Introduction

In South Shore Eye Care, LLP v. Lane, 2025 NY Slip Op 05272 (App Div 2d Dept Oct. 1, 2025), the Appellate Division, Second Department, confronted a recurring governance question in professional practice groups: may a managing partner, if expressly authorized by the partnership agreement, expel a partner without cause, and does that expulsion automatically terminate the partner’s membership in an affiliated real estate LLC when the LLC operating agreement conditions membership on partnership status?

The dispute arose within South Shore Eye Care, LLP (SSEC), a Long Island ophthalmology practice organized as a limited liability partnership. The defendant/counterclaim plaintiff, Dr. Howard Lane, and four colleagues were equal partners in SSEC and members of 689 Realty, LLC, a related entity that owned practice real estate leased to SSEC. In 2020, the partners amended their LLP agreement to designate the founding member, Dr. Mark Stein, as managing partner and to include an expulsion clause authorizing the managing partner to expel a partner “without cause.” The 689 Realty LLC operating agreement tied LLC membership to SSEC partner status and provided that an involuntary withdrawal from SSEC triggered a corresponding involuntary withdrawal from the LLC.

After Lane opposed negotiations with private equity investors, Stein expelled him in November 2021. Litigation followed. SSEC and 689 Realty sought a declaratory judgment that Lane was expelled from SSEC and, consequently, ceased to be a member of 689 Realty. Lane counterclaimed for breach of contract, breach of fiduciary duty (and aiding and abetting), and an accounting, arguing that the expulsion violated the LLP agreement and was carried out in bad faith.

The key issues on appeal were:

• Whether the “without cause” expulsion clause in the amended LLP agreement is enforceable according to its plain terms.
• Whether Lane raised a triable issue of bad faith sufficient to preclude enforcement of the expulsion clause under New York law.
• Whether Lane’s counterclaims (contract, fiduciary duty, aiding and abetting, and accounting) survived dismissal under CPLR 3211(a)(1) and (7) in light of the documentary record.
• Whether Lane’s expulsion from SSEC automatically terminated his membership in the affiliated realty LLC under the LLC operating agreement’s dependency provision.

Summary of the Opinion

The Second Department affirmed the Supreme Court, Nassau County’s order granting summary judgment for SSEC and the 689 Realty members, declared that Lane was expelled as a partner of SSEC, and held that he ceased to be a member of 689 Realty. The court further affirmed dismissal of Lane’s counterclaims under CPLR 3211(a)(1) and (7).

Applying traditional contract-interpretation principles, the court enforced the LLP agreement’s expulsion clause authorizing the managing partner to expel a partner without cause. The court rejected arguments that other provisions created ambiguity or contradicted the expulsion clause and concluded that Lane failed to raise a triable issue of bad faith that would bar enforcement under Gelder Medical Group v. Webber. The dependency language in the 689 Realty operating agreement meant Lane’s loss of SSEC partner status automatically terminated his LLC membership.

As to the counterclaims, the court held:

• Breach of contract claims failed because Lane did not identify a provision that Stein or others breached; the expulsion clause expressly authorized the conduct.
• Breach of fiduciary duty and aiding-and-abetting claims failed because the alleged damages (loss of patient access and reduced patient volume) were not directly caused by the alleged misconduct (exclusion from private equity meetings), and the claims lacked the particularity required by CPLR 3016(b).
• Accounting claims failed because Lane could not show a breach of fiduciary duty that would entitle him to an equitable accounting.

The matter was remitted for entry of a declaratory judgment, inter alia, memorializing Lane’s expulsion and cessation of LLC membership.

Analysis

Precedents Cited and Their Influence

The panel grounded its ruling in several strands of New York law: contract interpretation, the enforceability of expulsion clauses in professional partnerships, and pleading and dismissal standards under CPLR 3211.

