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William Penn Partnership v. Saliba

Delaware Supreme Court
13 A.3d 749 (Del. 2011)


Anis Saliba (plaintiff), Rosa Ksebe (plaintiff), and Robert Hoyt owned one-sixth interests in Del Bay Associates, LLC. The William Penn Partnership owned the remaining one-half interest. Bill and Bryce Lingo (defendants) each owned one-third interests in Penn and were managers of both Penn and Del Bay. The Lingos also owned 40 percent of J.G. Townsend Jr. & Co. (JGT). Del Bay was formed to construct the Beacon Motel. Thereafter, Del Bay converted to a Delaware limited liability company (LLC) pursuant to an operating agreement that required a two-thirds vote of member interests for all decisions. The agreement did not eliminate any member fiduciary duties. The Lingos eventually sought the advice of attorney Bob Thomas regarding sale of the motel. Thomas informed the Lingos that the motel could be sold with two-thirds approval. Thereafter, the Lingos offered to sell the motel to JGT. When Ksebe and Saliba received sales contracts for the motel, they contacted attorney James Griffin to discuss their options, informing him that if they could not stop the sale, they wanted to purchase the motel. Griffin sent letters to Hoyt and the Lingos describing Saliba and Ksebe’s offer. The Lingos said they were willing to accept the offer, but that the sale had to be settled by June 30. The Lingos never told Griffin that the JGT board was already considering purchasing the property. On June 10, the Lingos convinced Hoyt to sign the contract. JGT approved the purchase. At closing, the Lingos falsely represented that all members of Del Bay had authorized the sale. Saliba and Ksebe brought suit against the Lingos for breach of fiduciary duty. The Chancellor found in favor of Saliba and Ksebe. The Lingos appealed.

Rule of Law


Holding and Reasoning (Steele, C.J.)

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