Limited Liability Companies are perhaps the dominant business entity. They are easy to form and easy to manage. Often times they are manager-managed, which means that managers supervise and control the operations of the company. Managers of a LLC generally owe fiduciary duties to the LLC’s owners/members, subject to the terms of the LLC’s operating…
Legal Articles
Limited Liability Company Derivative Actions
Derivative lawsuits generally refer to claims made relating to the mismanagement of a corporation or limited liability company. It is brought by a shareholder, as the corporation’s representative. Nickell v. Shanahan, 439 S.W.3d 223, 227 (Mo. 2014). The shareholder is only a nominal plaintiff, and the corporation or limited liability company is the real party…
Fiduciary Duties in a Limited Liability Company
In Missouri, Managers of a limited liability company owe fiduciary duties to the company itself. Hibbs v. Berger, 430 SW.3d 296, 315 (Mo. Ct. App. 2014) (citing Section 347.088.2, RSMo). Indeed, a manager “has a duty to act in good faith and in the best interests of the limited liability company”). Sutherland v. Sutherland, 348…
Punitive Damages in Breach of Contract Cases
Punitive damages are “imposed for the purpose of punishment and deterrence.” Rodriguez v. Suzuki Motor Corp., 936 S.W.2d 104, 110 (Mo. 1996). As a general matter, punitive damages may not be awarded to a plaintiff in a breach of contract case. Peterson v. Continental Boiler Works, Inc., 783 S.W.2d 896, 902 (Mo. 1996). But there…
Power of Attorney Litigation, Attorney Fees
An attorney-in-fact for a principal under a power of attorney has a fiduciary obligation to act in the best interests of the principal consistent with the terms of the power of attorney document. When an attorney-in-fact breaches his or her obligations, the principal, a family member of the principal or some other successor in interest…
Trusts: Duty of Loyalty
A trustee has a fiduciary duty of loyalty to act in the best interests of the trust’s beneficiaries. While the Settlor (i.e., trust-maker) is alive and has capacity to revoke the trust, the duties of the trustee are owed exclusively to the Settlor. Section 456.6-603, RSMo. There is typically a shift in these duties when…
Oral Partnership Agreements
It is important to get it in writing, especially when it comes to business ventures. Contrary to popular belief, it is possible for a business partnership to exist without a writing saying so. If a court determines that a partnership exists, then this means that the partners owe each other a host of fiduciary duties….
Partnerships, Accountings
Partners owe each other a fiduciary with respect to the affairs of the partnership. Anchor Centre Partners v. Mercantile Bank, 803 S.W.2d 23 (Mo. 1991). As part of this fiduciary duty, each partner has a duty to “render on demand true and full information of all things affecting the partnership to any partner.” King v. Bullard, 257…
Voting Trusts, Corporations
A “voting trust” is an agreement where one or more shareholders appoints a trustee to vote on behalf of the shareholders at a corporate meeting. It is in effect a more nuanced proxy arrangements (a proxy is usually legally authorized to vote on another person’s behalf). The principle difference is that a voting trust document…
Employee Duty of Loyalty
In Missouri — even without an employment contract, non-compete agreement, non-solicitation agreement or confidentiality agreement — an employee owes his/her employer a duty of loyalty. Western Blue Print Co., LLC v. Roberts, 367 S.W.3d 7, 15 (Mo. 2012). What this generally means is that an employee cannot work directly against his/her employer’s interests. At the same…