Question

Newbury Properties Group owns, manages, and develops real property. Jerry Stoker and the Stoker Group, Inc. (the Stokers), also develop real property. Newbury entered into agreements with the Stokers concerning a large tract of property in Georgia. The parties formed Bellemare, LLC, to develop various parcels of the tract for residential purposes. The operating agreement of Bellemare indicated that "no Member shall be accountable to the LLC or to any other Member with respect to any other business or activity even if the business or activity competes with the LLC’s business." Later, when the Newbury group contracted with other parties to develop parcels within the tract in competition with Bellemare, LLC, the Stokers sued, alleging breach of fiduciary duty
(a) The first group will discuss and outline the fiduciary duties that the members of an LLC owe to each other.

(b)The second group will determine whether the terms of an operating agreement can alter these fiduciary duties.

(c ) The last group will decide in whose favor the court should rule in this situation.

Answer 1

Fiduciary duties are mentioned in the statue and enforceable in different states but there is not any clear demarcation. The court should rule in favor of Newbury group because it has not violated anything in the conduct of business .

Explanation:

a- Following fiduciary duties owed by member of LLC to other members

i-Fiduciary duty of Loyalty- Under this member in the LLC should be loyal to each other and they should put the success of and benefits to the LLC above any personal or individual advantages. They should also note that conflict of interest between LLC’s objective and their own objective should be avoided to the fullest.

ii- Fiduciary duty of Care- The members of the LLC should act in good faith, honestly and should exercise reasonable care while carrying their obligation and duty for the LLC. All decision and steps they took should be taken with full dedication and ownership.

b - Fiduciary duties are mentioned in the statue and enforceable in different states but there is not any clear demarcation between personal and LLC duties. The words are vague and not clear. Judicial precedence and decision in certain cases have decided about the legality of violence of fiduciary duty. Through operating agreement members in LLC can alter the fiduciary duty.

c-The court should rule in favor of Newbury group because it has not violated anything in the conduct of business.