Do You Know About the Equitable Buyout Remedy for Fraud?

July 31, 2023Article
The Recorder

Litigation Partners, Ann Lee and Gregg Martin, published the article, "Do You Know About the Equitable Buyout Remedy for Fraud?", to The Recorder.


The California Revised Uniform Limited Liability Company Act, Corporations Code Section 17701.01 et seq., does not provide an LLC member owning less than 50% with a guaranteed right to be bought out.

Rather, under Corporations Code Section 17707.03, if a minority member of an LLC files a judicial dissolution action (invoking one of the statutory grounds under Section 17707.03(b)), the other members have the option—but not the obligation—to buy out the minority member’s interest pursuant to Section 17707.03(c).

The Second District Court of Appeal of California held, for the first time, that a minority member may force the other members to purchase its ownership interest without complying with any of the statutory requirements or procedures. Reliant Life Shares v. Cooper (2023) 90 Cal.App.5th 14. Now, in addition to the statutory buyout procedure, there is an equitable buyout remedy available to aggrieved minority owners.