(a)Limit on Power to Challenge. Except as provided in subsection (b), the validity of an LLC‘s action may not be challenged on the ground that the LLC lacks or lacked the power to act.
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Terms Used In Tennessee Code 48-213-101

  • Court: includes every court and judge having jurisdiction in the case. See Tennessee Code 48-202-101
  • Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
  • Employee: includes an officer but not a director. See Tennessee Code 48-11-201
  • Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
  • Governor: means a natural person or entity serving on the board of governors of a board-managed LLC. See Tennessee Code 48-202-101
  • LLC: means a limited liability company, organized under chapters 201-248 of this title. See Tennessee Code 48-202-101
  • Manager: means a person elected, appointed, or otherwise designated as a manager by the governing body, and any other person considered elected as a manager pursuant to §. See Tennessee Code 48-202-101
  • Member: means a person reflected in the required records of an LLC as the owner of some governance rights of a membership interest of the LLC. See Tennessee Code 48-202-101
  • Proceeding: includes civil suit and criminal, administrative, and investigatory action. See Tennessee Code 48-202-101
  • Reporter: Makes a record of court proceedings and prepares a transcript, and also publishes the court's opinions or decisions (in the courts of appeals).
  • Representative: means a governor, manager, employee or other agent of a foreign LLC. See Tennessee Code 48-202-101
  • Trustee: A person or institution holding and administering property in trust.
(b)Challenge of Power. An LLC’s power to act may be challenged in a proceeding by:

(1) A member against the LLC to enjoin the act;
(2) The LLC, directly, derivatively, or through a receiver, trustee, or other legal representative, against an incumbent or former governor (if board-managed), manager, employee, or agent of the LLC; or
(3) The attorney general and reporter under § 48-245-902.
(c)Derivative Action. In a member’s proceeding under subdivision (b)(1) to enjoin an unauthorized LLC act, the court may enjoin or set aside the act, if equitable and if all affected persons are parties to the proceeding, and may award damages for loss (other than anticipated profits) suffered by the LLC or another party because of enjoining the unauthorized act.
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