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Chancery Determines LLC Agreement Required Payment to Remove Manager

Soleimani v. Hakkak, C.A. No. 2023-0948-LWW (Del. Ch. Apr. 12, 2024) - The defendants attempted to remove a manager-employee of several limited liability companies. The manager filed suit, and the parties moved for summary...more

Chancery Finds Amendment to LLC Agreement Invalid for Want of Manager’s Involvement

DiDonato v. Campus Eye Management, LLC, C.A. No. 2023-0671-LWW (Del. Ch. Jan. 31, 2024) - In governance disputes among LLC constituencies, the operating agreement is the beginning and often end point. This action involved...more

Chancery Finds Member Breached LLC Agreement in Unilaterally Dissolving the Company

VH5 Capital, LLC v. Jeremiah Rabe, C.A. No. 2020-0315-NAC (Del. Ch. June 30, 2023) - The at-issue LLC had two members – the defendant and the plaintiff, both of whom also constituted the company's board. The company never...more

Chancery Explains Standards of Review for Receiver Determinations and Shifts Fees and Expenses in Dissolution

In re Dissolution of Jeffco Management, LLC, C.A. No. 2018-0027-PAF (Del. Ch. Aug. 16, 2021) - When the Court of Chancery appoints a receiver to effectuate a company’s dissolution, certain determinations are subject to de...more

Chancery Addresses Whether LLC Agreement Modified or Eliminated Fiduciary Duties

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

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

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

Chancery Finds Implied-in-Fact LLC Agreement

Robinson v. Darbeau, C.A. No: 2019-0853-KSJM (Del. Ch. Mar. 1, 2021) - As Robinson v. Darbeau demonstrates, Delaware law recognizes implied limited liability company agreements. Plaintiff operated a daycare as a sole...more

Chancery Applies Forum Non Conveniens Analysis to Grant Partial Stay of Dispute Between LLCs and Former Manager

AG Resource Holdings, LLC v. Thomas Badford Terral, C.A. No. 2020-0850-JRS (Feb. 10, 2021) - In AG Resource, the Court of Chancery was tasked with determining whether it or a Louisiana state court should resolve similar...more

Chancery Rejects Challenge to Delaware as Proper Venue in Books and Records Action

Stanco v. Rallye Motors Holding, LLC, C.A. No. 2019-0751-SG (Del. Ch. Dec. 23, 2019). Delaware courts generally respect contractual forum selection provisions. When it comes to Delaware LLCs, however, the Delaware statute...more

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

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

Chancery Finds Unauthorized Transfer of LLC Interest Void and Denies Transferee Inspection Rights

Absalom Absalom Trust v. Saint Gervais LLC, C.A. No. 2018-0452-TMR (Del. Ch. June 27, 2019). Plaintiff was assigned a membership interest in the defendant, a Delaware limited liability company, and sought to exercise books...more

Chancery Address Valuation Issues Arising From LLC Member’s Withdrawal

Smith v. Promontory Financial Group, LLC, C.A. No. 11255-VCG (Del. Ch. April 30, 2019). In the limited liability company context, LLC agreements sometimes provide for a buyout of a member deciding to withdraw its...more

Delaware Supreme Court Overturns Nominal Damages Award and Explains the “Efficient Breach” Theory

Leaf Invenergy Co. v. Invenergy Renewables LLC, No. 308, 2018 (Del. May 2, 2019). Limited Delaware case law exists on the “efficient breach” theory. A new Delaware Supreme Court ruling examines that theory and confirms it...more

Chancery Enforces LLC Agreement’s California Forum Selection Clause For Advancement Claim

Li v. LoanDepot.com, LLC, C.A. No. 2019-0026-JTL (Del. Ch. Apr. 24, 2019). Delaware law permits parties conducting their business as limited liability companies to include mandatory arbitration or forum selection clauses...more

Chancery Declines to Find Personal Jurisdiction Over LLC Officers

CelestialRX Investments, LLC v. Krivulka, C.A. No. 11733-VCG (Del. Ch. Mar. 27, 2019). Section 109 of the Delaware Limited Liability Company Act is an “implied consent” statute. It provides for personal jurisdiction in...more

Court of Chancery Explains When to Dissolve an LLC

Decco U.S. Post-Harvest Inc. v. Mirtech Inc., C.A. No. 2018-0100-JTL (Del. Ch. Nov. 28, 2018) - Under Section 18-802 of the Delaware LLC Act, the Court of Chancery may dissolve an LLC when it is “not reasonably practical”...more

Court of Chancery Awards Fair Value to Forced-Out LLC Member

Domain Associates LLC v. Shah, C.A. No. 12921-VCL (Del. Ch. Aug. 13, 2018) - An LLC agreement may provide what payout a departing member receives for his or her interest. It also may provide that a member may be forced to...more

Court of Chancery Addresses Contract Formation

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

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

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

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

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

Court of Chancery Explains What Is A Proper Claim Reserve When Dissolving

Capone v. LDH Management Holdings LLC, C.A. No. 11687-VCG (April 25, 2018) - Under the LLC Act, as with the DGCL, an entity planning to dissolve and distribute its assets is required to set aside some reserve of assets to...more

Court Of Chancery Explains Inspection Rights Under An LLC Agreement

Aloha Power Company LLC v. Regenesis Power LLC, C.A. 12697-VCMR (Dec. 22, 2017) - This books and records decision addresses inspection rights granted under an LLC agreement. It also is useful as a reminder that a mere...more

Court Of Chancery Explains Limitation On Fiduciary Duty Claims

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

Court Of Chancery Clarifies Personal Jurisdiction Over LLC Managers

The Delaware LLC Act provides for personal jurisdiction in Delaware over those who manage a Delaware LLC—i.e., those who are named as managers in the LLC agreement, and those who participate materially in the LLC’s...more

Delaware Supreme Court Rejects Fraud Defense To Advancement

Delaware strongly protects a party’s right to advancement of attorney’s fees. This decision holds that a claim of fraudulent inducement cannot be asserted as a defense in a contractual advancement case even when the fraud is...more

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