Grants Pass Imaging & Diagnostic Center v. Marchini

The term "member," as used in an LLC Operating Agreement, means only an active or current member of the LLC, not a former member.

Grants Pass Imaging & Diagnostic Center, LLC (GPIDC), appealed a judgment for Carlos Marchini, M.D. (Marchini). GPIDC was formed to provide diagnostic testing services. GPIDC retained a firm to draft the agreement, which went into effect on January 1, 2001. Marchini later began constructing a sleep laboratory. GPIDC informed Marchini the operation of that laboratory would violate their agreement. Marchini withdrew from GPIDC, but GPIDC continued to refer patients to him. Based on the sleep laboratory, GPIDC eventually filed suit against Marchini for breach of fiduciary duty, breach of contract, and breach of implied covenant of good faith and fair dealing. On appeal, GPIDC assigned several errors and each party argued that the term “member” is ambiguous and requires judgment as a matter of law. The Court agreed with the trial court that the term “member” is unambiguous and means a current or active member. Marchini was a former member and therefore the agreement no longer applied. With regards to the second argument, the Court found that GPIDC’s admission foreclosed any breach of fiduciary duty claim. Finally, Marchini’s actions did not constitute a claim for breach of the implied duty of good faith and fair dealing. Affirmed.