Practice point: The Appellate Division reversed the order denying defendant's motion to dismiss, or alternatively for summary judgment, as to the cause of action for a
declaration that defendant is required to sell his LLC shares to
plaintiffs.
The parties' rights as members of a Delaware LLC are defined by the operating agreement which does not indicate that plaintiffs could compel the sale of defendant's membership
interests. Plaintiffs rely on a section of the agreement which allows them to
compel the sale of the membership interest upon the termination of the
employment of "an employee other than a manager." However, it is undisputed that defendant was a managerial employee at the time of his
termination, and so, under the agreement's plain language, the section is inapplicable. Moreover, plaintiffs' reading
would divest the phrase "other than a manager" of any effect, a result that
is contrary to Delaware which favors the interpretation that gives effect to all terms of contract.
Student note: Where, as here, the declaratory judgment claim is resolved on the merits, the
proper course is to issue a declaration in defendant's favor, not
a dismissal.
Case: LCM Holdings GP, LLC v. Imbert, NY Slip Op 00595 (1st Dept. 2014).
Here is the decision.
Tomorrow's issue: A landowner's liability.
