McConnell v. Hunt Sports Enterprises
725 N.E.2d 1193 (Ohio App. 1999)

PROCEDURE: On appeal from a directed verdict in favor of the defendant.

FACTS: Instant Facts: Several individuals formed a limited liability company to try to attract an NHL team to Columbus, Ohio, but when the company's principal did not enter into the necessary agreements in time to be considered by the NHL, a subgroup of the company secured the needed facilities and was awarded the NHL franchise.

ISSUE:Whether a LLC corp. may have an operating agreement that limits the scope of the fiduciary duties of its members?

RULE:Limited liability company members are bound by the terms of their operating agreement, and if the agreement expressly allows them to engage in "any other business venture of any nature," they are not prohibited from participating in a competing venture.

HOLDING: After breaking away from original limited liability company (LLC), appellees obtained National Hockey League (NHL) franchise. Appellees sought declaratory judgment that LLC operating agreement permitted members to compete for NHL franchise as well as judicial dissolution of LLC. Appellants' counterclaim alleged interference with prospective business relationships and breach of contract and fiduciary duty. After declaring that operating agreement unambiguously allowed competition, trial court granted appellant's voluntary dismissal of counterclaim. Trial court later declared that appellees had not violated any fiduciary duties or committed any tortious or wrongful acts, holding that appellants breached operating agreement by unilaterally rejecting arena lease proposal and usurping control of LLC. Further, trial court awarded attorney fees to appellees under Declaratory Judgment. xcept for award of attorney fees and costs, court affirmed lower court's judgment. Although appellants' rejection of lease did not wrongfully cause dissolution of LLC, court approved dissolution because it was no longer practicable to carry on LLC business. ourt affirmed lower court judgments in appellees' favor, holding that operating agreement of appellant limited liability company (LLC) allowed appellee members to compete for hockey franchise. Court approved dissolution of LLC because it was no longer reasonably practicable to carry on LLC business even though appellants' rejection of lease did not wrongfully cause dissolution. Court reversed award of attorney fees and costs to appellee.