Friday, October 19, 2012

McConnell v. Hunt Sports Enterprises case brief

McConnell v. Hunt Sports Enterprises
725 N.E.2d 1193 (Ohio App. 1999)

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.
Procedural History
On appeal from a directed verdict in favor of the defendant
Whether the operating agreement of the CHL LLC can define the scope of the fiduciary duties owed by the members to the LLC.
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.
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.
 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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