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Operating Agreements Created a Limited Liability Company In Which Members Did Not Share Control of the Development Project or Responsibility for Losses/No Fiduciary Duty Arises from a Limited-Liability-Company Relationship, As It Does from a Partnership or Joint Venture

The Second Department noted that a fiduciary duty did not arise among members of a limited liability company, as it would have in a partnership or joint venture.  Here, the operating agreements created a limited liability company in which (unlike a partnership or joint venture) the members did not share control of the project or responsibility for losses:

“Generally, where parties have entered into a contract, courts look to that agreement to discover . . . the nexus of [the parties'] relationship and the particular contractual expression establishing the parties' interdependency. If the parties . . . do not create their own relationship of higher trust, courts should not ordinarily transport them to the higher realm of relationship and fashion the stricter duty for them'” … . Here, the written operating agreements submitted in support of the motions demonstrated an intent to form a limited liability company, not a partnership or joint venture that would have given rise to a fiduciary relationship. Moreover, the members of the limited liability company did not share control of the subject development project or responsibility for the losses, which are elements of both a joint venture and a partnership … . Grand Pac Fin Corp v 97-111 Hale LLC, 2014 NY Slip Op 08604, 2nd Dept 12-10-14

 

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