Can a manager of a limited liability company be held liable for breach of contract or fiduciary duty?

California, United States of America


The following excerpt is from San Vicente Inv., LP v. Trammell Crow Santa Monica Dev., LLC, B291720 (Cal. App. 2020):

Under Delaware law, which governs here, "[i]t is a well-settled principle that where a dispute arises from obligations that are expressly addressed by contract, that dispute will be treated as a breach of contract claim. In that specific context, any fiduciary claims arising out of the same facts that underlie the contract obligations would be foreclosed as superfluous." (Nemec v. Shrader (Del. 2010) 991 A.2d 1120, 1129.) Delaware's Limited Liability Company Act similarly provides that "[u]nless otherwise provided in a limited liability company agreement, a . . . manager . . . shall not be liable to a limited liability company or to another member . . . for breach of fiduciary duty for the . . . manager's . . . good faith reliance on the provisions of the limited liability company agreement." (6 Del. Code, 18-1101, subd. (d).)

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