15 LLC 17 CORPORATE WOODS LLC 56 WOLF ROAD LLC CORPORATE WOODS LLC SOUTHWOODS LLC NEW SCOTLAND ROAD LLC MICHAEL PICOTTE v. MICHAEL PICOTTE (2026)

The above-captioned cases arise out of the proposed voluntary dissolution of West Bradford Corporation ("WBC") and a pending arbitration in which claimants allege that the WBC dissolution is a wrongful effort to dissolve affiliated limited liability companies ("LLCs") in which WBC holds membership interests.

In Case 1 ("LLC Proceeding"), petitioners Corporate Woods 15, LLC, 17 Corporate Woods, LLC, 56 Wolf Road, LLC, Corporate Woods, LLC, 7 Southwoods, LLC and New Scotland Road, LLC (collectively, "Petitioner LLCs"]), acting through Michael B. Picotte ("Michael") as manager, seek a preliminary injunction in aid of arbitration under CPLR 7502 (c) (see LLC Proceeding, NYSCEF Doc No. 1 ["Petition"]). The injunction requested by Michael and the Petitioner LLCs (collectively, "Petitioners") would restrain WBC, John D. Picotte ("John"), Rhea Picotte-Clark ("Rhea") and Marcia P. Floyd ("Marcia") from "taking any action to cause the dissolution" of WBC or the Petitioner LLCs during the pendency of the arbitration (LLC Proceeding, NYSCEF Doc No. 22 ["LLC OTSC"]).

In Case 2 ("DJ Action"), plaintiffs John, Rhea and Marcia (collectively, "DJ Plaintiffs") seek declaratory relief and an injunction restraining Michael from taking any action to interfere with the WBC dissolution vote (see NYSCEF Doc Nos. 2 ["DJ Complaint"], 22 ["DJ OTSC"]).

During the pendency of the motions for preliminary injunction, the DJ Plaintiffs asked the Court to construe the DJ Action and their opposition to the LLC OTSC as an application to stay arbitration (see LLC Proceeding, NYSCEF Doc No. 29), and Michael cross-moved in the DJ Action to compel the DJ Plaintiffs to arbitrate (see DJ Action, NYSCEF Doc No. 34).

Oral argument in both cases was held on August 28, 2026, and this Coordinated Decision & Order follows.

I. BACKGROUND

A. The Parties

The four individuals involved in these lawsuits — John, Michael, Rhea and Marcia — are the children of Bernard Picotte. Bernard "founded Picotte Real Estate in 1933 with his brother

Clifford. Over time, the various companies that they formed became collectively known as the

Picotte Companies" (DJ Action, NYSCEF Doc No. 4 ["John Moving Aff."], ¶ 4).

The Petitioner LLCs "form part of the commercial real estate business" built by Bernard and Clifford, which "[John and Michael] later took over and grew for the past 40 years" (LLC Proceeding, NYSCEF Doc No. 4 ["Michael Moving Aff."], ¶ 5). "The Picotte LLCs collectively own prominent Albany commercial office buildings such as 20 Corporate Woods Blvd., 15 Corporate Woods Blvd., 19 Corporate Woods Blvd., 5 Southwoods Blvd., 56 Wolf Road, 1251 New Scotland Road, and 7 Southwoods Blvd." (id., ¶ 6).

Bernard formed WBC to provide an opportunity for his four children to be involved in the family business and share in its fruits (see id., ¶ 10-11; see also John Moving Aff., ¶ 9). "[WBC] does not own commercial real estate itself; rather, its primary corporate purpose is to serve as a holding company that owns minority ownership interests in other revenue-producing companies — including the Picotte LLCs" (Michael Moving Aff., ¶ 10).

All four siblings are shareholders and directors of WBC, and the corporation is governed by a written Shareholder Agreement (see DJ Action, NYSCEF Doc No. 11 ["SHA"]). "The voting shares of WBC are owned or controlled in the following percentages . . . : (a) John Picotte — 45.45%; (b) Michael Picotte — 22.73%; (c) Rhea Clark — 15.91%; and (d) Marcia Floyd — 15.91%" (John Moving Aff., ¶ 11). Under the Shareholder Agreement, "any controversy or claim arising out of or related to [the SHA] or the breach thereof shall be submitted to the Supreme Court of the State of New York, County of Albany" (SHA, § 13 [a]).

The Petitioner LLCs are governed by operating agreements that designate John and Michael as co-managers (see LLC Proceeding, NYSCEF Doc No. 6, Exs. 3-9 ["Operating Agreements"]). The Operating Agreements generally provide that: the business and affairs of the LLCs shall be conducted by their managers, acting jointly; the managers may not act in contravention of the Operating Agreements; and the managers shall take all action necessary or appropriate to continue the Petitioner LLCs, maintain their tax status, and preserve the companies' property (see id., §§ 5.2.1, 5.2.7, 5.3.1, 5.3.4).

Article X of the Operating Agreements governs dissolution of the LLCs. All but one of the agreements identify the "death, Disability, termination, dissolution or bankruptcy of a Member" as an "event of withdrawal," triggering a 90-day period in which a majority of the remaining members must affirmatively agree to continue the business (id., § 10.1.1 [iv]).¹

Finally, subject to a few entity-specific variations, the Operating Agreements provide that a disagreement between members arising out of or relating to "the business or dissolution of the Company" shall be determined by the American Arbitration Association ("AAA") in Albany, New York (see Operating Agreements, § 11.1.1).

B. The Voting Agreement

On August 12, 2024, John, Rhea and Marcia entered into a Voting Agreement concerning WBC and various affiliates, including the Petitioner LLCs (see LLC Proceeding, NYSCEF Doc No. 6, Ex. 1 ["Voting Agreement"]).

Under the Voting Agreement, each signatory "irrevocably and unconditionally" agreed, in their capacities as a shareholder of WBC and member of the affiliated LLCs, to vote in favor of the dissolution and orderly winding-up of WBC and against continuation of the business of the Petitioner LLCs (id., § 3).

