Summary
This New York Appellate Division opinion addresses a dispute between former business partners regarding the conversion of their real estate partnership into a limited liability company. The court reversed the trial court's grant of summary judgment dismissing a breach of fiduciary duty claim, finding triable issues of fact regarding whether the attorney partner failed to disclose the legal implications of the LLC structure. Additionally, the court granted summary judgment for the plaintiff on a claim for statutory dissolution of the LLC, ruling that the absence of an operating agreement and manager appointment created a deadlock making it impracticable to carry on the business.
Topics
Practice areas
Questions Presented
- Whether the Supreme Court erred in granting summary judgment dismissing Amici's breach‑of‑fiduciary‑duty claim.
- Whether, under Limited Liability Company Law §702, it is not reasonably practicable for the LLC to continue its business, justifying statutory dissolution.
Holdings
- The appellate court reversed the summary‑judgment dismissal and held that material issues of fact exist, so summary judgment must be denied.
- The court entered summary judgment in favor of Amici on his statutory dissolution claim, finding that the LLC cannot continue its business without a manager or operating agreement.
Key quotations
“"axiomatic that summary judgment is a drastic remedy and should not be granted where triable issues of fact are raised and cannot be resolved on conflicting affidavits"” (*1)
“"If it shall appear that any party other than the moving party is entitled to a summary judgment, the court may grant such judgment without the necessity of a cross-motion"” (*2)
“"even assuming as partners that Mazza owed [plaintiff] a fiduciary duty . . . there is no evidence that Mazza engaged in any misconduct. He only formed the LLC after [plaintiff] raised the possibility of doing so, and there is no evidence that he did so to harm [plaintiff's] interests"” (*3)
“"we find that it is not reasonably practicable for the LLC to carry on its business"” (*4)
Factual background
Thomas Amici and Edward A. Mazza were long‑time business partners who owned residential rental properties as a partnership. In 2012 Mazza formed Mazza and Amici, LLC without a written operating agreement; the parties each owned a 50% membership interest. Amici later sought to retire and withdraw his interest, alleging Mazza breached a fiduciary duty and that dissolution of the LLC was statutorily required under LLC Law §702.
Procedural history
The Supreme Court (Tompkins County) entered an order on April 9, 2024 granting defendants' summary judgment motion and dismissing the complaint. The appellant appealed that order to the Appellate Division, Third Department.
Remand instructions
Modify the Supreme Court order: reverse the dismissal of Amici's first (breach of fiduciary duty) and sixth (statutory dissolution) causes of action; grant summary judgment on the sixth cause; affirm the remainder of the order.