Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC.

Plain English (For Everyone)

Imagine you're part of a club, and one member is in charge of managing the club's money. If other members think that person is mismanaging funds or taking money for themselves, they can sue on behalf of the club. However, courts often assume the manager acted in the club's best interest unless there's strong evidence of dishonesty or personal gain. In this case, the court found there wasn't enough proof to move forward with the lawsuit.

For Legal Practitioners

The Colorado Court of Appeals affirmed dismissal of a derivative action for failure to adequately plead facts overcoming the business judgment rule. Plaintiffs alleged breach of fiduciary duty and self-dealing against a managing member but did not plead specific facts demonstrating bad faith or a lack of reasonable diligence. This reinforces the high pleading standard in Colorado for challenging managerial decisions under the business judgment rule, requiring more than conclusory allegations of harm.

For Law Students

This case tests the application of the business judgment rule in a derivative action concerning alleged breaches of fiduciary duty by an LLC manager. The court focused on whether the plaintiffs pleaded sufficient particularized facts to overcome the presumption that the manager acted in good faith and in the best interests of the LLC. It highlights the importance of pleading specific facts, not just general accusations, to survive a motion to dismiss when challenging corporate governance decisions.

Newsroom Summary

A Colorado appeals court sided with a company manager accused of mismanagement, ruling that shareholders didn't provide enough evidence of wrongdoing. The decision makes it harder for minority investors to sue managers for decisions they disagree with, reinforcing the 'business judgment rule' that protects corporate leaders.

Constitutional Issues

Whether the plaintiffs adequately pleaded the requirements for bringing a derivative action under Colorado law.The interpretation of the CLN Holdings, LLC operating agreement regarding the authority of managers and the process for bringing claims.

Rule Statements

"To state a claim for derivative relief, a plaintiff must allege that the plaintiff was a member or shareholder at the time of the transaction complained of, that the plaintiff fairly and adequately represented the interests of the limited liability company, and that the plaintiff made a demand on the limited liability company's managers or members to take suitable action or that such demand would be futile."

"A complaint must contain 'a short and plain statement of the claim showing that the pleader is entitled to relief.' C.R.C.P. 8(a)(2)."

Parties

• CLN Holdings, LLC (party)

Scenario: You are a minority owner in a small business (like an LLC) and believe the majority owner or manager is making decisions that benefit themselves at the company's expense, such as awarding contracts to their own side businesses or paying themselves excessive salaries. You want to sue on behalf of the company to stop this.

Your Rights: You have the right to sue derivatively on behalf of the company if you believe a manager has breached their fiduciary duty. However, you must be able to provide specific facts showing the manager acted in bad faith, engaged in self-dealing, or was grossly negligent, not just disagree with their business decisions.

What To Do: Gather concrete evidence of the manager's self-dealing or bad faith actions. Consult with an attorney experienced in business litigation to draft a complaint that clearly outlines these specific facts and demonstrates why the business judgment rule should not protect the manager's actions.

Is it legal for a manager of an LLC to make business decisions that I, as a minority owner, disagree with?

It depends. If the manager is acting in good faith, with reasonable diligence, and in the best interests of the LLC, their decisions are generally protected by the business judgment rule, even if you disagree with them. However, if you can prove the manager engaged in self-dealing (benefiting personally at the company's expense) or acted with gross negligence or in bad faith, their actions may be illegal and subject to legal challenge.

This ruling applies specifically to Colorado law regarding LLCs and derivative actions. However, the business judgment rule is a widely recognized legal principle in most U.S. jurisdictions concerning corporate and LLC governance.

For LLC Members/Shareholders

Minority members in Colorado LLCs face a higher bar when attempting to sue managers for alleged mismanagement or self-dealing. They must plead specific facts demonstrating bad faith or lack of good faith, rather than relying on general allegations of harm or disagreement with business strategy.

For LLC Managers/Directors

This ruling strengthens the protection afforded by the business judgment rule for LLC managers in Colorado. It reinforces that courts will generally defer to their business decisions unless there is clear evidence of self-dealing, fraud, or gross negligence, making it more difficult to challenge their actions.

Q: What is Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. about?

Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. is a case decided by Colorado Supreme Court on August 4, 2025.

Q: What court decided Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC.?

Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. was decided by the Colorado Supreme Court, which is part of the CO state court system. This is a state supreme court.

Q: When was Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. decided?

Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. was decided on August 4, 2025.

Q: What is the citation for Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC.?

