Fiduciary Duty Case Study
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Janet Levitt and Mark Levitt filed a lawsuit against Gilligan Village, LLC, Lauren Bivins, Milton Burnside, Sondra Burnside and Patricia Goldstein. Janet Levitt, Mark Levitt, Lauren Bivins, Milton Burnside, Sondra Burnside and Patricia Goldstein are members of Gilligan Village. The individual defendants are each related by blood, marriage or are otherwise closely associated. Pursuant to section 4.2 of the LLC's operating agreement, Mark Levitt was appointed manager of Gilligan Village after the death of its initial manager, Edward R. Bivins.
During his tenure as manager, Mark Levitt pursued the sale of Gilligan Village's principal asset, a parcel of real estate. Shortly thereafter, Lauren Bivins, Sondra Burnside and Patricia Goldstein removed Mark Levitt from the position of manager and appointed Lauren Bivins (Edward Bivins' widow and the personal representative of his estate) as his successor. The alleged motivation for this action was to prevent the sale of the property in order to ensure that Bivins Properties, LLC (Bivins Properties), a separate company owned by Lauren Bivins, continued to receive a fee for managing the property.
What legal and ethical issues are apparent in these events? Have fiduciary duties owed to the LLC been violated? Are there any additional facts that we would need to find out in order to resolve this dispute?
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Solution Summary
The answer to this problem explains the lawsuit filed against Gilligan Village LLC. The references related to the answer are also included.
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The first ethical issue is Mark's pursuit of sale of Gilligan Village's principle asset, the parcel of real estate. It is the duty of Mark to pursue the financial interest of Gilligan Village LLC. If the sale of real estate was in the interest of the LLC it was ethical for Mark's to pursue the sale. Next, Bivins Properties, LLC was receiving a fee for managing Gilligan Village's property. From the deontological ethical perspective, Lauren Bivins should not have removed Mark as the manager so that her firm continues to receive a fee for managing the property. If Lauren's move was driven by self interest, she should not have been supported by Sondra Burnside and Patricia Goldstein in removing Mark. If the removal of Mark was against the interest of Gilligan Village, Bivins should not have been supported by Sondra Burnside and Patricia Goldstein. It is unethical.
The key legal issue is ...
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