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Appeals Limited Liability Company (LLC)

Patton Sullivan Brodehl LLP

LLC Members May Ratify Prior Defective Actions

Actions taken within business entities are sometimes deemed invalid due to procedural defects.  For corporations, section 119 of the Corporations Code establishes a clear procedure by which defective actions can be ratified...more

Patton Sullivan Brodehl LLP

To Moot a Statutory Buyout, LLC’s Dissolution Must be Valid Under its Operating Agreement

In 2022, The LLC Jungle covered the opinion Friend of Camden, Inc. v. Brandt in a post titled LLC Dissolution Vote Defeats Statutory Buyout. In the Friend of Camden case, the Court of Appeal held that an LLC membership vote...more

Butler Snow LLP

LLCS & Jurisdictional Allegations in the Fifth Circuit: It’s Membership, not Ownership

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By now, attorneys practicing in the Fifth Circuit should know that if a case is in federal court on the basis of diversity jurisdiction, they must ensure that the record supports the diversity of citizenship requirement, lest...more

Patton Sullivan Brodehl LLP

LLC Member Acting for LLC Without Authority Is Not “Protected Activity” Under California’s Anti-SLAPP Statute

California’s anti-SLAPP statute (Code of Civil Procedure section 425.16) aims to protect defendants from meritless lawsuits designed to chill “protected activity” — i.e., the exercise of rights of petition (litigation) or...more

Patton Sullivan Brodehl LLP

LLC Manager’s Conduct Benefits Her Side Entity at the Expense of the LLC — Are the Claims Against Her Direct or Derivative?

The distinction between direct and derivative claims is a recurring theme on The LLC Jungle. In a nutshell, under California law, an LLC (just like a corporation) is treated as a legal entity separate and distinct from...more

Faegre Drinker Biddle & Reath LLP

Indiana Court of Appeals Affirms Defense Judgment in LLC Members' Claim for Breach of Fiduciary Duty

In Jarboe v. Moore, two LLC members sued each other for alleged breaches of fiduciary duties and fraud. The members tried their cases to a judge, who denied relief to both sides. The Indiana Court of Appeals affirmed and...more

Patton Sullivan Brodehl LLP

Derivative Claim Upheld for Estate of Deceased LLC Member

Asserting claims derivatively on behalf of an LLC, as opposed to directly on behalf of an LLC member, can be tricky business for even experienced litigators.  The requirements for derivative claims have been explored in...more

DarrowEverett LLP

‘As Such’: Soroban Case Puts Limited Partnerships Under Tax Scrutiny

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In Soroban Capital Partners, LP v. Commissioner, the U.S. Tax Court determined that the exception to net earnings from self-employment in Section 1402(a)(13) of the Internal Revenue Code of 1986, as amended (the “Code”) ...more

Proskauer Rose LLP

UK Tax Round Up - December 2023

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Welcome to December’s edition of our UK Tax Round Up. This month has seen two interesting decisions on the connections needed for amounts to be taxed as employment income, the latest instalment in the BlueCrest partner...more

Patton Sullivan Brodehl LLP

Alter Ego — No Single Factor is Determinative

Alter ego liability is again the flavor of the day... As previously covered, the alter ego doctrine allows a court to disregard a corporate entity (including LLCs) and hold the individual owners liable for claims against...more

Holland & Hart LLP

Georgia-Pacific Ruling Furthers Texas Two-Step Challenges

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The U.S. Court of Appeals for the Fourth Circuit recently approved injunctive relief as part of a strategy for settling mass tort claims through the Chapter 11 bankruptcy case of Bestwall LLC, an entity created by...more

Patton Sullivan Brodehl LLP

“Equitable Buyout” as a Remedy for LLC Wrongdoing?

