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Rights of Expelled Member
Chadwick v. Huntoon, No. SD36850, decided September 16, 2021. The Missouri Court of Appeals held that an expelled member retained his right to receive distributions from the LLC. The operating agreement provided that an expelled member was entitled to certain monthly payments. However the operating agreement did not say that those payments were in lieu of receiving distributions. Because the operating agreement was silent as to the effect of expulsion on the member’s interest in the LLC, the default rule of the LLC act had to be applied. And the default provision was that an expelled member was entitled to receive his distribution percentage as an assignee, although he could no longer participate in management.
Sherrer v. Boston Scientific Corporation, No. SC97465, decided October 13, 2020. The Missouri Supreme Court held that Sec. 491.50 of the Missouri Statutes, which provides that any criminal convictions may be proven to challenge the credibility of witnesses in a criminal or civil trial does not apply to corporations. Therefore the trial court did not err in preventing the introduction of evidence of the corporate defendant’s prior criminal convictions. The court based its decision on both the legislative history and context of the section.
Forum Selection Clause
Green v. Paz, 4:16 CV 1900, decided February 4, 2020. The federal court in Missouri enforced a Delaware corporation’s forum selection bylaw and transferred a shareholder derivative suit alleging state and federal claims to the federal court in Delaware. The suit could not be transferred to the state court because the bylaw required selection of a forum for an action as a whole and not for discrete claims and the Delaware state court did not have jurisdiction over the federal claim.
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