Submit your answers to problems 16-8 Partnership Dissociation and Dissolution, 17-7 Limited Liability, and 18-7 Duties and Liabilities of Directors and Officers.
16–8. DISSOCIATION AND DISSOLUTION. Marc Malfitano and seven others formed Poughkeepsie Galleria as a partnership to own and
manage a shopping mall in New York. The partnership agreement stated that “all decisions to be made by the Partners shall be made
by the casting of votes” with “no less than fifty-one percent” of the partners “required to approve any matter.” The agreement also
provided that the partnership would dissolve on “the election of the Partners” or “the happening of any event which makes it unlawful
for the business . . . to be carried on.” Later, Malfitano decided to dissociate from the firm and wrote to the other partners, “I hereby
elect to dissolve the Partnership.” Did Malfitano have the power and the right to dissociate from Poughkeepsie Galleria? Could he
unilaterally dissolve the partnership? Can the other partners continue the business? Which, if any, of these actions violate the
partnership agreement? Discuss. [Congel v. Malfitano, 31 N.Y.3d 272, 76 N.Y.S.3d 873, 101 N.E.3d 341 (2018)] (See Partnerships.)
17–7. LIMITED LIABILITY. Vision Metals, Inc., owned and operated a pipe manufacturing facility that caused groundwater
contamination. The Texas Commission on Environmental Quality (TCEQ) issued a plan that obligated Vision to treat the water and
monitor the treatment. Later, Vision sold the property to White Lion Holdings, LLC. Bernard Morello, the sole member of White Lion,
knew of the environmental obligations accompanying the property. When White Lion failed to comply with the TCEQ plan, the agency
filed a suit in a Texas state court against Morello, asserting violations of the state’s environmental rules. Morello was charged with
personally removing the facility’s treatment plant and monitoring system. Considering the nature of an LLC, what is Morello’s best
argument that he is not liable? Is this argument likely to succeed? Explain. [State of Texas v. Morello, 61 Tex.Sup. Ct.J. 381, 547
S.W.3d 881 (2018)] (See The Limited Liability Company.)
8–7. DUTIES AND LIABILITIES OF DIRECTORS AND OFFICERS. M&M Country Store, Inc., operated a gas station and convenience
store. Debra Kelly bought M&M from Mary Millett. Under the purchase agreement, Millett was to remain as the corporation’s sole
shareholder until the price was fully paid. A default on any payment would result in the return of M&M to Millett. During Kelly’s
management of M&M, taxes were not remitted, vendors were not paid, repairs were not made, and the store’s gas tanks and shelves
were often empty. Kelly commingled company and personal funds, kept inaccurate records, and allowed M&M’s business licenses
and insurance policies to lapse. After she defaulted on her payments to Millett and surrendered M&M, the company incurred
significant expenses to pay outstanding bills and replenish the inventory. Can M&M recover these costs from Kelly? Explain. [M&M
Country Store, Inc. v. Kelly, 159 A.D.3d 1102, 71 N.Y.S.3d 707 (3 Dept. 2018)] (See Corporate Directors and Officers.)
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