J-A10023-17

2017 PA Super 380

 

RETINA ASSOCIATES OF GREATER 

PHILADELPHIA, LTD., JONATHAN B. 

BELMONT, M.D., ROBERT C. 

KLEINER, M.D.

IN THE SUPERIOR COURT OF

PENNSYLVANIA

Appellant

v.

RETINOVITREOUS ASSOCIATES, 

LTD. D/B/A MID ATLANTIC RETINA, 

WILLIAM BENSON, M.D., JAY L. 

FEDERMAN, M.D., GARY C. BROWN, 

M.D., MITCHELL S. FINEMAN, M.D., 

DAVID H. FISCHER, M.D., SUNIR J. 

GARG, M.D., ALLEN C. HO, M.D., 

RICHARD KAISER, M.D., ALFRED C. 

LUCIER, M.D., JOSEPH I. MAGUIRE, 

M.D., J. ARCH MCNAMARA, M.D., CARL 

H. PARK, M.D., CARL D. REGILLO, M.D., 

ARUNAN SIVALINGAM, M.D., WILLIAM 

TASMAN, M.D., JAMES F. VANDER, M.D., 

AND JASON HSU, M.D. 

No. 3265 EDA 2016

Appeal from the Order Dated July 2, 2010

In the Court of Common Pleas of Montgomery County

Civil Division at No(s): 09-32182

BEFORE: DUBOW, J., SOLANO, J., and FORD ELLIOTT, P.J.E.

OPINION BY SOLANO, J.: FILED DECEMBER 07, 2017

Appellants Retina Associates of Greater Philadelphia, Ltd. (“Retina”), 

and two of its physicians — its President, Jonathan B. Belmont, M.D. and 

Vice President, Robert C. Kleiner, M.D. (together, “Retina Physicians”) —

appeal from the order sustaining preliminary objections in the nature of a 

demurrer filed by Appellees William Benson, M.D., Jay L. Federman, M.D., 
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Gary C. Brown, M.D., Mitchell S. Fineman, M.D., David H. Fischer, M.D., 

Sunir J. Garg, M.D., Allen C. Ho, M.D., Richard Kaiser, M.D., Alfred C. Lucier, 

M.D., Joseph I. Maguire, M.D., J. Arch McNamara, M.D., Carl H. Park, M.D., 

Arunan Sivalingam, M.D., William Tasman, M.D., James F. Vander, M.D., and 

Jason Hsu, M.D. (collectively, “Mid Atlantic Physicians”), all of whom are 

alleged to be “members and/or employees” of Appellee Retinoviteous

Associates, Ltd., doing business as Mid Atlantic Retina (“Mid Atlantic”). We 

reverse.

Because the trial court disposed of this case on preliminary objections, 

we adopt the facts as alleged in Appellants’ amended complaint and its 

exhibits. Khawaja v. RE/MAX Central, 151 A.3d 626, 630 (Pa. Super. 

2016).

Retina and Mid Atlantic are competing practices of retina specialists 

who have staff privileges at Wills Eye Hospital in Philadelphia. In 2000, 

several retina specialists formed Retina Diagnostic & Treatment Associates, 

LLC (“RDTA”), a limited liability company that entered into contracts with 

Wills Eye to provide its members — who ultimately included both the Retina 

Physicians and the Mid Atlantic Physicians — with special privileges at Wills 

Eye’s facilities. 1 Pursuant to RDTA’s operating agreement, each RDTA 

____________________________________________

1 Paragraph 25 of the amended complaint alleged:

The professional and financial benefits of RDTA membership to 

[Appellants] included, but were not limited to:

(Footnote Continued Next Page)
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member owned an equal 5.263% interest in the company. The operating 

agreement provided that RDTA would be run by up to six managers,2 each of 

whom had to be a member of RDTA and one of whom had to be “the 

(Footnote Continued) _______________________

a. A contract with Wills Eye to be the exclusive provider 

of retinal care at its facility.

b. An academic supervision and teaching agreement, 

which provided the members of RDTA with an exclusive 

contract to provide academic supervision and teaching to 

both ophthalmology residents and retinal fellows.

c. An exclusive provider agreement with Wills Eye to 

provide on-call retinal coverage and services to the Wills 

Eye emergency room.

d. A private patient teaching agreement for teaching 

residents and fellows treating private patients.

e. A contract between Wills Eye and RDTA, establishing 

RDTA as the sole provider of retinal photography and 

retinal angiography at Wills Eye.

f. A contract between RDTA and Wills Eye 

Ophthalmology Clinic . . . for outpatient clinical services.

2 The operating agreement is an exhibit to the amended complaint. Section 

5.01(a) of the agreement provided:

Exclusive Responsibility. Except as otherwise expressly provided 

herein, (i) the management of the business and affairs of the 

Company shall be the sole and complete responsibility of the 

Managers, (ii) a Member, as such, shall not take part in, or 

interfere in any manner with, the management, conduct or 

control of the business and affairs of the Company, and shall not 

have any right or authority to act for or bind the Company, and 

(iii) the Company may act only by actions taken by or under the 

direction of the Managers in accordance with this Agreement. 

Individual Managers shall have only such authority and perform 

such duties as the Managers may, from time to time, delegate to 

such individual Managers.

Third Am. and Restated Limited Liability Co. Operating Ag. of RDTA, 

1/1/2006, at 10. 
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physician who is the then Director of the Retina Service of Wills Eye 

Hospital.” Third Am. and Restated Limited Liability Co. Operating Ag. of 

RDTA, 1/1/2006, at 10. Appellants alleged that at the time the amended 

complaint was filed, Appellee Brown held the position of Director and 

Appellees Fischer and Sivalingam were Co-Directors of the Wills Eye Retina 

Service. Am. Compl. ¶¶ 14-15.

Although the operating agreement provided that RDTA would be run 

exclusively by its managers, it contained provisions for some extraordinary 

decisions to be made by RDTA’s members. Section 6.06 of the agreement 

stated:

Certain Company Matters Requiring Member Approval.

(a) Specific Matters. Notwithstanding anything in this 

Agreement to the contrary, the approval of the following matters 

shall require the affirmative vote of the Members by a Majority 

Vote:

. . . 

(v) The sale, exchange or transfer of all; or substantially 

all, of the assets of the Company.

. . .

(viii) The dissolution of the Company pursuant to Section 

10.01(i). . . .

Third Am. and Restated Limited Liability Co. Operating Ag. of RDTA, at 15. 

On March 31, 2009, fifteen of the Mid Atlantic Physicians (all but 

Appellees Benson and Park), acting as members of RDTA, adopted a 

resolution titled “Written Consent of the Members Holding a Majority of the 
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Percentage Interests.” Am. Compl. ¶ 27 & Ex. D. The fifteen signers 

“collectively held a majority of the percentage interests in RDTA.” Id. ¶ 27. 

By their resolution, the signers provided for RDTA to sell substantially all of 

its assets to Mid Atlantic and then to liquidate and dissolve. The two Retina 

Physicians did not vote on the resolution (which did not contain signature 

lines for either of them), and Appellant Belmont was not given notice of it. 

Id. ¶¶ 27-28 & Ex. D. 

Pursuant to the resolution, Mid Atlantic then acquired RDTA’s assets, 

including its rights under contracts, leases, and other agreements with Wills 

Eye, for $353,494, a price that allegedly is below the assets’ fair market 

value. Am. Compl. ¶¶ 31-35. RDTA also entered into agreements to 

purchase services from Mid Atlantic in connection with winding up RDTA’s 

affairs, the cost of which, $107,829, would be offset against the purchase 

price owed to RDTA by Mid Atlantic. Id. ¶¶ 37-39. 

Appellants instituted this action by filing a complaint on October 7, 

2009. In an amended complaint, Appellants purported to state a claim for, 

among other things, breach of fiduciary duties by the Mid Atlantic Physicians, 

who “in the aggregate controlled the majority interest in RDTA.” Am. Compl. 

