Layt vs Messier NY

ED ON 212612007

At IAS Part of the Supreme Court of the State of New York, County of New York, held in and for the County of New York, at the Courthouse thereof, at 60 Centre Street, New York, New York, on the - day of February, 2007.

PRESENT: Hon. , Justice

SUPREME COURT OF THE STATE OF NEW YORK

22,2007, together with all of the exhibits annexed thereto,

LET Defendant, Messier Partners LLC ('Messier Partners" or "), or its

attorney, show cause before this Court at IAS Part -, to be held in and for the County of New

York, at the courthouse, 60 Centre Street, New York, New York, in Room , on the

day of March, 2007, at

co

Phi&€€ for inspection pursuant to New York Limited Liability Company Law 0 1 102@) and 6

Delaware Code 0 18-305 in accordance with NaktifEs lawful

noon of that day, or a soon thereaRcr as

should not be compelled to furnish its books and records to el can be heard, why !ZOW p t . h tip 4Lh

therefore; it is further

ORDERED, that pending the hearing of this motion Messier Partners and its

controlling member Jean-Marie Messier, its employees, and all other persons with notice herewith

Supreme Court Records OnLine Library - page 1 of 24

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are hereby restrained and prohibited from transferring or disposing of lkfhdmb 's books and

records for the years 2004-2007; and it is further

ORDERED, that service of a copy of this order and the papers upon which it is based and

day of February, 2006, by serving copies

Messier Partners LLC at One Rockefeller Plaza, Suite 1502, New York, NY

the undertaking herein, be made on or before the

thereof on

10020, by hand.

&nt

Entered: J.S.C.

GAPS Cllenta\hyt\Ordar to Show Cause 2 - 2 3 4 7 . d ~

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Index No.:

Jg---<T-& OF FATINE

LAYT FOR AN ORDER COMPELLING ACCESS TO BOOK$ AND RECORDS

1. Fatine Layt (‘%ktW or “Layt”), an individual residing in France, makes the

following to compel Messier Partners LLC (“Defendant” or WF“’), a

Delaware limited liabili

York, to grant access to Pkrrt&t to its books and records pursuaptto 6 Delaware Code 01 8-305’

and N.Y. Limited Liability Compmy Law 6 1 102(b).2

any with its only office at One Rockefeller Plaza, New York, New

/Le&) %$ ‘a? 4&w 2J* I

1 6 Delaware Code 518-305 provides in pertinent part as follows (eqhasi@@@ * 1. ;

(a) Each member of a limited liability company has the right, subject to such reaso forth in a limited liability company agreement or otherwise established by the m by the members, to obtain from the limited liability company from t ime to time upon reasonable demand for any purpose reasonably related to the member‘s interest as a member of the limited liability compahy: (1) True and full information regarding the status of the business and financial condition of the limited liability company; (2) Promptly after becoming available, a copy of the limited liability company’s federal, state and local income tax returns for each year; (3) A current list of the name and last known business, residence or mailing address of each member and manager; (4) A copy of any written limited liability company agreement and certificate of formation and all amendments thereto, together with executed copies of any written powers of attorney pursuant to whch the limited liability company agreement and any certikate and all amendments thereto have been executed; (5) True and full dormation regarding the amount of cash and a description and statement of the agreed value of any other property or services contributed by each member and which each member bas agreed to contribute in the future, and the date on which each became a member; and (6) Other information regarding the affairs of the limited liability company as is just and reasonable.

N.Y. Limited Liability Company Law $1 102@) provides as follows (emphasis added):

@) Any member may, subject to reasonable standards as may be set forth in, or pursuant to, the operating agreement, inspect and copy at hs or her own expense, for anypurpose reasonably related to the member‘s interest as a member, the records referred to in subdrvision (a) of this section, any financial statements maintained by the limited liability company for the three most recent fiscal years and other information regarding the aflairs of the limited liability company as is just and reasonable.


