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New York law regards a shareholder derivative plaintiff’s standing as fundamentally distinct from the plaintiff’s individual capacity. That leads to problems where a shareholder derivative defendant hopes to counterclaim against the plaintiff for personal liabilities. Read about this problem, and whether it forecloses direct counterclaims against shareholder derivative plaintiffs, in this week’s New York Business Divorce.
Continue Reading Can a Shareholder Suing Derivatively Face Countersuit Individually?

In this week’s New York Business Divorce, we consider a recent appellate decision addressing the effectiveness of LLC operating agreement “exculpatory” clauses to shield the company’s managers or members from personal liability for misconduct. With the latest decision, the roster of New York appeals court cases to consider this important legal issue grows from a trio to a quartet.
Continue Reading “Intentional” Breach of Fiduciary Duty Defeats Operating Agreement’s Exculpatory Clause

The lesson of the case highlighted in this week’s New York Business Divorce is simple: Don’t file for dissolution under the shareholder oppression and looting statute unless you’re prepared for the opposing shareholders to elect to purchase your shares for fair value, because you may not be able to walk it back.
Continue Reading Once Opened, The Door to Judicial Dissolution and Buy-Out Is Hard to Close

This week’s New York Business Divorce closes out the year with an interesting decision by Justice Timothy Driscoll dismissing a dissolution petition that followed the sale of an LLC’s sole real estate asset based on the broad purpose clause in the parties’ LLC agreement.. …
Continue Reading LLC Agreement’s All-Purpose Purpose Clause Defeats Dissolution Petition

A case decided last month by Justice Timothy Driscoll in Gilbert v Weintraub raises but doesn’t answer the tantalizing question whether a member of a multi-member, member-managed LLC with no operating agreement can shed fiduciary obligations and freely start a competing business by disavowing any management role in the prior business. This week’s New York Business Divorce has the story. …
Continue Reading Can LLC Members Walk Away From Fiduciary Duties?

In the face of Second Department case law rejecting subject-matter jurisdiction over statutory dissolution claims involving foreign business entities, the plaintiffs in Bonavita v Savenergy, Inc. argued to Justice Timothy Driscoll that he nonetheless could hear a claim for common-law dissolution of a Delaware corporation. Did they succeed? Find out in this week’s New York Business Divorce. …
Continue Reading Court Declines Jurisdiction Over Claim for Common-Law Dissolution of Delaware Corporation

After years of litigation and a lengthy trial, earlier this month Justice Timothy Driscoll released his decision fixing the fair value of the petitioning 50% shareholder’s interest in the AriZona Iced Tea companies. You won’t want to miss it in this week’s New York Business Divorce.
Continue Reading Court Rejects Potential Acquirers’ Expressions of Interest, Relies Solely on DCF Method to Determine Fair Value of 50% Interest in AriZona Iced Tea

Insurance-funded buy-sell agreements among owners of closely held companies, when done right, provide financial security for the family of a deceased owner and continuity for the surviving owners. When done wrong, well, that’s another story, as illustrated in a case recently decided by Justice Timothy Driscoll highlighted in this week’s New York Business Divorce. …
Continue Reading How Not to Create an Insurance-Funded Buy-Sell Agreement