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Who do managers owe a fiduciary duty to?
What kind of duties do members in a member managed LLC owe?
Duty to all other members
member's fiduciary obligations in a manager managed LLC?
they don't have any- just good faith.
Recent member fiduciary case in LLC
- re South Canaan Cellular Investments, LLC (Bankr. E.D. Pa.
- 2010)(applying Delaware law)(D LLC member allegedly misused the LLC’s
- confidential information to which the member had been granted access to buy a
- debt owed by the LLC to a third party)
- H: No breach of
- fiduciary duty! This non-managing, non-controlling member had no fiduciary duty
- No breach of implied
- covenant of good faith & fair dealing bcz Del statute lets a member lend $ and transact business
- with the LLC, and the LLC gave the member access to the info
If you have unbounded discretion?
you usually have full fiduciary obligation
Dissociation as it applies to Fiduciaries:
- distributional intersest must be bought if at will
- if for term:
- Article 7 applies if terminated before term
- Article 8 applies if after
Fiduciary and managment rights end at dissociation
Dissociation does not entitle member to distribution
- Managment rights ends
- If manager, fiduciary duties end as to post dissociation matters
- Member ownes interest as transferee
Deleware has no concept of dissociation
expulsion as it relates to LLC's
- Pursuant to OA
- Or by unanimous vote if
- 1) unlawful for member to carry on
- 2) there has been a transfer of a members distributional interests
- 3) corporation of partnership membership ceases
judicial expulsion in LLC
- if member:
- a) acts wrongfully, materially and adversly affects business
- b) willfully and persistently breached OA or fiduciary or statutory obligations
- c) conduct makes it not reasonably practicable to carry on
Events causing dissolution in LLC
- 1)Express will to withdraw
- 2)Agreed event in OA
- 3)Transfer of distributional interest
- 4) expulsion under OA or Vote, or judical
What leads to dissociation under RUPA and UPA?
UPA- Dissociation always leads to Dissolution
- 1) Disssociation by express will in an at will partnership
- 2) In an term partnership: 90 days within death or dissociation, majoirty of partners vote to dissolve, express will of all partners, end of term
- 3) Event outlined in OA
- 4) Illegal to continue
- 5) Judical determination
- 6) Transfer of partner's transferable interst
What is the standard for limited liability in LLCs?
No personally liable for LLC's debts solely by reason of acting as a member or manager
- for U this can be changed by articles and in writing
- for D the member can otherwise agree aroudn it.
How is delaware different regarding th right to forclose on a charging order?
Deleware doesn't include anything regarding forclosure- the other two say its fine.
What is one way that ULLCA is unique in regards to the enforcement of chargin orders
ULLCA allows for dissolution on account of a charging order if at will or at end of term llc
R doesnt mention judicial dissolution
D it is presumable not available
How are LLC's default allocation of profits and losses?
- U and R: equal shares
- D: as to members contributions
in llc, is a member's obligation to make contributions exused by death?
no, same for all three
When is a member of an LLC liable for wrongful distributions under U and R? how is that different from D?
Under U and R , member is liable of llc insolvent in equity or bankrupcy sense
D: liable if liabilities greater than fair maket value of assets