Davis v. MKR Development, LLC

Record No: 171020 Davis v. MKR Development, LLC (As published by the Virginia Supreme Court) In a derivative action brought on behalf of a limited liability company by the majority shareholder against the entity appointed under the LLC’s operating agreement to manage the company, along with two of the manager’s principals, the circuit court erred in dismissing the action on the ground that the plaintiff had failed to first make a demand for the corporation to take action. Although Code § 13.1-1042, as amended, no longer expressly states a “futility exception” to the demand requirement, the revised statute did not abolish the futility exception, which has long been part of the law and is contemplated in other provisions of Virginia statutory law. The judgment dismissing the case without prejudice is reversed and the case is remanded for further proceedings.