A two member LLC with both having a 50% stake and an operating agreement and non-compete agreement. One member starts own LLC

Asked about 2 years ago - Atlanta, GA

The non-compete and operating agreement prohibit one member from unilateral action. Member 1 moved out of state but did not relinquish stake in company. In Member 1's absence, Member 2 closed out the bank acct and organized a second LLC (in violation of non-compete) with nearly the exact same name and took all the assets, including website, client list, equipment, e-mail addresses, and continued to operate the business on her own. This information was withheld from Member 1. Member 2 deals with government in operations. What can Member 1 do to stop the government orgs from continuing to do business with Member 2? Besides applying for a TRO and injunction, will a cease and desist letter to government orgs be effective?

Attorney answers (3)

  1. Glenn M. Lyon

    Contributor Level 15

    3

    Lawyers agree

    Answered . It is unlikely that either a C&D letter or a TPO will do any good, although you could certainly try the letter. The issues here are between the two members and not Member 2 and any outside party. However, Member 1 would have a claim against Member 2 for breach of contract, breach of fiduciary duty, and possibly others. Consult with a local business attorney.

  2. Kevin M. Veler

    Contributor Level 15

    2

    Lawyers agree

    Answered . A C&D letter to government orgs will likely be ineffective as indicated. Whether the non-compete is effective and whether you have a cause of action to recover for the appropriate of the business name and assets should be discussed with legal counsel.

    Disclosure: This answer and any information contained in this answer is not intended to be treated as legal... more
  3. Robert V Cornish Jr.

    Contributor Level 16

    2

    Lawyers agree

    Answered . A C&D letter will not get your money back nor prevent this person from continuing to injure your business. If this person ran off with your money and client lists, a C&D letter certainly won't stop that conduct, and even the vendors are under no obligation to do what you ask of them if they're copied on the letter. You will need to file for injunctive relief to remedy this.

    The foregoing is not legal advice nor is it in any manner whatsoever meant to create or impute an attorney/client... more

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