It’s that time of year again, when I offer some lighter fare for poolside consumption consisting of summaries of a few recent decisions of interest involving disputes between business co-owners....more
8/12/2019
/ Breach of Duty ,
Business Divorce ,
Buyouts ,
Contract Terms ,
Dissolution ,
Fiduciary Duty ,
Legal Representatives ,
Limited Liability Company (LLC) ,
Limited Partnerships ,
Minority Shareholders ,
Non-Reliance Clauses ,
Pass-Through Entities ,
Settlement Agreements ,
Shareholder Litigation ,
Shareholder Oppression
Many thousands of closely held corporations, limited liability companies, and limited partnerships formed under Delaware law (and, to a much lesser extent, other foreign states) make their home in New York....more
Last week’s post examined an unusual case in which the court appointed a temporary receiver of an LLC pending the adjudication of the minority members’ petition for judicial dissolution....more
The limited liability company did not exist as a legally recognized business entity in New York when I first began handling business divorce cases in the 1980s. Decades later, the LLC is “King of the Hill,” having displaced...more
It’s commonly said there are three things that matter with real estate: location, location, location. Likewise, three things matter when choosing a lawyer to set up a limited liability company: experience,...more
6/18/2019
/ Agribusiness ,
Business Divorce ,
Business Formation ,
Business Litigation ,
Business Partners ,
Dissolution ,
Family Businesses ,
Farms ,
K-1 ,
Legal Representatives ,
Limited Liability Company (LLC) ,
Operating Agreements ,
Transfer of Interest
If you’re a member of a multi-member LLC, and especially if it’s manager-managed, here’s a reason you might want to check under the hood of your LLC agreement: if the business goes belly up amidst squabbling or worse among...more
I’ve long been intrigued with the frequency of litigation — especially in Delaware Chancery Court — over advancement of legal fees of a corporate director or officer or LLC manager who’s the target of a lawsuit by the entity...more
5/28/2019
/ Advancement ,
Business Divorce ,
Business Litigation ,
Commercial Court ,
Contract Terms ,
Corporate Dissolution ,
Corporate Officers ,
Directors ,
Indemnification ,
Indemnification Clauses ,
Legal Fees ,
Limited Liability Company (LLC) ,
Stock Options
This is the story of a deadlock resolution provision that backfired. It is a long story — 94 pages long to be exact. That is the length of Chancellor Bouchard’s characteristically detailed and thorough post-trial opinion...more
5/20/2019
/ Business Divorce ,
Contract Terms ,
Corporate Deadlock ,
Delaware Limited Liability Company Act ,
Dissolution ,
Limited Liability Company (LLC) ,
Opioid ,
Pain Management ,
Pharmaceutical Industry ,
Prescription Drugs ,
Startups
“I will not seek or accept an award in excess of $74,999.99, inclusive of punitive damages, attorney’s fees and the fair value of any injunctive relief.”...more
As it approaches its sixth anniversary with little sign of letting up, the highly contentious litigation between brothers and business partners NIssim and Avraham Kassab is the gift that keeps on giving, at least to us...more
Most judicial dissolution cases in New York courts involve a single entity. When the target of dissolution is structured as a holding company for one or more operating or asset-based companies with asymmetric management, the...more
Notwithstanding we’ve had no more than a dusting of snow thus far in my downstate New York neck of the woods, welcome to another edition of Winter Case Notes in which I visit my backlog of recent court decisions of interest...more
2/11/2019
/ Advancement ,
Arbitration ,
Books & Records ,
Business Divorce ,
Family Businesses ,
Indemnification ,
Limited Liability Company (LLC) ,
Membership Interest ,
Minority Shareholders ,
Shareholder Litigation ,
Shareholder Oppression ,
Statute of Limitations
What’s become known as the bad-faith petitioner defense in judicial dissolution proceedings first emerged in Matter of Kemp & Beatley, 64 NY2d 63 [1984]...more
I’m very pleased to present my 11th annual list of this past year’s ten most significant business divorce cases.
This year’s list includes four important appellate decisions, including one likely to stand as a landmark...more
12/31/2018
/ Appeals ,
Article III ,
Breach of Duty ,
Business Divorce ,
Business Ownership ,
Business Valuations ,
Closely Held Businesses ,
Corporate Counsel ,
Corporate Dissolution ,
Derivative Suit ,
Family Businesses ,
Fiduciary Duty ,
First Impression ,
Limited Liability Company (LLC) ,
Minority Shareholders ,
Partnerships ,
Standing
Raise your hand if you think that a lawsuit for an accounting by the managers of an LLC simply means they have to turn over financial records.
...more
After two years, 300+ docket entries, and 12 motions, a lawsuit among members of a Delaware LLC that owned a 5-story apartment building on Manhattan’s Upper East Side (the “UES Building”) acquired to provide short-term...more
12/10/2018
/ AirBnB ,
Article III ,
Books & Records ,
Breach of Duty ,
Commercial Court ,
Fiduciary Duty ,
Leave to Amend ,
Limited Liability Company (LLC) ,
Rental Property ,
Short-Term Lease ,
Standing ,
Subject Matter Jurisdiction ,
Vacation Rentals
Last month gave us three noteworthy post-trial decisions in three different cases from three different states, all centering on disputes among business co-owners over the ownership and exploitation of the businesses’s core...more
12/3/2018
/ Business Divorce ,
Copyright ,
Corporate Dissolution ,
Derivative Suit ,
Family Businesses ,
Infringement ,
Intellectual Property Protection ,
IP License ,
License Agreements ,
Limited Liability Company (LLC) ,
Patents ,
Shareholders ,
Trademarks
Let me say up front, I don’t claim to know the answer to the question posed in this post’s title, or pretend there’s a simple yes-or-no answer....more
It’s no surprise that the quorum requirements found in close corporation by-laws and LLC operating agreements rarely step into the limelight in business divorce disputes....more
Consider the following hypothetical: The operating agreement of an LLC vests management authority in its two members. ...more
Much digital ink has been spilled on this blog and elsewhere (Tom Rutledge’s terrific article can be read) concerning the ability of LLC controllers to adopt or amend an operating agreement without the consent of all members....more
What’s a weaponized LLC? It’s one whose operating agreement gives the controlling majority members the authority to dilute, remove from management, or expel a non-controlling minority member, typically for failing to satisfy...more
C’mon, New York lawyers, do you really want to spend your time, your client’s money, and bother the court litigating a dead-end claim that your client rightfully expelled his or her LLC co-member for alleged misconduct,...more
Very few and very far between are cases in which the holder of a minority membership interest in a New York LLC — with or without a written operating agreement — prevails in an action brought under section 702 of the New York...more
Three recent court decisions from three different states — New York, Pennsylvania, and Alabama — add to the rogue’s gallery of valuation cases stemming from poorly conceived and/or poorly implemented buy-sell agreements among...more
7/2/2018
/ AL Supreme Court ,
Asset Valuations ,
Business Divorce ,
Buy-Sell Agreements ,
Buyouts ,
Contract Terms ,
Fair Value Standard ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Shareholders