• Contract interpretation and enforcement of unambiguous agreements:
  • Greenfield v. Philles Records, 98 NY2d 562 (2002) – Courts enforce written agreements according to their plain meaning when they are complete, clear, and unambiguous.
  • Long Island Minimally Invasive Surgery, P.C. v. MultiPlan, Inc., 228 AD3d 638 (2d Dept) and Orlando v. County of Putnam, 208 AD3d 503 – Reaffirm the “best evidence” rule that parties’ intent is determined from the writing itself.
  • Village of Spring Valley v. Post Office Square, LLC, 211 AD3d 885; NML Capital v. Republic of Argentina, 17 NY3d 250; Roman Catholic Diocese of Brooklyn v. Christ the King Regional High School, 164 AD3d 1390 – Courts do not add to or distort contractual terms; they enforce what the parties wrote.
  These authorities supported enforcing Section 9.3(b) of the amended LLP agreement, which unambiguously permitted unilateral expulsion by the managing partner without cause.
• Expulsion clauses and “bad faith” limitation in professional partnerships:
  • Gelder Medical Group v. Webber, 41 NY2d 680 (1977) – The Court of Appeals upheld a professional partnership expulsion clause, emphasizing that partners choose with whom to associate. Enforcement may be precluded for bad faith resulting in undue penalty or unjust forfeiture.
  • Levy v. Nassau Queens Medical Group, 102 AD2d 845 (2d Dept 1984) – Applied Gelder, reiterating the narrow “bad faith/forfeiture” limitation.
  These cases supplied the framework: a no-cause expulsion clause is enforceable absent a showing of bad faith producing undue penalty or unjust forfeiture. Lane failed to make that showing.
• Summary judgment and CPLR 3211 dismissal standards:
  • Alvarez v. Prospect Hospital, 68 NY2d 320 (1986) – Standard for summary judgment; the movant must make a prima facie showing of entitlement to judgment as a matter of law.
  • Leon v. Martinez, 84 NY2d 83 (1994); Yan Ping Xu v. Van Zwienen, 212 AD3d 872; Goshen v. Mutual Life Ins. Co. of N.Y., 98 NY2d 314 – Dismissal under CPLR 3211(a)(1) where documentary evidence utterly refutes the allegations; under (a)(7), courts accept pleadings as true but may dismiss when evidentiary submissions show no cognizable claim.
  • Phillips v. Taco Bell Corp., 152 AD3d 806; Granada Condominium III Assn. v. Palomino, 78 AD3d 996 – Define “documentary evidence” as unambiguous, authentic, and undeniable documents like contracts and judicial records.
  • Klostermeier v. City of Port Jervis, 200 AD3d 866 – On (a)(7), the question becomes whether the plaintiff has a cause of action in light of evidentiary submissions.
  Here, the LLP and LLC agreements constituted dispositive documentary evidence that defeated the counterclaims and supported declaratory relief.
• Elements of substantive counterclaims:
  • Breach of contract: 1470 39th St., LLC v. Goldberg, 226 AD3d 853; Ripa v. Petrosyants, 203 AD3d 768; Stewart v. Berger, 192 AD3d 940; NFA Group v. Lotus Research, Inc., 180 AD3d 1060 – Plaintiffs must identify the specific contractual provision breached; failure is fatal.
  • Breach of fiduciary duty and aiding and abetting: 88-18 Tropical Restaurante Corp. v. Utica First Ins. Co., 223 AD3d 772; Matter of Caton, 206 AD3d 993; Plymouth Capital, LLC v. Montage Financial Group, Inc., 230 AD3d 1361; Land v. Forgione, 177 AD3d 862 – Elements include existence of fiduciary duty, misconduct, and resulting damages; aiding and abetting requires knowledge and substantial assistance; CPLR 3016(b) imposes particularity.
  • Accounting: LMEG Wireless, LLC v. Farro, 190 AD3d 716; Gorunkati v. Baker Sanders, LLC, 179 AD3d 904 – An accounting requires a fiduciary relationship and breach of duty respecting property in which the claimant has an interest.
  • Declaratory judgment procedure: Lanza v. Wagner, 11 NY2d 317 – When declaratory relief is granted, the matter should be remitted for entry of a formal declaration.
  These authorities undergirded the dismissal of Lane’s counterclaims.

