Summary
This Appellate Division, Second Department decision affirms a trial court order denying defendants' motion for summary judgment on a counterclaim for judicial dissolution of an LLC and granting plaintiffs' cross-motion for summary judgment on a cause of action for specific performance. The court held that the LLC's operating agreement expressly waived the members' right to seek dissolution and that the defendants failed to demonstrate frustration of purpose or financial unfeasibility under the Limited Liability Company Law. Furthermore, the court determined that the plaintiffs timely exercised a contractual purchase option and were ready to perform, thereby establishing their entitlement to specific performance of the real property transfer.
Topics
Practice areas
Questions Presented
- Whether the defendants are entitled to judicial dissolution of TZ Vista, LLC under LLC Law §702 despite a contractual waiver and lack of proof of frustration or financial infeasibility.
- Whether the plaintiffs are entitled to specific performance of the purchase option under the operating agreement.
Holdings
- The court affirmed the trial court’s denial of summary judgment on the defendants’ dissolution claim, holding that the members’ waiver of the right to seek judicial dissolution and the defendants’ failure to show frustration of purpose or financial infeasibility preclude dissolution.
- The court affirmed the trial court’s grant of summary judgment for specific performance, holding that the plaintiffs timely exercised the purchase option, were ready, willing, and able to perform, and therefore entitled to an order directing Foot of Main to transfer Parcel 7.
Factual background
In 2015 the members of TZ Vista, LLC executed an operating agreement that gave Drazen Cackovic an irrevocable option to require the LLC to purchase Parcel 7 from Foot of Main, an entity wholly owned by William Helmer. Cackovic exercised the option, but Helmer refused to transfer the parcel. The defendants later moved for summary judgment on a counterclaim seeking judicial dissolution of the LLC, alleging frustration of purpose and financial infeasibility.
Procedural history
The plaintiffs filed suit in January 2020 to enforce an operating agreement purchase option and to recover damages for breach of contract. The defendants asserted a counterclaim for judicial dissolution of the LLC based on alleged frustration of purpose. The trial court denied the dissolution motion and granted the plaintiffs' cross‑motion for summary judgment on specific performance. The defendants appealed.