They say inertia is the strongest force in the universe. It can be the strongest force in litigation too, where business owners sometimes have to endure endless years, countless dollars, and incalculable torment just to correct a misdecided ruling on a motion.
I'm not necessarily saying that what's happened in Rozof v Rozof (___ AD3d ___, 2025 NY Slip Op 07309 [2d Dept Dec. 24, 2025]). But after more than ten years and not one, not two, but three head-scratcher decisions that propelled a garden-variety general partnership breakup on a wild litigation trajectory, the Appellate Division – Second Department finally set things straight.
In Rozof, the Court reaffirmed one of the most basic principles of general partnership law: no general partner can be forced to remain in partnership with another person against his or her will.
We first featured Rozof on the blog in late 2023. Back then, litigation had already been underway for seven and a half years. The facts were simple. The outcome was anything but.
The Real Estate Holding General Partnership
Mark, Linda, and Judith, siblings and majority general partners of a New York general partnership called 392 1st Street Company (the "Partnership"), sued their fourth sibling and general partner, Arthur, for judicial supervision of the winding up of the Partnership. The Partnership had no partnership agreement. The real fight was whether to sell or to hold the building's sole asset, an apartment building. Mark, Linda, and Judith favored the former, Arthur the latter.
The Duo of Dissolution Events
Mark, Linda, and Judith argued that the death in 2011 of the Partnership's fifth general partner, their mother, Edna, dissolved the Partnership. This argument was, of course, absolutely right. Under Section 62 (4) of the Partnership Law, unless an agreement provides otherwise, "a partnership is dissolved by operation of law upon the death of a partner" (Birnbaum v Flaum, 172 AD2d 473 [2d Dept 1991]).
As a fallback, Mark, Linda, and Judith argued that even if the general partners continued or reconstituted the Partnership after Edna's death, the formal written withdrawal in 2016 by Judith from the Partnership dissolved the Partnership a second time. This argument, too, was absolutely right. Under Section 62 (1) (b) of the Partnership Law, unless an agreement provides otherwise, the "withdrawal of a partner dissolves the partnership by operation of law" (Pappas v Fotinos, 28 Misc 3d 1212(A) [Sup Ct, Kings County 2010]).
The Trio of Lower Court Decisions
Despite the wind seemingly at their back with these hard-and-fast rules of law, Mark, Linda, and Judith had to go through hell trying to wind up the dissolved Partnership.
First, the original Justice in Nassau County transferred the case to Kings County, where it sat with no activity by the Court despite multiple requests for several years, forcing Mark, Linda, and Judith to file a second, carbon copy lawsuit seeking the same relief.
Second, after Mark, Linda, and Judith filed their new petition to wind up the Partnership, the newly-assigned Justice denied and dismissed their petition. The Court ruled that upon the death of Edna, and again upon the withdrawal of Judith, the partners "continued all operations" of the Partnership, and thereby "created a new partnership at will." From this perspective, wrote the Court, "there can be no winding-up of the original partnership that has been replaced by the new partnership at will still functioning at this time." The Court said it "would be improper to seek to wind-up a partnership that has continued in a new form with the remaining partners."
Third, Mark, Linda, and Judith moved for leave to reargue the denial and dismissal of their petition, arguing that their commencement of litigation to wind up the Partnership days after Judith's withdrawal demonstrated the intent to wind up, not to continue or reconstitute, the Partnership. The Court denied reargument, characterizing the protracted, thus-far-unsuccessful litigation to wind up the Partnership as "really acts of no consequence" and "nullities" because they sought to wind up a Partnership that "had long ago been dissolved" and replaced with a new one. The Court was of the view that Judith withdrew from, and Mark, Linda, and Judith were trying to wind up, the wrong partnership, and that their "subjective wishes" to end "whichever partnership existed," were not relevant.
