Chapter 37

Limited Liability Companies and Special Business Forms

Case 37.1

477 F.Supp.2d 727 E.D.Va.,2007. McFarland v. Virginia Retirement Services of Chesterfield, L.L.C. E.D.Va.,2007. United States District Court,E.D. Virginia, Richmond Division. Penny McFARLAND, Plaintiff, v. VIRGINIA RETIREMENT SERVICES OF CHESTERFIELD, L.L.C. d/b/a Magnolias of Chesterfield, et al., Defendants. Civil Action No. 3:06CV651. March 6, 2007. DENNIS W. DOHNAL, United States Magistrate Judge. This matter is before the Court by consent of the parties pursuant to 28 U.S.C. § 636(c)(1) on the Defendants' Partial Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted (docket entry no. 14). The Plaintiff, Penny McFarland, brings suit pursuant to, inter alia, the Fair Labor Standards Act (“FLSA” or the “Act”), 29 U.S.C. § 201et seq., alleging that the Defendants, Virginia Retirement Services of Chesterfield, L.L.C. (“Magnolia”), FN1 and some of its various owners and directors,FN2*730 failed and/or refused to pay McFarland certain regular and overtime wages due her under the Act. (Am.Compl.¶¶ 1, 3) (docket entry no. 2.) McFarland also brings two pendent state law claims: the first alleges wrongful discharge in violation of Virginia public policy (the “Bowman claim”); the second is for wrongful retaliation/discharge pursuant to Va.Code Ann. § 40.1-51.2:2. (Am.Compl.¶¶ 43-52). The matter has been extensively briefed and the Court has entertained oral argument. For the reasons set forth herein, the Defendants' Partial Motion to Dismiss is GRANTED IN PART and DENIED IN PART. FN1. Virginia Retirement Systems of Chesterfield, L.L.C. does business as Magnolias of Chesterfield. As such, the primary Defendant will be referred to as “Magnolia.” 56 57 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW

FN2. The individually named Defendants include Mary Dunmoyer (the Executive Director of Magnolia), Robert Dunmoyer (the Administrator of Magnolia), and David H. Matthews (“Matthews”), Ben Stalker Reed (“Reed”), and Frances Wood Loughlin (“Loughlin”), the latter three Defendants alleged to be owners of Magnolia. (Am.Compl.¶¶ 1, 9-14.) The parties have stipulated to the dismissal, without prejudice, of the claims against Defendant Matthews (docket entry no. 35), as well as Defendant Loughlin (docket entry no. 37). The portions of the Defendants' Motion to Dismiss addressing the viability of McFarland's claims against Matthews and Loughlin are therefore rendered moot. Material Facts Because this case arises from a motion to dismiss, the facts as alleged in the Amended Complaint must be taken as true and viewed in the light most favorable to Plaintiff, Penny McFarland (“McFarland” or the “Plaintiff”). Chao v. Rivendell Woods, Inc., 415 F.3d 342, 346 (4th Cir.2005). Magnolia is a Virginia, for-profit retirement community, and it employed McFarland as its Activities Director and Office Manager from May 2005 until the date of her termination on July 1, 2006. (Am.Compl.¶¶ 17, 18.) In these roles, McFarland was responsible for coordinating and conducting activities for the residents of Magnolia, and was paid $15 per hour for such efforts. (Am.Compl.¶ 18.) McFarland's FLSA claim is based on Magnolia's alleged “hours shaving” and failure to compensate her for time worked “off-the-clock.” See29 U.S.C. § 207(a). McFarland asserts that her duties as the Activities Director required her to spend many hours “off the clock,” that the Defendants were aware or should have been aware that McFarland was performing such work, that the Defendants accepted the benefits derived therefrom, and yet failed to compensate McFarland for her “regular and overtime hourly wages.” (Am.Compl.¶¶ 19, 37.) The specific instances of overtime work performed is not relevant to the Court's analysis of the pending Motion to Dismiss, but suffice it to say that McFarland claims she was not paid for any of these additional services. (Am.Compl.¶¶ 20-27.) McFarland brings her second cause of action for wrongful termination in violation of Virginia public policy. She alleges that she was terminated for participating in a state investigation of a safety complaint levied against Magnolia. (Am.Compl.¶ 30.) The facts supporting the wrongful termination charge are pled as follows: On or around June 22, 2006, [Effie] Stovall FN3 instructed the staff to take the residents outside for a walk. It was around 95 degrees outside. Someone made a complaint out of concern for the residents. An inspector from the [state] licensing board called Magnolia and spoke to [McFarland] about the complaint. [McFarland] felt she had to comply with the investigation and answered the investigator's questions truthfully. [McFarland] immediately informed Stovall of the phone call. FN3. Stovall was McFarland's supervisor and was responsible for payroll hours and reporting. (Am.Compl.¶ 28.) She is not a named defendant in the present case. On or around June 29, 2006, after a telephone call with the inspector, [Defendant] Mary Dunmoyer told Stovall to terminate [McFarland]. Mary Dunmoyer stated that because the walk was an “activity,” [McFarland] should be terminated, even though Stovall informed Mary Dunmoyer that it was indeed Stovall who had given the instruction for the walk. Mary Dunmoyer stated that *731 by speaking to the inspector, [McFarland] was trying to “sabotage” Magnolia and should be terminated immediately. Initially, Stovall refused to terminate [McFarland], but complied after Mary Dunmoyer threatened to terminate her [ (Stovall) ] as well. [McFarland] was terminated on July 1, 2006 and filed for unemployment compensation. (Am.Compl.¶¶ 31-33.) In essence, McFarland alleges that she was terminated because she provided information regarding the health and safety of Magnolia's residents in response to the State investigator's inquiry. Such action, McFarland contends, violates Virginia's strong public policy favoring the liberal reporting of suspicion of abuse, neglect, or exploitation of aged adults, seeVa.Code Ann. § 63.2-1606, and, more specifically, the State's public policy prohibiting the retaliation against an employee of an assisted living facility who provides information to, or otherwise cooperates with, the appropriate State authorities regarding residents at such facilities, see id.§ 63.2-1730. After the Virginia Employment Commission determined that McFarland qualified for unemployment benefits (Am.Compl.¶ 33), McFarland filed a safety and health complaint with the Virginia Department of Labor and Industry on August 28, 2006. SeeVa.Code Ann. § 40.1-51.2:2(A) (an employee who has been discharged for filing a safety or health complaint may file a complaint with Commissioner within 60 days of the alleged violation). Nonetheless, the Commissioner refused to issue a charge against the Defendants. Hence, McFarland brings her third cause of action under Va.Code Ann. § 40.1-51.2:2(B) (if the Commissioner refuses to issue a charge against the allegedly discriminating/discharging employer, the employee may bring an action in state court for appropriate relief), which she believes vests her “with a right to report safety and health violations, and to bring an action for appropriate relief should her employer discharge her or otherwise discriminate against her for exercising a right under the Labor/Employment/Safety code.” (Am.Compl.¶ 51.) The Defendants have moved for partial dismissal of McFarland's lawsuit pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, arguing that Count II (wrongful discharge in violation of public policy) and Count III (retaliation/discrimination for filing a safety or health complaint) of the Amended Complaint fail to set forth sufficient factual allegations upon which relief can be granted. (Defs.' Partial Mot. Dismiss) (docket entry no. 14.) Standard of Review Pursuant to Rule 12(b)(6), a complaint must be dismissed when a plaintiff's allegations fail to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). After accepting the facts as alleged in the Amended Complaint as true and viewing them in the light most favorable to Plaintiff McFarland, see Chao, 415 F.3d at 346, this Court should not grant the Defendants' Rule 12(b)(6) motion “unless ... it appears certain that [McFarland] cannot prove any set of facts in support of [her] claim entitling [her] to relief.” Id. (citation omitted). Stated differently, a “court may dismiss a complaint only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002). Analysis 1. Virginia Law Applies to McFarland's Pendent State Claims CHAPTER 37: LIMITED LIABILITY COMPANIES AND SPECIAL BUSINESS FORMS 58

[1] [2] When a pendent state law claim is presented to a federal court in conjunction with a federal question claim, a federal *732 court has supplemental jurisdiction to hear the pendent state law claim if it “form[s] part of the same case or controversy” as the federal claim. See28 U.S.C. § 1367(a). Here, McFarland's state claims plainly arise from the same “case or controversy” as her federal FSLA claim, for both the FSLA claim and the state claims arise from the same set of facts, and it would be unreasonable to require that McFarland pursue her claims in two separate judicial proceedings. See White v. County of Newberry, 985 F.2d 168, 171 (4th Cir.1993) (district court may exercise supplemental jurisdiction over claims that “the plaintiff would ordinarily be expected to try ... in one judicial proceeding.”). When deciding state law claims under supplemental jurisdiction, federal courts apply the choice-of-law rules of the jurisdiction in which they sit. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). This Court sits in Virginia, and since Virginia applies the doctrine of lex loci delicti to tort claims, “the law of the place of the wrong governs all matters related to the basis of the right of action.” Dreher v. Budget Rent-A-Car Sys., Inc., 272 Va. 390, 634 S.E.2d 324, 327 (2006) (citations omitted). Hence, Virginia law will govern the resolution of McFarland's state law claims. 2. McFarland Has Pleaded a Valid Bowman Claim Count II of the Amended Complaint alleges that McFarland was wrongfully discharged in violation of public policy. Essentially, McFarland alleges that she was fired because she answered a state investigator's questions truthfully regarding the “activity” of taking some of Magnolia's residents on an outside excursion in 95 degree weather. See Am. Compl. ¶¶ 31-33. Specifically, McFarland claims that Defendant Mary Dunmoyer, the Executive Director of Magnolia, told McFarland's supervisor that “by speaking to the [State] inspector, [McFarland] was trying to ‘sabotage’ Magnolia and should be terminated immediately.” (Am.Compl.