PAPPAS 38 40 LLC v. Nick Glendis, et al., Defendants. (2019)

Judgment, Supreme Court, New York County (Saliann Scarpulla, J.), entered May 4, 2018, dismissing the complaint, and bringing up for review an order, same court and Justice, entered February 23, 2018, which granted defendants' cross motion to dismiss the derivative claims with prejudice and dismiss the individual claims without prejudice, and denied plaintiff's motion for a preliminary injunction and appointment of a temporary receiver, unanimously affirmed, without costs.

Under the terms of the LLC's operating agreement, plaintiff is a successor in interest to her decedent's membership interest in the LLC. As such, she is not a member of the LLC (see MFB Realty LLC v. Eichner, 2016 N.Y. Slip Op. 31242[U], 2016 WL 3541398 [Sup. Ct., N.Y. County 2016), affd 161 A.D.3d 661, 79 N.Y.S.3d 35 [1st Dept. 2018] ).  Defendants' grant of access to books and records and issuance of a K–1 did not constitute admissions by defendants that plaintiff was a member.

Plaintiff, who held an interest only in decedent's estate, was not the “legal or equitable owner” of a membership interest (Estate of Calderwood v. Ace Group International LLC, 157 A.D.3d 190, 194, 67 N.Y.S.3d 589 [1st Dept. 2017] [under the terms of the operating agreement, upon the death of a LLC member, the estate as successor-in-interest only retains the rights to distributions] ).

Because plaintiff's individual claims were substantially identical to her derivative claims, the IAS court did not err in dismissing them without prejudice as impermissibly mingled (see Barbour v. Knecht, 296 A.D.2d 218, 227–228, 743 N.Y.S.2d 483 [1st Dept. 2002] ).

Since plaintiff's complaint was dismissed, her motion was properly denied.