Ross v. Nelson

54 A.D.3d 258, 861 N.Y.S.2d 670

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: August 5, 2008
• Status: Published

Opinions

Order, Supreme Court, New York County (Helen E. Freedman, J.), entered October 17, 2006, which denied plaintiffs motion for summary judgment, granted defendants’ cross motion to dismiss the first, second, fifth, sixth, seventh, eighth, ninth, tenth and seventeenth causes of action, and declared that plaintiff was properly removed as a member-manager of the subject limited liability companies and not entitled to management fees, affirmed, without costs.

The operating agreement under which the parties worked was, by its terms, guided by the Limited Liability Company Law. Even though the agreement lacked a specific provision for removal of a member-manager, it clearly and unambiguously allowed for same by the language of article VI, which called for the dissolution of the limited liability company and its reorganization upon, among other events, the “expulsion” of a member-manager. Lacking a specific mechanism in the operating agreement for such expulsion, the parties relied on section 414 of the Limited Liability Company Law, which allows for removal of a manager by majority vote of the other members.

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Furthermore, the pertinent provisions of the operating agreement unambiguously evidenced an intent to pay management fees to the entity in the appointment of Vintage as the managing agent at the inception of the companies, as well as the payment of the fee to Vintage for approximately five years. This reflected the parties’ intention to pay the entire management fee to the managing agent (see Empire Mut. Ins. Co. v Applied Sys. Dev. Corp., 121 AD2d 956, 960 [1986]).

We have considered plaintiffs remaining contentions and find them unavailing. Concur—Tom, J.P., Gonzalez and Sweeny, JJ.

The dissent’s argument that article III controls would compel us to view that article in a vacuum, dismissing the significance, if not the actual presence, of article VI and thereby ignoring the need to read the agreement as a whole.