Dangers of "Drag-'n-Drop" Drafting? (Ross v. Nelson, NY AD 2008)

     posted by Gary Rosin

Peter Mahler has an interesting post on Ross v. Nelson, 2008 NY Slip Op 06504 (N.Y.A.D. Aug. 5, 2008), with links to the trial court and the appellate opinions.  In Ross v. Nelson, a majority of the members of and LLC removed another member as a manager of the LLC.  The operating agreement included an agreement to vote for the removed member/manager.  despite that, the appellate division upheld the removal of the member as manager.  I will not now comment of the correctness of the holding. 

What struck me was the incredible mish-mash of the relevant portions of the agreement:  (i) a voting agreement that spoke only in terms of elections; (ii) no language expressly overruling the right of a majority to remove a manager; and (iii) a dissolution provision that referred to expulsions.  To me, that mish-mash seems a hallmark of "drag-'n-drop" (formerly "cut-and-paste") drafting.  Most business agreements are complex documents, with many moving--and interrelated--parts; if you change one part, you have to consider what changes might be needed in the other parts.  An LLC operating agreement requires even more thought:  you have to look at the rest of the agreement, but also at the default provisions of the relevant LLC Act.