     The summaries of the Colorado Court of Appeals published opinions
  constitute no part of the opinion of the division but have been prepared by
  the division for the convenience of the reader. The summaries may not be
    cited or relied upon as they are not the official language of the division.
  Any discrepancy between the language in the summary and in the opinion
           should be resolved in favor of the language in the opinion.


                                                                  SUMMARY
                                                              March 21, 2019

                                2019COA42

No. 17CA2036, Gagne v. Gagne — Business Organizations —
Limited Liability Companies — Judicial Dissolution

     A division of the court of appeals addresses several issues

relating to dissolution of the parties’ co-owned limited liability

companies. These issues include the appropriateness of dissolution

and the manner in which the dissolution is to be carried out. In

addressing these issues, the division provides further guidance for

applying several of the factors articulated in Gagne v. Gagne, 2014

COA 127, relating to whether a court should order dissolution of a

limited liability company. In the end, the division concludes that

the district court did not err in ordering dissolution or in ordering

that it be accomplished in a particular way.
COLORADO COURT OF APPEALS                                          2019COA42


Court of Appeals No. 17CA2036
Larimer County District Court No. 12CV56
Honorable Devin R. Odell, Judge


Richard Gagne,

Plaintiff-Appellee,

v.

Paula Gagne,

Defendant-Appellant.


                       JUDGMENT AFFIRMED AND CASE
                        REMANDED WITH DIRECTIONS

                                  Division V
                         Opinion by JUDGE J. JONES
                         Terry and Grove, JJ., concur

                          Announced March 21, 2019


Otis, Bedingfield & Peters, LLC, Jennifer Lynn Peters, Timothy R. Odil, Lia
Szasz, Greeley, Colorado, for Plaintiff-Appellee

Burg Simpson Eldredge Hersh & Jardine, P.C., David P. Hersh, Diane Vaksdal
Smith, Lisa R. Marks, D. Dean Batchelder, Nelson Boyle, Englewood, Colorado,
for Defendant-Appellant
¶1    Paula Gagne appeals the district court’s judgment dissolving

 four limited liability companies in which she and one of her sons,

 Richard Gagne, were the only members (the LLCs). Paula 1 contends

 that the district court erred by dissolving the four LLCs, in

 determining how the dissolutions would occur, and in calculating

 each member’s portion of the LLCs’ assets. She hasn’t convinced

 us, however, that the district court erred in any respect, and so we

 affirm the judgment and remand for the court to determine

 Richard’s reasonable attorney fees incurred on appeal.

                           I.   Background

¶2    Some of the factual background relevant to this case is set

 forth in the prior division’s decision in Gagne v. Gagne, 2014 COA

 127 (Gagne I). We repeat it only as necessary and add to it

 developments occurring after the prior division’s remand.

¶3    Paula and Richard are mother and son. In the mid-2000s,

 they agreed to a joint business venture in which Paula would buy

 apartment complexes and Richard would manage them. They




 1Because the main players in this intra-family dispute share the
 same last name, for clarity’s sake we will refer to the Gagne family
 members by their first names.

                                    1
 created three LLCs in 2006 to buy and manage three such

 properties and created a fourth LLC in 2008 to buy and manage a

 fourth such property. (All of the apartment buildings are in Fort

 Collins.) The district court found, with ample record support, that

 the primary purpose of these LLCs was “to provide a joint business

 between [Richard] and [Paula], so that the parties would be partners

 in a business and so that [Richard] would have an occupation and a

 means to support his family.” The initial LLC operating agreements

 provided that Paula and Richard would own each LLC fifty-fifty, but

 that Richard would have fifty-one percent voting rights in each.

¶4    It didn’t take long, however, for Paula and Richard’s

 relationship, already strained, to devolve into a more or less

 constant state of acrimony. Litigation ensued, with Paula claiming

 that Richard was using the LLCs’ funds for his personal benefit.

 The parties settled. They entered into new operating agreements in

 August 2010. They remained fifty-fifty owners, but this time Paula

 got fifty-one percent voting rights. As now relevant, each of the

 identical operating agreements also provides as follows:

         • Paula’s contributions are money (in specified amounts),

           while Richard’s are “in-kind.” The parties acknowledged


                                   2
  that these in-kind contributions had caused appreciation

  of the LLCs’ equity in the apartment buildings.

• The success of the venture “requires the active interest,

  support, cooperation, and personal attention of” both

  Paula and Richard.

• Paula is “Chief Executive Manager” of the LLC, with

  “primary responsibility for managing” the LLC.

• The Chief Executive Manager “shall perform [her]

  [m]anagerial duties in good faith, in a manner [she]

  reasonably believe[s] to be in” the LLC’s best interests.

  (Emphasis added.)

• The Chief Executive Manager is liable to the LLC and its

  members for any loss resulting from her “fraud, gross

  negligence, willful misconduct, or . . . wrongful taking.”

  (Emphasis added.)

• Richard’s company, Home Solutions, Inc. (HSI), will

  manage the property for a minimum of two years, with

  possible extensions. Should a new property manager be

  desired, HSI has a right of first refusal.




                          3
         • If the property is sold, Paula has “a preferred status for

           the distribution of net revenues from the sale” to repay

           her cash capital contribution and any other loans or

           advances. If any proceeds remain, they will be divided

           evenly.

         • Paula has “the sole right and discretion to sell” the

           property, subject to certain conditions.