¶ 32.) Since there is no contract establishing that Magnolia hired McFarland for a definite period or pursuant to specific terms, the Court must presume that McFarland was an at-will employee, meaning that Magnolia could terminate her for any reason upon reasonable notice. See County of Giles v. Wines, 262 Va. 68, 546 S.E.2d 721, 723 (2001) (citations omitted). However, Virginia recognizes an exception to the doctrine of employment at-will “based on an employer's violation of public policy in the discharge of an employee.” Rowan v. Tractor Supply Co., 263 Va. 209, 559 S.E.2d 709, 710 (2002) (citing the seminal Virginia case establishing the exception, Bowman v. State Bank of Keysville, 229 Va. 534, 331 S.E.2d 797 (1985)). A lawsuit brought under this exception is known as a “Bowman claim.” [3] The narrow exception recognized in Bowman is limited “to discharges which violate public policy, that is, the policy underlying existing laws designed to protect the property rights, personal freedoms, health, safety, or welfare of the people in general.” Miller v. SEVAMP, Inc., 234 Va. 462, 362 S.E.2d 915, 918 (1987) (emphasis in original). The Supreme Court of Virginia has recognized at least three circumstances where a Bowman claim can be maintained: (1) where an employer violated a policy enabling the exercise of an employee's statutorily created right; (2) where the public policy violated by the employer was explicitly expressed in the statute (e.g.,“It is the public policy of the Commonwealth of Virginia that ...”), and the employee was clearly a member of that class of persons directly entitled to the protection enunciated by the public policy; or (3) *733 where the discharge was based on the employee's refusal to engage in a criminal act. See Rowan, 559 S.E.2d at 711 (internal citations omitted). McFarland claims that the facts as pled in the Amended Complaint satisfy each of the three exceptions as noted. [4] [5] As an initial matter, an employee plaintiff attempting to assert a wrongful discharge claim in violation of public policy must “identify [a] Virginia statute establishing a public policy” that was violated by the employer. Lawrence Chrysler Plymouth Corp. v. Brooks, 251 Va. 94, 465 S.E.2d 806, 809 (1996). “While virtually every statute expresses a public policy of some sort, [the Supreme Court of Virginia] continue[s] to consider” the Bowman exception to be “narrow” because “termination of an employee in violation of the policy underlying any one statute does not automatically give rise to a common law cause of action for wrongful discharge.” Rowan, 559 S.E.2d at 711 (internal brackets omitted) (quoting City of Virginia Beach v. Harris, 259 Va. 220, 523 S.E.2d 239, 245 (2000)). I. Did Magnolia Violate a Policy Enabling the Exercise of McFarland's Statutorily Created Right? [6] In Bowman, several employees were fired because they refused to vote shares of stock in the manner directed by their employer. Former Va.Code § 13.1-32 (currently codified in Code § 13.1-662) gave shareholders the right to vote their shares. Obviously, to fully realize the public policy underlying the shareholders' statutory right, shareholders had to be allowed to vote such shares free from duress or intimidation. Thus, the Supreme Court of Virginia concluded that “[b]ecause the right conferred by statute is in furtherance of established public policy, the employer may not lawfully use the threat of discharge of an at-will employee as a device to control the otherwise unfettered discretion of a shareholder to vote freely his or her stock in the corporation.” 331 S.E.2d at 801. Similarly, it would violate Virginia public policy for an assisted living facility employer to terminate an employee who reports truthful information regarding the health and safety of residents at the employer's facility, especially when the employee is statutorily obligated to report suspected abuse of such residents, because the statutory rights conferred on these employees furthers the well-established public policy endorsing the protection, care, and well-being of Virginia's aged adults. Virginia law requires certain professionals to report instances of abuse, neglect or exploitation of aged or incapacitated adults: A. Matters giving reason to suspect the abuse, neglect or exploitation of adults shall be reported immediately upon the reporting person's determination that there is such reason to suspect.... Reports shall be made to the local department or the adult protective services hotline in accordance with the requirements of this section by the following persons acting in their professional capacity: 5. Any person employed by ... a public or private ... facility and working with adults in an administrative, supportive or direct care capacity; [and] 6. Any person providing full, intermittent or occasional care to an adult for compensation, including but not limited to, companion, chore, homemaker, and personal care workers. .... Va.Code Ann. § 63.2-1606(A)(5) and (6). Importantly, “[a]ll persons required to report suspected adult abuse, neglect or exploitation shall cooperate with the investigating*734 adult protective services worker of a local department and shall make information, records and reports which are relevant to the investigation available to such worker to the extent permitted by state and federal law.” Id. § 63.2-1606(B) (emphasis 59 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW added). And, “[a]n employer of a mandated reporter shall not prohibit a mandated reporter from reporting directly to the local department....” Id. § 63.2-1606(F). It is clear that McFarland is a “mandated reporter” under the facts alleged in the Amended Complaint because she worked at “a private facility and work[ed] with adults in an administrative, supportive or direct care capacity,” and/or because she provided “intermittent or occasional care to an adult for compensation.” Id. § 63.2-1606(A)(5), (6). McFarland alleges that the contact from the State Board led her to suspect abuse of aged adults, and, therefore, Virginia law required her to truthfully report these suspicions to the Board and to cooperate in any subsequent investigation. (Am.Compl.¶¶ 31-33.) Indeed, Virginia law does require professionals like McFarland to report such activity, and the public policy of Virginia encourages everyday citizens to report the same if they be so advised. The Amended Complaint alleges that the Defendants terminated McFarland for reporting and providing information to the investigator, an act that, under Virginia law, McFarland was required to perform. SeeVa.Code Ann. § 63.2-1606(B). Thus, McFarland concludes that the Defendants' actions violated the public policy supporting McFarland's right (or more precisely, her obligation) as a mandated reporter to provide information regarding the incidents of abuse of aged adults to the State Board. As such, in firing McFarland, Magnolia attempted to punish her for exercising a statutorily created right and, more importantly, it disregarded Virginia's public policy supporting the reporting of abused persons to the appropriate state agency. The Defendants argue that McFarland's claim does not satisfy the first Rowan scenario because “McFarland has not alleged that she was ever prohibited from reporting any matters that she believed to be the abuse, neglect, or exploitation of adults.” (Defs.' Mem. Supp. Partial Mot. Dismiss at 4) (emphasis added) (docket entry no. 15.) McFarland, on the other hand, asserts that she is not required to allege that the Defendants prohibited her from fulfilling her statutorily created rights, but rather only that the Defendants' actions violated the policy underlying her statutorily created rights. (Pl.'s Mem. Opp'n at 9) (docket entry no. 21.) The Defendants misconstrue the requirements for pleading a cause of action under the first Rowan exception to the at-will employment doctrine. Although the shareholders in Bowman were prevented from voting their shares as they wished, the Supreme Court of Virginia has never held that to satisfy the first Bowman exception, an employee must show that he was, in fact, prohibited from exercising a statutory right. To the contrary, the Rowan Court noted that the employee must prove that the employer violated a policy enabling the exercise of an employee's statutorily created right, Rowan, 559 S.E.2d at 711, not that the employer must actually prevent the employee from exercising the statutorily created right. Here, McFarland alleges that the Defendants violated Virginia's public policy mandating the reporting of suspected abuse or neglect of elderly residents at an assisted living facility by those having responsibility for the care of those residents. In response to an inquiry about suspected abuse or neglect by a state investigator, McFarland reported what she knew of the incident, and now alleges that she was *735 fired for doing so. “All persons required to report suspected adult abuse, neglect or exploitation,” as was the case with McFarland, “shall cooperate with the investigating adult protective services worker of a local department and shall make information, records and reports which are relevant to the investigation available to such worker to the extent permitted by state and federal law.” Va.Code Ann. § 63.2-1606(B) (emphasis added). And, “[a]n employer of a mandated reporter shall not prohibit a mandated reporter from reporting directly to the local department.” Id. § 63.2- 1606(F). If an at-will employee of an assisted living facility could be terminated for responding to and providing information to a state agency regarding the suspected abuse or neglect of aged adults, the statutes cited herein would be rendered meaningless. The rights and protections conferred on employees such as McFarland are precisely designed to further Virginia's public policy seeking to ensure the health and well-being of the State's aged populace. Indeed, if persons such as McFarland feared losing their jobs for providing truthful information regarding the health and safety of these individuals, fewer incidents of abuse and neglect would be reported, and the public policy endorsing the same ultimately defeated. Thus, McFarland's Amended Complaint satisfies the first Rowan exception to the employment at-will doctrine. See Bleich v. Florence Crittenton Servs. of Baltimore, Inc., 98 Md.App. 123, 632 A.2d 463, 471 (1993) (plaintiff stated cause of action for wrongful discharge in violation of public policy when she alleged she was fired for sending a letter that she suspected child abuse and neglect where such reporting was required by Maryland law); Hirsovescu v. Shangri-La Corp., 113 Or.App. 145, 831 P.2d 73, 75 (1992) (plaintiff who asserted he