LLC MEMBER FIDUCIARY OBLIGATIONS
Updated: May 13, 2019
Two former members of a limited liability company were sued by it for breach of fiduciary duty. They moved to dismiss the case because the operating agreement said that it was not intended to be a general partnership and no member should be considered to be a partner or joint venturer with any other member. The court allowed the breach of fiduciary duty claim to go to trial.
WHY THIS IS IMPORTANT…
Unlike other states, Massachusetts treats limited liability companies like close corporations and imposes a duty of trust, confidence and absolute loyalty on members. Members are free to disavow that standard, however, in order to do it the contract was clearly and expressly indicate a departure from the general fiduciary principles that apply to close corporations.