Upper Chesapeake and the other Defendants moved to dismiss the action for failure to state a claim, alleging that the company itself lacked power to sue since its rights to do business in Maryland and use its name were forfeited, and that Price and Shikani were no longer members. Under this reasoning, the defendants argued that the Price and Shikani could not bring this derivative action. Upper Chesapeake further argued that the Price and Shikani did not represent adequately the interests of the company's members, a prerequisite to filing a derivative suit, and that Price and Shikani failed to demand that the management committee bring an action, a requirement for bringing a derivative suit under Maryland law. In addition, Upper Chesapeake moved to dismiss the breach of fiduciary duty claim on the grounds that Maryland does not recognize an independent action for breach of fiduciary duty.

The Circuit Court for Harford County dismissed the suit finding for the defendants on all counts. Specifically, the circuit court (1) dismissed the breach of fiduciary duty claim because Maryland does not recognize an independent cause of action for breach of fiduciary duty; (2) dismissed all other counts, finding that the Price and Shikani could not bring a derivative suit as the company ceased to exist,(3)and dismissed the claims against the individual members of the management committee. Price and Shikani then appealed asking the Maryland Court of Special Appeals to consider: (1) whether the circuit court erred in holding that members of a limited liability company could not maintain a derivative suit on behalf of a company whose rights to do business and use its name were forfeited, and (2) whether the circuit court erred in dismissing the claim for breach of fiduciary duty.

The Court of Special Appeals affirmed the ruling of the circuit court without discussing the claim of breach of fiduciary duty. Under Maryland law, a limited liability company must file a tangible personal property report on or before April 15 of each year. Failure to adhere to this provision results in forfeiture of the company's right to do business in Maryland and use its name. Because the company failed to file a personal property tax report for 2005, its rights to do business in Maryland and use its name were forfeited in October 2006. Although the Court disagreed with the circuit court and found that the LLC remained an entity after its right were forfeited, it ultimately decided that since the LLC could not file suit after its right to do business was forfeited, but solely defend suits in accordance with Maryland law, the LLC's members, namely Price and Shikani, could not bring this derivative action.

Finally, the Court of Special Appeals decided whether an equitable exception applied to the statute prohibiting members of a limited liability company from bringing derivative suits on behalf of a company that has lost its right to litigate. Distinguishing the case law of other states with express statutes recognizing the exception, the Intermediate Appellate Court concluded that no Maryland statute exists recognizing an exception that allows a limited liability company member to file a derivative suit when the LLC has lost its right to litigate. The Court of Special Appeals indicated that it might have applied an exception if the management committee deliberately engaged in conduct that caused the forfeiture of the company's rights in order to avoid liability, but no facts in this case suggested that situation.