News & Analysis as of

Limited Liability Company (LLC) Breach of Contract

Farrell Fritz, P.C.

Capital Call Cancelled: A Fairness Defense to the Majority’s Mandatory Capital Call

Farrell Fritz, P.C. on

There is perhaps no provision in an LLC operating agreement more susceptible to abuse than one allowing those in control of the LLC to make mandatory capital calls. For one, that authority often comes with very few...more

Morris James LLP

Chancery Upholds Expulsion of LLC Investor, Awards Fees and Expenses Caused by Breach

Morris James LLP on

PJT Holdings, LLC v. Costanzo, C.A. No. 2023-0665-JTL (Del. Ch. May 15, 2025) - In anticipation of launching a chain of restaurants, three restaurant operators joined an outside investor to form a four-member,...more

Davidoff Hutcher & Citron LLP

Enforcing Operating Agreements in Restaurant LLCs: Common Pitfalls and Solutions

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

Cadwalader, Wickersham & Taft LLP

Court of Appeals Upholds Contract Merger Clause

In Behler v. Kai-Shing Tao, the New York Court of Appeals found that the merger clause contained in a limited liability company agreement governed by Delaware law superseded an alleged prior oral agreement between the...more

Farrell Fritz, P.C.

A Message of Acceptance from the Garden State

Farrell Fritz, P.C. on

This week’s New York Business Divorce takes us to the Garden State for a delightfully-written, post-trial decision by retired, recalled Appellate Division Judge Clarkson S. Fisher, Jr....more

Morris James LLP

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

Morris James LLP on

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

Jackson Walker on

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

Patton Sullivan Brodehl LLP

You Come at the LLC Manager, You Best Not Miss

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

Wiley Rein LLP

Prior Demand for Books and Records Unrelated to Subsequent Arbitration Brought by Same Claimants

Wiley Rein LLP on

Applying Illinois state law, the Appellate Court of Illinois has held that two lawsuits against insureds did not allege Related Wrongful Acts sufficient to render the two lawsuits a single, related claim under the D&O...more

Vinson & Elkins LLP

Delaware Court of Chancery Dismisses Claims Relating to Sale of Company Against Private Equity Majority Owner

Vinson & Elkins LLP on

In the latest instance of a private equity seller vindicating contractual rights in the Delaware Court of Chancery, on April 30, Vice Chancellor Lori W. Will rejected attempts by minority LLC members in urgent care provider...more

Mayer Brown

Delaware Law Alert: Chancery Court Dismisses Challenge to Elimination of Tag-Along Rights in Private Equity-Backed Healthcare...

Mayer Brown on

A recent Delaware Chancery Court decision provides important guidance for private equity sponsors, minority investors, and deal professionals regarding the enforceability of contractual waivers and the limits of the implied...more

Farrell Fritz, P.C.

Bless This Mess: New York Court Shuts Down Attempted Early Ouster of Restauranteur From Managing His Own Restaurant

Farrell Fritz, P.C. on

It is not uncommon in the restaurant business for a restauranteur to partner with a silent-partner investor, i.e. the money guy. It’s not uncommon for the restaurant partners to fight over the control of the restaurant....more

Farrell Fritz, P.C.

Business Appraiser Liability? That’s a New One.

Farrell Fritz, P.C. on

We’ve written about accountant liability. We’ve written about bookkeeper liability. A carefully crafted complaint can state viable claims for either. But business appraiser liability?...more

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

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

Farrell Fritz, P.C.

New York Top Court’s Advice to Prospective Investors in Delaware LLCs: Pay Close Attention to Controller’s Power to Amend LLC...

Farrell Fritz, P.C. on

Opinions by the Court of Appeals, New York’s highest court, construing the state’s LLC Law enacted 30 years ago are almost but not quite as rare as hen’s teeth. The great majority of important rulings under the statute...more

Morris James LLP

Chancery Says Litigation Privilege No Shield Against LLC Interest Repurchase

Morris James LLP on

Seva Holdings Inc. v. Octo Platform Equity Holdings, LLC, C.A. No. 2022-0437-PWR (Del. Ch. Aug. 29, 2024) - In deciding limited cross motions for summary judgment, the Court of Chancery held that the absolute litigation...more

Venable LLP

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

Venable LLP on

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.

New Year, New Law – New Opacity – for LLC Owner Disputes

Farrell Fritz, P.C. on

New York’s appellate courts are breaking new ground in 2025. Until a month ago, I would have said that “deadlock” most certainly is not enough on its own to dissolve a New York LLC....more

Fox Rothschild LLP

A Corporate “One Man Band” Might be a Lonely Road, but the Company is Not Always a Puppet

Fox Rothschild LLP on

Matthew Bagley worked for a claims adjustment firm in Louisiana as its claims manager for nearly three years before resigning to, allegedly, improperly compete against his former employer, M.D. Claims Group. In M.D. Claims...more

Patton Sullivan Brodehl LLP

Appointing a Receiver to Safeguard Against LLC Shenanigans

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

Allen Matkins

Nevada Supreme Court Finds Want Of Personal Jurisdiction Over LLC Members

Allen Matkins on

In a recent post, I questioned why personal jurisdiction was unquestioned.  Personal jurisdiction is, of course, unquestionably fundamental, as evidenced by the Nevada Supreme Court's recent order in Rich v. Eighth Jud. Dist....more

Kohrman Jackson & Krantz LLP

Breach of Trust? Baker Mayfield Sues Father in $12 Million Business Dispute

On November 22, 2024, NFL star Baker Mayfield, his wife Emily Mayfield, and their business entity Team BRM, LLC (collectively, “Plaintiffs”), filed a lawsuit in the United States District Court, Western District of Texas,...more

Morris James LLP

Chancery Enforces LLC Agreement in Prince Estate Dispute

Morris James LLP on

McMillan v. Nelson, C.A. 2024-0016-KSJM (Del. Ch. July 5, 2024) - In a dispute over the management of Prince Legacy, LLC, an entity formed to manage assets from the estate of the late musician Prince, the Court of...more

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