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Katris v. Carroll - 362 Ill. App. 3d 1140, 299 Ill. Dec. 482, 842 N.E.2d 221 (2005)

Rule:

805 Ill. Comp. Stat. Ann. 180/15-3(g)(3) (2002) imposes fiduciary duties only on a member of a manager-managed limited liability company who exercises some or all of the authority of a manager pursuant to the operating agreement.

Facts:

Plaintiff-appellant Katris, who was a limited liability company manager acting individually and in a derivative capacity on behalf of the limited liability company, asserted a cause of action for collusion against defendants-appelees manager Carroll and Ernst & Company. The limited liability company manager contended that the manager and company colluded with a member of the limited liability company in the member's breach of his fiduciary duties owed to the limited liability company manager and the limited liability company. The trial court granted summary judgment in favor of defendants manager and the company, finding that the member did not owe the limited liability company or plaintiff limited liability company manager any fiduciary duty. Katris sought review.

Issue:

Did the member owe a fiduciary duty to the limited liability company or to the limited liability company manager?

Answer:

No

Conclusion:

The appellate court affirmed the trial court's judgment. It found that in order for the member to have owed a fiduciary duty to the limited liability company or the limited liability company manager, the member would have had to have exercised managerial authority pursuant to the relevant limited liability company operating agreement and the undisputed facts showed that the member did not do so. Thus, the member did not owe a fiduciary duty to the limited liability company or the limited liability company manager.

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