Legal Reasoning

The panel’s reasoning followed a straightforward path of contract enforcement constrained by a narrow “bad faith” exception:

• Unambiguous expulsion authority: Section 9.3(b) of the amended LLP agreement gave the managing partner unilateral authority to expel a partner “without cause.” The court held the provision was clear, not contradicted by other provisions, and therefore enforceable according to its plain meaning. Under Greenfield and its progeny, courts will not re-write the parties’ chosen governance structure.
• No triable showing of bad faith under Gelder/Levy: Even where an expulsion clause exists, enforcement can be precluded if the expulsion is in bad faith and results in an undue penalty or unjust forfeiture. The court emphasized Gelder’s core partnership principle—that partners choose their associates—and found Lane’s submissions insufficient to demonstrate bad faith. Notably, the court highlighted that Lane failed to show any undue penalty or unjust forfeiture resulting from his expulsion. Allegations that he was “abruptly cut off” from his patient base and saw fewer patients did not, on this record, amount to the kind of unjust forfeiture that would defeat the clause.
• Automatic loss of affiliated LLC membership: The 689 Realty operating agreement “expressly” conditioned LLC membership on SSEC partner status and provided that involuntary withdrawal from SSEC caused involuntary withdrawal from the LLC. Because Lane’s expulsion validly terminated his SSEC partnership, the dependency provision triggered automatic cessation of his LLC membership. This reflects courts’ willingness to enforce cross-entity linkage clauses when unambiguous.
• Summary judgment and CPLR 3211 dismissals:
  • The LLP and LLC agreements qualified as documentary evidence that “utterly refuted” Lane’s factual assertions to the extent they contradicted the governing documents. As a result, the contract and fiduciary claims could not proceed.
  • For breach of contract, the dispositive point was that Lane could not identify any LLP provision prohibiting no-cause expulsion; to the contrary, the expulsion clause expressly permitted the conduct.
  • For fiduciary duty and aiding-and-abetting claims, Lane’s damages theory (loss of patients and reduced volume) was not directly attributable to the alleged misconduct (exclusion from private equity meetings), defeating causation. The claims also failed the heightened particularity requirement of CPLR 3016(b).
  • For an accounting, the absence of a breach of fiduciary duty respecting property in which Lane retained an interest defeated his equitable claim.
• Procedural completeness: Because the suit sought declaratory relief, the panel properly remitted for entry of a formal judgment declaring Lane’s expulsion from SSEC and concomitant cessation of 689 Realty membership (Lanza v. Wagner).

Impact and Forward-Looking Implications

The decision has concrete implications for professional firms and closely held entities across New York, particularly in physician practices that pair an operating entity with an affiliated realty LLC.

