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2018 Georgia Code 14-11-801 | Car Wreck Lawyer

Link to State of Georgia Official Statute 2018 Georgia Code Annotated (sourced from legal.resource.org)
O.C.G.A. 14-11-801 Case Law from Google Scholar Amendments to OCGA 14-11-801

TITLE 14 CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS

Section 11. Limited Liability Companies, 14-11-100 through 14-11-1109.

ARTICLE 8 DERIVATIVE ACTIONS

14-11-801. Right of member to bring derivative action.

A member may commence a derivative action in the right of the limited liability company to recover a judgment in its favor if all of the following conditions are met:

  1. Either management of the limited liability company is vested in a manager or managers who have the sole authority to cause the limited liability company to sue in its own right or management of the limited liability company is vested in the members but the plaintiff does not have the authority to cause the limited liability company to sue in its own right under the provisions of the articles of organization or a written operating agreement;
  2. The plaintiff has made written demand on those managers or those members with such authority requesting that such managers or such members take suitable action;
  3. Ninety days have expired from the date the demand was made unless the member has earlier been notified that the demand has been rejected by the limited liability company or unless irreparable injury to the limited liability company would result by waiting for the expiration of the 90 day period;
  4. The plaintiff (A) is a member of the limited liability company at the time of bringing the action, and (B) was a member of the limited liability company at the time of the transaction of which he or she complains, or his or her status as a member of the limited liability company has devolved upon him or her by operation of law from a person who was a member at the time of the transaction; and
  5. The plaintiff fairly and adequately represents the interests of the limited liability company in enforcing the right of the limited liability company.

(Code 1981, §14-11-801, enacted by Ga. L. 1993, p. 123, § 1.)

JUDICIAL DECISIONS

Standing.

- When owners and co-owners of a limited liability company mistakenly signed a deed transferring real estate from the entity that owned it to the company, the owners had standing to bring a derivative suit on behalf of the entity that had owned the property, seeking its reconveyance, as they satisfied the requirements of O.C.G.A. § 14-11-801, but the owners' separate company did not have such standing because it had no ownership interest in the company that had owned the property or in the property itself. Ledford v. Smith, 274 Ga. App. 714, 618 S.E.2d 627 (2005).

Plaintiff, the debtor's former business partner, had standing to bring a dischargeability claim because a state court judgment showed a particularized injury caused by the debtor and the claim passed the prudential threshold in that the claim was a specific private action brought pursuant to O.C.G.A. § 14-11-801. Silver v. Edelson (In re Edelson), Bankr. (Bankr. N.D. Ga. July 3, 2013).

Member could not proceed directly.

- Court found it inappropriate to allow the member to proceed directly against the managing member for breach of duties under O.C.G.A. § 14-11-305. The member had not established any of the basis that would have allowed the member to proceed directly against the managing member for any violation of the managing member's duties to the limited liability company; inter alia, the member did not present any evidence of compliance with O.C.G.A. § 14-11-801. Pollitt v. McClelland (In re McClelland), Bankr. (Bankr. N.D. Ga. June 8, 2011).

Failure to make a formal demand.

- Trial court correctly dismissed a derivative action due to the failure to make a formal demand upon the limited liability company, pursuant to O.C.G.A. § 14-11-801, to bring the suit itself, and no futility exception was available. Pinnacle Benning, LLC v. Clark Realty Capital, LLC, 314 Ga. App. 609, 724 S.E.2d 894 (2012).

Cited in Internal Med. Alliance, LLC v. Budell, 290 Ga. App. 231, 659 S.E.2d 668 (2008); Practice Benefits, LLC v. Entera Holdings, LLC, 340 Ga. App. 378, 797 S.E.2d 250 (2017).

RESEARCH REFERENCES

ALR.

- Construction and application of limited liability company acts - issues relating to derivative actions and actions between members of limited liability company, 48 A.L.R.6th 1.

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