Limited Liability Company (LLC), Breach of Contract

New York Appellate Court’s Split Decision Involving Delaware LLC Pits “Harsh” Contractarianism Against “Fundamental Fairness”

Farrell Fritz, P.C. on 3/18/2024

Last week, the Manhattan-based Appellate Division, First Department, handed down one of the more intriguing decisions by a New York court I’ve seen in a long time involving a dispute between LLC members....more

JNOV is a Tough Road, but it’s Not a One in a Million Shot

Fox Rothschild LLP on 2/9/2024

A party seeking to unseat a verdict by JNOV “bears a heavy burden under North Carolina law.” Only a “scintilla of evidence” is needed to support the elements of the prevailing claim. But as the Business Court reminded in...more

Chancery Finds Member Breached LLC Agreement in Unilaterally Dissolving the Company

Morris James LLP on 12/11/2023

VH5 Capital, LLC v. Jeremiah Rabe, C.A. No. 2020-0315-NAC (Del. Ch. June 30, 2023) - The at-issue LLC had two members – the defendant and the plaintiff, both of whom also constituted the company's board. The company never...more

There Is a Big Difference Between ‎‎“Void” and “Voidable”‎

Locke Lord LLP on 11/28/2023

In the iconic “The Princess Bride,” Miracle Max observes that there is a big difference between “all dead” and “mostly dead” and then goes on to prove it. In Holifield v. XRI Investment LLC, 2023 WL 5761367 (Del. Supr. Sept....more

Recent Decisions Enforce LLC Member’s Right of First Refusal, Restrict Partnership Accounting, and Allow Damages Claim for Breach...

Farrell Fritz, P.C. on 5/30/2023

Someday, perhaps, I’ll find the comedic inspiration to come up with a joke that begins, “An LLC, a partnership, and a close corporation walk into a bar . . ..” Until then, I’ll have to satisfy myself with writing about an...more

Alter Ego Liability for LLC Managers: the Facts Matter

Patton Sullivan Brodehl LLP on 5/23/2023

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

When is a Class Action Superior? - McGlinchey Commercial Law Bulletin - March 31, 2023

McGlinchey Stafford on 4/3/2023

Substantial Compliance with Contract- American Bus. Investments, LLC v. Shaeena & Allos, LLC, 6th Dist. Lucas, 2023-Ohio-739. In this appeal, the Sixth Appellate District affirmed the trial court’s decision to grant...more

Title (Coverage) Not Available

Cadwalader, Wickersham & Taft LLP on 2/1/2023

Two recent decisions concerning title insurance illustrate that an insured’s negligence can result in an exclusion from coverage and that title insurers generally do not owe a fiduciary duty to their insureds....more

Chancery Suggests Alternative Approach To Contracts Providing That Prohibited Acts Are Void Ab Initio

Morris James LLP on 11/18/2022

XRI Investment Holdings LLC v. Holifield, et al., C.A. No. 2021-0619-JTL (Del. Ch. Sept. 13, 2022) - Under precedents such as CompoSecure, L.L.C. v. CardUX, LLC (Del. 2018), acts defined by an LLC agreement as “void” or...more

The Operating Agreement Controls, Unless Public Policy Says Otherwise

Farrell Fritz, P.C. on 2/28/2022

Two principles often guide courts’ interpretation and enforcement of contracts. First, courts respect parties’ freedom of contract, mostly. So long as an agreement is not illegal or violative of a strong public policy,...more

Valuation Decision Finds LLC “Worthless, Worthless, Worthless”

Farrell Fritz, P.C. on 2/14/2022

Justice Masley’s valuation decision in Quattro Parent LLC v Rakib, 2022 NY Slip Op 30190(U) [Sup Ct, NY County Jan. 14, 2022] is noteworthy for two reasons. First, it is an extraordinarily rare example of a business...more

Recent Westchester County Commercial Division Decision Demonstrates the High Bar Required for Obtaining Mandatory Injunctive...

