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Breach of Contract › Operating Agreements

Troutman Pepper

FERC Faults PJM for Failing to Execute Designated Entity Agreements, Establishes Hearing on Whether Remedial Actions Warranted

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On July 25, 2024, FERC issued an order granting in part and denying in part a complaint raised by American Municipal Power, Inc., the People’s Counsel for the District of Columbia, and the PJM Industrial Customer Coalition...more

Farrell Fritz, P.C.

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

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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

Farrell Fritz, P.C.

Where’s the Beef? Causation and Culpability Are Fatal Pitfalls in Zaycon Foods Lawsuit

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When representing an aggrieved plaintiff in a commercial matter, there are certain business torts that I tend to rely on more heavily than others.  If business torts were foods, for example, a claim like breach of contract...more

Farrell Fritz, P.C.

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

Farrell Fritz, P.C. on

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

Robson & Robson, P.C.

Civil RICO In Pennsylvania Business Divorce Cases: A Hammer Without A Nail?

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When legal disputes between owners of closely held companies turn the corner past “Let’s resolve this issue without litigation” and head toward “See you in court,” the owners and their lawyers typically begin jockeying for...more

Jones Day

COVID-19 and Merger Litigation: Takeaways After Two Years

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Before the pandemic, it was generally accepted that establishing an MAE was very difficult—indeed, only one case in Delaware, 2018's Akorn v. Fresenius Kabi, had ever found that an MAE occurred. Following the pandemic, this...more

Farrell Fritz, P.C.

But What of the Equitable Accounting?

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I can’t say what the number is, but my own experience tells me that a significant percentage of lawsuits by a minority owner of a closely-held company against those in control of the company include a demand for an...more

Farrell Fritz, P.C.

The Operating Agreement Controls, Unless Public Policy Says Otherwise

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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

Gray Reed

Caution: Court Finds Fiduciary Waivers Ineffective

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In In re Cadira Group Holdings, LLC (2021 WL 2912479 (Del. Ch. July 12, 2021)), the Delaware Court of Chancery has again shown its inclination to treat an agreement that purports to replace traditional fiduciary duties with...more

Patterson Belknap Webb & Tyler LLP

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

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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

Farrell Fritz, P.C.

Court Enjoins Dilution of Brewing Company LLC Membership Interest

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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

Adams and Reese LLP

Redefining Willful Misconduct: Texas Appellate Court Announces a New, Lower Standard

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In Apache Corp. v. Castex Offshore, Inc., the Texas Fourteenth District Court of Appeal announced that showing an oil-and-gas operator’s “willful misconduct” under an operating agreement’s exculpatory clause does not require...more

Snell & Wilmer

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

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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

Morris James LLP

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

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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

Goodwin

Buyer (or Seller) Beware: Who Bears the Risk with Hotel Operating Covenants in a Pandemic?

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Following a dramatic pause starting last spring, the hotel purchase and sale market has begun to show signs of a rebound. A significant challenge to these sales, however, is the remaining uncertainty around the COVID-19...more

Patton Sullivan Brodehl LLP

Determining Membership in an LLC: sometimes it’s not as easy as it should be

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LLC membership interests are usually straightforward and can determined by simply reviewing the LLC’s operating agreement. The operating agreement typically lists the members. Sometimes the operating agreement will impose...more

Farrell Fritz, P.C.

The Curious Case of the Expelled LLC Member Bound by Operating Agreement He Never Signed

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The case of Shapiro v Ettenson ranks as one of the more consequential ones in the realm of New York’s LLC jurisprudence....more

Farrell Fritz, P.C.

A Case of LLC Withdrawal Symptoms

Farrell Fritz, P.C. on

I was especially drawn to the case I’m about to introduce involving LLC member withdrawal, owing to the Jacobs v Cartalemi case that I litigated to a successful conclusion about two years ago, also involving member...more

Gray Reed

Louisiana Operator’s Bad Faith Does Not Preclude Recovery

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Under Louisiana law, does the operator’s bad faith preclude recovery for the non-operator’s breach of a joint operating agreement if the operator caused the non-operator to breach the JOA but did not itself breach?...more

Carlton Fields

New York Court Compels Arbitration of Commercial Marijuana Dispute

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The defendants moved to compel arbitration of a complex dispute concerning the parties’ investment in medical marijuana companies. The plaintiff claimed that the defendants breached a non-compete agreement and fiduciary...more

Farrell Fritz, P.C.

The Perils of Indeterminate LLC Membership Interests

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Here we go again — and again and again. On numerous prior occasions I’ve written about judicial dissolution cases and other infighting among LLC members featuring disputes over membership percentages. ...more

Carlton Fields

District Court Compels Arbitration Pursuant to Operating Agreement

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The action arises out of a foreclosure sale in which property was conveyed to First 100 LLC. Subsequent to the foreclosure sale, First 100 conveyed the property to Alan and Theresa Lahrs as trustees of the Lahrs Family Trust....more

Robins Kaplan LLP

Delaware Supreme Court Increases Damages from $1 to $126 Million, Holds Chancery Misapplied Efficient Breach Doctrine

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On May 2, 2019, Justice Traynor authored a unanimous opinion in which the Supreme Court of Delaware, sitting en banc, reversed a decision by Vice Chancellor Laster of the Delaware Court of Chancery awarding Leaf Invenergy...more

K&L Gates LLP

Chancery Court Grants Defendant’s Motion On The Pleadings Where Named Defendants Did Not Owe Any Of The Contractual Or Fiduciary...

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In Ross v. Institutional Longevity Assets LLC, C.A. No. 2017-0186-TMR (Del. Ch. Feb. 26, 2019), the Chancery Court, in a motion for judgement on the pleadings, found that the plain language of a limited liability company’s...more

Gray Reed

Contract Operator Not Liable for Breach of a Unit Operating Agreement

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It’s a tale as old as the oilfield: A non-operator doesn’t pay joint interest billings, operator sues, non-payer claims the expenses were unwarranted and the operator was negligent—no, grossly negligent—for incurring them in...more

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