What Happens If a Business Partner Violates the Operating Agreement?

Real remedies from real Missouri cases — and what to do before, during, and after a breach

There's a particular kind of business dispute that doesn't announce itself until it's already cost you money, relationships, or both. It begins with a partner who starts making decisions you didn't authorize, or stops honoring obligations you thought were locked in, or rewrites the rules of an agreement you both signed — sometimes literally, without telling you. By the time the damage is visible, the question isn't whether something went wrong. It's what you can do about it.

Operating agreement violations are different from ordinary contract disputes in ways that matter. The people involved are often insiders — partners, members, managers — who have access to the business, its records, its bank accounts, and sometimes its legal structure. The remedies available depend heavily on the specific language of the agreement, the structure of the entity, and the sequence of events. And the mistakes that sink otherwise valid claims are often procedural: wrong theory, wrong pleading, wrong timing, or the wrong person sued in the wrong capacity.

The cases below cover the full landscape — from a business partner who fraudulently added a new member to dilute an existing one, to a manager who drained LLC accounts and claimed the articles shielded him, to a minority member locked out of a company she helped build, to warring bank shareholders who eventually discovered that the breach of fiduciary duty claim they were counting on had a fatal flaw in the statute of limitations. Each case teaches something different about what the law can do — and what it cannot — when a partner violates the operating agreement.

What the operating agreement actually covers
When a co-member or manager owes you fiduciary duties — and when they don't
What happens when a partner uses self-dealing to harm you
The arbitration problem: when your own contract routes you away from court
Jury waivers, lost notes, and the hidden procedural consequences of your agreements
Veil-piercing: getting to the individual behind the entity
What a violation actually costs — and what it doesn't automatically give you
The oral operating agreement: rights you have even without a signature
What to do when you realize the agreement has been breached

Illustration: Real remedies from real Missouri cases — and what to do before, during, and after a breach

1. What the Operating Agreement Actually Covers

An operating agreement is, at its core, a contract. It binds the members and managers who sign it — and in Missouri, it can also bind parties who behave as though it governs them, even if they never signed it. McKinley v. Hook, 730 S.W.3d 311 (Mo. App. 2026). What it covers depends entirely on what it says — but Missouri law has established floors below which an operating agreement cannot go.

Section 347.088 of Missouri's Limited Liability Company Act defines the basic obligations of members and managers. Managers must discharge their duties "in good faith, with the care a corporate officer of like position would exercise under similar circumstances, in the manner a reasonable person would believe to be in the best interest of the limited liability company." This isn't optional language — it's the statutory baseline for every manager-managed Missouri LLC, regardless of what the operating agreement says about limiting liability.

What the operating agreement can do is adjust those baseline duties — expand them, restrict them, or define specific obligations that go beyond the statute. As Hibbs v. Berger, 430 S.W.3d 296 (Mo. App. 2014), made clear: "Missouri's Limited Liability Company Act grants limited liability companies the power to effectively limit or define the scope of the fiduciary duties imposed upon an LLC's members and managers." But that power has a ceiling. Provisions that limit a manager's liability only work if the manager acted in good faith. A manager who uses the LLC's money for personal expenses, fabricates loans, or locks out co-members without authorization cannot hide behind a liability limitation clause, because the limitation itself is conditioned on good faith conduct.

The practical implication: when you're drafting or reviewing an operating agreement, you're not just reading what the parties agreed to — you're reading a document that interacts with a statutory framework that fills the gaps, overrides some provisions, and preserves certain rights regardless of what the agreement says.

2. When a Co-Member or Manager Owes You Fiduciary Duties — and When They Don't

This is one of the most consequential questions in any LLC dispute, and the answer is more nuanced than most business owners expect.

Hibbs v. Berger worked through the question systematically. Tavern Creek Door Company was a manager-managed LLC. Berger was its non-member manager. Hibbs was a 5% economic interest holder with no voting rights. Taylor and Wood Nuts held the voting interests.

