BUSINESS ENTITIES

LLCs • Dissolution • Subject Matter Jurisdiction • Limited Liability Agreement

Intertrust GNC v. Interstate Gen. Media, PICS Case No. 14-0254 (C.P. Philadelphia Feb. 11, 2014) McInerney, J. (6 pages.

Pennsylvania lacked jurisdiction to dissolve foreign LLC where governing agreement provided that dissolution was to be governed by Delaware law. Petition dismissed.

Several members of an LLC, formed under the laws of Delaware, petitioned the Philadelphia Court of Common Pleas to dissolve the company and appoint a trustee. Because the governing limited liability agreement provided that the rights of the parties were to be interpreted in accordance with the laws of the State of Delaware, other members of the LLC filed a similar petition in the Delaware Court of Chancery requesting judicial dissolution, and alleging that Delaware, not Pennsylvania, had jurisdiction over the matter. The Philadelphia Court of Common Pleas held that it lacked jurisdiction to dissolve the LLC and dismissed the action.

Whether a court has subject matter jurisdiction to dissolve a foreign LLC is governed by the limited liability agreement under which the LLC was formed and operated. The agreement here stated that Delaware law would govern dissolution of the LLC and specifically invoked application of the Delaware Limited Liability Company Act. Under this law, the Court of Chancery may decree dissolution of a LLC upon application of a member whenever it is not reasonably practicable to carry on the business in conformity with a LLC agreement. 6 Del.C. §18-802. The plain language of the statute vests exclusive subject matter jurisdiction to hear and determine petitions for judicial dissolution in the Delaware Court of Chancery.