330 West 85th Street is a prime location on Manhattan’s Upper West Side. At that address sits an elegant, pre-war, 48-unit rental apartment building known as The Rexmere. A 4th floor one-bedroom apartment currently is available for $2,950 per month, if you’re interested. I get no commission.
330 West 85 also is the name of the limited liability company that owns the building. The LLC in turn is owned by two gentlemen, Harvey Rubin and James Baumann. Rubin and Baumann’s father acquired the building in the late 1970’s as partners in a general partnership.
Baumann subsequently succeeded to his father’s partnership interest. In 1996, he and Rubin converted the partnership to a manager-managed LLC in which each holds a 50% membership interest and each is a designated manager. The building today undoubtedly is worth exponentially more than its 1978 purchase price.
The business relationship between the two owners apparently went smoothly until around 2014 when Rubin, by then a widower in his 80s, decided to “retire” and approached the younger Baumann about a buy-out. Thus began a chain of events that ruptured their relationship and sees them currently entering their fifth year of litigation marked by two round trips to the appellate court.
The first appellate decision in 2017 pronounced Baumann the winner in a dispute over the construction of the operating agreement’s provisions governing the lifetime sale of a member’s interest.
The second appellate decision last week pronounced Rubin the winner in a dispute centering on the application of LLC Law § 408(b)’s default rule for manager decision-making, to the parties’ dispute over Baumann’s refusal to give up his longtime position as the building’s managing agent.
In both appeals, it’s fair to say that shortsighted drafting of the operating agreement sowed the seeds of dispute. I’ll offer some more thoughts about that at the bottom of this post. Continue Reading Operating Agreement Spawns Multiple Disputes Between 50/50 Members of Realty Holding LLC