The court recognized that "managers (member or nonmember managers) owe members of the LLC fiduciary duties, as a matter of law by virtue of the manager and member relationship." Section 347.088.1 of Missouri's LLC Act establishes the good-faith standard for managers, and the court read this as imposing on managers the same duties directors owe shareholders in a corporation. Berger, as manager, owed Hibbs fiduciary duties.

But — critically — the operating agreement had restricted those duties. Section 7.1 of Tavern Creek's Operating Agreement limited manager liability for actions taken "in good faith and in a manner reasonably believed by [the manager] to be within the scope of authority granted." And Section 3.6 specifically shielded managers from liability related to loan default proceedings. Because the evidence showed Berger acted in good faith and within the bounds of his authority (even if his decisions weren't in Hibbs's best interest), those operating agreement provisions provided effective protection.

The lesson isn't that managers are untouchable. The lesson is that the scope of your fiduciary duty claim depends on the specific language of the operating agreement, and courts will read those provisions carefully. If the agreement restricts the manager's liability to good-faith acts, you need to show the manager acted in bad faith. If the agreement requires good faith as a condition of the limitation, that condition becomes your focus.

On the member side, the picture is different. Section 347.088.4 provides that in a manager-managed LLC, "one who is a member of a limited liability company in which management is vested in one or more managers and who is not a manager shall have no duties to the limited liability company or to the other members solely by reason of acting in his capacity as a member." Wood Nuts, as a non-manager member of Tavern Creek, owed Hibbs no fiduciary duties at all. This is a statutory rule, not an oversight — members who are not managers simply don't have the same obligations managers do.

Hammett v. Atcheson, 438 S.W.3d 452 (Mo. App. 2014), shows what fiduciary duty looks like when it's actually breached. Atcheson was the First Manager of Simon Square Development, LLC, with "full and complete authority, power, and discretion to manage and control the business." After the Atcheson Trust acquired a majority interest through a transfer that violated the Buy-Sell Agreement, Atcheson used his sole control to: pay himself a $500,000 developer fee over his partner's objection; hire his own construction, landscaping, and realty companies at above-market rates; pay his personal legal fees from company funds; and make political campaign contributions. The jury found these actions breached his fiduciary duty to Hammett as a co-member.

The court upheld the breach of fiduciary duty finding: "Mr. Atcheson used this complete control to commit fraudulent and wrongful acts" and the "improper use of company resources resulted in an unjust loss to Mr. Hammett." The fiduciary duty running from manager to member was real, the breach was real, and the damages — though subject to a new trial on the amount — were warranted.

3. What Happens When a Partner Uses Self-Dealing to Harm You

Not every breach of a fiduciary duty involves outright fraud. Sometimes the violation is subtler: a partner captures a business opportunity that should have gone to the company, or uses their control over the entity to benefit their other interests at your expense.

Schieve v. Meyer, 628 S.W.3d 726 (Mo. App. 2021), presents the starkest version of self-dealing in the cases covered here. John Meyer was both the manager and a 39% member of Carroll Meyer Family Limited Liability Company. After the LLC sold farmland for $640,000, the other two members — his siblings — demanded their distributions. Meyer:

Suggested routing 95% of the proceeds through another of his businesses to claim a tax credit his co-members believed would constitute fraud
Stopped communicating with his siblings when they objected
Wrote a $50,000 check from the LLC to his own business, designating it as a "loan repayment" when no such loan existed
Used LLC funds to pay his personal federal and state tax bills totaling nearly $29,000
Transferred $200,000 to an account he controlled at another bank
Issued a cashier's check to himself for $109,444.35
Created a new LLC bank account, deposited $224,500, withdrew $224,480, and closed the account

When challenged, he told his co-members there was no money and essentially that all the proceeds had been his to control.

The court affirmed judgment of $205,982.55 plus attorneys' fees against Meyer. The statutory anchor was clear: Section 347.088.3 creates a trustee relationship — managers "hold as trustee for [the LLC] any profit or benefit derived by such person without the informed consent of more than one-half by number of disinterested managers or members from any transaction connected with the conduct of the business and affairs." Using company money to pay personal taxes or to repay fictitious loans is not a transaction connected with the business — it's personal misappropriation, and no operating agreement limitation on liability can shield it.