was discharged because he made “good faith” reports of “potential physical abuse” to patients in a residential care center set forth a cause of action for wrongful discharge); Witt v. Forest Hosp., Inc., 115 Ill.App.3d 481, 71 Ill.Dec. 123, 450 N.E.2d 811, 813 (1983) (nurse who alleged she was fired for providing information to State guardianship and advocacy commission stated cause of action for wrongful discharge). II. Did Magnolia Violate a Public Policy Explicitly Expressed in a Statute and was McFarland Clearly a Member of that Class of Persons Directly Entitled to the Protection Enunciated by that Public Policy? [7] [8] To satisfy the second Rowan exception to the at-will employment doctrine, McFarland must allege that Magnolia violated a public policy explicitly expressed in a Virginia statute, and that McFarland was clearly a member of that class of persons directly entitled to the protection enunciated by that public policy. See Rowan, 559 S.E.2d at 711. With regard to the particular statute a plaintiff claims to “explicitly” express a public policy (i.e.,“It is the policy of the Commonwealth that ...”), the Supreme Court of Virginia has held that the statute itself need not be so explicit to justify a wrongful termination claim in every case. “Laws that do not expressly state a public policy, but were enacted to protect the property rights, personal freedoms, health, safety, or welfare of the general public, may support a wrongful discharge claim if they further an underlying, established public policy that is violated by the discharge from employment.” Mitchem v. Counts, 259 Va. 179, 523 S.E.2d 246, 251 (2000) (citations omitted). That said, the Virginia Code makes it a violation to retaliate against any person who engages in certain protected conduct: No assisted living facility ... may retaliate or discriminate in any manner against any person who (i) in good faith *736 complains or provides information to, or otherwise cooperates with, the Department or any other agency of government... having responsibility for protecting the rights of residents of assisted living facilities ... [or] (ii) attempts to assert any right protected by state or federal law.... Va.Code Ann. § 63.2-1730 (emphasis added). Additionally,No assisted living facility ... may retaliate in any manner against any person who in good faith reports adult ... abuse or neglect pursuant to ... Article 2 (§ 63.2-1603 et seq.) of Chapter 16 of this title. CHAPTER 37: LIMITED LIABILITY COMPANIES AND SPECIAL BUSINESS FORMS 60

[9]Id.§ 63.2-1731. McFarland's Amended Complaint satisfies the second Rowan exception to the employment at-will doctrine. The statutes are designed to protect persons in McFarland's position who “blow their whistle” on an assisted living facility, and she falls into the class of individuals covered by the statutes' provisions. In fact, Sections 63.2-1730 and 1731, as well as the provisions contained in Section 63.2-1606, discussed supra, are all designed to afford protection to employees like McFarland who are employed at assisted living facilities, who report suspected abuse or provide information to the State Board regarding such abuse, but yet are fired as a result ( i.e., retaliated against) by the facility for performing their required duties. These statutes, taken as a whole, convey the Commonwealth's public policy favoring the protection of aged adults and the persons who are responsible for their well-being and comfort. Therefore, as pled, the Defendants' retaliatory termination of McFarland violated Virginia's public policy prohibiting the retaliation or discrimination against a person who, in good faith, provides information to an agency having responsibility for protecting the rights of residents of assisted living facilities. McFarland was clearly a member of that class of persons directly entitled to the protection articulated by the statute and, thus, McFarland's Bowman claim survives under the second recognized exception to the at-will employment doctrine.FN4 FN4. At the same time, the Amended Complaint fails to satisfy the third Rowan exception-that McFarland was discharged based on her refusal to engage in a criminal act. Rowan, 559 S.E.2d at 711. Va.Code Ann. § 63.2-1606(G) imposes criminal liability on those persons 14 years of age or older who make or cause to be made a report of adult abuse, neglect, or exploitation that he knows to be false. Id. § 63.2-1606(G) (emphasis added). As the Defendants emphasize, “Nothing in the Complaint suggests that McFarland was asked or required not to report any suspicion of abuse, neglect, or exploitation of adults or that her termination was based on McFarland's refusal to engage in a criminal act.” (Defs.' Mem. at 6) (emphasis added). Indeed, it is not alleged that anyone on behalf of Magnolia told McFarland to lie to the State investigator, and it is not alleged that anyone told McFarland she could not or should not report the suspected abuse, or that she should refuse to respond to the State investigator's inquiries. Therefore, as McFarland makes no claim that she was asked to break the law, she cannot satisfy the third Rowan exception. See Mitchem, 523 S.E.2d at 252 (trial court did not err in dismissing plaintiff employee's claim that she was wrongfully discharged in violation of the public policy embodied in the statute establishing the crime of simple assault as a Class 1 misdemeanor because the employee “did not allege that her employer discharged her for refusing to commit this crime.”). 3. Retaliation/Discrimination Under Va.Code Ann. § 40.1-51.2:1 [10] In Count III, McFarland argues that Va.Code Ann. § 40.1-51.2:1 vests her “with a right to report safety and health violations, and to bring an action for appropriate relief should her employer discharge her or otherwise discriminate against her for exercising a right under *737 the Labor/Employment/Safety code.” (Am.Compl.¶ 51.) According to McFarland, the “Defendants required their staff to perform walks in weather of 95 degrees, and are prohibited for [sic ] terminating [McFarland] for speaking with the state licensing board about this incident. Defendants' obligation to provide its employees with a safe workplace environment pursuant to”Section 40.1-51.2:1“should also be extended to Defendants' customers, the residents.” (Id.) (emphasis added). As noted below, such a construction stretches the statute beyond its permissible reach. Section 40.1-51.2:1, commonly known as Virginia's whistleblower statute, provides: No person shall discharge or in any way discriminate against an employee because the employee has filed a safety or health complaint ... or otherwise acted to exercise rights under the safety and health provisions of this title for themselves or others. Va.Code Ann. § 40.1-51.2:1. McFarland's claim under this Section is once again predicated on her discussion with the inspector from the state licensing board. In her view, she “engaged in conduct that exercised her rights under the safety and health provisions, as she spoke to [the Department] regarding the unsafe conditions endured by Defendants' elderly residents.” (Pl.'s Mem. Opp'n at 13.) By doing so, she contends that she “acted to exercise rights under the safety and health provision of this title for ... others.” Va.Code Ann. § 40.1-51.2:1. But the Defendants argue that McFarland's cooperation with the licensing inspector is not a proper basis for seeking the protection of Section 40.1-51.2:1. (Defs.' Mem. at 6.) This is so, they contend, because Title 40. 1, Chapter 3, Article 5 of the Code governs safety provisions as they relate to the protection of employees. (Id. at 7.) They maintain that the General Assembly intended the statute to apply to situations in which employees alone are in danger of unsafe work hazards, i.e., OSHA violations and the like. (Id.) Thus, any complaint McFarland may have had regarding the care of residents was entirely independent of the safety of her workplace. (Id. at 8.) The Court cannot reasonably hold that Section 40.1-51.2:1 was intended to address the situation McFarland alleges to have taken place, and the Court concludes that the statute's application should not be extended in such a way. Indeed, Article 5 outlines various provisions relating to the duties of employers, see Section 40.1-51.1(A) (requiring employers to furnish employees with a safe place of employment free from recognized hazards likely to cause death or serious physical harm to its employees ), as well as the rights and duties of employees, see Section 40.1-51.2. And, most importantly, the General Assembly explicitly established that Title 40.1 is “intended to provide solely for safety, health, and welfare of employees and the benefits thereof shall not run to any other person ....”Va.Code Ann. § 40.1-3 (emphasis added). Thus, Section 40.1-51.2:1 is designed to ensure the safety and health of employees and no one else. To read the statute otherwise would create a general whistleblower protection for reporting virtually anything that happens to any individual in the workplace. Thus, McFarland's claim pursuant to Section 40.1- 51.2:1 must be dismissed with prejudice. 4. Are the Defendants Proper Parties to McFarland's State Claim for Wrongful Discharge in Violation of Public Policy? [11] [12] Finally, the individual Defendants contend that no individual liability may be imposed against them with regard to McFarland's common law wrongful discharge claim because they were never McFarland's employer; rather Magnolia was the employer. (Defs.' Mem. at 11.) *738[13] The Virginia Limited Liability Company Act, Va.Code Ann. § 13.1-1000et seq., addresses the issue. Defendant Virginia Retirement Services of Chesterfield, L.L.C. operates as Magnolias of Chesterfield and, as a Virginia limited liability company (“LLC”), it is “an independent entity which can sue and be sued and its members are not personally liable for the debt or actions of the company.” Hagan v. Adams Prop. Assocs., Inc., 253 Va. 217, 482 S.E.2d 805, 807 (1997); see also Gowin v. Granite Depot, L.L.C., 272 Va. 246, 634 S.E.2d 714, 61 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW

