1. Will a court support BHA’s attempt to cancel the contract? What will be BHA’s likely theory of the case? 

2. Assume that the managing members agreed with the transaction and signed on in agreement. Given BHA’s choice of business entity, what are the options for financing this transaction?

3. Would an LLP be a better form than an LLC for BHA? Why or why not?

4. Assume that Luciano didn’t bring the opportunity to the LLC members but rather purchased the competing dealership with another partner outside the LLC. Subsequently, Luciano offers to sell the dealership to BHA at a premium over what he paid for it. Has Luciano breached his fiduciary duty? If so, which one?

5. If Luciano decides to exercise his dissociation rights, what is the impact on the remaining members of the LLC? Is dissolution of the LLC triggered by Luciano’s dissociation?

Beverly Hills Autos (BHA) LLC is a retail car dealership organized as a limited liability company and engaged in the business of selling various brands of luxury automobiles and SUVs in several dealership locations. The LLC was structured as a manager-managed LLC with two managing members and six other members who were primarily investors. The parties had an operating agreement that provided the structure and authority of managing members, included a provision eliminating liability for a breach of the duty of care, and stated that the members agreed to abide by the default LLC statute in their state based on the Uniform Limited Liability Company Act (ULLCA) for terms not in the agreement. One of the non managing members, Luciano, began a conversation with the owner of another car dealership and eventually negotiated a merger agreement. However, the managing members were out of town, and Luciano signed the agreement on behalf of the partnership without the managers’knowledge. When the managing members learned of 482  UNIT FOUR | Business Entities, Securities  Regulation, and Corporate Governance the merger, they immediately attempted to cancel the contract on behalf of BHA.