Friday, November 22, 2013

R&R Capital, LLC v. Buck & Doe Run Valley Farms, LLC case brief

R&R Capital, LLC v. Buck & Doe Run Valley Farms, LLC case brief summary
2008 WL 3846318


CASE SYNOPSIS
Petitioners, two New York limited liability companies (LLCs), filed a petition with the court seeking dissolution of respondents, nine separate Delaware LLCs. The Delaware LLCs, some of which had their certificates of formation canceled by the state pursuant to Del. Code Ann. tit. 6, § 18-1108 for failure to pay their annual taxes, moved to dismiss the petition.

DISCUSSION

  • Respondents' motion was based primarily on two arguments. 
  • First, with respect to two respondents, petitioners lacked standing to seek dissolution because they were neither members nor managers. 
  • The court concluded that this argument was meritorious, but incomplete. 
  • Consequently, it granted the motion to dismiss the claims against two respondents pursuant to Del. Code Ann., tit. 6, §§ 18-802, 18-803, but could not dismiss the claim pursuant to Del. Code Ann. tit. 6, § 18-805. 
  • Second, as to the other respondents, of which petitioners were members, respondents argued that petitioners had waived their right to seek dissolution in the respective LLC Agreements. 
  • Again, the court concluded that this argument was meritorious and that Delaware's strong policy in favor of freedom of contract in the LLC Agreements required such a result. 
  • Ultimately, it was the contract that compelled the court's decision in this case because it was the contract that defined the scope, structure, and personality of LLCs. 
  • The court noted that the allure of the LLC would be eviscerated if parties could simply petition the court to renegotiate their agreements when relationships soured.

CONCLUSION
Except for the claims seeking the appointment of a receiver, pursuant to Del. Code Ann. tit. 6, § 18-805, for two of the Delaware LLCs, all claims in this action seeking dissolution of the Delaware LLCs were dismissed.

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