July 13, 2012 (Press-News.org) Connecticut Supreme Court Clarifies Law on "Adverse" Members of an LLC
Operating agreements for limited liability companies can be complicated legal documents that involve multiple ownership groups and correspondingly complicated interactions between them. This can complicate matters in many ways, especially when deciding whether to file a lawsuit on behalf of the LLC. For example, an LLC can have multiple owners, and an owner may have an interest in multiple LLCs. Another example is if one owner has a relative involved with another corporation doing business with the LLC, that could make it difficult for the owner to remain impartial when deciding whether to file a lawsuit against the other corporation.
That is why a Connecticut statute denies "adverse" members of an LLC the right to decide whether to bring a lawsuit if the outcome of the lawsuit may be contrary to the LLC's interest in outcome of thelitigation.
Of course, the law is never so simple. What outcomes may be contrary to the LLC's interest? What exactly constitutes an "adverse" member of an LLC? A recent opinion by the Connecticut Supreme Court sheds light on this question.
The Business Dispute
In Meadow St. Associates v. Clean Air Partners, the plaintiffs were a three-member LLC, with two plaintiffs owning 50 percent of the interest and the third, Barbara Levine, owning the other 50 percent. The LLC leased office space to the defendant, and Barbara Levine's husband, Stephen, owned 20 percent of the defendant company that was renting the office space.
Eventually, a dispute arose between Barbara Levine's LLC and the defendant lessee over rent and other terms of the lease. The two other owners of the LLC wanted to bring a lawsuit against the lessee, but Barbara Levine expressly disagreed about bringing the claim. The two other owners filed suit anyway. In court, the defendant (the renters) argued that the plaintiffs (the building owners) could not bring the claim because they did not have corporate authorization because of Barbara Levine's disagreement with the plaintiffs. The trial and appellate courts agreed that the plaintiffs could not sue the defendant without the agreement of the third member of the LLC. The Supreme Court then agreed to review the case.
The Connecticut Supreme Court's Opinion
The court ultimately reversed the two lower courts' decisions. In doing so, it issued a blanket ruling that "when a member's spouse holds an interest or maintains a position of control in a defendant company, that member's interest is considered adverse to the outcome of a lawsuit that the LLC brings against the defendant company." In laymen's terms, this means Barbara Levine's LLC could sue the defendant because the statute prohibits adverse members from deciding whether to bring a lawsuit.
However, the court went on to note that the statute in this case is merely a default rule; an LLC's operating agreement can agree to ignore or contradict the statute if it chooses.
This case not only provides an interesting example of recent law governing LLCs in Connecticut, it is also a great example of how a knowledgeable attorney may have prevented years of costly litigation by anticipating this potential pitfall and using appropriate language to address the issue in the LLC's operating agreement.
If you are involved in the formation of an LLC or anticipate potential litigation, contact an experienced business litigation attorney to discuss your situation.
Article provided by Tinley, Nastri, Renehan & Dost, LLP
Visit us at http://www.tnrdlaw.com
Connecticut Supreme Court Clarifies Law on "Adverse" Members of an LLC
Complicated ownership structures can make it unclear when an LLC can bring a lawsuit.
2012-07-13
ELSE PRESS RELEASES FROM THIS DATE:
Texting While Driving: A Dangerous Combination
2012-07-13
Almost everyone has done it, been in a car with someone doing it, or seen other drivers doing it. Texting behind the wheel is nothing new, but recent studies are showing exactly how dangerous it can be. Injuries, vehicle damage and even death can result from car accidents caused by texting or using an electronic device while driving.
Men, Teenagers More Likely to Text and Drive
Recent data points to two groups that may be more likely to use cellphones while driving.
A recent Connecticut study analyzed ticket data and found that men receive more tickets than women ...
SUV Crash Involving Speeding and Alcohol Results in Two Deaths on I-44
2012-07-13
Just before 3:00 a.m. late last year, two passengers in an SUV lost their lives after the driver lost control and the SUV rolled over on the highway. The driver managed to crawl out of the vehicle before a tractor-trailer truck smashed into it, but was himself struck by a car as he was leaving the area. The driver and another passenger survived with critical injuries, but the two teens struck by the tractor-trailer lost their lives.
Authorities determined that the SUV was traveling at 82 mph at the time of the crash, at minimum, and that the drivers of the car and truck ...
Missouri Legislator Proposes Making All Forms of Distracted Driving Illegal
2012-07-13
The dangers of distracted driving have prompted the majority of states to enact legislation that bans texting while driving -- one of the most dangerous forms of distracted driving, as it takes a driver's hands off the wheel, eyes off the road and mind off of driving. According to the National Highway Traffic Safety Administration, a driver who texts while behind the wheel is 23 times more likely to get into a car crash than an attentive driver. In Missouri, however, one legislator wants to reduce all forms of distracted driving by increasing the number of acts that would ...
American Residential Services Launches Senior Care Program
2012-07-13
When a customer contacts ARS for maintenance, repair or replacement services, the customer is greeted with a live representative who asks a series of questions to qualify the customer for any eligible discounts. Effective immediately, if a senior discount is applicable, the representative will notify the ARS technician of such prior to the on-site appointment. Once an ARS technician is at the customer's residence, a service estimate with options is provided to the customer and the technician will then direct the customer to call into a recorded system that will guide the ...
