Unreported / Non-Citable
Background
Regions Bank, doing business as Ascentium Capital, sued Car Wash Management, LLC (CWM) and others over an equipment finance agreement. The bank alleges that the vendor, Washworld, applied part of the loan funds to another customer's balance and sent the rest back to CWM. Among other claims, the bank alleges fraud and concealment against Andrew Williams, a CWM manager. The main case continues.
Williams, representing himself, filed a second amended answer with counterclaims against the bank and a third-party complaint against Peter Matheny, a bank vice president. He alleges that Matheny pushed the loan through despite an underwriter's objection about the lack of arm's-length dealing. He further alleges that Matheny had his CWM stake cut from 60% to 10% as a funding precondition and arranged a circular flow of funds. Williams says he did not sign or guarantee the loan. He claims defense costs, lost income and membership value, reputational harm, emotional distress and lost business opportunities. An earlier order had barred further amendments absent extraordinary circumstances. The bank and Matheny moved to dismiss, and the court held a hearing on September 28, 2026.
The Court’s Holding
Because CWM is a Delaware limited liability company, the court applied Delaware law and the Tooley test, which asks who suffered the harm and who would receive the recovery. It reasoned that lost income and diminished membership value are classic derivative injuries. It also found that the cut from 60% to 10% may be derivative, relying on the Fourth Circuit's Total Auto Financing decision. The court did not decide the derivative question, however, because the claims fail on their own terms. Williams pleaded no facts showing a breach of duty or fraud tied to the ownership reduction. His role as certifier of an authority certificate produced no plausible injury, since he was neither borrower nor guarantor. His reputational harm, emotional distress and lost-opportunity theories were conclusory.
The tortious interference claim failed for lack of an alleged actual breach or disruption of CWM's operating agreement and for lack of causation. A single text message suggesting his removal was not tied to any injury. The aiding and abetting fiduciary duty claim targeted harm to CWM and was derivative, and Williams did not plead a demand on CWM's managers or the futility of one, as Delaware law requires. The declaratory relief claim sought only to declare past non-liability and alleged no ongoing or future harm. Because Williams had already amended and no facts could cure these defects, the court dismissed these claims with prejudice.
The court rejected Matheny's argument that equitable indemnity requires a viable fraud claim, noting that California permits indemnity between concurrent intentional tortfeasors. It nevertheless dismissed the indemnity claim without prejudice as premature, because no judgment or payment has yet occurred. The court did not reach judicial estoppel.
Key Takeaways
- An LLC member's claims for lost income or reduced membership value generally belong to the company, and a member does not make them direct by calling them personal injuries.
- A person who is neither a borrower nor a guarantor must plead specific, entity-independent injury to sue a lender or its employee over a loan.
- Claims to declare non-liability for past events do not support declaratory relief when no ongoing or future harm is alleged.
- Leave to amend was denied because the pleading had already been amended and the court had warned against further amendments.
- Equitable indemnity cannot be pursued until the claimant has paid a judgment or settlement, so a dismissal on that ground is without prejudice.
Why It Matters
The order applies Delaware's direct-versus-derivative framework to a lender-side dispute, and it shows how that framework can defeat a manager's attempt to sue over a loan to the entity he helped run. The court's use of Total Auto Financing is persuasive reasoning only, and the court itself stopped short of a firm derivative ruling.
This is an unpublished district court order and has no precedential force. The dismissals with prejudice end Williams's counterclaims against the bank and four claims against Matheny. The bank's claims against Williams, and his crossclaims against Ortiz, the Ortiz Family Trust and Washworld, are unaffected by this order. His equitable indemnity claim against Matheny may be refiled only after he suffers an actual loss. The order does not address the bank's and Matheny's motions to strike or the requests for judicial notice.