Goldstein v. Pikus

Jeffrey Pikus (defendant) formed Ten Sheridan Associates, LLC to purchase, own, and operate an apartment building. Pikus needed help financing the purchase of the building, so he enlisted the help of Stuart Goldstein (plaintiff). Goldstein joined Ten Sheridan Associates as a member and manager. Pikus and Goldstein executed an operating agreement for the company. The operating agreement provided that Goldstein’s management company, SDG Management Corporation, would manage the property and that Pikus would receive a supervisor fee of 37.5 percent of the management fee paid to Goldstein’s company. The operating agreement also provided that Pikus and Goldstein would have equal voting rights. It further provided that a partial or full liquidation or dissolution of the company required unanimous consent of both Pikus and Goldstein. After nearly two decades of operations, disputes began to arise between Pikus and Goldstein. The central conflict was a disagreement over Pikus’s desire to sell or refinance the property. Goldstein alleged that Pikus was engaging in misconduct—e.g., delaying renovations of units—in order to force a premature sale or refinancing of the property. As a result, Goldstein froze Pikus out of management and stopped paying him his supervisor fee. Pikus claimed that he had a right to manage the property because he and Goldstein had orally modified the operating agreement to indicate that Pikus would actively supervise the management of the property. Goldstein filed a claim against Pikus, seeking declaratory relief regarding the operating agreement and a permanent injunction enjoining Pikus from participating in management of the property. Pikus filed 13 counterclaims. The parties were heard before the New York Supreme Court.