William Penn Partnership v. Saliba

Saliba and Ksebe (plaintiffs) were minority members of Del Bay Associates, an LLC formed to build and run a motel; the Lingos (defendants) were managers of Del Bay who also controlled the majority member and owned a large stake in JGT, the eventual buyer. Wanting to sell the motel to JGT, the Lingos told the minority members they could match the offer, but never disclosed that JGT's board was already moving to buy, quietly got a third member to sign the contract, and at closing falsely represented that all members had authorized the sale. Saliba and Ksebe sued for breach of fiduciary duty; the Court of Chancery found for them, and the Lingos appealed.

Whether individuals acting as LLC managers owe the other members a fiduciary duty of fair dealing, requiring a self-dealing manager to prove the entire fairness of the transaction.