         • Paula has “the sole right and discretion to refinance” the

           LLC’s property, again subject to certain conditions,

           including that she act consistently with her status as a

           “fiduciary for the members.”

¶5    Unfortunately, the hatchet didn’t stay buried for long. There

 were arguments and allegations, confrontations and criticisms — a

 continual pattern of regrettable behavior that left the parties on

 hostile terms. Perhaps inevitably, Richard sued, seeking judicial

 dissolution of the LLCs under section 7-80-810(2), C.R.S. 2018, as

 well as a declaratory judgment as to his and Paula’s respective

 rights and obligations vis-a-vis the LLCs.

¶6    The district court appointed a receiver for the LLCs, but later

 decided that the receiver should act as a custodian during the

                                   4
 litigation. Some time down the road, the court granted Paula’s

 motion for summary judgment on the dissolution claim. Following

 a trial, the court resolved the remaining issues. Neither Richard

 nor Paula was entirely satisfied. Both appealed.

¶7    The prior division held that the district court hadn’t applied

 the right test in determining whether dissolution was appropriate.

 Drawing primarily on case law from other jurisdictions, it gave a

 nonexclusive list of seven factors that a court must consider.

 Gagne I, ¶ 35. It remanded the case for additional proceedings to

 resolve genuine issues of fact material to those factors. 2

¶8    On remand, the court held another trial on the judicial

 dissolution claim. The court entered a thorough, well-reasoned

 order concluding that dissolution is appropriate. Following another

 evidentiary hearing, the court entered another thorough,

 well-reasoned order setting forth how the dissolutions will proceed,

 essentially saying who will get what (and why). In brief, the court



 2 The division also addressed declaratory judgment issues
 pertaining to HSI’s role as property manager under the operating
 agreements, but because of the district court’s decision on remand
 to dissolve the LLCs, those issues, with one exception discussed
 below, aren’t before us.

                                    5
  ordered that Richard and Paula will each receive two of the

  apartment buildings — an in-kind distribution of LLC assets. This

  is to be accomplished by a so-called “drop and swap” exchange.

  Finding that Paula had engaged in a great deal of self-dealing

  misconduct, the court adjusted the parties’ respective shares of the

  assets’ values to account for money Paula had wrongfully pulled out

  of the LLCs.

¶9     Only Paula appeals.

                             II.   Discussion

¶ 10   Paula’s contentions on appeal fall into three general

  categories. First, she contends that the court erred, both legally

  and factually, in ordering dissolution of the LLCs. Second, she

  contends that the court erred in ordering an in-kind distribution of

  the LLCs’ assets, rather than ordering the assets sold and resulting

  proceeds distributed to the members. Third, she contends that the

  court erred in ordering various adjustments to each member’s side

  of the ledger. We aren’t persuaded that the district court erred in

  any respect.




                                     6
              A.   The Court Properly Ordered Dissolution

                         1.    Legal Framework

¶ 11   Section 7-80-110(2) provides that

            [a] limited liability company may be dissolved
            in a proceeding by or for a member or manager
            of the limited liability company if it is
            established that it is not reasonably
            practicable to carry on the business of the
            limited liability company in conformity with
            the operating agreement of said company.

¶ 12   In Gagne I, the division held that “to show that it is not

  reasonably practicable to carry on the business of a limited liability

  company, a party seeking a judicial dissolution must establish that

  the managers and members of the company are unable to pursue

  the purposes for which the company was formed in a reasonable,

  sensible, and feasible manner.” Gagne I, ¶ 31. In determining

  whether the party seeking judicial dissolution has met this burden,

  the court should consider the following seven nonexclusive factors:

          (1) whether the company’s managers are unable or

              unwilling to pursue the purposes for which the

              company was formed;

          (2) whether a member or manager has committed

              misconduct;


                                    7
            (3) whether it’s clear that the members aren’t able to work

                with each other to pursue the company’s purposes;

            (4) whether the members are deadlocked;

            (5) whether the company’s operating agreement provides a

                means of resolving any deadlock;

            (6) whether, in light of the company’s financial condition,

                there remains a business to operate; and

            (7) whether allowing the company to continue is financially

                feasible.

  Id. at ¶ 35. No one factor is dispositive, and, conversely, a party

  seeking dissolution isn’t required to establish all the factors. Id. at

  ¶ 36.

                     2.     The District Court’s Findings

¶ 13      The district court expressly addressed each of the seven

  factors identified above. Its findings as to each factor were, in

  summary, as follows:

            (1) Paula and Richard are unwilling or unable to promote

                the purposes for which they formed the LLCs. In

                particular, Paula has ensured that Richard can’t

                actively participate in what were supposed to be joint


                                       8
   businesses — joint businesses created, in large part, so

   that Richard “would have an occupation and a means to

   support his family.” She has done this by refusing to

   work with Richard in any way; shutting him out of any

   role in decision-making; terminating HSI’s role as

   property manager without cause; and giving a primary

   business role to her other son, Jay, who also refuses to

   work with Richard. In short, Paula has rendered

   Richard a mere passive observer of the LLCs’

   operations, contrary to the operating agreements’

   acknowledgment that the success of each LLC “requires

   the active interest, support, cooperation, and personal

   attention of the members.”

