## Facts

- The Hut at Avon, LLC was governed by an operating agreement requiring other members’ written consent for any transfer of any portion of a membership interest.
- Thomas Banner, a member, agreed in a divorce settlement to assign to his ex-spouse, Elizabeth Condo, his voting rights and right to receive distributions.
- Banner requested consent from the other members, Thomas J. Conners and George Roberts; they refused.
- Banner executed the assignment to Condo despite the lack of consent.
- After learning of the assignment, Conners and Roberts objected and later negotiated to purchase Banner’s LLC interest for $125,000.
- Condo sued Conners, Roberts, and their attorney, Wendell Porterfield, alleging tortious interference with contract and civil conspiracy, both premised on the assignment’s validity.

## Issues

1. Whether the operating agreement’s anti-assignment clause rendered Banner’s unconsented assignment of voting and distribution rights to Condo legally ineffective.
2. Whether the clause applied only to “duties” of membership or also to “rights,” including economic and voting rights.
3. Whether Colorado LLC law’s preference for contractual freedom requires enforcement of such a consent-based transfer restriction so that a noncompliant assignment has no legal effect.

## Decision

- The Colorado Supreme Court affirmed summary judgment for the defendants.
- The court held the anti-assignment clause barred unconsented transfers of any portion of a membership interest, including voting and distribution rights.
- The court concluded the clause removed Banner’s power to assign without the required consent; the attempted assignment was without legal effect.
- Because the assignment was legally ineffective, it could not support Condo’s tortious interference or civil conspiracy claims.

## Legal Principles

- LLC operating agreements are enforced according to their terms, and Colorado LLC law favors freedom of contract in defining members’ transfer rights and restrictions.
- A broadly worded anti-assignment clause covering “any portion” of a membership interest can restrict transfers of both membership rights and duties.
- Where an operating agreement conditions transfer on other members’ consent, an attempted transfer made without consent may be treated as beyond the member’s power to transfer and thus legally ineffective, not merely a breach.
- Tort claims for interference or conspiracy premised on an assignment fail when the underlying assignment is legally ineffective.

## Conclusion

The court enforced the LLC operating agreement’s consent requirement to hold that an unapproved assignment of a member’s distribution and voting rights had no legal effect, requiring dismissal of tort claims dependent on that purported assignment.


Condo v. Conners, 266 P.3d 1110 (Colo. 2011)