Gurney-Goldman v. Goldman, 321 A.3d 559

Background

Sol Goldman built a large NYC real‑estate empire; after his death (1987) his four children (Jane, Diane, Amy, Allan) came to own and run family entities.
SG Windsor, LLC (Del.), formed in 2002 (originally Mill Neck LLC), has no written LLC agreement; for ~2002–2022 each sibling was treated as owning a 25% member interest.
Practically, Jane and Allan (with longtime employee Louisa) ran the business colloquially; Diane and Amy were largely passive.
Allan died in January 2022; his son Steven is executor and seeks to exercise governance rights tied to Allan’s SG Windsor interest to administer/settle the estate.
Plaintiffs sued for declarations that SG Windsor is member‑managed, that Allan’s estate is a member (or that the executor can exercise member rights), and sought an injunction preventing Jane from acting unilaterally.
Court held: SG Windsor is member‑managed by default; Allan’s estate is an assignee (not a member); the executor may exercise the deceased member’s governance rights under 6 Del. C. § 18‑705 but only to settle the estate or administer its property; no injunction issued.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
1) Is SG Windsor manager‑managed or member‑managed?	SG Windsor operated as manager‑managed with Jane/Allan/Louisa as managers (implied agreement).	No written operating agreement; conduct shows colloquial management but no implied LLC‑Act managers.	Member‑managed by default (no persuasive evidence of an implied LLC‑Act manager agreement).
2) Does Allan’s estate hold membership (governance) rights in SG Windsor?	Estate is a member by operation of the 2002 transition (or by implied practice) and/or Sharing Agreement.	Default LLC law treats post‑death transferees as assignees; no unanimous admission occurred.	Estate is an assignee, not a member; plaintiffs failed to prove automatic admission.
3) Can the executor exercise the deceased member’s governance rights under § 18‑705, and to what extent?	§ 18‑705 permits the personal representative to exercise "all of the member’s rights" to settle/administer the estate, including governance rights.	Limit § 18‑705 narrowly: executor may only "settle the estate," not perform general administration or exercise broad governance powers.	§ 18‑705 authorizes the personal representative to exercise member‑level governance rights for proper purposes (settling the estate or administering the decedent’s property); executor must act subjectively for a proper purpose.
4) Do Jane’s equitable defenses or plaintiffs’ request for an injunction bar relief?	N/A (plaintiffs sought declaratory and injunctive relief).	Defenses: acquiescence, ratification, estoppel, laches, consent, waiver — plaintiffs waited and accepted longstanding management.	Defenses fail: prior colloquial management did not vest LLC‑Act managerial rights; plaintiffs sued promptly when dispute arose. No injunction issued (no concrete threatened act identified).

Key Cases Cited

Cede & Co. v. Technicolor, Inc., 758 A.2d 485 (Del. 2000) (statutory construction and use of legal history to interpret statutes).
In re Krafft‑Murphy Co., 82 A.3d 696 (Del. 2013) (distinguishing dissolution/winding up and termination/cancellation of entities).
Crabapple Corp. v. Elberg, 153 A.D.3d 434 (N.Y. App. Div. 2017) (New York courts construing analogous LLC statutes to permit executors to exercise decedent’s LLC rights for estate settlement).
Holdeman v. Epperson, 857 N.E.2d 583 (Ohio 2006) (executor of deceased partner/member may exercise partner‑level rights to settle estate).
Achaian, Inc. v. Leemon Family LLC, 25 A.3d 800 (Del. Ch. 2011) (describing pick‑your‑partner policy embedded in Delaware entity transfer defaults).
Goldstein v. Denner, 310 A.3d 548 (Del. Ch. 2024) (discussion of burden of proof and its practical effect on contested facts).