News & Analysis as of

Motion to Dismiss Operating Agreements

Patton Sullivan Brodehl LLP

LLC is Not an “Indispensable Party” to Direct Claims Between LLC Members

In litigation, the plaintiff must include as parties to the action all persons or entities whose interests are so directly involved that the court cannot render a fair adjudication in their absence.  If the plaintiff fails to...more

Patterson Belknap Webb & Tyler LLP

Commercial Division Denies Car Dealership Owner’s Motion to Dismiss Suit Brought by Dealership’s Operating Companies, Puts...

Judge Richard Platkin of Albany County recently handed down a stark reminder to Defendant Walid Darwish: everyone has to follow the rules of the road, even the person who writes the rules and owns all the cars. On April 26,...more

Winstead PC

Business Divorce: 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)....more

Morris James LLP

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

Morris James LLP on

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

Fox Rothschild LLP

In A Fight Over Corporate Inspection Rights, A Quick Kick Beats The Trick Play

Fox Rothschild LLP on

A group of mostly powerless Class B members in a utility services firm suspected its only Class A member of self-dealing, but their suspicions did not mate with corporate authority to do much about it. However, blessed with...more

Gray Reed

Minority Members’ Contractual Blocking Rights Can Result in the Imposition of Fiduciary Duties

Gray Reed on

In Skye Mineral Investors LLC v. DXS Capital (U.S.) Limited, et al., the Delaware Court of Chancery (the “Court”) denied defendants’ motion to dismiss, finding that plaintiffs had sufficiently pled a breach by the members...more

Farrell Fritz, P.C.

Forced to Buy Out Law Partner’s Interest In Defunct Firm, Years After Withdrawing? It Can Happen

Farrell Fritz, P.C. on

Article 12 of New York’s Limited Liability Company Law authorizes the formation of professional service limited liability companies (PLLC). Eligible professions include lawyers, medical doctors, accountants, architects, and...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

Farrell Fritz, P.C.

Court Looks to Partnership Law in Ruling Against Petitioner’s Status as LLC Member

Farrell Fritz, P.C. on

What makes someone a member of an LLC? It’s a question that frequently arises in business divorce cases involving LLCs that have no written operating agreement much less certificated membership interests. ...more

Farrell Fritz, P.C.

Court Blocks “End Run” Around Bar to Subject Matter Jurisdiction in Suit to Dissolve Foreign LLC

Farrell Fritz, P.C. on

Many thousands of closely held corporations, limited liability companies, and limited partnerships formed under Delaware law (and, to a much lesser extent, other foreign states) make their home in New York....more

Patton Sullivan Brodehl LLP

“Retaliatory Amendment” of an LLC Operating Agreement

LLCs are celebrated for allowing business partners to freely define their relationship by contract — i.e., the LLC operating agreement. The operating agreement generally covers all of the important aspects of the company and...more

Patterson Belknap Webb & Tyler LLP

Commercial Division Holds That Fiduciary Duties Limit LLC Majority Members’ Ability to Adopt Amendments Aimed at Freezing Out...

Many LLC operating agreements expressly require the consent of all members to adopt or amend the operating agreement. However, some LLC operating agreements do not contain such a provision, and instead simply require the...more

Farrell Fritz, P.C.

Does This Decision Put the Brakes on Non-Unanimous Amendments to Operating Agreements?

Farrell Fritz, P.C. on

Much digital ink has been spilled on this blog and elsewhere (Tom Rutledge’s terrific article can be read) concerning the ability of LLC controllers to adopt or amend an operating agreement without the consent of all members....more

Morris James LLP

Federal District Court Explains Incorporation By Reference Rules

Morris James LLP on

Askari v. Pharmacy Corporation of America, C.A. 16-1123-RGA (D. Del. August 8, 2018) - It is not always clear when two agreements are to be read as one. This is because incorporating one agreement into a second agreement...more

Patterson Belknap Webb & Tyler LLP

Commercial Division Holds That Agreement That Specifies Dilution as Remedy for Failure to Make Capital Call Prohibits Plaintiff...

Operating agreements often specify dilution as the remedy for a failure to make a capital contribution. But what if your business partner fails to make a contribution and you’d rather have the capital than an increased...more

Cadwalader, Wickersham & Taft LLP

Contracting Party Beware: The Implied Covenant Will Not Save You From Your Agreement If You Negotiated Away Your Rights

On February 1, 2018, the Delaware Court of Chancery granted defendants’ motion to dismiss an action brought by minority unitholders of Trumpet Search, LLC (“Trumpet” or the “Company”). The defendants were other unitholders...more

Farrell Fritz, P.C.

The Purposeless Purpose Clause Makes a Comeback — Or Does It?

Farrell Fritz, P.C. on

The test for judicial dissolution of LLCs under LLC Law § 702, as laid down in 1545 Ocean Avenue, initially asks whether the managers are unable or unwilling to reasonably permit or promote realization of the LLC’s “stated...more

Farrell Fritz, P.C.

LLC’s Purpose Being Achieved? Business Doing Fine? Good Luck Getting Judicial Dissolution

Farrell Fritz, P.C. on

New York’s LLC judicial dissolution statute, Section 702 of the Limited Liability Company Law, provides far more limited grounds to dissolve a business than the Business Corporation Law – a harsh reality for allegedly...more

Patterson Belknap Webb & Tyler LLP

Commercial Division Flags Novel Issue of Reasonable Reliance In LLC Member Battle

In PMC Aviation 2012-1 LLC et al. v. Jet Midwest Group, LLC et al., No. 654047/2015, BL221447 (Sup. Ct. Jun. 21, 2017), Commercial Division Justice Shirley Kornreich denied a motion to dismiss a fraudulent inducement claim by...more

Butler Snow LLP

The Tennessee Business Court Further Defines LLC Law

Butler Snow LLP on

The Tennessee Business Court continued its prolific promulgation of rulings affecting the resolution of internecine disputes between LLC members. In Terrell K. Raley, et al. v. Cees Brinkman, et al., Case No. 16-0196-BC, the...more

BCLP

Bankruptcy Courts Closing In – Will An Agreement Requiring Unanimous Consent To File For Bankruptcy Be Effective?

BCLP on

We’ve all seen it. The business opportunity looks enticing but is laced with risk about a potential bankruptcy filing down the road. As bankruptcy lawyers we are often asked how deals can be structured to prevent a...more

Burr & Forman

Intervention Energy: The Case Where the Golden Share Lost its Shine

Burr & Forman on

In connection with out-of-court restructurings, workouts and forbearance agreements, creditors often seek to include provisions that purport to limit the ability of a debtor to file for bankruptcy relief. However, bankruptcy...more

Morris James LLP

Court Of Chancery Explains When To Not Enjoin Arbitration

Morris James LLP on

This is another in a line of decisions that explains when the issue of arbitrability should be sent to the arbitrator to decide. ...more

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