The Business Divorce Law Report
A claim that one of the members has misappropriated assets of a limited liability company and ousted the other member from management is a “quintessential breach” of the fiduciary duties that may exist in a closely held business. It is not, however, grounds for the appointment of a receiver.
This decision of the New Supreme Court in Chen v. Dai, Index Co. 653601/2015 (New York County January 18, 2017) holds that the fact that a claim arises from the existence of a contract – in this case an operating agreement – it may also involve duties independent of the contract. The court finds in a decision on a motion dismiss that pleading that the plaintiff was a co-member of two New York limited liability companies is sufficient to state a cause of action.