The attorneys' fees issue deserves attention. Meyer argued that he couldn't be personally liable for attorneys' fees because the LLC's articles didn't include a specific carve-out for bad faith, and the operating agreement's liability limitation didn't carve out bad faith by name. The court rejected this: the operating agreement required good faith as a condition of the limitation. Meyer's conduct was not good faith. The liability limitation didn't apply. And the operating agreement's attorneys' fee provision — which gave the prevailing party "all costs and expenses, including... reasonable attorneys' fees" — applied because Schieve prevailed. Meyer paid both the underlying damages and $40,000 in legal fees.

HCI Investors, LLC v. Fox, 412 S.W.3d 424 (Mo. App. 2013), presents self-dealing in a more sophisticated form. LLCs were formed by bank shareholders to acquire nonperforming assets from a struggling bank. The Fox Family, which controlled about 15% of the Holding Company, claimed that Fingersh and Blitt — who were both directors of the Holding Company and managers of the LLCs — engaged in self-dealing by setting the warrant percentage at 25% (the amount by which non-participating shareholders would be diluted).

Under Missouri and Kansas corporate law, when directors are on both sides of a transaction, they can't rely on the business judgment rule's presumption. Instead, the burden shifts to them to prove the transaction was entirely fair — both fairly dealt and fairly priced. The court articulated this standard: "The entire fairness standard is exacting and requires judicial scrutiny regarding both fair dealing and fair price." Fair dealing examines when the transaction was timed, how it was initiated, structured, negotiated, and disclosed. Fair price examines the economic terms.

Fingersh and Blitt satisfied that burden. The evidence showed the 25% warrant rate was developed with outside counsel and the bank's CFO, was offered equally to all shareholders, was driven by emergency circumstances (an imminent FDIC examination), and was supported by a reasonable analogy to what dilution would look like if an outside investor bought $40 million in stock. Fox himself agreed that doing nothing was not an option and that some incentivizing mechanism was appropriate. His disagreement was only with the specific percentage — but he offered no evidence of what a fair percentage would have been.

HCI Investors illustrates an important principle: self-dealing by a manager or director doesn't automatically mean liability. The self-dealing standard shifts the burden of proof; it doesn't eliminate the path to justification. When a manager can demonstrate that a transaction was initiated through a reasonable process, disclosed appropriately, offered on equal terms, and priced within a defensible range, the entire fairness standard can be met — even in a transaction where the manager stood on both sides.

4. The Arbitration Problem: When Your Own Contract Routes You Away From Court

Several operating agreements in these cases contained arbitration clauses, and each one created a different problem.

Midland Property Partners, LLC v. Watkins, 416 S.W.3d 805 (Mo. App. 2013), involved an LLC operating agreement with a broad arbitration provision covering "all disputes and controversies between any of the Members and/or Managers relating to the subject matter of this Agreement." Watkins owed money under promissory notes and wanted to set off that debt against money he claimed Respondents owed him from the purchase of his ownership interest in the LLC — a transaction he claimed violated the operating agreement's procedures.

The trial court dismissed his set-off claim and sent it to arbitration. The appellate court upheld this: "Where there is a broad arbitration provision, the trial court should order arbitration of any dispute that touches matters covered by the parties' contract." Because Watkins's set-off claim was based entirely on the LLC's operating agreement — the procedures for removing managers, purchasing ownership interests, and conducting meetings — it fell "squarely within the scope" of the arbitration provision. The trial court had no authority to consider it.

The result: Watkins lost his ability to present his set-off defense in the same litigation. He could still arbitrate that claim separately — but arbitration has different rules, different timelines, different costs, and potentially different outcomes than litigation.

McKinley v. Hook presented the inverse arbitration problem. Hook had drafted a written Operating Agreement that included an arbitration clause. McKinley had never signed it. The court held that McKinley was not bound by an agreement she didn't sign, even though she had signed other documents (loan applications, leases, deeds of trust) that were part of the same transaction. The critical language was in the Operating Agreement itself: it stated it would be "effective... by and among the Company and the entities executing this Agreement as Members." McKinley never executed it in her name.

