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Peter J. Sluka

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Peter J. Sluka represents individuals and entities in all phases of complex commercial litigation.  Peter focuses his practice on business divorce and intra-company disputes, including at mediation, arbitration, trial, and appeal. Regularly litigating in New York State and Federal Court, Peter handles all aspects of claims between owners of closely-held business entities, including disputes over business valuation, fiduciary duties, governing agreements, capital calls, dilution, shareholder oppression, and dissolution.

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The shareholder oppression claim under BCL 1104-a has a unique relationship with claims for money damages.

A minority shareholder petitioning for dissolution under BCL 1104-a must establish that the majority shareholders have engaged in “illegal, fraudulent or oppressive actions,” or that the “property or assets of the corporation are being looted, wasted, or diverted for non-corporate purposes by its directors, officers or those in control of the corporation.”

Based on that standard, it’s easy to imagine conduct by the majority that both meets the criteria for dissolution and constitutes a separate tort compensable with money damages (for instance, a claim for the majority’s breach of fiduciary duty).  For that reason, it’s very common to see a dissolution petition coupled with money damages claims, all arising out of the same conduct. 

But where the money damages claims are filed before the dissolution petition, a plaintiff might be forced to litigate those to completion prior to pursuing their dissolution petition.  That’s the tough lesson learned by the petitioner of a dissolution proceeding brought under BCL 1104-a, in Ramirez v Issa, 2024 N.Y. Slip Op. 33488[U] [NY County 2024], the subject of this week’s post.Continue Reading Corporate Dissolution Petition Hits Back Burner in Favor of Earlier Filed Claims for Money Damages

Road Trip

While there is tremendous diversity from state to state when it comes to statutory and judge-made law in business divorce cases, business valuation principles are—with a few notable exceptions—far more homogenous.  So it makes sense to occasionally venture beyond New York’s borders to see how other courts and experts are addressing the business valuation questions that New York-based business divorces often encounter.

This week’s post looks at several recent decisions across the country concerning valuation principles and discounts.  While each case features different applicable rules and agreements, our New York readers would be wise to note the persuasive power of these cases, especially given the sometimes-thin body of New York caselaw on business valuation issues.Continue Reading Cross-Country Valuation Check-Up: Discounts, Buy-Sell Agreements, and Ambiguity Potholes

OIG2

Just a few weeks ago, I commented on a recent uptick in disputes centered on the breakup of professional services firms.  In those disputes, we expect that the demands of the legal, accounting, and medical professions draw individuals with keen attention to detail, focused on documentation, and prepared for all contingencies.  Less expected is the irony that many attorneys, accountants, and medical professionals fail to bring those attributes to the table when organizing their business relationships. 

The result of that failure is a tinderbox—poorly defined “partnership” relationships, mixed with high profit margins, difficult to value businesses, and type A owners willing to litigate their disputes.  The right spark triggers bitter and hotly contested litigation.  That part-legal, part-psychological phenomenon explains why business divorces of professional services corporations—especially law firms—can get complicated fast. 

Motivated by that uptick, Becky Baek and I were pleased to recently present a CLE on the complexities that arise in the dissolution or breakup of law firms.  Here are the highlights.Continue Reading Special Considerations for Law Firm Breakups

One-of-a-kind

It’s not every day that New York’s highest court considers a question impacting the business divorce cases that we typically litigate. But a recent decision from the Court of Appeals requires careful consideration by any owner of a foreign-incorporated entity considering New York litigation.   …
Continue Reading Court of Appeals Bolsters the Internal Affairs Doctrine, Takes a Stroll Through Scottish Fiduciary Law

OIG2

There are plenty of advantages to practicing business divorce litigation in New York.  The diversity of businesses and clients, complexity of agreements and transactions, and excellence of judges and attorneys make New York, in my view, the place to be for commercial litigators of all stripes.

One downside is the reality that crowded dockets and busy judges sometimes results in too terse decisions from the trial and appellate courts.  At the appellate level, hundreds of pages of evidence, and nuanced, extensively briefed legal theories are sometimes reduced to a one-line decision.  Not only do those one-liners inevitably leave the parties dissatisfied, but they also miss an opportunity to lend reasoned, precedential analysis to complex and unsettled questions of law.

But in some sense, that’s where the lawyers come in.  New cases can be won or lost in the grey areas created by brief appellate authority, and the sharpest lawyers will find the precedential value in even the shortest appellate decisions.

These few paragraphs are already much longer than the Fourth Department’s recent decision affirming dismissal of a shareholder’s claim for dissolution pursuant to BCL 1104-a in Kavanaugh v Consumers Beverages, Inc., 205 NYS3d 637 (4th Dept 2024).  But in a few words, the Fourth Department packs a punch in corporate dissolution jurisprudence.Continue Reading Termination, Adequate Alternative Remedies Sends Dissolution Proceeding Packing