In the world of LLCs, buyouts — where one member sells his/her membership interest to another member or the LLC itself — are commonplace. Buyouts generally fall into one of two categories: contractual — where the...more

Foley & Lardner LLP

Texas Legislature Passes Bill Creating Specialized Business Trial Courts: 12 Things You Need To Know Now

Foley & Lardner LLP on

On May 25, 2023, the Texas Legislature passed HB 19, legislation that creates specialized business courts. The bill now will make its way to the Governor’s desk for consideration. Here is what you need to know now:...more

Patton Sullivan Brodehl LLP

Alter Ego Liability for LLC Managers: the Facts Matter

Alter ego liability is a frequent topic covered in The LLC Jungle — see here for a list of all prior “alter ego” related posts. The alter ego doctrine allows a court to disregard a corporate entity (including LLCs) and...more

Patton Sullivan Brodehl LLP

Can an LLC Member be Forced to Contribute to the LLC’s Debts?

Members of an LLC are required to pitch in equally for the LLC’s expenses and debts, right? Generally, no....more

Patton Sullivan Brodehl LLP

Local Government Agencies Can Be “Alter Egos” Too

...Normally, a court will treat a business entity and its liabilities as separate and distinct from its owners. The alter ego doctrine allows the corporate veil to be pierced, and results in holding the owners liable for the...more

Butler Snow LLP

To Plead or Not to Plead Citizenship? That Is the Question (Among Others) for Limited Liability Companies Asserting Diversity...

Butler Snow LLP on

Jurisdiction always matters. Of course, litigants and the courts tend to focus on the merits. After all, the merits, not rote jurisdictional analyses, are what a lawsuit is all about. But parties cannot ignore basic...more

Patton Sullivan Brodehl LLP

LLC Operating Agreements: Indemnity, Arbitration, and Equity

LLC operating agreements frequently provide for indemnity to the LLC’s manager. This is consistent with the statutory default rule embodied by California Corporations Code section 17704.08(a), which provides for indemnity...more

Patton Sullivan Brodehl LLP

Diversion of LLC Funds Is Not “Protected Activity” Under California’s Anti-SLAPP Statute

California’s anti-SLAPP statute (Code of Civil Procedure section 425.16) aims to protect defendants from meritless lawsuits designed to chill “protected activity” — i.e., the exercise of rights of petition or free speech on...more

Proskauer Rose LLP

Del. Bankruptcy Rulings Instruct on Creditors' Rights to Sue

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Creditors of distressed businesses are often frustrated by shareholder- controlled boards when directors pursue strategies that appear to be designed to benefit shareholders at the creditors' expense. In these...more

Patton Sullivan Brodehl LLP

No Prejudgment Interest on Statutory Corporate Share Buyout

Most forms of California business entities have statutory buyout procedures allowing the company or its owners to avoid claims by a disgruntled owner for judicial dissolution by purchasing the disgruntled owner’s interest....more

Patton Sullivan Brodehl LLP

LLC Dissolution Vote Defeats Statutory Buyout

Several prior LLC Jungle posts have explored the statutory buyout procedures established by California Corporations Code section 17703.03 and related statutes: a botched buyout - “fair value” vs. “fair market value” - ...more

Sheppard Mullin Richter & Hampton LLP

California Court of Appeal Clarifies that a Derivative Plaintiff Must Demonstrate Both “Contemporaneous” and “Continuous”...

In Sirott v. Superior Court, 2022 Cal. App. LEXIS 389 (Cal. App. May 5, 2022), the First Appellate District of the California Court of Appeal (Humes, J.) analyzed the ownership requirements a plaintiff must satisfy to pursue...more

Farrell Fritz, P.C.

Anti-Dissolution Provisions and Public Policy

Farrell Fritz, P.C. on

In Congel v Malfitano, New York’s highest court wrote that business partners are free to include in partnership contracts practically “any agreement they wish,” including about “the means by which a partnership will dissolve,...more

Farrell Fritz, P.C.

General Partner’s Resignation Triggers Nonjudicial Dissolution of Limited Partnership

Farrell Fritz, P.C. on

A limited partnership without a general partner cannot lawfully continue. That’s why it’s critical that the limited partnership agreement thoughtfully address general partner succession and, when triggered, the agreement’s...more

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