GURNEY GOLDMAN v. SOL GOLDMAN INVESTMENTS LLC (2025)

Order, Supreme Court, New York County (Melissa A. Crane, J.), entered August 13, 2024, which granted defendant Sol Goldman Investments, LLC's (defendant LLC) motion to dismiss plaintiffs’ first, fourth, and fifth causes of action against it for breach of contract, inspection of books and records, and for an accounting, unanimously modified, on the law, to deny the motion as to that part of the claim for inspection of books and records as provided for under Limited Liability Company Law § 1102, and the claim for an accounting, and otherwise affirmed, without costs.

Contrary to defendant LLC's assertion, the fact that plaintiffs filed a second amended complaint does not render this appeal moot.  Plaintiffs’ appeal concerns claims against defendant LLC that have now been completely dismissed from the action (see Velez v. Feinstein, 87 A.D.2d 309, 313, 451 N.Y.S.2d 110 [1st Dept. 1982], lv dismissed in part and denied in part 57 N.Y.2d 737, 454 N.Y.S.2d 987, 440 N.E.2d 1334 [1982]).

Plaintiffs’ first cause of action for breach of contract against defendant LLC was properly dismissed.  Defendant LLC is not bound by its operating agreement, as it is a manager-managed LLC, and it was not a signatory to that agreement (see Matter of Wythe Berry LLC v. Goldman, 230 A.D.3d 1081, 1082–1083, 220 N.Y.S.3d 7 [1st Dept. 2024]).  Plaintiffs’ claim for breach of the implied covenant of good faith and fair dealing fails for the same reason (see Randall's Island Aquatic Leisure, LLC v. City of New York, 92 A.D.3d 463, 463–464, 938 N.Y.S.2d 62 [1st Dept. 2012] [recognizing that an implied covenant of good faith and fair dealing claim could not be sustained against a non-signatory]).  Nor does Limited Liability Company Law § 610 create any independent rights against defendant LLC.

Contrary to plaintiffs’ assertion, the fact that defendant LLC was managed, opened bank accounts, or otherwise was operated in accordance with the operating agreement does not stop it from claiming that it is not bound by that agreement.  Tarazi v. Truehope Inc. (2017 U.S. Dist LEXIS 120155 *22, 2017 WL 5957665, *8 [S.D.N.Y., July 28, 2017, 13 Civ. 1024, 1038(LAK)(JCF)]) is distinguishable.  In that case, because the member of the LLC asserted derivative claims that arose in part from the operating agreement, the LLC could not avoid arbitration of claims under that agreement.

Plaintiffs are entitled to inspection of books and records as provided for in Limited Liability Company Law § 1102.  Plaintiffs are also entitled to an equitable accounting (see Gottlieb v. Northriver Trading Co. LLC, 58 A.D.3d 550, 551, 872 N.Y.S.2d 46 [1st Dept. 2009]).