¶ 43. They alleged that, “[a]s controlling majority members, the [Mid 

Atlantic Physicians] owe [Appellants] a duty of utmost good faith and fair 

dealing” and “a quasi-fiduciary duty . . . not to use their power for selfish or 

personal interests or in such a way as to exclude [Appellants] from their due 
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share of the benefits accruing from the existence and operation of RDTA.” 

Am. Compl. ¶¶ 43-45. The pleading continued:

46. Despite these duties and obligations of utmost good faith 

and fair dealing imposed upon them by law, some or all of the 

[Mid Atlantic Physicians] breached these duties and acted 

exclusively in their self-interests by:

a. Excluding [Appellants] from meaningful participation in the 

decisions related to the [asset purchase agreement with Mid 

Atlantic], sale of RDTA’s assets to [Mid Atlantic], and 

termination of [Retina’s agreements with Wills Eye]; 

b. Self-dealing and directly or indirectly making a profit at 

[Appellants’] financial and professional expense by 

transferring and selling RDTA’s assets to [Mid Atlantic] of 

which all [Mid Atlantic Physicians] are members and/or 

employees, thereby excluding [Appellants] from the benefits 

they enjoyed through their ownership or relationship to 

RDTA;

c. Failing to act in good faith and for the benefit of 

[Appellants], Belmont and Kleiner, and RDTA in all matters 

involving the sale of RDTA’s assets to [Mid Atlantic];

d. Excluding [Appellants] from their rightful participation in 

and enjoyment of the benefits of their ownership in RDTA, 

including, but not limited to, the agreements with Wills Eye 

and the profits derived therefrom;

e. Causing [Appellants] to suffer and to continue to suffer 

substantial financial harm by terminating [Retina’s 

agreements] with Wills Eye and depriving [Appellants] of 

sufficient access to Wills Eye to treat patients at the Wills Eye 

facility; and 

f. Failing to act solely in the best interests of all owners and 

RDTA, which has caused [Appellants] to suffer and continue 

to suffer financial harm.

47. The actions of the [Mid Atlantic Physicians] . . . constitute a 

breach of their duty of utmost good faith and fair dealing owed 

to [Appellants], as well as a breach of their quasi-fiduciary duty 
J-A10023-17

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owed to [Appellants], as minority, or de facto minority owners of 

RDTA.

48. Further, the actions of the [Mid Atlantic Physicians] . . . 

constitute a breach of their fiduciary duties to RDTA by entering 

into a sales transaction for, upon information and belief, 

substantially less than fair market value.

49. Some or all of [Mid Atlantic Physicians] harmed [Appellants], 

Belmont and Kleiner, by acting in derogation of [Appellants’] 

rights in RDTA, including [Appellants’], Belmont and Kleiner, 

rights to their respective share of the benefits accruing from the 

existence and operation of RDTA.

50. Moreover, Defendants’ substantial undervaluation of RDTA 

has deprived [Appellants of] their fair market share of the 

assets, contracts, agreements, equipment, inventory, supplies, 

and goodwill.

51. Some or all of [Mid Atlantic Physicians’] intentional and selfserving conduct is outrageous in that it represents a wanton and 

willful disregard of [Appellants’] interests and rights as well as 

blatant self-dealing of the most egregious kind. 

52. Some or all of [Mid Atlantic Physicians] purposefully 

transferred all assets to [Mid Atlantic] with a reckless 

indifference and wanton and willful disregard of [Appellants’] 

financial and beneficial interests in RDTA without justification or 

privilege.

Am. Compl. at ¶¶ 46-52. 

The trial court described the subsequent procedural history as follows:

[Mid Atlantic Physicians] filed preliminary objections to the 

amended complaint. Their arguments included that they did not 

owe a fiduciary duty to [Appellants]. They cited 15 Pa.C.S.A. § 

8943(b)(2) for the proposition that members of limited liability 

companies do not owe fiduciary duties to each other.

After briefing and oral argument, this court issued an Order 

dated July 2, 2010, sustaining the preliminary objections in part 

and overruling them in part. Specifically, this court dismissed 

the breach of fiduciary duty claim against the [Mid Atlantic 
J-A10023-17

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Physicians] and permitted the remaining claims to move 

forward. 

[Appellants] filed a motion for partial reconsideration, which 

this court denied in an Order dated August 9, 2010. 

Approximately six years later the case was ordered on the 

standby trial list for the month of October 2016. [Appellants] 

voluntarily dismissed their remaining claims on September 29, 

2016. 

Trial Ct. Op., 12/6/16, at 2-3. Appellants then filed this timely appeal from 

the order sustaining the Mid Atlantic Physicians’ preliminary objection to the 

breach of fiduciary duty claim. See Pa.R.A.P. 341 (appeal may be filed after 

entry of order disposing of all claims against all parties).

In response to a court order, Appellants filed a Pa.R.A.P. 1925(b) 

Statement that listed, among other errors that they planned to appeal —

2. The Trial Court erred in determining, as a matter of law 

and/or based on the averments of the Amended Complaint and 

Exhibits attached thereto, that managers of a managermanaged Pennsylvania LLC do not owe a fiduciary duty to the 

minority members of said LLC and dismissing Count I (Breach of 

Fiduciary Duty) of the Amended Complaint as to the Physician 

Defendants/ Appellees. 

. . . 

4. The Trial Court erred in determining, as a matter of law 

and/or based on the averments of the Amended Complaint and 

Exhibits attached thereto, that it is not a breach of fiduciary duty 

for the managers of a manager-managed Pennsylvania LLC to 

intentionally and willfully sell substantially all of the assets and 

contractual rights of said LLC to a separate entity owned or 

controlled by the majority members of the LLC that excludes the 

minority members of the LLC and dismissing Count I (Breach of 

Fiduciary Duty) of the Amended Complaint as to the Physician 

Defendants/ Appellees.
J-A10023-17

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Pa.R.A.P. 1925(b) Statement, at 1-2 (emphasis added). The Mid Atlantic 

Physicians objected to Appellants’ inclusion in their Rule 1925(b) statement 

of questions regarding breach of their fiduciary duties as managers (as 

opposed to majority members) of RDTA, arguing that the amended 

complaint never stated a claim against any of them based on a status as 

RDTA managers. Mid Atlantic Physicians’ Joint Objs. to Retina’s Rule 

1925(b) Statement, 11/2/16, at 1-2. They observed that the amended 

complaint “literally does not contain the word ‘manager.’” Id. at 2. The trial 

court did not rule on the Mid Atlantic Physicians’ objection to Appellants’ Rule 

1925(b) Statement.

On December 6, 2016, the trial court issued a Rule 1925(a) opinion 

that explained its decision as follows:

The issues raised by [Appellants], when read together, 

challenge this court’s conclusion that the individual members of 

the limited liability company did not owe fiduciary duties to each 

other. The challenge lacks statutory and decisional support. 

. . .

Pursuant to [the Limited Liability Company Law,] 15 Pa. 

C.S.A. § 8943(b)(2), “[a] member [of a limited liability 

company] who is not a manager shall have no duties to the 

company or to the other members solely by reason of acting in 

his capacity as a member.” [Appellants] argued the individual 

defendants owed a fiduciary duty because they collectively held 

a majority of the interests in RDTA. . . . The plain language of 

Section 8943, however, does not provide support for 

[Appellants’] claim that the individual defendants owed them a 

fiduciary duty. Thus, this court properly sustained the individual 

defendants’ preliminary objections to the breach of fiduciary duty 

claim.
J-A10023-17

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Trial Ct. Op., 12/6/16, at 5-6 (citation and footnotes omitted).3

In their appellate brief, Appellants now raise the following issues:

1. Whether the lower court erred in determining, as a matter of 

law, that managers of a manager-managed Pennsylvania LLC 

do not owe a fiduciary duty to the minority members of said LLC 

and dismissing Count I (Breach of Fiduciary Duty) of the 

Amended Complaint as to [Mid Atlantic Physicians]?

