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OPINION
Judge Maurice Portley delivered the Opinion of the Court, in which
Presiding Judge Patricia A. Orozco and Judge Randall M. Howe joined.
P O R T L E Y, Judge:
1
We are asked to resolve whether KCI Restaurant
Management LLC (KCI), an ousted member of SVP Restaurant
Financing, LLC (SVP), can bring a derivative action on behalf of SVP
despite the plain language in Arizona Revised Statutes (A.R.S.) section
29-831 (2014) that only members of a limited liability company can bring
derivative actions. We also address the cross-appeal of Holm Wright Hyde
& Hays PLC, and individual members and their spouses (collectively
Holm), challenging the denial of their request for attorneys fees. For the
following reasons, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
2
SVP operates approximately two hundred Pizza Hut
restaurants in five states. SVP had three membersKCI, Jan Kasun, and
David Dolgen. SVP, Kasun, and Dolgen sued KCI in 2009 for breach of
contract, bad faith, breach of fiduciary duty, tortious interference with a
contract, and conversion. See SVP v. KCI, et al., Maricopa County Superior
Court No. CV2009-022740 (underlying case). The trial court granted
SVPs motion for partial summary judgment and entered a final judgment
against KCI for converting $425,000 of SVPs funds. Kasun and Dolgen then
scheduled a special meeting to expel KCI from SVP. After KCI
unsuccessfully sought a temporary restraining order to prevent the special
meeting, KCI was expelled as a member from SVP.
3
KCI then amended its third-party complaint against SVP,
Kasun, and Dolgen in the underlying case to request a judgment declaring
that it was still a member in SVP or, alternatively, damages for breach of
fiduciary duty. Five months later, and alleging it was a member of SVP,
KCI filed this separate derivative action against Holm, SVPs lawyers in the
underlying litigation, for professional negligence.
2 We can, however, affirm the judgment if the court was correct in its ruling
for any reason. Phelps Dodge Corp. v. El Paso Corp., 213 Ariz. 400, 404 n.7,
17, 142 P.3d 708, 712 n.7 (App. 2006) (quoting City of Tucson v. Morgan, 13
Ariz. App. 193, 195, 475 P.2d 285, 287 (1970)); see Dube v. Likins, 216 Ariz.
406, 417 n.3, 36, 167 P.3d 93, 104 n.3 (App. 2007) (in examining the trial
courts ruling, we noted that we may affirm the trial court if it is correct for
any reason supported by the record).
6
(Emphasis added.)
18
Although there is no dispute that KCI was a member of SVP
at the time it alleges Holm was negligent, the plain language of 29-831(4)
requires that KCI also needed to be a member at the time the derivative
lawsuit was filed. Id. There is nothing in the statute that supports KCIs
argument that a derivative action can be brought so long as the entity was
a member at the time of the transaction or demand. See City of Phoenix v.
Donofrio, 99 Ariz. 130, 133, 407 P.2d 91, 93 (1965) ([C]ourts will not read
into a statute something which is not within the manifest intention of the
legislature as gathered from the statute itself.).3 And KCI has not
articulated a legal basis for ignoring the plain language of the statute.
Consequently, because KCI was ousted as a member before it filed its
derivative action, it cannot as a matter of law maintain the derivative action
on behalf of SVP.
KCI also challenges A.R.S. 29-831s constitutionality. KCI did not raise
the issue with the trial court, and we will not address it. See McDowell
Mountain Ranch Land Coalition v. Vizcaino, 190 Ariz. 1, 5, 945 P.2d 312, 316
(1997) (declining to consider constitutional claims not first made to the trial
court); Cullum v. Cullum, 215 Ariz. 352, 355 n.5, 14, 160 P.3d 231, 234 n.5
(App. 2007) (generally, issues raised for the first time on appeal are waived).
3
:ama
10