¶ … court, it will be a state court. Each state has different laws with respect to how they treat LLCs in such situations. Without knowing the state, it is impossible to know which statute a state might apply. There can be significant differences between state law on this matter (Garon, 2008).
In most states, it will be difficult to adjudicate such disputes, insomuch as there is likely to be limited precedence (Garon, 2008). If the court uses the Uniform Limited Liability Company Act, it would turn to the language in Section 112, particularly subsection D. The relevant text is as follows: "Absent any contrary provision in the operating agreement, language in an LLC's certificate of organization might be evidence of the members' agreement and might thereby constitute or at least imply a term of the operating agreement." If there is nothing written down at all, the court is likely to find that the profits should be split by share of ownership, under the logic that ownership share implies profit sharing in the same manner, which it does unless otherwise stated, as this is the law of fiduciary duty.
This dispute could have been avoided in the first place in two ways. First, if the principles acted like grown-ups. Going to court with something like this probably costs the parties more money that this company makes in profits. Plus, there are many other dispute resolution mechanisms available to these people, such that it would be unusual for something like this to end up in litigation. The second way is that all LLCs should have a corporate operating agreement. This document is agreed to and signed by the owning when the LLC is formed. It specifically covers critical issues such as how the profit will be split among them. Even...
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