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In the Matter of 1545 Ocean Ave., LLC

Supreme Court of New York, Appellate Division
893 N.Y.S.2d 590 (2010)


Facts

1545 Ocean Avenue, LLC (1545 LLC) was an LLC with two members, Crown Royal Ventures, LLC (Crown Royal) (plaintiff) and Ocean Suffolk Properties, LLC (Ocean Suffolk) (defendant). Crown Royal and Ocean Suffolk held an equal stake in 1545 LLC, which they formed for the purpose of rehabilitating one structure and building another. The entity was run by two managers, one from each member: Walter Van Houten was a member of Ocean Suffolk, and John King was a member of Crown Royal. Van Houten also owned and operated a construction company, Van Houten Construction (VHC). Disagreements soon arose. Though the two managers agreed to solicit third-party bids for construction work, VHC began performing work on the property. Ocean Suffolk claimed that King consented to VHC’s work, while King said Van Houten acted unilaterally. King claimed VHC overbilled for this and other work and that Van Houten refused to meet regularly with him. King conceded that VHC did good work. Nonetheless, due to the disagreements, King sought to have Ocean Suffolk buy out Crown Royal’s interest in 1545 LLC. When this was unsuccessful, Crown Royal petitioned the court for dissolution, citing deadlock. The LLC’s operating agreement did not specifically address dissolution, and also stated that any individual manager may unilaterally take any action not prohibited by the agreement, unless the agreement or the LLC law specifically requires the approval of more than one manager. VHC continued work on the project throughout the dispute. The trial court granted the petition for dissolution, and Ocean Suffolk appealed.

Rule of Law

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Issue

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Holding and Reasoning

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  • A “yes” or “no” answer to the question framed in the issue section;
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  • The procedural disposition (e.g. reversed and remanded, affirmed, etc.).

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Concurrence/Dissent (Fisher, P.J.)

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