Posts Categorized: Derivative Actions

Posted: January 11, 2021

Shareholder of Dissolved LLC Has Standing to Bring Derivative Action

On December 9, 2020, Justice Emerson of the Suffolk County Commercial Division issued a decision in Mari v. Quatela, 2020 NY Slip Op. 34274(U), holding that a shareholder in a dissolved limited liability company has standing to bring a derivative action, explaining: The remaining allegations, that the individual defendants diverted firm monies and assets to... Read more »

Posted: August 30, 2020

Trust Beneficiary Cannot Sue On Behalf of Trust Unless She Has Made a Demand on the Trustee and the Trustee Has Refused

On August 27, 2020, the First Department issued a decision in Zachariou v. Manios, 2020 NY Slip Op. 04811, holding that a trust beneficiary could not bring an action on behalf of the trust unless she had made a demand on the trustee that had been refused or that such a demand would be futile,... Read more »

Posted: June 29, 2020

Derivative Action Dismissed for Failure to Give Board Adequate Time to Respond to Demand

On April 4, 2020, Justice Masley of the New York County Commercial Division issued a decision in D. Karnofsky, Inc. v. Rozof, 2020 NY Slip Op. 31748(U), dismissing derivative claims because of the plaintiff’s failure to give the board adequate time to respond to the plaintiff’s demand, explaining: [D]efendants challenge plaintiff’s failure to allege pre-litigation... Read more »

Posted: June 27, 2020

Derivative Claims Based on Misconduct of Corporate Officers Barred by In Pari Delicto Doctrine

On June 4, 2020, Justice Cohen of the New York County Commercial Division issued a decision in Rutigliano v. Locantro, 2020 NY Slip Op. 31768(U), holding that derivative claims based on the misconduct of corporate officers were barred by the in pari delicto doctrine, explaining: Plaintiffs unjust enrichment and conversion claims are asserted on behalf... Read more »

Posted: April 28, 2020

Demand Futility Allegations Fail to Overcome High Bar Where Outside Directors are Insulated from Monetary Liability

On April 13, 2020, Justice Scarpulla of the New York County Commercial Division issued a decision in Barrientos v. Salmirs, 2020 NY Slip Op. 30933(U), holding that a shareholder’s demand futility allegations failed to overcome the high bar that exists where outside directors are insulated from monetary liability, explaining: Further, the Board Members are insulated... Read more »

Posted: April 4, 2020

Decision in Derivative Action by Different Shareholder Has Res Judicata Effect on Later Suit by Different Shareholder

On March 18, 2020, the Second Department issued a decision in Noor v. Mahmood, 2020 NY Slip Op. 01921, holding that a decision in an earlier derivative action by a different shareholder had res judicata effect on a subsequent derivative action, explaining: The doctrine of res judicata bars the litigation of a claim if, in... Read more »

Posted: February 16, 2020

Deceased Partner’s Estate Does Not Have Standing to Seek Limited Partnership’s Dissolution

On February 5, 2020, Justice Borrok of the New York County Commercial Division issued a decision in Weinstein v RAS Prop. Mgt. LLC, 2020 NY Slip Op. 20028, holding that a deceased partner’s estate did not have standing to seek the partnership’s dissolution, explaining: In support of their position, the respondents rely on Salter v... Read more »

Posted: November 23, 2019

Derivative Claims Allowed to go Forward; Demand Futility was Properly Alleged

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 ยง 626(c)... Read more »

Posted: October 9, 2019

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 »