Key Highlights

• A voting agreement requiring board members to "vote in the same manner" as a founder is not a proxy and does not authorize unilateral action on their behalf.
• Proxy instruments must contain clear agency appointment language to be valid under Delaware law.
• When an LLC's operating agreement prescribes how its governing body must act, those procedures cannot be bypassed—even if one party views compliance as futile or inconvenient.
• The Court awarded attorneys' fees to the prevailing plaintiffs under the operating agreement's fee-shifting provision. 

Background

McNeill Investment Group, LLC ("MIG") is a Delaware LLC that owns and manages hotels across the United States. MIG was governed by a three-member Managing Board consisting of its founder and Executive Chairman, Phillip McNeill, Jr., who held 100% of the company's Voting Units, and two officers—CEO Christopher Ropko and COO Thomas Burdi—who held their board seats by virtue of their officer positions.

In June 2023, the three parties executed a short letter agreement (the "Voting Agreement") providing that board actions would require McNeill's consent and that Ropko and Burdi would "vote in the same manner" as McNeill. This agreement was intended to ensure McNeill retained control as the company expanded its governing body for future institutional investors.

The Dispute

By late 2024, McNeill had grown dissatisfied with the management team's performance, particularly the failure of a capital-raising effort that netted only $900,000 against a $100 million target while incurring over $2 million in expenses. On October 7, 2024, McNeill informed Ropko by phone that both officers were terminated and removed from the Managing Board. McNeill did not convene a board meeting. Instead, he executed a backdated written consent purporting to remove the officers (the “Removal Consent”), signing individually and "on behalf of" Ropko and Burdi pursuant to the Voting Agreement.

In November 2024, Ropko filed a complaint against McNeill (naming MIG as a nominal defendant) and a motion for a status quo order.  Burdi later joined as a plaintiff in an amended complaint filed in February 2025.  The amended complaint sought declaratory relief under 6 Del. C. §§ 18-110 and 18-111 regarding the validity of the Removal Consent and McNeill's authority to appoint himself as MIG’s sole officer.

The Court's Holdings

The Voting Agreement is not a proxy. The Court held that the Voting Agreement did not appoint McNeill as the officers' agent, did not authorize him to cast their votes, and did not empower him to execute a written consent on their behalf. The Court distinguished between a proxy, which grants authority to cast another's votes, and a voting agreement, which is merely a contractual commitment governing how a party will exercise its own voting rights. Accordingly, the Removal Consent did not validly remove the plaintiffs as officers of MIG. 

Formal board action was required. Under MIG's Operating Agreement, officers could be removed only by a majority vote of the Managing Board, either at a meeting or by written consent signed by a majority of board members. Because Ropko and Burdi held two of three seats, removal required at least one of their signatures, which McNeill never obtained.

Futility does not excuse compliance. The Court rejected McNeill's argument that a board meeting would have been futile and thus any requirement to hold a board meeting should be excused because Ropko and Burdi would have voted against their own removal. The Court emphasized that formality in board governance is not "mere formality" but rather is important because it focuses attention on the need for deliberation and the existence of accountability structures. The futility doctrine in Delaware has most often been narrowly applied to notice-and-cure provisions and contractual pre-suit dispute resolution procedures, not to excuse compliance with governance procedures prescribed by an entity's operating agreement. The Court could not square McNeill’s futility argument with Delaware’s policy favoring maximum freedom of contract for alternative entities "and the value it places on ‘the collaboration that comes when the entire board deliberates on corporate action and when all directors are fairly accorded material information.”

McNeill did not "designate" the officers to the board. The Court also rejected McNeill's fallback argument that he could unilaterally remove the officers because he had designated them to the Managing Board. The Operating Agreement provided that the initial board seats were filled by whoever held the offices of CEO and COO, not by McNeill's personal designation.

Plaintiffs were entitled to attorneys’ fees. The Court awarded the plaintiffs their attorneys’ fees pursuant to a fee-shifting provision in MIG’s operating agreement because plaintiffs established that their purported removal violated the operating agreement’s terms.

Practical Takeaways

This decision underscores several important points for practitioners and business owners:

• Draft proxy and voting agreements with precision. If the intent is to grant one party the authority to vote on behalf of another, the agreement must contain explicit agency appointment language—not merely a covenant to vote in the same manner.
• Build removal mechanisms into operating agreements upfront. If the parties intend that a founder or controlling member should be able to remove board members without requiring their consent, the operating agreement must say so clearly.
• Do not assume governance formalities can be bypassed. Delaware courts will enforce the procedural requirements set forth in an LLC agreement, even when the outcome of a vote may seem predetermined.
• Fee-shifting provisions have teeth. The Court enforced the Operating Agreement's fee-shifting clause, awarding the prevailing plaintiffs their reasonable attorneys' fees and expenses.