Homapour v 3M Properties, LLC
Attorneys and Parties
Brief Summary
Dispute over governance of family-owned real estate limited liability companies (LLCs), alleged fraudulent amendment of operating agreements, fiduciary duties among LLC members and managers, and alleged exposure from rent-regulation practices.
The lower court granted summary judgment dismissing the first, fifth, tenth, eleventh, and fourteenth causes of action against Mark Harounian and related entities, dismissed the fifteenth cause of action against Orange & Blue LLC, and struck plaintiffs' jury demand.
The Appellate Division reinstated only the fifth cause of action for fraud against Mark Harounian.
Although signers are ordinarily bound by documents they sign, summary judgment was improper on the fraud claim because Mark, as managing member, owed fiduciary duties to Mehrnaz Homapour and Jacob Harounian, creating triable issues as to whether their reliance on his alleged misrepresentations about signature pages and unchanged terms was justified.
Background
Mehrnaz Nancy Homapour sued individually and derivatively on behalf of a group of family real estate LLCs against her brother Mark Harounian, her father Jacob Harounian, the family LLCs, their attorneys, and several entities controlled by Mark. She alleged that Mark procured signatures on unilaterally amended operating agreements by presenting only signature pages and falsely stating that nothing had changed. She also asserted claims involving alleged diversion of opportunities and funds, constructive trust, removal of Mark as manager, and aiding and abetting by Orange & Blue LLC (O&B) in an alleged scheme affecting rent-regulated apartments.
Lower Court Decision
Supreme Court, New York County, granted summary judgment to Mark Harounian and multiple related LLC defendants dismissing the first, fifth, tenth, eleventh, and fourteenth causes of action, granted summary judgment to O&B dismissing the fifteenth cause of action, and struck plaintiffs' jury demand.
Appellate Division Reversal
The Appellate Division modified the order only to reinstate the fraud claim. It held that the record, including affidavits from Mehrnaz and Jacob stating they were given only signature pages and were told no terms had changed, raised factual issues because of Mark's fiduciary relationship with them as managing member of several LLCs. The court otherwise affirmed dismissal of the constructive trust claims, the fiduciary-duty-based claims tied to speculative rent-regulation liability, the claim to remove Mark as manager, and the jury demand ruling.
Legal Significance
The decision underscores that the usual rule binding a person to a signed document does not automatically defeat a fraud claim on summary judgment where the signer alleges deception by a fiduciary. At the same time, the court reaffirmed limits on equitable remedies in LLC disputes: constructive trust requires a sufficient confidential or fiduciary relationship, speculative future exposure does not make fiduciary-duty claims ripe, operating agreements may bar equitable relief, courts may lack power to remove an LLC manager where the agreements are silent, and broad contractual jury waivers are enforceable, especially in primarily equitable actions.
In New York family LLC litigation, a manager's fiduciary status can preserve a fraud claim based on allegedly concealed agreement changes, but courts will still enforce operating-agreement limits, reject unripe or time-barred equitable claims, and uphold jury waivers in predominantly equitable business disputes.