This blog, written by Thomas E. Rutledge, focuses primarily on business entity law in Kentucky. Postings on contract law, contractual and statutory construction, and the entity law of other jurisdictions appear as well. There may as well be some random discussions of classical, medieval and renaissance history.
Today is the anniversary of the Battle of
Bosworth, the final major battle of that English civil war titled The War of
the Roses (this conflict was at the time sometimes referred to as the Cousin’s
War).It was at this battle that King
Richard III, variously identified as the last King from the House of
Plantagenet or the House of York, was killed. He was the last English King to
die in battle.Henry Tudor, the victor
at Bosworth, then became King Henry VII.
Henry’s victory in battle was if anything
surprising.Richard’s forces outnumbered
those of Henry.Meanwhile, Lord Stanley
(William Stanley) held back his own force; if combined with that of Henry, that
of Richard would have been out-numbered.Conversely, if Stanley joined with Richard, the weight of the forces
arrayed against Henry would have been overwhelming.Richard held Stanley’s son as a hostage.As battle was about to commence, Richard sent
word to Stanley that if Stanley did not join with him, he would execute
Stanley’s son.Stanley replied, “I have
other sons.”Stanley’s brother Thomas
was married to Margaret Beaufort, mother of Henry Tudor.
To provide but a taste as to why this
conflict was referred to as the Cousins War, consider that William Stanley was
the brother of Thomas Stanley, husband of Margaret Beaufort, she being the
mother of Henry Tudor.Ergo, William Stanley
was the brother-in-law to Henry’s mother.Thomas Stanley had previously been married to Eleanor Neville, sister to
Warwick the Kingmaker and aunt to Richard III’s recently deceased wife Anne
Neville. That wife was a daughter of Warwick.
Richard’s attack upon Henry’s position
standard-bearer William Brandon was killed at Henry’s side.Polydore Virgil, a contemporary
historian/chronicler, recorded that Richard fought well.However, Richard’s fate was sealed when the William
Stanley and his troops, having until then not committed to either side, rode
against Richard’s infantry as his cavalry was separately moving against Henry.
Thomas Stanley would place the coronet (crown) of Richard III on Henry Tudor’s
William Brandon’s son Charles, ultimately
Duke of Suffolk, would become the best friend of Henry VIII.
In 2012, Richard’s remains were located
in the course of excavations under a parking lot that now covers part of what
was the Blackfriars (Dominican) Church in Leicester, England; early 2013 saw
the announcement that testing had confirmed the remains were those of
Richard.In sad testimony to the modern
age, litigation ensued as to whether Richard should be re-buried in Leicester
Cathedral, apparently consistent with the terms of the agreement by which the
archaeological work was performed and other British law, or in York where
certain claimed descendants of Richard assert he would want to have been
buried.That question was resolved in
favor of Leicester, and in 2016 Richard III was laid to rest in Leicester
Notwithstanding Polydore Virgil’s
positive comments as to Richard III, in proof of the adage that the winners
write the history, his reputation was besmirched by various Tudor affiliates
such as St. Thomas More and William Shakespeare.He is currently being reassessed by
historians who are not so indebted to supporting the legitimacy of the House of
In a recent decision from Kansas, there was
considered and rejected the suggestion that the attorney for an LLC was as well
an attorney for each of its members. Green
v. Blake, 2019 WL 3776009 (D. Kan. Aug. 12, 2019).
Green, Blake and Leonard were all members in an
LLC organized in Oregon, 63rd St., Enterprises, LLC. Green filed suit against
the Blake and Leonard asserting claims including fraudulent misrepresentation
with respect to his having joined the LLC as a member. Green, in bringing that
suit, utilized the services of Laner, an attorney who it was asserted had
previously advised Blake and Leonard with respect to the LLC. On that basis,
they sought his disqualification from the matter.
The court rejected that suggestion. Rather, it
found that to the extent Laner had been involved with the LLC, it had been as
counsel to the LLC and not the individual members. In addition, they could not
bring forth evidence of particularized communications and representation with
respect to the LLC. Falling back on the Kansas adoption of Rule 1.13 and the
principle that the attorney for the organization is not as well the attorney
for the constituent members, the motion to disqualify Laner as plaintiff’s
counsel was denied.
A decision rendered last December in Louisiana
highlights that the member of an LLC is not a party to the agreements that the
LLC enters into. DeJohn v. Delta Faucet
Company, Civil Action No. 18-13410, 2018 WL 6725393 (E.D. La. Dec. 21, 2018).
Woolf-Harris, LLC had a contract with Delta
Faucets to serve as its representative in Louisiana, Mississippi and Western
Tennessee, a relationship that dated back to 1975. DeJohn purchased
Woolf-Harris in September, 2016. DeJohn would allege that, before he made that
purchase, a representative of Delta “promised him, ‘outside of and in addition
to any agreement Delta had with Woolf-Harris generally,’ that Delta would not
terminate its contract with Woolf-Harris if DeJohn remained the owner and
Woolf-Harris maintained its level of performance.” Te written agreement betweek
Woolf-Harris and Delta provided that either party could terminate it at any
time with or without cause and as well contained an integration clause. In
September, 2018, two years after Dejohn had completed his purchase of Woolf-Harris,
Delta gave notice that it was terminating the sales representative agreement
effective December 31 of that year. DeJohn filed this action seeking injunctive
relief precluding Delta from effecting that termination, arguing “detrimental reliance”
upon Delta’s alleged agreement that the agreement would not be terminated.
