In re Weddle (Elsaesser v.Cougar Crest Lodge, LLC)
__ B.R. __, Bankruptcy No. 05-21089-TLM, Adversary No. 06-7015-TLM, 2006 WL 2848042 (Bankr. D. Idaho 2006).
The plaintiff in this adversarial proceeding alleged that the defendant LLC received a preferential transfer when it recorded judgments it recovered against the debtors and obtained a lien on the debtors’ real property. The debtors were members of the transferee LLC, each holding a 5% interest in the LLC. The only other member (Manning) was the father of Terri Weddle, one of the debtors. Continue reading
Civil Action No. 1447-N, 2006 WL 2507044 (Del. Ch. Aug. 17, 2006)
The court awarded attorney’s fees in an LLC dispute based on the bad faith exception to the American Rule. The court concluded that the respondents, Martinez and her son Rivera, acted in bad faith in arguing that Rivera, who was named as the initial member in the certificate of formation, was the sole member of the LLC at all relevant times. Martinez had previously stated on multiple occasions Continue reading
Cordier v. Tkach
No B179095, 2006 WL 2407051 (Cal. App. 2 Dist. Aug. 22, 2006)
Limited liability of partner.
__ So.2d __, 1040335, 2006 WL 2383376 (Ala. 2006)
Minority members of an Alabama LLC sued a North Carolina law firm and two of its attorneys based on the attorneys’ role in denying them access to the books and records of the LLC. The plaintiffs alleged that the attorneys threatened legal action against them if they continued to seek access to the LLC’s records, Continue reading
Brennan v. Lehn
Nos. X10UWYCV054010237S(CLD), X10UWYCV054010238S(CLD), 2006 WL 1577598 (Conn. Super. May 17, 2006).
In 1997, two individuals entered an operating agreement and formed an LLC for the purpose of operating and managing certain real property. The individuals, Brennan and Aiello, were equal members, and they operated the LLC until the death of Aiello in 2001. Brennan and the administrator of Aiello’s estate, Lehn, disagreed regarding the disposition of Aiello’s interest in the LLC. Brennan sought a declaration that he was entitled under the operating agreement to purchase Aiello’s interest, and Lehn sought a declaration that Aiello’s death constituted a dissolution of the LLC and Continue reading
924 So.2d 687 (Ala. 2005)
Nature of LLP as same entity that existed prior to registration; venue in suit against LLP.
__ N.Y.S.2d __, 2006 N.Y. Slip Op. 26132, 2006 WL 901675 (N.Y. Sup. 2006)
Potential liability of LLP partners for personal participation in alleged wrongdoing.
No. Civ.A. 1592-N, 2006 WL 905347 (Del. Ch. April 3, 2006)
For six months, the plaintiff and the defendant discussed and negotiated the formation of an LLC to purchase and operate an indoor swimming and fitness facility, but the parties never finalized their arrangement. Ultimately, the defendant purchased the property. The plaintiff argued that the defendant used the plaintiff’s good name and reputation to the defendant’s advantage and then cut the plaintiff out of the deal. The plaintiff alleged claims based upon breach of fiduciary duty, breach of contract, and promissory estoppel. The defendant claimed Continue reading
137 Cal.App.4th 579, 40 Cal.Rptr.3d 446, No. D047185 (Cal. App. 2006)
Discussion of privacy rights of LLP; discoverability of insurance policies, filings with Secretary of State, and financial records of non-party LLP in malpractice action against firm arising out of firm’s representation of plaintiff in previous malpractice action against LLP.
888 A.2d 1146, C.A. No. 1496-N (Del. Ch. 2006)
The minority members of a Delaware LLC sued the majority member and its affiliates for diverting assets of the LLC to the majority member’s affiliates without compensation to the LLC. The defendants sought to compel the minority members to arbitrate their claims pursuant to a broad arbitration clause in the LLC agreement, and the court found the arbitration clause encompassed the minority members’ claims. Continue reading
Securities and Exchange Commission v. Merchant Capital, LLC
400 F.Supp.2d 1336, No. 1:02-CV-2984-MHS (N.D. Ga. 2005)
In this securities fraud action brought by the SEC against the managing general partner (and its two individual principals) of 28 Colorado LLPs formed to purchase and collect debt pools of freshly charged off consumer debt, the court concluded the general partnership interests sold to the investors were not securities under the federal securities laws. The court described in detail the background and structure of the partnerships. Continue reading
2005 WL 2372082 , No. 254772 (Mich. App. Sept. 27, 2005)
The sole member of an LLC died, and the court held that the operating agreement, which was entered prior to amendment of the Michigan LLC statute to permit single member LLCs, was invalid. The court concluded that the amendment permitting single member LLCs and operating agreements did not have retroactive effect, and the provision of the statute stating that LLCs are bound by changes to the statute did not validate the agreement. Continue reading