Three states, three LLC disputes, three appellate rulings. Who could ask for more?
Continue Reading A Cross-Country Trio of Appellate Decisions Tackles Novel LLC Disputes
A Cross-Country Trio of Appellate Decisions Tackles Novel LLC Disputes
Can Majority-Authorized Action Still Breach Fiduciary Duty?
When an LLC operating agreement permits action upon majority consent, can a minority member nonetheless challenge that action as a breach of the majority’s fiduciary duties? The Fourth Department weighs in.
Continue Reading Can Majority-Authorized Action Still Breach Fiduciary Duty?
First Department Upholds Minority’s Unilateral Termination of Majority-Appointed CEO Over Majority’s Objections
Can a three-person minority outvote a four-person majority to oust the majority-appointed, longtime CEO of a profitable company (who also happens to be the founder of the company) in a vote requiring supermajority approval?
The math ain’t mathing, you may be saying to yourself.
But today, we explore a case—SJI Renewable Entery Ventures LLC,
In Delaware, You Live or Die Under Your LLC Operating Agreement
This week’s NYBD visits a recent Delaware Chancery Court decision involving, the Court wrote, a “poorly drafted” LLC agreement with “lamentable” consequences for one side that the parties “must live with.”
Continue Reading In Delaware, You Live or Die Under Your LLC Operating Agreement
Mere Assignment of an LLC Membership Interest Does Not Make You a Member
Hoping to derive standing to sue from an LLC membership interest assignment? This week’s New York Business Divorce is another reminder that assignment of a membership interest does not convey actual membership status, with all the coveted legal rights flowing therefrom, unless the operating agreement grants the assignor such power, and, then, only where the assignor and assignee comply with all the conditions of the contract for admission of a new member. Anything less can result in total litigation defeat.
Continue Reading Mere Assignment of an LLC Membership Interest Does Not Make You a Member
Hop Farmers Face Membership Forfeiture as a Deadlock Breaker and a Bitter Lesson on Pleading Shortcuts
The Appellate Division, Second Department delivered last week a fascinating case pitting a deadlock-based LLC dissolution petition against an equity forfeiture provision in the parties’ operating agreement. Add to that a bracing reminder that lazy pleadings and procedural missteps in special proceedings can be outcome-determinative, and Ribeiro v Libutti, 2025 NY Slip Op 06865 (2d Dept Dec. 10, 2025), becomes a cautionary tale for business owners and litigators alike.
For Embattled Bich Family, “Full Membership” Requires Admittance Without Precondition
This week’s New York Business Divorce features an intra-family battle concerning the precise contours of admittance as a “full” member of the family business.
The Humble LLC Exculpation Clause Wins Big: Member/CEO Escapes $8M Fiduciary Claims
Section 417 of New York’s LLC Law permits the members to eliminate their fiduciary duties, but only in very narrow circumstances. This week’s post shows how the seemingly toothless provision can carry the day.
Continue Reading The Humble LLC Exculpation Clause Wins Big: Member/CEO Escapes $8M Fiduciary Claims
Demand Futility, Dissolution, and Transfer Restrictions: Spring Blooms Fresh Developments in LLC Litigation
Spring in New York has ushered in a fresh crop of noteworthy decisions on intra-LLC disputes. Headliners include a boost to members’ rights to compel an accounting courtesy of the First Department, a procedural refresher on LLC dissolution and the applicable standard, and a winding dispute over membership bequests in the Surrogate’s Court.
Business Appraiser Liability? That’s a New One.
Business appraiser liability? A minority owner of an LLC recently took a run at it, alleging that a valuation firm conspired with the majority owners to undervalue his interest for a compelled buyout under the operating agreement. Learn how the court handled this novel issue in this week’s New York Business Divorce.
Continue Reading Business Appraiser Liability? That’s a New One.