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Fiduciary Duty Business Disputes Business Divorce

Farrell Fritz, P.C.

Winter Case Notes: Nice Try, But the Agreements Say What They Say

Farrell Fritz, P.C. on

Spring is soon upon us. March Madness is at our doorstep. The Formula 1 season is underway. Baseball season will be in full swing shortly. And my allergies are already in bloom....more

Bradley Arant Boult Cummings LLP

I’ll Cry if I Want To – But Taking Steps to Avoid Tears Is a Better Strategy for Private Company Business Partners

In recent years, the headlines have tracked the news of high-profile breakups among business partners in private companies. These business partner fallouts include: - 2023: Sam Altman was ousted as Open AI CEO (for...more

Farrell Fritz, P.C.

Can a Shareholder Be Oppressed After Ceding Control? Oppression, Reasonable Expectations, and Contractual Formalism

Farrell Fritz, P.C. on

One of the first business divorce cases that I participated in as a young litigator was a lengthy arbitration over whether a minority shareholder was oppressed under BCL 1104-a.  With those fond memories, evolution of the...more

Farrell Fritz, P.C.

When Less Effort Leads to More Trouble: Quiet Quitting and Fiduciary Accountability

Farrell Fritz, P.C. on

We frequently see a partner’s “fiduciary duties” expressed as the union of the duty of loyalty and the duty of care.  The duty of loyalty requires fiduciaries to avoid elevating the interests of any other person or entity...more

Farrell Fritz, P.C.

Diving Into the Shallow Waters of New York Law Permitting Elimination of LLC Managers' Liability for Breach of Fiduciary Duty

Farrell Fritz, P.C. on

There’s a ton of Delaware caselaw enforcing Section 18-1101 (c) of that state’s LLC Act as amended in 2004, authorizing LLC agreements to eliminate the members’ and managers’ liability for breach of fiduciary duty, the only...more

Farrell Fritz, P.C.

Enforcing the Guardrails on Transactions Involving Interested Directors of Close Corporations

Farrell Fritz, P.C. on

In my business divorce practice I deal with many closely held corporations that have only a few or perhaps just two shareholders, each of whom is actively involved in running the business. Within that category are many...more

Farrell Fritz, P.C.

Parallel Business and Matrimonial Divorce Proceedings

Farrell Fritz, P.C. on

Parallel business divorce proceedings in the same or different courts alleging overlapping or duplicative claims are common. When it occurs, judges must often determine whether to dispose of one so the other may proceed...more

Farrell Fritz, P.C.

Top 10 Business Divorce Cases of 2023

Farrell Fritz, P.C. on

Some years are easier than others to select the most significant business divorce cases. In this, the 16th year I’ve published this top-10 list, the task is made especially difficult by a veritable flood of court decisions...more

Farrell Fritz, P.C.

A Potent Combo: Misappropriation of Corporate Opportunity Meets Faithless Servant

Farrell Fritz, P.C. on

Misappropriation of corporate opportunity is one of our favorite, most frequently blogged topics on New York Business Divorce. A special kind of breach of fiduciary duty, the corporate opportunity doctrine holds that...more

Farrell Fritz, P.C.

Bad Things Can Happen When You Steal a Business from a Minority Co-Owner

Farrell Fritz, P.C. on

Occasionally, we come across court cases in which the majority owners so egregiously mistreated their minority co-owners that it’s difficult not to write about it — if only as a lesson in what not to do to separate oneself as...more

Farrell Fritz, P.C.

Derivative into Direct and Waived into Preserved: The Transformative Power of the Implied Covenant of Good Faith and Fair Dealing

Farrell Fritz, P.C. on

The distinction between direct and derivative claims pervades business divorce litigation.  Whether a dissident owner’s claim against his or her co-owners is a direct claim (one that the owner can assert in their individual...more

Farrell Fritz, P.C.

Eastland Redux: Do Close Corporation Shareholders Have a Direct Claim Against Directors For Taking Disguised Distributions?

