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COMPANY GOVERNANCE UNDER FLORIDA’S LIMITED LIABILITY COMPANY ACT - page 18 / 28

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70

FLORIDA STATE UNIVERSITY LAW REVIEW

[Vol. 30:53

statute.69 It is even possible that they will ignore the missing f-word but seize on the missing o-word: “only.” Courts might take that as an invitation to return to the halcyon days—halcyon for traditionalists, anyway—of the galloping moral mandate with its ever-expanding, open-ended structure of fiduciary duties. The missing o-word might even lead courts to return “good faith” to its previous position in the fiduciary pantheon.70 Thus, a well-intentioned71 effort to restrict the scope of fiduciary duties could wind up expanding them, thereby proving the continuing power of the law of unintended consequences.

So if the question is, “do managers of a Florida LLC have more fi- duciary duties than do partners, the same, fewer, or none at all,” then the answer is that they probably have the same duties as part- ners, although I offer that answer with neither joy nor certainty.

B. Wrongs Without A Remedy

This leads us to a second puzzle: why require “mandatory mini- mum” fiduciary duties and obligations but deny any effective remedy for their breach? This puzzle exists because the process of “hybridiza- tion” melded FRUPA’s standards of conduct with the Florida Busi- ness Corporation Act’s (FBCA) exculpation and indemnification pro- visions.

1.

An Overview of Exculpation

Once upon a time (but not so very long ago) in the world of corpo- rate law, the only fiduciary duty that really mattered was the duty of loyalty. The duty of care might be a theoretical concern, but the business judgment rule protected directors against the consequences of allegedly improvident decisionmaking or faulty oversight.72 Then

  • 69.

    Under the statute, not all wrongs have a remedy. See infra Part II.B.

  • 70.

    As noted earlier, one of RUPA’s major changes, carried over into FRUPA, was the

distinction between the “fiduciary” duties of care and loyalty and the mere “obligation” of good faith and fair dealing. Under the FLLCA, good faith is still an “obligation” and is in its own subsection, Section 608.4225(c), Florida Statutes:

Each manager and managing member shall discharge the duties to the limited liability company and its members under this chapter or under the articles of or- ganization or operating agreement and exercise any rights consistent with the obligation of good faith and fair dealing. However, if care and loyalty are not the “only fiduciary” duties, then there is some risk that a court could fail to perceive the delicate—one might even say gossamer—distinction between a “duty” and an “obligation” in the same statutory section.

71. At least from the contractarian perspective. Traditionalists would not characterize it so benignly.

72. The business judgment rule is a presumption that directors act in good faith and with reasonable care. While in theory it does not shield directors from charges of waste or gross negligence, in practice there were almost no cases before 1985 in which a “care” case got past the pleading stage, let alone resulted in a remedy. Gagliardi v. Trifoods Int’l, Inc., 683 A.2d 1049, 1051-52 (Del. Ch. 1996); Joseph W. Bishop, Jr., Sitting Ducks and Decoy

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