Blogs

Posts Categorized: Derivative Actions

Posted: January 5, 2015

Court Refuses to Disqualify Counsel from Defending Both the Nominal Defendant and Other Defendants in a Derivative Action

On December 30, 2014, the First Department issued a decision in Stilwell Value Partners IV, L.P. v. Cavanaugh, 2014 NY Slip Op. 09061, denying a motion to disqualify counsel. In Stilwell Value Partners, the court denied the plaintiff’s motion to disqualify a nominal defendant’s counsel in a derivative action, explaining: Plaintiff failed to show that... Read more »

Posted: October 15, 2014

Action for Corporate Waste Cannot be Brought Against the Former Sole Owner of a Company

On October 14, 2014, Justice Demarest of the Kings County Commercial Division issued a decision in Koryeo Intl. Corp. v. Kyung Ja Hong, 2014 NY Slip Op. 51495(U), dismissing an action for corporate waste and breach of contract. The plaintiff, Steve Hong, who brought the action on his own behalf, and directly on behalf of... Read more »

Posted: October 11, 2014

First Department Discusses Differences Between Direct and Derivative Claims

On September 30, 2014, the First Department issued a decision in Serino v. Lipper, 2014 NY Slip Op. 06551, explaining the differences between direct and derivative claims. In Serino, a “complex, multi-party litigation, extending over a period of 12 years,” the cross-claim plaintiff sought “three categories of damages in connection with his cross claims”: “the... Read more »

Posted: July 23, 2014

Commercial Division Applies Delaware Demand Futility Pleading Rules

On July 3, 2014, Justice Schweitzer of the New York County Commercial Division issued a decision in David Shaev Profit Sharing Account v. Riggio, 2014 NY Slip Op. 31776(U), dismissing a derivative action for failure adequately to plead demand futility. In David Shaev Profit Sharing Account, the plaintiff filed a derivative action against the individual directors of... Read more »

Posted: July 20, 2014

Double Derivative Claim Dismissed For Failure to Show Control of Subsidiary

On July 9, 2014, Justice Schweitzer of the New York County Commercial Division issued a decision in USHA SOHA Terrace, LLC v. Robinson Brog Leinwand Greene Genovese & Gluck, P.C., 2014 NY Slip Op. 31813(U), dismissing derivative claims for lack of standing. In USHA SOHA Terrace, the plaintiff “assert[ed] both direct and derivative claims against legal counsel for... Read more »

Posted: June 4, 2014

Notwithstanding Internal Affairs Doctrine, Some Claims in Derivative Action Governed by New York Law

On June 3, 2014, the First Department issued a decision in Culligan Soft Water Co. v. Clayton Dubilier & Rice LLC, 2014 NY Slip Op. 03955, holding that notwithstanding the internal affairs doctrine, New York law applied to some of the derivative plaintiff’s claims. In Culligan, the plaintiff brought a derivative action on behalf of Culligan,... Read more »

Posted: May 29, 2014

Unit Owners’ Vote Insulates Condominium Board from Derivative Action

On May 16, 2014, Justice Scarpulla of the New York County Commercial Division issued a decision in DSW Lenox, LLC v. Rosetree on Lenox Ave., LLC, 2014 NY Slip Op. 31311(U), dismissing a derivative action against a condominium’s board of directors. The court’s opinion in DSW Lenox addresses several distinct legal questions. This post focuses on... Read more »

Posted: May 23, 2014

Organization State Law Determines Whether Derivative Action Plaintiff is Entitled to Discovery on Demand Refusal

On May 22, 2014, the First Department issued a decision in Lerner v. Prince, 2014 NY Slip Op. 03763, holding in a derivative action, the law of the state of organization, not the forum state, determines whether the plaintiff is entitled to discovery on the basis for the refusal of its demand. In Lerner, the nominal-defendant corporation’s... Read more »

Posted: April 11, 2014

Settlement of Federal Derivative Action Bars State Court Plaintiff’s Derivative Action

On April 1, 2014, Justice Lowe (formerly of the New York County Commercial Division and now Presiding Justice of the Appellate Term, 1st Judicial District), issued a decision in Wexler v. KPMG LLP, 2014 NY Slip Op. 30825(U), granting a series of motions to dismiss in an action brought by an investor who allegedly lost... Read more »

Posted: February 1, 2014

Derivative Action Dismissed for Failure Adequately to Plead Demand Futility

On January 21, 2014, Justice Kapnick of the New York County Commercial Division issued a decision in Kebis v. Azzurro Capital Inc., 2014 NY Slip Op. 30171(U), dismissing a derivative action for failure adequately to plead demand futility. In Kebis, the plaintiff brought a derivative action against a corporation’s board of directors alleging “breaches of fiduciary duties... Read more »