## Facts

- The NHL invited expansion applications; Columbus civic leaders organized an investment group to pursue a franchise.
- The group formed Columbus Hockey Limited (CHL), an Ohio limited liability company, with members including John H. McConnell, Wolfe Enterprises, Hunt Sports entities, and others.
- CHL’s plan required an arena lease; after a public-financing effort failed, Nationwide proposed privately financing an arena that CHL would lease.
- Hunt Sports, acting as CHL’s negotiator, repeatedly rejected lease terms Nationwide was prepared to accept, creating delay as NHL deadlines approached.
- Nationwide then approached McConnell, who indicated he would proceed independently if CHL did not reach an arena deal by Nationwide’s deadline.
- CHL did not finalize an arena agreement by the deadline; Nationwide informed the NHL that McConnell would apply personally, and the NHL awarded the Columbus franchise to McConnell’s group. Other CHL members joined McConnell; Hunt’s entities did not.
- CHL’s operating agreement included a provision (Section 3.3) expressly permitting members to engage in other ventures, including those competing with CHL.
- McConnell and Wolfe filed a declaratory-judgment action seeking a declaration that competing for the franchise was permitted and not a fiduciary breach; Hunt and CHL counterclaimed for breach of fiduciary duty and usurpation of a company opportunity.
- The trial court largely ruled for McConnell, awarded attorney’s fees, and ordered CHL dissolved; Hunt and CHL appealed.

## Issues

1. Whether CHL’s operating agreement validly permitted members to compete with CHL, thereby limiting fiduciary-duty and corporate-opportunity theories asserted against McConnell.
2. Whether McConnell breached fiduciary or contractual duties by pursuing the NHL franchise independently after CHL did not secure an arena lease.
3. Whether Hunt Sports breached CHL’s operating agreement in connection with the arena negotiations and what legal consequences followed.
4. Whether the trial court properly awarded attorney’s fees to McConnell.
5. Whether dissolution and related remedial orders were proper and on what grounds.

## Decision

- The appellate court held that the operating agreement’s competition clause was enforceable and permitted member competition with CHL.
- The court affirmed the core declaration that McConnell’s pursuit of the NHL franchise did not breach fiduciary duties or the operating agreement.
- The court found Hunt Sports acted inconsistently with the operating agreement by unilaterally rejecting Nationwide’s proposed lease terms without required internal decision-making.
- The court concluded Hunt’s breach did not legally cause CHL’s dissolution; CHL became nonviable principally because McConnell lawfully obtained the franchise under the agreement’s competition provision.
- The court reversed or limited the attorney’s-fees award, applying the American Rule absent a sufficient contractual, statutory, or equitable basis.
- The court modified aspects of the trial court’s remedial orders but left intact the central holding that CHL could not bar McConnell’s independent franchise acquisition.

## Legal Principles

- An LLC operating agreement is interpreted as a contract; clear and unambiguous terms govern member rights and duties.
- LLC members may contractually limit or modify fiduciary duties, including duties that would otherwise restrict competition or the taking of business opportunities.
- When an operating agreement expressly authorizes members to hold interests in competing ventures, pursuing a competing opportunity is not, by itself, a fiduciary breach or wrongful usurpation.
- A contractual breach requires proof of both breach and legally sufficient causation of the claimed remedy; improper conduct in management does not automatically establish that it caused dissolution or loss of an opportunity.
- Under the American Rule, attorney’s fees are not recoverable absent a statute, contractual provision, or recognized equitable exception.

## Conclusion

The court enforced CHL’s operating agreement provision allowing member competition, holding that McConnell’s independent pursuit and acquisition of the NHL franchise did not violate fiduciary or contractual duties, while also curtailing the trial court’s attorney-fee award and treating dissolution as a consequence of CHL’s post-franchise nonviability rather than Hunt’s breach.


McConnell v. Hunt Sports Enters., 725 N.E.2d 1193 (Ohio Ct. App. 1999)