LLC Fiduciary Duties, Corporate Opportunity Doctrine, and Deadlock Dissolution in a Litigation Finance Joint Venture

Business Law and Estate Planning Controversies

LLC Fiduciary Duties, Corporate Opportunity Doctrine, and Deadlock Dissolution in a Litigation Finance Joint Venture

Prepared March 15, 2026

Court: Court of Chancery of Delaware

Date: March 10, 2026

Citation: In Re Priority Responsible Funding LLC, C.A. No. 2024-0651-NAC, 2026 WL 674490 (Del. Ch. Mar. 10, 2026)

Summary of Relevant Facts

Priority Responsible Funding LLC (PRF) is a Delaware limited liability company engaged in litigation finance, co-managed by Priority Pre-Settlement Funding LLC (PPSF, controlled by attorney Brett Findler) and Gard Family Office, LLC (GFO, controlled by hedge fund manager Casey Gard), each holding 50 percent. Formed in January 2019, PRF originated non-recourse pre-settlement litigation fundings. In 2019, the partners restructured the business into an origination-and-servicing (O&S) model, transferring PRF's case portfolio to newly formed investment vehicles—Fund I, LP and Fund II, LP—managed by GFO Asset Management LLC (GFOAM). Brett signed all operative documents facilitating this transition and actively marketed the enterprise to investors. By late 2023, PRF's underwriting performance declined significantly, cases resolved unfavorably, and tension over Brett's compensation demands escalated. After Gard refused Brett's request to increase his salary from $750,000 to $1 million, Brett threatened dissolution proceedings. Since mid-2024, PRF has been substantially inoperative.

Procedural Background

GFO filed a consolidated action seeking PRF's statutory dissolution and winding up under Delaware LLC Act Section 18-803(a), along with appointment of a liquidation trustee. PPSF counterclaimed for breach of fiduciary duty (corporate opportunity doctrine), breach of the PRF LLC Agreement, tortious interference with business relationships, and imposition of a constructive trust. The Court bifurcated proceedings into liability and damages phases. A three-day trial was held in March 2025, with Vice Chancellor Saritza Rivera Vega issuing the opinion on March 10, 2026.

Main Controversies

1. Whether GFO breached fiduciary duties by usurping corporate opportunities through the formation and management of the Funds, diverting origination opportunities that should have inured to PRF's benefit.

2. Whether GFO breached the PRF LLC Agreement by failing to make distributions, unilaterally altering PRF's business purpose, misusing confidential information, and disparaging PRF.

3. Whether GFO tortiously interfered with Brett's business relationships by disparaging him and PRF to prospective investors and business contacts.

4. Whether PRF should be dissolved for deadlock under Delaware LLC law, given the 50/50 co-management structure and the parties' inability to communicate or operate the business.

Positions of the Parties

PPSF argued that GFO systematically usurped opportunities belonging to PRF by initiating the hedge fund structure without PRF's equal participation, failed to distribute profits from the O&S arrangements, fundamentally altered PRF's business purpose without required written amendments, and manufactured the deadlock through bad faith conduct. Brett claimed he did not fully understand the business transformation documents he signed.

GFO contended that Brett consented to and participated in the O&S restructuring by signing all relevant agreements and actively marketing the enterprise. GFO argued the LLC Agreement did not restrict Gard from forming and managing the Funds, that no distribution obligation arose because PRF made no direct "Investments" under the agreement's definitions, and that the deadlock was genuine and indisputable.

Court's Holding

The Court entered judgment substantially in GFO's favor. All of PPSF's claims—fiduciary duty, breach of contract, tortious interference, and constructive trust—were rejected. The Court granted GFO's petition for dissolution, finding PRF's business was not reasonably practicable to carry on.

Key Reasoning and Analysis

On corporate opportunity, the Court applied the Broz test and found that Brett's detailed involvement in structuring the Funds—signing assignment and O&S agreements, marketing the enterprise to investors—constituted informed consent, defeating the claim. The Court found Brett's assertion that he did not understand documents he signed not credible given his 35 years of legal practice.

On breach of contract, the Court interpreted Section 3.5's distribution requirements narrowly: distributions flowed from "Investments" (capital deployed directly by PRF), but once PRF transitioned to O&S, it made no direct investments. The Funds deployed capital, and performance allocations accrued to GFOAM, not PRF. Section 1.3's broad purpose clause ("engage in any lawful business") permitted the O&S transition without formal written amendment.

On tortious interference, Brett failed to identify any specific business relationship that GFO wrongfully disrupted. On constructive trust, the Court noted it is a remedy, not an independent cause of action, and without a proven underlying breach, no constructive trust could be imposed.

On dissolution, the Court found indisputable deadlock: the 50/50 Managing Members could not communicate, had ceased operations, and the LLC Agreement contained no deadlock-resolution mechanism. Carrying on PRF's business was not reasonably practicable.

Significance and Takeaways

This decision reinforces that Delaware courts enforce LLC agreements according to their plain language and will not impose fiduciary restrictions beyond those parties explicitly adopt. It establishes that informed consent and participation in a challenged opportunity defeats corporate opportunity claims. The Court's treatment of the business model pivot—finding it permissible under a broadly drafted purpose clause—is significant for entities undergoing operational transitions. The deadlock dissolution holding confirms that when equal-partner co-management fails and the operating agreement provides no resolution mechanism, dissolution is appropriate even if assets retain value.