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Be Careful What You Say. It May Get You Expelled From Your LLC. | Farrell Fritz, P.C.


material breach of the LLC agreement. Earlier this month I came across another case, one might say, that pushes the envelope to include a member’s statements made to third parties complaining about the LLC managers’ claimed failure to provide information in breach of the operating agreement. The statements allegedly constituted ground for expulsion under an expansive provision covering “any act or omission which, in the reasonable judgment of the Managers, is in bad faith and is detrimental to the interests of the Company, its Members or its Managers.”
Earlier this month, in
Jacobowitz v Gutnick, a Brooklyn Supreme Court judge found that the challenged statements were non-actionable opinion and dismissed defamation claims brought by the plaintiff LLC and its managers against the defendant expelled member. The court nevertheless refused to dismiss the plaintiffs’ claim for a declaratory judgment enforcing the expulsion, holding that the non-defamatory nature of t ....

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