The lawsuit alleges two forms of "breach of contract" and twoforms of "breach of fiduciary duty," as well as two forms of"account stated," the latter meaning Harcourt's project-specificLLC allegedly has not paid in full its share of the costs to date.After reviewing Harcourt's motion to dismiss, Judge Dentondismissed all but the two "account stated" claims.

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"With respect to the [defendant's] contention that the Complaintfails to state claims for breach of fiduciary duty, Defendant iscareful to point out that it is based on the relationship between anon-managing member, on the one hand, and the LLC and the othermembers, on the other. This would distinguish the LLC situationfrom a close corporation one where the law has become wellestablished that ordinarily, and in the absence of a statute,organizational provision, or shareholders' agreement to thecontrary, shareholders in a position of control do have a fiduciaryresponsibility to minority shareholders.

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"In this case, the operating agreement…does not state theexistence of fiduciary duties of members inter se or to the LLC.The Court is thus persuaded by the line of cases cited by Defendantto the effect that under the circumstances alleged by Plaintiff toexist in this case – with reference, again, to the operatingagreement and to the managerial role of the Plaintiff Glen, Smith& Glen Development Company, LLC – there is no claim stated byPlaintiff, either directly or derivatively, for breach of fiduciaryduty."

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In not dismissing the "account stated" claims, Judge Denton says"the Court is not at this time called upon to go beyond the face ofthe Complaint and items that can be properly considered on a motionto dismiss, and so the fact that, as the defendants put it, "the[plaintiff] does not allege any facts indicating that the partiesagreed to a fixed amount for the debt or that Harcourt Nevadaacquiesced to the amount claimed by the company," does not meanthat the court cannot give effect to Plaintiff's allegation that"Defendant Harcourt Nevada became indebted to Plaintiff…on anaccount stated. Thus the Court Denies the motion…and will not fornow dismiss the same."

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Ryan Lower, one of the lawyers for Harcourt Developments, sent aletter to GlobeSt.com stating that Harcourt "unequivocally deniesthat it agreed to an account stated and then did not pay." JohnManley, the lawyer for Glen, Smith & Glen, tells GlobeSt.comthat there will be another round of complaints filed on behalf ofhis client that addresses the fact that Nevada law does notrecognize fiduciary responsibility within an LLC.

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"The significant thing is the court refused to dismiss the caseas they asked and we are going to have a series of amendments.These types of arguments over the pleadings are pretty typical butwhat's really clear to us is this case is not going away until jurygets to decide it and that's the most important thing. The decisionhas to be a disappointment for Harcourt."

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