Law

Law

CH40-PC#3

Issue: Is Olson entitled to the fair market value of his interest upon his leaving Viking Global Investors, LLC?

Rule: Under RULLCA, a dissociated member is not entitled to receive the value of her LLC interest until the LLC dissolves. The exception is if the LLC is at will. If

the LLC is at will and is not dissolved, the LLC must purchase his interest at fair value within 120 days after the member””s dissociation. If the LLC has a term,

however, and is not dissolved, the LLC may continue its business and pay the dissociated member the value of his interest within 120 days after the end of the LLC””s

term.

Application:
?The cause of action for Olson is breach of contract upon the Viking””s failure to pay him the fair market value of his interest in the LLC. To prove his claim, the

plaintiff must argue that the LLC was an LLC at will and by the principles of RULLC, the LLC must purchase his interest at fair value within 120 days after his

dissolution from the business. That is, the plaintiff must argue that the LLC was ongoing as long as the members wished the business to continue and that by definition

he is entitled to the fair market value of his interest in the LLC. Further, the plaintiff can argue that Delaware””s LLC statute requires that a dissociated member

be paid the fair market value of his interest. Thus, per the state””s law, the LLC is required to pay him his fair share of the LLC, regardless of the written or

oral agreement.
?Vikings Global Investors LLC””s defense is that the LLC had a written operations agreement in which buyouts procedures were outline. That is, the defendant can

argue that there””s a written agreement by which all members agreed upon in the creation of the LLC. It was agreed that if any of the members left the LLC, he would

receive only his capital account balance and earned compensation that had accrued and not been paid. Thus, the defendants can argue that the plaintiff is only entitled

to the $100million since this was their written agreement. As to the oral agreement, the defendants can argue that the written agreement supersedes any other

agreement, per the statute of frauds, and the plaintiff consented to its terms. Otherwise, he would not have signed it.

Conclusion: Assuming this was an LLC at will, there””s no evidence to prove it otherwise, the court should rule in favor of the plaintiff. Per RULLCA, buyouts are to

be paid at fair market value regardless of whether there is a written operating agreement or not.

CH 40- PC# 6:

Issue: Is May Carpenter liable to the condominium association for assessments for maintenance and repairs even though she believed she was a limited partner in a

limited partnership.

Rule: A general partner may be liable unless she in good faith believes she is a limited partner and upon discovering she is not a limited partner she either: causes a

proper certificate of limited partnership (or an amendment thereto) to be filed with the secretary of state, or withdraws from future equity participation in the firm

by filing a certificate declaring such withdrawal with the secretary of state.

Application:
?The cause of action for the condominium association is personal liability upon breach of contract of Briargate Homes”” failure to pay the assessment fees. To prove

their claim, the plaintiff must argue that the defendant is a general partner because she is part of a partnership. Thus, the plaintiff will argue that partners of a

general partnership are jointly and severally liable for the partnership obligations. Further, they can argue that it is unreasonable for an experienced businesswoman

not to know that she is entering a general partnership. Rather, as an experienced businesswomen it is reasonable to believe that she should have known she was entering

a partnership and consequently was agreeing to being a general partner with unlimited liabilities. Additionally, the plaintiffs can argue that if she really did in

good faith believe that she was a limited partner in a limited partnership, she would have, upon discovery of the partnership, submitted the proper documents with the

secretary of state to claim limited partnership. Or, she would have withdrawn from future participation in the partnership business by submitting a withdrawal

certificate with the secretary of the state. The plaintiff thus can argue that the defendant had no intention of dissociating herself from the general partnership

since did nothing after she learned in 1987 that Briargate was a partnership and she was a partner. Since she did nothing to end her relationship with the business and

instead allowed herself to continue in the partnership, the plaintiff can argue that she upheld her relationship as a partner to the partnership and therefore is

liable for all obligations of the business.
?Carpenter””s defense is that she is not liable for Brargate Homes”” failure to pay for the plaintiffs services. She can argue that she believed that Brargate was

a limited partnership and therefore she was a limited partner. Thus, she can argue that the limited partnership, not her, is liable for breaches of contract or

obligations. Also, she can argue that she was only a passive or limited partner because she only invested in Brargate. In other words, she had no managerial decisions

in the business and did not take any active status in the partnership. Therefore, the defendant argues that it was unreasonable to believe that she was a general

partner at the time of her investment.

Conclusion: The court should rule in favor of the plaintiff. The defendant had knowledge of her general partnership status before the partnership failed to pay the

condominium assessment fees and even after knowing the facts, she failed to take action to dissociate herself from the partnership.

CH 41-PC#9:

Issue: Did the taxi-cabs corporations circumvent a statute such that the court can pierce the corporate veil to reach Carlton individually and make him liable for

Walkovsky injuries?

Rule: Two requirements must exist for a court to pierce the corporate veil: domination of a corporation by its shareholder and use of the domination for an improper

use. Domination is when a shareholder causes a corporation to act to the personal benefit of the shareholder. The improper use may be any of three types: defrauding

creditors, circumventing a statute, or evading an existing obligation.

Application:
?The cause of action for Walkovsky against Carlton is personal liability for the corporate obligations. To prove his cause, the plaintiff must argue that the court can

pierce the corporate veil if the following can be met. That is, that there was a domination of a corporation by its shareholders and the use of the domination was for

an improper use. The plaintiff can argue that domination exists because Carlton, as organizer and main shareholder of the 10 corporations, caused the corporations to

act for his personal benefit. In other words, the plaintiff can argue that Carlton set up the corporations in a way that benefitted him. He can add that the

corporations were operated as a unit with respect to supplies, repairs and employees. Further, the plaintiff can argue that the domination was for an improper use,

such as circumventing the New York law that required that every taxicab company carry accidental liability for each cab. He can argue that the defendant organized the

corporations in a way that reduced his liability risk. That is each corporation carried a minimum liability insurance of $20,000 for two cabs. Therefore, the breaking

apart the business into ten corporations was a way to evade the statute.
?Carlton””s defense can be that he is not personally liable for the plaintiff””s injuries. He can argue that the corporations were created according to the law and

the taxicab statutes. In other words, each corporation complies with the statute””s requirement that a$1

 


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