February 11, 2019 News

Christopher Milito and Michael Mix Defeat Investor’s Claims against Madison Avenue Restauranteur

February 11, 2019 – Morrison Cohen obtained the complete dismissal of a complaint brought against a restauranteur accused of breaches of contract and fiduciary duty in connection with the operation of the now-closed Upper East Side bistro Le Chat Noir.

Plaintiff Bernard Spain – the hundred-millionaire behind the Dollar Express chain – invested in the company formed to operate Le Chat Noir.  Mr. Spain alleged that the restauranteur took too high a salary, expended money on entertainment and travel and failed to sufficiently keep company records.  Mr. Spain filed his claims in the Supreme Court for the State of New York, New York County.

Morrison Cohen moved to dismiss Mr. Spain’s claims because they were brought in his individual capacity, even though the wrongs alleged belonged to the operating company.  Under longstanding New York law, a member of an LLC cannot assert an individual cause of action for wrongs allegedly committed against the LLC itself, even if that member loses the value of his investment.   

The Court wholly-agreed with Morrison Cohen’s argument.  On February 7, 2019, Justice Melissa A. Crane ruled directly from the bench, dismissing the claims because it was improper for Mr. Spain to bring a direct claim against the restauranteur.

Christopher Milito and Michael Mix handled the defense of the case.