The signatories to the Voting Agreement agreed to conduct due diligence concerning WBC's life-insurance policies, outstanding indebtedness, leases, tax issues and other relevant matters, and the agreement recognizes an event that would materially impair an orderly dissolution as an "Adverse Event" and, potentially, a "Prohibitive Dissolution Effect" (id., § 5 [a]). If such an event or effect is identified, the signatories agreed to work in good faith to cure, modify or eliminate the impediment (see id., § 5 [b]). The existence of an uncured Prohibitive Dissolution Effect relieves signatories of the voting covenants, leaving them free to exercise independent judgment (see id., § 5 [d]).

The Voting Agreement also addresses life-insurance policies. If no Prohibitive Dissolution Effect exists and WBC is dissolved under the procedures contemplated by the agreement, each signatory waives the right to acquire a WBC-owned life insurance policy for its cash-surrender value (see id., § 6).

Finally, Section 9 provides that each signatory entered into the Voting Agreement "solely" as an equity owner of WBC and the Petitioner LLCs and "not in any other capacity, including any capacity as a manager, director or officer." The second sentence of Section 9 preserves the signatory's exercise of fiduciary duties "as a director or officer," but does not refer to managerial duties (id., § 9).

C. Prior Arbitration

On August 26, 2024, the shareholders and directors of WBC authorized the corporation to investigate its possible dissolution and the potential impacts, including the effect on affiliated LLCs in which WBC holds membership interests (see LLC Proceeding, NYSCEF Doc No. 7 ["Award"] at 6-10).

Michael and seven Claimant LLCs  ² responded by commencing an arbitration against John, Rhea, Marcia and WBC, alleging that WBC's resolutions were sufficiently broad to permit WBC, a non-managing member of the LLCs, and John, a co-manager, to exercise management prerogatives reserved jointly to the co-managers.

As an initial matter, Arbitrator Elizabeth H. Emerson ("Arbitrator") rejected respondents' contention that the dispute was not subject to arbitration under Section 11.1.1 of the Operating Agreements. The Arbitrator found that the claims involved "a disagreement between the Members . . . with respect to the interpretation of the [Operating Agreements] or the business or dissolution of the [Claimant LLCs]," in that the Claimant LLCs were seeking to ensure that WBC and John were "exercising their rights" as members "in a manner consistent with the Operating Agreement[s]" (id. at 3). The Arbitrator further found that Michael could assert such claims derivatively (see id. at 13-14).

The Arbitrator began her merits analysis by recognizing that WBC was "an entirely distinct entity from the Claimant LLCs" (id. at 15). "As such, [WBC] has the right to explore various options regarding its continued existence, as well as the effect of any such action on the nature and value of its assets, including . . . its membership interests in the Claimant LLCs" (id.).As to the "effect" of dissolution, the Arbitrator concluded that dissolution of WBC "would trigger the provisions of Section 10.1[.1] (iv)," thereby obliging a majority of the remaining members of each Claimant LLC to agree to carry on the company's business to stave off liquidation (see id.). And since a majority of the members of each Claimant LLC had committed to oppose continuation through the Voting Agreement, the Arbitrator found that dissolution of WBC "may result" in dissolution of the Claimant LLCs (id. at 15-16).

"While WBC . . . may explore the question of its dissolution and conduct due diligence with respect thereto, nothing about [WBC's] decision to conduct due diligence or the manner in which it goes about it can be used to expand or alter the information it is entitled to request or to receive regarding the business of the Claimant LLCs or the manner in which they are entitled to request such information" (id. at 17). For that reason, any requests by WBC for non-public information from the LLCs must be directed to Michael and John, acting jointly as co-managers (see id. at 17-21). The Arbitrator therefore determined that WBC could not implement the investigation resolutions to "intrude on the affairs and management of the Claimant LLCs," "interfere with the obligations of the [LLCs'] managers," or "expand WBC's rights as a member" of the LLCs (id. at 16).

However, the Arbitrator rejected claimants' contention that John's execution of the Voting Agreement created a conflict with his co-manager role "that cannot be expunged" (id. at 19 n 11). Although John held "several roles and [had] different responsibilities for each," the Arbitrator found that "it is possible [for John] to properly perform each such role" (id.). The Arbitrator further observed that the Voting Agreement "expressly provides that it does not limit or restrict fiduciary duties" and concluded that it would be "premature" to consider any specific fiduciary issues arising from John's multiple roles (id.).

D. The New Arbitration and This Litigation

Following the arbitration, WBC continued its due diligence under the framework established by the Award, and it submits an affirmation from outside counsel describing that work (see LLC Proceeding, NYSCEF Doc No. 21; see also John Moving Aff., ¶ 23).

On August 6, 2026, WBC's board of directors adopted a resolution directing John, as president, to call a special meeting of the shareholders to consider voluntary dissolution (see John Moving Aff., ¶¶ 24-26). That meeting was scheduled for August 19, 2026.

The Claimant LLCs, together with Michael (collectively, "Claimants"), responded by commencing a new AAA arbitration on August 6, 2026, alleging "a wrongful and imminent effort to dissolve the Claimant LLCs in violation of [their] governing documents and New York's common law rules regarding fiduciary duties" (LLC Proceeding, NYSCEF Doc No. 6 ["AAA Filing"], Demand at 1). Claimants seek the following relief from the arbitrator:

• A declaration that "John Picotte's efforts to cause the dissolution of the Picotte LLCs . . . violate his obligations under Paragraphs 5.2.7, 5.3.[1], and 5.3.4 of the Picotte LLCs' operating agreements, as well as his statutory and common law fiduciary duties to those companies" (AAA Filing, Statement of Claim at 27, ¶ 1).

• A declaration that John is operating under "an irreconcilable, and unpurged, conflict of interest which render null and void any and all corporate actions taken by him under the cloud of that conflict, including all corporate actions taken for, on behalf of, or toward [WBC]" (id., ¶ 2).

