Industry: Real Estate
In a November 3, 2008 decision, Judge Ramos denied a motion for a preliminary injunction brought to enjoin the defendants from competing with the plaintiffs to acquire development rights on the grounds that the defendants breached fiduciary duties owed to the plaintiffs. The court first determined that either Delaware or New York law applied. Where a claim involves a breach of fiduciary duty, the state of formation governs. Even though the plaintiff 125 Urban was formed in Delaware, the defendants were not signatories to the articles of organization, but could be held to some duty.
The court denied the preliminary injunction finding that to the plaintiffs failed to establish a reasonable probability of success on the merits of the breach of the fiduciary duty claim because:
- No operating agreement was executed to establish the defendants were fiduciaries;
- That one of the defendants made a contribution to Plaintiffs for payment was inadequate to make it a member of Plaintiff 125 Urban;
- The potential distribution of profits on an equal basis did not create a partnership or joint venture; and
- Evidence showed that defendants did not engage in prohibited conduct because an exclusivity period expired prior to defendants’ actions.
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