Pappas v. Schatz, recently decided by Justice Melvin Schweitzer, is a postscript to the more famous Pappas v. Tzolis case decided by New York’s highest court in late 2012 concerning a disputed buy-out of LLC membership interests. Get the story in this week’s New York Business Divorce.
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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.
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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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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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