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r&tionw 2. Based on the facts set forth in the attached affidavit

2007 (the “Layt Affidavit” or “Lap Aff.”), and the exhibits thereto,

the books and records of defendant pursuant k p /+It--

member of €b€m&nt owning a 25% interest in

“reasonably related to the member’s interest as a member” for examining s books and cinyd

records, and (c) the books and records I h a U s e e k s to investigating her claims of

diversion or misuse of defendant’s funds, to valuing P k k W ‘ s interest in M p , and to calculating

and paying her share of taxes on M l ” s income. 6 Del. Code 4 18-305; N.Y. Limited Liability

Company Law 61 102(b).

3. ‘43ekkdW Messier Partners is majority owned by Jean Marie Messier. Mr. Messier

was previously the Chief Executive Officer of the large French public company Vivendi Universal

S.A. (“Vivendi”). As a result of his improper conduct at Vivendi, in 2002, Mr. Messier was

removed from his position as CEO of Vivendi. Under a consent decree he signed with the US.

Securities and Exchange Commission, he was compelled to relinquish nearly $25 million in

severance payments from Vivendi and banned by the SEC from acting as an officer or director of

any US. publicly traded companies. A copy of press release issued by the SEC concerning this

matter is attached to the Layt Affidavit as Exhibit “A.” Set Layt Aff. 76.

4. In addition, Messier is a defendant in litigation brought by Vivendi shareholders

allegedly injured by the drop in price of Vivendi stock during Mr. Messier’s tenure. &g Layt

Aff. 78.

5 . Following his departure from Vivendi, in 2002 Messier established a consulting

firm to render advice in the area of mergers and acquisitions, named Messier Partners LLC, in

New York. Stc Layt Aff. 79.


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fQ-47 t; D d l w . . 6 . In 2003, M i . Messier first approached PkM&t bout becoming involved in the

consulting business he had established and she initially purchased a 20% interest therein. In

addition, Layt and Messier established two more companies, Messier Partners SAS (France)

(“Messier France”) in Paris, and Messier Partners SA (UK) (“Messier UK”) in London (with

Messier Partners LLC, the “Messier Companies”). plea‘mtlfflater purchased an additional 5% p+,&hw

interest in Defendant and currently owns 25% of each of the Messier Companies. Layt Aff,

7. The onlv office of M p is located in One Rockefeller Plaza in New York. +v.P*t-

4kfcdmkonducts its business activities from this office with the regular involvement of the

office of Messier France where Layt was located. & Layt M. 71 1. FWh t

8. The consulting services furnished by4cfoadapt are furnished in New York and

Paris. See Layt Aff. 712.

9. Messier frequently contacted-by e-mail or phone fiom the office of MP in

New York. See Layt Aff. 713. Layt also had duties relating to ME”s projects originating in New

York. & Layt Aff. 114.

Proof of P h M W s Membership Status in MP

10. Mrs. Layt is clearly the owner of a significant membership interest i m .

In 2004, plaintiff purchased a 20% interest in defendant from Messier which was to be paid for by

reducing the future profit distributions she would receive fkom p@&gUlt; . See Layt Aff. 715.

@+mh t- 11. To confirm Layt’s status as a member of J2&daat , Messier sent Lap a “Written

Consent For The Transfer of Interest In Messier Partners LLC” signed by Messier, as “Managing

Member of Messier Partners LLC.” & Layt Aff. Exhibit ‘73.” This document states:

Pursuant to Article IV sections 6.01 and 6.02 of the Messier Partners LLC limited liability operating agreement, I, Jean Marie Messier, in my capacity as the managing member of Messier Partners LLC,

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hereby consent to the transfer of a twenty percent interest in Messier Partners LLC from Jean Marie Messier to Fatine Layt. The effective date of the transfer is January 1 , 2004, on which day Fatine Layt shall be admitted as a member of q e limited liability company. u y i - pA-d-ioaclr

12. t en proceeded to pay PhrnM distributions of its profit on account of

her membership interest in M p for 2004 and 2005 on the basis of pktm@owning a 20% inter st

in that company. In October 2005, F%rrWacquired an additional 5% interest in

last distribution H&if€received due to her ownership interest in

l b f - d - i o 4 J

& t i o w - && . The

was paid on January F&kOmc/

23,2006 (relating to 2005 profits) in the amount of Euros 750,000 (about $900,000) which

equaled 25% of $ L f y - i 4 W f

rofits reflecting I?kw&&Fs 25% ownerslup interest in

- See Layt Aff. y17.

