Roche Freedman LLP v. Jason Cyrulnik

Background

Roche Freedman LLP sued Jason Cyrulnik, a founding partner, seeking a declaration that he had been properly removed for cause and that the firm’s withdrawal provisions governed what he would receive. The firm also asserted breach-of-fiduciary-duty and intentional-interference claims.

Cyrulnik filed counterclaims against the firm and five individual attorneys—Kyle Roche, Devin Freedman, Amos Friedland, Nathan Holcomb, and Edward Normand. He alleged that the individual attorneys conspired to remove him without cause after the firm’s cryptocurrency assets increased substantially in value. He claimed that the removal violated a partnership memorandum of understanding and a separate side letter, and that the counterclaim-defendants withheld compensation, firm equity, cryptocurrency interests, and an interest in a major contingency matter.

The individual counterclaim-defendants moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a pleading does not state a legally sufficient claim. The firm itself did not move to dismiss the counterclaims against it.

Statutory Partnership Claims

The court applied the Florida Revised Uniform Partnership Act to Cyrulnik’s claims for dissolution, a possible buyout, and an accounting. Because the parties identified no controlling Florida Supreme Court decision on whether a partner in a Florida limited liability partnership could bring these claims against individual partners, the court predicted how that court would resolve the issue and considered Florida appellate decisions.

The court held that Cyrulnik could pursue his dissolution claim against the individual counterclaim-defendants. His requested relief sought dissolution and winding up of the firm, not a direct money award against the individuals.

The court also held that Cyrulnik could pursue an accounting claim against the individual counterclaim-defendants under the Florida partnership statute governing accounting rights. The court reasoned that the statute allows a partner to enforce those rights against the partnership or another partner. However, the court dismissed Count 3 to the extent it sought an accounting under the Florida Revised Uniform Limited Partnership Act, because the parties’ Florida limited liability partnership was governed by the Florida Revised Uniform Partnership Act. The court also noted that Cyrulnik had not disputed the argument that the accounting statute did not authorize compensatory damages, so he conceded that point.

The court dismissed Cyrulnik’s statutory buyout claim against the individual counterclaim-defendants. Relying substantially on a Florida intermediate appellate decision, the court concluded that the statutory buyout claim could be brought only against the firm, not against another partner personally. The court stated that this ruling did not prevent Cyrulnik from pursuing separate contract and fiduciary-duty claims against the individuals.

Common-Law Counterclaims

The individual counterclaim-defendants also sought dismissal of Cyrulnik’s claims for breach of contract, breach of the implied duty of good faith and fair dealing, breach of fiduciary duty, conversion, unjust enrichment, promissory estoppel, and civil conspiracy.

The court rejected their argument that Cyrulnik had not alleged either damages to himself or a benefit received by the individual defendants. Cyrulnik alleged that the individual defendants improperly removed him to deprive him of compensation and other interests, pressured him to redistribute those interests, and continued to withhold assets he claimed. The court found those allegations sufficient to plausibly allege damages. It also found that allegations against Friedland, Holcomb, and Normand supported a reasonable inference that they financially benefited from Cyrulnik’s removal.

The court further held that the Florida statute limiting a partner’s personal liability for obligations of a limited liability partnership did not bar claims based on an individual partner’s own conduct or wrongdoing. Because Cyrulnik alleged that the individual defendants conspired, voted, and took other improper steps to deprive him of his assets, the court denied the motions to dismiss Counts 4 through 10 against them.

Other Requests

Holcomb, Normand, and Friedland requested a more definite statement, arguing that the counterclaims were too vague. The court denied that request, finding that the 174 allegations and 10 counts clearly described Cyrulnik’s theory of wrongdoing. The court stated that discovery, rather than a more definite statement, could provide additional details.

Cyrulnik asked the court to strike Roche and Freedman’s motion to dismiss and sought sanctions against them and their attorneys. The court found no basis to strike the motion or impose sanctions because the motion properly discussed documents referenced in or integral to the counterclaims and other materials the court could consider at the dismissal stage.

Disposition

Judge John G. Koeltl granted in part and denied in part the individual counterclaim-defendants’ motions to dismiss. The motions to dismiss the dissolution and accounting claims against the individuals were denied, except that Count 3 was dismissed against them to the extent it sought an accounting under the Florida Revised Uniform Limited Partnership Act. The motions to dismiss the statutory buyout claim were granted, and Count 2 was dismissed against the individuals. The motions to dismiss Counts 4 through 10 were denied. The motion for a more definite statement was denied, and the court found no basis for the requested striking of the motion or sanctions.