The third time definitely wasn’t a charm for the plaintiff in Austin v Gould, 2017 NY Slip Op 31494(U) [Sup Ct NY County July 13, 2017], in which the court dismissed ill-pleaded claims for “unfettered and unlimited access to all books and records” of a series of Delaware limited liability companies and their wholly-owned real estate subsidiaries.

The decision by Manhattan Commercial Division Justice O. Peter Sherwood is the latest in a series of trial and appellate court rulings, spread over seven years and three separate lawsuits, rejecting claims by the LLCs’ non-managing one-third owner against the managing two-thirds owner allegedly for failing to distribute millions in management and acquisition fees.

The plaintiff’s two prior lawsuits — the first filed in 2010 and, after its dismissal, the second filed in 2013 — hit dead ends for various reasons including untimeliness and pleading deficiencies. The third lawsuit, filed in 2016, asserted claims for access to the LLCs’ books and records along with damages claims for breach of fiduciary duty and conversion. Continue Reading Books and Records Case Illustrates Crucial Importance of Pre-Suit Demand

A pair of recent decisions by New York and Delaware courts adds to the small but growing body of case law surrounding efforts by non-controlling members of limited liability companies (LLCs) to enforce the right to inspect company books and records. (Read here and here my prior posts on the subject.)

In both cases, the courts grant the complaining members the requested access. The New York case affirms that a member may obtain access to records for the proper purpose of ascertaining the LLC’s financial condition. The Delaware case clarifies the circumstances under which a member may inspect the books and records of the LLC’s wholly owned subsidiaries.


Lipton v Citibabes LLC, 2011 NY Slip Op 32480(U) [Sup Ct NY County Sept 15, 2011].  With facilities located in Manhattan’s Soho district, Citibabes bills itself as a private family membership club offering best-in-class education amenities and fun for young children. According to a complaint filed by Tara Lipton in March 2010, she and Tracy Rensky co-founded Citibabes in 2003 and served as the LLC’s co-managers until 2008 when Lipton resigned her managerial role for personal reasons and due to “increased conflict with Rensky.” Lipton alleges that in 2009 Rensky blocked Lipton’s attempted sale of her membership interest to Lipton’s father.

Continue Reading New York and Delaware Courts Address LLC Member Access to Books and Records