• A declaration that, "even if [WBC] is voluntarily dissolved, such dissolution does not . . . effectuate or cause the dissolution of the Picotte LLCs, absent unanimous consent of the managers" (id., ¶ 3).

• A declaration that "John Picotte's assignees — Brooke A. Picotte, John D. Picotte, Jr., and Margaret Picotte-MacClarence — to whom he transferred 15% of the ownership interest of 7 Southwoods and 38% of the ownership interest in New Scotland Road, hold those interests as permitted transferees and not members" (id. at 28, ¶ 4).

• A permanent injunction restraining John from: (i) participating in any efforts to dissolve WBC, "including voting to dissolve [WBC] while under a conflict of interest to the Picotte LLCs"; and (ii) "pursuing any effort under Paragraph 10.1.1(iv) of the operating agreements to dissolve the Picotte LLCs without obtaining the consent of the co-manager of those companies" (id., ¶ 5).

On August 7, 2026, the six Petitioner LLCs, acting through Michael, commenced the LLC Proceeding, seeking a preliminary injunction restraining WBC, John, Rhea and Marcia from taking any action to cause the dissolution of WBC or the Petitioner LLCs during the pendency of the arbitration.

Around the same time, John, Rhea and Marcia commenced the DJ Action and submitted a proposed OTSC bringing on an application for a preliminary injunction ("PI"), restraining Michael from taking any action to prevent or interfere with WBC's dissolution.

The LLC OTSC sought a temporary restraining order ("TRO") during the pendency of the PI application, and a hearing was held on August 12, 2026. At the Court's suggestion, respondents consented to entry of a brief TRO preserving the status quo pending expedited briefing and determination of the competing applications.

Both OTSCs were made returnable on August 28, 2026 (see LLC OTSC; DJ OTSC; LLC Proceeding, NYSCEF Doc No. 24), copies of the oral argument transcript were filed on September 10, 2026 (see LLC Proceeding, NYSCEF Doc No. 37 ["Transcript"]), and this Coordinated Decision & Order follows.

II. ARBITRABILITY

Michael cross-moves in the DJ Action to compel arbitration pursuant to CPLR 7503 (a) (see NYSCEF Doc No. 34). He also asks the Court to convert the DJ Action to a special proceeding seeking a stay of arbitration under CPLR 7503 (b), and, upon conversion,

deny the stay (see id.).

For their part, John, Rhea and Marcia, who are the DJ Plaintiffs and individual respondents in the LLC Proceeding ("Individual Respondents"), argue that their complaint and DJ OTSC should be deemed an application to stay arbitration (see Board of Educ. of City School Dist. of City of Lockport v Lockport Educ. Assn., 64 AD2d 1027, 1027 [4th Dept 1978]), and ask the Court to construe the filings as such (see NYSCEF Doc No. 29 at 4-5; Transcript at 14-15).

"A party aggrieved by the failure of another to arbitrate may apply for an order compelling arbitration. Where there is no substantial question whether a valid agreement was made or complied with, and the claim sought to be arbitrated is not barred by limitation under subdivision (b) of section 7502, the court shall direct the parties to arbitrate" (CPLR 7503 [a]).

"On a motion to stay or compel arbitration, [the court's] inquiry is limited to ascertaining (1) whether there was a valid agreement to arbitrate, (2) if so, whether the parties complied with the agreement, and (3) whether the underlying claim is timely" (Matter of Conifer Realty LLC [Envirotech Servs., Inc.], 106 AD3d 1251, 1252 [3d Dept 2013]; see Matter of County of Rockland [Primiano Constr. Co.], 51 NY2d 1, 6-7 [1980]).

The Shareholder Agreement for WBC provides that "any controversy or claim arising out of [that agreement] or the breach thereof shall be submitted to the Supreme Court of the State of New York, County of Albany" (SHA, § 13 [a]). The Voting Agreement similarly provides that disputes "arising out of or related to" it shall be heard in the courts of Albany County (Voting Agreement, § 14 [a]).

However, the LLC Operating Agreements generally provide that disputes "between the Members with respect to . . . interpretation [of the agreements] . . . or the business or dissolution of the [LLCs] . . . shall be determined by the [AAA]" in Albany, New York (see Operating Agreements, § 11.1.1 ["LLC Arbitration Clauses"]).

Contrary to the arguments of the Individual Respondents, the Court is satisfied that the competing dispute-resolution clauses can be read together in a manner that gives each its full and intended effect. This Court is the proper forum for claims founded upon the SHA and Voting Agreement, including claims concerning their meaning and enforcement. This Court also is the proper forum for the statutory and corporate-law issues raised in the DJ Action, including the DJ Plaintiffs' rights as shareholders under Business Corporation Law § 1001.

On the other hand, the LLC Arbitration Clauses implicate disputes concerning the obligation of managers under the Operating Agreements, the common-law duties owed by the managers to the LLCs and their members, the meaning of Section 10.1.1 and the legal status of John's transferees.

To be sure, the same conduct may implicate different entities, agreements, rights and legal capacities. A claim concerning the voting rights of WBC shareholders or enforcement of the Voting Agreement belongs in this Court, but a claim that the same conduct violates the Operating Agreements or the common-law duties owed by John to the LLCs may be subject to the LLC Arbitration Clauses.

The two respondents in arbitration are John and WBC, both of whom assented to the LLC Arbitration Clauses through their membership in the Petitioner LLCs. As such, both John and WBC are bound to arbitrate matters within the scope of the LLC Arbitration Clauses, including disagreements regarding conduct alleged to be in violation of the Operating Agreements or common-law fiduciary duties — even if this may prevent John from pursuing WBC's dissolution.

Neither the Shareholder Agreement nor the Voting Agreement is the source of rights being asserted in the new arbitration or the basis for the declaratory and injunctive relief that Claimants seek from the arbitrator (see AAA Filing, Statement of Claim). Rather, Claimants seek a declaration that John's efforts to dissolve the LLCs constitute breaches of the Operating Agreements and his common-law duties to the Claimant LLCs, and they request an injunction restraining John from voting on the WBC dissolution as a remedy for these alleged breaches of the contractual and fiduciary obligations owed to the LLCs.

