On April 28, 2022, Justice Livote of the Queens County Commercial Division issued a decision in Matter of Mattone v. Mattone, 2022 NY Slip Op. 31253(U), refusing to dissolve an LLC when the basis for the petition was the manner in which the LLC was operated, not its viability, explaining:
In seeking a judicial dissolution of a limited liability corporation (LLC), LLCL S 702 provides that the petitioner must demonstrate that it is no longer reasonably practicable to carry on the business in conformity with the articles or organization or operating agreement.
Based upon all the submissions to this court, it is clear that the underlying allegations concerning an alleged delinquent mortgage loan on the corporation’s asset as threatening the practicable viability of the corporation, has been rendered moot due to the refinancing of said loan. It is noted that the parties were before this Court on a motion for a preliminary injunction brought by the within petitioner regarding whether the excess proceeds of the loan should be withheld or paid to the shareholders proportionately. In addition, it appears that any prior mortgage guarantee executed by the petitioner is no longer in effect. The allegations in the petition as to the inability of the corporation to be a going concern and that it is on the brink
of financial ruin, are not factually correct.The petitioner’s complaints regarding methods of management are insufficient to demonstrate grounds for dissolution. The grounds for dissolution pursuant to LLCL S 702 are far more restrictive than exist in the BCL, which does not apply herein. The operating agreement provides that nonparty JMM SPE Corp., (SPE) is the duly appointed general manager of the LLC. The operating agreement at S 5.1.2 states in its pertinent part that,
The General Manager [SPE] shall have full, exclusive, and complete discretion, power and authority, subject in all cases to the
other provisions of this Agreement and the requirements of applicable law, to manage, control, administer and operate the
business and affairs of the Company for the purposes herein stated, and to make all decisions affecting such business and affairs, including, without limitation, for Company purposes.Accordingly, SPE, as the duly appointed general manager of the LLC, conducts its affairs as general manager, as it sees fit. How SPE does so, in this case by allegedly engaging the assistance of other members, but not including CM, is perhaps a vexing and distasteful issue for CM to be sure, however, it does not rise to the level as a ground for dissolution of this limited liability corporation.
(Internal quotations and citations omitted) (emphasis added).