Like business divorce, New York trusts and estates litigation (“T&E”) is a highly specialized niche of the law. T&E litigators have their own universe of substantive law, their own set of procedural rules – the Surrogate’s Court Procedure Act, and their own courts – the Surrogate’s Court. Each and every one of the 62 counties in the State of New York has a Surrogate’s Court. So specialized is New York T&E litigation that, at our firm, we have an entire group of…

What makes someone a member of an LLC? It’s a question that frequently arises in business divorce cases involving LLCs that have no written operating agreement much less certificated membership interests. On the answer hangs the fate of the complainant’s standing to seek judicial dissolution, or to demand access to LLC books and records, or to assert derivative claims, or to enforce any other rights arising from member status. It’s also a question the answer to which turns on an…

LLC enabling statutes authorize two types of management structures. The default structure is member-managed in which all members participate in the management of the company’s business affairs. Member-managed LLCs usually have a relatively small number of members who are actively involved in the company’s business and who owe default fiduciary duties. Then there’s the manager-managed LLC, more akin to a corporation-style management structure and sometimes featuring a Board of Managers and designated officers, in which one or more persons or entities (who may be, but need not be,…

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. This year’s summaries include: a New York case in which a minority member of a Delaware LLC asserted an ill-fated claim for minority “shareholder” oppression; a California case in which the court disqualified a lawyer hired by one of two 50/50 partners to represent the partnership in a…

Strict procedural rules apply to corporate dissolution proceedings in New York, a difficult truth learned the hard way by a five-time rejected, would-be dissolution petitioner in a recent decision by Bronx County Supreme Court Justice Ruben Franco in Corner Furniture Discount Ctr., Inc. v Sapirstein, 2019 NY Slip Op 32245(U) [Sup Ct Bronx County June 14, 2019]. Four other decisions in a related case compounded the loss, as we shall see below. The Underlying Facts…

Many thousands of closely held corporations, limited liability companies, and limited partnerships formed under Delaware law (and, to a much lesser extent, other foreign states) make their home in New York. Those entities, while tending to have more sophisticated organizational documents than domestic entities, are no more or less immune to internal dissension and litigation including applications for judicial dissolution. New York jurisprudence and, for that matter, American jurisprudence, has evolved over many decades on the question of the judicial power…

Last week’s post examined an unusual case in which the court appointed a temporary receiver of an LLC pending the adjudication of the minority members’ petition for judicial dissolution. But what about the court’s power to appoint a receiver a/k/a liquidating trustee following the court’s involuntary dissolution of an LLC? There’s a statute for that, namely, section 703 of New York’s LLC Law. The statute authorizes a member “upon cause shown” to apply to…