(2) Paula engaged in misconduct in managing the LLCs for

   several years. The court gave many examples. Most

   illustrate that Paula has treated the LLCs as her

   personal piggy bank. Paula took many actions with LLC

   funds which served no legitimate business purpose but

   only her own self-interest. These include unnecessarily

   loaning money to the LLCs on terms favorable to her,


                         9
    distributing LLC funds to herself without good reason,

    paying “rent” to herself out of LLC funds, paying

    professionals working for her (rather than the LLCs),

    and paying Jay excessively from LLC funds. The court

    also found that Paula is likely to continue this course of

    action indefinitely.

(3) The members can’t work with each other to pursue the

    LLCs’ goals. There is “extreme animosity and distrust

    between them” and they can’t deal with each other in a

    rational, objective way.

(4) The members are deadlocked because they can’t agree

    on anything and there’s no prospect of that changing.

(5) The operating agreements don’t provide a way of getting

    around the deadlock. This is so mainly because the

    provisions dealing with HSI’s role as property manager

    don’t address the current circumstances.

(6) The LLCs are in good financial condition (despite

    Paula’s misuse of LLC funds).

(7) Continuing to operate the LLCs is financially feasible.




                           10
¶ 14   The court concluded that “the factors weigh heavily in favor of

  dissolution.” Of particular concern to the court were “a

  fundamental failure of purpose,” the fact that Paula had engaged in

  “substantial misconduct,” and Paula’s oppression of Richard.

  Though the court expressed “great reluctance” to dissolve the LLCs,

  it felt it had little choice given the “clearest evidence” of Paula’s

  misconduct.

¶ 15   Two other aspects of the court’s ruling are worth noting at this

  juncture: the court found that Richard had met his burden “by

  clear and convincing evidence if not beyond a reasonable doubt,”

  and the court found Richard largely credible and Paula and Jay

  almost entirely incredible.

                          3.    Standard of Review

¶ 16   Whether to order dissolution of a limited liability company

  under section 7-80-110(2) is ultimately a decision within the district

  court’s discretion. See In re 1545 Ocean Ave., LLC, 893 N.Y.S.2d

  590, 598 (N.Y. App. Div. 2010) (applying a statute almost identical

  to section 7-80-110(2); repeatedly cited with approval in Gagne I);

  Mitchell, Brewer, Richardson, Adams, Burge & Boughman, PLLC v.

  Brewer, 705 S.E.2d 757, 773 (N.C. Ct. App. 2011); cf. Colt v. Mt.


                                      11
  Princeton Trout Club, Inc., 78 P.3d 1115, 1118 (Colo. App. 2003)

  (reviewing dissolution of a corporation for an abuse of discretion). A

  court abuses its discretion when its ruling is manifestly arbitrary,

  unreasonable, or unfair, or if it misapplies or misconstrues the law.

  Rains v. Barber, 2018 CO 61, ¶ 8; Arabelle at Vail Square

  Residential Condo. Ass’n v. Arabelle at Vail Square LLC, 2016 COA

  123, ¶ 56 (addressing the equitable remedy of reformation).

¶ 17   But to the extent a party challenges the court’s application of

  law or choice of legal standard, we review such challenges de novo.

  Crocker v. Greater Colo. Anesthesia, P.C., 2018 COA 33, ¶ 15; In re

  Marriage of Vittetoe, 2016 COA 71, ¶ 17. And we review any

  challenges to the court’s underlying factual findings for clear error.

  M.D.C./Wood, Inc. v. Mortimer, 866 P.2d 1380, 1383-84 (Colo.

  1994); Van Gundy v. Van Gundy, 2012 COA 194, ¶ 12. A court’s

  finding of fact is clearly erroneous if there is no support for it in the

  record. M.D.C./Wood, 866 P.2d at 1384; Van Gundy, ¶ 12.

                               4.    Analysis

¶ 18   Paula challenges the district court’s findings as to the five

  Gagne I factors which the court determined favor dissolution.

  Though we conclude she has a small, and ultimately unavailing,


                                     12
  point on the two deadlock factors, we otherwise reject her

  challenges.

                         a.   Failure of Purpose

¶ 19   Paula argues that the district court violated the parol evidence

  rule by going beyond the four corners of the operating agreements

  to determine the LLCs’ purposes. See Glover v. Innis, 252 P.3d

  1204, 1208 (Colo. App. 2011) (“[E]vidence of prior or

  contemporaneous agreements or negotiations may not be used to

  contradict a written instrument or to vary the terms of a written

  agreement.”). Her argument fails for at least three reasons.

¶ 20   First, though Paula cites to page 1 of each of the operating

  agreements for the proposition that the purpose or each LLC is, in

  her words, merely “to own and operate a single apartment building,”

  none of the operating agreements say that. None of them contain a

  purpose clause setting forth such a limited purpose of the LLC, and

  it’s not possible to cobble together any clauses in the operating

  agreements to get to the same place.3 So there’s nothing in the




  3For examples of purpose clauses in limited liability company
  operating agreements, take a look at Fisk Ventures, LLC v. Segal,
  No. CIV. A. 3017-CC, 2009 WL 73957, at *1 (Del. Ch. Jan. 13,

                                    13
  operating agreements that testimony or other extrinsic evidence

  about the members’ purpose could even arguably contradict or

  vary. See, e.g., Natanel v. Cohen, No. 502760113, 2014 WL

  1671557, at *1, *3, *5 (N.Y. Sup. Ct. Apr. 18, 2014) (unpublished

  opinion) (where limited liability company’s articles of organization

  didn’t mention the company’s purpose, the court relied on

  testimony to determine that purpose).

