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Fiduciary Duty LLC Agreements

Jenner & Block

Delaware Court Upholds Contractual Freedom in Dismissal of CityMD Merger Challenge

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In a landmark decision with far-reaching implications for private equity-backed ventures and minority investors in Delaware limited liability companies, the Delaware Court of Chancery dismissed a lawsuit brought by former...more

Cadwalader, Wickersham & Taft LLP

Delaware Chancery Court Finds Private Equity Majority Owner Not Liable to Minority Investors Where LLC Agreement Waived Fiduciary...

In a recent decision, the Delaware Court of Chancery dismissed breach of fiduciary duty claims asserted by minority unitholders in connection with the acquisition of CityMD by VillageMD.  In Kahn, et al. v. Warburg Pincus, et...more

Morris James LLP

Chancery Rejects Attempt to Disguise Breach of Fiduciary Duty Claim Where LLC Agreement Waived All Traditional Fiduciary Duties

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Delaware permits the elimination of fiduciary duties in limited liability company agreements. Notwithstanding, and just like in any other contract, parties to a limited liability company agreement are still subject to the...more

Jackson Walker

Business Court of Texas Rebuffs Member’s Duty Claim, Reaffirms Freedom of Contract in LLC Agreement

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A recent opinion from the Business Court of Texas, Eighth Division (Fort Worth), provides a crisp reminder that an LLC’s company agreement can all but eliminate fiduciary duties among its members and managers. In Tall v....more

Morris James LLP

Chancery Sustains Claims for Improper Termination of Agreements For Cause in Connection with a Joint Venture to Develop Data...

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W.D.C. Holdings, LLC v. IPI Partners, LLC, C.A. No. 2020-1026-JTL (Del. Ch. June 22, 2022) - Two entities entered into a joint venture to develop data centers for Amazon. One entity managed the joint venture day to day,...more

Bradley Arant Boult Cummings LLP

Avoiding the Pitfalls of Assigning an Interest in an LLC

One of the goals in a business divorce is finality – ending a business relationship once and for all. But what if the end isn’t really the end?...more

Morris James LLP

Chancery Addresses Whether LLC Agreement Modified or Eliminated Fiduciary Duties

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In Re Cadira Group Holdings, LLC Litigation, Consolidated C.A. No. 2018-0616-JRS (Del. Ch. July 12, 2021) - The Delaware Limited Liability Company Act provides that “the fiduciary duties of a member, manager, or other...more

Morris James LLP

Implied Covenant of Good Faith and Fair Dealing Saves Employee’s Claim for Improper Termination Under Company’s LLC Agreement

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Smith v. Scott, C.A. No. 2020-0263-JRS (Del. Ch. Apr. 23, 2021) - The Delaware LLC Act provides that fiduciary duties may be expanded or limited by the provisions of an LLC agreement. If the agreement is silent, then...more

Morris James LLP

Court of Chancery Harmonizes Operating Agreement Governance Provisions To Resolve LLC Control Dispute

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Pearl City Elevator, Inc. v. Gieseke, C.A. No. 2020-0419-JRS (Del. Ch. Mar. 23, 2021) - Under Delaware law, limited liability company agreements are interpreted like other contracts; they are read as a whole in light of...more

Morris James LLP

Chancery Dismisses Complaint Challenging Dilution for Lack of Standing and Failure to State a Claim

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Hindlin v Gottwald, C.A. No. 2019-0586-JRS (Del. Ch. July 22, 2020) - The plaintiff, a minority investor (“Plaintiff”) in a Delaware limited liability company, Core Nutrition, LLC (the “Company”), brought an action for...more

Morris James LLP

Corporate Opportunity Doctrine Waiver Does Not By Itself Also Constitute a Waiver of Default Fiduciary Duties under an LLC...

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77 Charters, Inc. v. Gould, C.A. No. 2019-0127-JRS (Del. Ch. May 18, 2020) - The Court of Chancery held that a waiver of the corporate opportunity doctrine did not by itself constitute a waiver of default fiduciary duties...more

Morris James LLP

Chancery Enforces LLC Agreement Arbitration Clause and Finds that Member’s Resignation Did Not Prevent Enforcement

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360 Campaign Consulting, LLC v. Diversity Communication, LLC, C.A. No. 2019-0807-MTZ (Del. Ch. Mar. 20, 2020). Following a dispute between the two members of a Delaware LLC, Plaintiff filed an eleven (11) count complaint...more

Stinson - Corporate & Securities Law Blog

“Sole Discretion” Language in LLC Agreement does not Eliminate Fiduciary Duties

The Delaware Court of Chancery considered a number of issues in Skye Mineral Investors, LLC et al v DXS Capital (U.S.) Limited et al.  The dispute was among members of a Delaware limited liability company, Skye Mineral...more

Morris James LLP

Chancery Construes LLC Agreement as Imposing Only the Managerial Duty to Act in Good Faith and Dismisses Claims for Failure to...

