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
One of the pleasures of being a litigator is that we constantly learn. The pleasure multiplies as a law blogger, where articles we write inspire litigation arguments, and litigations we fight inspire articles....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
For most business divorce litigants, a dispositive win on the merits, even in a summary proceeding, can take years. Appraisal proceedings following a cash-out merger, for example, may involve multiple years of difficult...more
10/10/2022
/ Business Divorce ,
Commercial Litigation ,
CPLR ,
EB-5 ,
Foreign Investment ,
Limited Partnerships ,
Mergers ,
Net Profits ,
Partnership Agreements ,
Real Estate Development ,
Summary Judgment ,
Use of Proceeds
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 rarely litigated provision of the New York Limited Liability Company Law (the “LLC Law”), Section 1006, authorizes the conversion of a general or limited partnership to a New York LLC through a statutorily-prescribed...more
The topic of mergers between two business entities designed to involuntarily extinguish the equity interest of a minority owner in exchange for cash is one of our favorites on New York Business Divorce. Almost invariably...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
You know you’re in big trouble if the post-trial decision in a lawsuit you filed begins like this:
“The court finds the plaintiff, Rowen Seibel, not credible. This is primarily because it appears he fabricated evidence...more
A number of lawsuits have percolated through New York’s courts over the past five years between Adam Max, son of world-renowned visual artist Peter Max, and Adam’s sister, Libra, over control and management of the family...more
5/23/2022
/ Breach of Duty ,
Business Disputes ,
Business Divorce ,
Business Judgment Rule ,
Derivative Suit ,
Exculpatory Clauses ,
Family Businesses ,
Fiduciary Duty ,
Fine Art ,
Hostile Takeover ,
Negligence ,
Personal Liability
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
In Congel v Malfitano, New York’s highest court wrote that business partners are free to include in partnership contracts practically “any agreement they wish,” including about “the means by which a partnership will dissolve,...more
3/14/2022
/ Appeals ,
Business Divorce ,
Closely Held Businesses ,
Contract Disputes ,
Contract Terms ,
Delaware General Corporation Law ,
Dissolution ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Operating Agreements ,
Partnership Agreements ,
Public Policy
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