• Affirmation of managerial expulsion power where drafted: The court reiterated that New York courts will enforce no‑cause expulsion provisions that are clear and complete. A managing partner’s unilateral authority is not suspect if the partners agreed to it in writing. Drafting precision will be decisive.
• Narrow scope of the “bad faith/unjust forfeiture” exception: By requiring a showing of bad faith that results in an undue penalty or unjust forfeiture, the court underscores the high bar for displacing an agreed expulsion mechanism. Mere strategic disagreements (e.g., over private equity transactions) or general allegations of harm are not enough.
• Enforceability of cross-entity dependency clauses: Where an LLC operating agreement links membership to partnership status in an operating entity, courts will honor that linkage. Partners who lose their status under one agreement should expect collateral consequences in affiliated entities if the agreements so provide.
• Litigation posture and evidentiary strategy: Documentary evidence—the governing agreements—can be outcome-determinative at the pleadings stage and on summary judgment. Parties challenging expulsion must marshal specific, nonconclusory facts demonstrating bad faith and unjust forfeiture to avoid dismissal; they should also identify concrete contractual breaches rather than generalized grievances.
• Practice pointers in drafting:
  • For firms: If the intent is to allow managerial expulsion, state it expressly, define “withdrawal,” and specify cascading effects on related entities. Consider buyout valuation, timing, and payment mechanics to mitigate future “forfeiture” arguments.
  • For partners: Understand the breadth of expulsion clauses and the interdependence of entity agreements at entry. Negotiate limits (e.g., cause requirements, supermajority votes, procedural safeguards) if unilateral authority is a concern.
• Sector-specific resonance: In physician groups amid consolidation and private equity interest, internal governance battles are common. This opinion signals that courts will not second-guess bargained-for management authority absent a demonstrable, inequitable forfeiture or bad faith.

Complex Concepts Simplified

• No‑cause expulsion clause: A provision in a partnership agreement allowing designated authorities (e.g., a managing partner) to expel a partner without needing to prove misconduct or “cause.” New York courts enforce such clauses when they are clear and unambiguous.
• Bad faith, undue penalty, unjust forfeiture (Gelder standard): Even with a valid expulsion clause, enforcement may be denied if the expelling partners act in bad faith in a way that imposes an inequitable penalty on, or causes an unjust loss to, the expelled partner. Examples can include confiscatory buyout structures or conduct designed to strip value beyond what the agreement contemplates. The burden to show this is on the expelled partner and is demanding.
• Documentary evidence (CPLR 3211(a)(1)): Written materials like contracts and judicial records that are unambiguous, authentic, and undeniable can defeat claims at the pleadings stage when they conclusively refute the allegations.
• Failure to state a claim (CPLR 3211(a)(7)) and particularity (CPLR 3016(b)): Courts assume pleaded facts are true but can dismiss if, even so, no legal claim exists. Claims like fraud and breach of fiduciary duty must be pleaded with specificity, including the who, what, when, and how of the alleged misconduct and causation of damages.
• Accounting: An equitable remedy requiring a fiduciary to account to the beneficiary for property or funds under their control. It generally requires proof of a fiduciary relationship, a breach of duty, and an interest in the property at issue.
• Declaratory judgment and remittal: When a court determines parties’ rights, it often remits the matter for entry of a formal declaratory judgment so the declaration is reflected in a final judgment document.

Conclusion

South Shore Eye Care, LLP v. Lane reaffirms core New York principles: courts enforce clear governance arrangements as written; partners are generally free to choose their associates; and no‑cause expulsion clauses in professional partnerships are valid absent a concrete showing of bad faith leading to undue penalty or unjust forfeiture. The opinion also confirms that when an LLC operating agreement expressly ties membership to partnership status, expulsion from the partnership can automatically terminate LLC membership.

The decision’s practical significance is twofold. First, it empowers professional firms to rely on carefully drafted management and expulsion provisions without fear of routine judicial second‑guessing. Second, it cautions dissenting partners that overcoming such provisions requires specific, well‑supported evidence of inequitable forfeiture—not merely disagreement with strategic decisions or generalized harm. For drafters and litigants alike, the case underscores the primacy of unambiguous contracts and the narrowness of equitable exceptions in New York partnership law.

Key takeaways:

• Unambiguous no‑cause expulsion clauses are enforceable; courts will not rewrite them.
• The Gelder bad‑faith exception is narrow and requires a showing of undue penalty or unjust forfeiture.
• Cross‑entity membership dependency provisions are honored and may cause automatic termination of related interests.
• Documentary evidence can defeat counterclaims at the pleadings stage; specificity and causation are essential for fiduciary-duty based claims.
• In declaratory judgment actions, courts will remit for entry of a formal declaration reflecting the rights adjudicated.