13. MP distributed its income to Layt on the following dates:

Year/ LaYt LaYt Messier Distribution # Percentage Amount Percentage

2004-1 Sept. 15,2004 20% $100,000 80% 2005-1 Jan. 24,2005 20% $15,000 80% 2005-2 Sept. 15,2005 21% €127,006 79% 2005-3 Sept. 19,2005 21% €5 85,704 79% 2005-4 Oct. 18,2005 21% €126,759 79% 2005-5 Dec. 20,2005 25% €1,000,000 75% 2006-1 Jan 23,2006 25% €750,000 75%

(See Layt Aff, 718).

14. Copies of the statements from Mp confuming plaintiffs 20%, and later 25%,

equity interest in MY, and showing that M p made the above profit distributions based thereon to

Layt are annexed to the Layt Affidavit as m b i t “C,” Messier also received these profit

distribution letters. Layt Aff.

15. As further proof of s equity interest in MP, Layt received the 2004 Form

1065 (“U.S. Return of Partnership Income”) of MP. Stt Layt Aff. Exhibit “D.” Messier signed

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this return certifying underpenalty ofperjury that the statements made therein, including the

statement that a 20% interest in Mp, were true. See Layt 9 720. perC-r.hayuf

16. Page 2 of the Mp’s K-1 form attached to the return lists pknrrtWas 20% owner and

lists Layt’s address as “c/o Messier Partners LLC, One Rockefeller Plaza, New York, N.Y.”

Layt Aff. 721.

17. Moreover, Messier has acknowledged PkthtS as a minority shareholder in other

on December 1,2005 to Mp’s /LJ&h&/

writings. For example, Messier sent an e-mail (copied to

tax consultant in which Messier: (a) acknowledges that -is a 20% shareholder; and (b) MhJnw

states that ths is “without any specific U.S. shareholder agreement.” See Layt Aff. Exhibit “E.”

and Layt Aff. 722.

18. In September 2005, b z u i r e d an additional 5% interest in M P . Only

recently has Messier claimed for the first time that Layt is not a member of MP, despite the tax

returns of Mp and other documents from him stating otherwise. & Layt Aff. 723.

19. Indeed, Messer’s claim that Layt does not own an interest in t is belied by

a letter he wrote just days ago in which he acknowledged that Layt was entitled to 20% of h4Fs

profits for 2006. (See copy of letter dated February 14,2007 from Messier ta Layt attached as

Exhibit A to annexed Affirmation of Patrick P. Salisbury, Esq. dated February 22,2007).

Termination and Fraud by Mr. Messier

20. Disputes arose between Messier and Layt in 2006. These disputes involved

Messier’s improper use of the company’s funds to pay his personal legal fees not relating to

company business and ,fo pay expenses incurred by his latest girlfriend, Crista1 Delaval, for her

personal travel. S believes these improper payments exceeded $150,000 through the latest ~ 4 l ~ w - . .

date for which she has financial information from M p . & Layt Aff. 724.

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/ Ic@flQm t- 21. Additionally, M p became far more profitable in 2006. 3dBRhnt is believed to

have earned at least $12 million in 2006 (some of which may have been booked in other Messier

Companies), of which Naidff’s 25% share would be $3 million. Messier refused to distribute

Layt’s share of these profits or even to show FMnMthe records of the company which would

allow her to determine how much she is due. Stc Layt Aff. 725.

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22. In October 2006, while these disputes were on-going, Messier dismissed Layt from

her position in Messier France on a pretextual basis due to her objections concerning Messier’s

improper use of funds from MP for his personal expenses and her demand for her twenty-five

percent share of the profits at M p . See Layt Aff. 726. a& . . 23. Priorto dismissal, Messier had employed his girlfriend, Ms. Delaval, as

a “consultant” of M P , despite her complete lack of experience in the mergers and acquisitions

area. Messier paid this girlfriend many tens of thousands of dollars o f3dcnch& funds without

plaintiffs consent. Mp continues to employ Ms. Delaval and pays her substantial sums solely

because of her close personal relationship wit Messier.

