LLCs

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In a two-member, 50/50 LLC, can Member #1 as sole managing member assert a fiduciary breach claim against non-managing Member #2? Justice Vito DeStefano recently tackled the question in Kalikow v. Shalik, highlighted in this week’s New York Business Divorce. …
Continue Reading Court Dismisses Fiduciary Breach, Contribution Claims Against Non-Managing LLC Member

You won’t want to miss the discussion of Justice Charles Ramos’ recent decision in Serota v. Scimone in this week’s New York Business Divorce involving a family feud triggered by a management agreement given by the late founder of a real estate empire organized as a series of LLCs, that left his two sons with ownership and the title of managing member but with no authority to control or sell the business. …
Continue Reading Father’s Dead-Hand Control of LLCs Frustrates Sons’ Takeover of Realty Empire

Justice Stephen Bucaria’s recent decision in PFT Technology LLC v. Wieser is one of only a handful of rulings by New York courts addressing the right to advancement of legal fees in litigation among members of a limited liability company. Learn more in this week’s New York Business Divorce. …
Continue Reading Novel Ruling on Advancement in LLC Dissolution Case “Levels the Playing Field”

A noteworthy decision last week by Justice Carolyn Demarest is featured in this week’s New York Business Divorce. The case, involving a fight between sibling co-owners of a food distributor and a separate realty company, addresses important issues concerning the scope of a general release and LLC members’ right to advancement of legal defense costs. …
Continue Reading Court Limits Scope of Release, Denies Advancement of Defense Costs in Sibling “Food Fight”

In this week’s New York Business Divorce you’ll read about two recent cases in which New York courts decided disputes between members of Delaware LLCs over the interpretation of provisions — one dealing with a distribution waterfall and the other with compulsory buyback of membership interests — found in highly sophisticated operating agreements. …
Continue Reading Waterfalls and Compulsory Buybacks: New York Courts Decide Disputes Involving Sophisticated Delaware LLC Agreements

Unlike many states including Delaware, whose statutes authorize oral LLC agreements, New York’s LLC Law mandates a written operating agreement. A recent decision by the Appellate Division, First Department, permitting a claim based on an alleged oral LLC agreement to go forward, prompts examination of the pros and cons of oral LLC agreements, in this week’s New York Business Divorce. …
Continue Reading The Oral LLC Agreement: Boon or Bane?

Delaware law’s contractarian approach is central to that state’s jurisprudence concerning limited liability companies. Last month, in Huatuco v. Satellite Healthcare, the Court of Chancery cited freedom-of-contract in dismissing an action for judicial dissolution based on its finding that the LLC agreement’s provision, limiting member rights to those expressly granted in the agreement, constituted a waiver of the right to seek judicial dissolution. This week’s New York Business Divorce asks the question, does Huatuco take contractarianism too far?
Continue Reading Contractarianism Gone Wild?

In Digirolomo v. Sugar LI, LLC, decided last month by Justice Stephen Bucaria, the court devised a novel solution in a lawsuit between LLC members, designed to bring about an equitable buy-out, by conditioning injunctive relief on the plaintiffs filing an amended complaint seeking dissolution. Don’t miss it in this week’s New York Business Divorce. …
Continue Reading Novel Ruling in Lawsuit Over Capital Call Prods Parties to Equitable Buy-Out

Shareholder and LLC agreements, like other contracts, frequently contain terms accompanied by the proviso, “notwithstanding anything to the contrary in this Agreement,” signaling that the term trumps all others. Read this week’s New York Business Divorce to learn about a recent First Department appellate ruling in Schepisi v. Roberts highlighting the mischief that can result from multiple, ” dueling” notwithstanding clauses.
Continue Reading LLC Agreement Falters from Dueling “Notwithstanding” Clauses