Rubin v. Brodie

Syllabus

The plaintiffs appealed from the trial court's judgment dismissing their action for lack of subject matter jurisdiction. The plaintiffs claimed, inter alia, that the court improperly concluded that the individual plaintiffs, who are members of the plaintiff limited liability companies (LLCs), lacked standing to maintain a derivative action to enforce the rights of the plaintiff LLCs. Held: The trial court improperly concluded that the individual plaintiffs lacked standing to maintain a derivative action to enforce the rights of the plaintiff LLCs, as that court had properly determined that the complaint sufficiently alleged that it would have been futile for the plaintiffs to demand that the defendant B, the manager of the plaintiff LLCs, cause the plaintiff LLCs to commence the action, the allegations in the complaint satisfied the pleading requirements set forth in the applicable statutes (§§ 34-271a and 34-271c), and there was no requirement in the language of § 34-271a or § 34-271c that the individual plaintiffs receive consent from the plaintiff LLCs to bring a derivative suit. The trial court properly concluded that the plaintiff LLCs lacked standing to maintain their direct action because the LLCs' operating agreements established that only the LLCs' manager had the authority to commence litigation, not the LLCs' respective members, and, even if the individual plaintiffs, as members of the LLCs, had received authorization from the LLCs to commence the action, they would not have been empowered, pursuant to the language of the operating agreements of the plaintiff LLCs, to initiate a direct action on behalf of the plaintiff LLCs. The trial court properly concluded that the individual plaintiffs lacked stand- ing to maintain their direct action, the individual plaintiffs' having alleged injuries that were solely the result of injuries suffered by the plaintiff LLCs. This court declined to review the plaintiffs' claim that the trial court's failure to treat the