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In a case affirming the rights and obligations of shareholders in closely held corporations, a New York Supreme Court Commercial Division judge has ruled in favor of a pro se plaintiff against her former business partners. The dispute involved business partners who joined forces to buy out Christopher Street Financial Inc., a financial advisory company, in 1997. At the heart of their dispute stood the dysfunctional relationship between the plaintiff, Irene Sullivan, and defendants Kermit Johns and Jennifer Hatch. Sullivan sued her partners, alleging that they had wrongly curtailed her responsibilities, cut her salary and funnelled company loans to their personal accounts. The defendants countersued, claiming, among other things, unjust enrichment, interference with contractual relations, breach of fiduciary duty and fraud. In Sullivan v. Johns, No. 600343/99, Justice Herman Cahn ruled in favor of Sullivan and dismissed all the counterclaims. Christopher Street Financial was the first fully gay-owned and operated financial advisory firm in the nation, with more than $180 million under management, the decision said. The firm’s founder, Robert Casaletto, also founded an organization that became known as the Empire State Pride Agenda, a gay political group. When Casaletto died in 1996, he bequeathed Christopher Street Financial to the American Civil Liberties Union for its Gay and Lesbian Rights Project, requesting that the company be bought by ACLU employees. Justice Cahn said that after several employee groups at the ACLU tried but failed to purchase the company, Sullivan and the defendants joined together to buy it. The defendants each put in $75,000, and Sullivan’s contribution was her experience in recruiting and servicing clients. According to the decision, the partners then entered into a poorly drafted but binding shareholder agreement defining their relationships: The agreement called for unanimous approval of key decisions. When the defendants acted without Sullivan’s approval later, they violated the terms of this agreement, the court said. The parties suffered from, what Cahn described as, “irretrievable shareholder and director discord.” They had difficulty obtaining a license in several states and could not reach a resolution to dissolve the company, he said. In short time, defendants demoted Sullivan, reassigned her clients, and eventually suspended her from all employment activities. In each instance, Sullivan objected to the changes at company board meetings and later sued for damages. “A familiar and eminently sensible proposition of law is that, when parties set down their agreement in a clear, complete document, their writing should be as a rule enforced according to its terms,” said Cahn. “It is plain,” he continued, “that unanimous approval of the parties was required for essentially all major corporate decisions, including governance and business.” VOTING POWER Regardless of defendants’ differences with Sullivan, they could not override her voting power in making decisions, held the court. As an alternative, they could have dissolved the corporation, Justice Cahn suggested, instead of taking the route they did. He ordered defendants to compensate Sullivan for lost wages and restore her to her former position. Cahn also ordered the defendants to return $80,000 in proceeds they deposited in personal accounts from a loan made to the company. He dismissed all defendants’ claims, which also charged Sullivan with negligent misrepresentation and defamation. Sullivan appeared pro se. Robert Bridges of Jacobson & Schwartz in Rockville Center, N.Y., represented Johns. Sheryl Zuckerman of Gusrae, Kaplan & Bruno represented another defendant whose case was dismissed.

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