Condo v. Conners

Summary

The Colorado Supreme Court held that an LLC operating agreement's anti-assignment clause applied to both membership rights and duties, including the right to receive distributions. In the context of this closely held LLC, the clause rendered a member powerless to make an unapproved assignment even though it did not expressly state that the assignment was void or invalid. Because the assignment had no legal effect, the plaintiff's tortious-interference and civil-conspiracy claims failed for lack of a valid preexisting contract, and summary judgment for the defendants was affirmed.

Holdings

1. The operating agreement's prohibition on transferring 'any portion' of a membership interest applied to both membership rights and duties, including Banner's right to receive LLC distributions and his voting interest.
2. In the context of this closely held LLC and its operating agreement, the anti-assignment clause rendered Banner powerless to make the unapproved assignment; the assignment therefore had no legal effect even without 'magic words' stating that it was void or invalid.
3. Summary judgment for the defendants was proper because Condo's tortious-interference and civil-conspiracy claims depended on a valid, preexisting contract, and the Banner assignment had no legal effect.

Questions Presented

1. Whether the LLC operating agreement's anti-assignment clause applied to Banner's transfer of his right to receive distributions and voting interest.
2. Whether an anti-assignment clause in a closely held LLC operating agreement rendered an unapproved assignment legally ineffective even though the agreement did not expressly state that the assignment was void or invalid.
3. Whether summary judgment was proper on Condo's tort claims when the challenged assignment was ineffective and therefore could not constitute a valid contract with which defendants could interfere.

Disposition

affirmed