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Headfirst Baseball LLC v. Elwood

United States District Court, District of Columbia

March 7, 2016

HEADFIRST BASEBALL LLC, et al., Plaintiffs,
v.
ROBERT ELWOOD and STACEY ELWOOD, Defendants. ROBERT ELWOOD, Counterclaim Plaintiff,
v.
BRENDAN V. SULLIVAN III and HEADFIRST PROFESSIONAL SPORTS CAMPS LLC, Counterclaim Defendants. HEADFIRST PROFESSIONAL SPORTS, CAMPS LLC, Counterclaim Plaintiff,
v.
ROBERT ELWOOD, Counterclaim Defendant.

MEMORANDUM OPINION

REGGIE B. WALTON UNITED STATES DISTRICT JUDGE

Four motions are currently pending before the Court: (1) Brendan V. Sullivan III’s Motion for Summary Judgment on Counts Three, Four, and Six of Robert Elwood’s Amended Counterclaim (“P’ship Summ. J. Mot.”); (2) the Motion to Bifurcate and Try First Partnership Claim and Memorandum in Support (“Bifurcation Mot.”); (3) Brendan V. Sullivan III’s Motion for Summary Judgment on Count Five, and Sullivan and Headfirst Professional Sports Camps LLC’s Joint Motion for Partial Summary Judgment on Counts One and Two, of Robert Elwood’s Amended Counterclaim (“Estoppel/Buyout Summ. J. Mot.”); and (4) Stacey Elwood’s Motion for Summary Judgment as to Count I of the Second Amended Complaint and Memorandum in Support (“Conversion Summ. J. Mot.”). After careful consideration of the parties’ submissions, [1]as well as the parties’ oral arguments at the January 27, 2016 hearing, and for the reasons that follow, the Court concludes that it must deny summary judgment on the issue of partnership vel non, grant in part and deny in part the motion to bifurcate the trial, grant summary judgment in favor of plaintiff Brendan V. Sullivan III on defendant Robert Elwood’s promissory estoppel counterclaim, grant partial summary judgment in favor of plaintiffs Brendan V. Sullivan III and Headfirst Professional Sports Camps LLC on defendant Robert Elwood’s counterclaims to the extent that the counterclaims seek a compelled buyout of defendant Robert Elwood’s interests in any Headfirst entity as a remedy, and grant summary judgment in favor of defendant Stacey Elwood on plaintiffs Headfirst Baseball LLC and Headfirst Camps LLC’s conversion claim.

I. BACKGROUND

A. The Various Headfirst Limited Liability Companies (“Headfirst LLCs”)

1. Headfirst Baseball LLC

Plaintiff Brendan V. Sullivan III (“Sullivan”) assisted in the formation of Headfirst Baseball LLC (“Headfirst Baseball”) under the laws of the District of Columbia in 1997. P’ship Opp’n, Defendant Robert Elwood’s Statement of Material Facts in Response to Brendan V. Sullivan’s Statement of Material Facts in Support of His Motion for Summary Judgment on Counts Three, Four, and Six of Elwood’s Amended Counterclaim (“P’ship Opp’n Facts”) ¶ 2; see also id. ¶ 3. At that time, plaintiff Sullivan and non-party Sean Flikke (“Flikke”) were the only members of Headfirst Baseball and each owned 50% of the company. Id. ¶ 4. In 2001, non-party Flikke transferred his interest in Headfirst Baseball to non-party Ted Sullivan, the brother of plaintiff Sullivan. Id. ¶ 7.

2. Headfirst Professional Sports Camps LLC

In July 2010, Red Sox Camps LLC was organized under the laws of the District of Columbia. See id. ¶¶ 18-20. Plaintiff Sullivan and defendant Robert Elwood[2] “were each 50% owners” of this LLC. Id. ¶ 20. “In February 2012, Red Sox Camps LLC changed its name to Headfirst Professional Sports Camps LLC [(‘Headfirst Professional Sports Camps’)].” Id. ¶ 21.

3. Headfirst Camps LLC

Headfirst Camps LLC (“Headfirst Camps”) was established in January 2012 under the laws of the District of Columbia. Id. ¶ 26. Plaintiff Sullivan and his brother Ted Sullivan each own a 50% interest in the company. See id. ¶¶ 37-38.

B. The Parties’ Dispute

Plaintiffs Sullivan, Headfirst Baseball, and Headfirst Camps commenced this action, alleging that Headfirst Baseball and Headfirst Camps terminated their relationship with defendant Robert Elwood after the plaintiffs discovered that he had allegedly misappropriated hundreds of thousands of dollars from Headfirst Baseball and Headfirst Camps over several years, using the money for non-business purposes, i.e., personal expenditures, and that defendant Stacey Elwood was complicit in this conduct. See Headfirst Baseball LLC v. Elwood, 999 F.Supp.2d 199, 203-04 (D.D.C. 2013); see also Second Am. Compl. ¶¶ 1-2, 15. Defendant Robert Elwood insists that the non-business expenditures were permitted because he and plaintiff Sullivan allegedly formed an “overarching” Headfirst partnership, which authorized, inter alia, the use of Headfirst Baseball and Headfirst Camps funds for such expenditures. P’ship Opp’n at 6, 7.

Defendant Robert Elwood has filed several counterclaims against plaintiff Sullivan, generally seeking a declaration of the existence of the alleged Headfirst partnership, see Elwood Countercl. I ¶¶ 110-17 (count three); see also id. ¶¶ 122-28 (alleging, in count five, that he detrimentally relied upon repeated promises from plaintiff Sullivan that they were equal partners in the Headfirst partnership), as well as damages resulting from being ousted from the alleged partnership, see id. ¶¶ 118-21 (requesting, in count four, a full accounting and compelled buyout of the partnership if it exists); id. ¶¶ 129-35 (claiming, in count six, that if a partnership is found to exist, then damages have resulted from plaintiff Sullivan’s breach of his fiduciary ...


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