November 12, 2014
Schlam Stone & Dolan is counsel for appellants in the first two commercial cases in which the Appellate Division First Department granted leave to appeal to the New York Court of Appeals during the 2010-11 Term. Both cases involve important issues of LLC fiduciary duties. In the first case, Roni v. Arfa, the Court of Appeals will be asked to decide: (a) whether the organizer of a New York LLC owes a fiduciary duty as a matter of law to the prosective investors he solicits notwithstanding the absence of any trust or confidence being reposed in the organizer by the prosective investors or any superior skill or expertise on the part of the organizer compared to the prosective investors, and (b) whether the anti-fraud provision of New York's Martin Act applies only to public securities offerings and not to private securities offerings. In the second case, Arfa v. Zamir, the Court of Appeals will be asked to decide whether a release given by a fiduciary of a New York LLC is void where the fiduciary failed to disclose material facts to the releasor concerning the released conduct. In each of these two cases, Schlam Stone & Dolan partner David Katz and of-counsel attorney Michael Marcus succeeded in convincing the Appellate Divsion to certify these questions to the Court of Appeals for review. Their success in each case is discussed on the influential web blog nybusinessdivorce.com.
Coverage of the case can be found here: