Crabapple Corp. v. Elberg, 4025N. 650492/15.
| Decision Date | 15 August 2017 |
| Docket Number | 4025N. 650492/15. |
| Citation | 60 N.Y.S.3d 124,153 A.D.3d 434 |
| Parties | CRABAPPLE CORP., et al., Plaintiffs–Respondents, v. Ruben ELBERG, Defendant–Appellant, Royal One Real Estate, LLC, et al., Defendants–Respondents. |
| Court | New York Supreme Court — Appellate Division |
Arnold & Porter, Kaye Scholer, LLP, New York (James M. Catterson of counsel), for appellant.
Warshaw Burstein LLP, New York (Grant R. Cornehls of counsel), for Crabapple Corp., Zhu Qing, Feng Li, Mengsha Chen, Ruizhen Wang, Hong Ge, Qin Si, Yang Zhang, Zhe Fang Hongxing Liu and Xu Ning, respondents.
Johnson Liebman, LLP, New York (Charles D. Liebman of counsel), for Royal One Real Estate, LLC, Royal LIC Real Estate Management LLC, Royal Real Estate Management LLC, Royal CP Hotel Holdings LP and Royal HI Hotel Holdings LP, respondents.
SWEENY, J.P., RENWICK, ANDRIAS, GESMER, JJ.
Order, Supreme Court, New York County (Charles E. Ramos, J.), entered January 21, 2016, which, to the extent appealled from as limited by the briefs, granted defendants-respondents' (the LLCs) motion to remove defendant Ruben Elberg (Elberg) as their co-manager and fiduciary, unanimously reversed, without costs, the motion denied, and the matter remanded to
Supreme Court for further proceedings in accordance with this decision.
Elberg asserts that he is the sole managing member of the LLCs. His sister, nonparty Tamara Pewzner (Pewzner), asserts that their father, Jacob Elberg (Jacob), deceased, was the sole owner of the LLCs and that she is the LLCs co-manager by virtue of her status as the co-executor, along with Elberg, of Jacob's estate. By virtue of that authority, Pewzner moved in the name of the LLCs to remove Ruben as a co-manager of the defendant entities, asserting, inter alia, that he had breached his fiduciary duties.
Contrary to his contention, Elberg was not removed as the sole "managing member" of the LLCs. The record demonstrates that he was a 40% minority member, not a managing member with the power to act unilaterally on the LLCs' behalf. The relevant agreements contained no provision regarding the succession of management of the LLCs in the event of the death of Jacob, the majority member. Thus, Jacob's controlling interest in the LLCs passed to his estate upon his death, and Elberg and Pewzner, the co-executors of the estate, had the authority to act as co-managers of the LLCs ( Limited Liability Company Law [LLC] § 608 ; see also Yew Prospect v. Szulman, 305 A.D.2d 588, 589, 759 N.Y.S.2d 357 [2d Dept.2003] ). LLC § 608 provides that the executor of a deceased member "may exercise all of the member's rights for the purpose of settling his or her estate" (emphasis added).
In view of the foregoing, Elberg's reliance...
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...member's executor "may exercise all of the member's rights for the purpose of settling his or her estate" (see Crabapple Corp. v. Elberg, 153 A.D.3d 434, 435, 60 N.Y.S.3d 124 ). Thus, contrary to the respondents’ contention, the petitioner, as executor of the decedent's estate, has the auth......
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...was a 40% minority member in two of the defendant LLCs, as this Court has already made that determination ( Crabapple Corp. v. Elberg, 153 A.D.3d 434, 60 N.Y.S.3d 124 [1st Dept. 2017] ).We have considered defendants’ remaining contentions and find them ...
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