2. Whether the lower court erred in determining, based on the 

averments of the Amended Complaint and Exhibits attached 

thereto, that it is not a breach of fiduciary duty for managers of 

a manager-managed Pennsylvania LLC to intentionally and 

willfully adopt a resolution to sell substantially all of the assets 

and contractual rights of said LLC to a separate entity owned or 

controlled by the majority members of the LLC that excludes the 

minority members of the LLC and dismissing Count I (Breach of 

Fiduciary Duty) of the Amended Complaint as to [Mid Atlantic 

Physicians] without leave to amend?

3. Whether the lower court erred in determining, as a matter of 

law, that the majority members of a manager-managed 

Pennsylvania LLC do not owe a fiduciary duty to the minority 

members of said LLC and dismissing Count I (Breach of Fiduciary 

Duty) of the Amended Complaint as to [Mid Atlantic Physicians]?

4. Whether the lower court erred in determining, based on the 

averments of the Amended Complaint and Exhibits attached 

thereto, that it is not a breach of fiduciary duty for the majority 

members of a manager-managed Pennsylvania LLC to 

intentionally and willfully adopt a resolution to sell substantially 

all of the assets and contractual rights of said LLC to a separate 

entity owned or controlled by the majority members of the LLC 

that excludes the minority members of the LLC and dismissing 

____________________________________________

3 The trial court added: “The amended complaint lacks any allegation of a 

relationship between the individual defendants and plaintiff Retina Associates 

of Greater Philadelphia Ltd. As such, [Appellants] should not be heard to 

argue on appeal that they have stated a claim for breach of fiduciary duty on 

behalf of Retina Associates of Greater Philadelphia Ltd.” Tr. Ct. Op. at 5 n.7. 

The claims in this appeal have been asserted only on behalf of the Retina 

Physicians, and not Retina itself. See Appellants’ Br. at 7 n.1.
J-A10023-17

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Count I (Breach of Fiduciary Duty) of the Amended Complaint as 

to [Mid Atlantic Physicians] without leave to amend?

Appellants’ Brief at 5 (emphases added). Though listed as four issues, the 

questions presented by Appellants all challenge the trial court’s holding that, 

as a matter of law, the Mid Atlantic Physicians owed no duty to the Retina 

Physicians under the Limited Liability Company Law, either as managers of 

RDTA or as the majority of its members. 

We address Appellants’ issues under our standard of review applicable 

to an order sustaining preliminary objections:

Our standard of review of an order of the trial court overruling or 

granting preliminary objections is to determine whether the trial 

court committed an error of law. When considering the 

appropriateness of a ruling on preliminary objections, the 

appellate court must apply the same standard as the trial court.

Preliminary objections in the nature of a demurrer test the legal 

sufficiency of the complaint. When considering preliminary 

objections, all material facts set forth in the challenged pleadings 

are admitted as true, as well as all inferences reasonably 

deducible therefrom. Preliminary objections which seek the 

dismissal of a cause of action should be sustained only in cases 

in which it is clear and free from doubt that the pleader will be 

unable to prove facts legally sufficient to establish the right to 

relief. If any doubt exists as to whether a demurrer should be 

sustained, it should be resolved in favor of overruling the 

preliminary objections.

Khawaja, 151 A.3d at 630 (citation omitted); Lerner v. Lerner, 954 A.2d 

1229, 1235 (Pa. Super. 2008) (“In ruling on a demurrer, the court may 

consider only such matters as arise out of the complaint itself; it cannot 

supply a fact missing in the complaint”). As our Supreme Court has 

observed, “[t]he question presented by the demurrer is whether, on the 
J-A10023-17

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facts averred, the law says with certainty that no recovery is possible.” 

Price v. Brown, 680 A.2d 1149, 1151 (Pa. 1996) (citation omitted); 

Lerner, 954 A.2d at 1234.

The trial court sustained the demurrer because it concluded that the 

Limited Liability Company Law did not impose any fiduciary or other duties 

on the Mid Atlantic Physicians with respect to the Retina Physicians. In 

determining whether the trial court erred as a matter of law in reaching this 

conclusion, we must engage in an analysis and interpretation of the statute. 

As the Supreme Court recently summarized:

The Statutory Construction Act, 1 Pa.C.S. §§ 1901-1991, sets 

forth principles of statutory construction to guide a court’s efforts 

with respect to statutory interpretation. In so doing, however, 

the Act expressly limits the use of its construction principles. The 

purpose of statutory interpretation is to ascertain the General 

Assembly’s intent and to give it effect. 1 Pa.C.S. § 1921(a). In 

discerning that intent, courts first look to the language of the 

statute itself. If the language of the statute clearly and 

unambiguously sets forth the legislative intent, it is the duty of 

the court to apply that intent and not look beyond the statutory 

language to ascertain its meaning. See 1 Pa.C.S. § 1921(b) 

(“When the words of a statute are clear and free from all 

ambiguity, the letter of it is not to be disregarded under the 

pretext of pursuing its spirit.”). Courts may apply the rules of 

statutory construction only when the statutory language is not 

explicit or is ambiguous. 1 Pa.C.S. § 1921(c). 

. . . We must read all sections of a statute “together and in 

conjunction with each other,” construing them “with reference to 

the entire statute.” 1 Pa.C.S. § 1922(2). When construing one 

section of a statute, courts must read that section not by itself, 

but with reference to, and in light of, the other sections. 

Statutory language must be read in context, “together and in 

conjunction” with the remaining statutory language. 
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In re Trust of Taylor, 164 A.3d 1147, 1155 (Pa. 2017) (citations omitted). 

In addition, as we recently stated in Commonwealth v. Anderson, 169 

A.3d 1092 (Pa. Super. 2017) (en banc):

Every statute shall be construed, if possible, to give effect to all 

its provisions. We presume the legislature did not intend a result 

that is absurd, impossible, or unreasonable, and that it intends 

the entire statute to be effective and certain. When evaluating 

the interplay of several statutory provisions, we recognize that 

statutes that relate to the same class of persons are in pari 

materia and should be construed together, if possible, as one 

statute. 

Id. at 1096 (citation omitted). Also, “when interpreting a statute we must 

listen attentively to what the statute says, but also to what it does not say.” 

Hanaway v. Parkesburg Grp., LP, 168 A.3d 146, 154 (Pa. 2017) (quoted 

citation omitted).

The Mid Atlantic Physicians’ Duties as Members of RDTA

We shall begin by addressing the duties of the Mid Atlantic Physicians 

as RDTA’s members.

The amended complaint alleged that the Mid Atlantic Physicians signed 

a resolution providing for RDTA’s dissolution and the sale of all of RDTA’s 

assets to their own ophthalmology practice, Mid Atlantic, at a price below 

market value, thereby depriving the Retina Physicians of important contract 

rights and causing them financial harm. Appellants contend that they 

alleged “a classic case of oppression by the majority owners of a business 

through the freeze out of the minority owners,” Appellants’ Br. at 30, and 

that the Mid Atlantic Physicians’ conduct therefore is actionable as a breach 
J-A10023-17

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of their duties to the minority members of RDTA under the Commonwealth’s 

laws governing limited liability companies. Appellants acknowledge that no 

Pennsylvania appellate decisions have addressed this issue, but they 

contend that the result they advocate flows naturally from analogies to other 

areas of Pennsylvania corporate and business law. They state:

Here, the majority voted to sell all of the assets of the business 

to another entity which they controlled, to the exclusion of the 

two minority members. Had the same thing happened in a 

closely held corporation, a partnership or a joint venture, there 

would be no question that the conduct is actionable and 

unlawful. No different result should obtain merely because the 

entity in question was a limited liability company. . . . 

Id. After careful consideration, we agree.

Because limited liability companies are creatures of statute, their 

members are subject to only those duties that are authorized by statute. 

