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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: July 27, 2020

Allegations Insufficient to Show Existence of a Joint Venture

On July 22, 2020, the Second Department issued a decision in MacKay v. Paesano, 2020 NY Slip Op. 04155, holding that the plaintiff had failed adequately to allege the existence of a joint venture and, thus, of a fiduciary duty, explaining:

The essential elements of a joint venture are an agreement manifesting the intent of the parties to be associated as joint venturers, a contribution by the coventurers to the joint undertaking (i.e., a combination of property, financial resources, effort, skill or knowledge), some degree of joint proprietorship and control over the enterprise; and a provision for the sharing of profits and losses. The plaintiff failed to state a cause of action based on a joint venture agreement because he failed to allege a mutual promise or undertaking to share the burden of the losses of the alleged enterprise. Moreover, the complaint failed to allege joint control over the purported enterprise. Since the complaint fails to make a showing sufficient to establish the existence of an enforceable joint venture agreement, it also fails to make a showing sufficient to establish the existence of a fiduciary obligation owed to the plaintiff by the defendant. Therefore, accepting the facts as alleged in the complaint as true, and according the plaintiff the benefit of every possible inference, we agree with the Supreme Court’s determination to dismiss the causes of action alleging breach of a joint venture agreement and breach of fiduciary duty insofar as asserted against the defendant.

(Internal quotations and citations omitted).

Fiduciaries have special duties and complex commercial litigation often involves allegations of a breach of those duties. We both bring and defend breach of fiduciary duty and professional malpractice claims and other claims relating to the duties of trustees and professionals such as lawyers, accountants and architects to their clients. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding such claims or appeals of such claims.

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