Case Problem with Sample Answer—LLC Operation. After Hurricane Katrina, James Williford, Patricia Mosser, Marquetta Smith, and Michael Floyd formed Bluewater Logistics, LLC, to bid on construction contracts.

Under Mississippi law, every member of a member-managed LLC is entitled to participate in managing the business. The operating agreement provided for a “super majority” 75 percent vote to remove a member “under any other circumstances that would jeopardize the company status” as a contractor.

After Bluewater had completed more than $5 million in contracts, Smith told Williford that she, Mosser, and Floyd were exercising their “super majority” vote to fire him. No reason was provided. Williford sued Bluewater and the other members. Did Smith, Mosser, and Floyd breach the state LLC statute, their fiduciary duties, or the Bluewater operating agreements? Discuss. [Bluewater Logistics, LLC v. Williford, 55 So.3d 148 (Miss. 2011)] (See pages 730–732.)

—For a sample answer to Problem 28–7, go to Appendix H at the end of this text.