¶ 21   Second, even when an operating agreement contains a

  statement of purpose, that’s not necessarily the end of the matter.

  To be sure, a court must start with the operating agreement’s

  language. See, e.g., Meyer Nat. Foods LLC v. Duff, No. CV 9703-

  VCN, 2015 WL 3746283, at *3-4 (Del. Ch. June 4, 2015); Venture

  Sales, LLC v. Perkins, 86 So. 3d 910, 915 (Miss. 2012); see also In re

  1545 Ocean Ave., 893 N.Y.S.2d at 596 (“[T]he dissolution of a




  2009) (unpublished opinion), aff’d, 984 A.2d 124 (Del. 2009)
  (unpublished table decision); In re Seneca Invs. LLC, 970 A.2d 259,
  263 (Del. Ch. 2008); Cincinnati Bell Cellular Sys. Co. v. Ameritech
  Mobile Phone Serv. of Cincinnati, Inc., No. CIV. A. 13389, 1996 WL
  506906, at *5 (Del. Ch. Sept. 3, 1996), aff’d, 692 A.2d 411 (Del.
  1997) (unpublished table decision); Venture Sales, LLC v. Perkins,
  86 So. 3d 910, 913 (Miss. 2012); and Kirksey v. Grohmann, 754
  N.W.2d 825, 830 (S.D. 2008).

                                    14
  limited liability company . . . is initially a contract-based analysis.”).

  But a court need not stop there. “A sensible interpretation of

  precedent is that the purpose clause is of primary importance, but

  other evidence of purpose may be helpful as long as the [c]ourt is

  not asked to engage in speculation.” Meyer Nat. Foods, 2015 WL

  3746283, at *4. 4

¶ 22   Third, the court’s finding doesn’t truly contradict or vary

  anything in the operating agreements. Even if one could infer from

  the operating agreements alone that the purpose of the LLCs is to

  own and operate four apartment buildings, that wouldn’t preclude

  an inquiry into why Paula and Richard decided to do that. One

  possible explanation for such a venture is that the members see an

  investment opportunity; that is, they are motivated only to make a

  profit. But that’s not the only possible explanation, and it doesn’t

  preclude other, additional explanations. The other explanation

  found by the district court — that Paula and Richard sought to

  provide Richard with an occupation and means to support his



  4 Paula doesn’t argue that the court speculated as to the LLCs’
  purpose. Nor does she argue that the court’s findings on that issue
  lack record support.

                                     15
  family — doesn’t undermine, to any degree, the notion that the

  LLCs were formed to own and operate apartment buildings. It

  shows instead that owning and operating apartment buildings was

  a means to an end. 5

¶ 23   We therefore see no basis for concluding that the district court

  applied the law incorrectly in assessing this factor. And given that

  the record supports the court’s additional finding that Paula and

  Jay are unable and unwilling to allow Richard to have any role in

  managing the properties, we can’t say that the district court erred

  in concluding that this factor favors dissolution.

                         b.   Paula’s Misconduct

¶ 24   We reject Paula’s argument that the district court erred in

  finding that she engaged in numerous instances of misconduct

  because all of her actions were authorized by the operating

  agreements themselves; the Colorado Limited Liability Company Act




  5 We also observe that the court’s finding of purpose is supported
  by those provisions of the operating agreement (1) acknowledging
  that the active efforts of all members are required for the LLCs to
  succeed and (2) making Richard’s company, HSI, the property
  manager for each LLC.

                                    16
  (the Act), sections 7-80-101 to -1101, C.R.S. 2018; the business

  judgment rule; or all of the above.

¶ 25   The district court found that Paula changed the LLCs’ books to

  reflect “distributions” to Richard so that she could make improper

  “distributions” to herself, unnecessarily loaned money to the LLCs

  on terms favorable to herself, improperly charged the LLCs “rent”

  for her use of her own home (in Indiana), made unjustifiable

  payments to Jay from LLC funds, relegated Richard to the status of

  a “silent partner,” paid herself excessive management fees from LLC

  funds, paid professionals (from LLC funds) to protect her interests

  rather than the LLCs’, and took numerous improper

  “reimbursements” from the LLCs for personal (and extravagant)

  expenses. The court also found that in doing all this, Paula acted

  only to benefit herself personally and without any legitimate

  business purpose. And in so finding, the court repeatedly found

  Paula’s protestations to the contrary incredible. All of these

  findings enjoy substantial record support.

¶ 26   It’s true that the operating agreements, the Act, and the

  business judgment rule would allow a manager of an LLC to do

  such things as make distributions to members, loan money to the


                                    17
company, pay rent for use of space, hire and fire, seek the advice of

professionals, earn reasonable management fees, and obtain

reimbursement for expenses incurred while acting on the

company’s behalf. See, e.g., § 7-80-404(5), C.R.S. 2018 (lending

money to the company); § 7-80-407, C.R.S. 2018 (reimbursements

for liabilities incurred in the ordinary course of business). But none

of these sources of authority immunizes Paula from such acts taken

purely for self-interest, in bad faith, and in breach of her fiduciary

duties to the LLCs and their members.

