In re: Sky Harbor Hotel Properties, LLC, Debtor.
Patel Properties, LLC, Defendant. Sky Harbor Hotel Properties, LLC, Plaintiff, In re: Swift Air, LLC, Reorganized Debtor, MorrisAnderson & Associates, Ltd., Litigation Trustee for the Reorganized Debtor, Plaintiff,
Redeye II, LLC, et al., Defendants.
Certified Questions from the United States Bankruptcy Court
for the District of Arizona Nos. 2:17-bk-08082-PS;
R. Clemency (argued), Lindsi M. Weber, Maria F. Hubbard,
Polsinelli PC, Phoenix, Attorneys for Sky Harbor Hotel
M. Levine (argued), Paul M. Levine, P.C., Scottsdale,
Attorneys for Patel Properties, LLC
C. Schian (argued), Scott R. Goldberg, Schian Walker, P.L.C.,
Phoenix; Kim. R. Maerowitz, The Maerowitz Law Firm,
Scottsdale, Counsel for MorrisAnderson & Associates, Ltd.
J. Salerno, Alisa C. Lacey, Christopher C. Simpson, Anthony
P. Cali (argued), Stinson Leonard Street LLP, Phoenix,
Attorneys for Redeye II, LLC, et al.
JUSTICE BALES authored the opinion of the Court, in which
VICE CHIEF JUSTICE BRUTINEL and JUSTICES TIMMER, BOLICK,
GOULD, LOPEZ and PELANDER (Retired) joined.
These consolidated cases involve alleged breaches of
fiduciary duties. To address these claims, the United States
Bankruptcy Court for the District of Arizona certified the
following questions to this Court:
1. Does a manager of an Arizona limited liability company
("LLC") owe common law fiduciary duties to the
2. Does a member of an Arizona LLC owe common law fiduciary
duties to the company? 3. Can an Arizona LLC's operating
agreement lawfully limit or eliminate those fiduciary duties?
We answer the first question in the affirmative. We answer
the second question in the affirmative, provided that the
member is an agent of the LLC. We answer the third question
in the affirmative but note that the operating agreement may
not eliminate the implied contractual duty of good faith and
Arizona enacted its first limited liability company act
("LLC Act") in 1992. See 1992 Sess. Laws
395 (2d Reg. Sess.). The statutory scheme is codified at
A.R.S. § 29-601 et seq. Last year, Arizona's
legislature enacted a new Arizona Limited Liability Company
Act ("ALLCA") to eventually replace the LLC Act.
See 2018 Ariz. Sess. Laws 833 (2d Reg. Sess.) (to be
codified at A.R.S. § 29-3101 et seq.). ALLCA will first
apply only to LLCs formed on or after September 1, 2019, but