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American Master Lease LLC v. Idanta Partners, Ltd.

California Court of Appeals, Second District, Seventh Division

May 27, 2014

AMERICAN MASTER LEASE LLC, Plaintiff and Respondent,
v.
IDANTA PARTNERS, LTD. et al., Defendants and Appellants.

THE COURT:

IT IS ORDERED that the opinion filed herein on May 5, 2014, 225 Cal.App.4th ___; ___ Cal.Rptr.3d___, be modified as follows:

1. On page 30, lines 3 to 11 [225 Cal.App.4th 1480, advance report, 1st par., lines 3-12], the citation beginning with “See Corp. Code” and ending before the citation to “Huong Que, Inc.” is deleted and the following is inserted in its place:

See former Corp. Code, § 17153 [“[t]he fiduciary duties a manager owes to the limited liability company and to its members are those of a partner to a partnership and to the partners of the partnership”];18 former Corp. Code, § 17001, subd. (w) [“manager” includes each of the members unless the articles of organization state that one or more members will manage the company];

2. On page 30 [225 Cal.App.4th 1480, advance report, fn. 18], the text of footnote 18 is deleted and the following is inserted in its place:

The events of this case are governed by former section 17153 of the Corporations Code. Corporation Code section 17704.09, which replaced Corporations Code former section 17153, “applies only to the acts or transactions by a limited liability company or by the members or managers of the limited liability company occurring, or contracts entered into by the limited liability company or by the members or managers of the limited liability company, on or after January 1, 2014. The prior law governs all acts or transactions by a limited liability company or by the members or managers of the limited liability company occurring, or contracts entered into by the limited liability company or by the members or managers of the limited liability company, prior to that date.” (Corp. Code, § 17713.04, subd. (b).) The new statute provides that members of a limited liability company owe fiduciary duties of loyalty and care to the limited liability company, including the duties to “refrain fro dealing with a limited liability company in the conduct or winding up of the activities of a limited liability company as or on behalf of a party having an interest adverse to a limited liability company”

Page 593f

and to “refrain from competing with a limited liability company.” (Corp. Code, § 17704.09, subd. (b)(2), (3); see id., subd. (d) [“[a] member shall discharge the duties to a limited liability company and the other members under this title or under the operating agreement and exercise any rights consistent with the obligation of good faith and fair dealing”].)

3. On page 30 [225 Cal.App.4th 1480, advance report, 1st par., line 12 & add fn. 19], at the end of the insert noted in No. 1 above, add as footnote 19 the following footnote, which will require renumbering of all subsequent footnotes:

19 The Operating Agreement for AML named Roberts as the managing member, but provided that the members “may determine that there should be more than one Manager.” The January 2000 management agreement gave Andrews, Runnels, and Franklin control over AML’s “operational decisions” and responsibility at “both the senior management (operational) level as well as the board-level (leadership) level.”

There is no change in the judgment.


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