Background
MCS Burbank, LLC, a certified Airport Concessions Disadvantaged Business Enterprise, partnered with Mera USA, LLC to operate airport concessions. MCS, Mera, and La Farm Bakery Bistro RD, LLC formed Mera RD LLC, a Delaware limited liability company created to operate a restaurant at Raleigh-Durham International Airport. Mera held a majority interest and appointed three of the venture’s five managers, while MCS appointed one manager.
After the relationship deteriorated, MCS alleged that Mera, affiliated entities, and individual representatives had used MCS to enter the U.S. airport-concessions market and then sought to squeeze it out. In January 2024, Mera and its designated managers removed MCS’s representative as manager, operational director, and vice president and attempted to repurchase MCS’s membership interest. An earlier ruling upheld the removal but held that the attempted repurchase violated the parties’ agreed valuation procedure.
MCS asserted nine counterclaims and third-party claims, including fraudulent inducement, breach of contract, breach of the implied covenant, fiduciary-duty claims, estoppel, declaratory and accounting relief, and conversion. Mera and the third-party defendants moved to dismiss some or all of those claims.
The Court’s Holding
The Court dismissed Counts I, II, IV, V, VI, VII, and IX in their entirety. It dismissed Counts III and VIII against Axel Molet Warschawski, Rafael Felipe de Jesus Aguirre Gomez, and the affiliated Mera entities, leaving only MCS’s breach-of-contract claim and its related request for declaratory relief and an accounting against Mera itself.
The Court held that the affiliated entities and Gomez could not be liable for breach of the joint-venture agreement because they were not parties to it in their individual capacities. It also rejected the implied-covenant theory because the agreement expressly allowed the managers to remove an operational director “with or without cause at any time” and specified the resulting buyout process. The implied covenant could not rewrite those negotiated provisions or convert MCS’s broader theory of a precontractual scheme into a contract-performance claim.
The Court further concluded that the governing contracts foreclosed MCS’s fraud and estoppel theories concerning control of the venture’s bank account, a right of first refusal, and limits on competition. MCS could not reasonably rely on precontractual representations that conflicted with or were addressed by the parties’ integrated agreements.
Key Takeaways
- MCS’s case proceeds only on breach of the joint-venture agreement and related declaratory and accounting relief against Mera.
- Nonsignatory affiliates and representatives were not personally liable for breaching the joint-venture agreement merely because they participated in the underlying events.
- The implied covenant cannot restrict an express contractual right to remove an operational director without cause or displace the negotiated consequences of that removal.
Why It Matters
The decision illustrates Delaware courts’ reluctance to use fraud, estoppel, or the implied covenant to supply protections that sophisticated parties did not secure in their written agreements. Express LLC provisions allocating removal authority and establishing buyout procedures will generally control even when the minority member alleges that the majority acted with an improper strategic purpose.
The ruling also underscores the importance of identifying the proper contracting defendant. Participation by managers, owners, or affiliated entities in disputed conduct does not, without an independent legal basis, make them liable for the entity’s contractual obligations.