On February 6, 2025, the First Department issued a decision in Gurney-Goldman v. Sol Goldman Invs. LLC, 2025 NY Slip Op. 00722, holding that a limited liability company could not be held liable for the breach of its operating agreement, explaining:
Plaintiffs’ first cause of action for breach of contract against defendant LLC was properly dismissed. Defendant LLC is not bound by its operating agreement, as it is a manager-managed LLC, and it was not a signatory to that agreement. Plaintiffs’ claim for breach of the implied covenant of good faith and fair dealing fails for the same reason. Nor does Limited Liability Company Law § 610 create any independent rights against defendant LLC.
Contrary to plaintiffs’ assertion, the fact that defendant LLC was managed, opened bank accounts, or otherwise was operated in accordance with the operating agreement does not stop it from claiming that it is not bound by that agreement. Tarazi v Truehope Inc. (2017 US Dist LEXIS 120155, *22, 2017 WL 5957665, *8 [SD NY, July 28, 2017, 13 Civ 1024, 1038 (LAK) (JCF)]) is distinguishable. In that case, because the member of the LLC asserted derivative claims that arose in part from the operating agreement, the LLC could not avoid arbitration of claims under that agreement.
(Internal citations omitted).