Imagine litigating a case for nearly eight years to an eight figure money judgment, only to lose on appeal for lack of standing. It happened in our final New York Business Divorce story of 2024.
Continue Reading Check Your Footing: $36 Million Money Judgment Eviscerated in Brutal Appellate Standing Loss
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
This week’s New York Business Divorce post concerns the impact that estoppel can play in determining the all-important question of, “Am I a member of the LLC?”
Continue Reading To be or Not to Be (a Member). That is the Question… That Estoppel Can Help Answer.
To what extent do sharply disputed issues of fact preclude injunctive relief in business divorce cases? Read about an illuminating decision from Albany County Commercial Division Justice Richard Platkin addressing this question in this week’s New York Business Divorce.
Continue Reading Fact Issues and Credibility Determinations on Injunction Motions
November was a whirlwind month for New York LLC litigation. It featured disputes over how to wind up a judicially dissolved LLC, a bitter intra-family emergency indemnification/advancement injunction, and the finale of a decade-long battle over the enforceability of a partially baked operating agreement. Some of these recent cases add clarity to the growing body of New York LLC caselaw. Others add confusion. But all add precedential footholds for future arguments in disputes between members of New York LLCs. Members and their counsel take note.Continue Reading A Leaf Through a Busy November in New York LLC Litigation
New York’s LLC Law authorizes operating agreements to eliminate manager and member fiduciary duties, but does it really? Find out in this week’s New York Business Divorce.
Continue Reading Diving Into the Shallow Waters of New York Law Permitting Elimination of LLC Managers’ Liability for Breach of Fiduciary Duty
This week in New York Business Divorce, read how a New York LLC can successfully evade an arbitration provision in its own operating agreement.
Continue Reading Is an LLC Bound by its Own Operating Agreement?
The limited liability company is relatively young. Though origin research is always a dubious task, my efforts tell me that the first LLC was created in 1977 in Wyoming, followed by other LLCs in Florida in 1982. The years since then have witnessed the LLC’s rise to the closely held entity of choice among business owners.
One benefit of the LLC’s youthful age is that many of the minds that were most influential in its early-stage development are still teaching, practicing, and studying, all while continuing to lend their expertise on LLC formation, regulation, and litigation. And your best chance of catching all those prominent minds in one place is at the American Bar Association’s annual LLC Institute.
For those interested in learning the intricacies of the LLC laws directly from the experts, I highly recommend attending the two-day conference. While a single-post recap inevitably won’t do justice to the many presentations, panels, and discussions at the Institute, this week’s post attempts to sample some of the best business divorce topics highlighted in the 2024 LLC Institute.Continue Reading Greetings from the American Bar Association’s 2024 LLC Institute
In this week’s New York Business Divorce, read about last week’s important Appellate Division decision for the first time explicitly holding that LLC Law 608 gives member voting rights to the estate of a deceased member.
Continue Reading Appellate Division Construes LLC Law 608 as Giving Voting Rights to a Deceased Member’s Estate
Under traditional principles of business valuation, courts are generally expected to eschew metrics post-dating the valuation date. But often, litigants hoping to either increase or decrease an entity’s valuation ask courts to consider post-valuation date events or financial performance as affirmatory or disaffirmatory of financial projections or assumptions made before or as of the valuation date. Sometimes, litigants succeed in that endeavor. Read about a recent example in this week’s New York Business Divorce.
Continue Reading Can Post-Valuation Date Historical Performance Trump Pre-Valuation Date Financial Projections?