## Facts

- Dewey Monroe and his wife, Lou Ann Monroe, formed L & J Holdings, LLC in Virginia under an operating agreement.
- Dewey held an 80% interest; Lou Ann held 20%. Lou Ann was the managing member, and Joseph G. Monroe was named successor managing member.
- Dewey’s will left his entire estate to his daughter, Janet M. Ott.
- After Dewey died and the will was probated, Janet claimed she inherited Dewey’s full LLC membership interest, including governance rights.
- Janet noticed and conducted a company meeting, purported to remove Lou Ann and Joseph from their management roles, and elected herself managing member and Susan Shackelford successor managing member.
- Lou Ann and Joseph contended Janet inherited only Dewey’s economic rights (profits, losses, and distributions), not membership or management rights.
- Janet sued for declaratory judgment seeking recognition of her full membership status and validation of the purported removals and elections.
- The circuit court sustained defendants’ demurrer, ruling Janet was not an LLC member and lacked authority to remove or replace management.

## Issues

1. Whether, under the Virginia Limited Liability Company Act and the operating agreement, Dewey’s death allowed transfer by will of his full LLC membership (including management/control rights) to Janet.
2. Whether the operating agreement contained sufficiently specific language to displace the statutory rule that a member is dissociated upon death.

## Decision

- The Supreme Court of Virginia affirmed the judgment sustaining the demurrer.
- Dewey was dissociated upon death under Va. Code § 13.1-1040.1 because the operating agreement lacked specific language creating an exception.
- Janet succeeded only to an assignee’s economic interest under Va. Code §§ 13.1-1040.2 and 13.1-1039, not to membership or management rights.
- Janet therefore lacked authority to remove Lou Ann and Joseph or to install herself as managing member.

## Legal Principles

- Under Va. Code § 13.1-1040.1, a member’s death causes dissociation unless the articles or operating agreement specifically provide otherwise.
- Under Va. Code § 13.1-1039, assignment of an LLC interest transfers economic rights but does not confer management or participation rights absent member consent or admission as a member.
- General agreement language permitting transfers “by death” or “devise” is insufficient to override statutory dissociation without clear, specific terms.
- A member cannot unilaterally transfer personal control/management rights in an LLC by will or assignment contrary to statutory consent and admission rules.

## Conclusion

The court held that, because the operating agreement did not specifically negate dissociation on death, the deceased member’s devisee became only an assignee entitled to financial benefits, not an LLC member with governance rights, and thus could not alter company management.


Ott v. Monroe, 282 Va. 403, 719 S.E.2d 309 (Va. 2011)