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When You Don’t Know Where To Turn- Call Us
Our commercial litigation attorneys have decades of experience in fighting for business owners who were taken advantage of by the partners whom they trusted.
Partner or Shareholder Litigation
The Law Office of Michael H. Joseph, PLLC, offers representation for people involved in partner litigation or shareholder litigation. If your business partner has been cheating the business in any way, contact our office. We can prove wrongdoing and collect the compensation you deserve
What Do You Do When Your Partner Tries To Cheat You?
Our New York business litigation attorneys have decades of experience in handling cases involving partner disputes in a business. We know that a business dispute among partners and fellow shareholders, is like a divorce. There are always hard feelings and the partner or shareholder who is in control of the business feels that they can keep the business without compensating their partner. So if you are the minority shareholder, or are being frozen out of a business, you have the right to an accounting and to a fair distribution. While most majority shareholders believe they can run the business however they want and treat the business like its their personal piggy bank, the minority shareholders or partners in close corporations, partnerships and limited liability companies have rights to have their interest accounted for.
Our New York business dispute attorneys, are among the few attorneys, who will represent a minority interest business owner on contingency. We know that those in charge of a business, have money to pay lawyers to fight and drag things out. Our commercial litigation attorneys also know that the partner who is ejected or frozen out doesn’t always have the funds to pay legal fees in a long protracted legal battle. Our commercial litigation attorneys are committed to making sure the little guy, gets a fair shake, and that is why in appropriate cases, we handle commercial cases on contingency, so that our client’s ability to pay is not a barrier to them obtaining the justice that they are entitled to.
One of the most common questions that our New York commercial litigation attorneys hear is “My partner cheated me or stole from the business, What are my rights?”. The answer depends on a number of factors, including the type of business entity that your company was formed in and whether you have an operating agreement.
The Operating Or Partnership Agreement
The first place to look to determine what you are entitled to is the operating agreement. This document may have different names depending on the form of your business, but essentially its function is the same. In a corporation, it is usually called a shareholder agreement, and in a limited liability company (LLC), it is called a member’s agreement. A company’s operating agreement will usually lay out what a partner is entitled to if they withdraw from the business or are ejected from the business, or if the business is dissolved. This is the first place to look for what you are entitled to is the operating agreement. The operating agreement will also specify events, which trigger a dissolution of the business.
What If There Was No Operating Agreement
If you were involved in a business that did not have an operating agreement, also known as a handshake agreement, do not worry, you are not out of luck. The law provides a certain framework for default rules which apply unless otherwise agreed, i.e., unless the partners or shareholders have an operating agreement. For partnerships, these default rules are found in the Partnership Law. For corporate entities, these rules are found in the Business Corporation Law. For limited liability companies, these default rules are found in the limited liability corporation law.
Fiduciary Duties
Regardless of the type of entity, New York law recognizes that partners, shareholders and members of small businesses have fiduciary duties towards each other. A fiduciary duty is a position of trust, whereby the majority shareholder or the management of a business entity has to act for the benefit of the company and its owners, not for themselves. New York law firmly recognizes that those in control of a business must deal fairly with the interests of the investors and partners, including minority ownership, and these rules apply regardless of whether the business is a corporation, limited liability company or partnership. The directors and officers of a corporation or other business entity owe the owners of a corporation or other business entity a fiduciary duty and must perform their duties with conscientious fairness, morality, and honesty in purpose, and they are held, in official action, to the extreme measure of candor, unselfishness, loyalty and good faith. In other words, those who are in control of a company must run the company for the benefit of all of its owners and they cannot act for their own personal benefit or advantage, which does not benefit their fellow shareholders.
If a managing member of an LLC, or a majority shareholder in a corporation or a majority partner, breaches their fiduciary duties, they can be sued. Common examples of breaches of fiduciary duty, include self-dealing, misappropriation of business assets, starting a competing business, taking a corporate opportunity for themselves and freezing out their partners or fellow shareholders from the management of the business.
The Common Issues In Business Litigation
Our experienced New York business litigation lawyers have extensive experience in representing business owners who have been cheated or swindled by their partner. If you feel you didn’t get your fair share of what you were entitled to call our business litigation attorneys. Some general information on the usual issues that our commercial litigation attorneys face as discussed below.
When Am I entitled to A Distribution If Corporate Assets Were Sold
The shareholders of a dissolved corporation are the equitable owners of all of the property of the former corporation and under B.C.L. 910(a)(1)(b), a shareholder is entitled to receive payment of the fair value of his shares where there is a sale or other disposition of all or substantially all of the assets of a corporation. Under B.C.L. 910(a)(1)(b), there is no minimum share requirement to maintain an action for an accounting and valuation. Further, New York has long recognized the right of a shareholder to bring a derivative action even in the absence of express authority.
Can I Sue Those Who Were In Charge of The Corporation
Personal liability is imposed upon corporate officers who commit or participate in the commission of a tort, such as breach of fiduciary duty or conversion of business assets. A Plaintiff in a breach of fiduciary duty or conversion case against a corporate officer does not need to pierce the corporate veil because a corporate officer can be held personally liable for his tortious conduct and a breach of fiduciary duty is a tort. A corporate officer who participates in the commission of a tort can be held personally liable, even if the participation is for the corporation’s benefit, and to do so, Plaintiff does not need to pierce the corporate veil.
What Is An Action For An Accounting
The remedy of an accounting gives the partner or shareholder the right to have their interest in the company and the amounts they are due determined by the Court. For partnerships, Partnership Law 44 gives a partner the right to a formal accounting if he or she is wrongfully excluded from the partnership, there is a breach of a fiduciary duty or whenever circumstances render it just and reasonable.
