Like the Energizer bunny, some business divorce lawsuits keep going and going and going. Years of protracted litigation, brutal though they may be upon the parties, are a bonanza for voyeuristic business divorce practitioners when the result is thoughtful, precedential decisions that clarify prior rules of law, or better yet, announce new ones. Kassab v Kasab is a perfect example.
Begun nine years ago, Kassab involves two brothers so at odds they seem to disagree how to spell their own last name. For years, 75% owner Avraham and 25% owner Nissim battled over their interests in two entities, one a corporation referred to “Corner,” the other a limited liability company referred to as “Mall,” each of which owned an adjacent parcel of vacant land operated together as a parking lot in Jamaica, Queens.
Over the years, Kassab has spawned no less than five separate lawsuits, five appearances on this blog (read here, here, here, here, and here), and five published appeals court decisions, the latest two issued just last week by the Brooklyn-based Appellate Division – Second Department.
Last week’s companion decisions are Kassab v Kasab, ___ AD3d ___, 2021 NY Slip Op 03837 [2d Dept June 16, 2021], and Kassab v Kasab, ___ AD3d ___, 2021 NY Slip Op 03836 [2d Dept June 16, 2021]. The former emanated from a post-trial decision granting a petition for corporate dissolution. The latter emanated from a pre-answer decision dismissing a petition for LLC dissolution. Polar opposite outcomes.
Side-by-side, last week’s Kassab decisions perfectly illustrate a point we have made on this blog many times: the legal standards for judicial dissolution of corporations and limited liability companies are very different, the standards to dissolve an LLC in some ways more exacting and difficult to prove, and so allegations that might suffice to dissolve a corporation may not even come close to dissolve an LLC. Certain language from the latter Kassab decision addressing LLC dissolution may also have implications for another important issue no New York appeals court has addressed: whether New York law would recognize a viable cause of action for “common-law dissolution” of an LLC. Continue Reading To Dissolve or Not to Dissolve, that is the Question. The Answer is Both.