Delaware Business Litigation Report

Delaware Business Litigation Report

Category Archives: LLC Agreements

Subscribe to LLC Agreements RSS Feed

Court Of Chancery Explains Amendment-By-Merger Doctrine

Posted in LLC Agreements
In re Kinder Morgan Inc. Corporate Reorganization Litigation, C.A. 10093-VCL (November 5, 2014) This decision explains the Amendment-By-Merger Exception that is found in alternative entity agreements. The purpose of the Exception is to be sure that a merger agreement that has the affect of amending the operating agreement gets the same vote, including class votes, … Continue Reading

Court Of Chancery Explains Special Committee Standard Of Care

Posted in LLC Agreements
Gerber v. EPE Holdings LLC, C.A. 3543-VCN (January 18, 2013) It is now common for LLC and LLP agreements to have provisions permitting a "special committee" to approve  transactions with a controller.  What the limits are of that form of protection is the subject of this interesting opinion.  As the Court points out, surely not every committee … Continue Reading

Court Of Chancery Again Upholds Fiduciary Duties In An LLC

Posted in LLC Agreements
Feeley v.  NHAOCG LLC, C.A. 7304-VCL (November 28, 2012) For years the Court of Chancery has repeatedly held that the controllers of an LLC owe fiduciary duties to the members –  at least absent an express disclaimer of those duties in the LLC Operating Agreement.  Then on November 7, 2012 in the Gatz Properties decision, the Delaware Supreme Court … Continue Reading

Court Of Chancery Interprets LLC Consent Rights

Posted in LLC Agreements
Paul v. Delaware Coastal Anesthesia, C.A. 7084-VCG (May 29, 2012) The LLC statute, like the DGCL, permits the operating agreement to bar member action by written consent.  Here the plaintiff argued that such an agreement’s fairly common provisions dealing with how members were entitled to vote at a meeting also precluded member action by written consent. … Continue Reading

Court Of Chancery Applies Corporate Law Principles To LLC Dispute

Posted in LLC Agreements
Zimmerman v Crothall, C.A. 6001-VCP (March 5, 2012) This is an interesting application of corporate law principles to an LLC dispute where the LLC operating agreement defined the managers’ duties by language closely following common law duties for directors. Thus, the analysis included determining if they acted with gross negligence, were interested in 2 transactions to … Continue Reading

Court Of Chancery Explains Role Of Fiduciary Duties

Posted in LLC Agreements
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, … Continue Reading

Court Of Chancery Limits Implied Duties

Posted in LLC Agreements
Gerber v. Enterprise Products Holdings LLC, C.A. 5989- VCN (January 6, 2012) This is an important decision because it reaffirms the ability in an LLC agreement to severely limit the right to sue.  Here the LLC agreement first said that if the committee appointed to review conflict of interest decisions did so,  then there was no right to … Continue Reading

Court Of Chancery Uses Computer Records To Unravel Facts

Posted in LLC Agreements
Phillips v. Hove, C.A. 3644-VCL (September 22, 2011) This is an interesting decision for its very entertaining explanation of the facts and how the Court decided what was true in the face of false testimony.  Using the computer records to verify when documents were generated, the Court determined which story was most believable. There are also some key … Continue Reading