Gibber v. Colton

Gibber v Colton (2016 NY Slip Op 05227)

Gibber v Colton

2016 NY Slip Op 05227

Decided on June 30, 2016

Appellate Division, First Department

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on June 30, 2016
Acosta, J.P., Renwick, Saxe, Richter, Gische, JJ.

159326/12 -1500N 1499 1498

[*1] Deborah Gibber, etc., Plaintiff-Respondent,

v

Naomi Colton, et al., Defendants-Appellants.

Farrell Fritz, P.C., New York (Peter A. Mahler of counsel), for appellants.

Arent Fox LLP, New York (Bernice K. Leber and Mark A. Bloom of Counsel), for respondent.

Order, Supreme Court, New York County (O. Peter Sherwood, J.), entered January 31, 2014, which denied defendants' motion for summary judgment dismissing the cause of action for a declaration that plaintiff has been and continues to be a co-managing member of Charles K. Goldner, LLC, and order, same court and Justice, entered on or about June 4, 2015, which granted plaintiff's motion for partial summary judgment on that cause of action and declared that plaintiff remains a co-managing member of the company, unanimously affirmed, without costs. Order, same court and Justice, entered October 28, 2015, to the extent it ruled that the children of defendant Naomi Colton do not have voting rights under the company's operating agreement, unanimously affirmed, without costs.

Section 7.7 of the company's operating agreement provides that in a case of fraud, misfeasance or breach of the managing member's standard of care, "the Managing Member may be removed by a vote of all of the Members." Since plaintiff, who holds a 50% member interest in the company, was not included in the March 2012 vote to remove her as co-managing member, her removal did not comply with this section (see Overhoff v Scarp, Inc., 12 Misc 3d 350, 362 [Sup Ct, Erie County 2005]; see generally Lehey v Goldburt, 90 AD3d 410 [1st Dept 2011]). As the operating agreement is not silent on voting issues, Limited Liability Company Law § 402(f) does not avail defendants.

The motion court properly determined the issue of the Colton children's voting rights under the operating agreement. The record establishes that the issue had been raised by plaintiff in her motion for partial summary judgment and during an in-court proceeding on her subsequent order to show cause, and had been addressed by the court during various conferences with the parties.

We have considered defendants' remaining contentions and find them unavailing.

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: JUNE 30, 2016

CLERK