The effective date of an LLC member’s expulsion may be a critical issue in business divorce litigation and may be tied to critical events or the litigation.
Courts will look at the facts and circumstances of the case before determining the effective date, but are often guided by the parties’ own intent.
A court may give the expulsion a retroactive date, often the date that litigation was commenced.
An arbitration award entered in a dispute between two parties over the alleged issuance of shares in a financing transaction was vacated by a court because of the arbitrator’s failure to issue the written award on time.
In the Matter of the Application to Confirm an Arbitration Award of Theodore Papakonstadinou and AKTOR CORPORATION, Petitioners, against Nikolaos Sparakis, LIZBETH GOZZER and GOZZER CORPORATION, Respondents.
Petitioner Theodore Papakonstadinou is a director and owner of 95% of the voting shares of respondent Gozzer Corporation (“Gozzer Corp.” or “Corporation”), a domestic corporation with its principal place of business at 1043 Broadway, Albany, New York. The remaining 5% of the shares are owned by respondent Lizbeth Gozzer (“Gozzer”).
In a business divorce case alleging the fraudulent acquisition of shares, once the defendant established the existence of a release, plaintiff must prove it is invalid.
A claim of a fiduciary relationship does not relieve plaintiff of proving that he did not release a claim that he was the victim of fraud in the purchase of shares of a closely held business.
Nilish Chadha, Individually, and Derivatively on Behalf of Wahed Inc. f/k/a Wahed Invest Inc., Plaintiff, against Junaid Wahedna, and Wahed Inc. f/k/a Wahed Invest Inc., Defendants.
In a dispute among general partners, a single verbal threat against spouse of one of the partners does not create a claim for intentional infliction of emotional distress.
CHERYL E. CHAMBERS, J.P. SYLVIA O. HINDS-RADIX COLLEEN D. DUFFY ANGELA G. IANNACCI, JJ.
In August 2007, the plaintiff and the defendant allegedly entered into an oral agreement establishing a general partnership to own, manage, and maintain real estate and, in [*2]furtherance of that agreement, jointly held title to two properties in Port Chester.
An ordinary contract, even between close friends, does not create a fiduciary relationship from which a court will find an equity interest.
Dominic Thomas Karipaparambil, Plaintiff-Appellant, v Robert Michael Polus et al., Defendants-Respondents. Judgment, Supreme Court, New York County (Jennifer G. Schecter, J.), entered March 10, 2021, dismissing the complaint, unanimously affirmed, without costs.
Appeal from order, same court and Justice, entered on or about March 2, 2021, which granted defendants’ motion to dismiss the complaint alleging causes of action for breach of fiduciary duty and aiding and abetting breach of fiduciary duty, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.
An agreement prohibiting a former associate of a law firm from competing with his former employer within 90 miles of New York City was void and unenforceable.
Solicitation of the clients of a law firm by a former associate may be actionable, even if a potential restriction on practice, in limited circumstances.
The rule of professional conduct that precludes restrictions on practice will not bar a claim against a former non-lawyer employee.
A former employee will violate the computer fraud and abuse act only by having unauthorized access to data, not by using data for an unauthorized purpose.
Former owners or employees that access computer systems after termination may be liable under the Computer Fraud and Abuse Act.
A federal claim based on the unauthorized use of data will likely no longer support a federal claim in a business divorce litigation.
So much impact from such a little word. The U.S. Supreme Court, resolving a split among the circuit courts, imposed significant limits on the reach of the Computer Fraud and Abuse Act (CFAA), severely restricting its usefulness as a tool to pursue unfaithful former employees and owners.
The significance of the decision– which as discussed below turned on the construction of the work “so” in the statute’s definitions – in business divorce cases is that it will limit the ability of litigants to employ the statute as redress for some types of conduct and deprive a plaintiff in some cases of access to federal courts. (For the linquists and grammarians, the parsing of “so” is in the opinion, here.) Continue reading
A charging lien protects the interest of a lawyer in fee that is to be paid from a contingent-fee recovery. A statutory lien may be enforced through a petition filed in an underlying action.
The amount of a charging lien, and the lawyer’s compensation, is determined using principles of quantum meruit, or “so much as he deserves. Quantum meruit creates an implied contract to pay an amount based on the contribution of the former lawyer to the ultimate result.
A charging lien claim is subject to the general requirements for trial by jury. Once a jury trial is demanded by either party, it can be waived only with consent. Whether a party is entitled to trial by jury depends on whether a jury trial is available in the underlying action.
New Jersey’s attorney charging lien statute (N.J.S.A. 2A:13-5) permits a discharged attorney to file a lien petition in a matter makes clear that the trial court has the authority, in the first instance, to establish and enforce the charging lien, but it is silent on the issue of whether a jury trial is required to determine the ultimate outcome.
When is a Charing Lien Subject to Trial by Jury?
That question – jury trial or not – is likely to turn on where the case was pending at the time the lien was asserted, according to a decision of the Appellate Division of Superior Court in Toscano Law Firm v. Haroldson (opinion here). The appellate reversed the trial court’s decision in a long-running fee dispute, made without a jury, and remanded the dispute for a new trial.
Thus, although discharged attorneys in contingent-fee matters are generally compensated under principles of quantum meruit, an implied contractual theory that is equitable in nature, the parties may have a right to trial by jury. In the Toscano, litigation, the Appellate Division held, the trial court had confused the equitable nature of a quantum meruit claim with the fact that it is a legal remedy. (The quantum meruit claim is one that results in money damages payable to the successful charging lien petitioner.) Continue reading
Independent Contractor, or Not …
Divining the difference between the traditional employee and an independent contractor has an inherent level of uncertainty, particularly in this era of gig workers and home offices brought about by the Covid pandemic.
Shortly before the end of the Trump administation, the Department of Labor had announced a new standard under the Fair Labor Standards Act (“FLSA”) that was focused on a pair of core factors — worker control and opportunity for profit. The Biden administration has reversed course, however, and the Department of Labor has withdrawn the rule change.
In most lawsuits, there is a presumption that the matter will, in most circumstances, go to trial. A party involved in a dissolution action involving a closely held New York corporation needs to request a hearing, however, or risk having the matter resolved in a summary fashion.
That is the reminder from this decision of the Fourth Department of the Appellate Division affirming the decision of a trial court granting dissolution and the appointment of a temporary receiver for Brady Farms, Inc. in western New York. (Opinion in Brady v. Brady)
The record does not include a request from respondents for an evidentiary hearing and, on appeal, respondents concede that they failed to make such a request. Consequently, respondents’ contention that the court abused its discretion in ordering dissolution summarily, without a hearing, is unpreserved.