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Walker v. Resource Development Co. Ltd., LLC

Delaware Court of Chancery
791 A.2d 799 (2000)


Facts

William J. Cox, Jr., William C. Baron, and William C. Liedtke, III (the three Bills) (defendants) were members of Resource Development Company Limited, LLC (Resource) (defendant). Resource was engaged in oil and gas exploration and production in Moldova. Randolph T. Walker (plaintiff) was admitted as a member to Resource (owning an 18 percent interest) on the basis that Walker would provide value as a financial consultant. Specifically, Walker was to secure financing from Stephen L. Norris who was the founder of an investment fund with considerable financial resources and connections to the Middle East. During the time Walker was to be securing financing, little progress was made. In fact, Walker seemed to be suffering from alcoholism and traveling Europe for his own pleasure rather than to conduct business on behalf of Resource. The three Bills even requested that Walker travel to Moldova to meet with representatives of the Moldovan government who were impressed with Walker’s political connections, but Walker refused. After realizing Walker had greatly embellished his credentials and failed to secure financing from Norris, the three Bills attempted to effect an involuntary withdrawal of Walker as 18 percent owner of Resource. The three Bills did not attempt to force out Walker via any legal mechanisms provided for by the operating agreement or by statute like a merger or dissolution of the limited-liability company (LLC). Instead, they simply sent a letter claiming Walker’s ownership interest in Resource was terminated for breach of trust. However, the operating agreement was not written to provide its members with a remedy that would cause a member to forfeit a membership interest in Resource without fair compensation. Walker sued Resource and the three Bills in the Delaware Court of Chancery for the value of his 18 percent equity interest in Resource.

Rule of Law

Issue

Holding and Reasoning (Lamb, J.)

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