In Matter of B* v **** Holdings LLC, the Appellate Division, First Department, affirmed a lower court order permitting DB, as executor of the estate of FB, to be substituted as petitioner in a proceeding seeking dissolution of the entity -- ****Holdings LLC -- and related damages.
The central issue was whether the proceeding could continue following the death of FB, who had initiated the action. The court held that substitution was proper under CPLR 1015(a), which mandates substitution when a party dies and the claim survives. CPLR 1021 further authorizes successors or representatives to make such a motion. DB, acting as executor and personal representative of the decedent’s estate, satisfied these requirements, allowing the litigation to proceed.
Respondents argued that only a member of a limited liability company may bring a dissolution action under Limited Liability Company Law § 702. The court dismissed this argument, clarifying that the statute permits actions brought “by or for a member.” Since the decedent was a member of **** Holdings, and the petition was filed on his behalf by the executor, the statutory requirement was met.
Another contention was that FB’s death terminated his membership in the LLC, thereby nullifying his right to seek dissolution. The court rejected that position, citing Limited Liability Company Law § 608, which allows a deceased member’s executor or legal representative to exercise the member’s rights for purposes of estate administration. The right to pursue dissolution, therefore, passed to the estate upon death. The court emphasized that the dissolution proceeding was necessary to settle the estate and distribute proceeds from the sale of the apartment owned by the LLC.
Ultimately, the AD1 found all remaining arguments by the respondents to be without merit and affirmed the lower court’s order with costs.
Looks like death didn't dissolve the drama here ...
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DECISION