Gallet Dreyer & Berkey, LLP is pleased to announce that Partner Adam J. Berkey achieved a significant appellate victory in Loreti v. Lorcress, a closely watched shareholder dispute that has been recognized as one of the Top Ten Business Divorce Cases of 2025.

In a detailed Decision & Order issued by the New York Supreme Court, Appellate Division, Second Judicial Department, the Court affirmed key rulings in favor of our firm’s client and granted critical relief on cross-appeal—delivering a sweeping win in this contentious Business Corporation Law § 1104-a dissolution proceeding.

Key Appellate Holdings

The Court:

• Affirmed summary judgment declaring the rightful ownership of corporate shares, holding that shares issued in excess of those authorized by the certificate of incorporation were invalid as a matter of law.
• Reversed the lower court’s denial of summary judgment and granted relief setting aside a conflicted management agreement that provided an 8% gross-rent payment over ten years, finding no valid shareholder approval and no proof the agreement was fair and reasonable.
• Affirmed the imposition of spoliation sanctions under CPLR 3126, precluding the opposing party from offering testimonial or documentary evidence related to financial records that had been destroyed.

The appellate court’s opinion reinforces foundational principles of New York corporate law:

• A corporation may not issue shares beyond those authorized in its certificate of incorporation.
• Interested-party transactions must be properly disclosed and approved, or affirmatively proven fair and reasonable.
• Courts will not hesitate to impose meaningful sanctions for the destruction of key financial evidence.

Protecting Shareholder Rights in Closely Held Corporations

This case involved complex issues of ownership, fiduciary obligations, corporate governance, and discovery misconduct. The ruling provides important guidance for shareholders, directors, and counsel navigating disputes in closely held corporations.

According to Adam, “Business divorce litigation requires precision, persistence, and a command of both statutory and common-law corporate principles. We are gratified that the Appellate Division affirmed the integrity of the corporate structure and enforced accountability where it mattered most.”

The recognition of Loreti v. Lorcress as a Top Ten Business Divorce Case of 2025 underscores the significance of the decision within New York’s corporate litigation landscape.

Gallet Dreyer & Berkey remains committed to representing shareholders, fiduciaries, and businesses in high-stakes disputes involving corporate governance, dissolution proceedings, and complex commercial litigation.

If you have questions about a business divorce or commercial litigation, please connect with Adam at ajb@gdblaw.com, or call 212-935-3131.