Seth Alan Schwartz

Corporate Control Litigation

When handling disagreements between business owners, their partners, shareholders, or other parties, Seth believes in solving complex problems, either through private agreement, mediation, or litigation so his clients prosper long beyond the immediate dispute.

Seth’s clients include minority and majority corporate owners and business partners locked into disputes with fellow stakeholders.  Many times, co-business owners disagree about their corporation’s direction, are upset about the value of corporate assets, or disagree about other corporate governance issues.  Seth reviews the details of his clients’ contracts and other arrangements, and identifies the best ways to find lasting solutions or separate the parties.  Rarely does one-size-fit-all when resolving corporate disagreements, and Seth makes sure to consider the potential long- and short-term outcomes for clients before illuminating the optimal path towards long-term business success.

Experience

Defense of company in partnership dispute

Seth Schwartz represented our client, a contractor materials company (CMC), a fabricator of stainless steel rebar, in a significant case in New York Courts, ultimately reaching a favorable settlement focused on preserving our client’s business opportunities.

Our client had performed fabrication work for a former affiliate and, four years later, a dispute arose between the parties as to whether they entered into a partnership and the scope of the obligations owed between the parties contracted with a former affiliate (plaintiff) of CMC then contracted with another company while continuing to do business with both contractors. The former affiliate company brought a suit against our client in the Supreme Court of the State of New York. The plaintiff alleged, among other things, breach of contract, an action in accounting, conversion, breach of fiduciary duty, breach of the covenant of good faith and fair dealing, tortious interference with prospective business relations, fraud, unjust enrichment, promissory estoppel, misappropriation, negligent misrepresentation, and economic duress.

This matter was removed from the Supreme Court of the State of New York to the U.S. District Court for the Southern District of New York. Our client then brought counterclaims for breach of contract and breach of fiduciary duty. In addition, our client added a Third Party compliant against the plaintiff’s parent company in Denmark.

After substantial litigation, the case was ultimately settled on a favorable basis to our client, CMC.

Defend majority owner against fraud, breach of contract and conversion

Seth Schwartz and Rich Porotsky represented the majority owner of seven LLCs, which owned approximately $70 million in real estate. The minority shareholders brought claims for fraud, breach of contract and conversion against the majority shareholder. In addition, the minority shareholders brought a preliminary injunction against the majority shareholder, which requested the majority shareholder be removed as manager of the companies. The case proceeded to a two-day preliminary injunction hearing where our client, the majority shareholder, prevailed.

Representation of a Minority Shareholder when Denied Ownership Claim

Seth Schwartz represented a minority shareholder when the majority shareholder of a used printing press business denied the minority shareholder’s ownership claim, contrary to the parties’ agreement.

Our client only agreed to leave his former employer on the condition he would be a shareholder in the new enterprise. Upon reaching that agreement, our client left his employer and began working full time at the used printing press company. During the first year of his work at the new company, our client was generally treated as a partner. Our client was held responsible for expenditures of the company, including taxes, and was the only person responsible for writing checks on the behalf of the LLC. He also personally signed a lease for heavy equipment to be used by the business. In addition, the founder introduced our client as a partner to others.

After the company was very successful, the majority partner changed the compensation structure so all “partners” were making equal pay. Considering our client devoted his full-time energies to the company while other “partners” were involved with other ventures, our client disputed the new payment structure. When the dispute arose, the majority partner denied our client’s ownership of the business.

The matter proceeded to a jury trial, during which it was settled to our client’s satisfaction.

Represent Minority Shareholders in Close Corporation Dispute

We represented our clients, alcoholic beverage shareholders, in a close corporation dispute involving claims that company management breached their fiduciary duties and violated certain common-law corporate doctrines. The minority shareholders initiated action to remove management due to these alleged contractual violations. Our clients received a favorable resolution after taking advantage of pre-litigation mediation options.

Representation of a Client Involved in a $15 Million Dollar Family Dispute

We represent a family member in a three-way dispute involving trust assets, business assets, and substantial real estate holdings worth $15 million.

Represented a Supplier in Banking Litigation

Client: a granite countertop provider

Our client, a granite countertop provider, fell victim to wire transfer fraud.  Our client received an email, purportedly from a supplier, instructing it to wire money to a fraudulent account believed to be the supplier’s. The countertop provider’s bank received an alert, warning them the money was not going to an account bearing our client’s supplier’s name as intended, but the bank ultimately completed the transfer and the funds were lost. We represented our client in pre-litigation negotiation related to the stolen wire transfer funds. The case was ultimately settled.