The Court also rejects the Individual Respondents' argument that the LLC Arbitration Clauses were superseded by the later-adopted forum selection clause in the Shareholder Agreement. The agreements concern different entities, parties, capacities and sources of rights, and the language of the Shareholder Agreement does not manifest a clear intention to revoke arbitration obligations arising under the operating agreements of affiliated downstream entities (see Matter of Primex Intl. Corp. v Wal-Mart Stores, 89 NY2d 594, 598-602 [1997]).

Nor is this a case like Triangle Exploration & Drilling Corp. v Sorina Holding (187 AD2d 359, 360 [1st Dept 1992]), where arbitrable rights under a guarantee depended upon antecedent liability under a purchase agreement that had to be litigated in court. A determination that WBC shareholders possess statutory power to vote for voluntary dissolution does not resolve the issue of whether John's efforts to cause the flow-down dissolutions of the LLCs violate his contractual and/or fiduciary obligations to the companies and his co-members.

Applying the formation requirement party-by-party and agreement-by-agreement, the record establishes that John, Michael and WBC are bound to the LLC Arbitration Clauses in the operating agreements of Corporate Woods 15, 17 Corporate Woods, Corporate Woods, 7 Southwoods and New Scotland Road (collectively, "Five LLCs"). The clauses require arbitration of disagreements between members regarding the business or dissolution of the LLCs or interpretation of the Operating Agreements, and Michael and John are members of the Five LLCs who disagree about such matters.

Michael's cross motion to compel arbitration is directed generally towards the DJ Plaintiffs, including Rhea and Marcia. However, neither sister is named as an arbitral respondent, and Michael has not shown that Rhea or Marcia are bound by the LLC Arbitration Clauses of the Five LLCs. Thus, to the extent that Michael seeks to compel Rhea or Marcia to arbitrate, the application is denied.

Further, the present record does not establish an agreement requiring the arbitration of claims involving 56 Wolf Road. The operating agreement submitted by Michael states that it is for 50 Wolf Road, LLC, and no certificate of name change, merger, assignment or other documentary evidence explains the discrepancy. And even if a valid operating agreement with an arbitration clause had been produced, there is no evidence of any disagreement "between [its] Members."³ Accordingly, the application to compel arbitration is denied as to 56 Wolf Road.⁴

The incorporation of AAA rules ordinarily delegates scope questions to the arbitrator (see Garthon Bus. Inc. v Stein, 30 NY3d 943, 944 [2017]; Skyline Steel, LLC v PilePro LLC, 139 AD3d 646, 646-647 [1st Dept 2016]), and there is a "reasonable relationship between the subject matter of the [arbitration]," which concerns John's obligations as an LLC manager, the meaning of Section 10.1.1, the potential for flow-down dissolutions and membership status of transferees, "and the general subject matter of the [Operating Agreements]" (Matter of Nationwide Gen. Ins. Co. v Investors Ins. Co. of Am., 37 NY2d 91, 96 [1975]; see DS-Concept Trade Inv. LLC v Wear First Sportswear, Inc., 128 AD3d 585, 585 [1st Dept 2015]). As such, any open questions concerning arbitrability are for the arbitrator (see Matter of WN Partner, LLC v Baltimore Orioles L.P., 179 AD3d 14, 16-17 [1st Dept 2019]).

The Court therefore concludes that Michael's cross motion should be granted to the extent of compelling John to arbitrate the claims raised by the Five LLCs.⁵ For essentially the same reasons, the Individual Respondents' application to stay the new arbitration is granted only as to the claims of 56 Wolf Road.

III. PRELIMINARY INJUNCTION IN AID OF ARBITRATION

Michael and the Petitioner LLCs move under CPLR 7502 (c) for a preliminary injunction restraining WBC and the Individual Respondents from taking any action to cause the dissolution of WBC or the Petitioner LLCs during the pendency of the new arbitration.

CPLR 7502 (c) authorizes a court to grant a preliminary injunction in connection with a pending arbitration "upon the ground that the award to which the applicant may be entitled may be rendered ineffectual without such provisional relief." To obtain such relief, the movant "must also demonstrate a probability of success on the merits, danger of irreparable injury in the absence of a preliminary injunction, and a balance of the equities in [its] favor" (Matter of Patrolmen's Benevolent Assn. of the City of NY, Inc. v City of New York, 119 AD3d 1, 3 [1st Dept 2014], revd on other grounds 26 NY3d 1044, 1046 [2015] [mootness]; see Matter of Klein [Human Care Servs. for Families & Children, Inc.], 250 AD3d 1316, 1322 [3d Dept 2026]).

A. Irreparable Harm / Ineffectualness

A movant for a preliminary injunction must establish that it is likely to suffer irreparable harm absent the requested relief. Of the traditional equitable criteria, "a showing of probable irreparable harm is the single most important prerequisite" (Reuters Ltd. v United Press Intl., Inc., 903 F2d 904, 907 [2d Cir 1990] [internal quotation marks and citations omitted]). Irreparable harm means an injury for which a monetary award alone cannot be adequate compensation (see Town of Liberty Volunteer Ambulance Corp. v Catskill Regional Med. Ctr., 30 AD3d 739, 740 [3d Dept 2006]).

Coupled with the ineffectualness requirement of CPLR 7502 (c), Petitioners have the burden of establishing that the requested preliminary injunction is necessary to (i) avert imminent and irreparable harm, and (ii) prevent an eventual arbitral award in their favor from being rendered ineffectual.

The present dispute unquestionably threatens the continued existence of WBC. Absent this Court's intervention, the shareholders of WBC would have voted on the question of voluntary dissolution at the August 19, 2026 meeting, with a super-majority of shareholders pre-committed to dissolution pursuant to the Voting Agreement.

