A founding partner who was fired by a Harrison home health care firm is suing the company and its CEO for $1.11 million ”“ and trying to reclaim his position as a shareholder.
William M. Costello claims that Ronald M. Molloy, the chief executive officer of Curis Partners, exceeded his authority when he fired Costello and stripped his shares in the business, in a Feb. 17 complaint filed in Westchester Supreme Court.
He is asking the court to declare that the termination “is of no force and effect” and that he remains “entitled to all of the rights, powers and compensation associated with being a 25.1% founding equity member of Curis.”
Curis was founded in 2015 and specializes in assessing and treating high-risk patients in their homes.
The founding partners were Molloy, of Stamford, and Costello, of Flushing, Queens, each with 25.1% of the shares. Molloy put up $32,000 and Costello, the chief operating officer, contributed $40,000 in capital. George Stivala, the chief medical officer, of New Rochelle, and Scott Petersen, the chief information officer, of Utah, each got 24.9% of the shares.
A few months later, Molloy gave up 10% of his shares to John Foster, who contributed $50,000 to the partnership.
In 2019, Molloy distributed $100,000 to Foster and $20,000 to himself, according to the complaint, without getting authorization from partners holding a majority of the shares, as required by the operating agreement.
Costello objected.
Molloy said in an email to the partners that he had asked Foster to invest in the company, and that Foster had never requested or received any distributions or compensation.
The $100,000 was “fair and affordable,” Molloy said. “I didn”™t solicit any input from any of you because you have given me the control of the business to do what I think is correct and fair.”
Costello claims he has been denied access to company records since August.
On Dec. 8, Molloy notified Costello that he was being fired and released from the partnership at the end of the year. No justification was cited.
Costello argues that Molloy has no authority to unilaterally divest shareholders. Moreover, he says employment and membership in the partnership are separate matters.
He had no employment agreement, no duties, no set hours, no wages or salary, and no payroll taxes.
But as a founding member, the complaint states, Costello received distributions of profits, was listed as a member on Curis tax returns, and received a Form K-1 partnership tax statement each year.
He is “just a fully vested member,” the complaint states, “with a title.”
Molloy did not respond to an email asking for his side of the story.
Costello is asking the court to award him $1.11 million in damages; declare that he is an equity member with 25.1% interest in the company; nullify the $100,000 distribution to Foster and half of the $20,000 distribution to Molloy; and allow him to inspect company records and conduct an audit.
Queens attorney Gilbert de Dios represents Costello.
