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Slavens v. Slavens

Supreme Court of Idaho

November 3, 2016

JAMES ADAM SLAVENS, ALEXA SLAVENS, and TANNER SLAVENS, TWIN G HOLDINGS, LLC, and derivatively, THE ESTATE OF JAMES KENNETH SLAVENS, Plaintiffs-Respondents,
v.
MELANIE SLAVENS, both personally and as administrator of THE ESTATE OF JAMES KENNETH SLAVENS, Defendants-Appellants.

         2016 Opinion No. 124

         Appeal from the District Court of the Seventh Judicial District of the State of Idaho, Bonneville County. Hon. Jon J. Shindurling, District Judge.

         The judgment of the district court is vacated and the case is remanded for further proceedings.

          Parsons, Smith, Stone, Loveland & Shirley, Burley, for appellants. William A. Parsons and Randy Stone argued.

          John Simmons, JD LLM, PC, Idaho Falls, for respondents.

          BURDICK, Justice.

         Melanie Slavens, both personally and as administrator of the Estate of James Kenneth Slavens, brings this appeal from the Bonneville County district court. After the death of James Kenneth Slavens (Jim), James Adam Slavens, Alexa Slavens, Tanner Slavens, Twin G Holdings, LLC, and Jim's Estate (Respondents) sought a declaratory judgment as to the parties' rights in Twin G Holdings, LLC (Twin G), which Jim formed before he died. The district court determined that Melanie had no rights in Twin G and entered judgment that: (1) Jim's three oldest children-James Adam, Alexa, and Tanner (the Eldest Children)-each own 33% of Twin G; (2) the Eldest Children are Twin G's sole members; (3) James Adam is Twin G's sole manager; and (4) Melanie was never a member or manager of Twin G. We vacate and remand.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         On December 12, 2012, Jim was killed in a fatal car wreck. Jim predeceased his wife (Melanie) and five children. Those five children consisted of twins (Gracie and Grant) Jim had with Melanie, and the Eldest Children, who were from Jim's previous marriage.

         Seven years before Jim died, he formed the Idaho LLC-Twin G-that is the subject of this appeal. On June 22, 2005, Jim formed Twin G for asset protection purposes. Jim's concerns about asset protection arose after a buyer to whom Jim had sold a business defaulted on debts owed to Jim and other creditors. When those creditors began pursuing Jim, he formed Twin G to shield his assets from a judgment. Twin G was named after Jim and Melanie's twins, Gracie and Grant. Twin G's Articles of Organization list Jim as Twin G's managing member. Twin G's Operating Agreement designates Jim and Johnny Slavens, Jim's brother, as members, with Jim owning 1% and Johnny owning the remaining 99%. Johnny held a largely passive role in Twin G and testified he held the 99% ownership interest in Twin G for Jim's benefit until Jim's death and then for the Eldest Children's benefit.

         Jim's relationship with Johnny soured when real property recorded in Johnny's name became involved in a lawsuit in spring 2011. Although Johnny had deeded the property to Jim, Jim never recorded the deed. Therefore, Johnny blamed Jim for the lawsuit. After Jim settled the lawsuit, Johnny told Jim he "need[ed] to absolutely avoid th[o]se types of situations going forward" and expressed hesitation about "allow[ing] someone else to use [Johnny's] name on things for which [he] d[id] not fully understand the details."

         Apparently to that end, in April 2011, Jim took efforts to remove Johnny from Twin G. Jim first sent to Johnny an "Addendum" to Twin G on April 21, 2011. If signed, the Addendum purported to transfer Johnny's ownership interest. The Addendum recited that Johnny "desires to have no interest in Twin G" and, therefore, "has agreed to convey his entire interest to James K. Slavens and Melanie Slavens in such a way that they will share an equal interest in the property." When Jim sent the Addendum to Johnny, Jim explained he was unsure whether the Addendum was the proper way to transfer Johnny's ownership interest and requested that Johnny wait to sign it. Johnny never signed the Addendum.

         One day later, Jim sent to Johnny an Amended Certificate of Organization for Twin G. Jim, who had already filled in the Amended Certificate, requested Johnny's signature so that Jim "can get [Johnny] out of [Twin G.]" Whereas the Addendum indicated Johnny was merely transferring his ownership interest, the Amended Certificate went further. The Amended Certificate indicated Johnny was "[d]elet[ing]" himself as a member, adding Melanie as a member or manager, and authorizing Jim's ownership of 75% of Twin G and Melanie's ownership of the remaining 25%. Johnny signed and returned the Amended Certificate to Jim in April 2011. However, Jim never filed it with the Idaho Secretary of State. Instead, Jim kept the Amended Certificate in his personal files for approximately nineteen months. Jim could have filed the Amended Certificate when filing Twin G's annual reports in 2011 and 2012, but did not do so. Jim died without filing the Amended Certificate.

         After Jim died, Melanie opened a probate proceeding in Utah, where Jim was domiciled, and was appointed special administrator of Jim's estate. Melanie then asserted rights in Twin G and filed the Amended Certificate with the Idaho Secretary of State. Johnny maintained he still had membership and ownership rights in Twin G, despite having executed the Amended Certificate. As Johnny explained, delivery of the Amended Certificate to Jim was conditional on Jim filing it with the Idaho Secretary of State, which Jim never did. Thus, in August 2013, Johnny executed transfer documents purporting to transfer and assign membership, management, and ownership rights in Twin G to the Eldest Children.

         In October 2013, Respondents filed a complaint seeking a declaratory judgment as to their rights in Twin G. Melanie moved to dismiss, which the district court denied. Respondents then moved for partial summary judgment, which the district court granted. Melanie filed a motion to reconsider, which the district court denied. Thereafter, the district court entered a certified judgment under Idaho Rule of Civil Procedure 54(b). Melanie timely appealed.

         II. ...


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