Pokoik v. Pokoik

1 Analyses of this case by attorneys

  1. Do Non-Manager, Minority LLC Owners Owe Fiduciary Duties?

    Farrell Fritz, P.C.Franklin McRobertsJanuary 30, 2023

    . MacArthur would be involved in [Company] employment decisions, including the hiring of [the Company]’s accountant in or around 2016. He was also involved in other hiring, promotion, merchandising, event planning, and marketing decisions.”MacArthur moved to dismiss the Amended Complaint, arguing that Doeblin’s allegations were insufficient to allege the existence of any fiduciary duty. You can read the parties’ briefs here, here, and here.The Issue PresentedJustice Masley framed the legal question as follows:While managing members of an LLC owe non-managing members a fiduciary duty, it is not entirely clear, in this jurisdiction, whether a non-managing member, like MacArthur, owes a fiduciary duty to Doeblin, the managing member, and to [the Company] where it is alleged that MacArthur acted in a ‘managerial capacity.’” (citation omitted).The Leading Case LawThe Court noted that while Doeblin cited to cases like Jones v Voskresenskaya(125 AD3d 532 [1st Dept 2015]), and Pokoik v Pokoik (115 AD3d 428 [1st Dept 2014]), for the general “proposition that members of an LLC may owe a fiduciary duty to the LLC and to other members,” Doeblin lacked any case law support for the specific proposition that non-managing members owe fiduciary duties.“On the other hand,” wrote Justice Masley, “MacArthur cites toLandes v Provident Realty Partners II, L.P. (2017 NY Slip Op 30196(U) [Sup Ct, NY County 2017), andKalikow v Shalik(43 Misc 3d 817 [Sup Ct, Nassau County 2014]), for the proposition that a non-managing member owes no fiduciary duty to the LLC or the managing member unless the non-managing member participates in the management of the LLC.”Elaborating, Justice Masley wrote, “Subsequent cases that have applied the rule inJonesshed light to the matter.” The Court relied upon two lower court decisions, Verkhoglyad v Benimovich (57 Misc 3d 1201(A) [Sup Ct, Kings County 2017]), and Cortazar v Cortazar (64 Misc 1204(A) [Sup Ct, Queens County 2019]).In Verkhoglyad, Justice Masley wrote, the parties “were both man