One of the most important rights owned by LLC members is the right to inspect the LLC’s books and records. For an overview of LLC books and records requests, see the prior LLC Jungle post: Why LLC Managers Should Take Member...more
In a popular TV series (The Wire), a well-known quote is: “You come at the king, you best not miss.” The idea is that if you’re taking the risk of attacking someone at the top, you better not miss your shot....more
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
4/22/2025
/ Breach of Contract ,
Breach of Duty ,
Business Divorce ,
Business Entities ,
Business Litigation ,
California ,
Corporations Code ,
Declaratory Relief ,
Fiduciary Duty ,
Limited Liability Company (LLC) ,
Operating Agreements
A prior post — Statutory LLC Buyouts – “Fair Value” vs. “Fair Market Value” — covered an unpublished opinion filed in 2021 addressing the difference between the statutory buyout processes governing California corporations and...more
Many prior posts have addressed the “alter ego” doctrine, under which a business entity’s owner can be held personally liable for the entity’s debts. This is also known as “piercing the corporate veil.”...more
A prior post — A Receiver For Your LLC? — covered the basics of court-appointed receivers acting on behalf of an LLC. It is always worth keeping in mind that a receiver appointed to handle the affairs of an LLC is a “general...more
Corporate directors have long relied on the “business judgment rule,” under which their decisions are presumed to have been made “on an informed basis, in good faith, and in the honest belief that the action taken was in the...more
With certain narrow exceptions (including in connection with the sale of the “goodwill” of a business), agreements restraining competition face an uphill battle in California. As a matter of public policy, California law...more
The “right to alienate” (transfer) property is an important part of the legal “bundle of rights” regarding property ownership. But those rights, like most others, can be altered by court orders....more
Actions taken within business entities are sometimes deemed invalid due to procedural defects. For corporations, section 119 of the Corporations Code establishes a clear procedure by which defective actions can be ratified...more
In 2022, The LLC Jungle covered the opinion Friend of Camden, Inc. v. Brandt in a post titled LLC Dissolution Vote Defeats Statutory Buyout. In the Friend of Camden case, the Court of Appeal held that an LLC membership vote...more
Prior LLC Jungle posts have addressed the tricky issue of LLC managerial authority in the context of the LLC’s dealings with third parties...
As referenced in those posts, under Corporations Code section 17703.01, when an...more
7/5/2024
/ Actual or Constructive Knowledge ,
Agents ,
Board of Directors ,
Buyers ,
Commercial Litigation ,
Corporations Code ,
Lack of Authority ,
Limited Liability Company (LLC) ,
Managing Members ,
Operating Agreements ,
Property Owners ,
Purchase and Sale Agreements ,
Sellers ,
Third-Party Relationships ,
Unauthorized Transactions
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 (litigation) or...more
The distinction between direct and derivative claims is a recurring theme on The LLC Jungle.
In a nutshell, under California law, an LLC (just like a corporation) is treated as a legal entity separate and distinct from...more
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
Asserting claims derivatively on behalf of an LLC, as opposed to directly on behalf of an LLC member, can be tricky business for even experienced litigators. The requirements for derivative claims have been explored in...more
When a debtor LLC receives a discharge order from a bankruptcy court, a creditor is prevented from enforcing any preexisting debts against the discharged LLC as a personal liability. This is known as the “discharge...more
LLC managers often enjoy wide latitude and unrestricted “discretion” under the LLC’s operating agreement. At the same time, all contracts — including LLC operating agreements — are subject to the implied covenant of good...more
Courts often appoint receivers to manage the affairs of LLCs when the internal management is conflicted or broken. General equity receivers (as opposed to more limited receiverships such as deed of trust receivers) enjoy...more
Alter ego liability is again the flavor of the day...
As previously covered, the alter ego doctrine allows a court to disregard a corporate entity (including LLCs) and hold the individual owners liable for claims against...more
8/23/2023
/ Alter Ego ,
Appeals ,
Attorney Malpractice ,
Bad Faith ,
Business Ownership ,
Corporate Entities ,
Employment Litigation ,
Insolvency ,
Labor Commissioners ,
Liability ,
Limited Liability Company (LLC) ,
Motion to Amend ,
Proof of Ownership ,
Retaliation ,
Unpaid Wages
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
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
6/26/2023
/ Appeals ,
Breach of Duty ,
Buyouts ,
California Consumer Privacy Act (CCPA) ,
Corporations Code ,
Damages ,
Dissolution ,
Equity ,
Fiduciary Duty ,
Fraud ,
Limited Liability Company (LLC) ,
Operating Agreements
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
5/23/2023
/ Alter Ego ,
Appeals ,
Arbitration ,
Arbitration Awards ,
Breach of Contract ,
Business Ownership ,
California ,
Corporate Entities ,
Liability ,
Limited Liability Company (LLC) ,
Loans ,
Marketing ,
Reversal
Members of an LLC are required to pitch in equally for the LLC’s expenses and debts, right?
Generally, no....more
...Normally, a court will treat a business entity and its liabilities as separate and distinct from its owners. The alter ego doctrine allows the corporate veil to be pierced, and results in holding the owners liable for the...more
2/27/2023
/ Alter Ego ,
Appeals ,
Business Entities ,
Contamination ,
Corporate Veil ,
Government Entities ,
Infrastructure ,
Land Developers ,
Landfills ,
Liability ,
Limited Liability Company (LLC) ,
Partnerships ,
Piercing the Corporate Veil ,
Remediation ,
Site Remediation