When Can A Corporation Be Dissolved
A corporation can be dissolved based upon the petition of a shareholder under Business Corporation Law § 1104-a, where those in control of the corporation have engaged in illegal, fraudulent or oppressive conduct toward their fellow shareholders, of the corporation’s assets are being looted, diverted for non-business purposes or wasted. Alternatively, a shareholder or shareholders who have at least half the voting interest can petition the Court for dissolution where there is deadlock among the shareholder under Business Corporation Law 1104.
Right To Payment
The Business Corporation Law §1005, provides that after a dissolution and the payment of corporate liabilities, the corporation’s assets are to be divided according to the shareholder’s ownership percentages. In the case of self dealing by a director, the shareholders may bring an action in the name of the corporation to recover any property or asset of the corporation which was diverted.
When A Partner Withdraws From a Limited Liability Company
If you withdrew from a limited liability company, and your former partners think the business is now theirs and they don’t have to pay you, they better think again. Our New York commercial litigation lawyers know that New York’s Limited Liability Company Law 509 requires that unless an operating agreement says otherwise, a member who withdraws is entitled to be receive within a reasonable time, the fair value of their membership interest of the company, as of the date of their withdrawal.
Partnerships What Are The Rights Of A Partner In A General Partnership
Under Partnership Law 40, each partner must be repaid their capital contributions first, including advances and loans to the company, then all partners are entitled to share equally in the profits/remaining assets of the company according to their ownership interest, after the liabilities are paid. Also in the case of a loss, all partners are liable to contribute for the losses of the company.
Dissolution Of A Limited Liability Company
Under Limited Liability Company Law § 702, a limited liability company can be dissolved whenever it is not reasonably practicable to carry on the business in conformity with the articles of organization or the operating agreement. It is more difficult to get a judicial dissolution of a limited liability company, than a partnership or even a corporation. Many Courts have found that mere discord among member isn’t enough, because the business can still function. But where one member is converting partnerships assets or engaging in misconduct, that can suffice. So the first step is to determine if any of the dissolution events in the operating agreement occurred. Unless stated in the operating agreement, deadlock or disagreements between the owners is usually not enough to dissolve a L.L.C.
If I Can’t Get A Limited Liability Company Dissolved, Am I Out of Luck?
No. An action for breach of contract, i.e., the operating agreement, as well as for breach of fiduciary duty and an accounting can still be brought, even if you cannot get a dissolution. The Limited Liability Law has several provisions that protect you. For example, Limited Liability Law § 503 mandates that profits and losses be allocated among the members and under § 507, a member is entitled to interim distributions of profits. Likewise, Limited Liability Law § 409 requires managers of an LLC, to perform their duties in good faith and ordinary care.
What Am I Entitled to If I Withdraw
Events of withdrawal are based upon those outlined in the operating agreement and usually include death, disability, and expulsion. If you are a withdrawing member of an LLC, then Limited Liability Law § 509, you are entitled to whatever the operating agreement provides, but if there is no operating agreement or the operating agreement does not address withdrawal rights, then under § 509, you are entitled to the fair value of your interest in the company, as of the date of the withdrawal.
The Surviving Spouse
When the owner of the business passes away, leaving behind a spouse, who had relied upon the income of a business, the surviving spouse has rights to an accounting. The action needs to be brought in the name of the spouse’s estate, so if you were the spouse and your husband or wife was a partner in a business, you should get an estate set up as soon as possible so that you can enforce your rights to the money that you are entitled to, and which your spouse would have wanted you to have.
A Deceased Partner’s Estate Has A Right To An Accounting
Under Partnership Law 43, when a partnership is liquidated because of the death of a partner, the surviving partner continues to have fiduciary duties to their deceased partner, and ultimately to the estate, which the surviving spouse usually controls. Under Partnership Law 43, every partner must account to the partnership for any profits derived by him from any transactions connected with the liquidation of the partnership and all partnership property. Under Partnership Law 44, the estate has a right to an accounting of the deceased partner’s interest in the partnership.
The Estate Of A Deceased Partner In A Limited Liability Company Has A Right To The Value Of Their Interest
Death is one of the major events that most operating agreements treat as a withdrawal. Under Limited Liability Law § 509, the estate of a deceased partner has the right to receive the fair value of the deceased partner’s share at the time of their death. The surviving husband or wife through the estate of their spouse has the right to enforce this right and to seek the fair value of their spouse’s interest in the business.
Spouse Of A Deceased Shareholder In A Corporation
The estate of a deceased shareholder, is by operation of law, the transferee of the deceased shareholder’s shares. The estate therefore, has the same rights to bring an action to protect the corporation’s assets and to vote for dissolution of the corporation, which includes the right to distribute the corporation’s assets.
What Does A Surviving Spouse Need To Do To Enforce These Rights
All of the rights of a deceased person, in New York belong to the Estate. This means that if the person who died left a will, the person that they named as an executor has to file an petition in the Surrogate’s court to be named executor and for letter of administration. If the person died without a will, a petition to be an estate representative has to be filed in the Surrogate Court. The spouse usually has priority. To file any action to recover the value of their spouse’s interest in a business, the surviving spouse first has to be named as the executor or estate representative by the Surrogate Court, and any lawsuit or petition has to be brought in the name of the Estate of the Deceased person. The funds recovered will be distributed as set forth in the deceased person’s will or if they left no will, in the order of the New York Intestacy statute, which provides for recovery by the surviving spouse and children.
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If You Are Due Money, We May Be Willing To Take Your Case On Contingency
