![]() ![]() The Court of Appeal affirmed the trial court’s judgment.Īs to the conspiracy claim, the court recited the controlling rule: “A person who does not owe a fiduciary duty to a plaintiff cannot be held liable for conspiracy to breach that duty.” Since Newton, as a mere member, never undertook the fiduciary duties that the manager was accused of breaching, the conspiracy claim against Newton failed.Īs to the claim for aiding and abetting, the court held that it was possible for a member to be liable even without independently owing fiduciary duties. The trial sustained Newton’s demurrer and dismissed the claims against him, and Draz appealed. Draz also asserted claims against the LLC’s other member (Newton) for conspiracy to breach fiduciary duty and aiding and abetting breach of fiduciary duty. In the Draz case, one LLC member (Draz) sued the LLC’s manager for breach of fiduciary duty arising from the LLC’s financial troubles, which resulted in bankruptcy and the loss of the LLC’s hotel investment property through foreclosure. Sherman (an order from the United States District Court in the Southern District of California) - illustrate how difficult these theories can be to prove. Newton (an unpublished opinion by California’s Second Appellate District) and Hammett v. Two common theories asserted in this realm are “conspiracy” and “aiding and abetting.” A pair of recent opinions - Draz v. ![]() ( Corp Code §17704.09.) One of the most common claims in LLC litigation is “breach of fiduciary duty” asserted by a member of the LLC against its manager.īut can other LLC members be held liable for “assisting” or otherwise participating in the manager’s breach of fiduciary duty? LLC managers owe fiduciary duties of loyalty, care, and good faith and fair dealing to both the LLC and the LLC’s members.
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