Vintage Coventry Employee Named Champion by National Senior Living Organization
2012-07-13
Vintage Coventry of Vintage Senior Living, a family of vibrant retirement communities, today announced that employee Michael Gedam has been named an ALFA Champion by the Assisted Living Federation of America, a national organization serving the senior living field. Gedam was recognized for outstanding service to residents and an unwavering commitment to supporting quality of life for seniors and their families.
"Recognition as an ALFA Champion is a special honor and we are grateful that Michael has been part of the Vintage Coventry family for more than seven years," ...
Baltimore Summer Antiques Show's 32nd Anniversary Year to Feature All-Star Lecture Series Line-Up
2012-07-13
Art, jewelry and antique aficionados will not only get to see some of the world's most extraordinary collections from more than 575 international dealers, but they'll also have the opportunity to attend lectures presented by a stellar lineup of knowledgeable and respected speakers as part of the 2012 lecture series at the 32nd Annual Baltimore Summer Antiques Show, August 23-26, at the Baltimore Convention Center.
Free and open to the public, the lectures will be headlined by industry experts such as Robert Mintz, Chief Curator and the Mr. and Mrs. Thomas Quincy Scott ...
K5 Learning Wins 2012 Creative Child Magazine Top Award
2012-07-13
K5 Learning, an online reading and math program for kindergarten to grade 5, has been awarded the 2012 Creative Child Magazine Award for Media of the Year in the Online Educational Media/Website category.
The Creative Child Magazine awards stand out from other industry awards in that all products submitted are reviewed by moms and educators at a two-day event attended by more than 100 guest reviewers. In order to be considered for review, these products have to stand out as nurturing a child's creativity.
"We value awards that take the review process as seriously ...
SecurityCoverage Releases Mobile Suite for Android
2012-07-13
SecurityCoverage, Inc. today announced the release of SecureIT, Password Genie, and FileHopper applications for Android. The Mobile Suite provides antivirus protection, anti-theft features, digital identify and password management, and cloud-based file sharing that users need to protect and maximize their Android smart phones and tablet experiences.
These apps will help protect people in an exploding mobile environment. In 2011, global mobile handset shipments reached 1.6 billion and tablet shipments surged 260 percent to 66.9 million1. Malware developers have taken ...
BBB Announces Businesses with Most Unanswered Complaints
2012-07-13
Better Business Bureau serving Eastern North Carolina names the top 10 businesses with the most unanswered complaints during the first six months of 2012. BBB closed 4,237 complaints against businesses in eastern North Carolina during the first half of 2012. Among these complaints, the following businesses accounted for nearly 12 percent of BBB serving Eastern NC's 654 unanswered complaints:
Affordable Multimedia, a web hosting company in Raleigh, has 14 unanswered complaints and an "F" rating with BBB. The majority of complaints deal with customer service ...
David Michael Introduces Sweetness Advantage
2012-07-13
Food product developers have a wide array of sweetening options other than sucrose from which to choose. While they all have their pluses and minuses in replacing real sugar, the addition of a flavor can fill in profile gaps and help smooth out any rough edges.
David Michael's Sweetness Advantage flavor has been formulated to work specifically with Advantame, Ajinomoto's newest compound. When used together with Advantame, Sweetness Advantage fills the gap in up-front sweetness, masks some lingering aftertaste, and smoothes out the overall sweetness, bringing the product ...
LAST 30 PRESS RELEASES:
Burn grasslands to maintain them: What is good for biodiversity?
Ventilation in hospitals could cause viruses to spread further
New study finds high concentrations of plastics in the placentae of infants born prematurely
New robotic surgical systems revolutionizing patient care
New MSK research a step toward off-the-shelf CAR T cell therapy for cancer
UTEP professor wins prestigious research award from American Psychological Association
New national study finds homicide and suicide is the #1 cause of maternal death in the U.S.
Women’s pelvic tissue tears during childbirth unstudied, until now
Earth scientists study Sikkim flood in India to help others prepare for similar disasters
Leveraging data to improve health equity and care
Why you shouldn’t scratch an itchy rash: New study explains
Linking citation and retraction data aids in responsible research evaluation
Antibody treatment prevents severe bird flu in monkeys
Polar bear energetic model reveals drivers of polar bear population decline
Socioeconomic and political stability bolstered wild tiger recovery in India
Scratching an itch promotes antibacterial inflammation
Drivers, causes and impacts of the 2023 Sikkim flood in India
Most engineered human cells created for studying disease
Polar bear population decline the direct result of extended ‘energy deficit’ due to lack of food
Lifecycle Journal launches: A new vision for scholarly publishing
Ancient DNA analyses bring to life the 11,000-year intertwined genomic history of sheep and humans
Climate change increases risk of successive natural hazards in the Himalayas
From bowling balls to hip joints: Chemists create recyclable alternative to durable plastics
Promoting cacao production without sacrificing biodiversity
New £2 million project to save UK from food shortages
SCAI mourns Frank J. Hildner, MD, FSCAI: A founder and leader
New diagnostic tool will help LIGO hunt gravitational waves
Social entrepreneurs honored for lifesaving innovations
Aspects of marriage counseling may hold the key to depolarizing, unifying the country, study finds
With $2 million in new funding, Montana State research lab continues explorations into viruses and honeybee health
[Press-News.org] Connecticut Supreme Court Clarifies Law on "Adverse" Members of an LLCComplicated ownership structures can make it unclear when an LLC can bring a lawsuit.