Friday, December 27, 2013

Anderson v. Wilder case brief

Anderson v. Wilder case brief summary
2003 WL 22768666 (2003)

CASE SYNOPSIS
After plaintiff minority shareholders were expelled from the limited liability company (LLC) by a vote of defendant majority shareholders, the minority shareholders' stock was purchased low and sold high. The minority shareholders sued the majority shareholders for breach of fiduciary duty. The majority shareholders moved for summary judgment. The Circuit Court for Knox County (Tennessee) granted their motion. The minority shareholders appealed.

DISCUSSION

  • The appellate court found that a majority shareholder of an LLC stood in a fiduciary relationship to the minority shareholder. 
  • The appellate court also determined that its finding did not conflict with the Limited Liability Company Act (LLC Act), Tenn. Code Ann. § 48-201-101 et seq., and was in keeping with the statutory requirement that each LLC member discharge all of his or her duties in good faith pursuant to Tenn. Code Ann. § 48-240-102 of the LLC Act. 
  • Additionally, because the minority shareholders showed that the majority shareholders' reasons for expelling them were false and pretextual, the appellate court found that there existed a genuine issue of material fact regarding whether the majority shareholders' actions in expelling the minority shareholders were taken in good faith, as required by the LLC Act, or whether they expelled the minority shareholders solely in order to force the acquisition of their membership units at a price of $ 150 in order to sell them at $ 250 per unit, in violation of their fiduciary duty. 
  • Thus, the trial court improperly granted the majority shareholders' motion for summary judgment.
CONCLUSION
The appellate court vacated the trial court's judgment and remanded the case to the trial court for further proceedings.

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