Physicians with a controlling interest in a New York professional corporation should be mindful of a minority shareholder’s common law right to judicial dissolution. In a recent posting on our New York Business Divorce Blog, Peter A. Mahler describes a recent ruling by Westchester County Commercial Division Justice Alan D. Scheinkman in the case of White v. Fee, 2012 NY Slip Op 51133(U) (Sup Ct Westchester County June 7, 2012).  In the decision, Justice Scheinkman denied a defense motion to dismiss a complaint seeking common law dissolution by the minority-nonvoting shareholders of a closely-held firm.  As Mahler explains, this case likely sets a new baseline for the analysis of common law dissolution claims at the pleading stage.

Mahler provides an excellent summary of the salient principles that apply in common dissolution cases brought by minority shareholders.  This case demonstrates that minority shareholders who own less than 20% of the voting interests in a New York corporation (including professional corporations) will have the right to challenge oppressive or abusive conduct by the controlling majority, even though the minority is not eligible to pursue judicial dissolution remedies afforded by §§1104-a and 1118 of the New York Business Corporation Law.