Two years ago, we wrote about a bitter rivalry between two brothers, James and Vincent Cortazar, over their ownership and management of a single-asset real estate enterprise, 47th Road LLC, which owned an apartment building in Queens. In our last article, Queens County Justice Timothy J. Dufficy issued an order dissolving the LLC under Section 702 of the Limited Liability Company Law. The Court concluded that the brothers were so badly divided, and the…

Often business owners enter into arbitration agreements because they hope it will result in a speedier, less expensive resolution than litigation to disputes with their co-owners. Arbitration agreements often achieve that result. But sometimes, epic disputes arise over the scope of arbitration agreements and the power of arbitrators to decide controversies under them. In Matter of Capital Enters. Co. v Dworman, 2019 NY Slip Op 04494 [1st Dept June 6, 2019], a Manhattan appeals…

Over the years, we’ve written a lot about limited partnership, corporation, and LLC “fair value” appraisal proceedings. An appraisal proceeding is a statutory remedy that allows a minority business owner to “dissent” from a business transaction and/or withdraw from the business and have a court determine the “fair value” of his or her interest in the business, usually for the purpose of a buyout of that interest by the majority owners or the entity itself.…

One of the great ironies of New York business divorce litigation is that so much of it involves the breakup of law firms. Perhaps it’s because New York is the center of the legal universe and the home state of thousands of law firms. Maybe it’s because lawyers are litigious by nature. Another, less obvious reason: law firms often imprecisely use the term “partner” to describe their lawyers. Under Section 10 of the Partnership Law, the term…

Years ago, we wrote about the perils of “impromptu” settlements in business divorce cases – settlements eked out at the courthouse, on the fly, under pressure, during conferences, hearings, or trials. The resulting agreements tend to be memorialized in on-the-record, transcribed settlements made verbally between lawyers, clients, and the judge. In-court settlements are both common and vital to litigation, the ultimate goal of which, of course, is to resolve disputes. But sometimes the parties’ eagerness to…

It’s simply in the nature of things that business divorce litigants tend to accuse one another of all manner of heinous, dastardly misdeeds. Phrases like “oppression,” “fraud,” “deceit,” “theft,” “siphoning” of assets, “diversion” of opportunities, etc., are the norm. As a litigant, if you make those kinds of allegations, and they turn out to be unsuccessful, or you withdraw them, can you be sued for defamation? Staten Island Supreme Court Justice Wayne M. Ozzi considered that question in Seneca v Cangro, 2018 …

After 35 years, Matter of Kemp & Beatley, Inc. (64 NY2d 63 [1984]), remains the leading authority in New York on oppression-based corporate dissolution. In Kemp & Beatley, the Court of Appeals announced a now-venerable legal rule: “Assuming the petitioner has set forth a prima facie case of oppressive conduct,” a shareholder wishing to “forestall dissolution” must “demonstrate to the court the existence of an adequate, alternative remedy.” In practice, what this means is that courts must consider whether…