        • The operating agreements each provide that Paula must

           perform managerial duties “in good faith, in a manner

           [she] reasonably believe[s] to be in the best interest of

           the” LLC. The court found, with record support, that

           Paula didn’t do so. 6

        • The Act says that managers must refrain from “engaging

           in grossly negligent or reckless conduct, intentional



6Paula accuses the district court of ignoring the operating
agreements in resolving the issues presented. Far from it. The
district court’s orders in this case are replete with references to the
operating agreements. It’s plain to us that the district court
considered them whenever appropriate.

                                   18
          misconduct, or a knowing violation of the law.”

          § 7-80-404(2). And the Act requires managers and

          members to discharge their duties and exercise their

          rights “consistently with the contractual obligation of

          good faith and fair dealing.” § 7-80-404(3); 7 see also

          § 7-80-407 (allowing reimbursements if payments were

          made “without violation of the person’s duties to” the

          company). Members of a limited liability company

          formed under the Act also owe fiduciary duties to each

          other and to the company. LaFond v. Sweeney, 2012

          COA 27, ¶ 38, aff’d, 2015 CO 3; see JPMorgan Chase

          Bank, N.A. v. McClure, 2017 CO 22, ¶ 25; Long v.

          Cordain, 2014 COA 177, ¶ 26. Again, the court found,

          with record support, that Paula breached these

          obligations.

        • The business judgment rule “is a presumption that in

          making a business decision the [manager of a limited



7Section 7-80-108(2)(d), C.R.S. 2018, says that an operating
agreement may not “[e]liminate the obligation of good faith and fair
dealing under section 7-80-404(3).”

                                 19
          liability company] acted on an informed basis, in good

          faith and in the honest belief that the action taken was in

          the best interests of the company.” Aronson v. Lewis,

          473 A.2d 805, 812 (Del. 1984), overruled on other

          grounds by Brehm v. Eisner, 746 A.2d 244 (Del. 2000);

          see Rywalt v. Writer Corp., 34 Colo. App. 334, 337, 526

          P.2d 316, 317 (1974).8 So by its own terms it doesn’t

          apply if a manager acts in bad faith or without any

          reasonable belief that she is serving the company’s best

          interests. See also Polk v. Hergert Land & Cattle Co., 5

          P.3d 402, 405 (Colo. App. 2000); Rifkin v. Steele Platt,

          824 P.2d 32, 35 (Colo. App. 1991); 3A Fletcher

          Cyclopedia of the Law of Corporations § 1040, at 52-53,

          Westlaw (database updated Sept. 2018). The rule,

          therefore, offers no shelter to Paula. 9



8 The rule arose in the corporate context. We assume it applies in
the limited liability company context as well.
9 Though Paula argues that she acted after seeking professional

advice, professionals testified that they advised her in general terms
about what a manager may do and did so based only on what she
told them. And such advice wouldn’t insulate Paula from liability in
any event because acts which may, in the abstract, be done legally

                                  20
¶ 27   In sum, we conclude that the record supports the district

  court’s finding that this factor favors dissolution.

            c.    The Members Can’t Work With Each Other

¶ 28   Paula argues that because the operating agreement designates

  her as the sole manager for the LLCs, she gets to make the business

  decisions, and Richard can’t complain about the decisions she

  makes. In so arguing, Paula again ignores her contractual,

  statutory, and common law obligations of good faith.

¶ 29   Paula doesn’t argue that she is able to work with Richard to

  pursue the LLCs’ purposes.10 Given the record of prolonged

  animosity and conflict between Paula and Richard, any such

  argument would be meritless.

¶ 30   The record supports the district court’s finding that this factor

  favors dissolution.




  may still be taken for personal, as opposed to company, benefit.
  Flippo v. CSC Assocs. III, LLC, 547 S.E.2d 216, 221-22 (Va. 2001).
  10 Paula attempts to justify her actions in freezing out Richard by

  saying they were necessary “because of Richard’s misconduct.” But
  the district court found that Paula had failed to prove her
  allegations against Richard.

                                     21
                             d.   Deadlock

¶ 31   Paula argues that because the operating agreements designate

  her the “Chief Executive Manager” with “primary responsibility” for

  managing the LLCs’ operations, and give her “51% of the

  memberships’ voting rights,” there can’t be any deadlock: she can

  make all management decisions unilaterally.

¶ 32   Were Paula right about the scope of her authority, she would

  have a persuasive argument that the district court erred as to this

  (and the next) factor. See, e.g., Meyer Nat. Foods, 2015 WL

  3746283, at *1, *3-4 (no deadlock where operating agreement

  provided that the manager would “manage[] exclusively”); Lola Cars

  Int’l Ltd. v. Krohn Racing, LLC, Nos. CIV. A. 4479-VCN, CIV. A.

  4886-VCN, 2010 WL 3314484, at *22 (Del. Ch. Aug. 2, 2010) (no

  technical deadlock in day-to-day management given authority

  granted to the chief executive); In re 1545 Ocean Ave., 893 N.Y.S.2d

  at 597 (no deadlock where operating agreement allowed each

  manager to act autonomously). But she is wrong.

