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Breach of Contract › Operating Agreements › Business Litigation

Davidoff Hutcher & Citron LLP

Enforcing Operating Agreements in Restaurant LLCs: Common Pitfalls and Solutions

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A well-drafted Operating Agreement is crucial for restaurant LLCs, setting clear rules for ownership, management, and dispute resolution. However, even the best agreements can become a source of conflict if not properly...more

Patton Sullivan Brodehl LLP

LLCs Can Assert Offensive Claims Against Members

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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

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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

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

Venable LLP

Despite Chancery Court Decisions in Recent Years, Agreements Continue to Include Transfer Restrictions That May Not Be Enforceable

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Despite recent decisions by the Delaware Court of Chancery, many key corporate documents continue to include restrictions on indirect transfers of equity that may not be enforced if challenged in court....more

Farrell Fritz, P.C.

Recent Decisions Enforce LLC Member’s Right of First Refusal, Restrict Partnership Accounting, and Allow Damages Claim for Breach...

Farrell Fritz, P.C. on

Someday, perhaps, I’ll find the comedic inspiration to come up with a joke that begins, “An LLC, a partnership, and a close corporation walk into a bar . . ..” Until then, I’ll have to satisfy myself with writing about an...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

Farrell Fritz, P.C.

The Operating Agreement Controls, Unless Public Policy Says Otherwise

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Two principles often guide courts’ interpretation and enforcement of contracts.  First, courts respect parties’ freedom of contract, mostly.  So long as an agreement is not illegal or violative of a strong public policy,...more

Gray Reed

Caution: Court Finds Fiduciary Waivers Ineffective

Gray Reed on

In In re Cadira Group Holdings, LLC (2021 WL 2912479 (Del. Ch. July 12, 2021)), the Delaware Court of Chancery has again shown its inclination to treat an agreement that purports to replace traditional fiduciary duties with...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

Patton Sullivan Brodehl LLP

Determining Membership in an LLC: sometimes it’s not as easy as it should be

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LLC membership interests are usually straightforward and can determined by simply reviewing the LLC’s operating agreement. The operating agreement typically lists the members. Sometimes the operating agreement will impose...more

Farrell Fritz, P.C.

The Curious Case of the Expelled LLC Member Bound by Operating Agreement He Never Signed

Farrell Fritz, P.C. on

The case of Shapiro v Ettenson ranks as one of the more consequential ones in the realm of New York’s LLC jurisprudence....more

Robins Kaplan LLP

Delaware Supreme Court Increases Damages from $1 to $126 Million, Holds Chancery Misapplied Efficient Breach Doctrine

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On May 2, 2019, Justice Traynor authored a unanimous opinion in which the Supreme Court of Delaware, sitting en banc, reversed a decision by Vice Chancellor Laster of the Delaware Court of Chancery awarding Leaf Invenergy...more

Cadwalader, Wickersham & Taft LLP

Delaware Chancery Court Orders Venture Capital Firm To Increase Terminated LLC Member’s Payout In Post-Trial Opinion

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On August 13, 2018, Vice Chancellor Travis Laster of the Delaware Court of Chancery ordered Domain Associates, LLC (“Plaintiffs,” “Domain,” or the “Firm”), a venture capital firm, to pay its former member, Nimesh Shah...more

Farrell Fritz, P.C.

Will Someone Please Re-Name the Implied Covenant of Good Faith and Fair Dealing?

Farrell Fritz, P.C. on

In the annals of business divorce litigation and assorted other disputes between co-owners of closely held business entities, the cause of action for breach of the implied covenant of good faith and fair dealing likely wins...more

Patterson Belknap Webb & Tyler LLP

Special Proceeding Seeking a Judicial Decree to Dissolve an LLC

Patterson Belknap Webb & Tyler LLP on

In Advanced 23, LLC v. Chambers House Partners, LLC, No. 650025/2016, 2017 BL 462831 (NY. Sup. Ct. Dec. 15, 2017), Justice Saliann Scarpulla of the Commercial Division ruled that Advanced 23, LLC (“Advanced”) and David...more

Morris James LLP

Delaware Supreme Court Explains Setoff And Recoupment

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This decision explains the difference between a defendant’s right of setoff and recoupment. The key difference is that the right of setoff arises out of an independent transaction, while recoupment must be based on the same...more

Gray Reed

Operator Can’t Recover Drilling Costs For Affiliate’s Expensive Rig

Gray Reed on

In Elm Ridge Exploration Co., LLC v. Engle we are reminded of a little-used provision in the 1989 Model Form Operating Agreement. Article VI.D.1 allows the operator to use its own equipment, but his charges may not exceed...more

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