In this post-trial decision, the plaintiffs claimed that one of the defendants breached his fiduciary duties by failing to distribute assets equally at the subsidiary level following the dissolution of the LLC. The governing LLC agreement provided that, in the event of a dissolution, the members shall be entitled to equal economic rights at the subsidiary level. The Court held that the plaintiffs proved the breach of fiduciary duties because, while the plaintiffs made the defendant aware of their economic rights, the defendant (i) did not implement a plan to account for their economic rights leading up to the dissolution; (ii) on the date of the dissolution, the defendant did not address the economic rights; and (iii) the defendant unilaterally made payments to himself without making corresponding payments to the plaintiffs. As a result, these actions constituted an “intentional dereliction” or “conscious disregard” of responsibilities rising to the level of bad faith. Therefore, the Court held that the plaintiffs were entitled to specific performance, damages, and pre-judgment interest.
