In what he described as “the aftermath of what had been an amicable business divorce,” New York County Commercial Division Justice Joel Cohen discusses several interesting and novel limitations on New York’s cause of action for an equitable accounting.
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Discovery
Summer Shorts: For-Cause Termination of LLC Member and Other Decisions of Interest
This 10th annual edition of Summer Shorts presents brief commentary on four recent decisions of interest in business divorce cases in the New York courts along with a recent decision by the Mississippi Supreme Court upholding an unusual freeze-out remedy.
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Bending the Rules of Standing: The De Facto Merger Doctrine
Typically used to seek a money judgment against a successor entity, in this week’s New York Business Divorce, read about a novel appellate decision relying upon the “de facto merger” doctrine to authorize a post-judgment equitable accounting against a successor entity in which the plaintiff admittedly lacked an ownership interest or fiduciary relationship.
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Disclosure of Estate Tax Stock Appraisals in Shareholder Disputes
Are stock appraisals done for estate tax purposes discoverable in stock valuation proceedings or other types of shareholder disputes involving the shares of a deceased stockholder or of someone who inherits shares from the estate? A recent appellate decision on the topic is the springboard for this week’s post.
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Accounting Unchained: Is the Closely Held Business Owner’s Right to an Accounting Absolute?
In this week’s New York Business Divorce, we focus on the oft-overlooked accounting cause of action, recently reinvigorated by an appellate decision referring to the claim as an “absolute right.” What does that mean for business divorce litigants? Read on.
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Decision in Dissenting Limited Partner Case Directs Fair Value Hearing, Grants Discovery
In the 25 or so years since New York adopted its Revised Uniform Limited Partnership Act, last month’s trial court decision in Levine v. Seven Pines Associates, L.P. may be the first to address issues attendant to a post-merger, dissenting limited partner appraisal proceeding. It’s featured in this week’s New York Business Divorce.
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The High Price of Bungled Expert Disclosure in Valuation Cases
Appraisal experts provide critical testimony in valuation proceedings. Court rules govern pretrial expert disclosure. In this week’s New York Business Divorce, you can bone up on the disclosure requirements and read about cases in which the parties paid a price for failing to comply with disclosure requirements. …
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10 Ways to Screw Up Your Business Divorce Case
Rules of procedure can be a minefield for any litigation, including judicial dissolution proceedings. This week’s New York Business Divorce features a compilation of 10 of the most common procedural mistakes in business divorce cases. …
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Dissolution Case Ensnares Buyer of Corporation’s Realty in Unauthorized Sale
Someday, if and when the facts come out in discovery, we’ll learn what really happened in the curious case of Matter of Hu (Lowbet Realty Corp.), 2012 NY Slip Op 22314 (Sup Ct Kings County Nov. 2, 2012), in which a slippery minority shareholder somehow managed to sell the corporation’s sole realty asset and abscond with $1.6 million sale proceeds in violation of court order in a pending liquidation proceeding brought by the majority shareholder. In the meantime, the buyer and the property manager now find themselves ensnared in the majority shareholder’s effort to rescind the sale and to recover damages.
The court’s decision in Lowbet, issued earlier this month by Brooklyn Commercial Division Justice Carolyn E. Demarest, tells a remarkable story of brazen disobedience of court order by one Margaret Liu, a 25% shareholder of Lowbet Realty Corp. The decision also sheds light on an interesting, rarely seen procedural question in corporate dissolution proceedings, namely, whether the court may adjudicate within such summary proceedings a shareholder’s claim for relief against a third party who is neither a shareholder nor officer/director of the corporation, rather than being forced to commence a separate, plenary action by ordinary summons and complaint.
Background
The petitioner, Shau Chung Hu, was the 100% owner of Lowbet when, in 1980, it purchased a 19-unit apartment building in Brooklyn. In 1985, Hu married Margaret Liu and gave her a 25% stock interest in Lowbet. Mr. Hu and Ms. Liu separated in 1995, at which time Mr. Hu went to China where he has resided ever since, leaving Ms. Liu in full control over Lowbet.
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Obtaining Discovery of the Company Lawyer in Business Divorce Cases: Privileged or Not?
This week’s New York Business Divorce features an interesting decision by Justice Stephen Bucaria addressing the attorney-client privilege concerning company counsel in a dispute between membership factions of an LLC. Don’t miss it.
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Continue Reading Obtaining Discovery of the Company Lawyer in Business Divorce Cases: Privileged or Not?