Legal Question in Civil Litigation in California
Breach of an operating agreement
2 of 3 members of our LLC (operating managers) resigned as managers and started up another company with another investor, using all of our existing customer/vendor information and directly competing against us (while still active members). This is in direct breach of the O/A. We are now moving toward dissolution or a buyout, trying to keep the company going and receiving accounts receivable. Is there ANY repercussion to them for the breach and direct competition, which is underscoring and sabotaging our efforts?
4 Answers from Attorneys
Re: Breach of an operating agreement
You may be able to try a violation of TRADE SECRETS suit and seek an injunction. Contact me directly.
Re: Breach of an operating agreement
Maybe, but how much depends on the amount of damages you and or the LLC have suffered. If you have lost a lot of money and business that may be worth going after while very little or unprovable damages may not. However, you will not know what your damages are until you consult an attorney. Contact me if you want help.
Best,
Daniel Bakondi Esq.
IMPORTANT:
No attorney-client nor confidential relationship is created through this communication. You may not rely in any way on this communication, and nothing herein constitutes legal advice nor legal opinion. Your issue may be time sensitive and may result in loss of rights if you do not obtain an attorney immediately.
Re: Breach of an operating agreement
The short answer is YES. Breach of contract, breach of fiduciary duties, unfair competition, misappropriation of trade secrets, etc. You can sue both on behalf of yourselves and on behalf of the LLC. You may be able to get immediate injunctive relief (i.e. an order for them to stop what they are doing); however, the burden of proof will have some challenges in addition to asking for damages, including treble damages for the trade secret claim. I have been involved with similar cases previously. Of course, it is impossible to give you specific advise without seeing the documents and talking to you about what they have done specifically, but it appears that you have legal remedies available. Another pertinent part of the analysis would be whether a negotiated dissolution or buyout is the best strategy economically or whether a lawsuit is necessary.
Re: Breach of an operating agreement
Well...
You may have grounds for a suit against them and the new company on several theories, and you could seek a restraining order against them at the same time. Don't delay consulting with local counsel about this.
Related Questions & Answers
Looking for something else?
10,200 active attorneys ready to answer your legal questions today.
Featured Attorneys
Earn additional revenue and grow your business.
