VI. Corporate and Partnership

CORPORATE AND PARTNERSHIP CAUSES OF ACTION

Types for Causes of Action:

  1. Association and Membership Liability
  2. Association Membership Wrongfully Interfered with
  3. Avoiding the Corporate Liability Shield or Piercing the Corporate Veil
  4. Business Judgment Rule
  5. Business Partner Breaching Fiduciary Duty to Co-Partner
  6. Corporate Officer Participating in Tort
  7. Cost of Defending Against Derivative Suit
  8. Director’s Liability to Shareholders
  9. Improperly Buying Securities During Corporate Takeover
  10. Member Liability in Joint Enterprise
  11. Minority Shareholder Freeze-out
  12. Partner Breaching Duty to Co-Partner
  13. Partnership Liability for Debts
  14. Partnership Liability  for Injury
  15. Principal/Promoter Liability for Post-Incorporation Debt
  16. Principal’s/Promoter’s Bad Faith Liability for Real Estate Broker’s Commission
  17. Redeeming Shares in Company Merger or Sale
  18. Sales Commission Due from Principal
  19. Successor Liable for Predecessor
  20. Usurpation of Corporate Opportunity
Corporate & Partnership causes of action law in new york
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I. ASSOCIATION AND MEMBERSHIP LIABILITY

Elements to prove:

  1. an unincorporated association;
  2. may be held liable;
  3. only where the action could be maintained against all members individually.
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II. ASSOCIATION MEMBERSHIP WRONGFULLY INTERFERED WITH

Elements to prove:

  1. a voluntary association may restrict membership;
  2. in any way it chooses; except
  3. it cannot restrict membership based on race, gender, or ethnicity.

III. AVOIDING THE CORPORATE LIABILITY SHIELD OR PIERCING THE CORPORATE VEIL

Elements to prove:

  1. the corporate owners;
  2. exercised complete domination and control of the corporation;
  3. in respect of the transaction attacked;
  4. such domination and control was used;
  5. to commit a fraud or wrong;
  6. against the plaintiff; and
  7. it resulted in the plaintiff’s injury.

IV. BUSINESS JUDGMENT RULE

It prohibits judicial inquiry into the actions of corporate directors where, to prove:

  1. the directors have not breached their fiduciary duties;
  2. they acted in good faith; and
  3. their actions were in furtherance of lawful and legitimate corporate purposes.

V. BUSINESS PARTNER BREACHING FIDUCIARY DUTY TO CO-PARTNER

It prohibits judicial inquiry into the actions of corporate directors where, to prove:

  1. the co-partner has obtained an opportunity to make personal profits or advantageous arrangements;
  2. because of his position as co-partner; and
  3. did not pass on these advantages to the partnership.

VI. CORPORATE OFFICER PARTICIPATING IN TORT

The elements to prove for a corporation to be liable:

  1. for the torts and wrongful acts or omissions;
  2. of its officers;
  3. when those officers are acting within the scope of their authority as officers.

VII. COST OF DEFENDING AGAINST DERIVATIVE SUIT

Requires a corporation to indemnify upon a claim if it can prove:

  1. any person;
  2. made, or threatened to be made;
  3. a party to an action or proceeding;
  4. whether civil or criminal;
  5. including an action by or in the right of any other corporation of any type or kind;
  6. that any director or officer of the corporation;
  7. served in any capacity;
  8. at the request of the corporation;
  9. by reason of the fact that he was a director or officer of the corporation;
  10. against judgments, fines, amounts paid in settlement;
  11. reasonable expenses, including attorney’s fees; and
  12. if such director or officer acted in good faith.

VIII. DIRECTOR’S LIABILITY TO SHAREHOLDERS

The elements to prove:

  1. directors of a corporation;
  2. have an obligation;
  3. to all shareholders;
  4. to adhere to fiduciary standards of conduct;
  5. to exercise their responsibilities in good faith;
  6. when undertaking any corporate action.

