Court Opinion

ID: 5758373
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:10:16.856287+00
Date Added: 2024-06-11T08:41:28.779480
License: Public Domain

Andrias and Nardelli, JJ.,
dissent in part in a memorandum by Andrias, J., as follows: I agree that pursuant to the unambiguous terms of the operating agreement, and in light of the conduct of the member-managers since the inception of the companies, the member managers intended to pay the entire management fee to Vintage, the duly appointed managing agent. However, I would modify the order appealed from to the extent of granting plaintiff partial summary judgment declaring that he is and remains a member manager of 442-44 Third Ave. Realty, LLC and Chelsea Village Realty LLC, and denying defendants’ motion to the extent it seeks dismissal of plaintiffs second cause of action for breach of the operating agreements.
Limited Liability Company Law § 414 provides for the removal or replacement of any or all managers with or without cause by a vote of a majority in interest of the members entitled to vote thereon, “[e]xcept as provided in the operating agreement.” Although the operating agreements in issue do not have a specific expulsion provision, article III (members/managers) of both agreements sets forth the companies’ ownership and management structure and provides, in paragraph 7, that “Eric Nelson, Gary Fodell and Dean Ross have been elected member managers and shall continue to serve as member managers in *260accordance with the provisions of this Agreement. In case of any vote for the election of managers all members agree to vote for Eric Nelson, Gary Podell and Dean Ross only.” There is no claim of fraud or mistake in the wording or adoption of the operating agreements, and “[a]bsent some indicia of fraud or other circumstances warranting equitable intervention, it is the duty of a court to enforce rather than reform the bargain struck” (Grace v Nappa, 46 NY2d 560, 565 [1979]). Thus, regardless of the provision in paragraph 1 of article VI (dissolution) that the companies would be dissolved upon, inter alia, the “bankruptcy, death, expulsion, incapacity or withdrawal of any manager,” since the members were obliged to vote for the three named persons in “any” election of managers, their vote to expel plaintiff from both companies and replace him with his brother was contrary to the plain and unambiguous language of the agreements. Therefore, plaintiff is entitled to a declaration that his removal from office was invalid, and to reinstatement of his second cause of action for breach of the operating agreements.