The court denied the motion to compel arbitration. McKinley had standing to litigate in court because the court found an oral operating agreement between the parties — not the written one Hook had drafted and alone signed.

HCI Investors raised yet another variation: the LLC's operating agreement contained a jury waiver provision applying to claims "arising out of or in any way connected with this agreement or the relationship of the parties created hereunder." The Fox Family demanded a jury trial on their breach of fiduciary duty counterclaim against Fingersh and Blitt, arguing those individuals were being sued in a capacity different from the one in which they signed the operating agreements. The court disagreed. Fingersh and Blitt were parties to the operating agreements as managers. The counterclaim was "inextricably interwoven with the LLCs and the relationship of the parties created by the operating agreements." The jury waiver applied.

The practical result: a constitutional right — the right to a jury trial — can be waived by contract, and that waiver can extend to claims you didn't anticipate when you signed the agreement. Before you sign an operating agreement with a jury waiver or an arbitration clause, understand what you're giving up and in what circumstances.

If you're currently in a dispute involving an operating agreement with an arbitration clause, the threshold question — whether your claims can be litigated in court at all — may need to be resolved before anything else. We regularly advise clients on how to read these provisions and what options are available when they've been triggered. The conversation is worth having early.

5. Jury Waivers, Lost Notes, and the Hidden Procedural Consequences of Your Agreements

Midland Property Partners contains several additional procedural lessons that apply across business disputes.

The promissory notes at issue were lost. The respondents testified they had possessed the notes, hadn't transferred them, and couldn't locate them despite searching. The trial court found this sufficient to enforce the notes under Section 400.3-309, which allows enforcement of lost instruments when the claimant was in possession when loss occurred, has not transferred the instrument, and cannot reasonably obtain possession because the whereabouts are unknown.

Watkins objected that the pleadings didn't initially raise the "lost note" issue and that the evidence should have been excluded. The trial court allowed the pleadings to be amended to conform to the evidence under Rule 55.33(b), finding no prejudice because Watkins had already admitted he signed the notes, the note terms were undisputed, and the amendment didn't change the substance of the claims.

This matters for operating agreement disputes because similar evidentiary and pleading issues arise frequently: a party tries to introduce evidence of conduct not expressly alleged in the original petition, or raises a defense mid-trial that was never pled. Missouri courts give trial courts significant discretion to allow amendments when there's no prejudice to the opposing party. But the amendment must be sought; the evidence doesn't help you if you let the other side object without seeking leave to conform the pleadings.

The jury waiver issue in Midland Property Partners also illustrates the contemporaneous documents rule. The promissory notes didn't contain jury waiver provisions. But the guaranties — signed on the same day, attached as exhibits to the notes, explicitly referencing the notes — did. The court held these documents should be construed together because they "were executed contemporaneously and clearly relate to the same subject matter." The jury waiver in the guaranties extended to claims on the notes because the guaranties specifically referenced "any action or proceeding instituted against Guarantor or any other person liable on the Note."

This principle — that contemporaneously executed documents addressing the same transaction are construed together — has broad application in business disputes. If an LLC operating agreement contains a jury waiver, and a separate side agreement or guaranty or promissory note is signed at the same time in connection with the same transaction, a court may apply the jury waiver to disputes arising from the related documents, even if those documents don't themselves contain waivers.

On attorneys' fees: the Midland Property Partners court reversed the fee award because the note language — "all reasonable costs incurred by [Respondents] in collecting or enforcing payment" — did not expressly include attorneys' fees. Under Missouri's American Rule, attorneys' fees are not recoverable absent a statute or a contract that expressly authorizes them. "Costs" in a contract, like "costs" in a statute, does not ordinarily include attorneys' fees without more specific language. If you want your operating agreement to allow fee-shifting to the prevailing party in a dispute, the provision needs to say "attorneys' fees" explicitly — not just "costs" or "expenses."

6. Veil-Piercing: Getting to the Individual Behind the Entity

Sometimes the person who violated the operating agreement has structured things so that liability falls on the entity — which has no money — while they personally keep the benefit. The question then becomes whether the entity's legal protection can be stripped away.

