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Steve Malitz successfully represents shareholder in suits brought against his client by a fellow shareholder

Arnstein & Lehr Attorney Steven N. Malitz

Steven L. Malitz

Arnstein & Lehr Chicago Partner Steven N. Malitz successfully represented a shareholder in two separate suits brought against him by his fellow shareholder. The two shareholders were founders and co-owners of a national goods business for many years. Although Mr. Malitz’s client had expanded the goods business into a foreign country to the benefit of both shareholders, the other shareholder accused Mr. Malitz’s client of dedicating his efforts to an unrelated, foreign business, though he had previously authorized such involvement. The other shareholder then denied his client physical and financial access to their business, eliminated his compensation, canceled his benefits, raided the corporate coffers, and sued to dissolve the business to start a competing business. He also sued Mr. Malitz’s client for an ownership interest in and distributions from the foreign business.

Mr. Malitz persuaded the judge to deny the other shareholder’s motion for immediate dissolution of the goods business. He then counterclaimed alleging a variety of breaches of duty and oppression by the other shareholder, and sought a buy-out from the goods business. As for the suit seeking ownership in the foreign business, Mr. Malitz moved to dismiss and strike discovery arguing that the Illinois courts had no power over the foreign entity. And, even if the foreign entity could be haled into court in Illinois, Mr. Malitz contended that Illinois law did not apply to the shareholder’s claim of ownership in the foreign entity. Rather, the law of that foreign jurisdiction applied and the foreign country would not dignify a court order issued out of a U.S. court. Creating leverage in both cases against the other shareholder, he negotiated a settlement resulting in total corporate divorce, no specter of future liability, no money paid out and dismissal of both cases, enabling his client to freely pursue other lucrative business interests.