Welcome to this year’s Winter Case Notes where, amidst the arctic blast currently sweeping most of the nation, I offer shortish takes on several court decisions in recent business divorce cases.
This year’s edition...more
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
Potential client sits down with business divorce lawyer and says, “I’m a minority shareholder in XYZ Corp. I’ve been completely frozen out by the majority. Can you help me?” The lawyer says, “Absolutely. New York law gives...more
De facto dividend. Disguised dividend. Constructive dividend. They all refer to the same thing: monies in excess of reasonable compensation taken by owners of closely held companies, booked as deductible employment...more
I’m delighted to present our 15th annual list of the past year’s ten most significant business divorce cases.
This year’s list includes decisions by New York’s trial and appellate courts concerning a smorgasbord of...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
This episode features an interview with Professor Meredith Miller of the Touro Law Center on her recently published article in the Indiana Law Review entitled Challenging Gender Discrimination in Closely Held Firms: The Hope...more
Longtime readers of this blog may recall a post I wrote three years ago titled Minority Shareholder Oppression in the #MeToo Era. The post highlighted an apparent first-of-its-kind decision in a judicial dissolution case...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
If ever there was a ticking time bomb of a family-owned, closely held business more likely to result in business divorce litigation than the one in Matter of Brady v Brady, 2021 NY Slip Op 02705 [4th Dept Apr. 30, 2021], I...more
10/25/2021
/ Books & Records ,
Business Disputes ,
Business Divorce ,
Business Ownership ,
Closely Held Businesses ,
Declaratory Relief ,
Derivative Complaint ,
Derivative Suit ,
Family Businesses ,
Judicial Dissolution ,
Share Transfer ,
Shareholder Oppression ,
Stock Ownership
Iowa was one of the first states to adopt the 2006 Revised Uniform Limited Liability Company Act. As of this year, 21 others have done so not including New York which continues to limp along with its creaky LLC Law enacted...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
Fine dining and business divorce crossed paths in a recently decided case featuring a lengthy battle between co-equal ownership factions of the corporation that operates Delmonico’s, the renowned Manhattan restaurant...more
Three shareholders co-own an 8-year old internet-based “marketeer” business that imports Chinese-manufactured sinks, faucets, and related plumbing fixtures that it sells primarily to distributors and retailers in the United...more
This year’s list offers a good mix of business entities: six involve disputes among LLC members, two involve law firms organized as limited liability partnerships, one involves an accounting firm organized as a professional...more
12/30/2019
/ #MeToo ,
Bad Faith ,
Business Divorce ,
Conflicts of Interest ,
Corporate Culture ,
Corporate Deadlock ,
Damages ,
Defense Strategies ,
Dissolution ,
Employer Liability Issues ,
Employment Litigation ,
Family Businesses ,
First Impression ,
General Partner ,
Holding Companies ,
Hostile Environment ,
Judicial Dissolution ,
K-1 ,
Limited Liability Company (LLC) ,
Minority Shareholders ,
Sexual Harassment ,
Shareholder Oppression
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
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
In the last two years, fueled by a series of high profile cases involving media executives, entertainers, and other public figures, #MeToo has gained worldwide recognition as a symbol of the burgeoning movement against sexual...more
In the judicial dissolution case that John (“Jake”) Feldmeier brought after resigning as the highly paid president of the family-owned business, the central issue over which he and his opposing siblings fought was whether the...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
We call it deadlock dissolution when a 50% shareholder of a close corporation, who claims to be at an impasse with the other 50% shareholder, asks the court to dissolve and liquidate the corporation....more
I’ve said it before, I’ll say it again: for professionals who dwell in the world of LLCs, whether as transactional, tax, or litigation counsel, attending the annual, two-day LLC Institute, sponsored by the LLCs, Partnerships...more
Over the years I’ve litigated and observed countless cases of alleged oppression of minority shareholders by the majority. Oppression can take endlessly different forms, some more crude than others in their execution, some...more
The combination of majority rule and lack of exit rights leaves minority members of LLCs vulnerable to oppressive conduct by the majority, yet unlike legislation in most states giving dissolution and buy-out remedies to...more