Commercial Division Blog

Posted: July 26, 2015 / Categories Commercial, Derivative Actions, Corporations

Plaintiff Must Nullify Cancellation Before Bringing A Derivative Action On Behalf Of A Defunct Delaware LLC

On July 6, 2015, Justice Oing of the New York County Commercial Division issued a decision in Meissner v. Yun, 2015 NY Slip Op. 31181(U), granting summary judgment against all of a plaintiff's derivative claims.

Meissner involved the disputed ownership of a Delaware LLC, and the plaintiff advanced a number of claims—breach of fiduciary duty, usurpation of corporate opportunity, etc.—both individually and derivatively on behalf of the LLC. However, the defendant had "filed a Certificate of Cancellation with the State of Delaware" on behalf of the LLC before the action was brought, and the plaintiff had not 'successfully file[d] a petition with Delaware's Court of Chancery to nullify or rescind the Certificate of Cancellation." The court followed First Department precedent stating that derivative actions can only be brought on behalf of Delaware limited partnerships or LLCs "after or in conjunction with" a successful action to nullify a certificate of cancellation, and granted partial summary judgment to the defendant dismissing all derivative claims.