New York Court Dismisses Derivative Action Brought by Non-Member of LLC

New York Court Dismisses Derivative Action Brought by Non-Member of LLC

      A recent decision from New York reiterates the rule that only a member may bring a derivative action on the LLC’s behalf. Kaminski v. Sierra, 2029 NY Slip Op. 01067, 2019 WL 576474 (NY App. Div. 2nd Dept. Feb. 13, 2019).

      Kaminski, in 2009 or 2010, acquired an interest in Melange Med Spa, LLC from a former member. Kaminski was never admitted as a substitute member in the LLC. Still, in 2016 she commenced this derivative action against Sirera, a managing member of the LLC, and against the company’s attorneys, alleging a variety of claims including breach of fiduciary duty.

      After noting that a member of an LLC may bring a derivative action on its behalf, it was observed that here the plaintiff was not a member. No explanation was provided as to how Kaminski argued the suit should be permitted to proceed. Rather, the decision went right to the fatal fact, namely that a non-member does not have standing to bring a derivative action. Specifically, “[T]he plaintiff, as a nonmember purchaser who had not been admitted as a member of the LLC, lacks standing to pursue derivative causes of action on behalf of the LLC.” (Citations omitted).

      Not much more to say about that.