Using this book as source/reference: West’s Business Law, Alternate Edition, Twelfth Edition, Clarkson, Miller Jentz & Cross
A limited liability company (LLC) sold a Manhattan apartment building that it owned. The owners of 25 percent of the membership interests in the LLC filed a lawsuit on behalf of the LLC—called a derivative suit—claiming that those in majority control of the LLC had sold the building for less than its market value and had personally profited from the deal. The trial court dismissed the suit, holding that the plaintiffs individually could not bring a derivative suit “to redress wrongs suffered by the corporation” because such actions were permitted only for corporations and could not be brought for an LLC. An intermediate appellate court reversed, holding that derivative suits on behalf of LLCs are permitted. That decision was appealed. A key problem for the court was that the state law governing LLCs did not address the issue. How should such matters logically be resolved? Are the minority owners in an LLC at the mercy of the decisions of the majority owners? [Tzolis v. Wolff, 10 N.Y.3d 100, 884 N.E.2d 1005 (2008)]