{"id":493,"date":"2010-06-03T04:41:57","date_gmt":"2010-06-03T04:41:57","guid":{"rendered":"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/"},"modified":"2010-06-03T04:41:57","modified_gmt":"2010-06-03T04:41:57","slug":"fiduciary-duties-2","status":"publish","type":"post","link":"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/","title":{"rendered":"Management of LLCs By Non-Members"},"content":{"rendered":"<p style=\"text-align: justify;\">In <em><strong>Internal Medicine Alliance, LLC v. Budell<\/strong><\/em>, 290 Ga. App. 231 (2008), two physicians, Budell and Verbitsky agreed to create a medical practice together.\u00a0 They\u00a0formed a new company, Internal Medicine Alliance, LLC, through which to run the business.\u00a0 Although IMA\u2019s Articles of Incorporation provided that the company was to be a manager-managed LLC, as opposed to member managed, those articles did not specify who the manager was to be; nor did Budell and Verbitsky enter into an Operating Agreement.\u00a0 The physicians\u00a0did agree, however, that each would own 50% of that business and\u00a0they would share profits equally.<\/p>\n<p style=\"text-align: justify;\">IMA signed a lease and both Budell and Verbitsky\u00a0personally guaranteed the $70,000 in buildout expenses incurred by the landlord.\u00a0 Budell made an equity capital contribution to IMA of $70,199.\u00a0 For her part, Verbitsky contributed $70,000.\u00a0 Within weeks of getting the practice up and running, Verbitsky\u2019s husband injected\u00a0himself into the operations of the business and insisted on becoming a member of IMA.\u00a0 When Budell objected, Verbitsky\u2019s husband threatened him with violence.\u00a0 Shortly thereafter, Budell left IMA to start his own practice.<\/p>\n<p style=\"text-align: justify;\">In an effort to unwind their business relationship, Budell and Verbitsky agreed that Verbitsky would run IMA until\u00a0the end of the year, at which point Verbitsky would buy Budell out.\u00a0 When the end of the year came, however, Budell and Verbitsky\u00a0could not agree on a price.<\/p>\n<p style=\"text-align: justify;\">Using profits from the operations of IMA, Verbitsky\u00a0reimbursed herself the $70,000 invested at the outset of the business.\u00a0 However, she refused\u00a0to return\u00a0Budell $70,199 initial capital contruction.\u00a0 Verbitsky\u00a0also \u00a0refused to make further distributions to Budell, instead merely\u00a0retaining\u00a0all of IMA&#8217;s revenues for herself.\u00a0 Finally, Verbitsky made no\u00a0attempt to collect on the IMA receivables associated with Budell\u2019s patients.<\/p>\n<p style=\"text-align: justify;\">Budell filed suit for breach of contract and breach of fiduciary duty, among other claims.\u00a0 The Court found that Verbitsky had breached her agreement with Budell by not paying him his\u00a0share of the value of the business and awarded Budell $141,000, which his expert testified was the value.<\/p>\n<p style=\"text-align: justify;\">As for Budell\u2019s breach of fiduciary duty claim, Verbitsky argued that she owed no duty because it was not\u00a0Verbitsky, but her husband, who served as IMA\u2019s manager.\u00a0 The Court rejected this argument on the grounds that an LLC can only be managed by a non-member where more than half of the members have agreed to that manager\u2019s appointment. \u00a0Because Budell never agreed to the appointment of Verbitsky\u2019s husband as manager, and because Verbitsky remained as IMA\u2019s\u00a0sole remaining active member, the Court concluded that Verbitsky was effectively IMA\u2019s manager.\u00a0 As such, the Court found that Verbitsky owed, and breached, her fiduciary duty to act with the utmost good faith and loyalty toward the best interest of IMA.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In Internal Medicine Alliance, LLC v. Budell, 290 Ga. App. 231 (2008), two physicians, Budell and Verbitsky agreed to create a medical practice together.\u00a0 They\u00a0formed a new company, Internal Medicine Alliance, LLC, through which to run the business.\u00a0 Although IMA\u2019s Articles of Incorporation provided that the company was to be a manager-managed LLC, as opposed [&hellip;]<\/p>\n","protected":false},"author":21,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_mo_disable_npp":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4,8],"tags":[40,18,27,33,34,23,43,44],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Management of LLCs By Non-Members - Berman Fink Van Horn P.C.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Management of LLCs By Non-Members - Berman Fink Van Horn P.C.\" \/>\n<meta property=\"og:description\" content=\"In Internal Medicine Alliance, LLC v. Budell, 290 Ga. App. 231 (2008), two physicians, Budell and Verbitsky agreed to create a medical practice together.