@pflM

Layt M. 727. /&Lc

24. Following her dismissal, l&kktiR became aware of the diversion of other funds

from Mp’s profits to pay the personal expenses of Messier or expenses of other Mi. Messier

ventures. See Layt Aff. 728. f&ti O d W 25. Perhaps even more importantly, Phkti4Zbecame aware of extremely improper

pYJp.lnof9bl t conduct by Messier in which he, through

acquisition transactions involving major publicly traded companies. This advising both sides was

not disclosed by Messier to the clients and was wholly improper. Set Layt Aff. 728.

, provided advice to both sides in large

26. Layt has also become aware of potentially improper commissions being paid by

Messier using MP’s funds to representatives of MP’s clients relating to advisory work being

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FQ-yB“ b4-j performed by Messier, through -for both sides of large transactions involving major

public companies. @ Layt Aff. p. 8). /b(-l F-; B M W Y

s Request for Access to Defendant’s Books and Records Denialof PhfhKHY a

27. Following Layt’s dismipsal, she retained her membership interest in and 1 , A

&-loy‘ the other Messier Companies. cpeatedly requested information from Messier regarding

the financial affairs of Be&&mh n which she still owned a 25% interest. After Messier refused

to provide any information,

w4d- was forced to engage U.S. counsel to request access to the

books and records of Messier Partners on her behalf. Stt Layt Aff. 729 and Exhibit F.

28. In

Messier demanded that

first request for access to the financial records of MP,

prove that she was a member of M p . See Layt Aff. Exhibits F

and Exhibit G. Notably, this is an entity with just two owners, Messier and Layt. In his letter,

Messier did not deny that Layt was a member of M P . A copy of the first letter from counsel

requesting financial information dated October 25,2006 and Messier’s responsive letter dated

October 27,2006 are attached to the Layt Affidavit as Exhibits “F” and “G.” Layt Aff, 130).

29. Subsequently, Messier claimed through his New York attorney in a telephone call

that Layt was only an employee, suggesting that he could somehow “terminate” her ownership

interest in M p . A copy of counsel’s letter dated January 18,2007 summarizing that phone call is

attached to the Layt Affidavit as Exhibit “H.” (!&g Layt Aff. 73 1). Ph.ciPyld

30. Ultimately, M p agreed to let&m&€k eview only the tax returns of Messier

Partners for 2004,2005 and 2006 (when it becomes availabl .) Messier knows that Layt already

has the 2004 and 2005 US. tax returns of l h k h r d , and thus proposes giving Layt nothing as the b p 9 w ++

2006 tax return is not available now and will not be available for months. A copy of this letter

dated January 22,2007 is attached to the Layt Affidavit as Exhibit “I,” (’& Layt fdf. 732).

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31. Inview claim that some of M F s information is confidential, h - w b w c r

willing to execute a confidentiality order regarding any client information of M p and to

abide by any other restrictions on review of that information that the court may deem appropriate.

(See Layt Aff. 733).

FhthrtWs Lawful Demands for Inspection

32. In his October 25,2006 letter to Messier Partners, ’ counsel wrote (See

Layt Aff. Exhibit F):

Pursuant to such statute, Mrs. Layt hereby demands access to all of the financial statements of M p , including but not limited to all balance sheets, profit and loss statements and statements of cash flows since inception, together with a copy of all of Mp’s federal, state and local income tax returns. Moreover, Mrs. h y t requests copies of all documents demonstrating MP’s compliance with all federal, state and local licensing statutes governing the operation of MP’s business activities. In particular, Mrs. Layt requests copies of any applicable investment advisory, or investment banking licenses held by MP.

The purpose of this request is for Mrs. Layt to determine whether MP is being operated in accordance with applicable law and to determine the value of her interest in M P .