See Hanaway, 168 A.3d at 154-58 (general partner in limited partnership 

not subject to duty of good faith and fair dealing where limited partnership 

statute did not provide for such a duty). Here, the applicable statute is the 

Limited Liability Company Law of 1994, 15 Pa. C.S. §§ 8901-8993 (repealed 

2016) (“the 1994 Law”). Last year, the Legislature replaced the 1994 Law 

with the Pennsylvania Uniform Limited Liability Company Act of 2016, 15 Pa. 

C.S. §§ 8811-8898, but the conduct at issue here occurred prior to 

enactment of the 2016 legislation and all parties agree that the 1994 Law 

applies to this case. See 15 Pa. C.S. § 8811(b), (c) (rules regarding 
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applicability of 2016 statute). Throughout this opinion, we shall cite to the 

1994 Law without reference to its repeal.4

The 1994 Law was Pennsylvania’s first statute to deal with limited 

liability companies, a form of business organization that gained popularity in 

the early 1990s.5 Like other portions of Pennsylvania’s Associations Code 

(Title 15 of Pennsylvania Consolidated Statutes), it was drafted largely by 

what is now known as the Business Associations Committee of the Section 

on Business Law of the Pennsylvania Bar Association (sometimes referred to 

as the “Title 15 Task Force”). As that Committee’s history of the 1994 Law 

points out, the statute was derived in substantial part from a Prototype 

Limited Liability Company Act (the “Prototype Act”) that had been proposed 

by a working group at the American Bar Association in 1992. See Comm. 

Cmt. – 1994 to 15 Pa. C.S. § 8901.6

____________________________________________

4

If this case had arisen under the 2016 statute, the questions presented 

might be more easily resolved. The 2016 Act provides that a member of a 

limited liability company is subject to a contractual duty of good faith and 

fair dealing when discharging duties and obligations or exercising rights 

under the Act or the company’s operating agreement. 15 Pa. C.S. 

§ 8849.1(d), (i). This provision is not made retroactive, however, and thus 

is inapplicable to this case. Cf. Hanaway, 168 A.3d at 157-58.

5 The popularity of this business form may be explained by the fact that a 

limited liability company is “a conceptual hybrid, sharing some of the 

characteristics of partnerships and some of corporations. In particular, an 

LLC combines the two most critical features of all of the other business 

organizations in a single business organization — a corporate-styled liability 

shield and the pass-through tax benefits of a partnership.” In re 

Allentown Ambassadors, Inc., 361 B.R. 422, 442 (Bankr. E.D. Pa. 2007) 

(citations and internal quotation marks omitted); see Comm. Cmt. – 1994 

to 15 Pa. C.S. § 8925.

6 Section 1939 of the Statutory Construction Act provides:

(Footnote Continued Next Page)
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The 1994 Law provides that where, as is the case for RDTA, a limited 

liability company’s governing documents so provide, the company shall be 

managed by designated managers; otherwise, the company shall be 

managed by its members. 15 Pa. C.S. § 8941. The 1994 Law also provides 

that the company’s Operating Agreement may set forth rules for the 

company’s organization — including rules specifying requirements for voting 

by members on certain types of decisions — that vary from those in the Law, 

see id. § 8915, 8916(b), 8942; and, as noted, RDTA’s Operating Agreement 

(Footnote Continued) _______________________

The comments or report of the commission, committee, 

association or other entity which drafted a statute may be 

consulted in the construction or application of the original 

provisions of the statute if such comments or report were 

published or otherwise generally available prior to the 

consideration of the statute by the General Assembly, but the 

text of the statute shall control in the event of conflict between 

its text and such comments or report.

1 Pa. C.S. § 1939. The Business Associations Committee drafted comments 

to sections of the 1994 Law “to form part of the legislative history of [the 

Law] and to be citable as such” under Section 1939. Comm. Cmt. – 1994 to 

15 Pa. C.S. § 8901; see generally W.H. Clark, Jr., Forward to Title 15, 15 

Pa. Cons. Stat. Ann. xxi, xxiv-xxv (2013). The Committee’s comments 

adopt portions of the commentary to the ABA’s Prototype Act, but “are not 

intended to supersede the comments to the Prototype Limited Liability 

Company Act which contain detailed discussion of the laws of other states 

and the federal income tax aspects of organizing limited liability companies 

which have been omitted from the Pennsylvania comments.” Comm. Cmt. –

1994 to 15 Pa. C.S. § 8901. In light of these authorities, we rely on some of 

this commentary later in our opinion. The ABA’s Prototype Act appears not 

to be available online, and we refer to the text of that draft legislation as it 

appears in Volume 3, Appendix C to the very helpful treatise by Robert R. 

Keatinge and Larry E. Ribstein, Ribstein and Keatinge on Limited Liability 

Companies (Thomson Reuters 2017).
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thus contains special requirements for votes by RDTA’s members on the 

company’s dissolution and sale of assets. 

The duties applicable to a limited liability company’s members and 

managers are set forth in Section 8943, which provides:

Duties of managers and members

(a) Companies without managers.—If the certificate of 

organization does not provide that the limited liability company 

shall be managed by managers, every member must account to 

the company for any benefit and hold as trustee for it any profits 

derived by him without the consent of the other members from 

any transaction connected with the organization, conduct or 

winding up of the company or any use by him of its property. 

This subsection may not be varied by any provision of the 

certificate of organization or operating agreement.

(b) Companies with managers.—If the certificate of 

organization provides that the company shall be managed by 

one or more managers:

(1) Sections 1711 (relating to alternative provisions) through 

1717 (relating to limitation on standing) shall be applicable to 

representatives of the company. A written provision of the 

operating agreement may increase, but not relax, the duties 

of representatives of the company to its members under 

those sections. For purposes of applying the provisions of 

those sections, references to the “articles of incorporation,” 

“bylaws,” “directors” and “shareholders” shall mean the 

certificate of organization, operating agreement, managers 

and members, respectively.

(2) A member who is not a manager shall have no 

duties to the company or to the other members solely 

by reason of acting in his capacity as a member.

15 Pa.C.S. § 8943 (emphasis added). The trial court relied on Section 

8943(b)(2) in holding that the Mid Atlantic Physicians had no duties to the 

Retina Physicians and therefore could not be held liable to them. Trial Ct. 
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Op. at 6. Not surprisingly, the Mid Atlantic Physicians echo the trial court’s 

reasoning, contending that Section 8943(b)(2) is clear and unambiguous in 

foreclosing any basis for actions against them as RDTA members for breach 

of any duties to other members. Appellees’ Br. at 17-19.7

In response, the Retina Physicians rely on a Committee Comment to 

Section 8943(b)(2), which states:

Subsection (b)(2) makes clear that members who do not act as 

managers, like corporate shareholders and limited partners, do 

not have the fiduciary duties of managers. Even if a member is 

not involved in management, however, the member has no right 

to appropriate for personal use property belonging to the 

company. It is intended that the courts will fashion rules in 

appropriate circumstances by analogy to principles of corporate 

or partnership law to deal with situations such as oppression of 

minority members, actions taken in bad faith, etc. See 15 

Pa.C.S. § 110.

Comm. Cmt. – 2001 to 15 Pa.C.S. § 8943. Section 110 of the Associations 

Code, which is referenced in the comment, reads:

Unless displaced by the particular provisions of this title, the 

principles of law and equity, including, but not limited to, the law 

____________________________________________

7 The Mid Atlantic Physicians contend that this interpretation of the statute is 

bolstered by Section 8922(a) of the 1994 Law, entitled “Liability of members 

and managers,” which provides that members “shall not be liable, solely by 

reason of being a member, under an order of a court or in any other manner 

for a debt, obligation or liability of the company of any kind or for the acts of 

any member, manager, agent or employee of the company.” 15 Pa.C.S. § 

8922. Section 8922 deals with members’ liability to third parties, such as 

company creditors — not liability to other members. See Comm. Cmt. –

2001 to 15 Pa. C.S. § 8922 (subsection does “not deal with the internal 

affairs” of the company and may be varied only by “expand[ing members’] 

liability to third parties”). We therefore find the section inapposite. 