719 (2006) (“A limited liability company is an entity that, like a corporation, shields its members from personal liability based on actions of the entity.”) (citations omitted). Indeed, “no member, manager, organizer or other agent of a limited liability company shall have any personal obligation for any liabilities of a limited liability company, whether such liabilities arise in contract, tort or otherwise, solely by reason of being a member, manager, organizer or agent of a limited liability company.”Id.§ 13.1-1019 (emphasis added). Furthermore, “[a] member of a limited liability company is not a proper party to a proceeding ... against a limited liability company, except where,” inter alia,“(i) the object is to enforce a member's ... liability to the limited liability company....”Id. § 13.1-1020.FN5 Since Defendant Magnolia is a limited liability company, its members, managers, and agents can have no “personal obligation for any liabilities of” Magnolia “solely ” by virtue of their positions as members, managers, or agents of the LLC, even when such liability arises from a tort. Id.§ 13.1-1019. FN5. A “member” is “a person that has been admitted to membership in a[LLC] ... and that has not ceased to be a member,” Va.Code Ann. § 13.1-1002, and a “manager” is “a person ... designated by the members of a[LLC] to manage the [LLC] as provided in the articles of organization or an operating agreement,”id. Construing the facts alleged in the Amended Complaint in the light most favorable to McFarland, see Chao, 415 F.3d at 346, those individual Defendants asserted to be owners of Magnolia (i.e., Matthews, Reed, and Loughlin) will be considered “members” of the LLC, while the remaining individual Defendants (i.e., Mary Dunmoyer and Robert Dunmoyer) will be treated as “managers” or “agents” of the LLC for purposes of analyzing their statuses as proper parties to Counts II and III of the Amended Complaint. It is clear from the face of the Amended Complaint that the only member, manager, or agent of Magnolia alleged to have personally participated in or contributed to McFarland's alleged wrongful termination is Mary Dunmoyer, the Executive Director of Magnolia. (Am.Compl.¶¶ 31-32.) With the exception of Ms. Dunmoyer, the Amended Complaint does not allege that any of the remaining individual Defendants personally participated in or otherwise directed Magnolia's tortious conduct. Indeed, the only specific reference to the individual Defendants is their status as owners and/or managers of Magnolia. (Am.Compl.¶¶ 1, 9-14.) Since a plaintiff's action for wrongful discharge sounds in tort, the individually named Defendants (with the exception of Ms. Dunmoyer), whose existence in this case is predicated solely on their status as members, managers, or agents of Magnolia, must be dismissed as parties to McFarland's common law wrongful discharge claim. FN6See Wash. County v. City of Bristol, 63 Va. Cir. 450, 454 (Va. Cir. Ct.2003) (citing *739Section 13.1- 1019 and holding that plaintiff's allegation that defendant member was principal owner of a Virginia LLC was insufficient to state a claim for holding that member individually liable). FN7 FN6. The Court contemplated requiring the individual Defendants to remain as parties pending anticipated discovery and a possible motion for final dispositive relief by summary judgment because certain factual allegations are pled against the Defendants in the plural. For example, the Amended Complaint states that McFarland “was terminated on July 1, 2006 and filed for unemployment compensation. Defendants testified that [McFarland] was discharged for giving inaccurate information to the Director of Licensing and for providing information that did not concern [McFarland] or her job....” (Am.Compl.¶ 33) (emphasis added.) However, such after-the-fact allegations, at best, do not pertain to the relevant actions undertaken to initially terminate McFarland as there are regarding the Defendant Mary Dunmoyer, and the Court is otherwise obliged to render the appropriate relief of dismissal when sufficient grounds arise so as to excuse a party from further expense and effort. At the same time, it is also appropriate to allow McFarland to conduct focused discovery on the issue of potential individual liability of additional parties and for leave to be granted to rejoin any party if the appropriate basis for such a claim can be fairly alleged consistent with the strictures of Fed.R.Civ.P. 11(b). Although McFarland's counsel informally requested leave to amend at this juncture during a recent telephone conference with all counsel, the Court presumes that a sufficient basis is lacking at present to plead such additional allegations in good faith as required. Accordingly, the motion to dismiss said parties will be without prejudice to allow such forthcoming amendment if a sufficient basis should develop.

FN7. While Va.Code Ann. § 13.1-1020 allows a member of a LLC to be a proper party to a suit only when the object of the suit is (i) to enforce a member's right against or liability to the LLC or (ii) in the context of a derivative suit similar that provided for in Code § 13.1-1042, such limited exceptions appear inconsistent with Section 1019 as well as the relevant case law allowing for the imposition of liability on a member who personally engages in tortious conduct. Indeed, it would be illogical to hold, on one hand, that a member may be liable for his or her own tortious conduct inflicted on a plaintiff, yet to also hold, on the other hand, that this same member would not be a proper party defendant in a lawsuit filed by the same injured plaintiff. Even so, Section 1020 is specifically limited to a member's party status in lawsuits involving LLC's, and therefore it does not alter the Court's determination as to whether managers or agents of a LLC-such as Ms. Dunmoyer may be proper party defendants in a wrongful discharge lawsuit. [14] Such a conclusion furthers the statutory intent behind the Virginia Limited Liability Company Act which explicitly pronounces that a LLC is an independent entity designed to generally shield its members and managers from personal liability. SeeVa.Code Ann. § 13.1-1019. The conclusion also gives appropriate deference to those decisions from the Supreme Court of Virginia permitting a common law wrongful discharge claim to proceed against those officers or agents of a company who have played a key role in contributing to the company's tortious conduct allegedly inflicted on a wrongfully discharged plaintiff. See, e.g., Bowman, 331 S.E.2d at 798-801 (permitting employees' wrongful discharge lawsuit to proceed against both a Bank and seven individual members of the Bank's nine-person Board of Directors directly implicated in firing the employees, holding that the employees had “stated a cause of action in tort against the Bank and the named directors for improper discharge from employment.”) (emphasis added); Lockhart v. Commonwealth Educ. Sys. Corp., 247 Va. 98, 439 S.E.2d 328 (1994) (employee's wrongful discharge claim allowed to proceed against both corporate entity and individual supervisor who made decision to terminate employee and told her to “get out!”). Indeed, “[u]nder Virginia law, an officer or director of a corporation is liable only for those intentional torts he or she commits or authorizes on behalf of the corporation,” Airlines Reporting Corp. v. Pishvaian, 155 F.Supp.2d 659, 666 (E.D.Va.2001) (citing Sit-Set, A.G. v. Universal Jet Exch., Inc., 747 F.2d 921 (4th Cir.1984) and Miller v. Quarles, 242 Va. 343, 410 S.E.2d CHAPTER 37: LIMITED LIABILITY COMPANIES AND SPECIAL BUSINESS FORMS 62

639, 641-42 (1991)), and there is no reason to believe that such a *740 rule should not equally apply to LLC's because even though “a [LLC] is an entity that, like a corporation,” is designed to “shield [ ] its members from personal liability based on actions of the entity,”see Gowin, 634 S.E.2d at 719, a LLC member should still be held individually liable if he or she personally participates in a tort committed by the LLC or directs it to be done. See, e.g., Milk v. Total Pay & HR Solutions, Inc., 280 Ga.App. 449, 634 S.E.2d 208, 213 (2006); see also Karin Schwindt, Comment, Limited Liability Companies: Issues in Member Liability, 44 UCLA L.Rev. 1541, 1548 (1997) (“If a member commits a tort while in the course of LLC business, she may be held personally liable for that tort. The LLC limited liability shield cannot protect her.”) (internal footnotes omitted).FN8 FN8. To the extent Lucker v. Cole Vision Corp., Civil Action No. 7:05CV00126, 2005 WL 1411655 (W.D.Va. June 16, 2005), is to the contrary, the Court respectfully disagrees with that court's analysis for the reasons set forth herein. The Court is keenly aware of Federal Rule of Civil Procedure 8(a)'s liberal notice pleading requirements, especially in the employment discrimination context, whereby a plaintiff's complaint need only contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Indeed, the Supreme Court in Swierkiewicz held that there is not a heightened pleading standard for employment discrimination suits and that a plaintiff in such an action need not plead a prima facie case to withstand a motion to dismiss. 534 U.S. at 515, 122 S.Ct. 992. And, of course, at the motion to dismiss stage in the proceedings, the issue is not whether the plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims. See id. at 511, 122 S.Ct. 992 (citation omitted). But the Fourth Circuit has not interpreted Swierkiewicz to relieve a plaintiff of the burden “to allege facts sufficient to state all the elements of her claim.” Bass v. E.I. DuPont de Nemours & Co., 324 F.3d 761, 765 (4th Cir.), cert. denied,540 U.S. 940, 124 S.Ct. 301, 157 L.Ed.2d 253 (2003). In other words, “[w]hile a plaintiff is not charged with pleading facts sufficient to prove her case, as an evidentiary matter, in her complaint, a plaintiff is required to allege facts that support a claim for relief.” Id. (emphasis in original). It seems apparent to the Court that if a member, manager, or agent of a Virginia LLC cannot, as a matter of law, be liable in tort for actions of the LLC solely because that person is a member, manager, or agent of that LLC, seeVa.Code Ann. § 13.1-1019, then a plaintiff should plead facts demonstrating a particular member's culpability in the LLC's tortious conduct that extends beyond that person's mere status as a member of the company. McFarland has only made such allegations with respect to Defendant Mary Dunmoyer. Therefore, the individual Defendants (with the exception of Mary Dunmoyer) are dismissed from Counts II and III of McFarland's Amended Complaint, with leave to amend should the discovery process produce evidence to the effect that the other individual Defendants played meaningful roles in the decision to terminate McFarland's employment. Accordingly, Defendants Robert Dunmoyer and Ben Stalker Read must be dismissed as parties to Counts II and III of the Amended Complaint, but without prejudice for the reasons discussed, supra, in footnote six (n. 6). Conclusion For the reasons set forth herein, the Defendants' Motion to Dismiss is GRANTED IN PART, and DENIED IN PART. An appropriate Order shall issue.

