The Delaware Supreme Court’s public rebuke of Delaware Court of Chancery Chancellor Leo E. Strine Jr. in a recent opinion may have been sparked by differing opinion between Chief Justice Myron T. Steele and Strine on the state’s Limited Liability Company Act, according to legal sources within the state.
In a per curiam opinion issued last Wednesday in Gatz Properties v. Auriga Capital, the Supreme Court sharply criticized Strine for using 11 pages of his 75-page post-trial opinion in the case to espouse his view that Delaware’s Limited Liability Company Act does impose default fiduciary duties upon an LLC’s managers and controllers when the LLC agreement is silent on such matters. Strine had concluded that under the statute, LLC managers have the same fiduciary duties as heads of traditional equity groups unless both parties specifically write in the LLC agreement that such duties do not apply.
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