33. On January 18,2007, counsel repeated Plaintiffs request for access to the:

. . .complete records of Mp. This includes access to Mp’s financial statements, bank account statements, tax returns, documents evidencing any so-called bonuses, commissions or other payments of any kind to employees or third parties, copies of all engagement letters (including the engagement letter with Publicis) and any documents purporting to issue membership interests or amend the Operating Agreement of policies of MP.

See Layt Aff. Exhibit H.

This Court Has Jurisdiction Over MP

34. The Layt Affidavit confirms that cd in New York.J3&@$s

only office is at One Rockefeller Plaza. Messier himself lives at 228 E. 67’ Street, New York,

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N.Y., and previously lived at 160 East 66th Street and 5 15 Park Avenue, New York, N.Y. See Layt Aff. 75 and Exhibit C. Messier Partner’s business is conducted in or from New York, with

assistance from the Paris office. See Layt Aff. flll-14.

35. Where a Delaware limited liability company is based in New York, an owner may

bring in action in New York under N. Y, Limited Liability Company Law 5 1102(b) to compel

access to the Delaware company’s books and records. Sachs v. Adeli, 2005 N.Y. Slip opp. 9049,

26 A.D. 3d 52,804 N.Y.S. 2d 731 (First Dep’t November 29,2005). In SachS, the First

Department ruled that the substantial New York contacts warranted the exercise of jurisdiction

over the Delaware company. 26 A.D.3d at 5 5 , 804 N.Y.S.2d at 733. Mer noting that Delaware

Code 6 18-305 is substantially similar to Section 1 102(b), the Sachs court went on to cite Delaware

case law (Somerville S Trust v, TJSV Pmer$. 2002 Del. Ch. LEXIS 103 (New Castle 2002)) on

inspection of books and records with approval. 26 A.D.3d at 58,804 N.Y.S.2d at 735. The court

ordered access to the books and records of the Delaware limited liability company.

36. Here, as in Sachs, this Court has jurisdiction over ME’ because

limited liability company based in New York which conducts its business from New York.

Satisfaction of Statutow Renuirements

37. The Layt Affidavit also establishes that has more than one “purpose

reasonably related to the member’s interest as a member” of MY, and that such documents are

“essential” for the purposes identified. N. Y. Limited Liability Company Law 5 1 102(b); 6 Del.

Code 618-305. &g Sachs, 26 A.D.3d at 56-57, 804 N.Y.S.2d at 733-734. See also Sornefille S

Trust, supra, 2002 Del. Ch. LENS 103; Arbor Place. L,P . v. EDCQ re O p p ~ rtunitv Fund LLC, 2002

Del. Ch. LEXIS 102 (New Castle 2002).

38. Courts have recognized that the investigation of specific claims of waste and

mismanagement constitutes a legitimate reason to examine a company’s books and records,

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including tax records. Sachs, 26 A.D.3d at 5 8 , 804 N.Y.S.2d at 735 (“[tlhe possibility of fraud

goes directly to the plaintiffs interest in [the company]”); Thomas & Be#$ Corn, v, Lcviton

Manufacturinn Co.. Inc., 685 A.2d 702,710. (Del. Ch. Newcastle 1995) {suit for inspection of

corporate books under access provision of 8 Del. Code $220). The purpose of valuing one’s

interest in a non-public company is also a valid basis to inspect the books and records. Thomas &

Betts, supra, at 713. The risk that confidential information might be discussed is not, in and of

itself, a basis to refuse access to an owner, especially where the plaintiff has agreed to execute a

confidentially agreement. u. at 709-71 0.

39. Layt has also shown that the documents she seeks are essential for the purposes

Layt has identified - establishing and valuing her interest as a member, investigating evidence of

misuse of company funds, and the accurate payment of her taxes. & Layt Aff., pp. 7-9.

40, In response to that Layt works for a competitor, Layt is willing

to execute a confidentially agreement and to comply with other reasonable restrictions with

respect to her review of M p ’ s books and records. & Layt AK 733.