¶ 33   The district court found that under section 4 of the

  agreements, Paula doesn’t have a unilateral right to refuse to renew




                                   22
  HSI’s contract to manage the properties.11 And that contract lies at

  the heart of the parties’ dispute, for it was primarily through HSI

  that Richard maintained an active role in the LLCs and derived an

  income.12

¶ 34   We recognize that the district court may have gone too far in

  saying that because “the parties have not agreed on anything” there

  is a deadlock. But the court’s other findings concerning section 4 of

  the operating agreements support a finding that there is a real and

  material deadlock. See Rush Creek Sols., Inc. v. Ute Mountain Ute

  Tribe, 107 P.3d 402, 406 (Colo. App. 2004) (an appellate court may

  affirm a trial court’s ruling on any ground the record supports). It

  follows that the court didn’t err in concluding that this factor

  supports dissolution.




  11 Paula doesn’t challenge this ruling on appeal.
  12 The Gagne I division held that there were genuine issues of
  material fact whether “there is a deadlock” and whether Paula has
  “the unilateral right to control all management of the properties,”
  including making decisions under section 4 as to who will serve as
  the property manager. Gagne v. Gagne, 2014 COA 127, ¶¶ 45-46.
  The district court resolved those issues against Paula after trial.

                                    23
                     e.   Way Around the Deadlock

¶ 35   Paula’s only argument on this factor is that it can’t support

  dissolution because there can’t be a deadlock. As discussed above,

  the premise of her argument is incorrect: there is a deadlock.

  Because the court also found that the operating agreements don’t

  provide a way around the section 4 deadlock, and Paula doesn’t

  challenge that finding on appeal, we conclude that the district court

  didn’t err in concluding that this factor favors dissolution.

                             f.   Conclusion

¶ 36   Though the final two factors — the companies’ financial

  positions and whether continuation of the LLCs is financially

  feasible — don’t favor dissolution, the other five do. Of particular

  concern are the facts that, due to Paula’s actions, the LLCs aren’t

  being operated consistently with their primary purpose; Paula has

  engaged in serious misconduct, freezing Richard out of all

  operations and acting to benefit herself at the LLCs’, and, hence,

  Richard’s expense; and the parties simply can’t get along. Under

  similar circumstances, courts in other jurisdictions have concluded

  that dissolution of a limited liability company is appropriate. E.g.,

  Meyer Nat. Foods, 2015 WL 3746283, at *4-5; Fisk Ventures, LLC v.


                                    24
  Segal, No. CIV. A. 3017-CC, 2009 WL 73957, at *4 (Del. Ch. Jan.

  13, 2009) (unpublished opinion) (“Given the Board’s history of

  discord and disagreement, I do not believe that these parties will

  ever be able to harmoniously resolve their differences.”) (footnote

  omitted), aff’d, 984 A.2d 124 (Del. 2009) (unpublished table

  decision); Haley v Talcott, 864 A.2d 86, 95-96 (Del. Ch. 2004) (one

  member ended another’s managerial role, leaving that member “on

  the outside, looking in, with no power”; the status quo exclusively

  favored one of the fifty-percent members; parties couldn’t function

  together); Kirksey, 754 N.W.2d at 827-31 (family members no longer

  spoke to each other, two members engaged in self-dealing, those

  members had “all the power” and no reason to change a status quo

  that benefitted only them, and other members had “no power to

  influence the company’s direction”); see also Lola Cars Int’l, 2010

  WL 3314484, at *22-24 (had member proved its claims of breaches

  of the operating agreements and bad faith, “judicial dissolution

  might very well [have been] appropriate” given the members’

  difficulty in “working together cooperatively”).

¶ 37   For the foregoing reasons, we conclude that the district court

  didn’t abuse its discretion in finding that “it is not reasonably


                                    25
  practicable to carry on the business of the [LLCs] in conformity with

  the operating agreement[s]” and therefore ordering dissolution.

  § 7-80-810(2); see Gagne I, ¶ 31. 13

  B.    The District Court Didn’t Err in Ordering In-Kind Distribution
                                of LLC Assets

¶ 38   To effectuate the dissolution, the court ordered an in-kind

  distribution of the four apartment buildings, with each member (or

  entity created by each member) to receive two of the buildings. To

  determine which building each would receive, account for Paula’s

  misuse of LLC funds, and give effect to relevant portions of the

  operating agreements, the court took the following steps.

          (1) The court determined the equity in each of the

              apartment buildings (the LLCs’ only assets). Adding it

              up, the court found total equity of $6,071,000.

          (2) The court deducted from that sum the amount of

              Paula’s capital contribution — $2,025,000. (The

              operating agreements require her to receive back her




  13As the Gagne I division observed, “the test is whether it is
  reasonably practicable to carry on the business of the LLC, not
  whether it is impossible to do so.” Gagne I, ¶ 33.

                                    26
           capital contribution before any other proceeds are

           distributed.) This left $4,046,000 in total equity, or

           $2,023,000 equity for each of the fifty-fifty members.

       (3) The court determined what adjustments should be

           made for Paula’s misuse of funds. That amount totaled

           $1,257,635.87. Deducting $489,000 she had borrowed

           from herself, purportedly for the LLCs, through a

           revolving line of credit, 14 the court found that Paula

           owed the LLCs $768,635.87. Because she is a fifty

           percent member, she must return half that amount —

           $384,317.94 — to the LLCs. Adding Richard’s legal fees

           of $400,000 (for which the court found Paula liable)

           resulted in a total adjustment of $784,317.94 in

           Richard’s favor.




14 As noted above, the court had previously found that Paula had
created and used the line of credit as a way of siphoning money
from the LLCs for her sole personal benefit.

