In a November 2, 2011, decision by Justice Fried, the court denied in part and granted in part plaintiffs’ motion for a preliminary injunction. Plaintiffs sought to enjoin dissolution of their ownership interest in an LLC formed with defendants, which was effected by an allegedly unauthorized sale of outstanding common units of the LLC. Plaintiffs also sought to enjoin the operation of the non-solicitation and non-competition provisions of the related operating agreement. The court denied plaintiffs’ motion as to the dissolution of their ownership interest, finding that the issuance of additional common and preferred units of the LLC did not require the consent of a supermajority of the members under the operating agreement and that, therefore, plaintiffs failed to establish a likelihood of success on the merits of their claim. The court, however, granted plaintiffs’ motion as to the non-solicitation and non-competition provisions in the operating agreement, finding no limitations with respect to temporal duration or geographical scope in the language of the provisions and that, therefore, plaintiffs would likely succeed on the merits of the non-enforceability of such provisions under Delaware law.
Crossroads ABL, LLC v Canaras Capital Mgt., LLC, Sup Ct, New York County, November 2, 2011, Fried, J., Index No. 651268/2011