*741ORDER This matter is before the Court, by consent of the parties, on the Defendants' Partial Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted (docket entry no. 14). For the reasons set forth in the accompanying Memorandum Opinion, it is hereby ORDERED that: (1) The Defendants' Motion to Dismiss is GRANTED IN PART and DENIED IN PART. Specifically, A. Defendant Virginia Retirement Services of Chesterfield, L.L.C. d/b/a Magnolias of Chesterfield and Defendant Mary Dunmoyer are proper parties to the Plaintiff's common law wrongful discharge claim (Count II of the Amended Complaint); B. Defendants Robert Dunmoyer and Ben Stalker Reed are Dismissed as parties to Count II of the Plaintiff's Amended Complaint, with leave to amend should the Plaintiff be so advised; C. Plaintiff's Retaliation/Discrimination claim in violation of Va. Code Ann. § 40.1-51.2:2 (Count III of the Amended Complaint) is Dismissed against all of the Defendants, with prejudice; and D. In accordance with the parties' prior stipulations, Defendant David H. Matthews and Defendant Frances Wood Loughlin are dismissed as parties to the present lawsuit (Counts I, II, and III) without prejudice, with leave to amend should the Plaintiff be so advised. (Docket entry nos. 35 & 37.) Let the Clerk forward a copy of this Order and the accompanying Memorandum Opinion to all counsel of record. It is so ORDERED. Case 37.2

366 N.J.Super. 431, 841 A.2d 496, 52 UCC Rep.Serv.2d 981 Superior Court of New Jersey,Appellate Division. Clifford N. KUHN, Jr., and Touch of Class Limousine Service, L.L.C., d/b/a Touch of Elegance Limousine Service, Plaintiffs-Appellants, 63 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW v. Joseph M. TUMMINELLI, Joanne Tumminelli, Quick Cash, Inc., Chase Manhattan Bank, N.A., First Union National Bank, N.A. (succeeded by Wachovia Bank), and Bank of America Corporation, Defendants-Respondents, and Quick Cash, Inc., Third-Party Plaintiff-Respondent, v. Joseph Tumminelli, Joanne Tumminelli, Chase Manhattan Bank, N.A., First Union National Bank, N.A. (succeeded by Wachovia Bank), and Bank of America Corporation, Third-Party Defendants- Respondents. Argued Jan. 6, 2004. Decided Feb. 11, 2004. *435 LEFELT, J.A.D. Plaintiff Clifford Kuhn, Jr., a practicing attorney, and defendant Joseph Tumminelli formed Touch of Class Limousine Service under the New Jersey Limited Liability Company Act, N.J.S.A. 42:2B-1 to -70, doing business as Touch of Elegance Limousine Service. The parties orally agreed that Kuhn would provide the financial backing and procure customers, and Tumminelli would generally manage the business and operate the company day-to-day. Unfortunately, however, Tuminelli embezzled FN1 funds from the company after cashing customers' checks at defendant Quick Cash, Inc, a local check cashing service operating under The Check Cashers Regulatory Act of 1993, N.J.S.A. 17:15A-30 to -52. FN1. There are some facts in the record indicating that Tumminelli may not have embezzled company funds, however a Chancery Judge entered judgment against Tumminelli for $283,000 and ordered Tumminelli to transfer his ownership interest in the company to Kuhn. This judgment and order have not been appealed. After cashing the checks for Tumminelli, Quick Cash deposited the checks in its bank account with defendant First Union National Bank, N.A. [now Wachovia Bank] and First Union collected on the checks from the drawee banks, defendants Bank of America Corp. and Chase Manhattan Bank, N.A. [now J.P. Morgan Chase Bank]. Kuhn obtained a judgment against Tumminelli for the embezzled funds, but now appeals from Judge Ann McCormick's summary judgment in favor of all remaining defendants, which concluded that because Tumminelli was authorized to endorse the checks, none of the remaining defendants were liable to Kuhn. Kuhn claims that because Tumminelli did not have authority to convert the company's cash to his own use, summary judgment was granted erroneously as there were genuine issues of material fact regarding the scope of Tumminelli's check cashing authority under common law agency principles. We conclude that Judge McCormick correctly awarded defendants summary judgment and affirm. **499 *436 I. Here are the facts followed by the relevant procedural history. Kuhn and Tumminelli each owned a half-interest in the limousine service company, which began as a partnership in 1999 and soon became a Limited Liability Company (LLC), with Kuhn and Tumminelli as members. Kuhn and Tumminelli never entered into a written operating agreement, but they orally agreed to various operating procedures, including an understanding that while Tumminelli could receive customer payments all such monies should pass through the appropriate company bank accounts and be accounted for properly. The LLC leased several limousines, hired two full-time drivers, and served corporate customers in the area, such as Merck & Co. in Rahway. Kuhn and Tumminelli were authorized signatories on the LLC's only checking account. Beginning in late 1999, Kuhn became aware of shortages in the checking account along with returned checks and other irregularities in the operation of the LLC. Kuhn discovered as early as January 2000 that “Tumminelli had written several checks to ‘cash,’ signed the checks personally, and cashed them at Quick Cash.” Kuhn confronted Tumminelli who tried to explain the irregularities, but by February 2001, Kuhn had concluded that Tumminelli had been embezzling LLC money by cashing customers' checks payable to the LLC at Quick Cash based on Tumminelli's personal endorsement and converting the proceeds to his personal use. Nevertheless, Kuhn allowed Tumminelli to continue receiving company payments and to manage company funds after Kuhn's suspicions were aroused in January 2000 until June 2001, when Kuhn brought suit against Tumminelli. The record discloses that Kuhn did nothing to take control of the finances or otherwise protect the company assets during this period and merely instructed Tumminelli to not expend company money without discussing it with him. Kuhn never, during this period, attempted to enforce the instruction. Significantly, Kuhn also did not notify *437 Quick Cash of his concerns regarding Tumminelli at any time during this period. Before Tumminelli cashed any checks at Quick Cash, Tumminelli presented Quick Cash with a form corporate resolution provided by Quick Cash, signed by Tumminelli as Secretary and President, purporting to authorize him to cash checks on the company's behalf under his personal signature. The resolution, however, was not notarized and contained neither the date it was executed nor a corporate seal. In addition, Tumminelli had presented Quick Cash with two letters on LLC letterhead to the same effect, which Tumminelli had signed as General Partner. After receiving the two letters and resolution, an owner and officer of Quick Cash called the LLC offices and spoke with Mrs. Tumminelli, who helped in the day-to-day management of the business and maintained the company books and records. Mrs. Tumminelli informed Quick Cash that Tumminelli was an owner of the company. FN2 And, before cashing each check presented by Tumminelli, Quick Check also verified Tumminelli's identity by “taking [his] driver's license and photocopying [it] against the check presented.” FN2. Kuhn argues that we should not rely on the certification establishing the phone contact because discovery had been terminated and he was unable to depose the witness. However, such documentation is permitted by the pertinent rule, R. 4:46-2, and commonly submitted with summary judgment motions. Also, the record, reviewed favorably to Kuhn, does not reveal any suspicion of the CHAPTER 37: LIMITED LIABILITY COMPANIES AND SPECIAL BUSINESS FORMS 64

certification's unreliability. **500 Kuhn sued Tumminelli, Tumminelli's wife, and Quick Cash in the Chancery Division, accusing the Tumminellis of embezzlement and conversion and charging Quick Cash with negligence for failing to comply with statutory check-cashing procedures. The Chancery judge restrained the Tumminellis from any further involvement with the LLC, entered a $280,000 judgment against Tumminelli, and ordered the transfer of Tumminelli's ownership interest to Kuhn. The remaining claims against Quick Cash were *438 transferred to the Law Division and assigned to Judge McCormick. Quick Cash denied negligence and asserted third-party claims for indemnification against the Tumminellis, First Union and the drawee banks, Bank of America and Chase. The bank defendants cross-claimed against each other and against Quick Cash for indemnification. Kuhn then amended his complaint to assert direct claims of conversion and negligence against each of the banks. Quick Cash and each of the defendant banks moved for summary judgment on the ground that Tumminelli's endorsements were authorized. Judge McCormick granted the motion because she concluded that Tumminelli was authorized to endorse the checks and that his subsequent dishonesty defrauded Kuhn and the LLC, but was not the responsibility of Quick Cash or any of the banks. The judge found that there was “no dispute that Mr. Tumminelli was a 50% member and Mr. Kuhn was a 50% member [of the LLC].... There not being [a written] operating agreement[,] the powers, duties, and responsibilities of the members of the LLC defaulted to the Statute.” Under the judge's interpretation of the LLC statute, Tumminelli had the “power to endorse, to enter into simple contracts, to sign checks, etc.” Because Tumminelli's signature was authorized by the LLC, according to Judge McCormick “that is the end of the story and the bank is not responsible for a subsequent conversion of the funds by the person endorsing the check.” II. Kuhn argues on appeal that Tumminelli's endorsement was unauthorized because Tumminelli used the funds for personal purposes. Reasoning from out-of-state cases and the Uniform Partnership Act provision limiting partner authorization to partnership business, N.J.S.A. 42:1A-13(a) , Kuhn argues that because Tumminelli was not authorized by the LLC to convert company funds to his own use, there was minimally a factual dispute *439 regarding whether Tumminelli was authorized to endorse the company checks he subsequently converted. We do not agree with the legal construct Kuhn attempts to erect in order to find a factual dispute. New Jersey enacted the Limited Liability Company Act in 1994. L. 1993, c. 