Dismissals for lack of standing are routine in business divorce cases. Examples abound on this blog. Litigation over standing to sue takes an outsized role in business divorce cases for many reasons....more
Closely-held business owner breakups often defy easy categorization. What seem at first blush to be traditional business divorce cases sometimes end up treading far into other legal practice areas. Other disputes blur...more
Choice-of-law questions in shareholder derivative lawsuits venued in New York courts involving out-of-state or international entities can be confoundingly difficult, even for appeals court judges....more
Occasionally, we come across post-trial decisions with such scathing rebuke of one side that it’s difficult to imagine why the loser ever chose to take the case to trial. O’Mahony v Whiston is a perfect example....more
Litigants assert with growing frequency “faithless servant” claims in business divorce cases. New York’s faithless servant doctrine, and the legal standards governing faithless servant claims, emanate from two ancient...more
Litigated business breakups are often highly intense and emotional for the participants. The intensity and emotion multiply when the litigants are close family members....more
Nine months ago, we wrote about a 20% shareholder, Alvin Clayton Fernandes, whose bare bones petition Manhattan Supreme Court Justice Frank P. Nervo found stated sufficient grounds to judicially dissolve a seemingly...more
This important question of whether non-manager, minority limited liability company owners owe fiduciary duties continues to bedevil New York litigants and courts.
The prevailing state of the law remains unsettled, with...more
Folks hearing the phrase “business divorce” for the first time tend to focus unconsciously on the word “divorce,” tuning out the word “business.” The irony is that most business divorce cases have nothing to do with...more
Food trucks have become as ubiquitous on the streets of Manhattan as pigeons in Central Park. Unsurprisingly, the New York City food truck business is highly regulated, requiring licensure of those participating in the...more
In last week’s New York Business Divorce, we wrote about an important decision from New York’s highest court, Sage Sys., Inc. v Liss (___ NY3d ___, 2022 NY Slip Op 05918 [Ct App Oct. 20, 2022]). In Sage, the Court of Appeals...more
The universe works in mysterious ways. Four days ago, when I sat down to write this article, my plan was to feature a decision from Manhattan Commercial Division Justice Andrea J. Masley denying dismissal of a closely-held...more
The legal concept of “conflicts of laws” is difficult, to say the least, confounding even seasoned litigators and judges, with bulky treatises and entire law school classes devoted to the subject....more
9/12/2022
/ Breach of Contract ,
Breach of Duty ,
Business Divorce ,
Business Litigation ,
Choice-of-Law ,
Constructive Trusts ,
Conversion ,
Delaware General Corporation Law ,
Internal Affairs Doctrine ,
Misappropriation ,
Unjust Enrichment
In shareholder derivative litigation, defendants occasionally argue that the plaintiff – who ostensibly sues on behalf of the company and its owners in a fiduciary capacity – has some form of conflict of interest with the...more
A year and a half ago, we blogged about a decision in which Bronx County Supreme Court Justice Llinet M. Rosado ruled that a shareholder’s alleged stock transfer through a bequest in his last will and testament was...more
6/27/2022
/ Business Divorce ,
Business Litigation ,
Business Ownership ,
Buy-Sell Agreements ,
Declaratory Judgments ,
Family Businesses ,
Fiduciary Duty ,
Malicious Prosecution ,
Order to Show Cause ,
Ownership Interest ,
Preliminary Injunctions ,
Shareholders' Agreements ,
Stock Transfer Restrictions ,
Tortious Interference ,
Wills
It’s hard not to feel sorry for the petitioner in Fernandes v Matrix Model Staffing, Inc., Decision and Order, Index No. 160294/2021 [Sup Ct, NY County Apr. 20, 2022].
In Fernandes, Manhattan Supreme Court Justice Frank...more
Closely-held business owners often hope to avoid the costs and delays of litigation by including arbitration provisions in their partnership, shareholder, and operating agreements. Things can get tricky, though, when...more
Justice Masley’s valuation decision in Quattro Parent LLC v Rakib, 2022 NY Slip Op 30190(U) [Sup Ct, NY County Jan. 14, 2022] is noteworthy for two reasons.
First, it is an extraordinarily rare example of a business...more
Generally speaking, New York courts respect the corporate form, regarding the liabilities of the entity as separate from and inapplicable to the entity’s principals. Under this principle, a plaintiff may litigate a difficult...more
Two years ago, Peter Mahler wrote about a dissolution lawsuit by a female minority shareholder alleging that her male co-shareholders condoned a pattern of sexually offensive and demeaning conduct by a senior co-worker, which...more
11/29/2021
/ #MeToo ,
Breach of Duty ,
Business Divorce ,
Business Judgment Rule ,
Business Litigation ,
Closely Held Businesses ,
Corporate Culture ,
Corporate Waste ,
Derivative Complaint ,
Dissolution ,
Fiduciary Duty ,
Harassment ,
Sexual Harassment ,
Shareholder Oppression ,
Summary Judgment
The harried realities of modern life are such that business entity organizational documents, like LLC operating agreements, sometimes do not get drafted or executed until long after the entity’s initial formation with the...more
Ownership status in a closely-held business is the first and most vital box almost every business divorce petitioner must check....more
10/11/2021
/ Business Divorce ,
Business Litigation ,
Business Ownership ,
Closely Held Businesses ,
Dissolution ,
Estoppel ,
Evidence ,
Family Businesses ,
Limited Liability Company (LLC) ,
Litigation Strategies ,
Partnerships ,
Proof of Ownership ,
Tax Returns ,
Trial Preparation
Most folks associate beer with pleasure. Many craft brewers will tell you they went into business for that reason: to make themselves and others happy (and, oh yeah, make money). ...more
9/13/2021
/ Breach of Contract ,
Breach of Duty ,
Breweries ,
Business Divorce ,
Business Litigation ,
Dilution ,
Freeze-Out Mergers ,
Limited Liability Company (LLC) ,
Membership Interest ,
Motion To Enjoin ,
Operating Agreements ,
Preliminary Injunctions ,
Startups
In an article from a little over a month ago, we summarized New York’s LLC judicial dissolution statute with the comment, “Breaking up can be hard to do.”...more
Recently, we’ve written two articles focusing on the brewing dispute over whether New York law recognizes a viable cause of action for “common-law” or “equitable” dissolution of a limited liability company....more