Special Litigation Committee

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I like writing this blog. What I don’t like is coming up with ideas for it. Pennsylvania courts just aren’t pumping out business divorce cases with the frequency I’d like to keep the posts flowing. But occasionally we get a gem. The Superior Court’s recent decision in Cramer v. Kaplin Stewart Meloff Reiter & Stein, P.C., 2026 WL 1961013 (Pa. Super. July 7, 2026), gives us plenty to talk about.

The holding is not groundbreaking — Pennsylvania law requires a derivative plaintiff to make a demand on the corporation, and failure to make that demand is fatal to the claim. I’ve written about this before (see my prior post on the demand requirement). The interesting part is the context in which the demand issue reached the court. That context gives us a peek into the messy world of business divorce litigation, puts some creative lawyering on display, and suggests how it could have been executed better.

The Freezeout, the Firm, and the Failed Demand

Evan Cramer and his brother Matthew were co-equal 50% owners of two companies — M. Cramer & Associates LLC and Philadelphia Theatrical Supply, Inc. The Kaplin Stewart law firm represented the companies for years. When the brothers’ relationship broke down, Matthew (per the complaint) went to Kaplin Stewart for help pushing Evan out, which the complaint alleges the firm provided.

Setting aside the apparent conflict of interest, the Kaplin Stewart attorneys apparently failed to consider or advise Matthew on the potential impact the freezeout could have on the companies’ financing and bonding facilities, both of which Evan and Matthew personally guaranteed. As a result of the alleged freezeout, the companies’ lender refused to extend their line of credit without Evan’s consent, bonded contracts fell through, and the businesses started circling the drain. Id. at *3.

Continue Reading You can’t back-date a derivative action into existence — even by settlement.

There is perhaps no richer vein of literary gold than conflict between fathers and sons. Hamlet, Robinson Crusoe, multiple characters drawn by Charles Dickens, not to mention the mother of all family contretemps, Oedipus Rex, touch on this deeply human power struggle.

One such conflict was the backdrop for the Pennsylvania Superior Court’s recent decision in MBC Development, LP v. James W. Miller, 281 A.3d 332 (Pa. Super. Ct. 2022). The decision serves as an important reminder that courts overwhelmingly favor arbitration as a means of dispute resolution, and gives us an opportunity to think about the virtues of arbitration provisions in organizational documents like limited partnership and operating agreements.

Continue Reading A FATHER-SON FIGHT HELPS DEFINE THE SCOPE OF ARBITRATION PROVISIONS IN CLOSELY HELD COMPANY DISPUTES

For some owners of closely held companies, installing a board of directors may seem more painful than cutting off one of their pinkie fingers.

They’d have to give up control of their business.

They’d have to share confidential information.

They’d have to waste time on the formalities of having a board.

They’d have to waste money on compensating directors.

Putting aside for a moment whether these concerns are valid (they’re not), for many owners of closely held companies, installing a board could be one of the best things they do for their companies—and their sanity.

Continue Reading PREPARE TO BE BOARDED! YET ANOTHER REASON CLOSELY HELD COMPANIES SHOULD CONSIDER INSTALLING BOARDS OF DIRECTORS

Last month, we tackled Pennsylvania’s “universal” demand requirement. As a refresher, unlike many states, Pennsylvania will not excuse the shareholder of a company who wants the company to sue its executives or directors from making a written demand on the company’s board of directors prior to filing a lawsuit even when doing so would…