210, § 1 to § 70 (eff. Jan. 26, 1994). Its purpose was to enable members and managers of LLCs “to take advantage of both the limited liability afforded to shareholders and directors of corporations and the pass through tax advantages available to partnerships.” Senate Commerce Committee Statement, S. Doc. No. 890, at 1 (June 14, 1993). Under the LLC Act, when “a limited liability company is managed by its members, unless otherwise provided in the operating agreement, each member shall have the authority to bind the limited liability company.” N.J.S.A. 42:2B-27(b)(1) . Moreover, “[e]xcept as otherwise provided in an operating agreement, a member or manager may lend money to, borrow money from, act as a surety, guarantor or **501 endorser for, ... [an LLC].” N.J.S.A. 42:2B-9 (emphasis added). In the absence of a written operating agreement providing to the contrary, Tumminelli as a 50% owner of the LLC had broad authority to bind the LLC under N.J.S.A. 42:2B-27(b)(1) , and specific authority under N.J.S.A. 42:2B-9 to “endorse” and presumably cash checks payable to the LLC. If more limited authority was desired, Kuhn and Tumminelli had to so provide in a written operating agreement. We see no indication that the Legislature intended to incorporate any provision of the Uniform Partnership Act into the LLC law. The broad grant of authority to LLC members contained in N.J.S.A. 42:2B-27(b)(1) , was added to the statute by the Legislature in 1997. L. 1997, c. 139, § 15. The Uniform Partnership Law, which preceded the Uniform Partnership Act, and has been in existence since 1919, contained a provision limiting a partner's authority to partnership business, which was nearly identical to N.J.S.A. 42:1A-13(a) , contained in the current Uniform Partnership Act. N.J.S.A. 42:1-9 (repealed by L. 2000, c. 161, § 59). Therefore, when the LLC law was amended in 1997 to provide the broad grant of authority to LLC members, limitations contained in the partnership law could have been adopted, but were not. Instead, the LLC Act contemplates that its provisions will control unless the members agree otherwise in an operating agreement. When executing an operating agreement, which must be written if the LLC has more than one member, N.J.S.A. 42:2B-2 , the members are free to structure the company in a variety of ways and are free to restrict and expand the rights, responsibilities and authority of its managers and members. E.g., N.J.S.A. 42:2B-27(b)(1) (permitting the limitation of a members' authority and the designation of a manager and the detailing of company affairs); N.J.S.A. 42:2B-10 (permitting limitless indemnification and hold harmless provision for members and managers); N.J.S.A. 42:2B-22 (permitting the detailing of “relative rights, powers and duties” of “classes or groups of members”); N.J.S.A. 42:2B-25 (permitting the limitation of company information available to each member); N.J.S.A. 42:2B-28 and N.J.S.A. 42:2B-66 (permitting the establishment of restrictions and liabilities of members and managers); N.J.S.A. 42:2B-34 to -35 (permitting the specification of distributions among the members); N.J.S.A. 42:2B-37 (permitting the delineation of when and how a manager should resign). The LLC Act is, therefore, quite flexible and permits the LLC members great discretion to establish the company structure and procedures, with the statute controlling in the absence of a contrary operating agreement. The legislative intent is revealed by the directive that the LLC Act is “to be liberally construed to give the maximum effect to the principle of freedom of contract and to the enforceability of operating agreements.” N.J.S.A. 42:2B-66(a) . III. [1] Tumminelli was authorized under the LLC Act to endorse the checks. In fact, considering Tumminelli's position at the LLC, *441 his responsibilities, and daily functions along with the statutory grant of authority, it can be inferred that Tumminelli had actual authority to receive the checks, endorse the checks, and cash them at Quick Cash, especially because Kuhn knew that Tumminelli was paying business expenses in cash. Kuhn nevertheless argues that the endorsement and subsequent conversion constitutes**502 one act. Under Kuhn's argument, even if a person had been authorized to endorse and cash a check, if that person converts the funds to an unauthorized use, a depository bank would be 65 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW liable, as if the check had been paid on a forged endorsement. Kuhn relies on several out-of-state cases as support for this argument. E.g., Lund's, Inc. v. Chem. Bank, 870 F. 2d 840, 848-49 (2nd Cir.1989) ; Taco Ed's, Inc. v. State Bank and Trust, 63 B.R. 913, 933-34 (Bankr.N.D.Ohio 1986) ; Oswald Mach. & Equip., Inc. v. Yip, 10 Cal.App. 4th 1238, 13 Cal.Rptr. 2d 193, 194-95 (1992) ; Trust Co. Bank of Augusta v. Henderson, 185 Ga.App. 367, 364 S.E. 2d 289, 291 (1987) ; Nat'l Bank of Monticello v. Quinn, 126 Ill. 2d 129, 127 Ill.Dec. 764, 533 N.E. 2d 846, 847-48 (1989) ; Mohr v. State Bank of Stanley, 241 Kan. 42, 734 P. 2d 1071, 1076-77 (1987) ; Confederate Welding & Safety Supply, Inc. v. Bank of Mid-South, 458 So. 2d 1370 (La.Ct.App.1984) ; Delta Chem. v. Citizens Bank, 790 So. 2d 862, 865-66, 873 (Miss.App.2001). [2] We disagree that an authorized endorsement can become unauthorized by a subsequent unauthorized use of the funds. Rather, we view the circumstances as constituting two acts, the endorsement necessary to obtain the funds and the subsequent use of the funds. These acts are not inseparable. The misappropriation of the funds is unauthorized, but does not convert an authorized endorsement into a forgery. Jones v. Van Norman, 513 Pa. 572, 522 A. 2d 503, 507(Pa.), appeal denied, 515 Pa. 581, 527 A. 2d 542 (1987) . [3] [4] [5] “It defies reason to allow an event that occurs after the indorsement to affect the validity of the indorsement.” *442Citizens Bank of Md. v. Md. Indus. Finishing Co., 338 Md. 448, 659 A. 2d 313, 315-16 (1995) ; Willey v. Mayer, 876 P. 2d 1260, 1265 (Co.1994) ; Bank South v. Midstates Group, Inc., 185 Ga.App. 342, 364 S.E. 2d 58, 61 (1987) ; Rohrbacher v. BancOhio Nat'l Bank, 171 A.D. 2d 533, 534, 567 N.Y.S. 2d 431 (N.Y.App.Div.1991) ; Puget Sound Nat'l Bank v. Burt, 56 Wash.App. 868, 786 P. 2d 300, 302 (1990) . “The use to which the agent later puts the check does not affect the agent's authorization to indorse it.” Citizens Bank of Md., supra, 659 A. 2d at 318 . “[T]he validity of an indorsement does not depend upon the agent's subjective motivation at the time of the indorsement.” Id. at 319. We have years ago explained that a valid corporate resolution explicitly conferring authority on an officer to endorse checks was sufficient to excuse a bank from inquiring further into the validity of the underlying transaction. O'Connor v. First Bank & Trust Co., 12 N.J.Super. 281, 289-90, 79 A. 2d 687 (App.Div.1951) . As Judge McCormick stated “how can a bank or anyone else protect themselves against someone's bad intent[?]” “If the agent is otherwise authorized ... the fact that the agent had an improper purpose in making or endorsing the instrument in the authorized form does not prevent a bona fide purchaser in due course, or a subsequent transferee from one, from having the same rights in the instrument and against the principal as if the agent's act were authorized.” Restatement (Second) of Agency § 76 comment. c (1958); see also Restatement (Second) of Agency § 165 comment d (1958) (dealing with a principal's liability to third parties where its agent acts with an improper purpose and recognizing liability when “an agent, authorized to ... endorse checks ... endorses one to a named payee or endorsee, intending to simulate the name of a creditor of the principal and embezzle the proceeds”); Restatement (Second) of Agency § 173 comment a (1958) (a principal who employs a general agent “in a position in which it is usual for such agents to issue **503 negotiable instruments” is liable to a holder in due course of such an instrument issued by the agent in the name of the principal, even where the agent acted contrary to the principal's directions and the holder in due course was unaware of the agency relationship). *443 IV. Despite the proof that Tumminelli had actual authority to endorse the checks in question, Kuhn still argues that Quick Cash could not reasonably have concluded that Tumminelli was authorized to endorse the checks because the documentation that Tumminelli submitted to establish his authorization was defective. Specifically, Kuhn argues that Quick Cash was negligent because the corporate resolution submitted by Tumminelli was prepared on a Quick Cash form in which Tumminelli had omitted the date the resolution was approved and the date the form was certified. In addition, the form lacked a corporate seal and notarization. As a check cashing entity, Quick Cash is licensed and regulated and must adhere to the provisions of The Check Cashers Regulatory Act of 1993. N.J.S.A. 17:15A-30 to -52. This statute provides in pertinent part that an entity such as Quick Cash is not permitted to “[c]ash a check which is made payable to a payee which is other than a natural person unless the licensee has on file a corporate resolution or other appropriate documentation indicating that the corporation, partnership or other entity has authorized the presentment of a check on its behalf and the federal taxpayer identification number of the corporation, partnership or other entity.” N.J.S.A. 17:15A-47(a) . Kuhn argues that the partially executed corporate resolution that Tumminelli presented to Quick Cash was insufficient under the statute. [6] The check cashing statute, however, permits authorization to be established by “other appropriate documentation” besides a corporate resolution. N.J.S.A. 17:15A-47(a) . Here, the undisputed facts reveal that Tumminelli presented Quick Cash with a partially executed corporate resolution containing the LLC's tax identification number, and two letters on LLC letterhead, all granting Tumminelli authority to endorse and cash corporate checks under his own signature. Both of the letters Tumminelli provided Quick Cash noted that Tumminelli was a “General Partner ... authorized to endorse and/or cash checks made payable to [the LLC].” The letters authorized Quick Cash “to cash all checks *444 and drafts payable to the order of [the LLC], endorsed by [Tumminelli's] personal signature alone so that the [LLC] may