The Appeal
Stung by three consecutive losses, Mark, Linda, and Judith had no other option but to appeal. And appeal they did, framing the issue on appeal thusly:
Should a court deny a petition for judicial winding up of a general partnership at will that dissolved by operation of law upon a partner's withdrawal on the basis that the petitioners took no steps to wind up the affairs of the partnership, despite court records showing petitioners, including the withdrawing partner: commenced a proceeding for judicial oversight five days after the withdrawal; repeatedly and diligently sought a determination in that proceeding; commenced a second proceeding for the same relief when a determination could not be obtained in the first proceeding; and where petitioners limited their activities after dissolution to those required by and consistent with the winding up of the affairs of the partnership such as the filing of tax returns, the collection of rents, and the payment of expenses?
You can read all the briefs here, here, and here.
Last Month's Appellate Reversal
The Court gave Mark, Linda, and Judith a win. But only partially. The Court wrote:
- "It is well settled that a partnership at will may be dissolved at any time by the express will of any partner, and it is equally clear that a partnership dissolves at the time that a partner leaves or withdraws from it" (citation modified).
- "Although dissolution occurs when the partners determine to discontinue business, the partnership is not terminated until the winding up of partnership affairs is completed" (citation modified).
- "After dissolution, a partnership is considered as maintaining a limited existence for the purpose of making good any outstanding engagements, taking and settling accounts, collecting partnership property and the means and assets of the partnership, and generally watching over the business for the benefit of all those interested" (citation modified).
- "Here, the February 18, 2016 letter manifested [Judith]'s intent to leave the partnership and thereby dissolved it. Contrary to the determination of the Supreme Court, the petitioners' actions in seeking judicial supervision after the dissolution of the partnership were consistent with the winding up process and did not create a new partnership at will."
- "Accordingly, the court should have denied that branch of the respondent's motion which was pursuant to CPLR 3211 (a) to dismiss the petition."
Thoughts on Rozof
My 30,000-foot worldview is that it tends to be far too hard for business owners in New York to separate through the litigation process. Sometimes, reasonable people just cannot agree and need to go their separate ways. When there is good cause for a business divorce, courts should be trying to find ways to make it happen, not creating artificial obstacles.
We know from many stories here on the blog that the stringent Ocean Avenue standard for LLC dissolution can make it exceptionally difficult, even impossible, for LLC owners to separate.
But for general partnerships, the law is, and always should be, the opposite. "No one can be forced to continue as a partner against his will" (Napoli v Domnitch, 18 AD2d 707 [2d Dept 1962], affd 14 NY2d 508 [1964]). This rule applies even if a written contract prohibits partner withdrawal or requires partnership reconstitution upon dissolution – a general partner can still withdraw and dissolve "at any time" (Partnership Law § 62 [2]), but it exposes him or her to a claim for breach of contract / wrongful partnership dissolution (see e.g. Congel v Malfitano, 31 NY3d 272 [2018]; Hotel Prince George Affiliates v Maroulis, 62 NY2d 1005 [1984]).
In Rozof, it seems particularly harsh for the motion court to effectively blame the majority general partners for the court's own delay. Objectively, Mark, Linda, and Judith tried hard, for many years, in multiple ways, in multiple legal proceedings, and in multiple courts, to try to dissolve and wind up the Partnership. Under the partnership dissolution statute, all one needs to do to dissolve is manifest the "express will" to do so (Partnership Law § 62 [1] [b], [2]). By any measure, Mark, Linda, and Judith's actions in the legal process showed the will to dissolve. They continued to run the business only because the court forced them to do it by declining to rule on their petition for so many years. "The continuation of the business of the partnership after its dissolution does not revive the dissolved entity" (Bitetto v F. Chau & Assoc., LLP, 10 Misc 3d 595 [Sup Ct, Nassau County 2005]).
One final observation. The appeals court in Rozof ruled that Judith withdrew from, and "thereby dissolved," the Partnership, as a matter of law.
After ten years of legal warfare, the Court reversed only the grant of Arthur's motion to dismiss, but not the denial of Mark, Linda, and Judith's petition. Why not grant the petition? Will Mark, Linda, and Judith now have to relitigate whether the motion court should grant judicially supervised winding up of the Partnership? After what they have been through, let's hope not.
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