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Business Litigation Breach of Duty Limited Liability Company (LLC)

Farrell Fritz, P.C.

Limo Company Shareholders Can't Hitch a Ride in Derivative Litigation

Farrell Fritz, P.C. on

Closely-held business entities come in all shapes and sizes. By definition, under Partnership Law § 10, it takes “two or more” owners to form a general partnership. But corporations and LLCs have no such impediment, ranging...more

Farrell Fritz, P.C.

Parallel Business and Matrimonial Divorce Proceedings

Farrell Fritz, P.C. on

Parallel business divorce proceedings in the same or different courts alleging overlapping or duplicative claims are common. When it occurs, judges must often determine whether to dispose of one so the other may proceed...more

Farrell Fritz, P.C.

Top 10 Business Divorce Cases of 2023

Farrell Fritz, P.C. on

Some years are easier than others to select the most significant business divorce cases. In this, the 16th year I’ve published this top-10 list, the task is made especially difficult by a veritable flood of court decisions...more

Farrell Fritz, P.C.

Surrogate’s Court Jurisdiction to Resolve Close Business Owner Disputes

Farrell Fritz, P.C. on

Do New York’s Surrogate’s Courts have jurisdiction to compel an accounting related to a non-party limited liability company in which the decedent’s estate has only a minority interest? ...more

Stradling Yocca Carlson & Rauth

California Business Divorce: Corporate Opportunity Usurpation and Best Practices to Avoid it in Your California LLC

Going into business with someone requires a high level of trust. For a business to thrive, business partners must be loyal to the business and each other. As in a marriage, when a partner in a business is disloyal, things...more

Farrell Fritz, P.C.

A Recurring Business Divorce Feature: Usurpation of Corporate Opportunity

Farrell Fritz, P.C. on

One of the earliest signs that a closely-held business is headed for divorce lies in how its owners treat new opportunities. When the relationship among the owners reaches a certain level of distrust, an owner presented with...more

Hicks Johnson

The Importance of “Plain and Unambiguous Language” When Eliminating Fiduciary Duties in Delaware

Hicks Johnson on

The Delaware Limited Liability Company Act allows for the fiduciary duties of a member to be expanded, restricted, or eliminated by provisions in the operating agreement of a limited liability company (“LLC”). If drafters...more

Farrell Fritz, P.C.

Business Divorce, Brooklyn Style

Farrell Fritz, P.C. on

The pictured architectural rendering of the sunlit Kings County Supreme Courthouse at 360 Adams Street, completed in 1957, doesn’t quite capture the reality of its dour, hulking presence in downtown Brooklyn. Its design...more

Patton Sullivan Brodehl LLP

Derivative Claim Standing: Both Contemporaneous And Continuous Membership Required

When an LLC suffers primary harm that also indirectly harms the LLC’s members, the cause of action generally belongs to the LLC, not its members. Only if the LLC (through its duly authorized management) fails to pursue the...more

Farrell Fritz, P.C.

A Loan Is a Loan Is a Loan, Except When It’s Equity

Farrell Fritz, P.C. on

Disputes over capital accounts and equity percentages are frequent fodder for business divorce litigation — especially in LLCs without operating agreements. Exemplars previously treated on this blog include Chiu v Chiu, an...more

Hicks Johnson

Exculpation Provisions in LLC Agreements: A Comparison of Delaware and Texas

Hicks Johnson on

Case law involving limited liability companies (LLCs) is rapidly evolving. Some states, most notably Delaware, permit LLCs to limit or eliminate liability for breaches of fiduciary duty by an LLC’s members or managers. Other...more

Farrell Fritz, P.C.

Top 10 Business Divorce Cases of 2021

Farrell Fritz, P.C. on

It’s been another year of important case law developments in business divorce controversies. I’m pleased to present my 14th annual list of the past year’s ten most significant cases....more

Farrell Fritz, P.C.