The Necessity of the Books and Records Requesteg &kipnw

41. Wdl!ft% is entitled to inspect the books and records necessary to investigate her

claims. See Sachs, 26 A.D.3d at 56-57, 804 N.Y.S.2d at 734; Somerville S Trust 2002 Del. Ch.

LEXIS at *27. Moreover, whcn there is evidence of mismanagement, “a more wide-ranging

inspection may be justified.” Freund v. Lucent T e c h ~ l ~ n ‘e$, Inc., 2003 Del. Ch. LEXIS 3, *14-

* 16 (New Castle 2003) (shareholder inspection of books and records under 8 Del. Code 5220)

(“the order allowing plaintiffs requested books and records inspection will be limited to those

documents reasonably required to satisfy the purpose of the demand” (citation omitted)).

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Establishment and valuation of ownership: Mif; . . 0 4 L r

42. F%mhfhetds to examine the files of MP relating to the payments made to Layt

and the corporate records of M p which will demonstrate Layt’s ownership interest in M p . In

addition, to value Layt’s interest in M p , Layt needs to see all of Mp’s advisory agreements with

clients, its bank account statements which will show receipts and payments, and the accountant’s

work papers which will provide the information on the finances of M p needed to value M p . As a

consulting company MP’s value is almost entirely based upon the revenue from consulting

agreements.

43. MP has used MP’s funds to pay Messier’s personal legal fees in other matters

related to Messier’s many difficulties while at his previous at Vivendi. These attorneys did no

work for MP. A review of the attorney’s billing statements paid by M p will demonstrate that the

legal work paid for by M p was unrelated to MP’s business.

44. M P also employed Messier’s girlfriend, Delaval, for personal purposes and paid her

with MP’s funds. Delaval provided no services to M p and has no experience in the merger and

acquisitions business in which MP is involved.

Del. Ch. LEXIS 18 1 (New Castle No. 18,2005) (plaintiff entitled to inspect documents relating to

Sutberland v. Dardanelle Lumber Co., 2005

salary and benefits received by relatives of founder). M p also paid extensive costs for Delaval to

accompany Messier to such places as the Dominican Republic where Delaval has a vacation

home, but where Mp does no business. As detailed above, Layt has become aware of other

payments siphoned from M p for purposes unrelated to the consulting business of u. In &ywht-

order to investigate the potential diversion of substantial profits fiom MI? and the other misuse of

M p by Messier, Layt needs to examine the expenses paid by ddmdanband documents connecting h , b d b r

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such payments to defendant's legitimate consulting projects. Set Somerville S Trust, 2002 Del.

Ch. At *27-*34.

Determination of nrgfit for filing tax return:

45. Finally, Layt needs access to the financial records of M p to determine Mp's actual

income, including only valid deductible expenses, in order to pay U.S. income taxes on Layt's

share of the profits in the United States. Layt paid her previous U.S. taxes, but plaintiff has no

information on which to base her 2006 tax payments. A limited liability company such as

&$D&+- is taxed as a "partnership" for US. income tax purposes. Therefore, Layt must pay tax

on her 25% of its earnings even if these amounts are not distributed to her. Further, if M p has

improperly reduced its profits by improperly deducting payments made by M P at Messier's

direction for his personal legal expenses, and/or the personal expenses of his girlfiend, etc, MP

may have underreported its income, subjecting Layt to possible civil or criminal penalties.

Without access to s financial records, Layt cannot determine her U.S. tax liability for

2006. & Xachs, 26A.D. 3d at 58,804 NYS 2d at 735 (ordering access to tax records).

46. No previous application has been made for

ectfully requested that the

compel access to and records as identified herein be granted, together with

such other and further relief as the Court deems just and proper.

Dated: New York, New York February 23,2007

0:WS ClicntaVmytMpplication.doc

By:

George Schwab (GS 6153) Salisbury & Ryan LLP 1325 Avenue of the Americas, Suite 704 New York, New York 10019 T: 212-977-4660//F: 212-977-4668

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SUPREME COURT OF TJXE STATE OF NEW YORK COUNTY OF NEW YORK

FATINE LAYT,

Plaintiff, -against--

MESSIER PARTNERS LLC,

Defendant.