Similarly, other provisions of the 1994 Law discussing members’ liability to 

the company itself (as in a derivative action) deal with duties distinct from 

those owed to other members and also are not instructive here.
J-A10023-17

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relating to principal and agent, estoppel, waiver, fraud, 

misrepresentation, duress, coercion, mistake, bankruptcy or 

other validating or invalidating cause, shall supplement its 

provisions.

15 Pa.C.S. § 110. The 1994 Law specifically provides that Section 110 may 

be used as a basis for determining the liability of a limited liability company’s 

members. 15 Pa. C.S. § 8904(b).8

In light of the comment to Section 8943(b)(2), the Retina Physicians 

contend that the trial court misconstrued Section 8943(b)(2) as setting forth

an absolute rule that no member of a manager-managed limited liability 

company ever owes a duty to another member, a result that the comment 

makes clear was unintended by the statute’s drafters. See Retina’s Brief at 

20. They contend that, properly read, the provision gives courts the 

flexibility to analogize to corporate and partnership law to bar a member 

from engaging in the oppressive conduct that they allege occurred here. 

In resolving this issue, our first task is to determine whether, as the 

Mid Atlantic Physicians suggest, the language of Section 8943(b)(2) is so 

plain and unambiguous as to foreclose any interpretation that would permit 

a recognition of duties owed by RDTA’s members to other members of the 

company. The provision states that a member who is not a manager “shall 

have no duties . . . to the other members solely by reason of acting in 

____________________________________________

8 Section 8904(b) states that the liability of members shall be determined 

“solely and exclusively” by the provisions of the 1994 Law “[e]xcept as 

otherwise provided in section 110 (relating to supplementary general 

principles of law applicable).”
J-A10023-17

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his capacity as a member.” 15 Pa. C.S. § 8943(b)(2) (emphasis added). 

The provision thus suggests that the mere fact that a member acts as a 

member of the company is not a sufficient basis upon which to make that 

member liable to other members. The word “solely” further suggests, 

however, that a member may have duties to other members if the member 

is held to account for reasons other than or in addition to his mere status as 

a member of the company. The provision does not explain what situations 

would give rise to such duties, leaving it to the courts to fill in this gap in the 

statute. For this reason, we hold that Section 8943(b)(2) “is not explicit or 

is ambiguous.” Taylor, 164 A.3d at 1155; see id. at 1156 (provision is 

ambiguous if it does not “contain[] any explicit language addressing the 

issue raised”). Therefore, we may look to the comments to Section 8943 as 

well as its legislative history to discern the provision’s meaning. 1 Pa. C.S. 

§ 1921(c), 1939. 

The Committee Comment to Section 8943 states that a member who 

appropriates company property for his personal use is not absolved of 

liability despite the language of Section 8943(b)(2). See Comm. Cmt. —

2001 to 15 Pa. C.S. § 8943. In providing that example of a case in which 

the “no duties” language of Section 8943(b)(2) is inapplicable, the Comment 

implies that a member who acts for selfish personal reasons is not acting 

“solely . . . in his capacity as a member” and may not claim protection under 

Section 8943(b)(2). This view of Section 8943(b)(2) is supported by 

comments to Section 402(C) of the Prototype Act, on which Section 
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8943(b)(2) is patterned.9 In language closely resembling that of Section 

8943(b)(2), Section 402(C) states:

One who is a member of a limited liability company in which 

management is vested in managers under § 401 and who is not 

a manager shall have no duties to the limited liability company 

or to the other members solely by reason of acting in the 

capacity of a member.

A comment to Section 402(C) explains:

Subsection (C) makes clear that members who do not act as 

managers, like corporate shareholders and limited partners, do 

not have the fiduciary duties of managers described in this Act. 

However, they may have fiduciary duties if they engage in 

control transactions or act in some capacity other than merely as 

a member. See Donahue v. Rodd Electrotype Company of 

New England, Inc., 328 N.E.2d 505 (Mass. 1975) (liability of 

controlling shareholder in close corporation). Moreover, even if 

a member is not involved in management, the member has no 

right to appropriate for personal use property belonging to the 

LLC. See Tri-Growth Centre City Ltd. v. Silldorf, 265 Cal. 

Rptr. 330 (Cal. App. 1989). In addition, members like other 

contracting parties, must exercise their powers in good faith. 

For example, it may be bad faith to expel a member solely or 

primarily in order to appropriate the value of the member’s 

interest. In general, while the Committee believes that some 

type of “partner-like” duties should be imposed upon nonmanaging members, it concluded that the exact nature of those 

duties and whether they should be applied to all members or 

only managing members is an area best left to the courts. 

Prototype Act § 402(C), Cmt. The comment thus suggests that members 

acting to oppress other members for their own benefit do so “in some 

capacity other than merely as a member” and therefore, contrary to the Mid 

____________________________________________

9 When enacting the 1994 Law, the Legislature appended to the statute a list 

of official Source Notes that identify the source from which each provision 

was drafted. The legislation lists Section 402(C) of the Prototype Act as the 

source of Section 8943(b)(2). See Act No. 1994-106, P.L. 703, 772 (Dec. 7, 

1994) (calling section “402(c)”).
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Atlantic Physicians’ interpretation of Section 8943(b)(2), they do have duties 

to the other members in those circumstances.

The Committee Comment to Section 8943 further states that we 

should look to corporate and partnership law to ascertain whether and what 

duties exist in “situations such as oppression of minority members,” Comm. 

Cmt. to 15 Pa. C.S. § 8943, and Sections 110 and 8904(b) explicitly 

authorize us to apply “principles of law and equity, including, but not limited 

to, the law relating to principal and agent, estoppel, waiver, fraud, 

misrepresentation, duress, coercion, mistake, bankruptcy or other validating 

or invalidating cause” in connection with this task. 15 Pa. C.S. § 110.10 Our 

review of the authorities reveals that courts in Pennsylvania and other 

jurisdictions routinely have provided remedies when a controlling faction of a 

corporation, partnership, or other business entity engages in conduct alleged 

to oppress a minority. 

The issue arises most commonly within corporations, 11 when 

controlling shareholders seek to benefit themselves at the minority’s 

expense. In Donohue, the Massachusetts decision cited in the comment to 

____________________________________________

10 The 1994 Law does not make any explicit reference to oppression by a 

majority of the members, but the statute’s provisions on dissolution appear 

to recognize that a segment of the company’s members may act wrongfully 

in dissolving the company. See 15 Pa. C.S. § 8973(a)(1) (sometimes 

limiting those who may wind up the company’s affairs to “the members who 

have not wrongfully dissolved the company”). 

11 In Missett v. Hub Int’l Pa., LLC, 6 A.3d 530, 537 (Pa. Super. 2010), we 

observed that a “‘membership interest’ is an ownership interest in a limited 

liability company and is akin to an interest in stock of a corporation.” 
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the Prototype Act, a closely-held corporation purchased some of its shares 

from the controlling shareholders at a favorable price that it then refused to 

offer to the minority. In recognizing a cause of action in favor of the 

minority shareholders, the Supreme Judicial Court analogized the closely 

held corporation to a partnership, in which “the relationship among the 

stockholders must be one of trust, confidence and absolute loyalty if the 

enterprise is to succeed.” Donahue, 328 N.E.2d at 512. The court then 

continued:

Although the corporate form provides . . . advantages for the 

stockholders (limited liability, perpetuity, and so forth), it also 

supplies an opportunity for the majority stockholders to oppress 

or disadvantage minority stockholders. The minority is 

vulnerable to a variety of oppressive devices, termed 

“freezeouts,” which the majority may employ. An authoritative 

study of such “freeze-outs” enumerates some of the possibilities: 

“The squeezers (those who employ the freeze-out techniques) 

may refuse to declare dividends; they may drain off the 

corporation’s earnings in the form of exorbitant salaries and 

bonuses to the majority shareholder-officers and perhaps to 

their relatives, or in the form of high rent by the corporation for 

property leased from majority shareholders . . . ; they may 

deprive minority shareholders of corporate offices and of 

employment by the company; they may cause the corporation to 

sell its assets at an inadequate price to the majority 

shareholders . . . .” In particular, the power of the board of 

directors, controlled by the majority, to declare or withhold 

dividends and to deny the minority employment is easily 

converted to a device to disadvantage minority stockholders.

