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Archives for January 2016

We’ve moved (to a new office suite) – and other changes

January 14, 2016 By

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The new year brings more changes for the Ellinger Carr law firm.  We are growing, and we made a recent move.  We are settling in and hanging pictures in our new office suite.  Our new physical address is now Suite 360, at 2840 Plaza Place, Raleigh, North Carolina 27612.

We also recently added a new staff member, Nicole Savago, who is our office manager and paralegal.  We are pleased to have Nicole join our lawyer colleagues, Heather McDowell and  Sarah Goodin, who joined us in 2014, and Nevar Guy, our paralegal, who also joined us in 2014.

We recently celebrated our firm’s seventh anniversary, and we want to say “Thank you!” to all who have made the past seven years a great success.

We succeed because our clients succeed, and we remain focused on and dedicated to the things that were the reasons we formed the firm: developing communities, preserving history, and serving clients. We gratefully acknowledge and give thanks for all of our clients and colleagues who have made the past seven years a memorable and exciting time.

This year, we  joyfully anticipate more change and more success.  We will be updating our website soon, and we will be looking at expanding into new practice areas, and developing new and better ways of providing and improving our client service.

We look forward to working with you for many years to come, and we are grateful for the opportunities to do so!  Please contact us, and let us know how we can be of service to you.

Best wishes always,
Susan Ellinger and Steven Carr

Ellinger & Carr PLLC

Filed Under: About Us

The LLC with Multiple Members: What Does Your Operating Agreement Say About Major Decisions?

January 14, 2016 By

It’s fairly easy to start up and to organize your limited liability company (LLC) with the filing of articles of organization with the Secretary of State’s office. Many clients file the articles themselves. The LLC has become one of the most popular forms of business entity among new businesses being formed.

Owners of an LLC are called members. Members may include individuals, corporations, other LLCs, and even foreign entities. There is no maximum number of members. Most states, including North Carolina, also permit “single-member” LLCs, those having only one owner.

If your LLC has more than one member or owner, because of the potential for disputes and significant potential liabilities, and serious legal and tax consequences, we advise our clients to think ahead, and to write and to agree on a clear, consistent and unambiguous operating agreement.

It’s especially important to carefully review and to have the members agree on the wording of the operating agreement about how major decisions of the LLC get made. The members should discuss and agree on what the voting requirements are or should be for making such decisions by the LLC’s members.  Do the members always want unanimous decisions, or will a majority vote be sufficient for your management decisions?

In a recent North Carolina Business Court decision, the Business Court ruled that two of the three members of the LLC may vote and effectively deprive the third member from decision-making authority. The Court considered the LLC operating agreement provision that permits amendments by a majority in interest. In this case, the majority in interest (two of the three members, each of whom had a 1/3 membership interest in the LLC) may agree and vote to modify the provision requiring unanimous member consents for management decisions, so that such decisions may be made without unanimous consent, effectively excluding the vote of the third member. The Business Court ruled that the majority in interest owe no fiduciary duty to the third member, and owe no duty to act in good faith in their business relationship with the third member. [Read more…]

Filed Under: Uncategorized

Term Sheets and Good Faith: A Legal Duty to Continue Negotiating?

January 14, 2016 By

Business deals and commercial transactions often involve term sheets.  Sometimes multiple versions and exchanges of draft term sheets are used as the starting point for negotiations of the basic deal elements that culminate in a final writing for the closing of the transaction. We urge our clients to exercise care in the writing and exchanges of term sheets and deal terms, even when the parties declare that the term sheet or letter of intent is not binding until the final contract is prepared and executed by the parties. Sometimes, the parties don’t get to a final contract, and the negotiations end when one of the parties walks away.

Ordinarily, walking away concludes the discussions. But a recent North Carolina Business Court decision, following a trend in other jurisdictions, set forth a new rule in North Carolina: the party walking away may be liable for breach of a duty to negotiate, or to continue negotiating, in good faith.

The Business Court noted that North Carolina law already implies in every contract a duty of good faith and fair dealing. Under the right circumstances, the Business Court ruled that a jury or a court could conclude that, even though the parties failed to reach a final agreement on all of the material terms of the transaction, “their words and conduct established an agreement to continue negotiating in [an] attempt to finalize the terms of the agreement and close” on the transaction. And, while the “agreement to negotiate” might not bind either party to the final terms, “such an agreement would carry with it an implied obligation that the parties . . . conduct any further negotiations in good faith.” North Carolina law also recognizes that oral agreements may constitute enforceable contracts.

The lesson here may be that careful drafting of your deal terms includes carefully wording your term sheet, to make clear that you have no duty to continue negotiating and that the deal discussions may be called off at any time without liability.

Ellinger Carr is a business law and commercial real estate law firm based in Raleigh, North Carolina. Ellinger Carr lawyers are experienced and knowledgeable counselors, transaction leaders and business problem solvers, admitted to practice in North Carolina, South Carolina, Florida, Louisiana and New York. For assistance in commercial real estate and corporate and business development matters, call 919-785-9998 or email Susan Ellinger at sellinger@ellingercarr.com, Steven Carr at scarr@ellingercarr.com, Heather McDowell at hmcdowell@ellingercarr.com, and Sarah Goodin at sgoodin@ellingercarr.com.

Filed Under: Commercial Transactions and Contracts, Uncategorized