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Posts Categorized: Fiduciary Duties

Posted: February 6, 2017

LLC Member Does Not Owe Fiduciary Duty To Managing Member Or To The LLC Itself

On January 31, Justice Singh of the New York County Commercial Division issued a decision in Landes v. Provident Realty Partners II, L.P., 2017 NY Slip Op. 30196(U), denying and granting summary judgment motions made by the parties. The underlying dispute involves the relationship between several LPs and LLCs holding indirect interests in real property…. Read more »

Posted: December 21, 2016

Escrow Agent Has Fiduciary Duty to Persons With a Beneficial Interest in the Escrowed Property

On December 14, 2016, the Second Department issued a decision in Sasidharan v. Piverger, 2016 NY Slip Op. 08387, holding that an escrow agent has a fiduciary duty, explaining: An escrow agent not only has a contractual duty to follow the escrow agreement, but additionally becomes a trustee of anyone with a beneficial interest in… 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: November 27, 2016

Party Who Agreed to Be Tie-Breaker Vote for LLC Members Had Fiduciary Duty to Members

On November 21, 2016, Justice Ritholtz of the Queens County Commercial Division issued a decision in Fakiris v. Gusmar Enterprises, LLC, 2016 NY Slip Op. 51665(U), holding that a person who had agreed to be the tie-breaker in votes between two LLC members had a fiduciary duty to those members, explaining: The second cause of… Read more »

Posted: November 23, 2016

Former Employees Can be Ordered to Repay Salaries under Faithless Servant Doctrine

On November 22, 2016, the First Department issued a decision in Beach v. Touradji Capital Management, LP, 2016 NY Slip Op. 07852, holding that former employees that formed a competing company could be held liable for breach of fiduciary duty, explaining: Although plaintiffs were at-will employees, they could be found to have breached a fiduciary… Read more »

Posted: November 1, 2016

Managing Member of LLC Has Fiduciary Duty to Both LLC and Other Members

On October 11, 2016, Justice Friedman of the New York County Commercial Division issued a decision in Zacharias v. Wassef, 2016 NY Slip Op. 31897(U), holding that the managing member of an LLC had fiduciary duties to both the LLC and the other members, explaining: [A]s a member who exercised managerial control over Mechanical, Wassef… Read more »

Posted: July 15, 2016

Prior to Default, RMBS Trustees Owe Note Holders Extracontractual Duty to Perform Basic Functions

On July 5, 2016, the First Department issued a decision in Commerce Bank v. Bank of N.Y. Mellon, 2016 NY Slip Op. 05339, holding that prior to a default under a pooling and servicing agreement, an RMBS trustee owed note holders extra-contractual duties. In Commerce Bank, the First Department considered a number of issues on… Read more »

Posted: April 15, 2016

Business Judgment Does Not Protect Decision Where Some Partners Benefited Differently Than Others

On April 12, 2016, the First Department issued a decision in Pokoik v. Norsel Realties, 2016 NY Slip Op. 02740, reversing dismissal of claims against managing members based on the business judgment rule, explaining: Plaintiffs sufficiently alleged that Steinberg and Lieberman were conflicted and stood to benefit personally, in a manner other than as shareholders… Read more »

Posted: March 29, 2016

Six-Year Statute of Limitations Applies to Breach of Fiduciary Duty Claims Sounding in Fraud

On March 15, 2016, the First Department issued a decision in Cusimano v. Schnurr, 2016 NY Slip Op. 01758, holding that a claim for breach of fiduciary duty based on fraud has a six-year statute of limitations, explaining: Contrary to the motion court’s conclusion, we find that a six-year statute of limitations applies to the… Read more »