Id. at 513 (citations omitted). The court explained that, unlike a 

shareholder in a large, publicly held corporation, the minority shareholder in 

a closely held corporation “cannot easily reclaim his capital” because there is 

no market for his shares. Id. at 514. In light of this “inherent danger to 
J-A10023-17

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minority interests,” the court held that “stockholders in the close corporation 

owe one another substantially the same fiduciary duty in the operation of 

the enterprise that partners owe to one another” and “may not act out of 

avarice, expediency or self-interest in derogation of their duty of loyalty to 

the other stockholders and to the corporation.” Id. at 514-15 (citations and 

footnotes omitted). 

In Pennsylvania, as in Massachusetts, our courts have agreed that 

majority shareholders of a corporation owe a fiduciary duty to the minority. 

See Ferber v. Am. Lamp Corp., 469 A.2d 1046, 1050 (Pa. 1983) 

(“majority stockholders occupy a quasi-fiduciary relation toward the minority 

which prevents them from using their power in such a way as to exclude the 

minority”); In re Jones & Laughlin Steel Corp., 412 A.2d 1099, 1103 (Pa. 

1980) (“Pennsylvania and other jurisdictions have held that ‘a freezing out of 

minority holders with the purpose of continuing the business for the benefit 

of the majority holders’ is a violation of the fiduciary duty owed to minority 

shareholders by the majority shareholders” (footnote and citation omitted)); 

Weisbecker v. Hosiery Patents, 51 A.2d 811, 811-812 (Pa. 1947) 

(minority shareholder who held 10 out of 30 shares raised claim for breach 

of fiduciary duty against the two majority shareholders holding 19 and 1 

share, respectively); Viener v. Jacobs, 834 A.2d 546, 550-51 (Pa. Super. 

2003) (addressing whether two shareholders, each holding 1/3 share of 

company, oppressed minority shareholder holding 1/3 share), appeal 

denied, 857 A.2d 680 (Pa. 2004), cert. denied, 543 U.S. 1146 (2005). We 
J-A10023-17

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also have recognized that, contingent on the terms of the partnership 

agreement, general partners in a general or a limited partnership owe a 

fiduciary duty to the other partners. See Boland v. Daly, 318 A.2d 329, 

333 (Pa. 1974) (construing statutory predecessor 59 P.S. § 54); 12 Jarl 

Investments, L.P. v. Fleck, 937 A.2d 1113, 1123 (Pa. Super. 2007). We 

have held the same with respect to joint venturers. See Clement v. 

Clement, 260 A.2d 728, 729 (Pa. 1970). Several cases have rendered 

similar holdings in other jurisdictions. See 1 L.E. Ribstein & R.R. Keatinge, 

Ribstein and Keatinge on Limited Liability Companies § 9.6, at 590-91 n.7 

(2d ed. 2017) (citing cases).

We therefore agree with the following summary of the duties of 

members of a manager-managed limited liability company provided by a 

leading treatise on the subject:

The courts have generally held that if a member is acting 

solely as such, he or she generally does not have any of the 

fiduciary duties of managers described in this chapter. Thus, the 

duties above in this section do not apply to members who do no 

more than approve the actions of designated managers.

Members acting solely as such may breach [a] general duty of 

good faith . . ., although the courts often characterize the 

conduct as a breach of fiduciary duty. For example, it may be a 

breach of duty for the members to squeeze out or expel a 

member or for controlling members to appropriate benefits from 

____________________________________________

12 See George v. Richards, 64 A.2d 811, 813 n.1 (Pa. 1949) (quoting 59 

P.S. § 54 as follows: “Every partner must account to the partnership for any 

benefit, and hold as trustee for it any profits derived by him without the 

consent of the other partners from any transaction connected with the 

formation, conduct, or liquidation of the partnership, or from any use by him 

of its property”).
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minority members by exercising or selling control. . . . 

Non-managing members may have other duties, which may 

or may not be considered aspects of the good faith duty. 

Whether or not a member is involved in management, the 

member has no right to appropriate property belonging to the 

LLC for personal use. Also, members may have a duty to 

disclose in transactions with each other, as on sale of an interest 

in the LLC. Although these theoretical distinctions are largely 

reflected in the holdings of cases, the language of the opinions 

does not always clearly distinguish between the duties of 

members as such and those of managing members. Thus, 

courts sometimes impose what are labeled as “fiduciary” duties 

on non-managing members.

1 Ribstein & Keatinge § 9.6, at 588-92 (footnotes omitted). 

The Mid Atlantic Physicians take issue with this analysis on several 

grounds. The most significant is their contention that it is error to look for 

analogies in the law applicable to corporate shareholders or general partners 

because members of a manager-managed limited liability company are not 

comparable to such business participants. Rather, they point out, the 1994 

Law says such members are comparable to limited partners, and, the Mid 

Atlantic Physicians insist, limited partners owe no fiduciary-like duties to the 

other partners in their partnerships. 

The Mid Atlantic Physicians’ argument is based on Section 8904 of the 

1994 Law, which provides:

Rules for cases not provided for in this chapter

(a) General rule.—Unless otherwise provided in the certificate 

of organization, in any case not provided for in this chapter:

(1) If the certificate of organization does not contain a 

statement to the effect that the limited liability company shall 

be managed by managers, the provisions of Chapters 81 [the 
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Partnership Code, 15 Pa. C.S. §§ 8101-8105] and 83 [the 

Uniform Partnership Act, 15 Pa. C.S. §§ 8301-8365 (repealed 

2016)] govern, and the members shall be deemed to be 

general partners for purposes of applying the provisions of 

those chapters.

(2) If the certificate of organization provides that the 

company shall be managed by managers, the provisions 

of Chapters 81 [the Partnership Code], 83 [the Uniform 

Partnership Act] and 85 [the Pennsylvania Revised Uniform 

Limited Partnership Act, 15 Pa. C.S. §§ 8501-8594 (repealed 

2016)] govern, and:

(i) the managers shall have the authority of general 

partners prescribed in those chapters; and

(ii) the members shall be deemed to be limited 

partners for purposes of applying the provisions of 

those chapters.

(b) Basis for determining liability of members, etc.—Except 

as otherwise provided in section 110 (relating to supplementary 

general principles of law applicable), the liability of members, 

managers and employees of a company shall at all times be 

determined solely and exclusively by the provisions of this 

chapter [the 1994 Law].

15 Pa.C.S. § 8904 (emphasis in subsection (a)(2) added). Section 

8904(a)(2)(ii) “deems” members of a manager-managed company to be 

limited partners for purposes of applying, among other things, the provisions 

of the Pennsylvania Revised Uniform Limited Partnership Act, 13 and we 

assume for present purposes that limited partners have no duties to other 

____________________________________________

13 The 2016 statute that repealed the 1994 Limited Liability Company Law 

and replaced it with a new statute also repealed the Uniform Partnership Act 

and the Pennsylvania Revised Uniform Limited Partnership Act and replaced 

those statutes with new legislation on the same subjects. Those statutory 

changes are not relevant to our analysis here.
J-A10023-17

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partners under that statute. See Hanaway, 168 A.3d at 154-58.14 But 

Section 8904(b) makes clear that Section 8904(a)(2)(ii)’s “deeming” of 

members to be limited partners has nothing to do with members’ liability, 

which is determined not by applying the provisions of the Pennsylvania 

Revised Uniform Limited Partnership Act, but by “solely and exclusively” 

applying the provisions of the 1994 Limited Liability Company Law, as 

supplemented by Section 110. The Mid Atlantic Physicians’ claim that 

Section 8904 requires that they be treated as analogous to limited partners 

in determining their duties and liabilities to other RDTA members therefore is 

incorrect.

