Posts Categorized: Derivative Actions

Posted: December 11, 2017

Derivative Action Plaintiff Loses Standing–And Action Must Be Dismissed–If It Sells Its Ownership Interest

On December 6, 2017, the Second Department issued a decision in Jacobs v. Cartalemi, 2017 NY Slip Op. 08506, holding that a derivative action plaintiff loses standing–and the action must be dismissed–if it sells it ownership stake in the company on behalf of which the plaintiff is suing, explaining: Members of a limited liability company… Read more »

Posted: December 8, 2017

50% Shareholder Must Bring Derivative Action, Not Action in Name of Corporation, Against Other 50% Shareholder

On November 9, 2017, Justice Ramos of the New York County Commercial Division issued a decision in U-Trend N.Y. Inv. L.P. v. US Suite LLC, 2017 NY Slip Op. 32502(U), holding that a 50% shareholder could not bring an action in the name of the corporation against the other 50% shareholder and instead must bring… Read more »

Posted: July 2, 2017

Complaint Dismissed for Impermissibly Mixing Direct and Derivative Claims

On June 15, 2017, Justice Knipel of the Kings County Commercial Division issued a decision in Guindi v. Safrin, 2017 NY Slip Op. 31291(U), dismissing a complaint for mixing direct and derivative claims, explaining: Allegations of mismanagement or diversion of assets by officers or directors to their own enrichment, without more, plead a wrong to… Read more »

Posted: June 3, 2017

Derivative Claims Fail; Alleged Individual Harm Embedded in Harm to Corporation

On May 24, 2017, the Second Department issued a decision in Patterson v. Calogero, 2017 NY Slip Op. 04129, affirming the dismissal of claims as derivative rather than individual, explaining: [T]he first cause of action alleges a wrong suffered directly by the corporation. Therefore, it is a derivative claim which the plaintiff may not bring… Read more »

Posted: April 20, 2017

Plaintiff Lacked Standing to Bring Derivative Claims on Behalf of LLC

On April 12, 2017, Justice Oing of the New York County Commercial Division issued a decision in Pokoik v. Norsel Realties, 2017 NY Slip Op. 50459(U), dismissing claims as derivative claims on behalf of an LLC that the plaintiffs lacked standing to bring. First, Justice Oing held that the plaintiffs’ claims were derivative, rather than… Read more »

Posted: January 27, 2017

Derivative Action Dismissed; Demand Insufficient and Futility Not Shown (New York Count

On January 17, 2017, Justice Singh of the New York County Commercial Division issued a decision in Sims v. Firstservice Corp., 2017 NY Slip Op. 30104(U), dismissing a derivative action for lack sufficient allegations of demand, explaining: The demand requirement rests on the basic principle of corporate governance that the decisions of a corporation –… Read more »

Posted: December 5, 2016

First Department Reverses Trial Court Approval of Derivative Action Settlement

On November 29, 2016, the First Department issued a decision in Company v. Clayton Dubilier & Rice, LLC, 2016 NY Slip Op. 08021, reversing the approval of the settlement of a derivative action, explaining: The settlement does not provide for payment to the company. Plaintiffs are to receive the bulk of the $4 million settlement… Read more »

Posted: November 30, 2016

Board Did Not Breach Fiduciary Duty By Entering Into Management Contract With Former Employees

On November 22, 2016, the First Department issued a decision in Doppelt v. Denahan, 2016 NY Slip Op. 07868, holding that directors did not breach their fiduciary duty by entering into a management contract with former employees, explaining: Contrary to the argument advanced by plaintiff, a shareholder who seeks to bring a derivative action on… Read more »

Posted: October 29, 2016

Family Relationship of Majority of Managers Does Not Excuse Demand in Derivative Suit

On October 11, 2016, Justice Scarpulla of the New York County Commercial Division issued a decision in Danial v. Monasebian, 2016 NY Slip Op. 31909(U), holding that a family relationship among managers did not excuse demand in a derivative action, explaining: Demand is deemed futile and thus excused in the following three situations when alleged… Read more »