Unlike the vast majority of states, New York hasn’t adopted the Revised Uniform Partnership Act (1997) (“RUPA”). A recent appellate decision by a court in a neighboring RUPA state — New Jersey — highlights the very different...more
The statutes authorizing judicial dissolution of Delaware LLCs (LLC Act § 18-802) and New York LLCs (LLC Law § 702) essentially are the same: the petitioner must show that it is no longer “reasonably practicable” to carry on...more
What makes a partnership a partnership? What makes a partner a partner? To be clear, I’m referring to partners in a general partnership....more
In 1950, Sam Hoffman and his two sons, Hyman and Melvin, founded Brooklyn-based Cornell Beverages, Inc. to manufacture and distribute seltzer. Those were the days when “seltzer men” made weekly home deliveries of cases of...more
Those of us who follow the Delaware Chancery Court’s output are regularly treated to lengthy, detailed, finely crafted opinions sometimes in excess of 100 pages. Opinions of that length from our New York state court judges...more
7/18/2022
/ Bad Faith ,
Breach of Duty ,
Business Divorce ,
Business Litigation ,
Capital Calls ,
Co-Ownership ,
Contract Disputes ,
Contract Terms ,
Covenant of Good Faith and Fair Dealing ,
Financing ,
Joint Venture ,
Motion to Dismiss ,
Passive Investments
The pictured architectural rendering of the sunlit Kings County Supreme Courthouse at 360 Adams Street, completed in 1957, doesn’t quite capture the reality of its dour, hulking presence in downtown Brooklyn. Its design...more
7/5/2022
/ Breach of Duty ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Corporate Waste ,
Derivative Suit ,
Fiduciary Duty ,
Limited Liability Company (LLC) ,
Misappropriation ,
Ownership Interest ,
Shareholders ,
Standing
The current issue of The Business Lawyer, a quarterly publication of the ABA’s Business Law Section that rightly bills itself as “the premier business law journal in the country,” features a pair of dueling articles of great...more
Disputes over capital accounts and equity percentages are frequent fodder for business divorce litigation — especially in LLCs without operating agreements. Exemplars previously treated on this blog include Chiu v Chiu, an...more
6/6/2022
/ Aiding and Abetting ,
Breach of Duty ,
Business Divorce ,
Business Litigation ,
Capital Contributions ,
Equity ,
Fiduciary Duty ,
Fraud ,
Limited Liability Company (LLC) ,
Loans ,
Negligent Misrepresentation
In 2008, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery — one of the many intellectual giants and gifted writers who’ve occupied seats on that bench — published an article in the Delaware Journal of...more
A limited partnership without a general partner cannot lawfully continue. That’s why it’s critical that the limited partnership agreement thoughtfully address general partner succession and, when triggered, the agreement’s...more
The New York Times yesterday published an article entitled Climate Change Enters the Therapy Room discussing persons suffering from “climate anxiety.” As a northeasterner, the frigid, snow-blessed, ground-freezing winter...more
2/7/2022
/ Business Divorce ,
Business Litigation ,
Business Ownership ,
Derivative Suit ,
Estoppel ,
Family Businesses ,
Inter Vivos Gifts ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Payroll Taxes
Are claims for judicial dissolution of business entities arbitrable? -
It’s a question I’m occasionally asked by business owners and, surprisingly, by lawyers. I say surprisingly because here in New York, the courts long...more
If you ask me to name the most common skirmishes over the adequacy of pleadings at the outset of business divorce litigation, at or near the top of the list are motions to dismiss a dissident owner’s direct claims that should...more
It’s been another year of important case law developments in business divorce controversies. I’m pleased to present my 14th annual list of the past year’s ten most significant cases....more
For the second time in two years, the Connecticut Supreme Court has ventured into uncharted waters of LLC governance under the Revised Uniform LLC Act which, to date, has been adopted by 22 states and awaits legislative...more
11/22/2021
/ Books & Records ,
Business Divorce ,
Business Litigation ,
Closely Held Businesses ,
CT Supreme Court ,
Inspection Rights ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Membership Interest ,
Minority Shareholders ,
RULLCA ,
Shareholder Oppression ,
Trust Distributions ,
Wealth Management
Appearances can be deceiving. -
That, essentially, was the argument made in two recently decided cases involving claims for judicial dissolution. ...more
11/15/2021
/ Breach of Duty ,
Business Disputes ,
Business Divorce ,
Business Litigation ,
Contract Terms ,
Employment Contract ,
Fraudulent Conveyance ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Purchase Price ,
Stock Transfer ,
Unjust Enrichment
Who says email is more efficient and cheaper than regular mail? -
Not the manager of the McGuire family real estate business after winning a lower court ruling only to see it reversed on appeal last month in a decision...more
9/20/2021
/ Business Divorce ,
Business Litigation ,
Capital Calls ,
Contract Disputes ,
Contract Terms ,
Email ,
Family Businesses ,
Limited Liability Company (LLC) ,
Membership Interest ,
Notice Requirements ,
Operating Agreements
My partner Frank McRoberts recently posted about two New York cases, one involving an LLC and the other a close corporation, in which the courts resolved conflicts between, on the one hand, provision in the...more
The Cummins Nursery in upstate New York grows, harvests, plants, and grafts fruit trees — mainly apple trees — which along with scions and rootstocks it sells by the tens of thousands each year. There’s also a farm stand and...more
Anyone who keeps up with the public equity markets knows that the volume of IPOs generated by Special Purpose Acquisition Companies, better known as SPACs, has exploded over the last two years. ...more
Now that I’ve got your attention, relax. At least for New York LLCs, a member can be expelled from an LLC only if expressly authorized by the operating agreement....more
Of late I’ve been ruminating on New York’s membership in the shrinking pool of states that don’t recognize oppression of an LLC minority member by the controlling members or managers as ground for judicial dissolution....more
4/19/2021
/ Books & Records ,
Breach of Duty ,
Business Divorce ,
Business Litigation ,
Closely Held Businesses ,
Contract Terms ,
Dissolution ,
Fiduciary Duty ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Minority Shareholders ,
Operating Agreements ,
Shareholder Distributions ,
Shareholder Oppression
Here in the New York metro area, for the first time in years winter is living up to its name. The snow-plowed streets and sub-freezing temperatures are a natural setting for this sixth annual edition of Winter Case Notes in...more
2/22/2021
/ Breach of Duty ,
Business Divorce ,
Business Litigation ,
Commercial Court ,
Corporate Deadlock ,
Corporate Dissolution ,
Fiduciary Duty ,
Law Firm Partners ,
Limited Liability Company (LLC) ,
Tax Exempt Entities ,
Tax Fraud
Three weeks ago, I wrote about the Bak v Rostek case in Brooklyn Supreme Court addressing the duty to disclose third-party offers amidst buy-out negotiations between co-owners. ...more
2/1/2021
/ Aiding and Abetting ,
Breach of Duty ,
Business Divorce ,
Business Litigation ,
Buy-Out Agreements ,
Corporate Sales Transactions ,
Duty to Disclose ,
Fiduciary Duty ,
Fraudulent Inducement ,
Limited Liability Company (LLC) ,
Purchase Agreement ,
Unjust Enrichment
I’m very pleased to present my 13th annual list of the past year’s ten most significant business divorce cases.
This year’s list includes important appellate and trial court decisions in New York and Delaware on a...more