Remedy for breach of the duty of loyalty.
Unless otherwise provided in a written operating agreement:
(1) With respect to any claim for breach of the duty of care, a member or manager shall
not be liable, responsible, or accountable in damages or otherwise to the limited
liability company or the members of the limited liability company for any action
taken or failure to act on behalf of the limited liability company unless the act or
omission constitutes wanton or reckless misconduct.
(2) The duty of loyalty applicable to each member and manager shall be to account to
the limited liability company and hold as trustee for it any profit or benefit derived
by that person without the consent of more than one-half (1/2) by number of the
disinterested managers, or a majority-in-interest of the members from:
(a) Any transaction connected with the conduct or winding up of the limited
liability company; or
(b) Any use by the member or manager of its property, including, but not limited
to, confidential or proprietary information of the limited liability company or
other matters entrusted to the person as a result of his or her status as manager
or member.
(3) In determining whether a transaction has received the approval of a majority-in-
interest of the members, membership interests owned by or voted under the control
of the member or manager whose actions are under review in accordance with
subsection (2) of this section, and membership interests owned by an entity owned
by or voted under the control of that member or manager, shall not be counted in a
vote of the members to determine whether to consent, and the membership interests
shall not be counted in determining whether a quorum, if required by a written
operating agreement, exists to consider whether to consent. That a transaction was
fair to the limited liability company shall not constitute a defense to the failure to
request and receive the required consent of the disinterested managers or members.
(4) A member of a limited liability company in which management is vested in
managers under KRS 275.165(2) and who is not a manager shall have no duties to
the limited liability company or the other members solely by reason of acting in his
or her capacity as a member.
Effective: July 12, 2012
History: Amended 2012 Ky. Acts ch. 81, sec. 106, effective July 12, 2012. -- Repealed
and reenacted 2010 Ky. Acts ch. 51, sec. 109, effective July 15, 2010; and amended
ch. 133, sec. 32, effective July 15, 2010. -- Amended 2007 Ky. Acts ch. 137, sec.
109, effective June 26, 2007. -- Amended 1998 Ky. Acts ch. 341, sec. 28, effective
July 15, 1998. -- Created 1994 Ky. Acts ch. 389, sec. 34, effective July 15, 1994.
Legislative Research Commission Note (7/15/2010). 2010 Ky. Acts ch. 51, sec. 183,
provides, "The specific textual provisions of Sections 1 to 178 of this Act which
reflect amendments made to those sections by 2007 Ky. Acts ch. 137 shall be deemed
effective as of June 26, 2007, and those provisions are hereby made expressly
retroactive to that date, with the remainder of the text of those sections being
unaffected by the provisions of this section."
Legislative Research Commission Note (7/15/2010). This section was amended by
2010 Ky. Acts ch. 133, and repealed and reenacted by 2010 Ky. acts ch. 51. Pursuant
to Section 184 of Acts ch. 51, it was the intent of the General Assembly that the
repeal and reenactment not serve to void the amendment, and these Acts do not
appear to be in conflict; therefore, they have been codified together.
Notes of Decisions
Cited in
12
cases (
6 in the last 5 years), 2007–2025 · leading case:
Patmon v. Hobbs, 280 S.W.3d 589 (Ky. Ct. App. 2009).
Patmon v. Hobbs, 280 S.W.3d 589 (Ky. Ct. App. 2009).
· cites it 29× “But as to the damages claimed for the statutory breach under KRS 275.170, the court held that because American Leasing was unable to perform the contracts, no "opportunity," as defined under the common law of other states, could exist, thus barring any claim for damages under…”
Patmon v. Hobbs, 495 S.W.3d 722 (Ky. Ct. App. 2016).
· cites it 12× “! 2 ] Accordingly, Hobbs’s dubious conduct with respect to the [O’Reilly leases] did not rise to the level of a diverted opportunity constituting a violation of KRS 275.170. ■ Patmon appealed resulting in this Court’s opinion in Patmon I, which affirmed the trial court’s…”
Brunswick TKTKonnect, LLC v. Kavanaugh (W.D. Ky. 2023).
· cites it 18× “KRS § 275.170 provides in relevant part: Unless otherwise provided in a written operating agreement: (1) With respect to any claim for breach of the duty of care, a member or manager shall not be liable, responsible, or accountable in damages or otherwise to the limited…”
David G. Mounts v. Mounts & Dannheiser, LLC (Ky. Ct. App. 2023).
