Business Disputes.
New York Supreme Court.
Partnership and LLC disputes, shareholder and fiduciary duty claims, and commercial contracts. Where the cases belong, what the law requires, and how they actually move. More than 20 years of daily courtroom experience. The Lawyer’s Lawyer.
What a Business Dispute Actually Is
A business dispute is a cause of action, not a court. It is a civil claim that arises from a commercial relationship and belongs in New York Supreme Court because of the amount at stake or the nature of the remedy sought.
The most common categories I see:
- Partnership and LLC disputes. Partner deadlock, breach of the partnership or operating agreement, accountings, forced buyouts, dissolution under Partnership Law 63 or LLC Law 702. See Partnership and LLC Disputes.
- Shareholder disputes. Closely held corporation disputes, oppressed minority shareholder petitions under BCL 1104-a, derivative actions, books and records demands under BCL 624. See Shareholder Disputes and Business Divorce.
- Breach of fiduciary duty. Partners, officers, directors, and controlling shareholders owe duties of loyalty, care, and good faith. Breach produces compensatory damages and, in many cases, disgorgement of profit and equitable relief. See Breach of Fiduciary Duty.
- Commercial contract disputes. Breach of a commercial agreement between businesses or between a business and its counterparty. See Breach of Contract.
Each category has its own statutory framework, its own limitations period, and its own set of pleading requirements. A complaint that treats them interchangeably gets dismissed.
Business Disputes vs. the Commercial Division
A common confusion. The Commercial Division is a specialized part of New York Supreme Court. It is not a case type. A business dispute goes to the Commercial Division only if it meets both a subject matter test and a monetary threshold under Rule 202.70. Thresholds vary by county:
| County | Commercial Division Threshold |
|---|---|
| New York County | $500,000 |
| Nassau | $200,000 |
| Kings, Queens, Bronx, Richmond | $150,000 |
| Suffolk | $100,000 |
| Westchester | $100,000 |
A $50,000 partnership dispute in Kings County is a business dispute. It is not a Commercial Division case. It goes to a general IAS part, where the procedural rules are looser and the pace is slower.
A $600,000 shareholder dispute in Manhattan is both a business dispute and a Commercial Division case. There, you get Rule 202.70 pleading standards, the Commercial Division preliminary conference, and judges who read the papers before the argument.
For procedural detail on the Commercial Division as a court, see the Commercial Division Playbook. For the substance of the claims that get filed there, keep reading.
Partnership, LLC, and Closely Held Corporation Disputes
The owners of a business sue each other more often than outsiders sue them. The governing documents (partnership agreement, LLC operating agreement, shareholders agreement) are the starting point. What they say controls, subject to statutory floors that cannot be contracted around.
Partnership and LLC
Partnership Law governs general partnerships. Limited Liability Company Law governs LLCs. Both statutes are gap-fillers. When the agreement is silent, the statute supplies default rules on voting, distribution, indemnification, and dissolution.
Partnership Law 63 permits a partner to petition for judicial dissolution where another partner has been guilty of misconduct, where continuation is not reasonably practicable, or where the partner petitioning no longer has the right to continue. LLC Law 702 uses a similar standard: judicial dissolution where it is no longer reasonably practicable to carry on the business in conformity with the operating agreement.
Closely held corporations
BCL 1104-a is the center of gravity for minority shareholder disputes in New York. A shareholder owning at least 20 percent of the voting shares can petition for judicial dissolution on grounds of oppressive conduct, looting, waste, or diversion. Oppression is interpreted broadly to include conduct that substantially defeats the reasonable expectations the minority held on investment.
The remedy is usually not dissolution. It is an election under BCL 1118: the majority shareholders can elect to purchase the petitioner’s shares at fair value. Fair value is appraised by the court or a referee. The entire proceeding is designed to resolve business divorces without killing the business.
Full treatment in the dedicated spokes: Partnership and LLC Disputes and Shareholder Disputes and Business Divorce.
Breach of Fiduciary Duty
Partners owe fiduciary duties to each other. Officers and directors owe fiduciary duties to the corporation and its shareholders. Controlling shareholders owe limited duties to minority shareholders. Members of a manager-managed LLC who serve as managers owe duties to the LLC and the other members.
