Dissatisfied Members in Florida LLCs: Remedies

30 Pages Posted: 25 Sep 2018 Last revised: 1 Feb 2019

See all articles by Donald J. Weidner

Donald J. Weidner

Florida State University College of Law

Date Written: September 24, 2018

Abstract

Florida’s 2013 LLC Act locks in members of Florida LLCs to an unprecedented extent by removing the statutory right of members to be bought out. This article begins with a review of the challenges that dissatisfied members will face should they seek relief in court, including the objection that their claims are derivative, rather than direct, and that they have not met the statutory requirements to expel problematic members or dissolve the firm. Florida courts can respond to the difficult plight of members in closely-held LLCs in two basic ways. First, they can recognize that there is no reason in policy to mechanically apply to closely-held LLCs the derivative lawsuit doctrine that has developed either in the context of corporations or in the context of limited partnerships with investors who knew from the outset that they would be locked in to investments over which they had no control. They can join other courts that have recognized direct actions in the case of closely-held LLCs when to do so would not expose the LLC or its members to a multiplicity of suits, result in an unfair advantage over other members, or jeopardize the expectations of creditors. They can point to the comprehensive direct action provision of the 2013 LLC Act, which suggests a simple, single requirement for a direct action, and reflects the desirability of greater uniformity among the states. Second, they can grant dissolution, or lesser remedies such as a buyout, when members are being oppressed in any one of a number of well-recognized ways. These two steps should grant some relief, at least in the case of closely-held LLCs, from the imposition of a corporate model the members probably never anticipated.

Suggested Citation

Weidner, Donald J., Dissatisfied Members in Florida LLCs: Remedies (September 24, 2018). 18 Florida State University Business Review 1 (2019, Forthcoming); FSU College of Law, Public Law Research Paper No. 894; FSU College of Law, Law, Business & Economics Paper No. 18-11. Available at SSRN: https://ssrn.com/abstract=3254537

Donald J. Weidner (Contact Author)

Florida State University College of Law ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States
850-644-4834 (Phone)
850-644-7527 (Fax)

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