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Operating Agreements Fiduciary Duty

Patton Sullivan Brodehl LLP

LLCs Can Assert Offensive Claims Against Members

In “business divorce” litigation involving LLCs, it is common to see a disgruntled LLC member asserting claims against the LLC’s manager. Depending on the type of harm alleged, those claims might be asserted directly (by the...more

Davidoff Hutcher & Citron LLP

Handling Partner Expulsions in Restaurant Businesses: A Legal Guide

Partnership conflicts can arise in any restaurant business, and in some cases, the only solution is expelling a partner. However, removing a business partner is a complex legal process that must be handled carefully to avoid...more

Allen Matkins

Delaware LLCs - "I See Trouble On the Way"

Allen Matkins on

Delaware had barely birthed changes to Section 144 of its General Corporation Law when the Plumbers & Fitters Local 295 Pension Fund filed a complaint challenging those changes.  The plaintiff seeks a declaration that the...more

Farrell Fritz, P.C.

LLC Member States Direct Claims Arising from Machiavellian Manager’s Tactical Bankruptcy Petition

Farrell Fritz, P.C. on

“There is only going to be one winner here, and it’s not going to be you—give in while there is something still left in it for you,” said one LLC member to the other. With co-owners like that, who needs enemies?...more

Fox Rothschild LLP

A(nother) Cautionary Tale on the Importance of Operating Agreements

Fox Rothschild LLP on

To practitioners familiar with internal disputes involving closely held companies, the allegations in Lafayette Village Pub, LLC v. Burnham, 2025 NCBC 8, are nothing new. The member running the business (allegedly) made bad,...more

Farrell Fritz, P.C.

Help Comes From an Unexpected Place in LLC Deadlock Dissolution: The Third Department

Farrell Fritz, P.C. on

Join me if you know this refrain: In New York, deadlock is not an independent ground for LLC dissolution. But… Almost exactly two years ago from today, Peter Mahler published a post titled: “Has the Time Come for...more

DarrowEverett LLP

LLC's Failure to Execute Operating Agreement Opens Legal Trapdoor

DarrowEverett LLP on

While entity distinctness is a bedrock principle of corporate law, it may often appear redundant and unnecessary for a limited liability company (“LLC”) to sign its own operating agreement. That was likely the thinking of the...more

Farrell Fritz, P.C.

Diving Into the Shallow Waters of New York Law Permitting Elimination of LLC Managers' Liability for Breach of Fiduciary Duty

Farrell Fritz, P.C. on

There’s a ton of Delaware caselaw enforcing Section 18-1101 (c) of that state’s LLC Act as amended in 2004, authorizing LLC agreements to eliminate the members’ and managers’ liability for breach of fiduciary duty, the only...more

Farrell Fritz, P.C.

Diving Into the Shallow Waters of New York Law Permitting Elimination of LLC Managers’ Liability for Breach of Fiduciary Duty

Farrell Fritz, P.C. on

There’s a ton of Delaware caselaw enforcing Section 18-1101 (c) of that state’s LLC Act as amended in 2004, authorizing LLC agreements to eliminate the members’ and managers’ liability for breach of fiduciary duty, the only...more

Patton Sullivan Brodehl LLP

Operating Agreement Doesn’t Excuse Breach of Fiduciary Duty

Many posts on The LLC Jungle blog have focused on the fiduciary duties owed by LLC managers to both the LLC’s members and the LLC itself. Other posts have focused on the pitfalls of LLC Operating Agreements that fail to...more

Farrell Fritz, P.C.

Enforcing the Guardrails on Transactions Involving Interested Directors of Close Corporations

Farrell Fritz, P.C. on

In my business divorce practice I deal with many closely held corporations that have only a few or perhaps just two shareholders, each of whom is actively involved in running the business. Within that category are many...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.

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

Farrell Fritz, P.C. on

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

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

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

Husch Blackwell LLP

What You Need to Know About Wisconsin's New LLC Laws

Husch Blackwell LLP on

On January 1, 2023, the revised Wisconsin business laws go into effect. Among the changes, is a complete overhaul of Chapter 183, leading to the creation of the Wisconsin Uniform Limited Liability Company Law (WULLCL). This...more

Foley & Lardner LLP

Preparing for Wisconsin’s New Uniform Limited Liability Company Law

Foley & Lardner LLP on

Effective January 1, 2023, Wisconsin will have a new Uniform Limited Liability Company Law applicable to all Wisconsin limited liability companies (“LLCs”) unless existing LLCs opt out before December 31, 2022, with the...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

Ruder Ware

LLCs: The Next Generation Under Wisconsin Law

Ruder Ware on

Under new Wisconsin laws coming into effect soon, some important rules governing how limited liability companies (LLCs) operate will change. This article will describe some of the key changes, what LLC owners need to be...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

Farrell Fritz, P.C.

Never the Twain Shall Meet: Damages Claims Do Not Offset the Purchase Price in Buy-Sell Agreements

Farrell Fritz, P.C. on

Nestled between Broadway and Church Street in New York City’s hottest neighborhood is the landmarked, stone-façade building at 66-68 Reade Street.  Now marketed as the superluxury boutique condominium complex 66 Reade, the...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.

Gordon Ramsay’s The Fat Cow: Dishing Up Damages and Dissolution

Farrell Fritz, P.C. on

You know you’re in big trouble if the post-trial decision in a lawsuit you filed begins like this: “The court finds the plaintiff, Rowen Seibel, not credible. This is primarily because it appears he fabricated evidence...more

Robins Kaplan LLP

Thinking Ahead: Key Provisions to Consider When Drafting Entity Governing Documents

Robins Kaplan LLP on

A company’s governing documents, whether they be corporate bylaws and shareholder agreements, limited liability company (“LLC”) operating agreements, or partnership agreements, typically include the rules and regulations for...more

Farrell Fritz, P.C.

But What of the Equitable Accounting?

Farrell Fritz, P.C. on

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

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