Fliehr v. Storick, December 3, 2007 (Diaz)(unpublished)

A manager of an limited liability company may not, as a condition of the payment of consideration from a merger of the LLC, require that the member receiving the consideration execute a general release exonerating the manager and insiders from any misconduct.  Holding the consideration "hostage" in exchange for such a release might amount to willful and wanton conduct warranting punitive damages.

An LLC member pursuing a derivative claim must be a member of the LLC at the time the suit is filed.  Where the LLC no longer existed at the time the lawsuit was filed, Plaintiffs lacked standing to bring their claim.  Plaintiff's claim for mismanagement was a "classic derivative claim," which was also barred by their lack of standing. 

The Court also dismissed Plaintiffs' unfair and deceptive practices claim, because "misconduct arising from a merger of business entities is not the type of 'regular, day-to-day' business activity that is the principal focus of North Carolina's Unfair and Deceptive Trade Practices Act."

Full Opinion

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