                                 27
(4) Fourth, the court used these figures to calculate the

    total equity owed to each member, as shown in this

    table:


                                Richard          Paula

     Half of net equity    $2,023,000.00     $2,023,000.00

     Return of capital
                                     $0.00   $2,025,000.00
       contribution

     Adjustment for
                               $784,317.94    ($784,317.94)
   Paula’s misfeasance

    Target equity to go
                           $2,807,317.94     $3,263,682.06
     to each member




(5) Based on the appraised equity of each building, the

    court allocated two particular buildings to each of the

    members. As a result, Richard received equity of

    $2,914,500 and Paula received equity of $3,156,500.

(6) Last, subtracting from these respective equity totals the

    members’ respective “target equity” amounts (see the

    table above), the court calculated that to reach those

    targets Richard must pay Paula $107,182.06.


                          28
¶ 39   The court ordered the distribution of the apartment buildings

  through a “drop and swap.” The LLCs will distribute all four

  properties to both members as tenants-in-common. Each member

  will then convey his or her interest in the two properties he or she is

  not retaining to the other (or to an entity created by the other to

  take title to the properties). The parties may work together to make

  these transfers in a way that they qualify for tax advantages under

  26 U.S.C. § 1031 (2018) (a 1031 exchange).

¶ 40   Paula’s challenges to the district court’s decision to require an

  in-kind distribution of the LLCs’ assets are essentially three: such a

  distribution isn’t allowed by the operating agreements; ordering

  such a distribution amounts to “piercing the corporate veil,” for

  which the court didn’t make any findings; and, even if an in-kind

  distribution is an appropriate way to dissolve and wind up the

  LLCs, a 1031 exchange isn’t the right way to do it. These

  challenges fail.

                        1.    Standard of Review

¶ 41   Judicial dissolution is essentially a proceeding in equity.

  Brady v. Van Vlaanderen, 819 S.E.2d 561, 563-65 (N.C. Ct. App.

  2018) (corporate dissolution); Scott v. Trans-System, Inc., 64 P.3d 1,


                                    29
9 (Wash. 2003) (corporate dissolution); Estate of Matteson v.

Matteson, 749 N.W.2d 557, 566 (Wis. 2008) (partnership

dissolution); see also Strang v. Osborne, 42 Colo. 187, 195, 94 P.

320, 325 (1908) (“for good cause shown,” a corporation may be

dissolved by a “court of equity”). 15 Typically, a court has

substantial discretion in determining an equitable remedy, and so

we won’t overturn a court’s ruling fashioning such a remedy unless

the party challenging it shows that the court abused its discretion.

See La Plata Med. Ctr. Assocs., Ltd. v. United Bank of Durango, 857

P.2d 410, 420 (Colo. 1993) (reviewing court’s choice of equitable

remedies between limited partners); Young Props. v. Wolflick, 87

P.3d 235, 237 (Colo. App. 2003) (reviewing a court’s partition order

for an abuse of discretion). We review any issues of contract and

statutory interpretation, however, de novo. Laleh v. Johnson, 2017

CO 93, ¶ 18 (contract interpretation); Frazier v. Williams, 2017 CO

85, ¶ 35 (statutory interpretation).




15 We add, however, that a court can’t exercise its equitable powers
in this context in a way that contravenes the Act.

                                   30
                              2.    Analysis

  a.   The Operating Agreements Don’t Preclude In-Kind Distribution

¶ 42   In arguing that the operating agreements preclude in-kind

  distribution of assets, Paula relies on provisions giving her the “sole

  right” to sell LLC assets and saying that “in the event any assets are

  sold” the members agree “to fully cooperate in the use of a 1031

  exchange through a qualified intermediary.” Apparently, she

  asserts that such a sale and distribution is the only means of

  distributing assets.

¶ 43   The provisions at issue, sections 7A and 7B of the operating

  agreements, plainly apply to a sale (and arguably only to a sale by

  Paula). They don’t purport to limit a court’s options in the context

  of judicial dissolution, nor does anything else in the operating

  agreements.

¶ 44   Nor, contrary to Paula’s suggestion, does the applicable

  operating agreement need to expressly authorize an in-kind

  distribution of assets before a court may order one. The Act

  expressly contemplates in-kind distribution in the event of a judicial

  dissolution and winding up of the company.

  §§ 7-80-803(1), -803.3(3), -813(2), C.R.S. 2018.


                                    31
¶ 45        We therefore conclude that the operating agreements don’t bar

  in-kind distributions.

             b.   The District Court Didn’t Pierce the Corporate Veil

¶ 46        Next, Paula argues that the district court “pierced the

  corporate veil” without making the findings required to do so.

¶ 47        The district court didn’t pierce the corporate veil. That

  happens when a court holds individuals liable for corporate

  obligations or liabilities because of the officers’, directors’, or

  shareholders’ disregard or misuse of the corporate form. See

  Stockdale v. Ellsworth, 2017 CO 109, ¶¶ 18-20 (applying the

  doctrine to a limited liability company). The district court in this

  case did nothing of the sort. It only ordered distribution of assets

  as expressly allowed by the Act.

       c.     The District Court Didn’t Err in Allowing a 1031 Exchange

¶ 48        Paula argues that even if an in-kind distribution isn’t barred

  by the operating agreements, the type of in-kind distribution

  contemplated by the district court — a drop and swap 1031

  exchange — isn’t appropriate because (1) the Act’s provisions

  allowing for in-kind distribution don’t allow such a distribution to

  be accomplished in this way; (2) section 1031 doesn’t allow an


                                        32
exchange of limited liability company property; and (3) even if

section 1031 allows such an exchange, it won’t work here. These

arguments don’t require any extended analysis, because each fails

for very straightforward reasons.

