STEVEN MCFADDEN; GOOD STUFF L.L.C. d/b/a SHOTGUN BETTY'S, A NOMINAL PLAINTIFF;
THOMAS BALDWIN, ANNA MARY MARGARET BALDWIN, and TBJ, LLC, Defendants-Appellees. BOOM GOES THE DYNAMITE L.L.C. d/b/a MICKEY'S IRISH PUB, A NOMINAL PLAINTIFF; POKE THE BEAR, L.L.C. d/b/a BARCADIUM, A NOMINAL PLAINTIFF; STAT PROPERTIES, L.L.C., A NOMINAL PLAINTIFF; and BBMG MILLS CIVIC PARKWAY, L.L.C., Plaintiffs-Appellants,
from the Iowa District Court for Polk County, Robert A.
Hutchinson, David N. May, and Arthur E. Gamble, Judges.
former owner of two limited liability companies appeals
orders relating to their dissolution.
R. Walker, Jr. of Beecher, Field, Walker, Morris, Hoffman
& Johnson, P.C., Waterloo, for appellants.
D. Hanson and Bryan P. O'Neill of Dickinson, Mackaman,
Tyler & Hagen, P.C., Des Moines, for appellees.
by Tabor, P.J., Bower, J., and Carr, S.J. [*] Gamble, S.J., takes no part.
owner Steven McFadden challenges the process approved by the
district court for dissolving and liquidating two limited
liability companies (LLCs), doing business as Shotgun
Betty's and Mickey's Irish Pub (Mickey's).
McFadden contends the district court ignored equitable
principles in not compelling Tom Baldwin and Annie Baldwin,
former business associates, to assign the Mickey's lease
to McFadden as part of the pub's liquidation. McFadden
also contends the district court acted inequitably by
permitting Tom to profit from a violation of his fiduciary
duty to the Shotgun Betty's LLC.
no failure by the district court to do equity; substantial
evidence supports its rationale for not requiring the
Baldwins to assign the Mickey's lease to McFadden as part
of the liquidation. We decline to consider his allegation of
a breach of fiduciary duty in the Shotgun Betty's
dissolution because McFadden did not preserve that claim in
the settlement agreement. Accordingly, we reject
McFadden's appellate claim for damages.
Facts and Prior Proceedings
and the Baldwins spent nearly twenty years in a turbulent
business relationship. They launched several bar and
restaurant projects together in the Des Moines metro area,
but their alliance was an uneasy one.
of his business ventures with McFadden, Tom was the sole
owner of TBJ, LLC. TBJ owned and leased real estate in Des
Moines, including a downtown property on Third Street where
his wife, Annie, managed a bar called Party Cove. Party Cove
was not particularly successful, so Annie discussed joining
forces with McFadden in hopes of establishing a more
profitable business. McFadden and Annie organized a St.
Patrick's Day event at the Third Street property-and it
was a hit. Building on that spark, McFadden and Annie opened
Mickey's. Mickey's outdoor patio became a popular
downtown destination. In April 2013, Mickey's renewed its
lease with TBJ for ten years.
same time in West Des Moines, McFadden and Tom were equal
owners and managers of Shotgun Betty's bar. MRES West
Glen, LP was the landlord of Shotgun Betty's.
relationship with the Baldwins soured in 2014 when they
clashed over several business and personal decisions. The
rancor peaked in June 2014 when the parties met at the office
of their business lawyer. McFadden threw a pop can across the
table at Tom, the men wrestled, and their wives had to break
up the fight.
year later, in June 2015, McFadden petitioned to dissolve the
LLC known as Boom Goes the Dynamite (doing business as
Mickey's) and another LLC known as Good Stuff (doing
business as Shotgun Betty's). McFadden alleged the
Baldwins breached their fiduciary duties to Mickey's and
Shotgun Betty's by making improper distributions, hiring
employees without McFadden's consent, and wrongfully
withholding financial information from him. McFadden asked
the court to judicially dissolve the LLCs, citing a permanent
breakdown in his relationship with the Baldwins, irrevocable
deadlock, and oppressive conduct by the Baldwins, concluding
the parties were unable to continue properly carrying out
joint business activities. The Baldwins made several
parties tried to resolve their disagreements outside the
courtroom but were unsuccessful. In February 2016, the
Baldwins petitioned the court for judicial dissolution of
Mickey's and Shotgun Betty's. In May 2016, the
district court ruled on pending motions. The court considered
McFadden's new argument against dissolution-contrary to
his position in his petition-and in favor of an alternative
equitable remedy,  but concluded dissolution was mandatory
under Iowa Code section 489.701(1)(d) (2015). The court
distinguished the code provisions applicable to LLCs from
those applicable to corporations. The court ordered
Mickey's and Shotgun Betty's dissolved. And, under
section 489.702(5)(c), the court appointed Paul Juffer-who
was nominated by McFadden-as the liquidator to wind up the
determined the value of Shotgun Betty's and Mickey's
would be maximized if sold for "going
concern" value. Juffer proposed the liquidation
plan include a minimum acceptable going-concern bid of $200,
000 for Mickey's and $24, 000 for Shotgun
court approved Juffer's proposed plan to hold a private
auction for each property sale. Juffer's liquidation plan
recognized "Going Concern Bids will require the bidder
to obtain a lease assignment from the landlord."
Accordingly, Juffer planned to select the highest bid for
each LLC and request the landlord consent to assignment of
the lease to said bidder, while providing the landlord
information regarding the bidder's financial ability to
fulfill the terms of the lease. And if the landlord declined
to assign the lease to the highest bidder, Juffer would ask
the landlord to assign the lease to the second-highest
held the private auction for Shotgun Betty's on June 17,
2016. The liquidator received three bids for the
going-concern value-McFadden bid $210, 000; Brady Moss bid
$205, 000; and Tom bid $24, 000-and two bids for tangible
assets-Tom bid $43, 000 and McFadden bid $42, 000. Per the
liquidation plan, because McFadden was the highest bidder for
the going-concern value of Shotgun Betty's, Juffer mailed
a letter to MRES requesting consent to assignment of the
lease to McFadden. On June 24, 2016, MRES declined
Juffer's request to assign the Shotgun ...