Unless otherwise provided by the articles of organization or an operating agreement:
A. a member who is not a manager and is not vested with particular management
responsibilities by the articles of organization or an operating agreement shall not be
liable to the limited liability company or to the other members solely by reason of his act
or omission in his capacity as a member;
B. a member who is vested with particular management responsibilities by the
articles of organization or an operating agreement or a manager shall not be liable,
responsible or accountable in damages or otherwise to the limited liability company or to
the other members solely by reason of his act or omission on behalf of the limited
liability company in his capacity as a member having particular management
responsibilities or as a manager, unless such act or omission constitutes gross
negligence or willful misconduct;
C. a member or manager may lend money to and transact other business with the
limited liability company, and except as otherwise provided in Subsection D of this
section and subject to other applicable law, he shall have the same rights and
obligations with respect to such loan or transaction of business as he would have if he
were not a member or manager;
D. every member who is vested with particular management responsibilities by the
articles of organization or an operating agreement and every manager shall account to
the limited liability company and hold as trustee for it any profit or benefit he derives
from:
(1) any transaction connected with the conduct or winding up of the limited
liability company; or
(2) any use by such member or manager of the company's property, including
confidential or proprietary information of the limited liability company or other matters
entrusted to him as a result of his status as a member or manager unless:
(a) the material facts of the relationship of the interested manager or member
to the contract, transaction or use were disclosed or known to all of the other managers
or members who, in good faith, authorized or approved the contract, transaction or use
by: 1) the affirmative vote of a majority of all of the disinterested managers; or 2) the
affirmative vote of all of the disinterested members, even though all of the disinterested
managers were less than a majority of all of the managers or even though all of the
disinterested members did not have a majority share of the voting power of all of the
members; or
(b) the contract, transaction or use was fair to the limited liability company
when it was authorized or approved.
History: Laws 1993, ch. 280, § 16; 1995, ch. 213, § 2.
ANNOTATIONS
The 1995 amendment, effective June 16, 1995, substituted "Subsection D" for
"Subsections D and E" in Subsection C.
Breach of fiduciary duty. — In a case where a plaintiff challenges expenditures that
do not themselves create a presumption of self-dealing and the plaintiff is involved in
the financial affairs of the partnership or LLC such that plaintiff has access to the entity's
records, the burden of proving a breach of fiduciary duty is on the plaintiff. Mayeux v.
Winder, 2006-NMCA-028, 139 N.M. 235, 131 P.3d 85.
Notes of Decisions
Buke, LLC v. Cross Country Auto Sales, LLC, 2014-NMCA-078, 331 P.3d 942.
· cites it 11× “” It is also clearly expressed in Section 53-19-16(D), which addresses use of LLC property by an LLC manager: Unless otherwise provided by the articles of organization or an operating agreement.”
Cody Farms, Inc. v. Deerman (In re Deerman), 482 B.R. 344 (Bankr. D.N.M. 2012).
· cites it 3× “1978 § 53-19-16(D). A statute can impose fiduciary duties sufficient to establish a technical trust for purposes of 11 U.”
Patel v. Patel (In re Patel), 536 B.R. 1 (Bankr. D.N.M. 2015).
· cites it 2× “It simply limits liability for ordinary negligence; regardless of whether a claim is direct or derivative, if the claim is based on mismanagement, Section 53-19-16 establishes a heightened standard to prevail.”
Buke, LLC v. Cross Cnty. Auto Sales, LLC, No. 32,559 (N.M. Ct. App. Apr. 23, 2014).
· cites it 11× “” It is also clearly expressed in Section 53-19-16(D), which addresses use of LLC property by an LLC manager: Unless otherwise provided by the articles of organization or an operating agreement: .”
Stalker v. Haynes, No. 30,615 (N.M. Ct. App. Oct. 30, 2012).
· cites it 2× “or Haynes individually is 3 liable for acts on behalf of APS that rose to the level of gross negligence or willful 4 misconduct in violation of Section 53-19-16(B). Stalker, P.C. points to no evidence 5 in the record to support that assertion, nor is there showing that the issue…”
Strobel v. Rusch, 431 F. Supp. 3d 1315 (D.N.M. 2020).
“§ 53-19-16 (B); Lilak v. Astrazenca Pharm.”
N.M. Stat. § 53-19-16(B): 1 case
Stalker v. Haynes, No. 30,615 (N.M. Ct. App. Oct. 30, 2012).
“or Haynes individually is 3 liable for acts on behalf of APS that rose to the level of gross negligence or willful 4 misconduct in violation of Section 53-19-16(B). Stalker, P.C. points to no evidence 5 in the record to support that assertion, nor is there showing that the issue…”
N.M. Stat. § 53-19-16(D): 3 cases
Buke, LLC v. Cross Country Auto Sales, LLC, 2014-NMCA-078, 331 P.3d 942.
“” It is also clearly expressed in Section 53-19-16(D), which addresses use of LLC property by an LLC manager: Unless otherwise provided by the articles of organization or an operating agreement.”
Buke, LLC v. Cross Cnty. Auto Sales, LLC, No. 32,559 (N.M. Ct. App. Apr. 23, 2014).
“” It is also clearly expressed in Section 53-19-16(D), which addresses use of LLC property by an LLC manager: Unless otherwise provided by the articles of organization or an operating agreement: .”
N.M. Stat. § 53-19-16(D)(2): 2 cases
Buke, LLC v. Cross Country Auto Sales, LLC, 2014-NMCA-078, 331 P.3d 942.
“” It is also clearly expressed in Section 53-19-16(D), which addresses use of LLC property by an LLC manager: Unless otherwise provided by the articles of organization or an operating agreement.”
Buke, LLC v. Cross Cnty. Auto Sales, LLC, No. 32,559 (N.M. Ct. App. Apr. 23, 2014).
“” It is also clearly expressed in Section 53-19-16(D), which addresses use of LLC property by an LLC manager: Unless otherwise provided by the articles of organization or an operating agreement: .”
N.M. Stat. § 53-19-16(D)(2)(a): 3 cases
Buke, LLC v. Cross Country Auto Sales, LLC, 2014-NMCA-078, 331 P.3d 942.
“” It is also clearly expressed in Section 53-19-16(D), which addresses use of LLC property by an LLC manager: Unless otherwise provided by the articles of organization or an operating agreement.”
Buke, LLC v. Cross Cnty. Auto Sales, LLC, No. 32,559 (N.M. Ct. App. Apr. 23, 2014).
“” It is also clearly expressed in Section 53-19-16(D), which addresses use of LLC property by an LLC manager: Unless otherwise provided by the articles of organization or an operating agreement: .”
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