General partnerships are supposed to be the easiest of all business organizations for co-owners to separate. Not in the case featured on this week’s New York Business Divorce, where it took almost ten years for the majority partners of a New York general partnership to secure a court ruling that a formal written notice of withdrawal by one of the partners dissolved the business by operation of law.
But, IS Loss Sharing an “Indispensable Element” of Partnership? Not If You Contract Around It.
Happy 2026 to all!
A new year offers a new opportunity to shed the old and embrace the new. So, it is fitting that we kick off another year on New York Business Divorce with a case that involves a little old and a little new.
First, the old: In the world of partnerships
Swing of the Pendulum: A Tale of Two “For Cause” Removals
Strict compliance with contractual conditions precedent, yea or nay? In New York, it depends.
Now, the general rule is that strict compliance with contractual conditions precedent is required. The New York Court of Appeals has previously held: “Express conditions must be literally performed, substantial performance will not suffice” (MHR Capital Partners LP v Presstek,
Second Department Denies Judicial Dissolution of Realty Holding Limited Partnership (and Related Claims), Ending 22-Count Dispute
When an aggrieved party feels his or her back against the wall, there is a strong temptation to assert every claim under the sun against the adversary. Offense is the best defense, so they say. But when the claims don’t stick, litigants may find that more isn’t necessarily more… but it sure can tie up a case for years, particularly in the backlogged Second Department.
Today’s case—Waldorf Invs. L.P. v Waldorf—offers a solid back-to-basics review of the issues that can be litigated when a limited partnership goes south (and the viability of those claims), but at the cost, figuratively and literally, of 8 years of litigation.Continue Reading Second Department Denies Judicial Dissolution of Realty Holding Limited Partnership (and Related Claims), Ending 22-Count Dispute
Deal or No Deal, the Moxy Hotel Edition (or, The Joint Venture That Never Was)
You can’t have a business divorce without first having a business marriage.
Simple enough, right? But, a number of cases we’ve featured on this blog involve the central question of whether the parties, in fact, formed a business relationship… and the attendant difficulties in litigating those types of disputes. Specifically, in a post not too
Hoping to Take Assignment of an LP or LLC Interest? Best Read the Contract
A recent decision from one of our favorites, Albany County Commercial Division Justice Richard M. Platkin, is a reminder to would-be assignees of limited partnership interests that without total compliance with the terms and conditions of the partnership agreement, an attempted assignment conveys only economic rights (i.e., the right to distributions, profits, and losses), but not voting or management rights, even if both sides to the assignment genuinely intended transfer of all ownership rights.
Although not an LLC case, the concept of Marini v Marini Realty LP (2025 NY Slip Op 51138[U] [Sup Ct, Albany County July 2, 2025]), applies equally to LLC members: to become a full-blown equity holder with all attendant rights and privileges, compliance with the governing contract (or if none, the default rules under the Partnership Law and Limited Liability Company Law) is essential. Standard language in such contracts requires unanimity for admission of new equity owners. After all, who wants to take on a new partner without one’s consent? Less than total compliance conveys only economic benefits, not voting or management rights.Continue Reading Hoping to Take Assignment of an LP or LLC Interest? Best Read the Contract
Court’s Decision in High Stakes Case Cuts Through the “Fog of Dueling ‘Notwithstanding’ Clauses”
The qualifying phrase, “Notwithstanding anything to the contrary in this Agreement,” can be a highly useful and efficient means to clarify the hierarchy of otherwise potentially competing contract provisions. It can also trigger thorny litigation when two “notwithstanding” clauses arguably conflict with one another, as in the case featured in this week’s New York Business Divorce.
Premature or Untimely? Both at the Same Time? When to Sue as a General Partner
Can a partnership dispute be premature and untimely simultaneously? That was the unfortunate outcome for a hapless general partner in this week’s New York Business Divorce.
Continue Reading Premature or Untimely? Both at the Same Time? When to Sue as a General Partner
No Unforced Errors Please: “For Cause” Removal Provisions Mean What They Say and Say What They Mean
In this week’s business divorce follies, an imprecisely-drafted notice of default and cure letter leads to a stunning defeat for a group of limited partners who tried to remove a limited partner “for cause” under the partnership agreement.
When Less Effort Leads to More Trouble: Quiet Quitting and Fiduciary Accountability
We frequently see a partner’s “fiduciary duties” expressed as the union of the duty of loyalty and the duty of care. The duty of loyalty requires fiduciaries to avoid elevating the interests of any other person or entity (including their own) above the interests entrusted to their care. The duty of care requires fiduciaries to exercise their authority with reasonable diligence and prudence.
Though stated with disarming simplicity, business divorce litigation has a way of exploiting the often-blurry edges of those duties. Consider the “quiet quitting” phenomenon, where an employee does their job, but gives no more effort or enthusiasm than is absolutely necessary. If a partner or LLC manager did the same thing, how long before it rises to a breach of fiduciary duty?
That’s one of several difficult questions that New York County Commercial Division Justice Margaret Chan was called to answer in Metcalf v Safirstein Metcalf, LLP, 2024 NY Slip Op 34380 (NY County 2024), an early-stage summary judgment decision amid (another!) law firm breakup that highlights just how messy—and fact dependent—breach of fiduciary duty claims asserted between business owners can get. Continue Reading When Less Effort Leads to More Trouble: Quiet Quitting and Fiduciary Accountability