Auriga Capital Corp. v. Gatz Properties, LLC

Gatz Properties LLC (Gatz Properties) (defendant), through William Gatz, managed Peconic Bay, LLC (Peconic), which Gatz Properties, Auriga Capital Corporation (Auriga), and other minority investors (plaintiffs) had formed to develop and sublease a golf course. Peconic's operating agreement required fairness in any self-dealing transaction and made the manager liable for bad faith or gross negligence. When Peconic's sublessee failed to renew, Gatz took no steps to protect the members' investment, turned away an interested outside buyer, misled minority members, made unfair buyout offers, and then put the property up for an unmarketed auction where he was the sole bidder and bought it for a nominal price. Auriga and the other minority members sued for breach of fiduciary duty.