First Department

Subscribe to First Department via RSS

An important decision last week by the Appellate Division, First Department, in Giaimo v. Vitale directed the application of stock valuation discounts for lack of marketability and built-in gains taxes in a case involving closely held, subchapter C real estate holding corporations. It’s must reading for business appraisers and business divorce lawyers, in this week’s New York Business Divorce. …
Continue Reading Appellate Court Directs 16% Marketability Discount in Fair Value Buy-Out of Realty Companies, Affirms Discount for Future Built-In Gains Tax at Present Value

The New York Court of Appeals heard oral argument this month of an appeal from the Appellate Division, First Department’s split decision in Pappas v. Tzolis pitting fiduciary duty against contractual waiver in the context of an intra-member buy-out of LLC membership interests. This week’s New York Business Divorce provides highlights of the oral argument and links to the argument’s webcast, the parties’ briefs, and other background materials. …
Continue Reading Does Waiver Trump Fiduciary Duty? Court of Appeals Hears Argument in Pappas v. Tzolis

Derivative claims seeking recovery on behalf of the business entity frequently are brought in liitgation among the business’s co-owners. Often they are combined with direct claims seeking individual redress. A decision last week by a Manhattan appellate panel in Yudell v. Gilbert, featuring a signed opinion by Justice Karla Moskowitz, adopts Delaware’s approach to distinguish direct from derivative claims, which is crucial in determining whether the plaintiff must satisfy the requirement of pre-suit demand upon the entity’s controlling body. This week’s New York Business Divorce has the story.
…
Continue Reading Appellate Decision in Partnership Dispute Clarifies Distinction Between Direct and Derivative Claims

A Manhattan panel of appellate judges last month enforced an LLC operating agreement’s provision giving the manager sole discretion — even at his “whimsy” or “impetuously” said the court — to determine a member’s sharing ratio of the firm’s profits. It’s worth reading in this week’s New York Business Divorce.
…
Continue Reading Court Upholds LLC Manager’s Broad Discretion Under Operating Agreement to Determine Member’s Profit Share

Provisions in LLC operating agreements, penalizing members for failing to make capital contributions, have generated a number of court decisions in recent years, but none as interesting and perhaps controversial as last week’s ruling by the Appellate Division, First Department, in Antonini v. Petito. You won’t want to miss it in this week’s New York Business Divorce.
…
Continue Reading Bad LLC Agreement Makes Bad Law in Dispute Over Capital Call

Delaware decisional law holds that members of a Delaware LLC may eliminate the LLC manager’s default fiduciary duties by explicit disclaimer in the LLC agreement. In its decision last month in Kagan v. HMC-New York, Inc., a divided panel of the Appellate Division, First Department, disagreed whether the wording of a fiduciary disclaimer in an LLC agreement was sufficiently precise to warrant summary dismissal of fiduciary breach claims. Learn more about this important topic in this week’s New York Business Divorce.
…
Continue Reading Elimination of LLC Manager’s Fiduciary Duties Divides Appellate Panel

A decision last week by the Appellate Division, First Department, in Lehey v. Goldburt brings to light a bitter dispute between the managing member of a vodka distributor with a gimmicky bottle featuring an LED ticker display, and an investor claiming that his millions in funding have been squandered. Get the story in this week’s New York Business Divorce.
…
Continue Reading Appellate Court Reinstates LLC Manager in Dispute with Investor in Vodka Venture

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.
…
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.
…
Continue Reading Rothko Damages Awarded for General Partner’s Undervalued Buyout of Limited Partners’ Interest in Realty Company

Two notable decisions handed down the same day last week by the Appellate Division, First Department, address claims against managers of Delaware LLCs for breach of fiduciary duty. The plaintiffs scored in one and struck out in the other. It’s in this week’s New York Business Divorce.
…
Continue Reading One Hit, One Miss: NY Courts Decide Fiduciary Duties of Delaware LLC Managers