Athenian Forces Defeat Invading Persians at Marathon

Athenian Forces Defeat Invading Persians at Marathon

      Today might be the anniversary of the great battle, fought in 490 b.c. at Marathon, at which the forces of Athens defeated the Persian invasion sent by Darius the Great. The exact date of the battle is subject to controversy, although there is something of an alternative consensus on the 21st.

      At the time of the battle, the Persian Empire extended from the western boundaries of what is today India across the Middle East, Turkey and to Southwest Europe.  Darius had decided that the land we refer to today as Greece, inhabited by a variety of city-states, would be next incorporated into his empire.  The fact that various of the Greek city-states were supporting rebellious territories in what is today Western Turkey and the Mediterranean probably had a big role in that decision.  An invasion fleet landed its troops some twenty-six miles northeast of Athens at the Bay of Marathon.  Working with collaborators in Athens, it was thought that the army could be drawn away and destroyed even as the collaborators led an internal revolt, taking control of the city and making it available to Darius.  It would not turn out that way.

      At news of the landing, Athens sent word to Sparta seeking its assistance, the Spartan hoplite troops being the strongest force in the region.  Famously, the Spartans were unwilling to send their forces in light of an upcoming religious festival. In consequence, Athens would stand alone.  The Athenian army, well smaller than that of the Persian forces, camped facing their enemy for over a week.  On the 8th day, seeing that the Persians were re-embarking some troops onto ships and fearing that they intended to launch a direct assault on Athens, the Greek forces attacked.  Although outnumbered, by skillful flanking maneuvers the Greeks were able to envelop the Persian forces.  While the historical records recite what must be grossly inflated figures, certainly the Persians lost in excess of 6,000 men while the Greeks lost fewer than 200.

Although not recounted in the contemporary historic record, a runner, Pheidippides, took off to announce the victory to Athens.  Just over 26 miles later, he entered the city, announced “nickomen” (“victory”) and dropped dead from exhaustion.  Meanwhile, the balance of the Persian army embarked on their ships and set out from the Bay of Marathon with the intent of directly attacking Athens.  The Athenian army force-marched itself back to the city, manning its walls as the Persian fleet approached.  The Persians decided that another attack was not in their best interest and they withdrew.  

     A decade after Marathon, the Persian forces under Xerces, son of Darius, would again invade Greece.  They would ultimately fall victim to the Spartan and allied forces at Thermopylae, the Greek naval forces at Salamis and again the allied forces at Plataea.

            As for the famous runner bring news of victory, probably not.  The runner to Athens after the Battle of Marathon is not supported in the historic record, and is first recorded in the writings of the Roman Lucian. Lucian lived in the Second Century a.d., so generously there were six hundred thirty years between the Battle of Marathon and Lucian drafting the first report of this event.

Using Contractual Flexibility to Avoid Otherwise (Inappropriate) Fiduciary Obligations

Using Contractual Flexibility to Avoid Otherwise
(Inappropriate) Fiduciary Obligations

         

              A recent decision from the Delaware Court of Chancery highlights the ability of persons drafting unincorporated business entity contracts (partnerships, limited partnerships and LLCs) so as to avoid the application of Delaware's (highly questionable) decision USACafés, L.P. Litigation, 600 A.2d 43 (Del. Ch.), appeal refused sub nom. Wyly v. Mazzafo, 602 A.2d 1082 (Del. 1991). This most recent guidance was delivered in Fannin v. YMTH Land Development, L.P. (In re: United Development Funding III, L.P.), C.A. No. 12541-VCF, 2020 WL 4384230 (Del. Ch. Jul. 31, 2020).

Both this decision and USACafés involved limited partnerships. In USACafés, then-Chancellor Allen of the Delaware Chancery Court held that “directors and controllers of a corporate general partner owed fiduciary duties to the limited partnership and the limited partners.” In that case, when an opportunity was presented that could conceivably have been utilized by the limited partnership, certain principles of the corporate general partner utilized it for themselves. In this instance, the defendants argued that USACafés was incorrectly decided and should be abandoned. The court, however, found that there was no indication that USACafés was clearly wrong and noted its continued citation in both court decisions and the legal scholarship. Note, however, that the parent satisfaction with USACafés is incomplete. For example, Mohsen Manesh has cogently argued that it was incorrectly decided, and is catalog the decisions of numerous other state courts that have not followed. See Mohsen Manesh, The Case Against Fiduciary Entity Veil Piercing, 72 Bus. Law. 61 (Winter 2016-17).

        But all is not lost. Under Delaware law as well as the law of many other jurisdictions, it is possible to disclaim, modify and entirely eliminate fiduciary duties. The Fannin decision points out that this opportunity to use contract reduces the impact of USACafés. Specifically, if it is desired that those in control of the general partner of the limited partnership not owe fiduciary obligations to either the limited partnership as a whole lot to the limited partners either individually or as a class, that can be specified in the controlling agreements. “Controllers may avoid or at least minimize the duty that USACafes recognized by structuring their limited partnership agreements to eliminate fiduciary duties. Delaware limited partnership jurisprudence has long recognized broad license to limit fiduciary duty protections in limited partnership agreements.” Fannin, 2020 WL 4384230, * 18.  In that way the otherwise default application of the principles set forth in USACafés is avoided.

