A New York appellate court has reversed a previous ruling in the case of Manzo v. Scanlon, affecting the ownership of shares in LRM Properties, Inc. The decision, made on November 4, 2026, allows the plaintiffs, led by Lucio Manzo, to pursue their claims regarding stock ownership and the validity of shares issued to the defendant, James Scanlon. This case is significant for shareholders and businesses navigating corporate governance and stock issuance.

The dispute centers around the ownership of shares in LRM Properties, Inc. (LRM), which was allegedly dissolved due to nonpayment of taxes. Lucio Manzo, the president of LRM, and other plaintiffs filed a lawsuit against Scanlon, claiming that shares issued to him were invalid and that Manzo was the sole shareholder of LRM. The case highlights important issues regarding corporate capacity and shareholder rights.

The case reached the Appellate Division of the Supreme Court of the State of New York after the Supreme Court in Westchester County granted Scanlon's motion for summary judgment. This ruling dismissed the complaint and declared that shares issued to Scanlon were valid, effectively denying Manzo's claim of sole ownership. The plaintiffs appealed this decision, leading to the recent ruling.

The Appellate Division, which included Justices Valerie Brathwaite Nelson, Paul Wooten, Laurence L. Love, and James P. McCormack, found that the lower court had made errors in its determination. The court ruled that the plaintiffs raised a triable issue of fact regarding LRM's capacity to bring the action, as they provided evidence that LRM had been restored to active status after paying tax arrears. The court stated, "the Supreme Court improperly determined that Manzo lacked capacity to bring this action based upon a determination as to Manzo's capacity in the prior order."

The court's decision reversed the previous ruling, denying Scanlon's motion for summary judgment and allowing the plaintiffs' cross-motion for summary judgment to be reconsidered. The court emphasized that the issue of whether Manzo had a direct claim for harm to him individually was not resolved in the earlier decision, meaning it could still be pursued in this case.

This ruling has significant implications for the parties involved. It allows the plaintiffs to continue their pursuit of claims regarding the validity of shares and the ownership structure of LRM. The court's decision also highlights the importance of corporate governance and the rights of shareholders in disputes over stock ownership.

Moving forward, the case will return to the Supreme Court in Westchester County for a new determination of the plaintiffs' cross-motion for summary judgment. The court will also consider whether that motion was timely filed. This ruling could set a precedent for similar cases involving corporate capacity and shareholder rights in New York.

As for the possibility of further appeals, the court's decision can be appealed to the New York Court of Appeals, but it remains to be seen if either party will pursue that route. The outcome of this case could influence future disputes involving corporate governance and shareholder rights.