Hibbs v. Berger established an important principle for LLC minority members specifically: under "appropriate circumstances," a minority shareholder can pierce the corporate veil of an LLC they're a member of to reach a majority member or controlling insider. The trial court had held this was categorically unavailable to members because they'd lose the ability to use the corporate shield against their own liability. The appellate court reversed: "if majority shareholders desire to be protected via the equitable doctrine of corporate veil piercing, then we should also require majority shareholders to operate under the same equitable principles by which they seek protection."

But establishing those "appropriate circumstances" is a high bar. The three-prong test requires:

Control. Not just majority ownership or majority votes, but "complete domination, not only of finances, but of policy and business practice in respect to the transaction attacked so that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own."

Breach. "Such control must have been used by the defendant to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or dishonest and unjust act in contravention of plaintiff's legal rights."

Causation. The control and breach must have "proximately cause[d] the injury or unjust loss."

Hibbs failed on the breach prong. The court found that despite Tavern Creek's financial difficulties, the evidence showed the managers acted in good faith during a genuinely terrible economic environment. Wood Nuts had lent the company nearly $300,000 trying to keep it alive; Berger's actions were aimed at corporate survival, not personal enrichment at Hibbs's expense. The court noted pointedly: "There is no evidence of Defendants perpetrating injustice; rather, there is only evidence of poor business decisions — performed in good faith — in a struggling economy."

Hammett v. Atcheson succeeded on piercing analysis precisely because Atcheson's conduct failed the good-faith test so clearly. Atcheson had essentially created a situation where the Atcheson Trust's majority interest combined with his role as First Manager gave him unchecked control — and he used it for personal enrichment at Hammett's expense. The self-dealing was explicit, documented, and specifically objected to by Hammett in real time. This is what the piercing doctrine was designed to address.

The contrast between Hibbs and Hammett is instructive. Poor business decisions made in good faith, even when they result in financial harm to minority members, generally don't support veil-piercing. Using control of a business to redirect its assets to personal benefit, pay personal expenses with company funds, or harm co-members through self-dealing generally does.

7. What a Violation Actually Costs — and What It Doesn't Automatically Give You

When a partner breaches the operating agreement, you're entitled to damages — but only the damages caused by the breach, measured appropriately, and not in a way that creates a double recovery.

Hammett v. Atcheson illustrates both the promise and the limits. The jury found for Hammett on all five counts and awarded $280,650 in general, unapportioned damages. But the court reversed on one count — the breach of the Buy-Sell Agreement — because the notice obligation ran to the seller (Haas), not to the buyer (the Atcheson Trust). Without that claim, the general damages award couldn't stand as-is because it was impossible to know how much of the $280,650 the jury had attributed to the defective count.

The court remanded for a new trial on damages only. The liability findings on the remaining counts — breach of the Restated Operating Agreement, breach of fiduciary duty, and fraud — survived and were affirmed. But the damages had to be re-determined based only on those valid claims, and apportioned among them.

The double-recovery issue also appeared. Settling defendants had paid Hammett some amount before trial (the record didn't specify how much). The Atcheson Parties argued any judgment should be offset by those settlement amounts. The court agreed in principle — "a party may be made whole by one compensatory damage award for multiple theories of liability, but a double recovery for the same wrongs is deemed an impermissible windfall" — but because damages were being retried, the offset question went back to the trial court too.

The attorneys' fees question was similarly contingent. Hammett's Buy-Sell Agreement expressly authorized fee recovery by the prevailing party. Because the buy-sell breach claim was reversed and the case was being retried on damages, the fee question was reserved pending the outcome on remand.

HCI Investors adds the principle that an invalid setoff claim cannot make a valid counterclaim unliquidated for prejudgment interest purposes. The Fox Family had stopped paying capital calls and the LLCs sought to enforce those obligations. The Fox Family's damages theory was based on their breach of fiduciary duty claim against Fingersh and Blitt. But once that claim failed on its merits, the setoff evaporated — and with it any argument that the LLCs' claim was unliquidated. The LLCs' unpaid capital call claim was based on specific documented amounts; there was no valid competing claim to make it uncertain.

