COURT OF CHANCERY OF THE STATE OF DELAWARE 417 S. State Street JOSEPH R. SLIGHTS III Dover, Delaware 19901 VICE CHANCELLOR Telephone: (302) 739-4397 Facsimile: (302) 739-6179 Date Submitted: July 12, 2018 Date Decided: July 18, 2018 Kurt M. Heyman, Esquire Stephen B. Brauerman, Esquire Heyman Enerio Gattuso & Hirzel LLP Bayard, P.A. 300 Delaware Avenue, Suite 200 600 N. King Street, Suite 400 Wilmington, DE 19801 Wilmington, DE 19801 Re: A&J Capital, Inc. v. Law Office of Krug C.A. No. 2018-0240-JRS Dear Counsel: This letter opinion addresses Plaintiff, A&J Capital, Inc.’s (“A&J”), motion for summary judgment in which A&J seeks a declaratory judgment that it was improperly removed as manager of LA Metropolis Condo I, LLC (“LAMC” or the “Company”). A majority of the Company’s members purported to remove A&J as manager “for cause.” A&J’s motion for summary judgment posits that, as a matter of contract or as a matter of Delaware common law, prior to removal, the members were required to provide A&J with: (1) a notice of their intent to remove A&J that contained an explanation of the ground(s) for removal, and (2) an opportunity to A&J Capital, Inc. v. Law Office of Krug C.A. No. 2018-0240-JRS July 18, 2018 Page 2 respond to the notice. In taking this position, A&J acknowledges that the Company’s operating agreement does not expressly contain either condition to “for cause” removal. For the reasons discussed below, I am satisfied that the common law does not alter or amend the Company’s operating agreement with respect to “for cause” removal procedures. Consequently, the motion for summary judgment must be denied. I. FACTUAL BACKGROUND I have drawn the facts from the admissions in the pleadings and uncontested facts presented in the parties’ submissions.1 I have resolved any doubt as to the absence of a genuine issue of fact in favor of the non-moving party.2 A. The Parties Plaintiff, A&J, is a California corporation and the designated Class B Manager of the Company pursuant to the Operating Agreement of LAMC (the “Operating 1 See Ct. Ch. R. 56(c). Citations to the Complaint will be to “Compl. ¶ __” and to the Def.’s Answer and Verified Countercls. to Verified Compl. will be to “Answer & Countercl. ¶ __.” 2 Brown v. Ocean Drilling & Expl. Co., 403 A.2d 1114, 1115 (Del. 1979). A&J Capital, Inc. v. Law Office of Krug C.A. No. 2018-0240-JRS July 18, 2018 Page 3 Agreement”) and the Management Agreement by and among LAMC, A&J and the Joined Members (the “Management Agreement”),3 both dated July 11, 2014 (collectively, the “Agreements”).4 Nominal Defendant, LAMC, is a Delaware LLC that was formed for the purpose of raising immigrant investor capital under the EB- 5 visa program administered by the United States Citizenship and Immigration Services.5 The Company solicited capital from 200 foreign investors, and these investors became Class B Members of the Company. 6 Defendant, Law Office of 3 The Management Agreement defines “Joined Members” to be “[t]hose persons . . . who have joined ...
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