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.
Continue Reading No Unforced Errors Please: “For Cause” Removal Provisions Mean What They Say and Say What They Mean
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
While the general partnership form of business association is long past its prime, we still see the occasional partnership dispute make its way to court. This week’s New York Business Divorce looks at recent appellate decisions from Pennsylvania and New Jersey resolving novel issues in two such disputes.
Continue Reading Recent Appellate Rulings Address Novel Issues in General Partnership Disputes
This week in New York Business Divorce, read about yet another attempted bequest in a last will and testament of a valuable business interest foiled by a buy-sell provision in the entity’s contract. We’ll summarize some of the rules of law courts use to resolve the conflict.
Continue Reading A Gift Horse with Rotten Teeth: When Equity Bequests Violate Transfer Restrictions or Buy-Sell Agreements
Just a few weeks ago, I commented on a recent uptick in disputes centered on the breakup of professional services firms. In those disputes, we expect that the demands of the legal, accounting, and medical professions draw individuals with keen attention to detail, focused on documentation, and prepared for all contingencies. Less expected is the irony that many attorneys, accountants, and medical professionals fail to bring those attributes to the table when organizing their business relationships.
The result of that failure is a tinderbox—poorly defined “partnership” relationships, mixed with high profit margins, difficult to value businesses, and type A owners willing to litigate their disputes. The right spark triggers bitter and hotly contested litigation. That part-legal, part-psychological phenomenon explains why business divorces of professional services corporations—especially law firms—can get complicated fast.
Motivated by that uptick, Becky Baek and I were pleased to recently present a CLE on the complexities that arise in the dissolution or breakup of law firms. Here are the highlights.Continue Reading Special Considerations for Law Firm Breakups
Oral joint venture agreements tend to be the murkiest, easiest to allege, and difficult to disprove of all closely-held business relations. Learn more in this week’s New York Business Divorce.
Continue Reading Oral Joint Ventures: The Wild West of Business Associations
This week’s New York Business Divorce showcases how courts reign in aggrieved limited partners whose demands stray from the plain terms of the limited partnership agreement
Continue Reading You Get What You Get, and You Don’t Get Upset: First Department Boots Limited Partner’s Claims Based on Plain Terms of Limited Partnership Agreement
On the menu for this week’s New York Business Divorce: five noteworthy business divorce cases from five different states.
Continue Reading Crossing the Hudson: Recent Business Divorce Decisions from Yonder States
In this week’s New York Business Divorce, read about some of the many ways courts find “irreparable harm” warranting injunctive relief in business divorce disputes.
Continue Reading “Irreparable Harm” and Injunctions in Close Business Owner Disputes
These days general partnership decisions are rare. This general partnership rule is unprecedented: continuing to run an at-will partnership post-dissolution results in the partnership’s reconstitution even if the majority is actively suing for judicially supervised wind up. Does that sound right? Get our take in this week’s New York Business Divorce.
Continue Reading A General Partnership in Perpetual Enmity