In Auriga Capital Corp. v. Gatz Properties, LLC, No. 4390, 2012 WL 361677 (Del. Ch. Jan. 27, 2012), the Delaware Chancery Court held that traditional fiduciary duty principles apply to managers of limited liability companies unless those duties are expressly restricted or eliminated in the LLC agreement.  The case involved an LLC manager who used a sham auction process to sell the LLC’s main asset (a golf course) and purchase it himself at a discount, thereby eliminating the interests of the LLC’s minority members.  In a suit by minority members challenging the manager’s conduct, the court observed that the Delaware LLC Act “does not plainly state” that traditional fiduciary duties “apply by default.”  However, the Act does provide that the underlying “rules of law and equity … shall govern.”  Analyzing the history of the Act and the development of LLCs, the court held that as a matter of equity, fiduciary duties of loyalty and care apply to LLC managers by default.  Accordingly, a manager cannot structure a transaction to manipulate the company’s value “so as to permit or facilitate the forced elimination of the minority [holders] at an unfair price.”  The court stressed that under the Act, the LLC agreement can permit “full contractual exculpation for breaches of fiduciary and contractual duties,” and concluded that, because the applicable LLC agreement did not exculpate breaches of fiduciary duty, the defendant manager was liable for substantial damages, plus a large portion of plaintiffs’ attorneys’ fees.