JG Club Holdings, LLC v Jacaranda Holdings, LLC
Decided on April 20, 2012
Supreme Court, New York County
JG Club Holdings, LLC, as assignee of TDK HOLDINGS, LLC, Individually and derivatively on behalf of JACARANDA CLUB, LLC, Plaintiffs,
Jacaranda Holdings, LLC, DAVID M. TALLA a/k/a MICHAEL TALLA and CLUB AT 60th ST, INC., Defendants.
Appearances of Counsel:
Henry E. Rakowski
2631 Merrick Road
Bellmore, New York 11710
Jeffrey A. Kimmel
Howard S. Koh
Meister Seelig & Fein
140 East 45th Street
New York, NY 10017
Proposed Intervenor Plaintiffs:
Lloyd M. Eisenberg
Eisenberg & Carton
535 Broadhallow Road
Melville, New York 11747
Shirley Werner Kornreich, J.
GRKS II, LLC and DZ Ventures, LLC (collectively, Proposed Intervenors), move: 1) to intervene as plaintiffs to assert a claim for dissolution of derivative plaintiff Jacaranda Club, LLC (the Club), a New York limited liability company; and 2) to appoint a temporary receiver for the Club. Defendants Jacaranda Holdings, LLC (Holdings), David M. Talla and Club at 60th St., [*2]Inc. (collectively Defendants), oppose intervention.[FN1]
The Club is owned 48.9% by plaintiff JG Club Holdings, LLC (JG).[FN2] The Proposed Intervenors together own approximately 6.9% of JG, a New York limited liability company. The other 51.1% of the Club is owned by Holdings. Pursuant to the Club's operating agreement, Holdings is the Club's managing member. The Club's business is the operation of "Sapphire," described by the parties as a "gentlemen's nightclub," with a bar and restaurant.
The proposed intervenor complaint contains a single claim, pursuant to Limited Liability Company Law (LLCL) 702, to dissolve the Club, an entity in which the Proposed Intervenors are not members. The Proposed Intervenors say that they want to intervene because they do not agree with the relief being sought by JG in this lawsuit.
The motion to intervene is denied for lack of standing to assert a claim for dissolution of the Club. The Club's operating agreement is silent on the issue of dissolution. In the absence of a provision in the operating agreement, the default requirements of the LLCL apply. Matter of the Dissolution of 1545 Ocean Avenue LLC, 72 AD3d 121, 128-129 (2d Dept 2010).
Section 702 of the LLCL provides that a court may grant dissolution upon "application by or for a member...." The parties have pointed to no precedent, and the court's independent research has discovered none, extending the right to seek dissolution of a limited liability company to non-members. All of the New York precedents confer or deny standing based upon membership. See, e.g., Matter of Cline v Donovan, 72 AD3d 471, 472-472 (1st Dept 2010)(dissolution should not have been granted due to question of fact as to whether petitioner was member of LLC); Caplash v Rochester Oral & Maxillofacial Surgery Assoc., LLC, 63 AD3d 1683 (4th Dept 2009)(plaintiff had standing to dissolve LLC because his resignation as member was not effective before he moved for dissolution).
Furthermore, after this motion was submitted, JG filed a second amended complaint asserting a claim for dissolution of the Club.[FN3] If the Proposed Intervenors feel that JG is being managed improperly, they can bring a derivative action against its management. Tzolis v Wolff, 10 NY3d 100 (2008). Thus, the motion to intervene and to appoint a temporary receiver for the Club is denied. Accordingly, it is
ORDERED that the motion by GRKS II, LLC and DZ Ventures, LLC to intervene to assert a claim for dissolution of Jacaranda Club, LLC, and to appoint a temporary receiver of Jacaranda Club, LLC, is denied; and it is further
ORDERED that the cross-motion by Defendants to depose Jack Constantine and Francis Moezinia was granted by decision on the record of January 31, 2012.
Dated: April 20, 2012ENTER:
Footnote 1:Defendants' cross-motion to depose Jack Constantine and Francis Moezinia, principals of the Proposed Intervenors, was granted upon oral argument of the motion. Tr. 1/31/12, p. 23.
Footnote 2:JG acquired its interest through an assignment from TDK Holdings, LLC.
Footnote 3:Permission to amend was granted by compliance conference order, dated January 31, 2012.