In the end, it wasn’t much of a fight.
The case of Huggins v Scott, decided last month by Justice W. Franc Perry of the Manhattan Supreme Court, illustrates anew the well-nigh insurmountable hurdle faced by a minority...more
12/9/2019
/ Books & Records ,
Breach of Duty ,
Business Divorce ,
Business Litigation ,
Contract Disputes ,
Fiduciary Duty ,
Judicial Dissolution ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Receivership
The title of this post describes not an army maneuver, but the outcome of a recent lawsuit in Delaware Chancery Court for advancement of litigation expenses in which...more
11/4/2019
/ Advancement ,
Amended Complaints ,
Breach of Duty ,
Business Divorce ,
Confidential Information ,
Contract Terms ,
Delaware General Corporation Law ,
Employment Contract ,
Fiduciary Duty ,
Hiring & Firing ,
Indemnity ,
Insider Trading ,
Litigation Fees & Costs ,
Merger Agreements ,
Non-Compete Agreements ,
Non-Solicitation Agreements ,
Post-Termination Acts ,
Pre-Termination Notice ,
Statutory Interpretation
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
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
The litigation arsenal of business divorce lawyers contains weapons of varying firepower. The choice of weapon for any particular assignment will depend on many factors including the type and size of the business; whether the...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
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
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
When you think about protecting a business firm’s intellectual property (IP), usually you think about protecting it from infringement by external actors.
But there also are internal threats — even mortal ones — to the...more
7/23/2018
/ Breach of Duty ,
Business Ownership ,
Consent ,
Copyright ,
Copyright Infringement ,
Copyright Registration ,
Damages ,
Employee Inventors ,
Fiduciary Duty ,
Independent Contractors ,
Intellectual Property Protection ,
Inventors ,
IP License ,
Operating Agreements ,
Preliminary Injunctions ,
Restaurant Industry ,
Service Marks ,
Software Developers ,
TRO ,
USPTO
When three gentlemen in their mid-eighties, one of whom is in a nursing home with failing health and onset dementia, are the key players in a disputed shareholder buy-out transaction, what are the odds they’ll all be around...more
7/16/2018
/ Appeals ,
Breach of Duty ,
Business Divorce ,
Buy-Out Agreements ,
Fair Market Value ,
Fiduciary Duty ,
Fraudulent Concealment ,
Motion for Reconsideration ,
Motion to Dismiss ,
Partnership Interests ,
Partnerships ,
Real Estate Investments ,
Shareholder Litigation ,
Shareholders ,
Stock Sale Agreements ,
Stock Transfer ,
Summary Judgment
Recently, in two separate cases, two New York judges construing two LLC agreements of two LLCs formed under the laws of two different states — Delaware and Nevada — came to the same conclusion when faced with the same...more
The family-owned business at the center of Vaccari v Vaccari, 2018 NY Slip Op 30546(U) [Sup Ct NY County Mar. 28, 2018], decided last month by veteran Manhattan Commercial Division Justice Eileen Bransten, is a classic...more
4/9/2018
/ Accounting ,
Attorney's Fees ,
Breach of Duty ,
Business Litigation ,
Commercial Court ,
Conversion ,
Dissolution ,
Divorce ,
Failure To State A Claim ,
Family Businesses ,
Fiduciary Duty ,
Injunctive Relief ,
Joint Venture ,
Motion to Dismiss ,
Shareholder Oppression ,
Summary Judgment ,
Unjust Enrichment
When the tsunami of LLC enabling statutes swept the U.S. in the late ’80s and early ’90s, including New York in 1994, many included a default rule authorizing as-of-right member withdrawal and payment for the “fair value” of...more
12/11/2017
/ Appeals ,
Breach of Duty ,
Buyouts ,
Commercial Property Owners ,
Declaratory Judgments ,
Derivative Suit ,
Fiduciary Duty ,
Limited Liability Company (LLC) ,
Membership Interest ,
Operating Agreements ,
Transfer of Interest
A little over three years ago I reported on the first round of a fascinating “food fight” among four siblings, each of whom is a 25% shareholder of a Brooklyn-based, second-generation food distributor known as Jersey Lynne...more
The U.S. reportedly has the world’s highest number of lawyers per capita (1 for every 300 people) and the 5th highest number of lawsuits per capita (74.5 for every 1,000 people, topped only by Germany, Sweden, Israel, and...more
Article 11 of the Business Corporation Law governs dissolution of closely held New York business corporations. Article 11 has existed, more or less in its current form, for decades. Some of its provisions have been heavily...more
4/17/2017
/ Breach of Contract ,
Breach of Duty ,
Buy-Out Agreements ,
Corporate Dissolution ,
Fiduciary Duty ,
Fraud ,
Minority Shareholders ,
Shareholder Litigation ,
Shareholders ,
Tortious Interference ,
Unjust Enrichment
It’s true that the statutory and common-law rules at play in business divorce cases can vary widely from state to state. But it’s also true that court decisions in one state can influence courts in other states, and can...more
When a romantic affair evolves into a business relationship, the eventual falling out can be especially messy. Even more so if the former lovers try to keep the business going after the romance ends. That is a theme from a...more
Does a shareholder have a fiduciary duty not to exercise a contractual right under the shareholders’ agreement to resign and demand a buy-out of his shares by the financially distressed corporation, particularly when the...more
I’m pleased to present my 9th annual list of this past year’s ten most significant business divorce cases. The list includes important appellate rulings by the First and Second Departments on dissolution of foreign business...more
12/27/2016
/ Appeals ,
Appraisal ,
Books & Records ,
Breach of Duty ,
Corporate Dissolution ,
Derivative Suit ,
Enabling Laws ,
Fiduciary Duty ,
First Impression ,
Foreign Business Partners ,
Foreign Entities ,
Jurisdiction ,
Limited Liability Company (LLC) ,
LLC Agreements ,
Merger Agreements ,
NJ Supreme Court ,
Partnership Interests ,
Popular ,
Shareholder Rights ,
Shareholders' Agreements ,
Standing
What makes a shareholder a shareholder? What makes an LLC member a member?
The simplicity of the questions belies the difficulties and endlessly unique fact patterns encountered in case after case involving close...more
12/19/2016
/ Breach of Duty ,
Closely Held Businesses ,
Declaratory Judgments ,
Fiduciary Duty ,
Hiring & Firing ,
Judicial Dissolution ,
Likelihood of Success ,
Limited Liability Company (LLC) ,
Members ,
Membership Interest ,
Operating Agreements ,
Preliminary Injunctions ,
Shareholders ,
Standing ,
Stock Purchase Agreement ,
Stock Transfer Restrictions