Hi. I am a member of LLC (we have 9 members, 3 of which are managers). Can I sue the mgrs for breach of operating agreement?

Asked over 1 year ago - Cerritos, CA

The LLC's operating agreement states that members can access and review accounting files. I've been trying to ask for them but the mgrs won't give them to me or gave me incomplete files. Do I have the rights to sue the managers for breaching the contract (operating agreement)? Some friend told me I can't because of some thing called derivate rights - company needs to sue? Thanks.

Attorney answers (4)

  1. Charles Richard Perry

    Pro

    Contributor Level 16

    10

    Lawyers agree

    Answered . You can indeed sue to enforce your personal rights pursuant to the Operating Agreement and California law. The law regarding the pursuit of derivative claims would not apply.

    I would hire a lawyer to write a letter to the managers to get the missing documents for you, rather than running off to court and filing a lawsuit.

  2. Jeff Hoang Pham

    Contributor Level 12

    8

    Lawyers agree

    Answered . Yes, you can sue to enforce your right to inspection under the operating agreement.

    Even if these rights were not granted to you under the operating agreement, they would be conferred upon you under CA Corporations Code section 17106. This section gives LLC members broad rights to inspect and copy certain company records, including books and records for the prior four years.

    You should consult with an attorney in your area for further assistance. Good luck.

    The information presented here is general in nature and is not intended, and should not be construed, as legal... more
  3. Brandy Ann Peeples

    Pro

    Contributor Level 19

    8

    Lawyers agree

    Answered . My colleague is correct. However, some states also have statutory provisions which require a certain "transparency"...that is, there are statutes in place that may grant you the right to demand to inspect and review corporate documents. California may have such a provision requiring the other members of the LLC to provide the documents and files to you upon written request.

    DISCLAIMER: Brandy A. Peeples is licensed to practice law in the State of Maryland. This answer is being provided... more
  4. Jeffrey Bruce Gold

    Pro

    Contributor Level 19

    8

    Lawyers agree

    Answered . You should have an attorney review the operating agreement, which should provide you with your rights and remedies.

    If you'd like to discuss, please feel free to call. Jeff Gold Gold, Benes, LLP 1854 Bellmore Ave Bellmore,... more

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