obtain said funds which it needs immediately.” In addition, Quick Cash verified Tumminelli's identity each time he cashed a check and made a photocopy of the identification provided. We believe that the documentation obtained by Quick Cash was appropriate to establish Tumminelli's authorization. To have required more in this case would have been commercially unreasonable. Even if a properly executed corporate resolution was required by Quick Cash, for example, Tumminelli could have easily provided such a resolution because he was a 50 percent owner, a member, and general manager of the LLC. Kuhn also argues that Quick Cash should have been alerted by Tumminelli's actual endorsement. When endorsing each check, Tumminelli signed only his name and did not indicate that he was endorsing the check on behalf of the LLC. [7] We do not believe that by signing only his name the endorsement was invalidated, for three reasons: first, N.J.S.A. 12A:3-402(a) provides in part that “[i]f a **504 person acting, or purporting to act, as a representative signs an instrument by signing either the name of the represented person or the name of the signer, the represented person is bound by the signature to the same extent the represented person would be bound if the signature were on a simple contract.” In other words, “[i]f under the law of agency the represented person [here the LLC] CHAPTER 37: LIMITED LIABILITY COMPANIES AND SPECIAL BUSINESS FORMS 66 would be bound by the act of the representative [here Tumminelli] in signing either the name of the represented person or that of the representative, the signature is the authorized signature of the represented person.” N.J.S.A. 12A:3-402 (Uniform Commercial Code Comment 1 on § 3-402 (1995)). By signing only his name, Tumminelli as the representative of the LLC also bound the LLC and could receive payment on behalf of himself and the LLC. Second, because of Tumminelli's high ranking position with the LLC, if Quick Cash had asked Tumminelli to endorse the name of *445 the LLC or state that he was signing on behalf of the LLC, Tumminelli could have easily endorsed in this fashion and still have been able to convert the funds to his own purposes. [8] [9] Third, even if Tumminelli did not have actual authority to endorse LLC checks, the documents he provided Quick Cash established apparent authority. N.J.S.A. 12A:1-201(43) . “Apparent authority imposes liability on the principal not as a result of an actual contractual relationship, but because the principal's actions have misled a third-party into believing that a relationship of authority in fact exists.” Mercer v. Weyerhaeuser Co., 324 N.J.Super. 290, 317, 735 A. 2d 576, 592 (App.Div.1999) . As one of the owners of the LLC and its general manager, Tumminelli had apparent authority to endorse business checks and was placed in this position by the LLC and Kuhn. It was not unreasonable for Quick Cash to rely on Tumminelli's apparent authority. Consequently, by cashing the check, Quick Cash became a person entitled to enforce and receive payment for the instrument and against whom a conversion charge could not be successful. N.J.S.A. 12A:3-420(a) . V. Regarding First Union, Judge McCormick determined that this bank was the depository bank for the transactions at issue and no party challenges this conclusion. Any depository bank, under the Uniform Commercial Code, that pays an instrument on a forged or unauthorized endorsement, is strictly liable even if it otherwise acted in a commercially reasonable manner. N.J.S.A. 12A:3-420 ; Leeds v. Chase Manhattan Bank, 331 N.J.Super. 416, 422-23, 752 A. 2d 332, 336 (App.Div.2001) (citing Uniform Commercial Code, comment 1 on § 3-420 (1995)); Silver v. Commwealth Trust Co. of N.J., 22 N.J.Super. 604, 609, 92 A. 2d 152, 154 (Co.Ct., Law Div.1952) , opinion adhered to on reargument, 24 N.J.Super. 504, 94 A. 2d 880 (Co.Ct., Law Div.1953) (an unauthorized signature is wholly inoperative and equal to a forgery). *446 The Uniform Commercial Code places responsibility for forged and unauthorized endorsements on depositary banks not only because they are the first solvent entity after the one who forged the endorsement, 2 James J. White & Robert S. Summers, Uniform Commercial Code § 18- 4 at 209-10 (4th ed.1995), but also because it follows that the depositary bank is in the best position of any other bank in the negotiation chain to guard against forged or unauthorized endorsements. See N.J.S.A. 12A:3-420(c) ( Uniform Commercial Code Comment 3 ) (explaining that depository banks no longer have the good **505 faith defense because they are ultimately liable to payor banks by the warranty under Section 4-208(a)(1)). That is not the case here. [10] Here, First Union paid on Quick Cash's stamped endorsement as a licensed check casher after the Tumminelli endorsement. First Union therefore correctly relied on Quick Cash's transfer warranty that Quick Cash was entitled to “enforce” the check and that Tumminelli's endorsement was “authentic and authorized.” N.J.S.A. 12A:4-207(a) . [11] Regarding the drawee-payor banks, Chase and Bank of America, they correctly relied on First Union's warranty, under N.J.S.A. 12A:4- 208(a)(1), that First Union was entitled to enforce the draft. Furthermore, Kuhn has not provided any reasons to conclude that these banks did not in good faith follow reasonable commercial standards or that further discovery on this issue might be productive. See N.J.S.A. 12A:3- 420(c); see also N.J. Lawyers' Fund for Client Protection v. First Fidelity Bank, 303 N.J.Super. 208, 226-27, 696 A. 2d 728, 737-38 (App.Div.1997) (discussing the 1995 amendments to N.J.S.A. 12A:3-420 ). Accordingly, for the reasons explained above, we conclude that Judge McCormick correctly granted summary judgment to defendants Quick Cash, First Union, Chase, and Bank of America. Affirmed. Case 37.3

718 N.W.2d 580, 2006 ND 159 SPW ASSOCIATES, LLP, Plaintiff, Appellee and Cross-Appellant v. Douglas H. ANDERSON, a/k/a Douglas Anderson, Jim Stockeland, Michael Ceynar, Defendants andMurdo Cameron, d/b/a Cameron & Sons Aircraft, (f/k/a Flight Training Devices), Defendant, Appellant and Cross-Appellee. No. 20050205. July 18, 2006. Rehearing Denied Aug. 16, 2006. VANDE WALLE, Chief Justice. [¶ 1] Murdo Cameron appealed from a district court judgment determining that SPW Associates, LLP (“SPW”), had lawful possession of an airplane based upon its security interest in the airplane. SPW cross-appealed, claiming the district court erred in ordering SPW to sell the airplane after giving notice to all of the defendants in the action. We affirm the district court's determination that SPW had lawful possession of 67 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW the airplane under its valid security interest, but we reverse that portion of the judgment ordering SPW to sell the airplane. I [¶ 2] Cameron is a commercial airline pilot who is interested in the vintage P-51 Mustang airplane. He developed and manufactured graphite body parts and other components to make replicas of the P-51. He placed advertisements in aviation magazines seeking someone to design and manufacture additional parts and construct the airplanes. [¶ 3] Douglas Anderson answered Cameron's advertisement and, in 1996, Anderson and Cameron entered into a written agreement to build two airplanes. Cameron was to provide an engine for the first airplane and various other component *582 parts for both airplanes, and Anderson was to design and manufacture additional parts and build the airplanes. Upon the first flight of one of the planes, Anderson was to pay Cameron for the engine, with the price dependent upon the amount of time it took Anderson to build the airplane. Although not expressly stated in the written agreement, Cameron and Anderson had agreed that each would keep one of the two completed airplanes. The parties intended to build additional planes for sale to the public. [¶ 4] In 1997, Anderson, through his company, Exclusive Aviation, LLP, entered into a loan agreement with SPW to finance the operation. The first airplane was pledged as security for the loan, and Anderson also signed a personal guaranty for the loan. SPW perfected a security interest in the airplane by filings with the State of North Dakota and the Federal Aviation Administration (FAA). Anderson did not disclose to SPW his agreement with Cameron and did not disclose to Cameron the loan transaction with SPW. The second airplane was never built. [¶ 5] Anderson defaulted on the loan and, on August 18, 1998, signed a “Transfer of Collateral Upon Peaceable Foreclosure and Renunciation” granting possession of the completed first airplane to SPW. In May 1999, Cameron filed a lien against the airplane with the FAA. The lien was twice refiled, and was finally recorded on April 28, 2000. [¶ 6] SPW commenced this action in 2002, seeking a declaratory judgment that it was entitled to possession of the aircraft and that its security interest was superior to all other liens against the plane. Cameron answered, claiming that his interest in the airplane was superior to the security interest of SPW, and alternatively sought to reclaim possession of the engine and various component parts he had provided for the plane. After a bench trial, the district court found that Anderson and Cameron had entered into a joint venture and that Anderson was authorized to grant SPW a security interest in the airplane, which was joint venture property. The court determined that SPW had a perfected security interest in the airplane superior to any rights of Cameron and was entitled to possession of the plane. The court further held, however, that SPW had failed to notify Cameron of its intent to accept the plane as payment in full on the debt, and SPW was therefore required to sell the airplane in a commercially reasonable manner with notice to all defendants. On appeal, Cameron contends that there was no joint venture and that he was entitled to possession of the engine, propeller, and other component parts he had provided for the airplane. SPW cross-appealed, claiming the district court erred in requiring it to sell the airplane rather than keep it in payment of the debt. II [¶ 7] Cameron first contends that the district court erred in determining the agreement between the parties constituted a joint venture. [¶ 8] North Dakota has historically recognized the joint venture relationship. ; see ; ; . A joint venture is generally considered