| Fuiaxis v 111 Huron St., LLC |
| 2009 NY Slip Op 00501 [58 AD3d 798] |
| January 27, 2009 |
| Appellate Division, Second Department |
| George Fuiaxis, Appellant, v 111 Huron Street, LLC, etal., Respondents. |
—[*1] Kreinik Associates, LLC, New York, N.Y. (Daniel Heyman of counsel), forrespondents.
In an action, inter alia, to dissolve a limited liability company pursuant to Limited LiabilityCompany Law § 606, the plaintiff appeals from an order of the Supreme Court, QueensCounty (Hart, J.), dated November 26, 2007, which denied his motion for a preliminaryinjunction prohibiting the defendants from enforcing against him a contractual provisiondemanding a contribution in the sum of $10,000 to the defendant 111 Huron Street, LLC, datedJuly 12, 2007, and from commencing any action or proceeding with respect to enforcement ofsaid demand.
Ordered that the order is affirmed, with costs.
The plaintiff is a member owning a one-quarter interest in the defendant 111 Huron Street,LLC (hereinafter the LLC). After serving a notice of his election to withdraw from the LLC, theplaintiff commenced the instant action against the LLC and the three other LLC members, eachof whom also own a one-quarter interest in the LLC, for, inter alia, a judicial dissolution of theLLC and a determination of his interest therein. By letter and LLC resolution dated July 12,2007, which was approved by the three individual defendants, who collectively hold a 75%interest in the LLC, the LLC demanded from the plaintiff a $10,000 cash contribution, to be usedas an advance to the LLC for the cost of "substantial legal services incurred" in defendingagainst the instant litigation and for paying "substantial fines" imposed by the City of New York"for boiler related violations" (hereinafter the demand). The demand explained that it was beingmade pursuant to paragraph 17 of the LLC's operating agreement, which provides: "From time totime, Members will be required to make cash contributions to the Company for purposes asdetermined by the [Managing] Committee. Should a Member fail to make [*2]the called for contribution within ten (10) days of the date set forthe contribution by the Committee, any other Member may purchase the Percentage Ownershipof the defaulting Member at a sum equal to six (6) time[s] the annual current legal gross rent rolldivided by four (4) minus one quarter (1/4) of the outstanding debt of the Company." Theplaintiff moved for a preliminary injunction prohibiting the defendants from, inter alia, enforcingthe demand. The Supreme Court denied the motion on the ground that Limited LiabilityCompany Law § 420 authorized the demand. We affirm, but on a different ground.
Here, the three individual defendants, who comprise three of the four members of the LLC'smanaging committee, approved the demand that each LLC member contribute $10,000 becauseof legal expenses incurred in defending the instant litigation and substantial fines imposed by theCity of New York for boiler-related violations. As such, the demand was proper pursuant toparagraph 17 of the LLC's operating agreement. In turn, paragraph 17 is consistent with theLimited Liability Company Law, which does not preclude a limited liability company from usingits funds to defend itself in a judicial dissolution action (see Limited Liability CompanyLaw § 502 [a], [c]).
On this record, it is not clear whether Limited Liability Company Law § 420, whichconcerns indemnification, applies to the case at bar. In any event, even if it is applicable, itwould not bar the subject demand (seeVan Der Lande v Stout, 13 AD3d 261 [2004]).
To the extent that the defendants raise arguments in support of their cross motion to dismissthe complaint and in opposition to the plaintiff's motion for a preliminary injunction barringthem from, inter alia, expending LLC funds beyond those necessary in the ordinary course ofbusiness to operate the LLC, those arguments are not properly before us since the motion and thecross motion remain pending and undecided (see Katz v Katz, 68 AD2d 536, 542-543[1979]).
The plaintiff's remaining contention is without merit. Prudenti, P.J., Spolzino, McCarthy andLeventhal, JJ., concur. [See 2007 NY Slip Op 33318(U).]