Reference no: EM131175127
Zappa, LLC is a member-managed limited liability company organized in a state that has adopted the latest version of the Revised Uniform Limited Liability Company Act. Zappa has three members: Acme Corporation; Beta, Inc.; and Capri, Inc.
Zappa is in the business of buying, selling, and leasing commercial real estate in Dallas, Texas. Acme, Beta, and Capri are also each separately engaged in the commercial real estate business, and all three corporations also own properties in Dallas. Acme and Beta are huge international companies; Capri is a local Dallas company.
Zappa's operating agreement includes the following language:
Each member may continue to operate its separate business, may compete with Zappa without limitation, and may take advantage of any business opportunity whatsoever. No member shall be liable for competing with Zappa or for taking any business opportunity that might otherwise be construed to belong to Zappa.
Acme's counsel drafted the operating agreement, which was also reviewed and edited by Beta's counsel. Capri's president read and signed the agreement, but was not represented by counsel.
On May 15, Paul Prez, the CEO of Acme, was in Dallas doing some work on behalf of Zappa. He ran into a friend, Sam Seller, who asked if Zappa would be interested in buying a commercial office building in downtown Dallas. Prez said Zappa wasn't interested, but Acme would be. After further discussions, Acme's board of directors approved a contract for Acme to purchase the building from Seller for $25 million. Acme did not disclose this opportunity to either Beta or Capri before signing the contract.
Discuss whether Acme is liable to Zappa and the other members of the LLC for breach of fiduciary duty.
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