Company Appeals Dismissed New York Breach of Fiduciary Duty Claim
Posted on Jan 01, 2016
On Monday, May 13, a New York state appeals court heard claims from a Cleveland auto parts manufacturer accusing Monomoy Capital Partners, LP of breaching a fiduciary duty. Monomoy is a private equity firm based in New York. According to claims by the plaintiff, Northern Stamping, Inc., the two entities had a deal to jointly pursue the acquisition of Steel Parts Manufacturing, Inc., for a possible $25 million. Monomoy was to provide the financing.
Instead of moving forward as agreed, the plaintiff accuses Monomoy of violating the confidentiality agreements between the two parties. Monomoy reportedly met privately with Steel Parts in February of 2011. Monomoy then allegedly signed a deal with Steel Parts on its own, cutting out Northern Stamping.
In the May 13 hearing, attorneys for Northern Stamping asked a four-judge state appeals court in Manhattan to revive a claim that Monomoy committed a breach of fiduciary duty that it owed to Northern Stamping. Northern Stamping states that Monomoy owed it a fiduciary duty because the sides had agreed to pursue the potential deal together in good faith. However, they had not yet entered into a definitive agreement to actually purchase Steel Parts. If there had been such an agreement in place, the fiduciary duty would be clear in light of the joint venture or partnership.
In its defense, Monomoy argues that it had only agreed to negotiate in good faith, which according to the defendant does not give rise to a fiduciary duty. In June of 2012, Judge Melvin L. Schweitzer had dismissed several claims against Monomoy, including the breach of fiduciary claim.
To learn more about breach of fiduciary duty and other business litigation matters, contact a New York breach of fiduciary duty attorney today at (888) 497-3410.