I t

Index No.:

AFFIDAVIT OF FATINE: LAYT IN SUPPORT OF APPLICATION FOR ACCESS TO COMPANY FWCORDS

STATE OF NEW YORK )

COUNTY OF NEW YO=) ) ss.:

Fatine Layt, being duly sworn, deposes and says:

1. I am a citizen of France and reside at 95 rue Monceau, 75008 Paris, France. I am a

member of Defendant Messier Partners LLC (“Defendant” or “MI”’) and own a twenty-five

percent (25%) equity interest therein. As such, I am the minority member of the Defendant. The

only other member is Jean-Marie Messier who owns the remaining 75%.

2. I am over the age of 18 and make this affidavit on personal knowledge, in support of

my motion as member of MP for access to the books to records of M p pursuant to Delaware Code

5 18-305 and N.Y. Limited Liability Law 5 1 102(b).

3. Defendant is a Delaware limited liability company located at One Rockefeller Plaza,

New York, N.Y.

4. Defendant’s majority shareholder is Jean-Marie Messier (“Mi. Messier”).

5. Upon information and belief, Mr. Messier currently resides at 228 E. 67th Street, New

York, N.Y. Mr. Messier previously lived at 160 E. 66* Street, New York, N.Y. and 5 15 Park

Avenue, New York, N.Y.


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6. Mr. Messier was previously the Chief Executive Officer of the large French public

company Vivendi Universal S.A. (“Vivendi”). As a result of his improper conduct at Vivendi, in

2002 Mr. Messier was removed from his position as CEO of Vivendi. Under a consent decree he

signed with the U.S. Securities and Exchange Commission, he was compelled to relinquish nearly

$25 million in severance payments fiom Vivendi and banned by the SEC fiom acting as an officer

or director of any U.S. publicly traded companies. A copy of press release issued by the SEC

concerning this matter is attached hereto as Exh ibit “A.”

7. Mr* Messier was also fined more than $1 million by the French regulatory equivalent

of the SEC for his conduct at Vivendi.

8. Mr. Messier is a defendant in litigation brought by Vivendi shareholders allegedly

injured by the drop in price of Vivendi stock during Mr. Messier’s tenure.

Establishment of Mesg ier Partners LLC‘ i n New YQrk

9. Following his departure from Vivendi, in 2002 Mr. Messier established a consulting

firm to render advice in the area of mergers and acquisitions named Messier Partners LLC in New

York,

10. In 2003, Mi. Messier first approached me about becoming involved in the consulting

business he had established and we created two more companies, Messier Partners SAS (France)

(“Messier France”) in Paris, and Messier Partners SA (UK) (“Messier UK”) in London (with

Messier Partners LLC, the “Messier Companies”). I currently own 25% of each of these

companies.

1 1. The only office of Defendant MP is located in One Rockefeller Plaza in New York.

Defendant conducts its business activities from this office with the regular involvement of the

office of Messier France where I was located.

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12. The consulting services furnished by Defendant are furnished in New York and Paris.

13. M. Messier frequently contacted me by e-mail or phone from the office of Messier

Partners in New York

14. I also had duties relating to Messier Partners’ projects originating in New York.

Proof of Plaintiffs Membership Status in IvlIp

15. In 2004, I purchased a 20% interest in Defendant from Mi. Messier which was to be

paid for by reducing the future profit distributions I would receive from Defendant.

16. To confirm my status as a member of Defendant, Mr. Messier sent me a “Written

Consent For The Transfer of Interest In Messier Partners LLC” signed by Mr. Messier, as

“Managing Member of Messier Partners LLC”. A copy of this transfer document is attached to

this affidavit as Exhibit “B”. This document states:

Pursuant to Article 1V sections 6.01 and 6.02 of the Messler Partners LLC limited liability operating agreement, I, Jean Marie Messier, in my capacity as the managing member of Messier Partners LLC, hereby consent to the transfer of a twenty percent interest in Messier Partners LLC from Jean Marie Messier to Fatine Lap. The effective date of the transfer is January 1,2004, on which day Fatine Layt shall be admitted as a member of the limited liability company.

