On March 1, 2022, Justice Emerson of the Suffolk County Commercial Division issued a decision in Fritch v. Bron, 2022 NY Slip Op. 50165(U), explaining that individuals may not operate their business and define their rights vis-a-vis each other as partners while concurrently holding the business out to the general public as a corporation, explaining:
The plaintiff seeks to compel arbitration of her claims against the Sajiun defendants, who are not signatories to EEC’s amended and restated operating agreement. Absent an express agreement to arbitrate, courts have recognized only limited theories upon which they are willing to enforce an arbitration agreement against a nonsignatory. These theories are limited to (1) incorporation by reference, (2) assumption, (3) agency, (4) veil-piercing/alter ego, and (5) estoppel. The plaintiff contends that the Sajiun defendants can be compelled to arbitrate under the agency, veil-piercing/alter ego, and estoppel theories.
. . .
The plaintiff’s contention that Igor Bron and Richard Sajiun are silent partners is unavailing. It is axiomatic that individuals may not, as a matter of law, operate as a business entity as a partnership for purposes of defining their rights vis-a-vis each other while concurrently holding the entity out to the general public as a corporation. As the New York Court of Appeals stated in Weisman v Awnair Corp. of Am. (3 NY2d 444, 449), [t]he two forms of business are mutually exclusive, each governed by a separate body of law. Thus, the plaintiff cannot claim that Igor Bron and Richard Sajiun entered into a partnership that was set up and run through the defendant Sajiun Electric, Inc. Although Weisman has been qualified so as not to preclude members of a preexisting partnership from acting as partners between themselves and as a corporation to the rest of the world, the record does not reflect a preexisting partnership that later spawned the creation of Sajiun Electric. The record reflects that Sajiun Electric was formed long before the alleged partnership between Igor Bron and Richard Sajiun was formed. Moreover, a mutually beneficial affiliation is insufficient to bind the Sajiun defendants, as non-signatories, on agency principles to the arbitration agreement signed by Mr. Bron.
(Internal quotations and citations omitted).