Court Of Chancery Explains Role Of Fiduciary Duties
Auriga Capital Corporation v. Gatz Properties LLC, C.A. 4390-CS (January 27, 2012)
It is often the case that a controlling owner wants to eliminate the minority interests. How to do so and abide by his fiduciary duties is the stuff that makes for litigation. This is an example. This decision is particularly important for 2 reasons. First, it makes clear that even a controlling owner who does not really want to be a seller must consider going through a validly conducted sale process to show that he has been entirely fair with the minority.
Second, it explains the role of fiduciary duties in LLCs, including those LLC agreements that try to modify or eliminate those duties. That is possible to do but needs to be done very explicitly.
