Chancery Addresses Default Fiduciary Duties in LLC Context
In Feeley v. NHAOCG, LLC , C.A. No. 7304-VCL (Del. Ch. Nov. 28, 2012), the Delaware Court of Chancery addressed–for the first time since the recent Delaware Supreme Court decision in Gatz Properties v. Auriga Capital, highlighted on these pages here, the issue of default fiduciary duties in the LLC context. We will have more to say about this later, but for the time-being, a taste of what passes in the corporate legal world as a hot topic, is provided by Professor Larry Hamermesh in his following post:
The November 28, 2012 opinion by Vice Chancellor Laster in Feeley v. NHAOCG, LLC represents the latest round in the ongoing debate about whether those with managerial authority in Delaware LLCs have fiduciary duties as a default matter. We have addressed this issue extensively on this site, most recently in Prof. Luke Scheuer’s post about the Delaware Supreme Court’s (non)decision on this issue in Auriga v. Gatz.
Vice Chancellor Laster’s decision ratchets up one notch the Court of Chancery’s commitment to the proposition that such default duties exist. Although the Chancellor’s opinion to the same effect in Auriga now has no precedential value, Vice Chancellor Laster has now ruled the same way in a case in which the issue was squarely presented. Chancellor Strine’s discounted opinion was relied upon not as precedent, but so as to “afford his views the same weight as a law review article, a form of authority the Delaware Supreme Court often cites.”
Prior Chancery decisions in the Feeley case were highlighted on these pages here.