Kuroda v. SPJS Holdings, L.L.C
In Kuroda v SPJS Holdings, L.L.C. (971 A2d 872 [Del Ch 2009]), the court, in deciding a motion to dismiss for failure to state a claim, addressed the issue of whether managing members of a limited liability company were liable for the limited liability company's failure to, inter alia, pay incentive allocations owed to an employee who was a non-managing member of the company. The agreement at issue, as in the instant case, purportedly limited the liability of members of the company for breaches of the agreement.
The Court denied the motion to dismiss the breach of contract claims against the managers of the company, notwithstanding that the language of the agreements conferred duties only on the company. The Court found that, since the managing members had signed the limited liability agreement, and the agreement did not clearly limit their liability to preclude the breach of contract claims alleged in the complaint, there was ambiguity in the provisions of the agreement regarding whether the managing members and signatories to the agreement could be held liable for their breach.
Section 7.9 of the subject LLC Agreements states: "Duties of Managers. The Managers shall act in good faith and in the best interest of the Company and with such care as an ordinarily prudent person in a like position would use under similar circumstances."
Section 7.10 of the LLC Agreements states, in relevant part:
Limitation of Liability. No Manager or Officer shall have any liability to the Company or any Member or Holder for any loss suffered by the Company or any Member or Holder that arises out of any act or omission by the Manager or Officer, if such Manager or Officer performs its duty in compliance with the standard set forth in the immediately preceding sentence, except loss or damage resulting from intentional misconduct, knowing violation of law, gross negligence or a transaction from with the Manager or Officer received a personal benefit in violation or breach of the provisions of this Agreement.