Tzolis v. Wolff
Court of Appeals of New York
884 N.E.2d 1005 (2008)
Pennington Property Co., LLC (PPC) owned an apartment building in Manhattan. PPC’s managers (defendants) allegedly colluded with others to lease and later sell the building for less than fair market value. The plaintiffs collectively own a 25 percent share of PPC. They sued individually and on behalf of PPC seeking, among other things, to void the sale and terminate the lease. The trial court dismissed the complaint, ruling that the plaintiffs could not sue individually because the wrongs alleged were suffered by PPC; and that they could not sue on behalf of PPC because New York law does not permit LLC derivative actions. The appellate court reversed, finding that New York law does permit derivative actions by members on behalf of LLCs. The defendants appealed.
Rule of Law
Holding and Reasoning (Smith, J.)