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Current Developments in the Commercial Divisions of the
New York State Courts
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 in her individual capacity. While the plaintiff contends that she alleged individual harm, even where an individual harm is claimed, if it is confused with or embedded in the harm to the corporation, it cannot separately stand. The fact that an individual closely affiliated with a corporation is incidentally injured by an injury to the corporation does not confer on the injured individual standing to sue on the basis of either that indirect injury or the direct injury to the corporation.

(Internal quotations and citations omitted).

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