fiduciary

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Last week, in Pappas v. Tzolis, the Appellate Division, First Department, handed down a 3-2 decision reinstating claims for fiduciary breach and fraud brought by members of an LLC against another member who acquired their interests allegedly while keeping secret his negotiations to sell the LLC’s sole asset to an outside buyer at a drastically higher valuation. It’s an important decision likely headed to the New York Court of Appeals, and it’s in this week’s New York Business Divorce.
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Continue Reading The Rise and Fall and Rise of Blue Chip: Fiduciary Duty Trumps Waiver in Latest First Department Decision

A recent decision by the Appellate Division, First Department, in Frame v. Maynard authorizes the imposition of so-called Rothko damages against a general partner who breaches fiduciary duty by misrepresenting the value of partnership assets when buying out the limited partners’ interests. Learn more in this week’s New York Business Divorce.
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Continue Reading Rothko Damages Awarded for General Partner’s Undervalued Buyout of Limited Partners’ Interest in Realty Company

Getting sued by your client’s adversary is an occasional occupational hazard for attorneys in any field, but perhaps more so for attorneys who represent closely held companies that fall into the business divorce maelstrom, as evidenced by Nassau County Justice Denise Sher’s recent decision in Aranki v. Goldman & Associates. It’s in this week’s New York Business Divorce.
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Continue Reading Lawyers Caught in the Crossfire of Shareholder Disputes

It’s hard to imagine a more challenging fact pattern and set of legal issues for a law school exam than the one presented in real life in the recently decided case, Pappas v. Tzolis, involving a buyout among LLC members followed by the purchasing member’s sale of the LLC’s asset to an outside buyer for a price far in excess of the buyout, followed by a lawsuit by the former members claiming they were bamboozled by the buying member. Read all about it in this week’s New York Business Divorce.
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Continue Reading Does Operating Agreement’s Clause Permitting Competitive Activities Eliminate Member’s Fiduciary Duty to Disclose Negotiations to Sell LLC’s Assets Before Buying Out Co-Members?

The attorney who prepares a shareholders’ agreement without documenting exactly whom the attorney does and doesn’t represent, and without appropriate disclosure of conflicts when representing multiple shareholders with divergent interests, is asking for trouble, at least, that’s the lesson to be drawn from a recent decision by Justice Carolyn Demarest in Schlissel v. Subramanian, featured in this week’s New York Business Divorce.
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Continue Reading The Importance of Identifying Your Client — And Who’s Not Your Client — When Preparing Shareholder Agreements

A majority shareholder’s breach of fiduciary duty owed a minority shareholder may constitute oppressive action within the meaning of the judicial dissolution statute. But does oppressive conduct constitute breach of fiduciary duty? A recent federal court decision suggests so, but is it right? Read this week’s New York Business Divorce and see for yourself.
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Continue Reading Fiduciary Breach Can Result in Shareholder Oppression, But Is Shareholder Oppression a Breach of Fiduciary Duty?