The prospect of WBC's dissolution also gives rise to a real and imminent threat that the Petitioner LLCs will be dissolved. Under the Individual Respondents' construction of Section 10.1.1 (see LLC Proceeding, NYSCEF Doc No. 16 ["Opp Mem"] at 12), the dissolution of WBC, which is a member of each Petitioner LLC, constitutes an "event of withdrawal," thereby requiring dissolution and liquidation absent an affirmative continuation vote by a majority of the remaining members (Operating Agreements, § 10.1.1 [iv]). And through the Voting Agreement, the Individual Respondents bound themselves to vote against continuation (see Voting Agreement, §§ 3, 5).

The Court therefore rejects the Individual Respondents' assertion that "[t]he vote to dissolve WBC will not have an immediate impact upon the [Petitioner] LLCs" (Opp Mem at 13) or affect their "continued existence" (id. at 14). For purposes of an injunction in aid of an arbitration that may take one year or more to conclude (see Transcript at 66-67), the prospect of the Petitioner LLCs being dissolved in next three or four months suffices to establish the threat of imminent harm. And the prompt dissolution of the Petitioner LLCs is not an unintended or incidental consequence of the WBC shareholder vote; it is the very object of the Voting Agreement and the contemplated WBC dissolution.

The Court is satisfied that the imminent threat of the dissolutions of WBC and the Petitioner LLCs constitutes irreparable harm (see Reuschenberg v Town of Huntington, 16 AD3d 568, 570 [2d Dept 2005] [threat "to destroy an ongoing business concern"]; Mr. Natural v Unadulterated Food Prods., 152 AD2d 729, 730 [2d Dept 1989] ["interference with an ongoing business . . . risks injury for which monetary damages will be inadequate"]). Money damages would not fully compensate Michael for the loss of ownership and governance rights in companies that have been wrongfully dissolved and liquidated (see Matter of Witham v Finance Invs., Inc., 52 AD3d 403, 403-404 [1st Dept 2008]).

The Court further finds that the dissolutions of WBC and the Petitioner LLCs may render ineffectual a potential arbitral award in Claimants' favor. Claimants seek an injunction restraining John from: (i) participating in any efforts to dissolve WBC, "including voting to dissolve [WBC] while under a conflict of interest to the Picotte LLCs"; and (ii) "pursuing any effort under Paragraph 10.1.1(iv) of the operating agreements to dissolve the Picotte LLCs without obtaining the consent of the co-manager of those companies" (AAA Filing, Statement of Claim at 28). Claimants also seek declarations intended to preserve the legal existence, ownership and governance of the LLCs (see id. at 27-28). But if WBC and the Petitioner LLCs were dissolved and liquidated prior to entry of the new award, a ruling in Claimants' favor on these points would be rendered ineffectual.

In arguing to the contrary, the Individual Respondents rely heavily on Karnavat v Jesse Bands, Inc. (284 AD2d 266 [1st Dept 2001]), a case in which a minority shareholder was unable to show irreparable harm/ineffectualness from a dissolution and liquidation where the company's remaining assets would be distributed on a pro rata basis. Plaintiff offered the court no evidence for suspecting that a pro rata distribution would not occur, and he also failed to show "why an award of money would not make him whole were defendants to divert physical assets," as he feared (id. at 267). In contrast, Petitioners here have identified the award of declaratory and injunctive relief to which they claim to be entitled, the controversies to be decided in arbitration and the rights that WBC and John's contemplated actions would defeat, including Michael's loss of continued ownership and governance in companies that have operated for decades.

Accordingly, the Court finds that Petitioners have shown that the requested preliminary injunction in aid of arbitration is necessary to (i) avert imminent and irreparable harm, and (ii) prevent an eventual arbitral award in Claimants' favor from being rendered ineffectual.

B. Likelihood of Success in Arbitration

To obtain relief under CPLR 7502 (c), Petitioners also must demonstrate a likelihood of success on the merits. In this context, "likelihood of success is . . . measured in terms of the likelihood of success in arbitration" (SG Cowen Sec. Corp. v Messih, 224 F3d 79, 83 [2d Cir 2000]). "[A]rbitration is frequently marked by great flexibility in procedure, choice of law, legal and equitable analysis, evidence, and remedy. Success on the merits in arbitration therefore cannot be predicted with the confidence a court would have in predicting the merits of a dispute awaiting litigation in court, and it can be expected that when the merits are in the hands of an arbitrator, this element of the analysis will naturally have greatly reduced influence" (id.).

The claims alleged in the new arbitration fall into four principal groups: (i) John's alleged breaches of the Operating Agreements and fiduciary duties owed to the Claimant LLCs; (ii) John's alleged "irreconcilable" conflict of interest; (iii) whether a dissolution of WBC would "flow down" to the Claimant LLCs; and (iv) the membership status of certain of John's assignees.

1. Operating Agreement/Fiduciary Duty Claims

Claimants argue that John's "efforts to trigger the dissolution of the Picotte LLCs —without the consent of Michael — by spearheading the dissolution of [WBC] constitutes a failure to perform his obligations under the operating agreements[,] a violation of [John's] fiduciary duties to the Picotte LLCs" and a violation of Michael's "right to participate jointly in the [LLCs'] management" (AAA Filing, Statement of Claim, ¶ 128).

Sections 5.2.1 and 5.2.7 require John and Michael to manage the LLCs jointly in conformity with the Operating Agreements. Section 5.3.1 further provides:

The Managers shall take all action which may be necessary or appropriate (i) for the continuation of the Company's valid existence as a limited liability company under the laws of New York, (ii) for the continued classification of the Company as a partnership, for Federal income tax purposes under the Code, and (iii) for the acquisition, development, maintenance, preservation and operation of the Property in accordance with the provisions of the Agreement and Governmental Requirements.

And Section 5.3.4 confirms that the co-managers are required to act as fiduciaries in the best interests of the LLCs and the members (see also LLC Law § 409).

