BUSINESS LAW 6: Membership dispute in a LLC.

This case arises out of a joint business venture between cousins. The LLC was formed in 2015. Originally, plaintiff and defendant were going to share a 50/50 ownership interest, but because defendant alleged that she needed a majority ownership in order to satisfy her visa requirements, the operating agreement provided for a 51% to 49% ownership interest for defendant and plaintiff, respectively. The retail outlet was opened in October of the same year. At some point, a Jeep became a business asset of the LLC.

Up until the underlying dispute, defendant had been managing the store and plaintiff had been involved behind the scenes by handling payroll and other administrative tasks, including making changes to the website that maintained the business’s clothing inventory. At some point around January of 2016, the relationship between the parties deteriorated.

Plaintiff filed a motion for a preliminary injunction alleging that defendant had unilaterally: (1) locked plaintiff out of all of the LLC’s social media accounts and computer equipment, (2) removed the business’s alarm system, such that plaintiff was prevented from detecting when she was onsite, (3) refused to communicate with plaintiff, (4) paid employees under the table without withholding taxes, (5) prevented plaintiff’s access to company books and records, (6) changed the resident agent from plaintiff to herself, (7) updated the articles of organization to indicate that the business was now managed by the manager, (8) drove, and continued to drive, the Jeep that is titled in the company’s name, and (9) made decisions to pay for her personal matters with company funds.

The trial court granted plaintiff’s motion and ordered that (1) plaintiff be given access to all business, financial, and online accounts, (2) plaintiff receive keys, and have access, to the retail location, (3) neither party act in a harassing manner towards each other or other employees, and (4) defendant file a certificate of correction with the state regarding the improper amendment to the articles of organization.

The trial court recognized that defendant had made the decision to exclude plaintiff from the business. Supporting this premise, the trial court heard evidence that defendant changed the locks, prevented his access to financial and social media accounts, altered the articles of organization to give her management control, and unilaterally decided to close the store. Additionally, the testimony demonstrated that defendant, to some extent, was attempting to open the same type of business, under a similar name, and in potentially the same location.

Based on the testimony, the trial court ordered the dissolution and liquidation of the assets of the LLC. The trial court also directed the LLC, to make a distribution to plaintiff, which represented the 49% share owed to him to compensate for defendant’s distribution.

From our law firm in Plymouth, Michigan, Aldrich Legal Services represent business owners throughout Wayne County and the surrounding region who need help with partnership and membership disputes.

 Our founder, Brad Aldrich, has litigated thousands of cases throughout his more than 20 years of practicing law. If litigation is necessary, he can put his trial experience to work for you. He also has the knowledge you need to resolve disputes without litigation. This is just one of the many ways that Aldrich Legal Services builds relationships with clients for life.

Contact Aldrich Legal Services

Top 3 Misconceptions on Power of Attorney

Considering leaving the country for a long time while maintaining a business or selling a home in the US? Were you recently diagnosed with a terminal or degenerative disease? For these and many other issues, it may become necessary for someone...

FAMILY LAW 29: Quitclaim deed signed after prenuptial agreement prevails.

The court ruled that title to the land prevails and that once the deed was signed, the property became the undivided whole interest for both the decedent and appellee and became appellee’s property upon the decedent’s death. Consequently, the court concluded that the prenuptial agreement did not have any impact on the property rights of appellee in this case.

Know the Differences between Annulment and Divorce

  Marriage can end through two ways: divorce and annulment. Though both of these options have the same result, each has different requirements. There are many similarities and differences between a divorce and an annulment, so many...

Understanding Vaping Laws for Minors

  Vaping is a fad that is quickly solidifying into a stable industry of products around the world. Vaping and electronic cigarette (or e-cigarette) use have dramatically increased from roughly “seven million [users] in 2011 to 35...

Michigans New Marijuana Laws

The 2018 ballot initiative titled “the Michigan Regulation and Taxation of Marihuana Act (MRTMA) passed with 56% of the vote. Michigan joins nine states and D.C. in legalizing some form of recreational marijuana use.  Due to the...

Cyberbullying Is Now A Punishable Crime In Michigan

Beginning in March 2019, cyberbullying will now be illegal in the state of Michigan. The House Bill 5017 now makes cyberbullying a punishable crime by Michigan law, meaning that those who harass others online could face potential jail...

The Difference Between Theft, Robbery and Burglary

Often, burglary, robbery, and theft are used interchangeably even though there are distinct differences between all of them. Though, what all three do have in common is they may involve the unlawful taking of someone’s personal property by...

Do I Have To Go To Court If I Get A Divorce?

If you’re contemplating a divorce in Michigan, you probably have a lot of questions. One of the most intimidating aspects of getting a divorce in Michigan or anywhere else is the idea of having to appear in court. The laws for getting a...

Do I Need A Prenuptial Agreement?

A prenuptial agreement is not only for the wealthy people in society, like Hollywood celebrities and the like but also for any couple that brings personal assets, property, debts or children from a former relationship into the marriage. This...

PROBATE 19: Respondent argues she did not receive notice of hearing until five days before.

Respondent argues that she was denied her right to due process of law because she did not receive notice of the hearing until five days before it took place. Respondent argues that the five-day notice of hearing violated her right to due process. Due process generally requires that notice be reasonably calculated to apprise interested parties of the action and to provide them an opportunity to be heard.

WILLS/TRUSTS 11: Allegations that a trustee violated his fiduciary duties.

MCL 700.7803 states that a trustee shall act as would a prudent person in dealing with the property of another, including following the standards of the Michigan prudent investor rule. If the trustee has special skills or is named trustee on the basis of representation of special skills or expertise, the trustee is under a duty to use those skills. MCL 700.7810 states that a trustee shall take reasonable steps to take control of and protect the trust property.

How Is Probation Violated?

If you are on probation, it means you have the judge's trust and have been allowed some level of freedom. Now you must work on ensuring you don’t violate your probation. You will need to abide by every term that the criminal court judge...

Don't let a bad decision, unfair contract, or a messy divorce get in the way of a promising future!
Contact the experienced team at Aldrich Legal Services today to schedule your free initial
and secure reliable and trustworthy representation today!
Get the Help You Need From a Team You Can Truly Count On: (734) 404-3000