Question: Bonnie Strickland and her husband Jake formed the Strickland Family

Bonnie Strickland and her husband Jake formed the Strickland Family Limited Liability Company as part of their estate plan. They transferred 83 percent of the equity shares of the LLC to their daughter Suzy Strickland Harbison. The Stricklands retained a 17 percent interest in the LLC and acted as comanagers of the LLC for the next two years. When Jake died, Bonnie became the only manager of the LLC. In 2002, Bonnie conveyed three parcels of real property belonging to the LLC to her son David Strickland. David was not a member of the LLC. Bonnie transferred the parcels of real property for an amount Suzy believed was less than fair market value. Suzy sued Bonnie, claiming that Strickland had breached her fiduciary duty to the LLC under the Alabama Limited Liability Company Act and that she had violated the terms of the operating agreement when she failed to make managerial decisions based on the best interests of the LLC and the equity owners. Bonnie defended by referring to the LLC's operating agreement, which clearly stated that the LLC was not formed for profit purposes: The managers do not, in any way guarantee a profit for the Equity Owners from the operations of the Company. Decisions with respect to the conduct, dissolution and winding up of the business of the company shall be made in the sole discretion of the Equity Owners and such other matters as the Managers consider relevant. There shall be no obligation on the part of the Managers to maximize financial gain or to make any or all of the Company Property productive.
Has Bonnie breached her fiduciary duty?

Sale on SolutionInn
  • CreatedJuly 16, 2014
  • Files Included
Post your question