On July 5, 2018, the First Department issued a decision in Epstein v. Ruane, Cunniff & Goldfarb Inc., 2018 NY Slip Op. 04970, affirming the dismissal of a derivative action for failure adequately to plead demand futility, explaining: Plaintiff failed to allege sufficient facts to establish that a pre-suit demand on the board of the… Read more »
Blogs
Posts Categorized: Derivative Actions
Fraud Claim Dismissed; Claim Was Derivative, Not Direct
On May 30, 2018, Justice Masley of the New York County Commercial Division issued a decision in Khan v. Garg, 2018 NY Slip Op. 31061(U), dismissing a fraud claim because it did not plead a direct claim for fraud, explaining: With respect to Garg, defendants contend that the fraud claim inadequately pleads the elements of… Read more »
Derivative Action Dismissed for Failure to Plead Demand or Demand Futility
On May 9, 2018, Justice Sherwood of the New York County Commercial Division issued a decision in Glaubach v. PricewaterhouseCoopers, LLP, 2018 NY Slip Op. 30875(U), dismissing a derivative action for failure to plead demand or demand futility, explaining: Under Delaware law, and Delaware Chancery Court Rule 23.1, to have standing to pursue a derivative… Read more »
Estate of Deceased LLC Member Lacked Standing to Bring Derivative Claims
On February 22, 2018, Justice Scarpulla of the New York County Commercial Division issued a decision in Pappas v. 38-40 LLC, 2018 NY Slip Op. 30329(U), holding that the estate of a deceased member of an LLC lacked standing to bring a derivative action, explaining: Moving Defendants argue that Plaintiff does not have standing to… Read more »
Derivative Action Dismissed for Failure to Plead Demand Futility With Particularity
On February 13, 2018, the First Department issued a decision in Retirement Plan for Gen. Empls. of the City of N. Miami Beach v. McGraw, 2018 NY Slip Op. 01027, dismissing a derivative action for failure to plead demand futility with particularity, explaining: The motion court correctly dismissed the complaint, as plaintiffs failed to adequately… Read more »
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 »
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 »
Plaintiff Without Standing to Bring Derivative Action Not Entitled to Fee Award Under BCL Sec. 626
On November 29, 2017, the Second Department issued a decision in Sakow v. Waldman, 2017 NY Slip Op. 08403, holding that a prevailing plaintiff that did not have standing to bring a derivative action was not entitled to a fee award under Business Corporations Law Sec. 626, explaining: Mawash moved for leave to renew its… Read more »
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 »
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 »