Farrell Fritz, P.C. on

Earlier this year, using as a springboard the Maryland intermediate appellate court’s decision in Eastland Food Corp. v Mekhaya, I posted about a topic on which there’s little or no New York law, viz., whether a complaint for...more

Farrell Fritz, P.C.

Strength in Numbers: The Resurgence of the Accounting Claim in Business Divorce Litigation

Farrell Fritz, P.C. on

At the beginning of last year, I wrote a eulogy for the equitable accounting cause of action in business disputes: But What of the Equitable Accounting?  The gist was that perhaps due to its potential potency, and certainly...more

Farrell Fritz, P.C.

Surrogate’s Court Jurisdiction to Resolve Close Business Owner Disputes

Farrell Fritz, P.C. on

Do New York’s Surrogate’s Courts have jurisdiction to compel an accounting related to a non-party limited liability company in which the decedent’s estate has only a minority interest? ...more

Farrell Fritz, P.C.

Can One 50% Shareholder Sue the Other in the Company Name on the Company Dollar? Answer: It Depends

Farrell Fritz, P.C. on

In the menagerie of closely held companies, those owned and controlled by 50/50 business partners pose unique benefits and challenges. On the benefit side, co-equal ownership and control can foster cooperation,...more

Farrell Fritz, P.C.

Take the Business Divorce Pop Quiz!

Farrell Fritz, P.C. on

It’s been many years since our last pop quiz for all you business divorce aficionados. Time for another. See how many you get right before you read the answers...more

Robson & Robson, P.C.

The Hazards of 'Weaponizing' Capital Call and Dilution Provisions

Robson & Robson, P.C. on

There are many ways that an owner of a closely-held business can use their superior financial resources to gain an advantage over their co-owners in a dispute. One common way is the use of a capital call provision to dilute...more

Robson & Robson, P.C.

Without Equal? Pennsylvania Federal Court Charts New Path, Rules Fiduciary Duty Exists Between 50/50 Co-owners Of A Business

Robson & Robson, P.C. on

There is arguably no more prevalent legal claim in business divorces than a claim of breach of a fiduciary duty. Simply put (and I do mean simply), when one person owes a fiduciary duty to another, the person with the duty...more

Farrell Fritz, P.C.

Faithless Servant in Business Divorce Cases

Farrell Fritz, P.C. on

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

Robson & Robson, P.C.

PA. Superior Court Channels Spider-Man: Rules That In Business Partnerships, Great Power Comes With Great Responsibility...

Robson & Robson, P.C. on

Business partnerships are built on the trust and loyalty of their participants. Without mutual coordination and honesty among all involved, tensions will inevitably arise that could derail a partnership’s success. The...more

Stradling Yocca Carlson & Rauth

California Business Divorce: Corporate Opportunity Usurpation and Best Practices to Avoid it in Your California LLC

Going into business with someone requires a high level of trust. For a business to thrive, business partners must be loyal to the business and each other. As in a marriage, when a partner in a business is disloyal, things...more

Farrell Fritz, P.C.

A Litigation Odyssey

Farrell Fritz, P.C. on

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

Farrell Fritz, P.C.

Do Non-Manager, Minority LLC Owners Owe Fiduciary Duties?

Farrell Fritz, P.C. on

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

Robson & Robson, P.C.

Pennsylvania’s Alternative Path For Minority Shareholders Who Can’t Pass Federal Rule Of Civil Procedure 23.1’s “Adequate...

Robson & Robson, P.C. on

When shareholders of a company believe the leaders of the company have breached their fiduciary duties to it, they can bring a lawsuit against those leaders in one of two ways. Shareholders can bring the suit in their own...more

Stradling Yocca Carlson & Rauth

Family-Owned Business Divorce: When Litigation is Your Only Remedy

Family-owned businesses can be an optimal means for transferring and preserving family wealth. When the family works cooperatively in their respective best interests to run and manage their businesses and assets efficiently,...more

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