Legal Question in Business Law in Arizona

My sister and I started an LLC in arizona to open up a book store. 6 months into it she walked out next thing I knew she was filing with the state to remove her name off the LLC, She not only left me with the burden of having to put all the rest of my money into the business to keep it running but she turned around and opened a business of her own. Now 8 months after she had her name removed she is demanding all the money she put into the business. She put 80K in and I have now had to put in 180K. I was not planning on having to put all that in as I had her promise to contribute half. I am not in the position financially to just give her 80K and have had many losses and added expences due to her abandonment. Not to mention the fact that the business is not yet showing a profit. What am I leagally obligated to pay her.


Asked on 2/12/10, 6:47 pm

1 Answer from Attorneys
Donald Scher Donald T. Scher & Associates, P.C.

I do not know that you are obligated to pay her anything. I do not know what she filed with the state to remove her name from the LLC, but that does not relieve her of her legal and fiduciary duties to the LLC and the other member. You have not given enough facts to give any specific answer, however, it is clear to me that an argument can be made that she had no right to start a competing business without properly (legally) withdrawing from the LLC. You have not stated that you and she made an operating agreement, so state law would apply to determine what are your respective rights, duties and obligations. You should consult with legal counsel to learn about your rights and her rights at this junction.

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Answered on 2/17/10, 7:25 pm


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