Haley v. Talcott
Delaware Court of Chancery
864 A.2d 86 (Del. Ch. 2004)
Haley (plaintiff) and Talcott (defendant), equal partners running the Redfin Grill restaurant, formed an LLC to purchase the land beneath it, each personally guaranteeing the full mortgage. After a bitter falling-out, the two deadlocked on every major decision — Talcott's attempt to push Haley out of his job, a proposed new restaurant lease, and a vote to sell the property — with the 50/50 ownership structure locking the status quo in place. Their LLC agreement had an exit mechanism for exactly this kind of breakdown, but it didn't specify who would retain the LLC, and it left both men personally exposed on the mortgage regardless of who kept control. Haley sued for judicial dissolution and moved for summary judgment.
Whether a court may order judicial dissolution of an LLC when it is not reasonably practical to carry on the business under the LLC agreement, even though the agreement contains its own exit mechanism.