PROFIT-SHARING AGREEMENT WAS VIOLATIVE OF NY STATE LAW
Alleging that the defendant – a dentist – had breached the terms and conditions of an asset purchase agreement, “A.D.A., PLLC” filed suit against T.B., alleging breach of contract and unjust enrichment.
When TB later sought to dismiss those claims, the Westchester County Supreme Court denied that request, and an appeal followed.
On its review, the Appellate Division, Second Department, thought that the court below had committed reversible error by denying the motion.
Apparently, the parties’ agreement allowed for the splitting of fees earned by their respective dental practices; an arrangement violative of New York State law. [Education Law §§ 6509-a, 6530[19]].
Since that was understanding was "illegal,” the AD2 thought the parties were precluded from seeking any form of relief from the courts, and noted:
"'Where the parties' arrangement is illegal the law will not extend its aid to either of the parties . . . or listen to their complaints against each other, but will leave them where their own acts have placed them'" (id., quoting United Calendar Mfg. Corp. v Huang, 94 AD2d 176, 180 [internal quotation marks omitted]).
Accordingly, the AD2 reversed the underlying determination, and dismissed the causes of action in question.
Was that a toothless agreement?
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DECISION