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Durham v. Grapetree, LLC

Court of Chancery of Delaware

July 21, 2014

Grapetree, LLC

Submitted: July 9, 2014


Andrew C. Durham, pro se

John G. Harris David B. Anthony Annandale, Berger Harris LLP

Dear Counsel and Litigant:

A father of five gave his children two rental properties, one in Costa Rica and the other in St. Lucia. These siblings then incorporated a Delaware limited liability company, Defendant Grapetree, LLC ("Grapetree" or "the LLC"), to manage these properties. This task, however, has not been easy, largely as a result of the deep animus running between certain members of the Durham family. Andrew Durham, the only non-managing member of Grapetree, has brought this litigation seeking reimbursements by the LLC for expenses incurred in connection with these vacation properties.[1] I previously determined that Andrew, [2] as a member of the LLC, is entitled to be reimbursed in connection with certain expenses incurred on behalf of the LLC, but that he had not met his burden as to specific expenses for which he sought reimbursement. I invited further submissions on the amounts, if any, to which Andrew was due, and address this pending issue, the last issue remaining in this litigation, below.

A. Background

On March 14, 2012, Andrew, acting pro se, filed a Complaint, subsequently amended, alleging both direct and derivative claims against the LLC. The derivative claims were withdrawn, and the remaining request for reimbursement was addressed first in Cross-Motions for Summary Judgment and then, after my finding that the pertinent language in the governing Operating Agreement was ambiguous, during a one-day trial held on February 17, 2014. On May 16, following the submission of post-trial closing arguments, I issued my Post-Trial Letter Opinion.

In my Post-Trial Letter Opinion, I found, based on the managing members' course of conduct, that Andrew was "entitled to reimbursement for all expenditures under $2, 000 made on behalf of the LLC."[3] Nevertheless, Andrew had not, at trial, testified as to the authenticity of the documentation provided to the Court supporting his reimbursement requests. He also did not aver under oath as to the accuracy of that documentation. However, instead of simply finding that Andrew had not satisfied his burden, and in the interests of a just resolution of this matter, I afforded him the opportunity to authenticate his supporting documentation, post-trial. Specifically, I provided Andrew the opportunity to "file a memorandum explaining the expenses he incurred and how they benefited Grapetree, as well as the documentation to support these requests accompanied by appropriate affidavits."[4]

Although I was unable, in my Post-Trial Letter Opinion, to further resolve the issue of which requested reimbursements were appropriate, I provided guidance to the parties that narrowed the scope of eligible reimbursements. In particular, I found that Andrew was only permitted to seek reimbursements for expenses incurred within three years of the date his Complaint was filed; that he was not entitled to recoup litigation costs; that reimbursement for travel expenses was limited to trips that were taken on behalf of the LLC; that his personal loan to his brother Davis was not reimbursable; and that the cost of artwork he unilaterally purchased for the rental properties was not reimbursable, although this artwork remained the personal property of Andrew.[5]

On June 5, 2014, Andrew filed his Opening Memorandum. Grapetree filed its Answering Memorandum on June 26, 2014, and Andrew filed his Reply Memorandum on July 9, 2014. At trial, Andrew sought $28, 983.14 plus interest, while Grapetree argued that the LLC owed Andrew no more than $1, 504.90.[6]However, in his Reply Memorandum, Andrew adjusted his request to $20, 381.70 plus interest, noting that there may also have been a payment made to him by the LLC "in the summer of 2014 [that] has not yet been incorporated into his final accounting."[7] Despite my ruling, Andrew still seeks reimbursements for all of his travel expenses, as well as artwork he purchased for the vacation properties.[8] For the reasons that follow, I find that Andrew is entitled to $1, 504.90 plus pre- and post-judgment interest at the legal rate.

B. Andrew Has Not Met His Burden

In connection with his Opening Memorandum, Andrew submitted an Affidavit in which he "swears under oath and the penalties of perjury that every document he has submitted is true and correct."[9] Andrew contends that this Affidavit "is Plaintiff's averment(s) as best as he can verifying that every single document he has submitted to the Court and every statement he has made is accurate and the absolute truth."[10] In his Opening Memorandum, Andrew reiterates that he "has averred repeatedly [in this litigation] as to the accuracy of all of the receipts and invoices."[11] Andrew has made no further attempt to authenticate the supporting documents, beyond these general and conclusory allegations.

Further, instead of addressing each of the expenses for which he seeks reimbursement, Andrew attached to his Opening Memorandum "a random sampling" of five invoices with various expenses presented for reimbursement, accompanied by copies of "available supporting receipt[s]."[12] I have reviewed this sampling, which seeks reimbursement for several expenses, including the following: airfare, a car rental, and an overnight stay in connection with a trip to meet with the LLC's Costa Rican attorney; cash tips provided to the staff for which there is no receipt; expenses incurred in connection with this litigation, namely copies and notary services; and the purchase of several books for the "St. Lucia library."[13] None of ...

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