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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: February 19, 2020

LLC’s Managing Members Owed Fiduciary Duties to Non-Managing Member

On January 3, 2020, Justice Scarpulla of the New York County Commercial Division issued a decision in Zunzurovski v. Bukefal LLC, 2020 NY Slip Op. 30264(U), holding that an LLC’s managing members had fiduciary duties to its non-managing member, explaining:

To assert a claim for breach of fiduciary duty, a plaintiff must allege that (1) defendant owed them a fiduciary duty, (2) defendant committed misconduct, and (3) they suffered damages caused by that misconduct.

As the managing members of Bukefal, Motamedi and Ristovski owed nonmanaging member Plaintiff a fiduciary duty. Plaintiff has alleged that Motamedi and Ristovski misappropriated business assets, kept a secret set of books and records and engaged in self-enrichment at Plaintiffs expense. Given the existence of disputes as to the underlying factual allegations in support of the claim for breach of fiduciary duty and the paucity of relevant evidence submitted by both parties, it is not appropriate to dismiss this claim in favor of either party and thus summary judgment is denied to both.

(Internal quotations and citations omitted).

Fiduciaries have special duties, but the questions of whether a defendant is a fiduciary and what acts breach a fiduciary duty are sometimes complicated ones. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding such claims or appeals of relating to a fiduciary.

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