Michael argues principally that John cannot avoid core obligations under the Operating Agreements — to continue the "valid existence" of the Claimant LLCs, "preserv[e] . . . the[ir] Property" and jointly co-manage them — by orchestrating a scheme to dissolve the LLCs as a shareholder, officer and director of WBC. John's "motivation for seeking dissolution of [WBC] and derivatively the Picotte LLCs is solely personal and economic," and it is in direct contravention of "his contractual and fiduciary obligation to do everything in his power to maintain [the LLCs'] 'valid existence' " (LLC Proceeding, NYSCEF Doc No. 3 ["LLC Mem"] at 14).

The problem for Michael, however, is that Section 5.3.1 governs John's responsibilities as a manager of the LLCs, but he has not identified any action that John has taken, or threatens to take, as a manager of the LLCs that contravenes the Operating Agreements or his fiduciary duties. John executed the Voting Agreement as a shareholder of WBC and member of the Claimant LLCs; the proposed WBC dissolution vote is an exercise of shareholder rights; John's implementation of WBC's dissolution would be undertaken in his role as a WBC officer; and any subsequent vote against continuation of the LLCs would be undertaken as an LLC member. There simply is no record basis to find that John exercised his authority as manager of the LLCs in any way connected with the WBC dissolution or the potential flow-down dissolutions (see LLC Mem at 14 [citing John's actions taken as a WBC shareholder, officer and director]).

The Operating Agreements themselves recognize these varying capacities. Section 5.3.1 uses the defined term "Manager," which means "John or Michael, in their capacity as managers" (Operating Agreements, § 1.1.16 [emphasis added]). And "Member" is defined as a person "admitted as a member of the Company, . . . including the Managers in their capacity as members of the Company" (id., § 1.1.17). Further, "[r]esignation as a Manager shall not affect such Manager's rights or obligations as a Member" (id., § 5.6.1). Thus, an arbitrator is likely to find that John is subject to Section 5.3.1 only for actions taken in his capacity as a manager of the Claimant LLCs.

Moreover, while the Court declines the Individual Respondents' invitation to dismiss Section 5.3.1 as mere "boilerplate" (Opp Mem at 10), there is force to their argument that the language was intended to ensure maintenance of the companies' corporate and tax structure, rather than imposing a sweeping all-capacities continuation obligation (see Huff Energy Fund, L.P. v Gershen, 2016 Del Ch LEXIS 150, *29-31 [2016]). And while Michael emphasizes the "preservation" obligation of Section 5.3.1 (iii), that clause speaks to the preservation of "Property," which means the land and improvements held by the Claimant LLCs (see AAA Filing, Ex. 3, § 1.1.23).

As in Huff Energy, Michael's sweeping construction of Section 5.3.1 also appears to be inconsistent with other provisions of the Operating Agreements that contemplate dissolution. Section 2.2.1 provides that each LLC shall continue until the sooner of (i) a fixed date, (ii) sole ownership or (iii) "termination pursuant to the provisions of Article X," and Article X gives the managers discretion to dissolve an LLC "with or without the approval of any of the Members" (Operating Agreements, § 10.1.1 [iii]). Additionally, the Claimant LLCs shall be dissolved "[u]pon the death or Disability of a Member or the occurrence of another event described in Section 701(d) of the [LLC] Act," absent an affirmative continuation vote (id. § 10.1.1 [iv]; see also former LLC Law § 701 [d] ["bankruptcy, death, dissolution, expulsion, incapacity or withdrawal of any member"]). Thus, the Operating Agreements contemplate a variety of means and circumstances by which the LLCs may be dissolved prior to the fixed date.

Nor does the Court see a likelihood of success in Michael's argument that the Claimant LLCs can only be dissolved with his consent as co-manager. Dissolution by agreement of the co-managers is one path (see Operating Agreements, § 10.1.1 [iii]); dissolution under Section 10.1.1 (iv), following the loss of a member, is a separate and independent path.

As to the Voting Agreement itself, Michael correctly notes the omission of "manager" from its savings clause (see Voting Agreement, § 9), but the preceding sentence makes clear that John is not entering into the agreement in his capacity as a manager of the LLCs. And the Voting Agreement neither amends the Operating Agreements nor releases John from his fiduciary duties.⁶

Thus, while Michael has shown conduct on John's part intended to cause the flow-down dissolutions of the Claimant LLCs, Michael has not shown a fair likelihood that the arbitrator will treat John's conduct as a breach of the contractual and fiduciary duties that John owes to the Claimant LLCs and their members as manager.

2. Conflict of Interest

Relatedly, Michael contends that John's desire to cause the flow-down dissolutions of the Claimant LLCs creates a disabling conflict of interest: John "may not vote in favor of [WBC] dissolution, while at the same time holding the title of co-Manager of the Picotte LLCs" (LLC Mem at 16). Michael further argues that the business judgment rule does not protect John's unauthorized, contractually prohibited or self-interested conduct (see id. at 27-29).

Settled law holds that fiduciaries may not leverage a formally-authorized dissolution, merger or other transaction to disadvantage a minority interest or divert corporate value to themselves (see Kavanaugh v Kavanaugh Knitting Co., 226 NY 185, 193-198 [1919]; Alpert v 28 Williams St. Corp., 63 NY2d 557, 568-571 [1984]), and "the business judgment rule has no place where corporate officers or directors take actions that exceed their authority under the relevant corporate bylaws, or where they make decisions affected by an inherent conflict of interest" (Matter of People v Lutheran Care Network, Inc., 167 AD3d 1281, 1286 [3d Dept 2018] [internal citations omitted]).

But there is nothing in the record to indicate that John and his sisters will receive any profit, distributions or other financial benefit from the dissolutions not received by Michael on a proportionate basis (see Pokoik v Steinberg, 246 AD3d 597, 598-599 [1st Dept 2026]). Michael does allege a benefit with respect to life insurance policies, but John waived his cash-surrender purchase right if dissolution proceeds under the Voting Agreement (see Voting Agreement, § 6). Thus, an arbitrator is unlikely to find that the WBC's dissolution will disadvantage a minority interest or divert value to the majority.

