What to do if I just started an LLC and a member/manager violated the operating agreement, non-compete and non-disclosure agreements?

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What to do if I just started an LLC and a member/manager violated the operating agreement, non-compete and non-disclosure agreements?

During his termination meeting he sent everyone an email saying he resigned. Nothing in our operating agreement covered resignation. Can my former memeber/manager do this and if he can’t what specific state statute stops him from legally doing so?

Asked on October 23, 2012 under Business Law, Pennsylvania

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Several different issues involved here:

1) Resignation as a manager or executive: anyone may resign from a position/employment unless there is a contract specifically stopping them from doing so.

2) Leaving the LLC: he cannot "resign" from the LLC, however, unless he 1) gifts his interest to someone (which can have tax consequences); sells his interest to somone; or the LLC is dissolved. And any actions in this regard (e.g. selling his interest) have to comport with the terms of the operating agreement.

So, he can't necesarily just pull out of the LLC, but he can resign from having an operational role.

3) Non-disclosure and non-compete agreements: these are contracts, and therefore are enforceable (e.g. by a lawsuit, in court) as per their plain terms; if he violated them, you can take legal action.


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