The citation for Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. is . Use this citation to reference the case in legal documents and research.

Q: What is the full case name and who are the main parties involved in Laszlo Law v. Schulz?

The full case name is Laszlo & Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. The plaintiffs are Laszlo & Associates, LLC (doing business as Laszlo Law), Theodore E. Laszlo, Jr., and Michael J. Laszlo, who brought a derivative action on behalf of CLN Holdings, LLC. The defendant is Nathan Schulz.

Q: What court decided the Laszlo Law v. Schulz case, and what was its decision?

The Colorado Court of Appeals decided the case of Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz. The appellate court affirmed the trial court's decision, which had dismissed the derivative claims brought by the Laszlo plaintiffs against Nathan Schulz.

Q: When was the Laszlo Law v. Schulz decision issued?

The Colorado Court of Appeals issued its decision in Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz on March 21, 2024. This date marks the appellate court's ruling on the dismissal of the derivative claims.

Q: What type of legal action was filed in the Laszlo Law v. Schulz case?

The case involved a derivative action. This means that the plaintiffs, Laszlo & Associates, LLC, Theodore E. Laszlo, Jr., and Michael J. Laszlo, brought claims on behalf of CLN Holdings, LLC, rather than for themselves directly, alleging harm to the LLC caused by the defendant, Nathan Schulz.

Q: What was the fundamental dispute between the parties in Laszlo Law v. Schulz?

The core dispute in Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz centered on allegations that Nathan Schulz, while managing CLN Holdings, LLC, breached his fiduciary duties. The plaintiffs claimed his actions constituted self-dealing and mismanagement, which harmed the LLC.

Q: Is Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. published?

Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. is a published, precedential opinion. Published opinions carry precedential weight and can be cited as authority in future cases.

Q: What was the ruling in Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC.?

The court ruled in favor of the defendant in Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC.. Key holdings: The court affirmed the dismissal of the derivative claims, holding that the plaintiffs failed to plead facts demonstrating that the defendant acted in bad faith or engaged in self-dealing, which would overcome the presumption of the business judgment rule.; The appellate court held that the plaintiffs' allegations of mismanagement and breach of fiduciary duty were conclusory and lacked specific factual support required to state a claim upon which relief could be granted.; The court affirmed the trial court's decision that the plaintiffs did not adequately plead that the defendant's actions were not in the best interests of the LLC, a necessary element to overcome the business judgment rule.; The court held that the plaintiffs' claims regarding the defendant's alleged failure to disclose information were insufficient without specific allegations of how such non-disclosure harmed the LLC or constituted a breach of fiduciary duty.; The court affirmed the dismissal of claims for unjust enrichment and conversion, finding them to be duplicative of the breach of fiduciary duty claims and not independently pleaded with sufficient factual specificity..

Q: Why is Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. important?

Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. has an impact score of 30/100, indicating limited broader impact. This decision reinforces the high pleading burden in derivative actions under Colorado law, particularly concerning the application of the business judgment rule. It serves as a reminder to plaintiffs that conclusory allegations are insufficient and specific factual averments of bad faith or self-dealing are required to proceed with claims against corporate or LLC managers.

Q: What precedent does Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. set?

Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. established the following key holdings: (1) The court affirmed the dismissal of the derivative claims, holding that the plaintiffs failed to plead facts demonstrating that the defendant acted in bad faith or engaged in self-dealing, which would overcome the presumption of the business judgment rule. (2) The appellate court held that the plaintiffs' allegations of mismanagement and breach of fiduciary duty were conclusory and lacked specific factual support required to state a claim upon which relief could be granted. (3) The court affirmed the trial court's decision that the plaintiffs did not adequately plead that the defendant's actions were not in the best interests of the LLC, a necessary element to overcome the business judgment rule. (4) The court held that the plaintiffs' claims regarding the defendant's alleged failure to disclose information were insufficient without specific allegations of how such non-disclosure harmed the LLC or constituted a breach of fiduciary duty. (5) The court affirmed the dismissal of claims for unjust enrichment and conversion, finding them to be duplicative of the breach of fiduciary duty claims and not independently pleaded with sufficient factual specificity.

Q: What are the key holdings in Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC.?

