Bay Center Apartments Owner, LLC v. Emery Bay PKI, LLC
Delaware Court of Chancery
2009 WL 1124451
Bay Center Apartments Owner, LLC (Bay Center) (plaintiff) and Emery Bay PKI, LLC (PKI) (defendant) were co-venturers in a condominium development project (the Project). Bay Center and PKI formed a third LLC, Emery Bay Member, LLC (Emery Bay) (defendant). The LLC agreement for Emery Bay (the LLC Agreement) made PKI the managing member, stating that PKI alone “shall manage and conduct” Emery Bay’s business. Responsibility for managing the Project was governed by a separate agreement, the Development Management Agreement (DMA). PKI designated one of its affiliates, Emery Bay ETI, LLC (ETI) (defendant), to be the party bound by the DMA. The Emery Bay LLC Agreement, however, expressly granted PKI the power and authority to “cause the Development Manager to perform its obligations under the DMA,” or if the Development Manager failed to do so, to cause the services to be performed at no additional cost. The LLC Agreement also addressed fiduciary duties. In separate paragraphs it stated both that the members shall have the same duties to each other as provided in the Delaware LLC Act, and that each member “shall owe no duty of any kind” to Emery Bay or the other members other than the duties imposed by the LLC Agreement. PKI and ETI were both controlled by Alfred Nevis (defendant).The Project ran into serious financial trouble almost immediately and ultimately failed. According to Bay Center, Nevis and his entities grossly mismanaged the Project and sought to benefit themselves at the Project’s expense. Bay Center sued Nevis, Emery Bay, PKI, and ETI, alleging breach of the LLC Agreement. Since the LLC Agreement gave PKI the authority to cause ETI to perform under the DMA, Bay Center argued that PKI was obliged to ensure performance. In addition to breach of contract, Bay Center also sued for breach of the implied covenant of good faith and fair dealing, and breach of PKI’s fiduciary duty. Nevis, PKI, ETI, and Emery Bay moved to dismiss the claims of breach of the implied covenant and breach of fiduciary duty.
Rule of Law
Holding and Reasoning (Strine, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 166,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 13,800 briefs, keyed to 187 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.