Articles Tagged with equitable remedies

  • Managers of a limited liability company owe to the company fiduciary duties of loyalty and care, must act in good faith, and refrain from reckless or unlawful conduct.

  • A member who seeks information about a manager-managed limited liability company must state the purpose for the request under the Uniform Limited Liability Act.

  • In a dispute involving a family farm, the trial court exercises equity to look through the details of disputed loan payments and find that they were to benefit of the limited liability company and its members.


Some cases make you wince when you think about the underlying relationship.  This case in which a son sued his father over the repayment of a mortgage is one of them.  It comes from the Iowa Court of Appeals and is interesting from my perspective because the underlying statute is the same as applies here in New Jersey and because it demonstrates the scope of equity to reframe disputed issues into a more manageable solution.field-213364_1920-e1612533257149-1024x379

The dispute in Erwin v. Erwin (opinion here) addressed the dispute between Michael Irwin and his son, Richard, that grew out of the father’s attempt to pass the family farm without incurring tax liability.  The father and Richard’s mother, who owned the farm individually, formed a limited liability company, Erwin Farms II, LLC, in 2012 and passed the land to the company.  At the time of the transfer, the land was subject to a mortgage. Richard received a block of non-voting membership units.  The remaining membership units, including all of the voting units, were owned by the parents.

The operating agreement of the company  named Michael Erwin as manager.  In addition to the existing mortgage, after the land was transferred to the LLC, the Erwin parents took two loans for improvements.  By the time of the trial, those loans had all been paid. Continue reading

Shareholder Deadlock AttorneyIs an intractable deadlock among the shareholders good grounds to force the sale of a large, successful corporation? That was the issue before the Delaware Supreme Court in a case in which the trial court’s decision to sell the business as a going concern – over the objection of one shareholder –was affirmed by the Supreme Court.

In this case, a trial court’s ability to fashion and equitable remedy based on the circumstances of the case ran into direct conflict with the limited remedies that are available to minority shareholders under Delaware law.

Court Orders Sale of Corporation in Shareholder Deadlock

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The last-minute motion of a 50-percent shareholder to prevent the sale of a business as part of an oppressed shareholder lawsuit was insufficient to block the receiver from proceeding with the transaction, according to a New Jersey appellate court.

The opinion in Georgiadis v. Georgiadis, Docket No.: A-4018-08 (App. Div. June 21, 2010) demonstrates the ability of a chancery judge to manage a business divorce and fashion an equitable remedy based on the facts of the case, and the deference that the appellate courts give to those decisions.

The lawsuit arose between two brothers who owned equal shares in a diner in Mountainside. One of the brothers left the business to run another diner in Connecticut.  When that diner closed, his brother refused to let him return to the business in Mountainside and an oppressed shareholder action followed.  The defendant brother filed a counter claim and the case was tried in 2007.

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