McConnell v. Hunt Sports Enterprises
725 N.E.2d 1193 (Ohio App. 1999)
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725 N.E.2d 1193 (Ohio App. 1999)
Facts
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Several individuals formed a
limited liability company to try to attract an NHL team to Columbus, Ohio,
but when the company's principal did not enter into the necessary agreements
in time to be considered by the NHL, a subgroup of the company secured the
needed facilities and was awarded the NHL franchise.
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Procedural History
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On appeal from a directed verdict
in favor of the defendant
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Issue
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Whether the operating agreement of the CHL LLC can define
the scope of the fiduciary duties owed by the members to the LLC.
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Holding
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The members of an LLC can define the scope of their
fiduciary duty. Therefore, Appellees did not violate their fiduciary duty
owed to CHL when they made a bid for the NHL franchise, because each member
of CHL agreed that members could compete against the LLC.
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Rules
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Limited liability company members
are bound by the terms of their operating agreement, and if the agreement
expressly allows them to engage in "any other business venture of any
nature," they are not prohibited from participating in a competing
venture.
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Analysis
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The court relied on general contract
law to justify LLC members to define their fiduciary duties. If parties agree
to be held to a certain set of conditions, courts try not to disturb the
agreement unless there are statutory or strong public policy concerns.
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Notes
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