Under Section 702 of New York’s Limited Liability Company Law (“LLCL”), a court sitting in the judicial district in which the office of the company is located may dissolve the company “whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement.” LLCL § 702. (This Blog addressed Section 702 here and here .) To successfully petition for the dissolution of a limited liability company under LLCL § 70

In very general terms, fraudulent conveyance statutes are designed to protect creditors from situations where a debtor transfers its assets to a creditor’s detriment. Sometimes such transfers are made with actual intent to defraud. Other times, transfers may be deemed to be constructively fraudulent regardless of the actual intent of the debtor/transferor. Presently, Article 10 of New York’s Debtor and Creditor Law (the “DCL”) governs fraudulent transfers. For example, s

Ponzi schemes remain a familiar and unfortunate risk for investors. Because Ponzi schemes purport to offer high returns with little or no risk, and rely on inflated credentials of a financial professional, investors are attracted to the investment products these scammers offer. Often, Ponzi schemes are perpetrated on specific groups of people sharing common interests, such as a church or charitable group. (Fraudulent sales practices that target specific organizations or group

What word that comes to mind when you hear the term “professional malpractice”? Medical? Legal? To be sure, doctors and lawyers are the more common professionals subject to malpractice claims. But, there are other professionals who can commit malpractice. These include accountants, architects, and engineers. Yet, not all professionals are subject to malpractice claims. In Gutterman v. Stark , 2017 NY Slip Op. 32618(U) (Sup.Ct. N.Y. County, Dec. 18, 2017) ( here ), a financia

On December 12, 2017, the New York Court of Appeals resolved an ambiguity in Rule 908 of the Civil Practice Law and Rules, concerning whether the parties to a putative class action must give notice of a dismissal, discontinuance, or compromise to members of the class before the lower court certifies the action as a class action. In Desrosiers v. Perry Ellis Menswear, LLC , 2017 NY Slip Op 08620 ( here ), a divided court held that, where a complaint containing class allegatio

Should Your Business Contracts Contain Mandatory Arbitration Clauses? Mandatory arbitration clauses have increased in popularity in recent years and are now part of most business contracts. While arbitration clauses are not ideal for all situations, this method of dispute resolution can provide benefits to both businesses and customers alike. What is an Arbitration Clause? Arbitration is an alternative form of dispute resolution where the parties voluntarily agree that a neu

A recent blog post entitled: “ Appellate Division, Second Department Tells Foreclosing Residential Lender to ‘SHOW ME THE EVIDENCE ,’” cautioned foreclosing mortgagees that evidence in admissible form must be submitted to the court to demonstrate compliance with the many statutory provisions that must be followed to ensure a successful foreclosure action. The Second Department in U.S. Bank National Association v. Brody , decided on December 20, 2017, reiterates that foreclo

What facts must you plead to pursue a false claims case? In , the United States Court of Appeals for the Sixth Circuit (Sixth Circuit) reaffirmed the “stringent” pleading requirement for cases brought under the False Claims Act. The pleading standard comes from the Federal Rules of Civil Procedure 9(b) which requires the plaintiffs to plead their case with “particularity.” In , the Sixth Circuit held that the “particularity” standard for litigating complex schemes or fraud u

Since the late 1970s, federal employees have enjoyed protection from retaliatory acts in response to the reporting of illegal or other wrongful conduct by their employers. Such protections were provided in the Civil Service Reform Act of 1978. Since that time, Congress has expanded the protections for federal employees in the Whistleblower Protection Act of 1989 (“WPA”) and the Whistleblower Protection Enhancement Act of 2012 (“WPEA”). Whistleblower Protection Act Of 1989 T

There is an old idiom that says: “the devil is in the details.” It generally means that although something may seem simple, the details are complicated and likely to cause problems. This aptly describes pleading a fraud claim under New York law. To state a claim for fraud, a plaintiff must allege a material misrepresentation of fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages. Eurycleia Partners, LP v. Seward & K

Certain issues regarding Labor Law §240 were discussed in “Be Helpful at Your Own Peril” , an article posted on this Blog on October 20, 2017. Again, Labor Law § 240 was enacted, inter alia , to protect construction workers from height related injuries. In discussing the purpose behind Labor Law § 240, the New York Court of Appeals stated: The legislative purpose behind this enactment is to protect workers by placing ultimate responsibility for safety practices at buildin

Standing to sue derivatively requires stock ownership in the corporation at the time the lawsuit is filed and at the time of the wrongful occurrence. As noted in a recent article posted by this Blog ( here ), these standing requirements are strictly enforced. Now comes another decision from the New York Appellate Division, Second Department, that reiterates the point that the absence of standing is the death knell of a shareholder’s derivative action. , 2017 N.Y. Slip Op. 085

In prior posts, this Blog has discussed the elements required to assert a shareholder’s derivative action. ( Here .) Today’s article focuses on the standing requirements needed to commence such an action and the consequences of not satisfying them. What is a Derivative Action? A shareholder’s derivative action is a lawsuit “brought in the right of a … corporation to procure a judgment in its favor, by a holder of shares or of voting trust certificates of the corporation or of

Real property owners or lessees (“Owners”) often find that their real property is in need of improvement and/or repair (the “Work”). Sometimes the Work requires access to the property of an adjoining property owner (the “Neighbor”). In many instances, the Neighbor graciously permits access to the Owner’s contractors so that the Work can be performed. In such instances the parties can informally agree on how to resolve problems that may result from the Work. Sometimes the

On November 28, 2017, the United States Supreme Court heard arguments ( here ) in Digital Realty Trust v. Sommers , a case that will determine whether employees who report suspected violations of the securities laws internally can file suit against their employers under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act” or “Dodd-Frank”) for retaliation, even if they do not report their concerns to the Securities and Exchange Commission (“S

J.P. Morgan Securities, LLC ("J.P. Morgan") was recently fined $1.25 million by the Financial Industry Regulatory Authority ("FINRA") for how the securities firm handled criminal background checks. In particular, J.P. Morgan failed to conduct timely or adequate background checks on approximately 95 percent of its non-registered personnel, a total of about 8,600 employees. As noted by FINRA in the announcement of the settlement ( here ), under the federal securities laws, br

Yellowstone injunctions got their name from First National Stores, Inc. v. Yellowstone Shopping Center, Inc., 21 N.Y.2d 630, 290 N.Y.S.2d 721 (1968) . A commercial tenant that is faced with the threat of the termination of its commercial lease as a result of a lease default, must follow the procedures set forth in Yellowstone or it runs the risk of losing its lease. While Yellowstone was decided almost fifty years ago, commercial tenants continue to lose their valuable le

On November 3, 2017, Thrivent Financial for Lutherans (“Thrivent”) obtained a preliminary injunction that temporarily restrains the Department of Labor (the “Department” or the “DOL”) from enforcing an anti-arbitration provision in an exemption to the DOL’s fiduciary duty rule (the “Fiduciary Rule” or the “Rule”) against Thrivent. See Thrivent Financial for Lutherans v. Acosta , Case No. 16-cv-03289 (SRN/DTS) (D. Minn. Nov. 3, 2017). ( Here .) The decision was issued days af