Breach of fiduciary duty is distinct from breach of contract. It reaches conduct that a contract does not prohibit but that violates the loyalty and care obligations imposed by equity. Self-dealing, usurping business opportunities, diverting assets, unfair self-compensation, and waste all state claims for breach of fiduciary duty.
Damages are compensatory. In some circumstances, disgorgement is available: the fiduciary must account for profits earned through the breach. Punitive damages are rare but possible where the conduct is willful and directed at the enterprise.
The statute of limitations is three years for monetary damages (CPLR 214(4)) and six years where the claim sounds in fraud (CPLR 213(8)). Equitable tolling can extend these periods where the fiduciary concealed the breach, which in many cases they have.
The Process in Every Business Dispute
1. Assessment and preservation
Before any filing, the documents get collected: operating or partnership agreements, shareholder agreements, emails, financial records, bank statements, tax filings. Many business disputes are won by the party that preserved and organized the paper trail and lost by the party that did not.
2. Demand or notice
Some disputes require pre-suit demand. Derivative actions under BCL 626 require demand on the board (or a particularized showing of futility). Books and records demands under BCL 624 or LLC Law 1102 must be written and state a proper purpose. Other disputes benefit from a demand letter that preserves settlement options and creates a record of the breach.
3. Filing and provisional remedies
Complaint filed in the Supreme Court of the county that has venue. Request for Judicial Intervention triggers assignment to a judge and, if the threshold is met and the case qualifies, assignment to the Commercial Division. Provisional remedies (preliminary injunction, temporary restraining order, attachment, receiver) are considered early where the case requires them.
4. Preliminary conference and discovery
Discovery deadlines, motion schedules, and case management orders are set at the preliminary conference. Discovery in a business dispute is document-heavy. Depositions are tactical. Expert discovery on valuation is common in dissolution proceedings. For a realistic sense of the cadence from filing through trial, see How long does commercial litigation take in New York.
5. Motion practice
Pre-answer motions to dismiss under CPLR 3211 test the sufficiency of the pleading. Summary judgment motions under CPLR 3212 follow the close of discovery. Partial summary judgment on liability is common where the governing agreement is unambiguous and the breach is documentary.
6. Resolution
Most business disputes resolve before final disposition. The settlement pressure points are different from a garden-variety commercial case: buyouts at fair value, exit and non-compete covenants, releases, and confidentiality provisions all become part of the resolution.
What I See in Practice
After more than 20 years of handling business disputes in New York Supreme Court across every borough plus Nassau, Suffolk, and Orange, a few patterns are consistent.
- The agreement you signed is the agreement you have. Partnership agreements, operating agreements, and shareholder agreements get drafted carelessly and then get ignored. When the relationship breaks down, the document controls. The time to negotiate favorable terms is at formation. The time to read the agreement carefully is before the dispute.
- Dissolution is not the goal. Leverage is the goal. Most BCL 1104-a and LLC Law 702 petitions do not end in dissolution. They end in an election to purchase, a negotiated buyout, or a restructured ownership arrangement. The petition is the mechanism to get the other side to a deal.
- Books and records demands are underused. A properly drafted BCL 624 demand forces access to corporate records that are otherwise impossible to obtain before suit. Many cases that look unwinnable at the pre-suit stage become clear after the records come in.
- Small business disputes get filed in the wrong court. Partnership and LLC disputes under $25,000 generally belong in Civil Court. Above $25,000, Supreme Court. Above the Commercial Division threshold for the county, the Commercial Division. Filing in the wrong court wastes money and slows the case down.
Talk to a Business Disputes Lawyer in New York
The Law Office of Frederic R. Abramson represents plaintiffs and defendants in business disputes in New York Supreme Court across the five boroughs, Nassau, Suffolk, and Orange counties. Case evaluation, demand letters, filings, provisional remedies, discovery, motion practice, valuation, and resolution.
Phone: 212-233-0666 | Email: fabramson@abramsonlegal.com
Related: Partnership and LLC Disputes · Shareholder Disputes · Breach of Fiduciary Duty · Breach of Contract · Commercial Division Playbook · Civil Litigation Overview
Attorney Advertising. Prior results do not guarantee a similar outcome. The information on this page is general and is not legal advice. Consult an attorney about the specific facts of your matter. Law Office of Frederic R. Abramson, 160 Broadway, Suite 500, New York, NY 10038. 212-233-0666.