Plaintiff Lola owned 51% of an LLC with Defendant Krohn owning the remaining 49%. However, they agreed to equal representation on the LLC’s board. Lola asserted breach of the LLC’s operating agreement and the implied covenant of good faith by Krohn and also alleged breach of fiduciary duty of loyalty and care, including mismanagement, by Krohn’s designee to the LLC’s board. In its first complaint, Lola sought to dissolve the LLC and have a receiver appointed and also damages for its breach of contract and fiduciary duty claims. Lola sought in a second complaint to invoke a termination clause in the LLC agreement and injunctive relief. The Court denied Defendants’ motion to dismiss the first complaint but granted the motion as to the second complaint without prejudice finding the claim premature. In doing so, the Court found that demand with respect to Plaintiff’s derivative claims was excused because the LLC had a two member board with equal voting power and the defendant director faced a substantial risk of liability.
