Matter of Rizzotto v Romano
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Attorneys and Parties
Brief Summary
A dispute over the judicial dissolution of a closely held auto collision repair business, involving allegations of shareholder oppression and improper handling of corporate assets.
The Supreme Court, Nassau County, denied without a hearing the branch of the petition seeking judicial dissolution of Manhasset Collision, Ltd. (MCL).
The Appellate Division reversed the denial of the dissolution request insofar as appealed from and remitted the matter for further proceedings.
The verified petition and supporting papers were prima facie sufficient under Business Corporation Law § 1104-a [authorizes a holder of 20% or more of the stock of a closely held corporation to seek judicial dissolution based on oppressive actions or looting, waste, or diversion of corporate assets], and the parties' conflicting factual claims required a hearing before deciding whether dissolution was warranted.
Background
In 2020, Anthony Rizzotto allegedly acquired a 25% ownership interest in Manhasset Collision, Ltd. (MCL) from Benadetto Romano, who allegedly retained the remaining 75% of the outstanding shares. In 2024, Rizzotto commenced this proceeding, among other things, seeking judicial dissolution of MCL pursuant to Business Corporation Law § 1104-a, claiming grounds sufficient for dissolution of a closely held corporation.
Lower Court Decision
The Supreme Court, Nassau County, denied, without a hearing, the branch of the petition seeking judicial dissolution of MCL.
Appellate Division Reversal
The Appellate Division, Second Department, held that the Supreme Court should not have denied dissolution without first conducting a hearing. The appellate court found that the petition and supporting papers made a prima facie showing under Business Corporation Law § 1104-a and that the parties' factual disputes had to be resolved through a hearing. It therefore reversed insofar as appealed from and remitted the matter for further proceedings.
Legal Significance
The decision reinforces that in a proceeding under Business Corporation Law § 1104-a, courts have broad discretion in deciding whether dissolution or alternative relief is appropriate, but they may not summarily deny relief where the petition sufficiently alleges oppression or asset diversion and the material facts are disputed. A hearing is required in that circumstance.
When a minority shareholder in a closely held corporation makes a prima facie showing for dissolution under Business Corporation Law § 1104-a and the facts are contested, the court must hold a hearing before denying the dissolution request.