LLCs

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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

Decisions in lawsuits brought by minority members challenging LLC mergers are rare finds. This week’s New York Business Divorce highlights a recent decision in just such a case by Manhattan Commercial Division Justice Melvin Schweitzer, in which he denied a motion to dismiss an action seeking to set aside a merger involving a realty management company organized as a three-member LLC. You won’t want to miss it.
Continue Reading Action to Enjoin LLC Freeze-Out Merger Goes Forward

It’s a familiar story: Business partners have a falling out, and without the assistance of counsel prepare and sign on their own a written agreement that almost inevitably creates more problems than it solves. This week’s New York Business Divorce highlights a recent decision by Manhattan Justice Carol Edmead in which she …
Continue Reading Breaking Up Badly

Is an LLC membership interest forfeited or reduced when a member fails to make a required capital contribution? That was the threshold issue in a decision last week by the Delaware Chancery Court in Grove v. Brown, where the LLC’s financial success in its first year led to acrimony and litigation. Get the answer in this week’s New York Business Divorce.
Continue Reading LLC’s Quick Success Breeds Mutual Misbehavior in Delaware Case

This week’s New York Business Divorce offers some “summer shorts” consisting of summaries of three recent decisions of interest by Justices Orin Kitzes, Stephen Bucaria and Ellen Coin featuring involving exclusion of a minority LLC member seeking dissolution, a request for injunctive relief pending the trial of a corporate dissolution case, and a cmplaint seeking profit share following the revocation of an LLC membership purchase agreement.
Continue Reading Summer Shorts: The Excluded LLC Member and Other Decisions of Interest

In Shao v. Li, decided last week by Manhattan Commercial Division Justice Charles Ramos, the court analyzed a claim by one LLC member that his co-members entered into a sham collateral assignment of a membership interest designed to circumvent a right of first refusal. You won’t want to miss it in this week’s New York Business Divorce. …
Continue Reading When is Permitted Collateral Assignment of LLC Membership Interest a Prohibited Sale?

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. …
Continue Reading Fighting for Home Court Advantage in Multi-State Business Divorce Litigation

If you’re going to require super-majority consent as to certain business decisions in a shareholder or operating agreement, be sure to draft clearly so as to leave no room for potential litigation over the level of required consent. That’s the lesson of Herbert v Schodack Exit Ten, LLC, decided earlier this month by an upstate appellate panel and highlighted in this week’s New York Business Divorce.
Continue Reading Unanimous Vote Requirement in LLC Agreement Turns on Meaning of “Commitment”

It happens once in a while: the co-owners of a business entity formed under the laws of State X have a choice of law clause in their agreement opting to be governed by the laws of State Y. Such was the case in Gelman v. Gelman, recently decided by Justice Daniel Palmieri involving a dispute between sibling co-members of a Delaware LLC whose operating agreement had a New York choice of law provision. Which state’s law did the court apply? Get the answer in this week’s New York Business Divorce.
Continue Reading What Law Applies When Internal Affairs Doctrine Clashes With Choice-of-Law Clause?

A recent decision by Westchester Commercial Division Justice Alan D. Scheinkman in Briarcliff Solutions Holdings, LLC v. Fifth Third Bank (Chicago) takes the spotlight in this week’s New York Business Divorce, featuring a battle for control of the company’s Board of Directors and, ultimately, control of a lawsuit asserting claims against one ownership faction. Don’t miss it. …
Continue Reading Whose Lawsuit Is It Anyway?