        • Nothing in the Act, and section 7-80-803 in particular,

          supports Paula’s argument that an in-kind distribution

          can’t be ordered through a 1031 exchange. Though

          Paula objects that such an exchange “convert[s] the

          parties’ interests and create[es] new interests,” the Act

          plainly allows for a distribution in-kind to members. The

          court’s decision to do this through a temporary creation

          of tenancies-in-common and subsequent transfers of

          these interests from each member to the other was driven

          by the parties’ treatment of the four LLCs as essentially

          one business. As noted, the court has substantial

          discretion in fashioning an equitable remedy, and, in

          light of the lack of any express or implied statutory

          prohibition of the process chosen by the court, we don’t

          see any abuse of that discretion.




                                    33
• Paula cites no legal authority supporting her assertion

  that limited liability company property can’t be subject to

  a 1031 exchange. The experts testified that swapping

  membership interests for each other or for real property

  can’t qualify for section 1031 treatment. But at least one

  of them testified that once the properties are owned by

  tenants-in-common, they qualify for section 1031

  treatment. So the district court ordered a process —

  involving initial transfers to the members as tenants-in-

  common — which will allow the parties to take advantage

  of section 1031 if doing so is something they want to

  pursue.

• In arguing that a 1031 exchange won’t work, Paula

  points to a number of contingencies or steps that would

  need to occur, such as IRS approval, careful planning,

  and involvement by banks and title companies. She

  doesn’t argue, however, that these are insurmountable

  obstacles. And, in any event, such an exchange is

  expressly contemplated by section 7B of the operating

  agreement and is merely an option the court is allowing

                         34
             the parties to pursue. Though Paula says she will suffer

             negative tax consequences as a result of “los[ing] her gain

             in each LLC,” she offers no legal argument in support of

             that contention. Nor does she explain how negative tax

             consequences could be avoided while still winding up the

             LLCs. 16

¶ 49    For these reasons, we conclude that the district court didn’t

  abuse its discretion by ordering an in-kind distribution of the LLCs’

  assets.

       C.   The District Court Didn’t Err In Computing Adjustments

¶ 50    Lastly, Paula challenges the district court’s adjustments to the

  members’ respective distributions to account for her misuse of LLC

  funds. The court made adjustments for payments to attorneys and

  other professionals, salary payments to Paula as manager, rent

  payments for “office space” at Paula’s house, payments to Jay,

  payments for loans, payments for travel expenses (including meals),




  16The court also concluded that because of the appreciation in the
  apartment buildings’ values, liquidation (sale and distribution of the
  proceeds) would cause tax consequences “likely as great as those
  resulting from in-kind distribution.” Paula doesn’t challenge that
  conclusion.

                                    35
  the cost to repair one of the apartment buildings, improper

  distributions, and payments for vacation properties the LLCs don’t

  own. The court also ordered Paula to pay Richard’s attorney fees

  and declined to make other adjustments requested by Paula for her

  legal fees.

¶ 51   Paula argues that she had both contractual and statutory

  authority to act as she did with respect to these matters. In so

  arguing, however, she emphasizes her own testimony, Jay’s

  testimony, and the testimony of certain professionals taken out of

  context and overstated. As already noted, the district court found

  both Paula and Jay almost entirely incredible. And the district

  court found that Paula had acted in her own self-interest, in bad

  faith, and without any legitimate business purpose. Her arguments

  on this point are nothing more than an invitation to reweigh the

  evidence, an invitation which we decline. See M.D.C./Wood, 866

  P.2d at 1383-84 (the appellate court is bound by the trial court’s

  findings of fact unless those findings are clearly erroneous); IBC




                                    36
  Denver II, LLC v. City of Wheat Ridge, 183 P.3d 714, 719 (Colo. App.

  2008) (it’s not the appellate court’s role to reweigh the evidence).17

           III.   Richard’s Request for Appellate Attorney Fees

¶ 52   Citing a fee-shifting provision in the operating agreements,

  Richard asks that we order Paula to pay his attorney fees incurred

  on appeal. We grant his request. Oster v. Baack, 2015 COA 39,

  ¶ 37. We remand the case under C.A.R. 39.1 for the district court

  to determine the reasonable amount of attorney fees Richard has

  incurred in this appeal.

                             IV.   Conclusion

¶ 53   We commend the district court for its thoughtful consideration

  of the parties’ evidence and arguments, its careful application of the

  applicable law, and its thorough and cogent orders resolving the

  relatively complex issues presented by the parties.




  17 Paula argues that the division in Gagne I approved of her attorney
  fees that the LLCs paid on her behalf. The division did so, however,
  in addressing Richard’s contention that the district court erred in
  denying his motion to require Paula to disgorge those fees and, of
  course, based only on the record before it. The district court, after
  hearing quite a bit more evidence, changed its mind. The record
  supports the district court’s decision to do so.

                                     37
¶ 54   The judgment is affirmed. The case is remanded to the district

  court for a determination of his reasonable attorney fees incurred

  on appeal.

       JUDGE TERRY and JUDGE GROVE concur.




                                   38
