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Auriga Capital Corp. v. Gatz Properties, LLC, is an iconic opinion from the Delaware Court of Chancery that was issued on Jan. 27, 2012 and highlighted on these pages here. This decision is momentous because it explains why fiduciary duties will apply by default to managers and controlling members of LLCs unless those duties are expressly waived in the LLC's operating agreement.
On Feb. 23, 2012, the Court issued a post-trial Order granting attorneys' fees to the prevailing Plaintiffs in the amount of over $660,000. As explained in the Court's opinion, the award was due, in part, to errant litigation tactics. The Court, in its opinion last month, awarded Plaintiffs "one-half" of their reasonable attorneys' fees. The post-trial, procedurally indecorous manner in which the exact amount of fees was determined might serve as a cautionary tale, or a "teaching moment" for those who seek to object to the amount of fees awarded pursuant to the decision of the Court of Chancery to award "reasonable" fees in an amount to be determined. See, e.g., the last post-trial letter to the Court from Plaintiffs' counsel, just prior to the Court's ruling on fees.
(The Court's opinion from last month must be noteworthy, if only because former Chancellor William Chandler, now with the Wilson Sonsini firm, also made time along with his new colleague Ryan McLeod, to summarize the case in a post available here.) The author of the Auriga opinion recently succeeded Chancellor Chandler as the current Chancellor for the Court of Chancery.
Please click here to read the entire post.
Read more Delaware business litigation case summaries and commentary on Delaware Corporate and Commercial Litigation Blog, a blog hosted by Francis G.X. Pileggi, of Eckert Seamans.
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