct or when it is simply no longer reasonably practicable to stay in business together.  The statutory provision comes from uniform limited liability company and partnership laws.  This departure from Delaware law is a substantial consideration when organizing an LLC or when a dispute arises between the owners.

What that means in practical terms is that for LLCs organized under New York or Delaware Law, the aggrieved parties must often establish that the business cannot go on in pursuit of its original purpose if they are to immediately recoup their investment or, in similar fashion, that the behavior of the offending party is so egregious that the business cannot continue.

By borrowing from the law of partnerships, New Jersey provided the members of LLCs with something short of mutual assured destruction of the business found elsewhere. The statute permits a court to involuntary dissociate -- that is, to expel -- a member under the following circumstances.

(a) the member engaged in wrongful conduct that adversely and materially affected the limited liability company's business;

(b) the member willfully or persistently committed a material breach of the operating agreement; or

(c) the member engaged in conduct relating to the limited liability company business which makes it not reasonably practicable to carry on the business with the member as a member of the limited liability company.

N.J.S.A. 42:2B(3)(3)(a)-(c).

A useful comparison can be drawn from In re Arrow Investments in which the Delaware Chancery Court declined to order the dissolution of an LLC absent a showing that the business could not carry on as the parties intended, despite claims of underhanded dealings by some of the members. In Horning v. Horning, the trial judge readily acknowledged that exit from a New York LLC by way of dissolution required a showing not just that the aggrieved member was forced unfairly to stay in business with someone, but rather that the business could not carry on. Since the business could carry on, dissolution was denied.

The circumstance can be further complicated by operating agreements that prohibit withdrawals or terminations of memberships, and which may otherwise be enforceable.

No New Jersey decision has yet to apply the standards for expulsion, but there is some indication of how they are likely to be applied in Sebring Assocs. v. Coyle, 347 N.J. Super. 414 (App.Div. 2002), a partnership dispute. Here the Court found that an individual had been invited to join the partnership for a specific reason, that he had failed to fulfill that purpose and that his refusal to participate in cash calls -- forcing the other partners to make up the shortfall -- was unfair.

The borrowing of this partnership divorce provision from the partnership law certainly makes it easier for a New Jersey LLC to force out a troublesome member, notwithstanding the existence of contrary terms in the Operating Agreement or other remedies in the LLC Act. On the other hand, the ease with which a member may be expelled is more readily abused..

Operating Agreement Determines When New York LLC May Dissolve

Posted by Jay McDaniel on May 05, 2010

The romance of the new business venture has waned. There are disputes between the principals. Emotions are clearly running high. In short, this business marriage, consummated as a limited liability company, no longer works the way at least one of the parties intended. Is that enough under New York for the members of the LLC to get divorced? The answer from the New York Appellate Division, Second Department, is a resounding "No."

The decision In re 1545 Ocean Avenue (opinion here), which involved a limited liability company formed for purpose of redeveloping property in Bohemia, NY. The LLC's two members were business entities, Crown Royal and Ocean Suffolk Properties, both in the construction business, and the managers were the principals of those two business entities. Various disputes arose between the managers, including the price charged by one of the members for work on the project and the selection of an architect, and ultimately one of the members asked for a divorce and walked out on the project. The other member continued on, however, and with only a few weeks Crown Royal sought to dissolve the LLC.

Crown Royal claimed deadlock and the trial court granted the petition for dissolution. The Appellate Division reversed, holding that Crown Royal had failed to establish that the LLC had been prevented from continuing in accordance with the terms of its operating agreements. (New York law, you may recall, does not provide for the expulsion of individual members.)

The dissolution of an LLC organized under New York law is "initially a contract-based analysis," the Second Department wrote. Limitied Liability Company Law 702 permits judicial dissolution "whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement." Thus, the court reasoned, it is not proper to consider standards developed in similar disputes involving corporations or partnerships.

Rather, a court considering dissolution of an LLC must determine whether the manager's agreement is such that the LLC cannot continue to function as envisioned by the terms of the written agreements between the members. The touchstone of the analysis, according to the court, is whether the the management of the entity "is unable or unwilling to reasonably permit or promote the stated purpose of the entity to be realized or achieved or the entity is financially unstable."

Now the interesting gem in this decision is the fact that because the Operating Agreement did not limit the authority of its managing members, and because in the absence of such a limitation either one could act unilaterally on behalf of the LLC, there could be no deadlock preventing the company from pursuing its stated objectives. Simply put, because the company was still operating and pursuing the real estate projects for which it was organized, it mattered not that one of the members was so unhappy as to seek a dissolution of this business marriage.