Managing member of limited liability company owed fiduciary duty to other members

Following a bench trial, John Meyer appealed a judgment of $205,982.55 plus court costs entered against him in favor of Lynn Schieve. Schieve claimed Meyer, as acting manager of the Carroll Meyer Family Limited Liability Company, breached his fiduciary duty to the LLC members by taking the LLC’s money for his personal use and failed to issue distributions required by the LLC’s operating agreement. The Missouri Court of Appeals-Western District affirmed the judgment.

When a breach of fiduciary duty is asserted in a tort, the plaintiff must establish that (1) a fiduciary duty existed between it and the defendant, (2) the defendant breached the fiduciary duty, and (3) the defendant’s breach of duty caused the plaintiff to experience harm. § 347.088.3 of the Revised Statutes of Missouri codifies a Missouri LLC’s duty of loyalty and prohibits its manager from self-dealings.

The operating agreement would only shield Meyer from liability if he acted in good faith. Since he did not, he was not shielded from liability. Meyer argued the trial court misapplied the law in granting Schieve attorneys’ fees. However, since Schieve was the prevailing party in the suit, she was entitled to attorneys’ fees under § 9.15 of the LLC’s operating agreement, and the trial court was required to award them.

Schieve v. Meyer, 2021 WL 2197406 (Mo. App. W.D. 2021)

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