In assessing Claimants' likelihood of success in arbitration, the Court also is mindful that the Arbitrator previously rejected the contention that John's execution of the Voting Agreement created a per se conflict "that cannot be expunged" (Award at 19 n 11). Although John "has several roles and different responsibilities for each [role,] it is possible to properly perform each such role" (id.). And while the Arbitrator left open the prospect that particularized conflicts might arise, Claimants rely on the same alleged "irreconcilable" conflict raised in the prior arbitration.

The Court therefore concludes that Michael has not demonstrated a fair probability of success in arbitration on his conflict-of-interest claim.

3. Flow-Down Dissolution

Claimants seek a declaration that WBC's voluntary dissolution will not trigger Section 10.1.1 (iv) of the Operating Agreements. They argue that voluntary dissolution is governed exclusively by Section 10.1.1 (iii), which requires a joint determination of the co-managers, and the reference in Section 10.1.1 (iv) to the death/dissolution of an LLC member should be confined to involuntary events (see LLC Mem at 18-21).

Initially, the Arbitrator previously determined that "a dissolution of WBC would trigger the provisions of Section 10.1[.1] (iv) of each of the Operating Agreements" (Award at 15 [emphasis added]). And the Arbitrator relied on this determination in finding that WBC had a valid "reason to consider the effect of [its dissolution on the Claimant LLCs]" (id. at 16).⁷

This reading of Section 10.1.1 (iv) appears to accord with its plain language, which provides that the Claimant LLCs "shall be terminated and liquidated and dissolved upon the happening of any of [certain, specified] events." Through the incorporation of former LLC Law § 701 (d), one such event is the dissolution of a member.⁸ The limitation that Michael seeks to read into Section 10.1.1 appears nowhere in its text.

For all these reasons, the Court is unable to conclude that Claimants have shown a fair likelihood of prevailing in arbitration on their construction of Section 10.1.1.⁹

4. Transferee Status

Finally, Claimants seek a declaration that transferees of membership interests in 7 Southwoods and New Scotland Road are permitted assignees, rather than members (see AAA Filing, Statement of Claim, ¶¶ 143-148). Under LLC Law § 603 (a), an assignment of a membership interest ordinarily transfers economic rights but does not "entitle the assignee to participate in the management and affairs of the limited liability company or to become or to exercise any rights or powers of a member" (see also Operating Agreements, § 1.1.21 [defining "Permitted Transferees"]).

The Court finds that the status of the 7 Southwoods and New Scotland Road transferees bears only on the question of who is entitled to participate in a continuation vote, assuming that WBC is dissolved and flow-down dissolutions are triggered; this dispute does not provide a basis for restraining WBC's shareholders from pursuing voluntary dissolution or insulating the Claimant LLCs from potential downstream effects.

5. Overall Determination

The Court is mindful of the flexibility of arbitration and that "[s]uccess on the merits in arbitration . . . cannot be predicted with the confidence a court would have in predicting the merits of a dispute awaiting litigation in court" (SG Cowen, 224 F3d at 84). Still, it would be improper to grant an injunction in aid of arbitration absent " 'a probability of success on the merits' " (Matter of Klein, 250 AD3d at 1322, quoting Matter of Patrolmen's Benevolent Assn., 119 AD3d at 3; see SG Cowen, 224 F3d at 84 [contrary rule would raise "serious due process concerns"]).

As a consequence, courts are obliged to assess the merits of issues yet to be arbitrated (see SG Cowen, 224 F3d at 84), even where that assessment turns on legal conclusions drawn from largely undisputed facts (see Matter of Patrolmen's Benevolent Assn., 119 AD3d at 9 [Gische, J., dissenting] ["By interpreting this (Executive Order), the majority has resolved the very issue that is the subject of the grievance yet to be arbitrated."]). Thus, the Court has a duty here to assess the likelihood that Claimants' arguments will prevail in arbitration, even though resolution of those issues is committed to the arbitrator (see id. at 5 ["Since petitioners' interpretation of EO 75 is not plausible, they have not demonstrated a likelihood of success on the merits."]).

The critical issue is whether Petitioners have shown a fair probability of obtaining arbitral relief that makes the WBC dissolution process wrongful or insulates the Claimant LLCs from a flow-down dissolution. The Court finds that an arbitrator is not likely to accept the notion that John's duties as a manager of the Claimant LLCs extend to an all-capacities obligation to refrain from causing an event of dissolution. Further, the prior Award rejected Michael's claim of an inexpungeable conflict arising from John's multiple roles, and the present record does not disclose any misuse of LLC managerial power, misappropriation, unequal treatment, a non-pro rata benefit or other specific conduct amounting to a breach of John's fiduciary and/or contractual duties. And Michael's arguments concerning Section 10.1.1 run counter to the prior Award and lack textual support.

Accordingly, petitioners have failed to establish a fair probability of success in arbitration.

C. Balancing of the Equities

A preliminary injunction in aid of arbitration is an equitable remedy that only will be granted where the balance of equities tips in favor of the requested relief. The Court "must weigh the interests of the general public as well as the interests of the parties to the litigation . . . [and] inquire into whether the irreparable injury to be sustained is more burdensome [to Michael] than the harm caused to [John, Rhea and Marcia] through imposition of the injunction" (Eastview Mall, LLC v Grace Holmes, Inc., 182 AD3d 1057, 1059 [4th Dept 2020] [internal quotation marks, alterations and citation omitted]).

Michael emphasizes that the dissolution plan has been under development for approximately two years, the Picotte companies have operated for decades and maintaining the status quo during expedited arbitration would cause far less harm to his siblings than the harm that dissolution and liquidation would cause him. For their part, John and his sisters cite their advanced ages, prolonged intra-familial dysfunction, the lack of an acceptable succession plan and potential financial obligations upon the death of a shareholder.

