Harbison v. Stricklan

900 So.2d 385 (2004)

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Nature of the Case

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Facts

D is the manager and a 17% equity owner of the Strickland Family Limited Liability Company ('the LLC'). The LLC was formed by D and her now deceased husband, Jake Strickland, on August 4, 2000, as part of their estate plan. In accordance with their estate plan, on December 24, 2000, they transferred 83% of the equity shares of the LLC to their daughter P. The Stricklands retained a 17% interest in the LLC and acted as co-managers of the LLC for the next two years. Jake Strickland died. Under the operating agreement for the LLC, D became the sole manager of the LLC and retained the 17% equity in the LLC she had held in common with Jake. P retained 83% of the equity shares in the LLC. On December 24, 2002, D conveyed three parcels of real property belonging to the LLC to her son David Strickland. David is not a member of the LLC. P believes they were transferred for less than fair market value. P sued D, claiming a breach of fiduciary duty to the LLC and a violation of the terms of the operating agreement when D failed to make managerial decisions based on the best interests of the LLC, and the equity D moved for a summary judgment. the trial court entered a summary judgment in favor of D: This Court must look to the four corners of the governing document in determining whether D breached her fiduciary duty to the LLC in selling LLC property to her son. The governing document is the operating agreement of the Strickland Family, LLC. The purpose of the LLC operating agreement was for distribution of the assets of D and Jake Strickland. ''The managers do not, in any way guarantee ... a profit for the Equity Owners from the operations of the Company. There was no obligation on the part of the Managers to maximize financial gain or to make any or all of the Company Property productive.' Because the LLC was for a nonprofit purpose, D was free to distribute the real property of the LLC as she saw fit.