Posts tagged LLC Agreements

Court of Chancery Upholds Drag Along Rights

Minnesota Invco of RSA #7, Inc. v. Midwest Wireless Holdings LLC, C.A. No. 1887-N, 2006 WL 1596675 (Del. Ch. June 7, 2006). In this case, the Court of Chancery was required to interpret complex agreements between the members of a Delaware limited liability company. The Court held that the defendant holding company had the right to "drag along" holders of a minority interest in an operating subsidiary of the holding company in connection with the sale of the holding company. More ›

Share

Court of Chancery Remedies Breach of LLC Agreement

Eureka VIII LLC v. Niagara Falls Holdings LLC C.A. No. 1203-N, 899 A.2d 95 (Del. Ch. June 6, 2006). This case illustrates the ability of the Court of Chancery to fashion a remedy that is non-traditional and fits the exact circumstances of the case before it. Here the remedy for the breach of a LLC agreement is to hold the breaching party, who is no longer a member in the LLC but only an assignee, with limited rights. More ›

Share

Court of Chancery Awards Reliance Damages for Promissory Estoppel

Ramone v. Lang, C.A. No. 1592-N, 2006 WL 905347 (Del. Ch. Apr. 3, 2006). This case involved a dispute between two businessmen who hoped to work together on a project to open a swim and fitness center, but who failed to achieve this despite months of efforts and negotiations. Plaintiff and defendant intended to formalize their relationship in a written LLC agreement. Ultimately, defendant closed on the property for himself, frustrated by his inability to reach a final agreement with plaintiff. Plaintiff sued for breach of contract, breach of fiduciary duty, and promissory estoppel. The Court of Chancery found that there was no contract between the parties and that the parties were not partners, therefore defendant did not owe any fiduciary duties. The court did, however, find that plaintiff had a claim for promissory estoppel and awarded reliance damages. More ›

Share

District Court Denies Motion to Dismiss Declaratory Judgment Action for Lack of Jurisdiction and Failure to Allege a Controversy of Sufficient Immediacy

Shamrock Holdings of Ca., Inc. v. Arenson, C.A. No. 04-1335-SLR, 2006 U.S. Dist. LEXIS 9835 (D. Del. Mar. 14, 2006). Plaintiff Shamrock Holdings of Ca., Inc. ("Shamrock") was a Class A member of ALH Holdings, Inc. ("ALH"), a Delaware limited liability company, and the other plaintiffs were employees and/or members of ALH's Supervisory Board (the "Board"). In connection with the failure of ALH's business, and its investors' subsequent loss of their investments, plaintiffs filed an action in the Court of Chancery seeking a declaration that (i) they did not breach ALH's operating agreement; (ii) they did not breach their fiduciary duties as ALH employees, members or Board members; (iii) they had relied in good faith on the advice of experts and professionals in making their decisions; (iv) they were not liable to the defendants under the terms of a consulting agreement; and (v) they were entitled to advan More ›

Share

The Court of Chancery Determines the Membership and Future of a LLC Using a "Substance over Form" Approach

In re Grupo Dos Chiles, LLC, C.A. No. 1447-N, 2006 WL 668443 (Del. Ch. Mar. 10, 2006). This case involved a dispute over the membership and future of a Delaware limited liability company. Petitioner sought a reformation of the LLC's certificate of formation to the effect that he and Respondent were members of the LLC. Applying a "substance over form" approach, the Court of Chancery concluded that the petitioners were members of the LLC by interpreting the LLC agreement and turning to documentary evidence regarding the parties' portrayal of their relationship. More › Share

Superior Court Finds "Volunteer" Director of LLC Immune from Suit and Requires Plaintiff to File a More Definite Statement As to Whether Board's Actions Were Void

Gilliland v. St. Joseph's at Providence Creek, C.A. No. 04C-09-042, 2006 WL 258259 (Del. Super. Ct. Jan. 27, 2006). After the board of directors of an LLC terminated the plaintiff, the plaintiff filed suit, alleging, among other things, that the board's actions were void. The defendants moved to dismiss plaintiff's suit. The court found that one of the directors was immune from suit pursuant to 10 Del. C. § 8133, which grants immunity to an organization's volunteers. Another defendant, the LLC from which plaintiff had been terminated, argued that the claim against it should be dismissed because the board's actions were voidable rather than void. However, there was no indication that the Board had ever ratified the voidable acts. The Court directed the Plaintiff to file a more definite statement as to what it was claiming against that defendant. More › Share

Court Of Chancery Holds That Contractually Agreed Issues Of Substantive Arbitrability Are For Judicial Resolution

Willie Gary LLC. v. James & Jackson LLC., C.A. No. 1781, 2006 WL 75309 (Del. Ch. Jan. 10, 2006), aff'd, (Del. Mar. 14, 2006)(Berger, J.) Plaintiff sought to enjoin defendant to remedy an alleged breach of the LLC Agreement and to specifically enforce the defendant's alleged promise to guarantee a debt of the LLC. Alternatively, plaintiff sought to dissolve the entity in which he owned 80% of stock because of an alleged decisional deadlock. More › Share

Court of Chancery Finds LLC Member Had Standing To Bring Derivative Claims On Behalf Of LLC, But That Her Claims Were Subject To Arbitration

Ishimaru v. Fung, C.A. No. 929, 2005 WL 2899680 (Del. Ch. Oct. 26, 2005). Plaintiff, a member of Paradigm Financial Products International LLC, sought to assert a cause of action on behalf of Paradigm against Defendant Ivy Asset Management Corp. for breach of contract. Ivy Asset moved to dismiss for lack of subject matter jurisdiction. More › Share

Court of Chancery Dissolves LLC that is Deadlocked and was Arguably Formed as Part of Scheme to Deceive Investors

In re: Silver Leaf, LLC, C.A. No. 20611, 2005 WL 2045691 (Del. Ch. Aug. 18, 2005). Plaintiff and the defendants formed Silver Leaf, LLC ("Silver Leaf") to market a new vending machine that was to produce French fries. In connection with the formation of the entity, the parties signed a stock purchase agreement and a sales and marketing agreement with Tasty Fries, which owned the manufacturing rights to the vending machines. After the relationship between the parties deteriorated, Tasty Fries terminated the sales and marketing agreement over a dispute related to the stock purchase agreement. More › Share

Superior Court Dismisses Case Against Member of Limited Liability Company, Finding that Member Was Not Liable for the Actions of the Limited Liability Company

Thomas v. Hobbs, C.A. No. 04C-02-010 RFS, 2005 WL 1653947 (Del. Super. Ct. Apr. 27, 2005). The Plaintiff brought an action for breach of contract against the defendant limited liability company and against the sole member of that defendant limited liability company personally. The member moved for summary judgment, arguing that she could not be held personally liable for the actions of the defendant limited liability company. The court granted the defendant member's motion. More › Share