Foreign Business Entities

This week’s New York Business Divorce highlights two recently published articles on two topics of great interest to business divorce practitioners: (1) whether courts of one state have jurisdiction to dissolve business entities formed in another state, and (2) the role of equity in Delaware LLC litigation.
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shortsTraditions are good. This blog has two annual traditions. First, at the end of each year I write a post listing the year’s top ten business divorce decisions. Second, each August I offer readers who are (or ought to be) on summer vacation some light reading in the form of three, relatively short case summaries.

So here we are in what’s been a particularly felicitous August weather-wise (at least here in the Northeast U.S.), with another edition of Summer Shorts. This edition’s summaries feature two out-of-state cases — one from Florida involving expulsion of an LLC member and one from Delaware involving the valuation upon redemption of an LLC member’s interest — and a New York appellate court decision involving the removal of a limited partnership’s general partner.

The Anti-Chiu: Florida Court Upholds LLC Member’s Expulsion

Froonjian v Ultimate Combatant, LLC, No. 4D14-662 [Fla. Dist. Ct. App. May 27, 2015].  The Florida intermediate appellate court’s ruling in Froonjian makes for a fascinating contrast with New York case law represented most prominently by the Second Department’s 2010 decision in Chiu v Chiu holding that, absent express authorization in the LLC’s operating agreement, a member’s involuntary expulsion is not permitted. Going 180° in the other direction, the Froonjian court upheld the majority members’ expulsion of a minority member from a Florida LLC that had no operating agreement, reasoning that the Florida default statute vesting all decision-making authority in the members acting by majority vote encompasses the authority to expel a member.
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A recent decision by Manhattan Commercial Division Justice Jeffrey Oing dismissed for lack of subject matter jurisdiction a petition to dissolve a Delaware LLC whose operating agreement included a venue provision waiving the members’ right to sue anywhere but New York. Get the full story in this week’s New York Business Divorce.
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In the face of Second Department case law rejecting subject-matter jurisdiction over statutory dissolution claims involving foreign business entities, the plaintiffs in Bonavita v Savenergy, Inc. argued to Justice Timothy Driscoll that he nonetheless could hear a claim for common-law dissolution of a Delaware corporation. Did they succeed? Find out in this week’s New York Business Divorce.
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Justice Emily Pines’ decision last month in Matter of Bianchi, dismissing for lack of subject matter jurisdiction a petition to dissolve a New York-based Delaware corporation, raises anew the conflicting decisions on the issue among New York’s several Appellate Divisions. This week’s New York Business Divorce has the story.
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What happens when feuding business partners bring competing lawsuits against each other, including a dissolution proceeding, in different courts in different states? That’s the question addressed in a recent decision by Suffolk County Commercial Division Justice Elizabeth Emerson in Picarella v. HMA Properties, LLC, highlighted in this week’s New York Business Divorce.
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