FIDUCIARY DUTY – YES – BUT TO WHOM?
Virginia Circuit Court Judge in Fairfax recently held that one member of an LLC could not sue the manager of the LLC for breach of fiduciary duty. The Supreme Court of Virginia agreed.
Why was the case dismissed?
Because the member did not have standing to bring suit.
“Standing” is legal speak for – a right. The member, in her individual capacity, did not have the legal right, to claim an employee of the LLC had breached a duty to her. In fact, the manager / employee had no duty to this member individually at all, only to the LLC. So the LLC could have claimed breach of fiduciary duty but a member, not representing the LLC, was not owed a duty and therefore did not have standing to allege breach of the duty.
Confused? I know it is strange.
Often times in business tort suits we attack or defend the case from two angles: (1) legal angle – “Judge they don’t have facts to support that claim,” and (2) from a factual angle – “Even if they can allege that, they don’t have facts to support it or to support damages.”
These cases can get very complicated.
I hope as an individual employee, you will never know how complicated!
Remora Investments LLC v. Orr (Lemons, J.); Fairfax Cir.Ct. (Bellows) Robert K. Richardson for appellant; Richard C. Sullivan Jr. For appellee.