Court issues Temporary Restraining Orders for both Plaintiff and Defendant in Corporate Dissolution Proceeding

By Lewis Tesser, Partner, and Timothy Nolen, Associate, of Tesser, Ryan & Rochman, LLP

A recent decision from the Suffolk County Supreme Court demonstrates how conflicts between partners or shareholders can jeopardize the business and risk corporate dissolution. The case involved issues of corporate law, business law, equity and civil practice.

The case, Scomello v. Pascarella, 2011 N.Y. Misc. LEXIS 5232 (Sup. Ct. Suffolk County November 2, 2011), involved two members of a closely-held corporation who accused each another of improperly transferring funds and mismanaging the corporation. The Court initially issued a Temporary Restraining Order preventing only the defendant from transferring the corporation’s funds. When the defendant sought dissolution of the corporation, the Court issued an injunction preventing both parties from transferring funds until a receiver was appointed and the Court had an opportunity to examine the corporation’s Operating Agreement.

Disputes between corporate officers requiring court intervention can greatly increase the cost of doing business and may require dissolution. At Tesser, Ryan & Rochman, LLP, our attorneys are experienced in handling disputes between corporate officers, directors or shareholders. We can work with clients in an effort to avoid the cost and delay of litigation.