In light of the court having already quoted the
termination clause and the merger clause, the reader could reasonably have been
expecting a discourse on the inability of a later oral statement to modify a
written agreement and the relationship of merger clauses to subsequent oral
statements. However, in fact the court would go in a different direction, namely
that of standing.
Essentially, DeJohn could not make his claims
for detrimental reliance with respect to a contract to which he was not a
party. The court wrote:
not have standing to pursue injunctive relief relating to the dissolution of
the contract. Because the personalty of a [LLC] is distinct from its members,
the principle of such a company cannot assert rights on the company’s behalf.
his individual capacity, seeks injunctive relief preventing Delta from
terminating a contract with a third-party, Woolf-Harris. DeJohn is not a party
to the contract in his individual capacity and Woolf-Harris is not a party to
this litigation, which does not involve a claim for breach of the contract. DeJohn
cannot bootstrap the personal harm he might face as a result of the termination
into standing to seek relief that clearly belongs to Woolf-Harris. Therefore, DeJohn
lacked standing to assert claims for injunctive relief that would affect the
rights of the parties to the contract. Id.,
** 2-3 (citations omitted).
The opinion does not explain why Woolf-Harris
was not a party to this particular action. In footnote 8 to the opinion, is
recited that Delta had brought a suit against Woolf-Harris in Indiana seeking a
determination that it's termination of the agreement was proper.
Professor Daniel S. Kleinberger is the 2019
Recipient of the Martin I. Lubaroff Award
The votes have been counted, and the
overwhelming view of the Committee is that the recipient of the 2019 Martin I.
Lubaroff Award will be Professor Daniel S. Kleinberger.
While it is almost inconceivable that anyone
reading this message would not be already familiar with Dan’s numerous
contributions to our shared field of unincorporated entity law, here are a few
of a multi-volume treatise on LLCs;
on the Revised Uniform Limited Liability Company Act (2006);
on the Revised Uniform Limited Partnership Act (2001);
on the Uniform Protected Series Acts
& Explanations: Agency Partnerships & LLC;
Author of innumerable law review articles; and
The source of the category “the bare naked assignee.”
been a contributor to our Committee in numerous other ways including organizing
programs and participating in our webinars.
Martin I. Lubaroff Award will be presented to Dan at the 2019 LLC Institute. In
the meantime, please feel free to send him your congratulations.
About the Martin I. Lubaroff Award
The Martin I. Lubaroff Award recognizes a nationally
regarded business attorney and member of the ABA Business Law Section’s
Committee on LLCs, Partnerships and Unincorporated Entities who has
consistently demonstrated leadership, scholarship and outstanding service in
business entity law.The award was
established in 2001 in honor of the memory of Marty Lubaroff, a well-known and
highly regarded Delaware attorney who made substantial contributions to the
field of partnerships and unincorporated entities.He was a distinguished lecturer, writer and
Last year, California passed a statute requiring, for any public
corporation either incorporated or having its principal place of business in
California, that it have on its Board of Directors a minimum number of women.
That minimum number is set on a sliding scale based upon the total number of
directors. HERE IS A LINK to my earlier posting on that statute.
The legislative review of the statute indicated that there was a
significant risk of litigation, Then Governor Brown, when signing the legislation,
noted that “serious legal concerns have been raised” with respect to its requirements.
He also noted that “I don’t minimize the potential flaws that indeed may prove
fatal to its ultimate implementation.”
Those observations have turned out to be prophetic; suit has been
filed in California challenging are their requirements. The complaint asserts
that “the legislation’s quota system for female representation on corporate
boards employees express gender classifications. As a result, SP 826 is immediately suspect and presumptively invalid
and triggers strict scrutiny review.“
In Wedding v. First National Bank, Inc. of
Chicago, 133 S.W.2d 931 (Ky. 1939), the Kentucky Court of Appeals (then the
highest court of Kentucky), in discussing whether a promissory note was
“The note is quite long, covering almost four single spaced
In a decision rendered in June, the Delaware
Court of Chancery had opportunity to apply an attorney fee provision of an
operating agreement. In this instance, consequent to the provision’s expansive
language and the plaintiff’s limited recovery, the plaintiff was required to
cover the LLC’s attorney fees. Durham v.
Grapetree, LLC, 2019 WL 2337475 (Del. Ch. June 4, 2019).
Grapetree, LLC held a single asset, a rental
property on the island of St. Lucia. The LLC had five siblings as the members;
four of those siblings served as well as member-managers. The plaintiff was the
only member who was not as well a manager. That member sought to inspect company
books and records under section 18-305 of the Delaware LLC Act. Vice Chancellor
Glasscock granted in part and denied in part that request. In that order, the
plaintiff was granted limited relief; six of his 32 claims for documents were
In reliance upon the operating agreement, the
LLC sought its attorney’s fees. Specifically, the operating agreement at issue
provided in part that if any member brought an action against the company and
that member “does not obtain a judgment on the merits that substantially
achieves, in substance and amount, the full remedy sought, the Claiming Member [i.e.,
the plaintiff] shall be obligated to reimburse the Company … for all fees, costs
and expense” incurred by the company. Id.,
On the facts, Vice Chancellor Glasscock found
that the operating agreement was unambiguous and explicit as to the point.
While the plaintiff had been successful on certain of his demands, most were
denied “as unnecessary to a proper purpose.” Id., *4. On that basis, applying this particular operating
agreement, it was held that of the LLC was entitled to its reasonable attorneys’
fees and expenses.
The Vice Chancellor rejected the suggestion that as the plaintiff was
proceeding pro se, that should militate the fee shifting. Rather, that was the
plaintiff’s decision, and should not reduce his exposure for the LLC’s costs