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THE AMENDED LIMITED LIABILITY COMPANY AGREEMENT SUPERSEDED THE PRIOR ORAL SIDE AGREEMENT BECAUSE IT INCLUDED AN UNAMBIGUOUS INTEGRATION AND MERGER CLAUSE (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Manzanet-Daniels, over a two-justice dissenting opinion, determined the amended Limited Liability Company (LLC) agreement with an integration and merger clause superseded the prior oral side agreement, called an exit opportunity agreement:

… [T]he amended LLC agreement contains a clear and unambiguous integration and merger clause providing that it “constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter;” the “subject matter” being the “allocation of profits and losses among the Members, distributions among the Members, [and] the rights, obligations and interests of the Members to each other and to the Company” … . * * *

… [T]he merger clause explicitly states that the amended LLC agreement supersedes all prior written and oral agreements concerning the subject matter of the amended LLC agreement … . Behler v Kai-Shing Tao, 2024 NY Slip Op 01337, First Dept 3-14-24

Practice Point: Here the unambiguous integration and merger clause in the amended Limited Liability Company agreement precluded enforcement of a prior oral side agreement. Although the issue here appears simple, it was the subject of a full-fledged majority opinion and a full-fledged two-justice dissenting opinion.

 

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