Niloy & Rohan, LLC v. Sechler, 335 Ga. App. 507

Background

N&R (Niloy & Rohan, LLC) and Sechler were equal members of SRP, an LLC formed to develop and sell office condominiums; N&R (via Thakkar and related entities) funded the project while Sechler managed sales through his brokerage, New South.
The Operating Agreement required closing proceeds to pay SRP expenses and creditors first, then divide remaining profits equally; it contemplated loans evidenced by notes and guaranties that were never executed.
Over years Thakkar’s entities advanced $8.5M to SRP; N&R directly advanced $1,387,289.79. SRP repaid about $6.66M overall, but N&R received only $189,531.69 in repayments.
Sechler controlled closing funds and paid himself $899,465.85 (including $778,504.73 characterized as profit) and New South $384,264.07 in commissions; trial court found these distributions breached the Operating Agreement and Sechler’s fiduciary duty.
The trial court found breaches occurred but denied monetary damages to N&R, reasoning N&R failed to prove it (rather than other Thakkar entities) suffered the unpaid debt and that the parties had mutually departed from the contract terms.
On appeal the court affirmed the finding of breach but reversed the no-damages ruling as to N&R, holding the stipulated accounting established N&R’s outstanding loan balance ($1,197,758.10) and remanding for damages (and statute-of-limitations) analysis.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether N&R proved damages from Sechler’s breaches	Stipulated accounting shows N&R’s loan was not repaid and it suffered $1,197,758.10 loss	N&R failed to prove that unpaid funds were advanced by N&R (vs. other Thakkar entities) so N&R lacks damages	Court: Accounting establishes N&R has an unpaid loan balance; trial court erred in denying damages on that ground
Whether Sechler breached contract and fiduciary duty by distributions	Distributions to Sechler/New South violated Operating Agreement and fiduciary duty	Sechler relied on an agreed modified split (65/35) and classified payments as profit/loan repayments	Court: Sechler breached both contract and fiduciary duty by paying profit distributions and unauthorized commissions when no profits existed
Whether mutual departure from the Operating Agreement bars recovery	Departure should not bar fiduciary-duty recovery; N&R entitled to damages despite past practice	Parties’ long-standing departure modified contract; N&R failed to give notice to insist on original terms	Court: Mutual departure defense does not necessarily bar fiduciary-duty damages; remand to assess damages despite prior conduct
Whether statute of limitations or multiple acts affect damages	Damages accrue when wrongful acts caused appreciable damage; each act may create new claim	Some claimed breaches occurred years earlier and may be time-barred	Court: Remand to trial court to consider applicable statutes of limitation and timing for any damages awarded

Key Cases Cited

Schick v. Bd. of Regents of the Univ. System of Ga., 334 Ga. App. 425 (overview of appellate standards and deference to bench trial findings)
Norton v. Budget Rent A Car System, Inc., 307 Ga. App. 501 (elements of breach of contract require damages)
Wells Fargo Bank, N.A. v. Cook, 332 Ga. App. 834 (elements of breach of fiduciary duty require proximate damage)
Corrosion Control, Inc. v. William Armstrong Smith Co., 157 Ga. App. 291 (failure to prove damages is fatal to contract claim)
Conner v. Hart, 252 Ga. App. 92 (failure to establish damages can defeat fiduciary-duty claim)
Morrison v. Roberts, 195 Ga. 45 (mutual departure/modification by conduct doctrine)
Internal Medicine Alliance, LLC v. Budell, 290 Ga. App. 231 (managing members owe fiduciary duties to LLC and members)
Northwest Plaza, LLC v. Northeast Enterprises, Inc., 305 Ga. App. 182 (a course of conduct can create tort liability separate from contract)
Godwin v. Mizpah Farms, LLLP, 330 Ga. App. 31 (statute-of-limitations analysis for fiduciary-duty claims)