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Sullivan v. Ruvoldt

United States District Court, S.D. New York

March 24, 2017

ALLAN J. SULLIVAN, Plaintiff,
v.
HAROLD RUVOLDT, an individual, CATHY FLEMING, an individual, and FLEMING RUVOLDT, PLLC a New York Professional Limited Liability Company, Defendants.

          OPINION AND ORDER

          Edgardo Ramos, U.S.D.J.

         Allan J. Sullivan (“Sullivan” or “Plaintiff) brings this action against Harold Ruvoldt (“Ruvoldt”), Cathy Fleming (“Fleming”) and Fleming Ruvoldt, PLLC (together, “Defendants”). Before the Court is Defendants' motion to dismiss on the grounds that (1) Sullivan is not a real party in interest and does not have standing to bring this action; (2) complete diversity of the parties does not exist; and (3) the Complaint fails to state a claim.

         For the following reasons, Defendants' motion is GRANTED.

         I. Background[1]

         A. Factual Background

         In December 2013, Sullivan and Ruvoldt formed the law firm Sullivan Ruvoldt PLLC as a New York professional limited liability corporation. First Am. Compl. (“FAC”) at 10. (Doc. 19). Sullivan and Ruvoldt operated the firm pursuant to certain written and oral understandings. Id. at 11. From December 3, 2013 to March 31, 2015, Sullivan and Ruvoldt each shared decision-making responsibility for the operations of the firm as equal partners, each owned 50% interest in the firm, each had an absolute and unreviewable right to veto any transaction, and each had a right to 50% of the profits. Id. at ¶ 11. Sullivan Ruvoldt PLLC maintained a TD Bank account (the “Sullivan Ruvoldt Account”). Id. at ¶ 21. As of March 31, 2015, Sullivan Ruvoldt PLLC's net assets had an estimated value of over $400, 000. Id. at ¶ 19.

         In March 2015, Sullivan informed Rudvoldt that he had accepted an executive-level legal position with the State of Vermont effective April 1, 2015. Id. at ¶ 16. On March 26, 2015 the two partners exchanged a total of seven emails regarding Sullivan's departure:

1. At 9:58 a.m., Rudvoldt emailed Sullivan that: (1) Sullivan would need to “formally withdraw, ” (2) Sullivan's interest “will be set as assets minus liabilities at Midnight 3/31, ” (3) Ruvoldt will let Sullivan know “when receivables are collected and [Sullivan and Ruvoldt will] share all assets and liabilities, including receivables, ” (4) there are some liabilities that will not be known as of March 31, 2015, but will be shared if incurred before that date, and (5) Ruvoldt will “manage the wind down.” FAC Exhibit A; Second Supp. Sullivan Decl., Ex. 5 at 2. At the end of the email, Ruvoldt stated that he “deeply personally regret[s] the loss of [Sullivan] as a partner” and requested that Sullivan “email back that this is agreeable.” Id.
2. Sullivan responded at 10:51 a.m., “[I] will need to have continued access to books and records as the accounts as of now are incomplete and I believe not 100% accurate. [I] am assuming if [I] withdraw my name comes off?” Second Supp. Sullivan Decl., Ex. 5 at 2.
3. Ruvoldt wrote at 10:55 a.m., “Signatures come off but you will still have access. New accounts will be opened for new partnership[.] What kind of errors[?]” Id. at 1-2.
4. Sullivan replied at 11:02 a.m., “[F]or example it said I had $40, 000 in distributions. I think the number is for less, however that might account for someone's going into deposits. [I]t all needs to be looked at. [ ] I have no interest in delaying anything. I just want to make sure everything is accurate. [W]e are hindered by not having a complete set of books and records. . . . [T]he records right now are incomplete.” Id. at 1.
5. Ruvoldt stated at 11:09 a.m. that both Sullivan and Ruvoldt need to “update expenses etc., ” and reminded Sullivan that “there [a]re many more expenses than submitted by either of us that should be accounted for going forward.” Id.
6. At 11:36 a.m., Sullivan emailed on the same chain, “[I] was asking about use of my name for a spell. [I] take it you are not interested in that now? [I]f so, [I']ll need some hold harmless for that period, right?” Id.
7. Ruvoldt responded at 11:40 a.m., “We may need to use the name a few days. I am working to try to minimize, to avoid any overlap. But I may not be able to. Yes for any period your name after withdrawing is used you will be held harmless for any action taken or any liability thereafter incurred.” Id.

         On or about April 1, 2015, Fleming Ruvoldt PLLC's website announced that the operation of Fleming Ruvoldt PLLC had commenced and that Sullivan had departed. FAC at ¶ 20. Fleming Ruvoldt PLLC opened separate ...


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