Contract Limiting Exposure of Fiduciary Partially Enforced

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In Thomas John, etc. v. George Varughese, etc., 2017-04162, 2017-05352, 2021 NY Slip Op 03026, Supreme Court Of The State Of New York Appellate Division, Second Judicial Department (May 12, 2021) the plaintiff appealed a judgment upon the decision made after a nonjury trial, in favor of the defendant and against the plaintiff dismissing the complaint.

ZALMA OPINION

Failure to obtain insurance by a fiduciary of a property owning LLC could be actionable except where there is no damage to the LLC. The defendant was lucky that his failure to provide insurance coverage protecting the property resulted in no harm to the LLC. However, using the LLC’s money to pay his personal attorney, was a clear breach of the fiduciary duty and the appellate division reversed that part of the judgment and ordered the defendant to pay what he misappropriated.