\u00a0 They\u00a0formed a new company, Internal Medicine Alliance, LLC, through which to run the business.\u00a0 Although IMA\u2019s Articles of Incorporation provided that the company was to be a manager-managed LLC, as opposed [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/\" \/>\n<meta property=\"og:site_name\" content=\"Berman Fink Van Horn P.C.\" \/>\n<meta property=\"article:published_time\" content=\"2010-06-03T04:41:57+00:00\" \/>\n<meta name=\"author\" content=\"William Piercy\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"William Piercy\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/\",\"url\":\"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/\",\"name\":\"Management of LLCs By Non-Members - Berman Fink Van Horn P.C.\",\"isPartOf\":{\"@id\":\"https:\/\/www.bfvlaw.com\/#website\"},\"datePublished\":\"2010-06-03T04:41:57+00:00\",\"dateModified\":\"2010-06-03T04:41:57+00:00\",\"author\":{\"@id\":\"https:\/\/www.bfvlaw.com\/#\/schema\/person\/1948d1b4ae45b0684d6f37e0f5c35649\"},\"breadcrumb\":{\"@id\":\"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.bfvlaw.com\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Management of LLCs By Non-Members\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.bfvlaw.com\/#website\",\"url\":\"https:\/\/www.bfvlaw.com\/\",\"name\":\"Berman Fink Van Horn P.C.\",\"description\":\"A Business Law Firm In Atlanta\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.bfvlaw.com\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.bfvlaw.com\/#\/schema\/person\/1948d1b4ae45b0684d6f37e0f5c35649\",\"name\":\"William Piercy\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.bfvlaw.com\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g\",\"caption\":\"William Piercy\"},\"url\":\"https:\/\/www.bfvlaw.com\/author\/william-piercy\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Management of LLCs By Non-Members - Berman Fink Van Horn P.C.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/","og_locale":"en_US","og_type":"article","og_title":"Management of LLCs By Non-Members - Berman Fink Van Horn P.C.","og_description":"In Internal Medicine Alliance, LLC v. Budell, 290 Ga. App. 231 (2008), two physicians, Budell and Verbitsky agreed to create a medical practice together.\u00a0 They\u00a0formed a new company, Internal Medicine Alliance, LLC, through which to run the business.\u00a0 Although IMA\u2019s Articles of Incorporation provided that the company was to be a manager-managed LLC, as opposed [&hellip;]","og_url":"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/","og_site_name":"Berman Fink Van Horn P.C.","article_published_time":"2010-06-03T04:41:57+00:00","author":"William Piercy","twitter_card":"summary_large_image","twitter_misc":{"Written by":"William Piercy","Est. reading time":"2 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/","url":"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/","name":"Management of LLCs By Non-Members - Berman Fink Van Horn P.C.","isPartOf":{"@id":"https:\/\/www.bfvlaw.com\/#website"},"datePublished":"2010-06-03T04:41:57+00:00","dateModified":"2010-06-03T04:41:57+00:00","author":{"@id":"https:\/\/www.bfvlaw.com\/#\/schema\/person\/1948d1b4ae45b0684d6f37e0f5c35649"},"breadcrumb":{"@id":"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.bfvlaw.com\/fiduciary-duties-2\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.bfvlaw.com\/"},{"@type":"ListItem","position":2,"name":"Management of LLCs By Non-Members"}]},{"@type":"WebSite","@id":"https:\/\/www.bfvlaw.com\/#website","url":"https:\/\/www.bfvlaw.com\/","name":"Berman Fink Van Horn P.C.","description":"A Business Law Firm In Atlanta","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.bfvlaw.com\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.bfvlaw.com\/#\/schema\/person\/1948d1b4ae45b0684d6f37e0f5c35649","name":"William Piercy","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.bfvlaw.com\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g","caption":"William Piercy"},"url":"https:\/\/www.bfvlaw.com\/author\/william-piercy\/"}]}},"_links":{"self":[{"href":"https:\/\/www.bfvlaw.com\/wp-json\/wp\/v2\/posts\/493"}],"collection":[{"href":"https:\/\/www.bfvlaw.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bfvlaw.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bfvlaw.com\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bfvlaw.com\/wp-json\/wp\/v2\/comments?post=493"}],"version-history":[{"count":0,"href":"https:\/\/www.bfvlaw.com\/wp-json\/wp\/v2\/posts\/493\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.bfvlaw.com\/wp-json\/wp\/v2\/media?parent=493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bfvlaw.com\/wp-json\/wp\/v2\/categories?post=493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bfvlaw.com\/wp-json\/wp\/v2\/tags?post=493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}