More generally, although members of a manager-managed company 

may be analogous to limited partners in other circumstances, the analogy 

does not apply to these facts. Where members of a company managed by 

managers are not involved in operation of the company, it stands to reason 

that their duties may be limited, as may be the case with limited partners. 

____________________________________________

14 The Mid Atlantic Physicians based their argument that limited partners 

have no duties to other partners on Section 8523(a) of the Revised Uniform 

Limited Partnership Act, 15 Pa. C.S. § 8523(a), which states that limited 

partners are not liable to third-party creditors of the partnership. See 

Appellees’ Br. at 19. Section 8523(a) does not discuss limited partners’ 

duties to other partners, and we deem it inapposite here. The Supreme 

Court’s decision in Hanaway, which was issued after the Mid Atlantic 

Physicians filed their brief, provides more persuasive support for the Mid 

Atlantic Physicians’ argument regarding limited partners’ lack of duties. 

Though not applicable here, we note that the Pennsylvania Uniform Limited 

Partnership Act of 2016 (the statute that replaced the Pennsylvania Revised 

Uniform Limited Partnership Act referenced in Section 8904(a)) provides that 

limited partners under the new statute have a duty of good faith and fair 

dealing in exercising rights under the partnership. 15 Pa. C.S. § 8635(a). 
J-A10023-17

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Here, however, Mid Atlantic Physicians are accused of breaching duties they 

owed to the Retina Physicians by signing the “Written Consent of the 

Members Holding a Majority of the Percentage Interests” that authorized the 

sale of RDTA’s assets to Mid Atlantic and the dissolution of RDTA. They 

signed that resolution pursuant to Section 6.06 of RDTA’s Operating 

Agreement, which placed the authority to sell the assets and dissolve the 

company in the hands of a majority of the members, rather than in the 

hands of RDTA’s managers. Thus, with respect to these decisions, the 

majority members were not mere passive bystanders to allegedly wrongful 

conduct by RDTA’s management; they were the persons engaging in the 

wrongful conduct. With respect to the challenged decisions, the members 

exercised powers in place of RDTA’s managers, and it therefore is 

appropriate to assess their duties in light of that non-passive role. See

Prototype Act § 402(C), Cmt. (stating members “may have fiduciary duties if 

they engage in control transactions”).

The Mid Atlantic Physicians’ other arguments challenge whether the 

amended complaint sufficiently alleges a type of majority misconduct that 

should be actionable by the Retina Physicians. They assert, for example, 

that “the individual [Mid Atlantic] Physician Defendants are all minority

members” of RDTA (apparently because each member’s interest in the 

company is 5.263%), Appellees’ Br. at 22 (emphasis added), and repeatedly 

emphasize that they comprise a majority only “in the aggregate,” see id. at 

6, 8. They complain further that the sale of RDTA’s assets to Mid Atlantic 
J-A10023-17

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should not be called “self-dealing” because the amended complaint alleges 

only that they are “members and/or employees of” Mid Atlantic — not Mid 

Atlantic’s “owners or controllers.” Id. at 23. 

We believe these arguments go to factual issues in the case and do 

not render Appellants’ allegations legally insufficient. Notably, the Mid 

Atlantic Physicians cite no case law supporting any argument that these 

purported pleading deficiencies entitle them to dismissal. The amended 

complaint alleges that the Mid Atlantic Physicians all are members of Mid 

Atlantic and that most of them voted together — “in the aggregate” — to 

transfer RDTA’s assets to Mid Atlantic and thereby to freeze the Retina 

Physicians out of receiving the benefits of their RDTA membership. Through 

those aggregate votes, they “controlled the majority interest in RDTA,” and 

were its “controlling majority members.” Am. Compl. at ¶ 43-44. The 

pleading also says that by transferring RDTA’s assets to Mid Atlantic, their 

own company, they acted to make a profit at Appellants’ expense. Id. ¶ 

46(b). Whether the evidence would support these allegations and whether 

the facts that develop will amount to the type of majority oppression that is 

actionable under the case law is a matter to be determined on a factual 

record, not on preliminary objections. Rather, at this stage, “all material 

facts set forth in the challenged pleadings are admitted as true, as well as all 

inferences reasonably deducible therefrom.” Khawaja, 151 A.3d at 630. 

The factual record also will inform a decision about just what types of 

duties apply to the Mid Atlantic Physicians as RDTA members. The trial court 
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dismissed Appellants’ claims because it held that the Mid Atlantic Physicians 

owed the Retina Physicians no duties as members of RDTA, a holding that 

we have disapproved. But although we have determined that the allegations 

are sufficient to allow this case to go forward on the understanding that the 

Mid Atlantic Physicians may have breached some type of duty to RDTA’s 

minority members, we have avoided a definitive characterization of the type 

of duty that is at issue. 

Appellants pleaded their claim as one for “breach of fiduciary duty,” 

Am. Compl. Count I, but their pleading variously alleges that the defendants 

breached “a fiduciary duty,” “a quasi-fiduciary duty,” or “a duty of utmost 

good faith and fair dealing.” See id. ¶¶ 44-45, 47-48. Appellants’ brief 

frames the questions presented in terms of whether a “fiduciary duty” was 

owed to RDTA’s minority members, Appellants’ Br. at 5, but later references 

a “fiduciary duty of good faith and fair dealing,” an apparent hybrid, see id.

at 18. These terms are not synonymous. A fiduciary duty “is the highest 

duty implied by law” and exists in legal relationships requiring trust and 

confidence, where it often is enforced by tort actions. See Yenchi v. 

Ameriprise Fin., Inc., 161 A.3d 811, 819-20 (Pa. 2017). The duty of good 

faith and fair dealing is most commonly recognized as a contractual 

obligation. See Herzog v. Herzog, 887 A.2d 313, 317 (Pa. Super. 2005). 

There are times, however, when the concepts blend. See, e.g., Birth Ctr. 

v. St. Paul Cos., 787 A.2d 376 (Pa. 2001). Appellants’ apparent confusion 

about the correct terminology applicable to obligations within limited liability 
J-A10023-17

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companies seems to mirror the state of the law in this area in other 

jurisdictions. See 1 Ribstein & Keatinge §§ 9.6, 9.7; see generally Comm. 

Cmt. – 2016 to 15 Pa. C.S. § 8849.1 (discussing duties applicable under 

2016 Limited Liability Company Act).

None of the parties have addressed this confusion in their briefs to this 

Court and it is unnecessary for us to do so to resolve this appeal. 

Appellants’ varying formulations have adequately pleaded a breach by the 

Mid Atlantic Physicians of a duty and standard of care owed to them. The 

precise nature of that duty may be determined as this case progresses on 

remand. For now, we hold only that, on the facts alleged, the trial court 

erred in holding that Appellants could not proceed with their claim in Count I 

of their amended complaint on the ground that the Mid Atlantic Physicians 

owed no duty to the Retina Physicians as members of RDTA. Further issues 

that stem from this holding will have to be resolved after the parties have 

developed a factual record.

The Mid Atlantic Physicians’ Duties as Managers of RDTA

In their Rule 1925(b) Statement, Appellants asserted that the trial 

court’s no-duty holding was erroneous not only because the Mid Atlantic 

Physicians owed duties to them as members of RDTA, but also because they 

owed duties to them as managers. Appellees object to that contention 

because the amended complaint made no specific allegations regarding any 

breach of duties as managers.
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Preliminarily, we are confounded by the fact that there is no clear 

indication in the record or the parties’ briefs of the identities of the parties to 

which this argument pertains. Under RDTA’s Operating Agreement, the 

company had up to six managers, but no one has told us who they were. 

