In Goggin, a member of the East Coast Miner LLC (ECM) filed an action against the director of ECM and his employees to challenge several allegedly self-negotiated transactions. The Claimant asserted, among other things, that the manager of ECM had ensured that ECM`s partial ownership of certain assets was redirected to various companies that the director and his employees owned and controlled. The assets at issue were subject to a right of pledge held by ECM against an insolvent company. Under the right of pledge, ECM had the right to credit the offer on the secured assets at a bankruptcy auction. The claimant asserted that the Managing Director of ECM had induced the Insolvency Court to transfer the assets to a consortium of undertakings whose members, with the exception of ECM, would be in the possession and control of the ecm manager and its employees. The claimant brought a number of claims against the ECM manager, including for breach of ECM`s LLC agreement and breach of the trust obligation. An attempt should be made to eliminate ambiguities arising from the relationship between the provisions. Any ambiguity in the design of an alternative entity that governs the contract may not only lead to future disputes between the parties, but also open the door to a possible appeal by the Court to the implied agreement in good faith. A frequent source of ambiguity is the interaction between the various fiduciary duty disclaimer provisions, a general trust and faith standard, exculpations and indemnification provisions, and conflicting transaction provisions.
It is appropriate to adopt provisions of the state of the art which clearly and unambiguously reflect the intentions of the parties and take into account recent judicial declarations relating to such provisions. the obligations of LLC directors are most limited when the LLC enterprise agreement explicitly expresses all fiduciary duties; declares that any standard of good faith is limited to subjective good faith or good faith only if necessary within the framework of the implicit pact of good faith and fair trade; excludes from exoneration or compensation only acts that have not been carried out in accordance with the standards of good faith established in the Agreement; and provides clear safe havens for adversarial transactions, with consistent presumptions of good faith for expert dependency or approval of a conflict committee (with a subjective standard of good faith for the Committee`s decision and without any qualification with respect to expert dependence). risk of ambiguity due to the interdependence of the provisions. LLC agreements often contain a disclaimer for fiduciary duties, a general standard of trust and subjective faith for directors, exoneration for directors other than for acts of bad faith, a consistent presumption of trust and faith for acts committed in trust with experts (for example. B confidence in an opinion of fairness) and safe harbor provisions (a conclusive presumption of trust and faith with respect to experts) transactions of personal interest if approved by a conflict committee). If the Tribunal found that an LLC agreement was not clear or ambiguous, this is most often due to a lack of clarity as to the interaction between these different provisions with respect to directors` obligations. . . .