8. The Oral Operating Agreement: Rights You Have Even Without a Signature

McKinley v. Hook presents a scenario that is more common than most people realize: two people build a business together without ever finalizing a written operating agreement that both signed. When the relationship breaks down, does the person who never signed the document have any rights?

In Missouri, the answer is yes — because Missouri's LLC Act defines "operating agreement" to include oral agreements: "any valid agreement or agreements, written or oral, among all members, ... concerning the conduct of the business and affairs of the limited liability company and the relative rights, duties and obligations of the members and manager, if any." Section 347.015(13).

McKinley and Hook had agreed, orally, that: they would form G&W for the purpose of purchasing and managing a property; they would each hold a 50% interest; they would split profits and losses; and McKinley would manage the firm while Hook managed the LLC. Both signed the real estate contract for the property, personal guaranties on the bank loans, leases, and deeds of trust. McKinley was identified as a member on G&W's tax returns. She participated in the loan closing.

Hook drafted a written Operating Agreement naming herself as Managing Member and Hook and McKinley as 50/50 members — but never presented it to McKinley for signature, and there was no signature line for McKinley. Hook alone signed it. The court held that document was not a valid operating agreement as to McKinley because its own language required it to be executed by the members to be effective.

The court found instead that an oral operating agreement existed with material terms: parties, subject matter, consideration, mutual promises. McKinley's consideration was her personal guaranty of the LLC loans, her acquisition of life insurance in connection with those loans, and her assumption of additional Firm management responsibilities so Hook could run the LLC. These weren't trivial. She was personally liable for the LLC's debt. She had skin in the game.

When Hook executed a resolution in 2019 purporting to confirm that McKinley had transferred her membership interest to Hook — when McKinley had done no such thing — and then locked McKinley out of the LLC's records and physical premises, the court found Hook breached her fiduciary duty. Hook had held herself out as Managing Member and was operating the LLC in that capacity; that conduct created a fiduciary duty to McKinley as a co-member even though the written Operating Agreement was invalid.

The lesson for businesses that are informally structured: the absence of a signed operating agreement is not the same as the absence of rights. If you have contributed to an LLC — money, personal guaranties, services, other consideration — and you've been publicly identified as a member, you likely have rights under an oral agreement. Those rights may be harder to prove than rights under a signed document, but they exist.

The lesson for businesses that are formally structured: an unsigned governing document is not a governing document. Hook learned this the hard way. If you want an operating agreement to govern the parties' relationship, all parties need to sign it.

9. What to Do When You Realize the Agreement Has Been Breached

The cases above collectively suggest a framework for responding when you discover a partner has violated the operating agreement.

Document what you know, now. The evidentiary foundation for every claim in these cases was the contemporaneous record: bank statements, emails, tax returns, meeting minutes, loan documents, demands made and ignored. If you're beginning to see signs of a breach — unauthorized transactions, unexplained payments, denials of access, decisions made without required approvals — start preserving documentation immediately. Don't rely on being able to reconstruct it later.

Understand which claims you have and which you don't. Hibbs shows that not every business outcome that hurts you is a legal wrong. If a co-member made poor decisions in good faith and the business suffered, you likely don't have a breach of fiduciary duty claim. If a manager used company money to pay personal expenses, you do. The distinction matters because pursuing a claim you can't win costs you time and money — and may reduce credibility on the claims you can win.

Check your operating agreement for arbitration clauses before you file anything. Midland Property Partners and McKinley v. Hook both illustrate how critical this is. If the agreement requires arbitration of disputes, filing in court may result in dismissal of your claims (with associated delay and cost), or in the court ordering arbitration but exercising no further authority. If your claims can only be brought in arbitration, you need to start that process with the right procedure. If the agreement is invalid as to you — as it was in McKinley — you may have more options than you think.

Pay attention to the statute of limitations. HCI Investors found that the Fox Family's breach of fiduciary duty counterclaim against Fingersh and Blitt as directors of the Holding Company was barred by the statute of limitations — even though the related affirmative defense was not. The distinction mattered. Missouri has different limitations periods for different claims: five years for general contract claims, shorter periods for some business torts. If you've been harmed by a partner's conduct but delayed in bringing a claim, get legal advice immediately about whether you're still within the window.

