On November 13, 2019, the Second Department issued a decision in Guzman v. Kordonsky, 2019 NY Slip Op. 08176, allowing derivative claims to go forward based on adequate allegations of demand futility, explaining: [W]e agree with the Supreme Court’s denial of the Board members’ motion pursuant to CPLR 3211(a) and Business Corporation Law § 626(c)... Read more »
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Posts Categorized: Derivative Actions
Derivative and Individual Claims Based on Same Facts Cannot be Brought in Same Action
On September 23, 2019, Justice Scarpulla of the New York County Commercial Division issued a decision in Jobar Holding Corp. v. Halio, 2019 NY Slip Op. 32813(U), holding that derivative and direct claims based on the same facts cannot be brought in the same action, explaining: Although the complaint is rife with allegations that a... Read more »
Derivative Claims Against LLC’s Non-Managing Members Dismissed
On September 27, 2019, Justice Schecter of the New York County Commercial Division issued a decision in Weinstein v. W.W.W. Assoc., LLC, 2019 NY Slip Op. 32868(U), dismissing derivative claims against an LLC’s non-managing members, explaining: Barbara and Candee Weinstein seek dismissal of all claims asserted against them because plaintiff does not seek to pierce... Read more »
Derivative Action Dismissed for Failure to Make Demand/Adequately Plead Demand Futility
On June 28, 2019, Justice Masley of the New York County Commercial Division issued a decision in Gammel v. Immelt, 2019 NY Slip Op. 32005(U), dismissing a derivative action for failure make a demand or adequately to allege demand futility, explaining: Business Corporation Law § 626 sets forth specific procedures that must be followed in... Read more »
Claim Dismissed as Derivative, Not Direct
On July 5, 2019, Justice Masley of the New York County Commercial Division issued a decision in 600-602 10th Ave. Realty Corp. v. Estate of HY Nusimow, 2019 NY Slip Op. 31993(U), dismissing a claim as derivative, not direct, explaining: Pinchevsky asserts that the first counterclaim must be dismissed because Larissa lacks standing as she... Read more »
Claims Relating to Injury to LLC Permissible Direct Claims When They Also Relate to Separate Injury to Plaintiff
On March 12, 2019, Justice Schecter of the New York County Commercial Division issued a decision in Beatrice Invs., LLC v. 940 Realty LLC, 2019 NY Slip Op. 30605(U), holding that claims relating to injury to an LLC were permissible direct claims when they also related to a separate injury to the plaintiff, explaining: Defendants argue... Read more »
Partnership Not Entitled to Recover Fees from Derivative Action Plaintiff When Security for Fees Not Posted
On January 31, 2019, the First Department issued a decision in NWM Capital, LLC v. Scharfman, 2019 NY Slip Op. 00674, holding that where a derivative action plaintiff had not posted security pursuant to Partnership Law § 121-1003, the plaintiff could not subsequently be required to pay the partnership’s attorneys’ fees, explaining: The court properly... Read more »
Mere Theory as to the Board’s Misconduct Insufficient to Plead Demand Futility With Particularity
On November 15, 2018, Justice Ramos of the New York County Commercial Division issued a decision in Shields v. Murstein, 2018 NY Slip Op. 32964(U), holding that a “mere theory as to the Board’s misconduct is insufficient to meet” the demand particularity requirements for a derivative action under Delaware law, explaining: In a final attempt... Read more »
Plaintiff Asserting Derivative Claims Must be Represented by Counsel
On November 1, 2018, Justice Schecter of the New York County Commercial Division issued a decision in Park v. Song, 2018 NY Slip Op. 28343, holding that a plaintiff asserting derivative claims must be represented by counsel, explaining: Whether a derivative plaintiff can maintain claims without being represented by counsel is a question of first impression under... Read more »
Shareholder Has Standing to Sue Corporation’s Counsel for Malpractice
On September 20, 2018, Justice Sherwood of the New York County Commercial Division issued a decision in Reines v. Raoul Felder & Partners, P.C., 2018 NY Slip Op. 32332(U), holding that a shareholder had standing to sue the corporation’s counsel for malpractice, explaining: It is well settled that a stockholder has no individual cause of action against... Read more »