Court Error – Equitable Contribution

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WI Court of Appeals – District III

Case Name: Wisconsin Wealth Management , LLC, v. Key Property Management, LLC,

Case No.: 2017AP89

Officials: Stark, P.J., Hruz and Seidl, JJ.

Focus: Court Error – Equitable Contribution

Steven Ambrosius, Daniel Pamperin, and Sarah and David Felton (collectively, “the Ambrosius Group”) made numerous payments to Johnson Bank pursuant to their respective personal guaranties on a loan Johnson Bank issued to Riverside Group Investments, LLC (“Riverside”). In this lawsuit, they sought equitable contribution from William and Dean Johnson, who also signed personal guaranties on the loan, for the Johnsons’ proportionate share of those payments. The circuit court denied the Johnsons’ motion to submit the matter to arbitration, and it granted summary judgment in favor of the Ambrosius Group and against the Johnsons.

The Johnsons assert the circuit court erroneously denied their motion to compel arbitration based on an arbitration provision contained in Riverside’s operating agreement. We reject this argument primarily because none of the individuals comprising the Ambrosius Group was a party to Riverside’s operating agreement. Rather, the agreement bound only Riverside’s members, which were other limited liability companies that the individuals involved in this lawsuit had formed. We also conclude the arbitration provision was not triggered with respect to the equitable contribution claim at issue here, nor does that claim implicate a “Limitation on Liability” provision within the Riverside operating agreement. As a result, the Ambrosius Group’s claim in this lawsuit is not a “dispute arising with respect to” the Riverside operating agreement for purposes of the arbitration provision.

The Johnsons also assert the circuit court erroneously granted summary judgment in favor of the Ambrosius Group. We conclude the court correctly granted summary judgment because the record establishes the Ambrosius Group is entitled to equitable contribution from the Johnsons for a portion of the payments they made to Johnson Bank under their guaranties. Accordingly, we affirm.

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.