Summary
noting enforceability of Delaware LLC Act's allowance of fiduciary duty waivers
Summary of this case from PMC Aviation 2012-1 LLC v. Jet Midwest Grp. LLCOpinion
03-16-2017
Kevin CAPONE, et al., Plaintiffs–Appellants, v. CASTELTON COMMODITIES INTERNATIONAL LLC (formerly known as Louis Dreyfus Highbridge Energy LLC), et al., Defendants–Respondents, LDH Management Holdings LLC, et al., Defendants.
Williams & Connolly LLP, New York (Steven M. Cady of counsel), for appellants. Davis Polk & Wardwell, LLP, New York (Michael P. Carroll of counsel), for respondents.
Williams & Connolly LLP, New York (Steven M. Cady of counsel), for appellants.
Davis Polk & Wardwell, LLP, New York (Michael P. Carroll of counsel), for respondents.
Order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered March 29, 2016, which, to the extent appealed from as limited by the briefs, granted defendants-respondents' (defendants) motion to dismiss the causes of action for tortious interference with contract, unjust enrichment, veil-piercing, and breach of the implied covenant of good faith and fair dealing, unanimously affirmed, with costs.
Section 9.9(a) of the relevant agreement contains a clear exculpatory provision that, standing alone, supports the motion court's dismissal of the claims alleged against defendants (see e.g. Elf Atochem N. Am., Inc. v. Jaffari, 727 A.2d 286, 291 [Del.1999] ; 6 Del. C. § 18–1101 ). The Delaware Limited Liability Company (LLC) Act was designed to "give the maximum effect to the principle of freedom of contract and to the enforceability of limited liability company agreements" (6 Del. C. § 18–1101 [b] ). Plaintiffs' public policy arguments that this section should not apply are unavailing, as the Delaware LLC Act's broad authorization to eliminate all liability also embraces the power to more narrowly specify the persons who may or may not be sued. Plaintiffs' claims against defendants would fail even without this exculpatory provision. A nonsignatory to a valid contract, such as defendants here, cannot be held liable for unjust enrichment when the claim covers the same subject matter as covered in the written agreement (Randall's Is. Aquatic Leisure, LLC v. City of New York, 92 A.D.3d 463, 464, 938 N.Y.S.2d 62 [1st Dept.2012], lv. denied 19 N.Y.3d 804, 2012 WL 1948299 [2012] ; CIM Urban Lending GP, LLC v. Cantor Commercial Real Estate Sponsor, L.P., 2016 WL 768904, *2, 2016 Del. Ch. LEXIS 47, *5–6 [Del. Ch., Feb. 26, 2016, C.A. No. 11060–VCN] ). The tortious interference claim fails because plaintiffs have not alleged that defendants have acted with malice (Felson v. Sol Cafe Mfg. Corp., 24 N.Y.2d 682, 687, 301 N.Y.S.2d 610, 249 N.E.2d 459 [1969] ).
The implied covenant claim fails because the agreement expressly addresses the conduct at issue (see Nationwide Emerging Mgrs., LLC v. Northpointe Holdings, LLC, 112 A.3d 878, 896 [Del.2015] ).
The motion court properly dismissed the veil-piercing claims, as plaintiffs' allegations are not sufficient to support such a claim, especially in light of their concession that the entities were established for a legitimate business purpose (see Wallace v. Wood, 752 A.2d 1175, 1184 [Del.Ch.1999] ; 3 E. 54th St. N.Y., LLC v. Patriarch Partners, LLC, 90 A.D.3d 418, 420, 934 N.Y.S.2d 126 [1st Dept.2011] ).
We have considered plaintiffs' remaining contentions and find them unavailing.
FRIEDMAN, J.P., MAZZARELLI, ANDRIAS, FEINMAN, GESMER, JJ., concur.