Critical Drafting Considerations for LLC Members' Operating Agreements
If an operating agreement is in place and not drafted correctly, the parties could inadvertently broaden this narrow exception under Florida law and create avenues for direct claims by and between one another which are not generally available to them under he Florida Revised Limited Liability Company Act (the Revised LLC Act).
April 20, 2022 at 09:54 AM
7 minute read
Litigation between and among members in a limited liability company (LLC) can be, to say the least, complicated. Disputes over money usually are, but when a minority group of members believe that they are entitled to profits and they believe the majority in control are making mistakes in running the company, oftentimes these situation lead to litigation if agreements cannot be reached. One of those complications is whether a lawsuit relating to the distribution of profits or breaches of fiduciary duties is brought derivatively on behalf of the company or directly on behalf of the members themselves. Usually, aggrieved members would prefer to sue directly so that they can directly recoup money damages, but as will be discussed below, Florida law provides for a narrow set of circumstances when members can sue other members directly. That said, as will be discussed below, if an operating agreement is in place and not drafted correctly, the parties could inadvertently broaden this narrow exception under Florida law and create avenues for direct claims by and between one another which are not generally available to them under he Florida Revised Limited Liability Company Act (the Revised LLC Act). Depending on your role in an LLC, you will want to pay close attention to how your operating agreement is drafted.
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