Crypto Counterclaims May Be Filed By Ousted Law Firm Partner

An appeals court in a New York state has denied a claim brought by a former founding partner of a law firm as well as its individual members, which aimed to dismiss his counterclaims.

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Among the issues at the heart of the dispute is Roche Freedman LLP owing Jason Cyrulnik $250 million in cryptocurrency tokens, and whether or not they should divide those cryptocurrency tokens up among themselves.

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After Cyrulnik was fired for cause, the firm sued him for declaratory judgment, breach of fiduciary duty, and intentional interference with contract in the US District Court for the Southern District of New York when negotiations on how to settle the matter fell apart. In addition to the counterclaim against the firm and five of his former partners, Cyrulnik has filed a lawsuit against them as well.

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Cyrulnik, who had an office in Florida, filed for dissolution, a buyout in the alternative, and a Florida accounting as a result of his litigation. As well as breach of contract claims, he asserts that there is an implied covenant of good faith and fair dealing, as well as a fiduciary duty claim. Additionally, he claims conversion, unjust enrichment, promissory estoppel, and civil conspiracy claims.

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Cyrulnik saw his claims as statutory claims against the firm and not as common law claims against the partners since Cyrulnik did not plead damages to him or a benefit to them as individuals in the case. As for his common law claims, the partners argued that Cyrulnik could only bring them privately.

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A recent opinion by Judge John G. Koeltl indicated that there is no state precedent as to whether a partner in a Florida limited liability company can sue the other partners of the limited liability company individually for an accounting, a buyout, or a dissolution of the corporation. It is Koeltl's opinion that the accounting and dissolution provisions of Florida Revised Uniform Partnership Act indicate that Cyrulnik's counterclaims against his former partners were justified under the law. The seller may counterclaim for a buyout only against the firm rather than against the buyer, he said.

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As Koeltl said, the counterclaims brought by the partners "are without merit," citing the common law counterclaims. The allegations made by Cyrulnik, including the fact that he is still holding onto his assets at the firm as well as a share of the crypto tokens, are “reasonable evidence that he has suffered damages as a consequence of his alleged wrongful removal from the firm,” as he explained.As Koeltl said, the counterclaims brought by the partners "are without merit," citing the common law counterclaims. The allegations made by Cyrulnik, including the fact that he is still holding onto his assets at the firm as well as a share of the crypto tokens, are “reasonable evidence that he has suffered damages as a consequence of his alleged wrongful removal from the firm,” as he explained.

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Essentially, Cyrulnik claimed sufficient evidence for the court to find that they benefited from his removal as he claimed that every equity partner's interest in the firm increased when he was removed.