Fiduciary Duties in Limited Liability Companies (LLC)
Limited liability companies are a hybrid between a corporation and partnership. Hibbs v. Berger, 430 S.W.3d 296, 313 (Mo. Ct. App. 2014). They are creatures of statute. Those individuals or entities that hold an ownership interest in a limited liability company are designated as “members.” “Managers,” on the other hand, are those individuals who may or may not be members of the LLC, but manage the LLC’s operations. See Section 347.015, RSMo. The rights, duties and obligations of members and managers of an LLC spring from Missouri statutes in conjunction with the LLC’s operating agreement and articles of organization. Id.; Urban Hotel Dev. Co., Inc. v. President Dev. Grp., L.C., 535 F.3d 874, 878 (8th Cir. 2008).
The principal statutory section dealing with fiduciary duties relevant to a LLC is Section 347.088, RSMo. Missouri courts have consistently found that the statute evidences that managers and members of an LLC owe fiduciary duties to the LLC itself. Sutherland v. Sutherland, 348 S.W.3d 84, 91-92 (Mo. Ct. App. 2011). Similarly, except as provided in the LLC’s operating agreement, an authorized person must discharge his responsibilities “in good faith, with the care of a corporate officer of like position would exercise under similar circumstances.” Because LLCs are relatively new creations in the law, there have yet to be many cases fully exploring the meaning of this language. It is clear, though, that managers owe members of the LLC fiduciary duties. Id.; Hibbs, 430 S.W.3d at 317.
Further aggravating the analysis, however, is that fiduciary duties may be enlarged or restricted in the operating agreement. See Section 347.088.2, RSMo. Thus, interested parties in a LLC may freely contract between each other and limit potential breach of fiduciary duty exposure.
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