· cites it 8× “095; (3) the Judgment is inconsistent, (4) Dannheiser delegated his authority to manage and control the LLC to Mounts in accordance with KRS 275.”
Wheatley v. McCarty (Bankr. W.D. Ky. 2020).
· cites it 6× “Defendants are correct that the fiduciary duties of members and managers of a Kentucky limited liability company are exclusively set forth in KRS 275.170 – the “Duties of care and loyalty” subsection – of Kentucky’s Limited Liability Company Act, and that section makes clear…”
Hannah v. Mullins (S.D.W. Va 2021).
· cites it 4× “8–420, and KRS 275.170 run directly to the corporation or limited liability company, not the members or shareholders individually.”
Fabing v. Howell (In Re Howell), 373 B.R. 1 (Bankr. W.D. Ky. 2007).
· cites it 3× “170(1) creates an exception to a member or manager’s limited liability when the conduct in question constitutes “wanton or reckless conduct.”
Steve Hibbs v. Brian Berger (Mo. Ct. App. 2014).
“A review of these cases, the statutes which they interpret, and commentary on this subject reveal Missouri's Limited Liability Company Act is most analogous to 25 those jurisdictions that impose fiduciary duties upon managers to members of the LLC.”
— Ky. Rev. Stat. § 275.170(1) — 4 cases
Wheatley v. McCarty (Bankr. W.D. Ky. 2020).
“Defendants are correct that the fiduciary duties of members and managers of a Kentucky limited liability company are exclusively set forth in KRS 275.170 – the “Duties of care and loyalty” subsection – of Kentucky’s Limited Liability Company Act, and that section makes clear…”
Hannah v. Mullins (S.D.W. Va 2021).
“8–420, and KRS 275.170 run directly to the corporation or limited liability company, not the members or shareholders individually.”
Fabing v. Howell (In Re Howell), 373 B.R. 1 (Bankr. W.D. Ky. 2007).
“170(1) creates an exception to a member or manager’s limited liability when the conduct in question constitutes “wanton or reckless conduct.”
— Ky. Rev. Stat. § 275.170(2) — 5 cases
Patmon v. Hobbs, 280 S.W.3d 589 (Ky. Ct. App. 2009).
“But as to the damages claimed for the statutory breach under KRS 275.170, the court held that because American Leasing was unable to perform the contracts, no "opportunity," as defined under the common law of other states, could exist, thus barring any claim for damages under…”
Patmon v. Hobbs, 495 S.W.3d 722 (Ky. Ct. App. 2016).
“! 2 ] Accordingly, Hobbs’s dubious conduct with respect to the [O’Reilly leases] did not rise to the level of a diverted opportunity constituting a violation of KRS 275.170. ■ Patmon appealed resulting in this Court’s opinion in Patmon I, which affirmed the trial court’s…”
Brunswick TKTKonnect, LLC v. Kavanaugh (W.D. Ky. 2023).
“KRS § 275.170 provides in relevant part: Unless otherwise provided in a written operating agreement: (1) With respect to any claim for breach of the duty of care, a member or manager shall not be liable, responsible, or accountable in damages or otherwise to the limited…”
Hannah v. Mullins (S.D.W. Va 2021).
“8–420, and KRS 275.170 run directly to the corporation or limited liability company, not the members or shareholders individually.”
— Ky. Rev. Stat. § 275.170(2)(a)(b) — 1 case
Patmon v. Hobbs, 280 S.W.3d 589 (Ky. Ct. App. 2009).
“But as to the damages claimed for the statutory breach under KRS 275.170, the court held that because American Leasing was unable to perform the contracts, no "opportunity," as defined under the common law of other states, could exist, thus barring any claim for damages under…”
— Ky. Rev. Stat. § 275.170(3) — 1 case
Patmon v. Hobbs, 495 S.W.3d 722 (Ky. Ct. App. 2016).
“! 2 ] Accordingly, Hobbs’s dubious conduct with respect to the [O’Reilly leases] did not rise to the level of a diverted opportunity constituting a violation of KRS 275.170. ■ Patmon appealed resulting in this Court’s opinion in Patmon I, which affirmed the trial court’s…”
— Ky. Rev. Stat. § 275.170(4) — 1 case
Wheatley v. McCarty (Bankr. W.D. Ky. 2020).
“Defendants are correct that the fiduciary duties of members and managers of a Kentucky limited liability company are exclusively set forth in KRS 275.170 – the “Duties of care and loyalty” subsection – of Kentucky’s Limited Liability Company Act, and that section makes clear…”
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