In a post last year entitled “Squabbling Partners with Piecemeal Adjudications Need Not Apply,” I wrote about Nassau County Commercial Division Justice Stephen A. Bucaria‘s creative adaptation of the ancient common-law principle of partnership law, forbidding actions at law between partners prior to dissolution and a final accounting, to cases involving close corporations and LLCs.
Essentially, in a series of cases involving claims among co-owners of close corporations and LLCs for breach of fiduciary duty and the like, Justice Bucaria likened these cases to partnership disputes and either conditioned relief on one side bringing a dissolution claim or dismissed the complaint with leave to replead including a claim for dissolution or buy-out.
The squabbling-partners rule applicable to corporations and LLCs now has a corollary, also courtesy of Justice Bucaria: if you do bring a claim for dissolution, don’t expect you’ll be able to withdraw it later for the purpose of gaining interim injunctive relief against your adversary.
The corollary appears in a recent decision by the judge in PFT Technology LLC v Wieser, Short Form Order, Index No. 8679/12 [Sup Ct Nassau County Apr. 13, 2015]. The case, commenced in 2012, involves a four-member LLC in which the three majority members brought suit in the LLC’s name against the fourth seeking judicial dissolution of the LLC and also asserting claims for breach of fiduciary duty. The defendant member opposed dissolution, demanded a fair-value buy-out of his membership interest, and counterclaimed against the three majority members for breach of fiduciary duty. Continue Reading Court Rebuffs Dissolution Withdrawal in Denying Enforcement of Non-Compete