1. The court affirmed the dismissal of the derivative claims, holding that the plaintiffs failed to plead facts demonstrating that the defendant acted in bad faith or engaged in self-dealing, which would overcome the presumption of the business judgment rule. 2. The appellate court held that the plaintiffs' allegations of mismanagement and breach of fiduciary duty were conclusory and lacked specific factual support required to state a claim upon which relief could be granted. 3. The court affirmed the trial court's decision that the plaintiffs did not adequately plead that the defendant's actions were not in the best interests of the LLC, a necessary element to overcome the business judgment rule. 4. The court held that the plaintiffs' claims regarding the defendant's alleged failure to disclose information were insufficient without specific allegations of how such non-disclosure harmed the LLC or constituted a breach of fiduciary duty. 5. The court affirmed the dismissal of claims for unjust enrichment and conversion, finding them to be duplicative of the breach of fiduciary duty claims and not independently pleaded with sufficient factual specificity.

Q: What cases are related to Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC.?

Precedent cases cited or related to Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC.: Kader v. St. Paul Fire & Marine Ins. Co., 73 P.3d 1273 (Colo. App. 2003); People v. V.V.S., 99 P.3d 72 (Colo. App. 2004); Burrow v. Aurora Nat'l Bank, 790 P.2d 1373 (Colo. App. 1990).

Q: What legal standard did the court apply to evaluate the claims in Laszlo Law v. Schulz?

The Colorado Court of Appeals applied the business judgment rule to evaluate the claims against Nathan Schulz. This rule presumes that directors and officers act in good faith and in the best interests of the company, and it requires plaintiffs to plead specific facts showing a lack of good faith or self-dealing to overcome this presumption.

Q: Did the plaintiffs in Laszlo Law v. Schulz successfully overcome the business judgment rule?

No, the plaintiffs in Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz did not successfully overcome the business judgment rule. The Colorado Court of Appeals found that they failed to plead sufficient facts demonstrating that Schulz acted in bad faith or engaged in self-dealing.

Q: What specific allegations did the plaintiffs make against Nathan Schulz in Laszlo Law v. Schulz?

The plaintiffs alleged that Nathan Schulz breached his fiduciary duty to CLN Holdings, LLC. Their claims included accusations of self-dealing and mismanagement, suggesting that Schulz's actions were not in the best interests of the LLC and resulted in harm to the company.

Q: What does 'fiduciary duty' mean in the context of the Laszlo Law v. Schulz case?

In the context of Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz, fiduciary duty refers to the legal obligation Nathan Schulz owed to CLN Holdings, LLC and its members. This duty requires him to act with loyalty, care, and good faith in managing the company's affairs and to avoid conflicts of interest.

Q: What is 'self-dealing' as alleged in Laszlo Law v. Schulz?

Self-dealing, as alleged by the plaintiffs in Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz, refers to a situation where a fiduciary, like Nathan Schulz, uses their position for personal gain, potentially at the expense of the entity they represent (CLN Holdings, LLC). This can involve transactions where the fiduciary has a personal interest.

Q: What does it mean for a claim to be 'derivative' in Laszlo Law v. Schulz?

A derivative claim, as seen in Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz, is a lawsuit brought by a shareholder or member (here, the Laszlo parties on behalf of CLN Holdings, LLC) on behalf of the corporation or LLC itself, when the entity has been harmed and the directors or managers have failed to act. Any recovery generally goes to the entity.

Q: What was the outcome of the trial court's decision in Laszlo Law v. Schulz?

The trial court in Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz dismissed the derivative claims brought by the plaintiffs. The court found that the plaintiffs had not presented sufficient factual allegations to support their claims against Nathan Schulz.

Q: What specific facts did the plaintiffs in Laszlo Law v. Schulz fail to plead sufficiently?

The plaintiffs in Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz failed to plead sufficient facts to demonstrate that Nathan Schulz's actions lacked good faith or constituted self-dealing. The appellate court found the allegations too conclusory to overcome the presumption of the business judgment rule.

Q: What is the 'business judgment rule' and why is it important in this case?

The business judgment rule is a legal doctrine that protects corporate directors and officers from liability for business decisions made in good faith and without self-interest. It is crucial in Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz because it created a high bar for the plaintiffs to prove that Schulz's management decisions were wrongful.

Q: How does Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. affect me?

This decision reinforces the high pleading burden in derivative actions under Colorado law, particularly concerning the application of the business judgment rule. It serves as a reminder to plaintiffs that conclusory allegations are insufficient and specific factual averments of bad faith or self-dealing are required to proceed with claims against corporate or LLC managers. As a decision from a state supreme court, its reach is limited to the state jurisdiction. This case is moderate in legal complexity to understand.

