In an incredibly detailed, 75 page opinion, the Delaware Court of Chancery confirmed that, at least in Delaware, “Default Fiduciary Duties Do Exist In The LLC Context.” The full opinion, Auriga Capital Corp. v. Gatz Properties LLC, C.A. No. 4390-CS (Del. Ch., Jan. 27, 2012), can be found here. The Auriga Capital Corp. opinion contains a thorough analysis and explanation regarding why the default rule in Delaware is that fiduciary duties apply to LLCs. Given that courts across the country often look to Delaware for guidance on corporate law, this opinion serves as an excellent resource for anyone looking for guidance regarding whether (and why) a court may impose fiduciary duties when a particular state’s laws, such as Arizona’s, are arguably unclear on the topic.
Further, the opinion echoes several corporate legal principles that are well-recognized in several states like, Iowa. For example, the Auriga Capital Corp. Court recognized the default rule can be changed by agreement, such as in an operating agreement:
Where the parties have clearly supplanted default principles in full, we give effect to the parties’ contract choice. Where the parties have clearly supplanted default principles in part, we give effect to their contract choice. But, where the core default fiduciary duties have not been supplanted by contract, they exist as the LLC statute itself contemplates.
While the text of the opinion is peppered with valuable legal authority and analysis, don’t overlook the footnotes, which also contain a wealth of insight.
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