The New York Court of Appeals’ 2012 opinion in Pappas v Tzolis, decided in the wake and spirit of that court’s rulings the year before in the Centro Empresarial v America Movil and Arfa.
Now there’s a fourth,
Bak v Rostek, 2020 NY Slip Op 33142(U) [Sup Ct Kings County Sept. 25, 2020], in which a 47.5% member of a single-asset realty-holding LLC sold his membership interest to the other 52.5% member for around $900,000 based on a $1.9 million valuation assigned by the buying member. One month later, the buying member sold the LLC’s property to a third-party buyer for $2.9 million. After learning of the sale, the 47.5% member sued the other member for damages equal to the delta between what he received in the buyout and 47.5% of the net proceeds from the $2.9 million sale, arguing primarily that the defendant breached fiduciary duty by failing to disclose third-party offers that were tendered shortly before the buyout.