Identify who you're actually suing. Hammett demonstrates that the capacity in which someone signed or acts matters. Atcheson signed the Restated Operating Agreement as trustee of the Atcheson Trust, not as an individual — yet the court found him individually liable because, as First Manager, his actions were inseparable from those of the Trust. Hibbs shows the opposite: Wood Nuts, as a non-manager member, owed Hibbs no duties, period. Making sure the right defendants are named in the right capacities is a threshold requirement, not an afterthought.

Know what remedies are available and be specific about what you're seeking. Operating agreement violations can support multiple theories: breach of contract, breach of fiduciary duty, fraud, unjust enrichment, veil-piercing, constructive trust. Each theory has its own elements, its own measure of damages, and its own procedural requirements. Asserting all of them simultaneously without factual specificity — as the University in Missouri Baptist University did — may result in all of them being rejected for inadequate pleading. If you want a constructive trust, say so and explain what property it attaches to. If you want an accounting, say so and specify what time period. If you want attorneys' fees, your operating agreement needs to expressly authorize them — and you need to plead and prove them.

Don't underestimate the "unclean hands" risk. Multiple cases in this series have touched on the principle that equity will not aid a party who has themselves engaged in inequitable conduct related to the same dispute. Finch v. Campbell (covered in prior articles) lost hundreds of thousands of dollars in partnership equity because the partner had taken inconsistent positions in his divorce proceedings. If you have made representations about the business — in a tax return, a loan application, another lawsuit — that conflict with what you're now claiming, address that issue with counsel before it becomes a problem in litigation.

Illustration: 9. What to Do When You Realize the Agreement Has Been Breached

A Note on Operating Agreement Design

The cleanest lesson that runs through all five of these cases is that operating agreements are litigation documents. Most people draft them hoping they'll never need to use them as such. But whether an agreement will protect you depends entirely on whether it was drafted to address the scenarios that actually arise when business relationships break down.

That means:

Specify what fiduciary duties apply and when the limitation provision kicks in. Language that says a manager isn't liable for acts taken "in good faith" is more protective than language that simply says the manager isn't liable "for acts taken as manager" — because courts read the good-faith condition into the limitation either way.

Require attorneys' fees to be expressly named. As Midland Property Partners held, "costs" don't include attorneys' fees in Missouri. If you want fee-shifting in an operating agreement dispute, write "attorneys' fees" into the provision.

Think about whether you want arbitration — and draft the clause precisely. Broad arbitration clauses sweep in everything connected to the agreement, including claims you might prefer to litigate. If some categories of disputes should stay in court (injunctive relief, enforcement of specific provisions, claims against managers in their individual capacities), build those carve-outs in.

Put the signature lines on the document and require all members to sign. McKinley v. Hook is a cautionary tale. Hook drafted the agreement, listed McKinley as a member, and then never gave her a copy or asked her to sign. The result: the written agreement was invalid, the arbitration clause was unenforceable, and McKinley had full rights under an oral agreement that was harder to prove and harder to work with. If you want the written agreement to govern, get everyone's signature.

Define what happens when a member stops fulfilling their obligations. HCI Investors involved a member who simply announced they were "no longer willing to participate." The operating agreement had a clear capital call obligation and the LLCs were able to enforce it — but only because the agreement was explicit. Vague agreements about "reasonable" obligations or "mutual" contributions create disputes about meaning before you can even get to enforcement.

Operating agreement disputes are among the most complex business litigation matters we handle — precisely because the operating agreement is both the source of the rights being enforced and the document that determines how the dispute gets resolved. Whether you're the member who's been wronged, the manager defending against a claim, or the business owner who wants to prevent the dispute from arising in the first place, the analysis starts with the agreement itself and what it actually says. Our attorneys work with clients at every stage — from drafting through litigation — to understand their rights, evaluate their claims, and build a strategy that accounts for the full legal landscape. If a business partner has done something that doesn't look right to you, that's the right time to have the conversation.

This article is for informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult our attorneys.