Expert Commentaries
9/11/2008 4:48:17 PM EST
Derivative Suits by LLC Members in New York: Tzolis v. Wolff
Partner, Chitwood Harley Harnes LLP, Atlanta, GA
On February 14, 2008, the New York Court of Appeals held that members of limited liability companies ("LLC") may bring derivative suits on behalf of their LLCs, just as shareholders and partners may bring such suits on behalf of their corporations and limited partnerships respectively. The majority's decision is controversial because New York's limited liability statute does not specifically authorize derivative suits by LLC members. Indeed, the New York State legislature removed a provision from the LLC bill prior to enactment that would have expressly provided for derivative suits. The dissent described the decision as "unique in the annals of the Court of Appeals" because, they allege, "never before has a majority of the Court read into a statute provisions or policy choices that the enacting Legislature unquestionably considered and rejected."
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