In Fuiaxis v. 111 Huron Street, LLC, 2009 WL 203625 (N.Y. A.D. 2 Dept. 2009) the plaintiff got hoisted on the operating agreement.
Fuiaxis withdrew from an LLC and then brought an action against the LLC and the three remaining members for among other things judicial dissolution. The LLC and the three defendants turned around and made a demand on the plaintiff for $10,000 to defend the litigation and to pay for fines imposed by the City of New York for boiler violations.
The demand was based on paragraph 17 of the operating agreement which permitted the LLC to make a capital call on the members and allowed the membership interest of a defaulting member to be purchased by the other members. The court refused the plaintiff's request that the demand not be enforced because the New York LLC Act authorized such a demand. Ouch!
My thanks to Professor Dan Kleinberger for bringing this case to my attention via the lnet-llc list serve.
-Marc Ward
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