Kentucky

BUSINESS - LLC members duties to each other, corporate opportunity doctrine: Patmon v. Hobbs (COA 3/27/2009)

By Michael Stevens

Patmon v. Hobbs
2007-CA-002527
03/27/2009
2009 WL 792601

Opinion by Judge Clayton; Judge Caperton concurred; Chief Judge Combs concurred by separate opinion.

The Court affirmed in part and reversed and remanded in part a judgment of the circuit court finding that damages could not be awarded for the value of build-to-suit-lease agreements.

The Court first held that appellee, a member of a limited liability company, owed a duty of loyalty to fellow members and the company, absent contrary provisions in the limited liability company operating agreement.

The Court then adopted the corporate opportunity doctrine and held that appellee violated his duty and therefore, breached his fiduciary duty when he diverted the build-to-lease projects to his separate company. However, the Court remanded for further proceedings for the trial court to determine whether appellants could establish that they had the financial wherewithal to undertake the projects, for the trial court to determine a remedy for the breach of fiduciary duty, and for the trial court to follow the statutory guidelines of KRS 275.170.

Full post as published by Kentucky Cases on August 02, 2009 (boomark / email).