From: Subject: Ross v Nelson (2008 NY Slip Op 06504) Date: Fri, 8 Aug 2008 19:12:57 -0400 MIME-Version: 1.0 Content-Type: text/html; charset="Windows-1252" Content-Transfer-Encoding: quoted-printable Content-Location: http://www.courts.state.ny.us/reporter/3dseries/2008/2008_06504.htm X-MimeOLE: Produced By Microsoft MimeOLE V6.00.2900.3198 Ross v Nelson (2008 NY Slip Op 06504)
Ross v Nelson
2008 NY Slip Op 06504
Decided on August 5, 2008
Appellate Division, First Department
Published by New York State = Law=20 Reporting Bureau pursuant to Judiciary Law =A7 = 431.
This opinion is uncorrected = and=20 subject to revision before publication in the Official=20 Reports.


Decided on August 5, = 2008=20
Tom, J.P., Andrias, Gonzalez, Nardelli, Sweeny, JJ.=20

3155 601814/01

[*1]Dean Ross,=20 Plaintiff-Appellant,

v

Eric Nelson, et al.,=20 Defendants-Respondents.





Joseph C. = Andruzzi,=20 Plainview, for appellant.
Kudman Trachten Aloe LLP, New York = (Michelle S.=20 Babbitt of
counsel), for respondents.

Order, Supreme Court, New York County (Helen E. Freedman,
J.), = entered=20 October 17, 2006, which denied plaintiff's motion for summary judgment, = granted=20 defendants' cross motion to dismiss the first, second, fifth, sixth, = seventh,=20 eighth, ninth, tenth and seventeenth causes of action, and declared that = plaintiff was properly removed as a member-manager of the subject = limited=20 liability companies and not entitled to management fees, affirmed, = without=20 costs.=20

The operating agreement under which the parties worked was, by its = terms,=20 guided by the Limited Liability Company Law. Even though the agreement = lacked a=20 specific provision for removal of a member-manager, it clearly and = unambiguously=20 allowed for same by the language of Article VI, which called for the = dissolution=20 of the LLC and its reorganization upon, among other events, the = "expulsion" of a=20 member-manager. Lacking a specific mechanism in the operating agreement = for such=20 expulsion, the parties relied on =A7 414 of the Limited Liability = Company Law,=20 which allows for removal of a manager by majority vote of the other=20 members.[FN1]=20

Furthermore, the pertinent provisions of the operating agreement=20 unambiguously evidenced an intent to pay management fees to the entity = in the=20 appointment of Vintage as the managing agent at the inception of the = companies,=20 as well as the payment of the fee to Vintage for approximately five = years. This=20 reflected the parties' intention to pay the entire management fee to the = managing agent (see Empire Mut. Ins. Co. v Applied Sys. Dev. = Corp., 121=20 AD2d 956, 960 [1986]).=20

We have considered plaintiff's remaining contentions and find them=20 unavailing.=20

All concur except Andrias and Nardelli, JJ. who dissent in = part in=20 a memorandum by Andrias, J. as follows:

[*2]ANDRIAS, J. (dissenting in part)=20

I agree that pursuant to the unambiguous terms of the operating = agreement,=20 and in light of the conduct of the member-managers since the inception = of the=20 companies, the member managers intended to pay the entire management fee = to=20 Vintage, the duly appointed managing agent. However, I would modify the = order=20 appealed from to the extent of granting plaintiff partial summary = judgment=20 declaring that he is and remains a member manager of 442-44 Third Ave. = Realty,=20 LLC and Chelsea Village Realty LLC, and denying defendants' motion to = the extent=20 it seeks dismissal of plaintiff's second cause of action for breach of = the=20 operating agreements.=20

Limited Liability Company Law =A7 414 provides for the removal or = replacement=20 of any or all managers with or without cause by a vote of a majority in = interest=20 of the members entitled to vote thereon, "[e]xcept as provided in the = operating=20 agreement." Although the operating agreements in issue do not have a = specific=20 expulsion provision, Article III (MEMBERS/MANAGERS) of both agreements = sets=20 forth the companies' ownership and management structure and provides, in = paragraph 7, that "Eric Nelson, Gary Podell and Dean Ross have been = elected=20 member managers and shall continue to serve as member managers in = accordance=20 with the provisions of this Agreement. In case of any vote for the = election of=20 managers all members agree to vote for Eric Nelson, Gary Podell and Dean = Ross=20 only." There is no claim of fraud or mistake in the wording or adoption = of the=20 operating agreements, and "[a]bsent some indicia of fraud or other = circumstance=20 warranting equitable intervention, it is the duty of a court to enforce = rather=20 than reform the bargain struck" (Grace v Nappa, 46 NY2d 560, 565 = [1979]).=20 Thus, regardless of the provision in paragraph 1 of Article VI = (DISSOLUTION)=20 that the companies would be dissolved upon, inter alia, the "bankruptcy, = death,=20 expulsion, incapacity or withdrawal of any manager," since the members = were=20 obliged to vote for the three named persons in "any" election of = managers, their=20 vote to expel plaintiff from both companies and replace him with his = brother was=20 contrary to the plain and unambiguous language of the agreements. = Therefore,=20 plaintiff is entitled to a declaration that his removal from office was = invalid,=20 and to reinstatement of his second cause of action for breach of the = operating=20 agreements.=20

THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, = APPELLATE=20 DIVISION, FIRST DEPARTMENT.=20

ENTERED: AUGUST 5, 2008=20

CLERK=20

Footnotes


Footnote 1:The dissent's argument that Article III = controls=20 would compel us to view that Article in a vacuum, dismissing the = significance,=20 if not the actual presence, of Article VI and thereby ignoring the need = to read=20 the agreement as a whole.



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