[M]embers of limited liability companies owe one another the duty of utmost trust and loyalty.
Business Associations, Pages 985–993
McConnell v. Hunt Sports Enterprises
Court of Appeals of Ohio, 1999
Facts:
Hunt, McConnell, and others formed an LLC to invest in and operate a new team in the NHL. The operating agreement contained an express allowance for members to compete against the LLC. McConnell then did compete against the LLC and signed a franchise agreement before the LLC.
Issue:
Did McConnell breach his fiduciary obligation?
Rule:
Page 993
Note:
This is not the rule in Virginia, where members do not owe each other fiduciary duties.Reasoning:
Ordinarily, this would be a breach of the fiduciary duty, but since the operating agreement specifically allowed its members to compete, it was not in this case. McConnell did not act secretly or otherwise engage in behavior which would constitute wrongful behavior.
Holding:
No, McConnell did not breach his fiduciary duty.