## Facts

- Women’s World of Boxing, LLC (WWB) operated a women-focused boxing gym business started by Teresa Scott and later organized as a New York LLC.
- In 2016, Korin Huggins agreed to finance construction of a dedicated gym space and co-guaranteed the lease.
- In 2017, the parties entered an operating agreement giving Scott a 60% membership interest and Huggins a 40% interest; Scott was CEO/COO and Huggins was CFO.
- The operating agreement vested ordinary decision-making in the majority member, with unanimity required only for specified major actions.
- It was undisputed that Huggins did not participate in day-to-day operations or financial management.
- The gym opened in early 2018 and grew to more than 100 client members.
- After the parties’ romantic relationship ended, Huggins proposed that Scott buy out Huggins’s interest for $75,000 and stated Scott had been successfully maintaining the business and paying rent without Huggins’s contribution.
- After no buyout occurred, Huggins demanded access to financial documents and filed a proceeding seeking dissolution, a receiver, injunctive restraints, and inspection of books and records.

## Issues

1. Whether the petitioner proved under New York Limited Liability Company Law § 702 that it was not reasonably practicable for WWB to carry on its business in conformity with the operating agreement.
2. Whether internal dissension and allegations of asset misconduct by the majority member justified dissolution, receivership, and injunctive relief.
3. Whether, independent of dissolution, the petitioner was entitled to inspect WWB’s books and records as a member.

## Decision

- The court denied the petition for judicial dissolution under LLCL § 702.
- The court denied the requested temporary receiver and related injunctive relief as unwarranted absent grounds for dissolution.
- The court granted limited relief directing access to WWB’s books and records consistent with member inspection rights.

## Legal Principles

- Dissolution under LLCL § 702 requires a showing that it is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement.
- The petitioner bears a heavy burden; dissolution is an extraordinary remedy.
- The inquiry focuses on whether the LLC can achieve its stated business purpose and operate under the governance structure established by the operating agreement.
- Member conflict, loss of trust, or allegations of wrongdoing do not alone establish impracticability where the LLC remains economically viable and continues to operate for its intended purpose.
- Majority-control provisions in an operating agreement, and evidence that the majority member can continue operations without the minority member’s participation, weigh against dissolution.
- A member’s inspection rights may be enforced without ordering dissolution.

## Conclusion

The court held that a functioning, economically viable LLC operating in accordance with its stated purpose and majority-governance operating agreement could not be dissolved under LLCL § 702 based on member conflict and allegations of misconduct, though the minority member could obtain limited access to company records.


Huggins v. Scott, 2019 WL 6310506 (N.Y. Sup. Ct. Nov. 25, 2019)