akin to a partnership, although more limited in scope and duration, and principles of partnership law apply to the joint venture relationship. See ; ; 1 *583 Alan R. Bromberg & Larry E. Ribstein, Partnership § 2.06(a) (2006). [¶ 9] ., provides that a partner is an agent of, and may bind, the partnership: Each partner is an agent of the partnership for the purpose of its business. An act of a partner, including the execution of an instrument in the partnership name, for apparently carrying on in the ordinary course the partnership business or business of the kind carried on by the partnership binds the partnership, unless the partner had no authority to act for the partnership in the particular matter and the person with whom the partner was dealing knew or had received a notification that the partner lacked authority Under an earlier, similar version of the partnership statute, applying the same agency principles, this Court held that “a chattel mortgage given by a general partner upon partnership property for the purpose of binding the partnership and carrying on the partnership business is valid as between the parties to the mortgage.” Syll. ¶ 1 (1934); see also (“A partner, as an agent of the partnership, normally binds the partnership by executing any instrument that carries on the business of the partnership in the usual way.”); (a partner has the authority to grant a security interest in partnership property). Applying these principles in this case, if Anderson was a joint venturer with Cameron he had the authority to grant a security interest in joint venture property and the security agreement would be valid. [¶ 10] For a business enterprise to constitute a joint venture, the following four elements must be present: (1) contribution by the parties of money, property, time, or skill in some common undertaking, but the contributions need not be equal or of the same nature; (2) a proprietary interest and right of mutual control over the engaged property; (3) an express or implied agreement for the sharing of profits, and usually, but not necessarily, of losses; and (4) an express or implied contract showing a joint venture was formed. (citations omitted); see also . There is, however, no definite formula for identifying the joint venture relationship in all cases, and each case will depend upon its own unique facts. [¶ 11] In this case there is no dispute on three of the four elements. Both parties made contributions to the enterprise, both exerted a degree of control over the enterprise, and there was a written contract evidencing the agreement. Cameron contends, however, that there was no evidence showing an agreement, either express or implied, to share profits. [¶ 12] In this case the parties admittedly contemplated building additional airplanes for sale to the public, and evidence was presented at trial indicating it would not have been economically feasible to design and construct the necessary molds, dies, and tooling for only two airplanes. The parties' written agreement also expressly recognized that additional planes would be built for sale. For example, the agreement provided that Cameron would provide computerized documentation and lab test results on composite parts he manufactured to Anderson “and future aircraft purchasers,” and Anderson was to “develop an inspection and documentation process on the first two airplanes, and all future airplanes purchased.” The agreement*584 further provided that construction of “all appliances” to be used in the manufacturing process “will be such CHAPTER 37: LIMITED LIABILITY COMPANIES AND SPECIAL BUSINESS FORMS 68 that they can be used for multiple year production runs.” Under these circumstances, where the parties entered into a relationship to build airplanes and expressly contemplated further sales of planes to third persons, the trial court's conclusion there was a joint venture necessarily implied an agreement to share profits. [¶ 13] Cameron contends it was his intent to be merely a parts supplier, and that his only profit would be from sale of component airplane parts to Anderson. The agreement between the parties, however, expressly recognizes a much broader, on-going role by Cameron in the construction of the airplanes. The agreement does not merely envision that Cameron will sell parts to Anderson, but creates reciprocal duties and obligations between Cameron and Anderson in the design and manufacture of component parts and completed airplanes. [¶ 14] We conclude the district court did not err in determining that Cameron and Anderson had entered into a joint venture. III [¶ 15] Cameron contends that, even if there was a joint venture, he had merely loaned the engine and composite parts to Anderson and those parts did not become joint venture property. Cameron argues that, if the parts were not joint venture property, Anderson had no authority to grant a security interest in them to SPW. [¶ 16] Cameron's argument is based upon his assertion that he supplied the engine, propellor, and other aircraft parts as a gratuitous bailment. The terms of the parties' agreement, however, do not indicate a bailment. As noted by the United States Court of Appeals for the Eighth Circuit: The term “bailment” in its ordinary legal sense signifies a contract resulting from the delivery of a thing by the bailor to the bailee on condition that it be restored to the bailor in accordance with his directions as soon as the purpose for which it was bailed is satisfied. (quoting ); see also . There is no indication that the engine, propellor, and other component parts were to be returned to Cameron when the enterprise was complete. Rather, the parties' agreement indicates that these items were intended to be used in constructing, and would become part of, the two airplanes to be completed by Anderson. [¶ 17] We have sustained the district court's determination that the agreement between the parties created a joint venture. When Cameron supplied parts to be incorporated into the airplanes, those items became joint venture property. Thus, Anderson had the authority to grant a security interest in the first airplane as joint venture property, including the parts which had been supplied by Cameron. We therefore reject Cameron's claim that the parts were not joint venture property. IV [¶ 18] SPW has cross-appealed, alleging the district court erred in holding SPW was required to sell the airplane in a commercially reasonable manner after notice to all defendants. The court determined that SPW was not entitled to keep the airplane as full payment of the debt because SPW never gave notice to Cameron *585 of its intent to retain the airplane as payment. Cameron contends that he had an ownership interest in the property and therefore was entitled to notice of SPW's intent to keep the airplane in satisfaction of the debt. See . [¶ 19] SPW acquired the airplane when Anderson signed the “Transfer of Collateral Upon Peaceable Foreclosure and Renunciation,” which granted SPW possession of the airplane and expressly authorized SPW to “sell, use, hold, operate, lease or otherwise dispose of the collateral” without further notice. The district court found, and Cameron does not dispute, that Anderson thereby waived any right to further notice regarding disposition of the collateral, including SPW's decision to accept the collateral as payment in full. [¶ 20] A joint venturer is an agent of the joint venture and may bind the joint venture by executing any instrument that carries on the business of the joint venture. See ; The airplane, including all of its component parts, was joint venture property. Thus, when Anderson signed the document transferring the airplane to SPW and waiving any further notice of its disposition, Anderson bound the joint venture to the terms of the agreement. Furthermore, knowledge of or notice to one joint venturer is presumed to be knowledge of or notice to the joint venture. See ; Because Cameron and Anderson had entered into a joint venture, Cameron was not entitled to separate notice of SPW's intent to keep the collateral in payment of the debt. [¶ 21] Nor was Cameron entitled to notice as a secured party. The relevant statutory provision at the time of SPW's receipt of the airplane in 1998 was : In any case involving consumer goods or any other collateral, a secured party in possession may, after default, propose to retain the collateral in satisfaction of the obligation. Written notice of such proposal shall be sent to the debtor if the debtor has not signed after default a statement renouncing or modifying the debtor's rights under this subsection. In the case of consumer goods, no other notice need be given. In other cases, notice shall be sent to any other secured party from whom the secured party has received (before sending the secured party's notice to the debtor or before the debtor's renunciation of the debtor's rights) written notice of a claim of an interest in the collateral. If the secured party receives objection in writing from a person entitled to receive notification with twenty-one days after the notice was sent, the secured party must dispose of the collateral under section 41-09-50. In the absence of such written objection, the secured party may retain the collateral in satisfaction of the debtor's obligation. Under the statute, SPW was only required to give notice to other secured parties if SPW had received written notice of the other's claim of an interest in the collateral before the debtor's renunciation of his rights in the collateral. In this case, Cameron's claimed security interest in the airplane had not yet been filed or recorded when SPW received possession of the airplane and Anderson signed the transfer agreement waiving all rights in the collateral. Furthermore, Cameron never sent to SPW written notice of any claimed security interest in the plane. Therefore, under , SPW was entitled to retain the airplane in satisfaction of the debt. *586 [¶ 22] We conclude the district court erred in ordering SPW to sell the airplane after notice to all defendants. V [¶ 23] We have considered the remaining issues and arguments raised by the parties and they are either unnecessary to our decision or are without merit. We reverse that portion of the judgment ordering SPW to sell the airplane in a commercially reasonable manner with notice to all defendants. In all other respects, the judgment is affirmed. 69 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW