I am a 10% member in an LLC construction company in Arizona. We do not have a signed operating agreement, but I do have documentation showing my 10% interest. The managing member has written a large number of checks secretly to pay for personal things and shown them as subcontractor payments on real jobs. I am thinking of leaving the company but am afraid that they will refuse to pay me for my 10% interest. If they refuse to pay me for my 10% interest in the company what recourse do I have? Can I sue the managing member? Can I only sue the LLC?
-- Anonymous
A.
Most if not all states have statutes that govern the affairs of an LLC if there is no operating agreement in place. Look those up. Otherwise, the majority owners usually cannot engage in acts that constitute oppression of the minority owners. However, it is a high threshold before someone can successfully argue oppression. You could also argue breach of fiduciary duty if their actions are not in the best interests of the members. Get your month back, though? That could be tough without an operating agreement or other agreement giving you the right to get it back when you leave. It may even be the case that you can't withdraw unless they consent to it. Go see a local lawyer for a better explanation of your options.
