In closely held family businesses, trust often substitutes for formalities. This phenomenon was on display in Homapour v. 3M Props., LLC, 2026 N.Y. Slip Op. 04371 (1st Dept. July 9, 2026), where the formality of “read-before-you-sign” was tested. The dispute centered on allegations that a managing member repeatedly presented family members with signature pages detached from amended LLC operating agreements while assuring them that “nothing had changed.”

The principal takeaway from Bent is that the business judgment rule will not shield board members from suit when a complaint contains nonconclusory allegations of bad faith, retaliation, or other tortious conduct, but derivative standing remains limited to those who hold a membership interest in the corporation and cannot be acquired merely through an assignment of litigation claims.

Disputes over closely held family corporations frequently arise when ownership of corporate stock is transferred informally within a family. While a parent may intend to make a lifetime, or inter vivos, gift of corporate shares to a child, courts generally require more than evidence of donative intent alone. The transfer must also be accompanied by proof that the gift was completed in accordance with governing corporate law and the corporation’s own stock-transfer requirement

Under Section 706(a) of the New York Business Corporation Law (“BCL”), a director may be removed for cause either by shareholder vote or, where authorized by shareholder-adopted bylaws, by action of the board. In addition, where a corporation’s governing bylaws leave “cause” undefined, the board retains broad discretion to determine whether sufficient grounds for removal exist, subject to the business judgment rule.

Under New York law, alter ego liability, often referred to as piercing the corporate veil, is a doctrine that permits a court to disregard the corporate form and hold an individual officer, director, or owner liable where that person exercised domination and control over the entity and used that domination and control to commit a fraud or wrong that injured the plaintiff.

New York’s Limited Liability Company Law § 607 limits the remedies available to a creditor when the judgment debtor is an LLC member, confining recovery to the member’s economic interest and prohibiting any direct interference with LLC property. As demonstrated in Finance Holding Co., LLC v. Farzam, 2026 N.Y. Slip Op 31868(U) (Sup. Ct., N.Y. County Apr. 7, 2026), courts use the statute to protect the separation between the LLC and its members.

Under Limited Liability Company Law §  609(a), a member or manager of a limited liability company is not personally liable for the LLC’s debts, obligations, or liabilities solely by reason of being a member or acting in that capacity. Applying this rule, the courts in 27-21 27th St. Sponsors, LLC v. Kanta , 2026 N.Y. Slip Op. 01273 (1st Dept. Mar. 05, 2026), held that a minority member of an LLC could not be sued individually for the LLC’s obligations, as the operating agreem

By: Jonathan H. Freiberger In today’s BLOG article, we again discuss summary judgment in lieu of complaint pursuant to CPLR 3213, which provides, in relevant part: When an action is based upon an instrument for the payment of money only or upon any judgment, the plaintiff may serve with the summons a notice of motion for summary judgment and the supporting papers in lieu of a complaint. The summons served with such motion papers shall require the defendant to submit answering

By: Jeffrey M. Haber In New York, foreign business entities – e.g. , corporations, limited liability companies, and partnerships authorized to do business in another jurisdiction or country – are required to register to do business with the Secretary of State. The failure to receive such authority deprives the foreign entity of the ability to affirmatively access the courts of New York and subjects any action commenced by the foreign entity to dismissal. The purpose of the r

In any contract dispute, “it is necessary to consider the language in the contract, for that is what controls the parties’ rights and responsibilities.” For this reason, New York courts “are guided by the standard rules of contractual interpretation, which provide that ‘a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms.’”

In Kober v. Nestampower, 2025 N.Y. Slip Op. 06609 (2d Dept. Nov. 26, 2025), the Appellate Division, Second Department, decided an appeal involving disputes over membership interests in a limited liability company.

Under New York’s Limited Liability Company Law (“LLCL”) § 702, a court “may decree dissolution of a limited liability company whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement.” The claim must be brought “[o]n application by or for a member” of the company.

Today, we consider Tahari v. 860 Fifth Ave. Corp., 2025 N.Y. Slip Op. 05584 (1st Dept. Oct. 9, 2025), an apparent case of first impression in the Appellate Division, First Department, involving the suability of a board of directors under New York law.

In Celauro v. Celauro, 2025 N.Y. Slip Op. 04870 (Sept. 10, 2025), a minority shareholder of a family-owned business alleged that company executives operated an illicit cash business, diverted profits and deprived shareholders of distributions/dividends. The motion court dismissed most of the breach of fiduciary duty claim, finding many of the allegations to be time-barred under the six-year statute of limitations and the surviving claims too speculative.

In New York, as in most jurisdictions, statutes of limitation serve as a cutoff point for initiating legal action. In business litigation, parties often encounter statutes of limitation issues involving, inter alia, breach of fiduciary duty and fraud claims.

In today’s article, we examine BLDG 44 Developers LLC v. Pace Companies N.Y., LLC, a case involving consequential damages.

Under New York law, an action based upon fraud must be commenced within six years of the date the cause of action accrued, or within two years of the time the plaintiff discovered or could have discovered the fraud with reasonable diligence, whichever is greater.

In Bardy v. Bonnem, the plaintiff sought to enforce an alleged oral agreement for an ownership option in a drive-thru coffee business. The motion court upheld the agreement based on an email proposal orally accepted by the plaintiff and partial performance. On appeal, the Second Department modified the motion court’s order, finding the email lacked essential terms to satisfy New York’s Statute of Frauds (GOL § 5-701) and that the contract could not be performed within one yea

In One River Run Acquisition, LLC v. Milde, 2025 N.Y. Slip Op. 03653 (1st Dept. June 17, 2025) (here), the Appellate Division, First Department reinstated counterclaims for fraud and fraudulent transfers after they had been dismissed at the motion court level.

By: Jeffrey M. Haber It has long been the law that the business judgment rule applies to the decisions made by boards of directors of residential cooperatives and condominiums. “The business judgment rule ‘bars judicial inquiry into actions of corporate directors taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes.’” “ ourts must defer to a board’s determination if it was taken in furtherance of the corpo