The Court found that the considerations raised by Michael supported a brief TRO: the threatened change in legal status would be difficult to reverse, the issue of a preliminary injunction in aid of arbitration could not be decided prior to the noticed meeting, and a short pause allowed the Court to consider the requested injunction on a fuller and firmer record.

The requested preliminary injunction stands on different footing. It would restrain the holders of 77.27% of WBC's voting shares from pursuing their chosen path for the duration of an arbitration that is likely to take at least one year. This effectively would grant Michael a prolonged veto, despite the lack of persuasive evidence that he is likely to obtain relief from the arbitrator. And given the ages of the parties (see Transcript at 20), there is a real prospect of intervening events altering the status quo. Thus, the longer-term equities are more closely balanced.

Michael also invokes the interests of employees, tenants and lenders but the record supports respondents' position that the commercial properties held by the LLCs would be under professional management during an orderly transition. John and his sisters have every incentive to conduct the dissolution and liquidation process in a way that maximizes value for everyone.

The Court therefore finds that the equities do not tip in favor of the requested injunction in aid of arbitration.

IV. DECLARATORY JUDGMENT ACTION

The DJ Plaintiffs move for a preliminary injunction (i) restraining Michael from taking any action to prevent or interfere with the WBC dissolution vote, and (ii) restraining the AAA from purporting to assert jurisdiction over WBC or the dissolution vote. For his part, Michael cross-moves to dismiss the DJ Complaint under CPLR 404, 409 (b) and 3211 (a) (7).

Plaintiffs' motion for a preliminary injunction in the DJ Action is denied. The only interference they identify is the commencement of the new arbitration and the LLC Proceeding,

but those issues have been considered and addressed in Parts II and III, supra. Insofar as plaintiffs seek broader relief, they have not identified a threat of imminent and irreparable harm that would be averted by the injunction they request.

As to the cross motion for dismissal, the DJ Complaint mixes WBC-specific questions assigned to this Court under the forum selection clause of the Shareholder Agreement with questions concerning John's obligations to the LLCs that mirror the issues being referred to arbitration (see Part II, supra). To the extent that the WBC-specific claims ultimately require adjudication,¹⁰ the new arbitral award may narrow the issues or render them academic.

The Court therefore finds, in the exercise of discretion, that the DJ Action should be stayed under CPLR 2201 during the pendency of the new arbitration to avoid piecemeal and potentially inconsistent rulings (see generally Piller v Tribeca Dev. Group LLC, 156 AD3d 1257, 1260 [3d Dept 2017]).

V. CONCLUSION

For all of the foregoing reasons, it is

ORDERED that John shall arbitrate the claims raised by the Five LLCs in the new arbitration commenced with the AAA; and it is further

ORDERED that Michael's cross motion to compel arbitration is granted to the extent indicated in the preceding decretal paragraph and is otherwise denied; and it is further

ORDERED that the informal application of John, Rhea and Marcia to stay arbitration is granted as to the arbitral claims of 56 Wolf Road, and is otherwise denied; and it is further

ORDERED that the motion for a preliminary injunction in aid of arbitration under CPLR 7502 (c) in the LLC Proceeding is denied; and it is further

ORDERED that the motion for a preliminary injunction in the DJ Action is denied; and it is further

ORDERED that Michael's cross motion to dismiss the DJ Complaint under CPLR 3211 is denied; and it is further

ORDERED that the DJ Action is stayed during the pendency of the new arbitration, and plaintiffs therein shall notify the Court upon the conclusion of the arbitration; and finally it is

ORDERED that the temporary restraints in the LLC OTSC are vacated.

This constitutes the Decision & Order of the Court, the original of which is being uploaded to NYSCEF for entry by the Albany County Clerk. Upon such entry, counsel for the Individual Respondents shall promptly serve notice of entry on all parties entitled thereto.

Dated: September 23, 2026

Albany, New York

RICHARD PLATKIN

A.J.S.C.

Papers Considered:

LLC Proceeding: NYSCEF Doc Nos. 1-9, 16, 21-22, 29, 36-37.

DJ Action: NYSCEF Doc Nos. 1-7, 10-12, 22, 27-32, 34-39, 46-48.

FOOTNOTES

1.   Dissolution under the New Scotland Road agreement is triggered by an event affecting "the last remaining Member who is a Manager" (LLC Proceeding, NYSCEF Doc No. 6, Ex. 9, § 10.1.1 [iv]).

2.   The "Claimant LLCs" consist of the Petitioner LLCs, together with 8 Southwoods, LLC, an affiliated LLC that has no operating agreement (see Award at n 1 & n 4).

3.   The only membership information before the Court shows that the members of 56 Wolf Road are WBC, Rhea and Marcia (see NYSCEF Doc No. 8 at 147-148), and there is no disagreement among them.

4.   8 Southwoods is an arbitral claimant but not a petitioner in the LLC Proceeding, and there is no evidence of any arbitration clause governing its disputes. The Court thus makes no order concerning this absent party.

5.   The same principles support an order compelling WBC to arbitrate, but it is not a party to the DJ Action or a subject of Michael's motion to compel (see also Transcript at 70).

6.   Additionally, sections 3 and 5 of the Voting Agreement establish that the voting covenant is conditional and that independent action remains possible if warranted.

7.   Of course, the preclusive effect of the prior Award will be for the arbitrator to determine (see Matter of Falzone [New York Cent. Mut. Fire Ins. Co.], 15 NY3d 530, 534-535 [2010]).

8.   The issue must be considered on an agreement-by-agreement basis. New Scotland Road's Section 10.1.1 (iv) applies only to an event affecting "the last remaining Member who is a Manager."

9.   As this claim involves only the downstream consequences of a WBC dissolution, it would not provide a basis for restraining the dissolution of WBC itself. And in the absence of a fair likelihood of success under Section 10.1.1, a restraint limited to the downstream effects of a WBC dissolution is unwarranted.

10.   Michael does not appear to dispute the general corporate issues raised in the DJ Complaint.

Richard Platkin, J.