Of course, this means that the application of USACafés continues to exist where the drafters of the controlling agreements are unaware of this option. In those circumstances, those organizing the venture should have done a better job of hiring legal counsel who were up to date with developments in the law. More pernicious is, however, the situation of small ventures that are not in the position to draft bespoke organizational documents; they are not inexpensive. Those smaller, less sophisticated ventures will continue to bear the brunt of USACafés and its arguably invalid core holding.

Professional Eric Chaffee and Liberty University

Professional Eric Chaffee and Liberty University

        Last week, in a story published on Reuters titled How Jerry Falwell Jr. Mixed Personal Finances with His University’s (Sept. 4, 2020), Prof. Eric Chaffee of the University of Toledo Law School, was quoted “These sweetheart land transactions are certainly eyebrow-raising.”

         HERE IS A LINK to that story.

An LLC Is Not a Corporation

An LLC Is Not a Corporation

      

      An LLC is not a partnership, and it is not a corporation. Neither is it a species of either of those business organizational forms. Rather, an LLC is a unique combination of characteristics, some which have precedents in the law of corporations and partnerships and some of which are unique to limited liability companies. There are a significant number of cases addressing the challenge of whether a statute drafted long before the existence of LLCs that references, for example, “corporations” or “partnerships” should be read as including as well LLCs. In a recent decision from Texas, with respect to a particular statute, that question was answered in the negative. D. Webb Industries, LLC v. Permian Equipment Rentals, LLC, 2020 WL 4875879 (Tx. App. - Eastland, Aug. 20, 2020).

      Under Texas law, it is possible to recover attorneys’ fees against corporations and individuals in certain cases as provided for in § 38.001 of the Texas Civil Practice and Remedies code, it being helpfully labeled “Recovery of Attorney’s Fees.” In this instance, an application was made for recovery of attorney's fees against the LLC. The defense was that the statute is restricted to recovery against corporations and individuals, and an LLC is neither.

      Following a long string of prior Texas decisions that have addressed the issue, the court refused to step outside the accepted interpretation of § 38.001, holding that attorney's fees may not be recovered against an LLC in that it is neither a corporation nor an individual.

Choice of Law/Forum and Waiving the Right to a Jury Trial: California Courts Holds That the Former Cannot Do the Latter

Choice of Law/Forum and Waiving the Right to a Jury Trial: California Courts Holds That

the Former Cannot Do the Latter

Business Law Today, a publication of the Section of Business Law of the American Bar Association, has published a short article of mine, Choice of Law/Forum and Waiving the Right to a Jury Trial: California Courts Holds That the Former Cannot Do the Latter.  This article reviews a recent decision of a California court that is yet another cog in the disfunctional machine that is the relationship of the business law of Delaware (and by implication of every other state) and California.  In this case the plaintiff was a member of a Delaware LLC.  When he sued the LLC he claimed that he should not be required to litigate in the Delaware Chancery Court, which does not have juries, because under the California Constitution he has a right to a jury trial.

How the Delaware court will respond awaits to be seen.

            HERE IS A LINK to the article.

Different Forms Have Different Rules

Different Forms Have Different Rules

        While often times business organization forms such as the limited liability company, the corporation, the partnership and the limited partnership are lumped together as being only slightly different shades of gray, in fact they are distinct bodies of law all with their own rules. In a recent posting on the New York Business Divorce Blog, Franklin C. McRoberts has reviewed the New York law governing LLCs, corporations, partnerships and limited partnerships from the perspective of what obligations may or may not be set forth in an oral/course of conduct versus a written agreement. In that posting, he identifies a number of important points. Now, that may be the law for New York, but every state is going to have similar disparate limitations across entity acts, and they need to be recognized.

      The title of that posting is Enforceability of Oral Operating, Shareholder, and Partnership Agreements, posted August 24, 2020. HERE IS ALINK to that piece.

And So Begin the Middle Ages

And So Begin the Middle Ages

        By a certain measure, today marks the anniversary of the date in 476 from which the “Middle Ages” may be dated. On this day, the last emperor of the Western Roman Empire, Romulus Augustus, who was in his mid-teens and was completely controlled by his father, Orestes, the Magister Militum of the Roman military, was deposed by Odoacer. Orestes had little standing to complain about the over-throw of his son's reign - Orestes had revolted against the prior emperor and put his son on the imperial throne. Odoacer did not bother asserting that he was another Roman emperor; he was to be simply the King of the territories under his control.

        With Romulus' resignation the imperial regalia was packed up and shipped off to Byzantium. With this event, the Western Roman Empire ceased to exist, its fragments now under control of various “barbarian” tribes.

             The “eastern” Roman Empire centered at Constantinople (Byzantium) would survive another millennium until it fell to the Ottoman Turks in 1453.