Appellants imply that the managers may have included Drs. Brown, Fischer, 

and Sivalingam because they were the Director and Co-Directors of Wills 

Eye’s Retina Service, Am. Compl. ¶¶ 14-15, but Appellants do not clearly say 

that and make no allegation regarding the manager status of anyone else. 

And although the Mid Atlantic Physicians argue that manager-related claims 

cannot now be asserted against those of them who were managers, they do 

not say on whose behalf they make that argument. 

In arguing that this case does not present claims against managers, 

the Mid Atlantic Physicians point out that Pennsylvania is a fact-pleading 

state and that “[t]he material facts on which a cause of action or defense is 

based shall be stated in concise and summary form.” Appellees’ Br. at 14, 

quoting Pa.R.Civ.P. 1019(a). They continue:

Nowhere in the Amended Complaint do [Appellants] state 

concisely or summarize the material facts to support a managermanaged fiduciary duty. The Amended Complaint fails to aver 

(1) that RDTA was a manager-managed LLC; (2) that any 

Physician Defendant was, or acted as, a manager of RDTA; or 

(3) that such Physician Defendant’s actions as a manager 

breached a duty to Drs. Belmont and Kleiner.

Id. They allege that these deficiencies failed to “put them on notice of 

liability as managers.” Id. Appellants respond that the copy of RDTA’s 

Operating Agreement attached to the amended complaint made clear that 
J-A10023-17

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the company was run by managers selected from among its members, and 

that — 

While the Amended Complaint references Physician Defendants’ 

fiduciary duties as majority members of RDTA, liability is not 

premised exclusively on Physician Defendants’ status as majority 

members of RDTA. Rather, under the facts averred, Appellants 

have asserted claims for any breaches of fiduciary duty that can 

be maintained against Physician Defendants.

Appellants’ Reply Brief at 4.

“It is not necessary that the plaintiff identify the specific legal theory 

underlying the complaint.” Krajsa v. Keypunch, Inc., 622 A.3d 355, 357 

(Pa. Super. 1993). Here, the amended complaint clearly states that 

Appellants seek to hold the Mid Atlantic Physicians liable for breaching duties 

owed to the Retina Physicians by their actions in selling RDTA’s assets to Mid 

Atlantic and then dissolving RDTA. Appellants were not required to plead 

the legal theory on which they contended that the Mid Atlantic Physicians 

had such duties. The question is whether there is some aspect of a claim 

based on some of the defendants’ status as managers that required a more 

specific pleading than Appellants provided. 

The Mid Atlantic Physicians say that two additional facts that were 

missing from the pleading were that RDTA was a manager-managed 

company and that one or more of them acted as managers. Appellees’ Br. 

at 14. We disagree. Facts in documents appended to a pleading are to be 

considered in assessing the pleading’s sufficiency. Pleet v. Valley Greene 

Assocs., 538 A.2d 567, 569 (Pa. Super. 1988). Here, the Operating 
J-A10023-17

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Agreement made clear that RDTA is a manager-managed limited liability 

company whose managers are selected from among RDTA’s members. As 

members of RDTA, the Mid Atlantic Physicians surely already knew that. 

And while we have been confounded by the failure of the parties to tell us 

which of them were managers to whom this issue applies, each of the Mid 

Atlantic Physicians who is a defendant in this action surely knows whether or 

not he was a manager of the company and whether this issue therefore 

applies to him; he also knows that he has been made a defendant in this 

case and that Appellants seek to hold him liable. We therefore do not 

believe that the amended complaint was legally deficient in failing to name 

which of the Mid Atlantic Physicians were managers; it named all of them, 

and the status of each was a fact that would be revealed through discovery 

or other proceedings as the case progressed. See generally Georges 

Twp. v. Union Trust Co. of Uniontown, 143 A. 10, 18 (Pa. 1928) (“As a 

general rule, a party will not be required to furnish information which is 

peculiarly within the knowledge of the party demanding the particulars”).15 

Any of the Mid Atlantic Physicians who was not a manager cannot face 

____________________________________________

15 The authors of Standard Pennsylvania Practice 2d state that a “court may 

link the overruling of a preliminary objection” on the basis of insufficiency 

specificity “with the express recognition that further specificity could be 

obtained through pretrial discovery, for example, where the parties are 

adequately identified, or where the defendant has as much knowledge of the 

facts as the plaintiff.” 5 Standard Pa. Prac. 2d § 25.71 (2015) (footnotes 

containing citations omitted).
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liability as a manager, and any manager who is not already a defendant 

cannot face liability either.

The third fact that the Mid Atlantic Physicians say is missing is “that 

such Physician Defendant’s actions as a manager breached a duty to [the 

Retina Physicians].” Appellees’ Br. at 14. On this issue, we agree that 

Appellants were required to plead the material facts on which they sought to 

hold liable those of the Mid Atlantic Physicians who served as managers. In 

this connection, we have explained that —

Material facts are ultimate facts, i.e. those facts essential to 

support the claim. Evidence from which such facts may be 

inferred not only need not but should not be alleged. . . . 

Allegations will withstand challenge under Rule 1019(a) if (1) 

they contain averments of all of the facts the plaintiff will 

eventually have to prove in order to recover, and (2) they are 

sufficiently specific so as to enable defendant to prepare his 

defense.

Lerner, 954 A.2d at 1236 (citation and brackets omitted). Here, the 

material facts on which Appellants base their claims against the Mid Atlantic 

Physicians are the signing of the resolution authorizing the sale of RDTA’s 

assets to Mid Atlantic and dissolution of the company. See Am. Compl. 

¶¶ 27-52. Appellants make no contention that they seek to hold the Mid 

Atlantic Physicians liable (as members or otherwise) for any other 

misconduct, and if Appellants later seek to hold any of the Mid Atlantic 

Physicians liable for other actions not alleged in the amended complaint, 

they may not recover for those unpleaded other actions. But Appellants 

may recover for the misconduct they have pleaded.
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Appellees’ position is that because the amended complaint said that 

each defendant engaged in the misconduct as a member of RDTA, 

Appellants may not recover for the exact same conduct by the exact same 

defendant to the extent that the defendant also acted as a manager of 

RDTA. Appellees cite no authority supporting that contention. Under the 

Operating Agreement, any defendant who was a manager also was a 

member. Although manager status sometimes may have given a member 

greater authority to act, it is not clear that matters here. By signing the 

resolution that forms the basis for Appellants’ claim, all of the signers acted 

as members because Section 6.06 of the Operating Agreement vested 

members, not managers, with the authority to dissolve the company and 

sell its assets. 

In addition, the only duty Appellants allege to have been breached by 

the Mid Atlantic Physicians is the duty they owed to the Retina Physicians as 

minority members of RDTA. We have held that all of the Mid Atlantic 

Physicians were subject to that duty as members. Appellees do not argue 

that this duty does not also apply to managers. As we have explained, the 

precise nature of the duty — a duty of good faith and fair dealing, or a more 

demanding duty as a fiduciary — remains to be decided in the case, and it 

may be that those Mid Atlantic Physicians who were managers may be 

subject to a higher standard. But the amended complaint already avers that 

the defendants are liable under each of these standards, see, e.g., Am. 

Compl. ¶¶ 44-48, so that application of any of the standards will not be 
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without notice. On these facts, we therefore conclude that Appellants were 

not required to plead manager status in order to recover. Rather, we agree 

with Appellants that they can recover “for any breaches of fiduciary duty 

that can be maintained against Physician Defendants,” Appellants’ Reply 

Brief at 4, regardless of the defendant’s status as a member or manager, so 

long as the recovery is based only on the facts currently alleged in the 

amended complaint. 

Because the trial court erred as a matter of law in sustaining 

Appellees’ preliminary objections in the nature of a demurrer, we reverse the 

order below and remand for further proceedings.

Order reversed in part.16 Case remanded. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.

Prothonotary

Date: 12/7/2017

____________________________________________

16 We do not disturb any part of the trial court’s order other than that 

dismissing the claims under Count I of the amended complaint.