Monday, July 11, 2016

An LLC's operating agreement and the LLC statute.

Practice point:  The Appellate Division affirmed denial of defendants' motion for summary judgment dismissing the cause of action for a declaration that plaintiff has been and continues to be a co-managing member of the LLC.

Section 7.7 of the company's operating agreement provides that in a case of fraud, misfeasance or breach of the managing member's standard of care, "the Managing Member may be removed by a vote of all of the Members." Since plaintiff, who holds a 50% member interest in the company, was not included in the vote to remove her as co-managing member, her removal did not comply with this section.

Student note:  As the operating agreement is not silent on voting issues, Limited Liability Company Law § 402(f) is not implicated and does not avail defendants.

Case:  Gibber v. Colton, NY Slip Op 05227 (1st Dep't June 30, 2016)

Tomorrow's issue: An auto accident claim dismissed.