Lora Drycksback won $4 million from her family’s company after San Bernardino Superior Judge Corey Lee found the family attempted to cut Drycksback out without her due payment.
Lee found that the McBride family had broken their company’s operating agreements multiple times in attempts to remove Drycksback’s 25% ownership in McBride’s RV Storage.
Drycksback was awarded $2 million in damages and $2.36 million for the value of her share in the company.
His ruling said that Drycksback created, oversaw and administered the business since it started in 2005. She started it from the back lot of her father Charles McBride’s business—McBride’s Service and Supply—in Chino. Her siblings, Andrew McBride and Benjamin McBride, became involved at her father’s insistence. The three siblings, with their father, each held 25% ownership.
Event timeline — according to court documents
Each of them put in $10,000 in starting capital contributions, and each were given individual duties.
Drycksback led the effort to save the company from bankruptcy in 2009, according to Lee’s ruling. Her health suffered, causing her to take a medical leave of absence. While she was away, she believed the partners were mismanaging the business, and that her concerns were ignored.
On April 15, 2013, Drycksback offered to either be bought out, or to buy out her sibling, Andrew.
She asked for $1.5 million for her 25% share. She arrived at that number through the company’s valuation of $20 million, with $14 million in debt. Her siblings offered a buyout package at a company valuation of $15 million. If accepted, the buyout would have given Drycksback $152,000. The $15 million valuation used by her siblings was disproven previously in bankruptcy court in favor of the $20 million evaluation. Negotiations stalled.
Drycksback told her siblings on July 11, 2014, that she was in a financial crisis, and needed the buyout to be resolved. Her siblings offered a $150,000 immediate buyout.
Drycksback offered a second buyout proposal, sticking with the $20 million valuation. This version distributed a $1.4 million payout over 20 years.
Drycksback withdrew $5,231 in company funds—the value of the first payout if her second proposal had been accepted. She informed the siblings about the withdrawal, and said it should be subtracted from her buyout. The next day, Benjamin offered Drycksback the option to give up her ownership rights for $3,000 a month, to be later offset by a future buyout of an unspecified amount. Drycksback rejected the offer because the buyout amount was not finalized.
On Oct. 24, 2014, Drycksback made a third offer, proposing to sell her ownership for $750,000, payable over five years, plus 25% of a reimbursement the company expected to receive from Chino for land improvement costs. Charlie offered instead $300,000, paid in installments over seven years.
On Dec. 31, 2014, Andrew told Drycksback that a buyout would be impossible. A lawyer he consulted said the buyout would cause a loan default, Andrew said.
In January 2015, the siblings attempted to refinance the company, but the bank refused to do so without Drycksback’s agreement.
During a Jan. 17, 2015 member meeting, Andrew said a buyout could occur only if the company were refinanced. His recorded notes, according to Lee’s ruling, said that there was a legal way to remove her from the company without payment.
“We showed her (Section) 3.07 of the operating agreement that if we wanted to remove her from (the) company, there is a legal way to do that without paying her anything. Neither the family nor the members have considered such a move as of yet,” he wrote, according to Lee’s ruling.
Drycksback viewed that as a veiled threat.
Two weeks later, the siblings held an emergency meeting with three days’ notice—in violation of the company’s agreement that meetings would be held with 10 days’ notice. Drycksback missed the meeting. The siblings voted to exercise a clause in their agreement to force every member to provide $15,000 in capital contributions, or face a penalty of ownership reduction.
Drycksback could not provide $15,000, and her siblings reduced her ownership from 25% to 10%.
The money was intended to fund an environmental lawsuit against Chino, with the intent to prevent a competitor from opening an RV storage business in Chino, according to both the meeting minutes and Andrew’s sworn declaration.
The lawsuit was eventually filed, but the company was not a party. The attorney who did file the case later testified that the company was not involved in the lawsuit, and did not financially support the lawsuit.
The company’s financial records showed $600,000 in cash on hand, with $100,000 in unrestricted funds, when the siblings asked for the $15,000, according to Lee’s ruling. The records also did not indicate a $15,000 payment from the siblings. The defendants said their contribution checks were retained in a safe, and were deposited into company accounts on May 28, 2015. Accounting records showed that the company paid out $15,000 to each defendant during that time.
Stripping of authority
On April 6, 2015, the siblings attempted to amend the company’s operating agreement to remove the unanimous consent requirement. The attempt failed because Drycksback voted against the change. The siblings, however, began to act as though it had passed, Lee wrote.
In May 2015, they sought refinancing without Drycksback’s signature. When the bank asked why her signature was missing, Ben wrote that “the majority now have the power to sell assets and take out (a) mortgage or encumber assets. Section 4.01 gives the majority the power to make this change,” he said.
He attached a copy of the failed resolution. The bank rejected the resolution, and denied refinancing.
In August 2016, the siblings ignored the unanimous consent clause again to remove each owner’s inherent right to manage the company.
New company, new agreement
On Oct. 28, 2016, the siblings created a new limited liability company. On Nov. 29, 2016, they held a meeting to merge the new company with the old company. The meeting notice said that the merger could be authorized by a majority of the members. Drycksback did not attend. The merger was approved without her consent.
On May 30, 2017, they made a new agreement for the new company that guaranteed majority rule, instead of unanimous consent. Drycksback kept 10% ownership share.
Forced buyout
The siblings commissioned a new appraisal that valued the company at $5.9 million. They issued notes promising payouts of $590,000 to Drycksback, and began depositing monthly payments to her bank account, which she rejected.
From March 2015 to September 2023, the siblings were given $2.8 million from the company, while Drycksback was paid $135,000.
Lee’s analysis
Lee, the judge, found that the siblings caused significant monetary damage to Drycksback by repeatedly breaching the operating agreement.
“The capital call (for $15,000) was a pretext, however, to ultimately dispossess (Drycksback) of her ownership interest,” Lee wrote.
The violations of the operating agreement were even noticed by the company’s bank, Lee wrote.
“In sum, Defendants had no authority to reduce Plaintiff’s interest from 25% to 10%, no authority to change the unanimous consent requirement to majority vote, no authority to change (the company) from member-managed to manager-managed, no authority to create (the new company), no authority to merge (the companies), no authority to adopt (a new operating agreement), and thus, no authority to redeem Plaintiff’s interest at 10%. Plaintiff’s ownership interest remains at 25%,” Lee wrote.
Lee ruled against Drycksback on her claim that her siblings had attempted to steal from her, finding that she did not prove felonious intent. He also ruled against her argument for punitive damages, finding that the evidence did not prove malicious, oppressive or fraudulent conduct.
Case information
Case No. CIVDS1807555
David Wright and Andrew Van Ligten of the McCune Law Group* represented Drycksback.
Joanne Frasca and Matthew Veenstra of Saul Ewing represented the McBride family.
*McCune Law Group provides funding for Follow Our Courts.
