Binge watching HGTV is my guilty pleasure. Those of you who suffer from the same vice, may have seen HGTV’s “Fixer Upper.” Well, the stars of the show are now defendants in a million-dollar lawsuit. So what happened? Allegedly, the star of the show, Chip Gaines, persuaded his two previous partners to sell their 1/3 interest in Magnolia Realty for $2,500 apiece. The former partners claim that Chip bought them out only two days before Chip began the hit show, which prominently featured Magnolia Realty. Since then, Magnolia Realty’s business has allegedly grown exponentially. The Texas suit raises the following questions, among others, about Chip’s actions and duties at the time of the buyout:
- What did Chip know about the HGTV deal at the time of the buyout?
- What, if anything, did he disclose to the partners about the deal?
- What duty, if any, did Chip have to inform his partners about the HGTV deal?
- Must the partnership be resurrected?
At least in Pennsylvania, we know that members owe a fiduciary duty to other members in a member-managed limited liability company such as Magnolia.
You can read more about the lawsuit here.