The Former LLC Law only provided that the fiduciary duties of managers of a California LLC were the same as the fiduciary duties owed by a partner of a partnership to the partnership and its partners. The New LLC Law clarifies the fiduciary duties of members and managers of all California LLCs, but the duties depend on whether the LLC is member managed or manager managed.
If a California LLC is member managed the members are subject to the fiduciary duties of loyalty and care and the obligation of good faith and fair dealing. The duty of loyalty to the LLC and its members means members must:
1. account for any property, profit, or benefit derived from the member’s use of a LLC property or the appropriation of an LLC opportunity,
2. not act on behalf of somebody who has an interest that is adverse the LLC, and
3. not compete with the LLC.
The duty of care means members must not engage in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law. See California RULLCA Section 17704.09(b) & (c).
If the California LLC is manager managed then the members are not subject to the duties of loyalty or care. Instead, it is the managers of the LLC who are subject to the fiduciary duties of loyalty and care. Members and managers of a manager managed CA LLC are subject to the obligation of good faith and fair dealing. See California RULLCA Section 17704.09(f).