Patterson Belknap Webb & Tyler LLP on 10/21/2021

In Costello v. Molloy, Justice Gretchen Walsh of the Westchester County Commercial Division denied Plaintiff William Costello’s request for a mandatory injunction against Defendants Ronald Molloy and Curis Partners, LLC...more

Court Enjoins Dilution of Brewing Company LLC Membership Interest

Farrell Fritz, P.C. on 9/13/2021

Most folks associate beer with pleasure. Many craft brewers will tell you they went into business for that reason: to make themselves and others happy (and, oh yeah, make money). ...more

Chancery Addresses Whether LLC Agreement Modified or Eliminated Fiduciary Duties

Morris James LLP on 9/10/2021

In Re Cadira Group Holdings, LLC Litigation, Consolidated C.A. No. 2018-0616-JRS (Del. Ch. July 12, 2021) - The Delaware Limited Liability Company Act provides that “the fiduciary duties of a member, manager, or other...more

A Dissolved LLC Can Still Recover Attorney Fees

Patton Sullivan Brodehl LLP on 8/23/2021

An LLC Jungle post from last year addressed the issue of whether derivative claims can be pursued for a dissolved LLC. See: Can Derivative Claims be Pursued for a Dissolved or Cancelled LLC? The short answer is “yes.”...more

Chancery Explains Pleading Standard and Sustains Unjust Enrichment Claim Related to Plaintiff’s Forfeiture of LLC Acquisition...

Morris James LLP on 8/20/2021

Angel v. Warrior Met Coal, Inc., C.A. No. 2019-0235-SG (Del. Ch. Jun. 30, 2021) - Under Delaware’s notice pleading standard, a plaintiff’s claim will survive a motion to dismiss if it is “reasonably conceivable” that the...more

Chancery Addresses Claims Arising Out of LLC Dispute Involving Parallel Venture

Morris James LLP on 8/17/2021

Largo Legacy Group, LLC v. Evens Charles, C.A. No. 2020-0105-MTZ (Del. Ch. June 30, 2021) - In this LLC dispute, an investor in a hotel development company alleged that the company principals breached the operating...more

Alter Ego Claims — Beware Attorney Fee Liability

Patton Sullivan Brodehl LLP on 6/30/2021

One of the essential purposes of forming an entity and conducting business through that entity is to limit the owners’ personal liability. California law generally views the entity and its owners as separate and legally...more

Implied Covenant of Good Faith and Fair Dealing Saves Employee’s Claim for Improper Termination Under Company’s LLC Agreement

Morris James LLP on 6/7/2021

Smith v. Scott, C.A. No. 2020-0263-JRS (Del. Ch. Apr. 23, 2021) - The Delaware LLC Act provides that fiduciary duties may be expanded or limited by the provisions of an LLC agreement. If the agreement is silent, then...more

Delaware Court of Chancery: Deadlock Can be Genuine Even When Unilaterally Orchestrated

Snell & Wilmer on 5/5/2021

A Delaware Court of Chancery case decided earlier this year provides some useful guidance on the interpretation of LLC agreements and what constitutes a “deadlock” under Delaware law. The case, Mehra v. Teller, involved a...more

Chancery Confirms that the Implied Covenant Imposes a “Good Faith” Component to an Agreement to Negotiate

Morris James LLP on 4/15/2021

DG BF, LLC v. Ray, C.A. No. 2020-0459-MTZ (Del. Ch. Mar. 1, 2021) - The Operating Agreement for an LLC involved in the cannabis industry provided for a five-member board of managers, with one Independent Manager appointed...more

Superior Court Applies Affiliate Privilege Doctrine To Dismiss Tortious Interference Claim Against Controller, While Sustaining...

Morris James LLP on 2/25/2021

Surf’s Up Legacy Partners, LLC v. Virgin Fest, LLC, C.A. No. N19C-11-092 PRW CCLD (Del. Super. Jan. 13, 2021) - In adjudicating a dispute over a scuttled deal in the music festival industry, the Delaware Superior Court...more

Limited Liability Company (LLC) › Breach of Contract