Starr

FACTS AND PROCEDURAL HISTORY

A. Formation and Sale of Company Mayhew, Starr, and Hunt formed Strata Tustin, LLC (Strata) in 2003 to develop a shopping center in Tustin. Starr and Hunt were investors in Strata (investing $350,000 and $250,000, respectively) while Mayhew agreed to manage the entity and provide sweat equity. Strata’s operating agreement (the operating agreement) expressly identified Starr and Hunt as members at the company’s formation, and they remained members throughout the relevant time period. Mayhew was identified as Strata’s manager in the operating agreement, but it was ambiguous as to whether he was also a member. For their respective contributions, the operating agreement specified Starr and Hunt owned a combined 50 percent share of Strata while Mayhew owned the remaining 50 percent. The operating agreement allowed for these ownership percentages to be modified if new members were admitted to Strata. Strata’s capital structure and list of members were set forth on exhibit B of the operating agreement (exhibit B), which could be “modified as necessary to reflect the addition[] of new Members and/or new Capital Contributions.” The shopping center’s business…