Salm v. Feldstein
New York Supreme Court, Appellate Division
799 N.Y.S.2d 104 (2005)
World Wide Automotive, LLC (WWA) had two equal members: the plaintiff and the defendant, who served as managing member. The defendant bought the plaintiff's share for about $5 million and, only two days later, sold the entire business to a third party for $16 million; the plaintiff sued for breach of fiduciary duty and fraud, alleging the defendant never disclosed the pending $16 million offer and instead undervalued the company at $5 to $6 million when buying him out. The trial court granted the defendant summary judgment before discovery even took place, and the plaintiff appealed.
Whether a managing member of an LLC owes a fiduciary duty to fully disclose all relevant facts prior to engaging in LLC-related business with another member.