Fisk Ventures, LLC v. Segal

Dr. Andrew Segal (defendant) founded Genitrix, LLC, retaining 55 percent of its Class A membership interest, while H. Fisk Johnson and entities he controlled -- including Fisk Ventures, LLC (plaintiff) -- held much of the Class B interest. Genitrix's LLC agreement gave the five-member board equal-footing control requiring 75 percent approval for most actions, expressly disclaimed any member duties beyond those in the agreement itself, and gave Class B members a 'Put Right' letting them sell their interests back to Genitrix at any time. As Genitrix ran into financial trouble, Segal believed the Put Right scared off investors and repeatedly asked the Class B members to suspend it and to approve a private-placement memorandum to attract funding; the Class B members refused both requests. Genitrix eventually ran out of cash, leaving only Segal as an employee with no office, funds, or revenue. Fisk sued in Chancery seeking Genitrix's dissolution; Segal counterclaimed that Fisk breached the LLC agreement, the implied covenant of good faith and fair dealing, and fiduciary duties by blocking Genitrix's funding efforts, and Fisk moved to dismiss those counterclaims.