The Court of Chancery recently explained who must receive notice in order to satisfy the requirements of 6 Del. C. § 18-110, which provides a summary procedure for LLCs, similar to § 225 for corporations, to determine the proper manager of an LLC. In HREF Senior Worthington LLC v. Conroe WN LLC, C.A. No. 2024-1148-MTC (Del. Ch. Oct. 2, 2025), the court explained that one of the parties with a potential claim to the disputed office did not receive notice. The company at the center of the § 18-110 claim was never served with the complaint, and no other form of notice was distributed.

The court explained the reasons why it was necessary to give that party notice in this proceeding. Because it did not receive notice, even though the court stated that it had nearly completed its opinion after an expedited trial in this matter, the court required the parties to provide that proper notice before it would be able to issue its final decision.

In the meantime, the court did the parties the courtesy of explaining its reasoning for the “draft” decision. Specifically, the court described the unusual procedural posture as follows: “So that all can proceed as efficiently as possible, I will do the parties the courtesy of sharing what my draft opinion currently holds . . . .” Slip op. at 4.

This letter ruling provides a cornucopia of important principles and procedural requirements for § 18-110 cases that I will merely highlight.

Highlights

• The court noted that § 18-110 (a) requires that the limited liability company involved be named as a party. See footnote 3.
• The issue presented to the court in this case was whether HREF Senior Worthington LLC (“HREF”) was the sole manager of HoldCo, the LLC involved.
• But this case marched forward without notice to a purported member of the entity involved, that the defendants argued was also a HoldCo co-manager. That member was MStar Conroe, LLC (“MStar”).
• The court observed that no summons was ever sought for or issued to HoldCo, the complaint was not sent to HoldCo’s registered agent, and no other form of notice was distributed in a way that would reach MStar.
• The court underscored that a § 18-110 proceeding is in rem, not in personam.
• Although all claimants to the disputed office did not need to be served with process because the court’s jurisdiction is based on its power over the res, see footnote 11, unlike in personam actions, service of process in an in rem action does not create personal jurisdiction. Slip op. at 3.
• A judgment based on § 18-110 does not require that all claimants to the disputed office be subject to in personam jurisdiction in order for the court to make an authoritative adjudication on the question of who holds the office. See footnote 12.
• Nonetheless, service is a means of giving notice and an opportunity to be heard to those who might lose their property. A party with a potential claim to the res who does not receive adequate notice is not bound by the results of the litigation. Therefore, the court must be satisfied that all such parties have received notice before it can rule. See Slip op. at 4 and footnote 15.
• The problem presented at this juncture, which the court realized while preparing its post-trial opinion, and which apparently the parties did not address, is that a member of the LLC whom defendants argue is a co-manager of the LLC, did not receive any notice of this dispute as to whether HREF is the sole manager of HoldCo.
• The court held that HREF is HoldCo’s sole manager.
• The court included in its reasoning the truism that § 18-402 of the LLC Act “mandates that management shall be vested in the manager who shall be chosen in the manner provided in the limited liability company agreement.” Slip op. at 5.
• The court parsed the terms of the agreement which were “undisputably triggered” to provide for HREF to be the sole manager. Slip op. at 5. See also footnotes 18 and 19. The court rejected the reasoning of the defendants that the “purpose clause” overrode other provisions in the agreement regarding how the manager of the LLC was chosen. Slip op. at 7.
• After explaining the procedural conundrum and the reasoning to support the “draft decision,” the court concluded with the following sentence: “The matter is back in your hands.”