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MKE Holdings v. Schwartz, C.A. No. 2018-0729-SG (Del. Ch. Sept. 26, 2019). Under Delaware law, the managers of a limited liability company owe the entity and its members the traditional common law fiduciary duties of care...more

Morris James LLP

Court of Chancery Finds Agreements Unenforceable for Lack of Assent, Dismisses Remaining Claims for Lack of Personal Jurisdiction

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Eagle Force Holdings, LLC v. Campbell, C.A. No. 10803-VCMR (Del. Ch. Aug. 29, 2019). Parties to a contract must provide evidence of an overt manifestation of assent for a contract to be enforceable under Delaware law....more

Goulston & Storrs PC

Probate & Fiduciary Litigation Newsletter – June 2019

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The Probate & Fiduciary Litigation Newsletter compiles recent Trust & Estate cases. Our lawyers are at the forefront of this area of the law, shaping how it is handled in the Probate and Family Court. Goulston & Storrs is the...more

Morris James LLP

Court of Chancery Addresses Contract Formation

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CSH Theatres L.L.C. v. Nederlander of San Francisco Associates, C.A. No. 9380-VCMR (Del. Ch. July 31, 2018) - This drama arises from a dispute involving the Curran Theatre in San Francisco. The decision mostly deals with...more

Morris James LLP

Court of Chancery Holds That Notice and an Opportunity To Be Heard Are Not Prerequisites to Dismissing an LLC Manager “For Cause”

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A&J Capital, Inc. v. Law Office of Krug, C.A. No. 22018-0240-JRS (Del. Ch. July 18, 2018) - This decision holds that, absent contrary language in an LLC operating agreement, members do not need to provide notice and an...more

Tarter Krinsky & Drogin LLP

Delaware LLC Agreements: Beware Relying On The Implied Contractual Covenant Of Good Faith And Fair Dealing

Delaware has long been the jurisdiction of choice when forming a limited liability company (LLC). One reason is flexibility, with members themselves having the power to define their preferred relationship within their LLC...more

Morris James LLP

Court of Chancery Enforces Broad Director-Like Books and Records Rights in the LLC Context

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Obeid v. Gemini Real Estate Advisors LLC, C.A. No. 2017-0510-JTL (Del. Ch. June 5, 2018) - To facilitate the proper exercise of one’s fiduciary duties, the right of directors to inspect a corporation’s books and records is...more

Morris James LLP

Self-Dealing Conduct Supporting Fiduciary-Duty Claims Was Covered by Contractual Duties Imposed in the LLC Agreement

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The Delaware Limited Liability Company Act’s policy is to give the maximum effect to the principle of freedom of contract in LLC operating agreements. The act permits parties to eliminate common-law fiduciary duties, and...more

Morris James LLP

Court Of Chancery Applies The Covenant Of Good Faith And Fair Dealing To Fill A Gap

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In re Oxbow Carbon LLC Unitholder Litigation, C.A. 12447-VCL (February 12, 2018) - This may be the definitive decision on when and how to apply the covenant in every LLC agreement to act in good faith and deal fairly. Here...more

Morris James LLP

Court Of Chancery Resolves Good Faith Claim In LLC Context

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Miller v. HCP & Company, C.A. 2017-0291-SG (February 1, 2018) - This decision resolves the tricky issue of when the provisions of an LLC agreement do not allow “gap filling” so as to permit a claim for violation of the...more

Morris James LLP

Court Of Chancery Limits Creditor Standing

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This decision holds that a creditor lacks standing to bring breach of fiduciary duty claims arising out of the management of an LLC. Of course, creditors are better served by drafting the loan documents to protect their...more

Morris James LLP

Court Of Chancery Explains Limitation On Fiduciary Duty Claims

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This decision explains how a provision in an LLC agreement waiving fiduciary duties is to be applied in the context of conflicted transactions. It is a good summary of Delaware law on that issue. ...more

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