IX. IMPROPERLY BUYING SECURITIES DURING CORPORATE TAKEOVER

The elements to prove:

  1. any person who is in possession of material information;
  2. relating to any takeover bid;
  3. that information he or she knows or has reason to know is nonpublic;
  4. that was acquired either before or after the commencement of the takeover bid;
  5. that he or she knows or has reason to know was acquired directly or indirectly from:
    1. an offeror;
    2. a target company; or
    3. any officer, director, partner or employee or any other person acting on behalf of the offeror or target company;
  6. to purchase or sell or cause to be purchased or sold;
  7. within or from the state; and
  8. any securities sought or to be sought by such takeover bid or any securities convertible into or exchangeable for any such securities or any option or right to obtain or to dispose of any such securities.

X. MEMBER LIABILITY IN JOINT ENTERPRISE

The elements to prove:

  1. a joint venturer;
  2. for the actions of the joint enterprise;
  3. only when the joint property is inadequate to pay the debt; or
  4. where there is no effective remedy without a resort to individual member property.

XI. MINORITY SHAREHOLDER FREEZE-OUT

The elements to prove in petition for dissolution:

  1. a minority shareholder;
  2. who owns at least 20 percent of all shares of a corporation;
  3. where directors, or those in control, of the corporation;
  4. have oppressed the plaintiff as a complaining shareholder.

XII. PARTNER BREACHING DUTY TO CO-PARTNER

Partners owe one another a fiduciary duty. The statute governing the rights and duties of partners is a default provision only applicable absent such an agreement.

XIII. PARTNERSHIP LIABILITY FOR INJURY

The elements to prove:

  1. all partners;
  2. who are jointly liable;
  3. for all debts; and
  4. obligations of the partnership.

XIV. PARTNERSHIP LIABILITY FOR DEBTS

The elements to prove:

  1. where any wrongful act or omission;
  2. of any partner;
  3. acting in the ordinary course of the business of the partnership or with the authority of his copartners;
  4. caused loss or injury;
  5. to any person, not being a partner in the partnership, or any penalty is incurred; and
  6. to the same extent as the partner so acting or omitting to act.

XV. PRINCIPAL/PROMOTER LIABILITY FOR POST-INCORPORATION DEBT

The elements to prove:

  1. a promoter;
  2. who executes a contract;
  3. on behalf of an entity;
  4. before an entity is incorporated;
  5. unless the parties agree otherwise; or
  6. the corporation assumes the contract

XVI. PRINCIPAL’S/PROMOTER’S BAD FAITH LIABILITY FOR REAL ESTATE BROKER’S COMMISSION

The elements to prove:

  1. for misrepresentations;
  2. that were reasonably relied upon; and
  3. caused damage.

XVII. REDEEMING SHARES IN COMPANY MERGER OR SALE

The elements to prove:

  1. a shareholder;
  2. that is entitled to vote;
  3. has the right to receive payment;
  4. of the fair value of his or her shares; and
  5. he or she did not assent to any plan of merger or consolidation where the corporation is a party.

XVIII. SALES COMMISSION DUE FROM PRINCIPAL

The elements to prove:

  1. a salesperson;
  2. who earns commission on sales;
  3. is entitled to that commission;
  4. from the principal;
  5. even if the salesperson no long is employed by the principal; and
  6. pursuant to the terms of the contracting agreement.

XIX. SUCCESSOR CORPORATION LIABLE FOR PREDECESSOR

The elements to prove:

  1. a company that purchases or otherwise acquires;
  2. the assets of another company;
  3. is not liable for the debts and liabilities of the transferee unless:
  1. the purchasing corporation expressly or impliedly agrees to assume the seller’s liabilities;
  2. the transaction amounts to a consolidation or merger;
  3. the purchaser is merely a continuation of the seller; or
  4. the transaction is entered into fraudulently to escape liability for obligations.

XX. USURPATION OF CORPORATE OPPORTUNITY

The elements to prove for an action against its officers and directors for usurpation of corporate opportunity:

  1. a business opportunity existed where the corporation had;
    1. a tangible expectancy to the opportunity in that it was within the corporation’s operations, not necessarily ownership but more than a hope or desire; or
    2. the opportunity was essential for the corporation’s business or one of its lines;
  2. to benefit the corporation; and
  3. was taken by one or more of the corporation’s officers or directors.

the above is an abstract from the Encyclopedia of New York Causes of Action by Ernest Edward Badway, 2018 edition.

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