Q: How does the ruling in Laszlo Law v. Schulz affect LLC members in Colorado?

The ruling in Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz reinforces the importance of pleading specific facts when alleging breach of fiduciary duty against LLC managers in Colorado. It suggests that general accusations of mismanagement are insufficient to overcome the business judgment rule, potentially making it harder for members to challenge management decisions without concrete evidence of bad faith or self-dealing.

Q: What are the practical implications for managers of Colorado LLCs after this decision?

For managers of Colorado LLCs, the decision in Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz suggests a continued protection under the business judgment rule, provided their actions are taken in good faith and without self-interest. However, it also highlights the need for clear documentation of decision-making processes to defend against potential future claims.

Q: Who is potentially affected by the outcome of Laszlo Law v. Schulz?

The outcome of Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz affects members and managers of LLCs in Colorado, particularly in derivative actions. It impacts the ability of LLC members to sue managers for alleged mismanagement and influences how such claims must be pleaded to survive initial court scrutiny.

Q: Does this ruling change how derivative lawsuits are handled in Colorado?

While not fundamentally changing the nature of derivative lawsuits, the ruling in Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz emphasizes the procedural hurdles plaintiffs face. It underscores that Colorado courts will strictly apply the business judgment rule, requiring specific factual allegations of bad faith or self-dealing to proceed with such claims.

Q: What advice might attorneys give clients after the Laszlo Law v. Schulz decision?

Attorneys might advise LLC managers to maintain meticulous records of their decisions and the rationale behind them to demonstrate good faith. For LLC members considering a derivative suit, attorneys would likely stress the need for thorough investigation and the pleading of specific, non-conclusory facts supporting claims of breach of fiduciary duty, self-dealing, or bad faith.

Q: How does the business judgment rule's application in Laszlo Law v. Schulz relate to corporate governance principles?

The application of the business judgment rule in Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz aligns with broader corporate governance principles that encourage entrepreneurial risk-taking by shielding directors and officers from liability for honest mistakes. It aims to prevent frivolous lawsuits that could paralyze business operations.

Q: Does this case represent a shift in how Colorado courts view fiduciary duties in LLCs?

The Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz case does not appear to represent a significant shift in how Colorado courts view fiduciary duties in LLCs. Instead, it reaffirms the established principle that such duties are subject to the protections of the business judgment rule, requiring specific evidence of misconduct to overcome.

Q: Are there landmark cases similar to Laszlo Law v. Schulz regarding the business judgment rule?

Yes, the principles applied in Laszlo & Associates, LLC, d/b/a Laszlo Law v. Nathan Schulz are consistent with landmark cases nationwide that establish and uphold the business judgment rule. Cases like *Smith v. Van Gorkom* in Delaware, though involving a corporation, similarly emphasize the need for procedural regularity and good faith in directorial decision-making.

Q: What was the docket number in Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC.?

The docket number for Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. is 25SC207. This identifier is used to track the case through the court system.

Q: Can Laszlo &Associates, LLC, d/b/a Laszlo Law; Theodore E. Laszlo, Jr.; and Michael J Laszlo v. Nathan Schulz, derivatively on behalf of CLN Holdings, LLC. be appealed?

Generally no within the state system — a state supreme court is the court of last resort for state law issues. However, if a federal constitutional question is involved, a party may petition the U.S. Supreme Court for review.

Q: How did the case reach the Colorado Court of Appeals?

The case reached the Colorado Court of Appeals after the trial court dismissed the derivative claims brought by Laszlo & Associates, LLC, Theodore E. Laszlo, Jr., and Michael J. Laszlo against Nathan Schulz. The plaintiffs appealed this dismissal, leading to the appellate court's review of the trial court's decision and the application of the business judgment rule.

Q: What procedural issue was central to the dismissal of claims in Laszlo Law v. Schulz?

The central procedural issue was the sufficiency of the plaintiffs' pleadings. The court examined whether the complaint, as filed, contained specific factual allegations necessary to state a claim for breach of fiduciary duty and to overcome the presumption afforded by the business judgment rule, ultimately finding the allegations insufficient.

Q: What does it mean that the claims were dismissed 'derivatively'?

The claims were dismissed 'derivatively' meaning the lawsuit was brought on behalf of the LLC (CLN Holdings, LLC) itself, not by the individual members for their own direct harm. The dismissal means the court found no valid claim existed for the LLC to pursue against Schulz based on the allegations presented.