IN RE: CHEF TANG LLC (2024)

Order, Supreme Court, New York County (Lyle E. Frank, J.), entered March 6, 2024, which granted the petition for dissolution, awarded certain injunctive relief, and denied respondent's cross-motion to dismiss the petition, unanimously modified, on the law, to deny the petition, vacate the injunctive relief, and remand for a hearing on the purpose of the company and Chen Lieh Tang's (Chef Tang) performance or breach of his obligations under the operating agreement, and otherwise affirmed, without costs.

While special proceedings of this type should be resolved on the papers and admissions where possible, when there are disputed issues of fact, a hearing is necessary (see CPLR 409[b];  Widewaters Herkimer Co., LLC v. Aiello, 28 A.D.3d 1107, 1108, 817 N.Y.S.2d 790 [4th Dept. 2006]).  Here, there are issues of fact as to whether “the management of the entity is unable or unwilling to reasonably permit or promote the stated purpose of the entity to be realized or achieved,” warranting dissolution (see Doyle v. Icon, LLC, 103 A.D.3d 440, 440, 959 N.Y.S.2d 200 [1st Dept. 2013] [internal quotation marks omitted]).  The company's operating agreement is ambiguous as to whether the purpose of the company is to operate a noodle restaurant generally, or one branded and under the culinary supervision of Chef Tang, the principal of petitioner.  Further, there are disputed issues of fact as to whether Tang caused the alleged failure of the LLC by his own action or inaction (see Center for Specialty Care, Inc. v. CSC Acquisition I, LLC, 185 A.D.3d 34, 42, 127 N.Y.S.3d 6 [1st Dept. 2020]).

The financial issues raised by petitioner are insufficient as a matter of law to justify dissolution (see Doyle v. Icon, LLC, 103 A.D.3d at 440, 959 N.Y.S.2d 200).  While there is some dispute as to whether certain taxes or bills were paid, the restaurant has been in continuous operation, with a staff of 15, for over a year.  There is insufficient evidence, or even allegations, that the restaurant is financially infeasible.

It is unclear whether the injunctive relief issued by the court was meant to be a preliminary or permanent injunction.  If the former, it must be vacated because petitioner failed to show a likelihood of success on the merits, as opposed to issues of fact;  if the latter, it must be vacated since the matter is remanded for a hearing on the ultimate merits.