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 »
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Posts Categorized: Derivative Actions
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 »
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 »
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 »
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 »
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 § 626(c)... Read more »
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 »