I’m pleased to present my third annual list of the year’s top ten business divorce cases. This year’s crop includes some very important decisions concerning the standard for LLC dissolution, expulsion of LLC members, buyouts triggered by dissolution petitions, stock valuation, and much, much more. All ten were featured in this blog previously; click on the case name to read the full treatment. And the winners are:
1. Matter of 1545 Ocean Avenue, LLC, 72 AD3d 121, 2010 NY Slip Op 00688 (2d Dept Jan. 26, 2010), in which the Second Department differentiated dissolution of LLCs from business corporations and pronounced a contract-based standard for judicial dissolution of LLCs giving primary weight to the terms of the operating agreement.
2. Jain v. Rasteh, Decision and Order, Index No. 109920-09 (Sup Ct NY County Feb. 1, 2010), where the court upheld the right of the LLC’s majority member to expel a minority member for breach of the operating agreement.
3. Chiu v. Chiu, 71 AD3d 646, 2010 NY Slip Op 01768 (2d Dept Mar. 2, 2010), holding that courts have no statutory authority to order expulsion of an LLC member for alleged misconduct, absent language in the operating agreement expressly providing for an expulsion remedy.
4. Matter of Superior Vending, LLC, 71 AD3d 1153, 2010 NY Slip Op 02801 (2d Dept Mar. 30, 2010), in which the court upheld as an "equitable method of liquidation" the return of the petitioner’s capital contribution in exchange for his membership interest in the LLC.
5. Matter of Eklund Farm Machinery, Inc., 73 AD3d 1319, 2010 NY Slip Op 04097 (3d Dept May 13, 2010), in which the court construed BCL Section 1217 to limit the commission payable to receivers in corporate dissolution cases.
6. Matter of Murphy (United States Dredging Corp.), 74 AD3d 815, 2010 NY Slip Op 04794 (2d Dept June 1, 2010), a stock valuation case where the Second Department affirmed the trial court’s application of the discount for lack of marketability to the corporation’s entire enterprise value and not just its good will value.
7. Roni LLC v. Arfa, 74 AD3d 442, 2010 NY Slip Op 04700 (1st Dept June 3, 2010), in which the appellate court ruled that the organizer of an LLC owes a fiduciary duty of disclosure to the investors it solicits to become members.
8. Matter of Stevens (Allied Builders, Inc.), 74 AD3d 1757, 2010 NY Slip Op 05066 (4th Dept June 11, 2010), where the court construed a shareholder’s agreement as not triggering a mandatory buyout upon the minority shareholder’s filing of a dissolution petitioner.
9. Matter of Piekos (Home Studios Inc.), 28 Misc 3d 1220(A), 2010 NY Slip Op 51408(U) (Sup Ct Westchester County Aug. 3, 2010), in which the court allowed a petitioner to raise an unconscionability defense to the respondents’ argument that the filing of the petition triggered petitioner’s obligation to offer his shares at book value as specified in the shareholders’ agreement.
10. Teutul v. Teutul, 2010 NY Slip Op 09248 (2d Dept Dec. 14, 2010), where the court held unenforceable an option agreement giving Paul (Senior) Teutul of American Chopper television fame the right to acquire his son Junior’s 20% stock interest in Orange County Choppers.