Katris V. Carroll
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Katris v. Carroll (1011)
In the 1990s Doherty wrote for Szlendak a software program called Viper. In 1997 Doherty and Szlendak aong with Katris and Hamburg from Ernst and company formed Viper Executions Systems LLC to exploit the software. Each member held 25% interest and Szlendak and Doherty assigned all their rights in Viper to the LLC. They decided that business ould be manager-managed where the members elected Katris and Hamburg as “sole managers”. None of th erights and obligations of members provided the members with any managerial authority and stated the opearting agreemnt could not be ammedned except by th evote of members holding majority.
That same year Katris and Hamburg named Hamburg as CEO and Katris as CFO, Szlendak as Director of marke, and Doherty as director of tech services with the written consent to the resoluution having hamburg and katris signed as “all of the managers” of the llc
prior to this, Dohery worked as an independent contractor for hamburg and carroll where doherty helped adapt a sofware program called worldwide options web for carrool and ernst.
In 2002 Karis came to believe worldwide options web was similar to viper and sued doherty, carroll nd ernst arguing dohery usurped a corprate opportunity of th ellc by working in secret with carroll and developing software for ernst and contended doherty breached his fiduciary duties to th elcc. Doherty settled the case with katris eaving only carroll and ernst as defendants.
Carroll and ernst filed a motion for summary judgment asserting that katris collusion claim faied because doheryt as anonmanaging member of he mananger-managed llc did not owe katris or the llc a fiduciary duty under illinois limited lialbity company act so here was no breach in a fiduciary duty . Kartris argued that th e1997 resolution of managers amended the operating agremen to name doherty as directo f technology and gave doherty sole management respinsiblity for develping writing revising an dimplementing viper software. Katris cotended believing doherty was subject to standards of condut imposed on managers by th eillinois llc act. The illinois trial court disagreed with katris granting carroll and ernst motion fo summary judgment. Katris appealed to the appeallate court of illinois.
Looking at fidiuciary duties it is noted that although the operating agreement sets forth the right snd olbigtions of the members these provisions do not provide ny managerial authority. Therefore, doherty di dnot exercise ny managerial authority. Katris bleieves his psition of director of authority elevated him beyound a member and made him part of the mangerial of llc, but this argument fails because they could not ammend the operating agreement ithout an additional vote (amburg and katris is 50% combined interest) secondly even if the written consent were viwed as