United States District Court, W.D. Wisconsin
JAMIE R. LEIFKER and CATARI A. LEIFKER, Plaintiffs,
LEIFKER GRAIN, LLC, ROBERT J. LEIFKER, and RITA M. LEIFKER, Defendants.
FINDINGS OF FACT & CONCLUSIONS OF LAW
D. PETERSON DISTRICT JUDGE.
case requires the court to value and divide a family farming
business. Plaintiffs Jamie R. Leifker and Catari A. Leifker
had been raising corn and soybeans with Jamie's parents,
defendants Robert J. Leifker and Rita M. Leifker. The farming
operation was run through a set of limited liability
companies, the two most important of which were Leifker
Grain, LLC, and Leifker Farms, LLC. The basic idea was that
Leifker Farms would grow corn and soybeans under contracts to
Leifker Grain, and Leifker Grain would own the crops and
market them to take advantage of commodity market conditions.
In 2014, a family conflict led Jamie and Catari to formally
withdraw from Leifker Grain, in which they owned a 45 percent
interest. Jamie and Catari filed this suit to recover the
fair value of their share of Leifker Grain, as provided in
Chapter 183 of the Wisconsin Statutes, which governs limited
parties agree that the fair value of Leifker Grain is its net
asset value, which simply means the value of its assets less
the amount of its liabilities. But they sharply dispute that
value: Jamie and Catari contend that their share is worth $1,
572, 194; Robert and Rita contend that it is $252, 053.
case proceeded to a bench trial. This opinion sets forth the
court's findings of fact and conclusions of law under
Federal Rule of Civil Procedure 52. The court concludes that
plaintiffs are entitled to monetary judgment in the amount of
$1, 496, 646.90.
AND PRELIMINARY RULINGS
and Catari seek the fair value of their shares in Leifker
Grain. Leifker Grain is an LLC organized under Wisconsin law,
so Wisconsin law governs the parties' dispute. Chapter
183 of the Wisconsin Statutes governs rights and obligations
of an LLC and its members unless the parties' operating
agreement states otherwise. See Gottsacker v.
Monnier, 2005 WI 69, ¶¶ 14-19, 45, 281 Wis.2d
361, 697 N.W.2d 436. The parties agree that their operating
agreement did not modify their rights and obligations, so
Chapter 183 applies.
Wis.Stat. § 183.0604, disassociating members of an LLC
are entitled to a distribution for the “fair
value” of their shares. Once a member “becomes
entitled to receive a distribution, ” that member has
the status of a creditor and is entitled to all remedies
available to a creditor. Wis.Stat. § 183.0606. A claim
arising under Chapter 183 may be enforced against the LLC
itself and, if its assets have been liquidated, against
members to whom the assets have been distributed in
liquidation. Wis.Stat. § 183.0909. Here, the parties
agree that Jamie and Catari are entitled to the “fair
value” of their shares.
183 does not provide a method to determine an LLC's fair
value, but the parties agree that the appropriate method here
is the “net asset approach.” Under this approach,
Leifker Grain' value is equal to the value of its assets
less the amount of its liabilities.
and Rita contend that Leifker Grain should be valued as of
the date of the liquidation of its assets. They contend,
essentially, that the liquidation value is fair because Jamie
and Catari caused the liquidation by withdrawing from the
LLC, and that it would be fair to use the liquidation value
because that is what Robert and Rita actually got for the
assets. The argument has some equitable appeal, although
there are also countervailing equitable arguments, too. But
the equities do not matter when the statute is clear. Under
Wis.Stat. § 183.0604, the dissociating members are
entitled to the fair value of their share “as of the
date of dissociation.” The parties agree that the date
of dissociation is January 16, 2015, and the court will use
that date as the valuation date.
Testimony of Rita Leifker
and Rita's main challenge to the valuation of Leifker
Grain was presented through Rita, who testified extensively
about Grain's accounting practices and records. Rita
presented what was essentially a forensic analysis of the
books of both Leifker Grain and Leifker Farms. She testified
that Leifker Grain's accounting practices were shoddy,
that Jamie and Catari's expert overlooked various
liabilities of Leifker Grain, and that Jamie and Catari
actually owe Leifker Grain certain sums of monies because
Leifker Grain had paid for their personal expenses. Jamie and
Catari objected to Rita's testimony repeatedly throughout
the trial. Tr. 1a, at 17:5-16; Tr. 1p, at 81:15-82:10,
121:24-122:12; Tr. 2a, at 122:24-123:19. The court heard
Rita's testimony, but deferred ruling on its
admissibility until now. The court will exclude Rita's
testimony on the accounting matters for two basic reasons.
Rita's testimony about the finances and accounting of the
two limited liability companies is an expert analysis that
was not properly disclosed in an expert report under
Fed.R.Civ.P. 26(a)(2). The court already ruled that Robert
and Rita's expert, Ron Helle, had not timely disclosed
his opinions and that Robert and Rita would not be allowed to
present expert opinion at trial. Dkt. 18. Defendants cannot
circumvent this ruling by having Rita provide their expert
analysis at trial. See Compania Administradora de
Recuperacion de Activos Administradora de Fondos de Inversion
Sociedad Anonima v. Titan Int'l., Inc., 533 F.3d
555, 560-61 (7th Cir. 2008).
even if Rita were testifying in some capacity other than an
expert, her testimony and the exhibits on which she relied
were not timely disclosed. See Whitfield v. Int'l
Truck & Engine Corp., 755 F.3d 438, 447 (7th Cir. 2014).
Rita was never disclosed as a witness with knowledge of
Leifker Grain's finances. In fact, Rita testified at her
deposition that she had “nothing to do with”
Leifker Grain. Tr. 2a, at 122:24-123:19.
also failed to timely disclose the exhibits on which Rita
relied. For example, at trial they sought to introduce
Defense Exhibit No. 510, an 184-page document showing crop
prices, but they had not produced the document during
discovery, and Jamie and Catari saw it for the first time one
week before the trial. There are other examples.
See, e.g., Defense Exhibit Nos. 550 through
555.1 Jamie and Catari had no meaningful ...