Disguised Agreements and Dissolution

Farrell Fritz, P.C. on

Appearances can be deceiving. - That, essentially, was the argument made in two recently decided cases involving claims for judicial dissolution. ...more

Allen Matkins

Do LLC Members Owe Fiduciary Duties? Yes And No

Allen Matkins on

Does a member of a limited liability company owe a fiduciary duty to the company and the other members?  Section 17704.09(a) of the California Corporations Code states that a member owes a duty of loyalty and a duty of care. ...more

Patton Sullivan Brodehl LLP

LLC Operating Agreements Can Reduce Fiduciary Duties

LLC managers owe fiduciary duties both to the LLC and to the LLC’s members, similar to the duties owed by a partner to other partners in a partnership.  (Corp Code §17704.09.)  These include the duty of loyalty, care, and...more

Gray Reed

Villareal v. Saenz: Fiduciary Duties Will Go On

Gray Reed on

In Villareal v. Saenz, a district court magistrate judge for the Western District of Texas, San Antonio Division, has recognized that members exiting a limited liability company may continue to hold fiduciary duties despite...more

Farrell Fritz, P.C.

Court Enjoins Dilution of Brewing Company LLC Membership Interest

Farrell Fritz, P.C. on

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

Winstead PC

Exiting Member of LLC May Still Owe Fiduciary Duties

Winstead PC on

In Villareal v. Saenz, two co-owners of a limited liability company sued each other regarding conduct surrounding a business divorce. 5-20-CV-00571-OLG-RBF, 2021 U.S. Dist. LEXIS 94183 (W.D. Tex. May 18, 2021). After the...more

Farrell Fritz, P.C.

The Money’s There But Out of Reach for the Minority LLC Member

Farrell Fritz, P.C. on

Of late I’ve been ruminating on New York’s membership in the shrinking pool of states that don’t recognize oppression of an LLC minority member by the controlling members or managers as ground for judicial dissolution....more

Farrell Fritz, P.C.

Winter Case Notes: Dissolution of Not-For-Profit Corporation and Other Decisions of Interest

Farrell Fritz, P.C. on

Here in the New York metro area, for the first time in years winter is living up to its name. The snow-plowed streets and sub-freezing temperatures are a natural setting for this sixth annual edition of Winter Case Notes in...more

Farrell Fritz, P.C.

Re-Revisiting The Duty to Disclose Third-Party Offers Amidst Buy-Out Negotiations

Farrell Fritz, P.C. on

Three weeks ago, I wrote about the Bak v Rostek case in Brooklyn Supreme Court addressing the duty to disclose third-party offers amidst buy-out negotiations between co-owners. ...more

Miles & Stockbridge P.C.

Recent Maryland Court of Appeals Decisions Create Key Changes in Corporate and Commercial Litigation

In July, Maryland’s highest court published two decisions that could impact limited liability companies (“LLC”) and other entities which operate in the State. The first of these decisions, Plank v. Cherneski, provides clear...more

Gray Reed

An Illustration of Remote Controller Fiduciary Liability

Gray Reed on

Under Delaware law, indirect controllers of a Delaware limited liability company (“LLC”) can owe limited fiduciary duties to the LLC and its members if they exert control over the LLC’s assets, unless those duties are clearly...more

Stinson - Corporate & Securities Law Blog

“Sole Discretion” Language in LLC Agreement does not Eliminate Fiduciary Duties

The Delaware Court of Chancery considered a number of issues in Skye Mineral Investors, LLC et al v DXS Capital (U.S.) Limited et al.  The dispute was among members of a Delaware limited liability company, Skye Mineral...more

Farrell Fritz, P.C.

Death of Limited Partner Disarms Derivative Action

Farrell Fritz, P.C. on

I’ve yet to see him make a court appearance, and hope I never do, but the Grim Reaper sure has a knack for disrupting business divorce litigation involving LLCs and limited partnerships....more

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