17. Defendant then proceeded to pay me distributions of its profit on account of my

membership interest in MP for 2004 and 2005 on the basis of my owning a 20% interest in that

company. In October 2005, I acquired an additional 5% interest in Defendant. The last

distribution I received due to my ownership interest in Defendant was paid on January 23,2006 in

the amount of Euros 750,000 (about $900,000) which was 25% of Defendant’s profits reflecting

my 25% ownership interest in Defendant.

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18. Messier Parhers distributed its income to me on the following dates:

Yearf m u t i o n # . .

2004- 1 2005-1 2005-2 2005-3 2005-4 2005-5 2006- 1

Sept. 15,2004 Jan. 24,2005 Sept. 15,2005 Sept. 19,2005 Oct. 18,2005 Dec. 20,2005 Jan 23,2006

LaYt PerctmtaKe

20% 20% 21% 21% 21% 25% 25%

LaYt A!mm

$100,000 $1 5,000 €127,006 €585,704 €126,759 €1,000,000 €750,000

Messier F!!YUaw

80% 80% 79% 79% 79% 75% 75%

19. Copies of the statements from MP confirming my 20%, and later 25%, equity interest

in MP and showing that MP made the above profit distributions based thereon to me are annexed

hereto as Exhibit “C.” Mr. Messier also received these letters.

20. As further proof of my equity interest in M p , Furthermore, I received the 2004 Form

1065 (“U.S. Return of Partnership Income”) of Messier Partners, a copy of which is attached as

Exhibit “D.” Mr. Messier signed this return certifying underpenalty ofperjuy that the

statements made therein, including the statement that I owned a 20% interest in M P , were

true.

2 1. Page 2 of the Messier Partners K- 1 form attached to the r e m lists me BS 20% owner

and lists my address as “c/o Messier Partners LLC, One Rockefeller Plaza, New York, N.Y.”

22. Moreover, Mr. Messier has acknowledged me as a minority shareholder in other

writings. I attach an email dated December 1,2005 fiom Mr. Messier to Messier Partners’ tax

consultant (and copied to me) in which Mr. Messier: (a) acknowledges that I am a 20%

shareholder; and @) states that this is ”without any specific U.S. shareholder agreement.” A copy

of Mr. Messier’s e-mail is attached hereto as Exhibit “E,”

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23. In September 2005, I acquired an additional 5% interest in MP. Only recently has Mr.

Messier claimed for the first time that I am not a member of ME’, despite the tax returns of MP and

other documents fiom him stating otherwise.

wmination and Fraud bv Mr. Megsier

24. Disputes arose between Mr. Messier and me in 2006. These disputes involved Mr.

Messier’s improper use of the company’s funds to pay his personal legal fees not relating to

company business and to pay expenses incurred by his latest girlfriend, Crista1 Delaval, for travel.

I believe these improper payments exceeded $150,000 through the latest date for which I have

financial information from MP.

25. Additionally, MP became far more profitable in 2006. It is my belief that Defendant

earned $12 million in 2006 (some of which may have been booked in other Messier Companies),

ot which my share would be $3 million. Mr. Messier rehsed to distribute my share of these

profits or even to show me the records of the company which would allow me to determine how

much I am due.

26. In October 2006, while these disputes were on-going, Mr. Messier dismissed me from

my position in Messier France on a pretextual basis due to my objections concerning his improper

use of funds from M p for his personal expenses and my demand for my twenty-five percent share

of the increased profits at M p .

27. Prior to my dismissal, Mr. Messier had employed his girlfriend, Ms. Delaval, as a

“consultant” of Messier Partners, despite her complete lack of experience in the mergers and

acquisitions area. He paid this girlfriend many thousands of dollars of Defendant’s funds without

my consent. MP continues to employ Ms. Delaval and pays her substantial sums solely because

of her close personal relationship with Mr. Messier.

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other funds from MP profits to pay the personal expenses of Mr. Messier or expenses of other Mr.

Messier ventures. Perhaps even more importantly, I became aware of extremely improper

conduct by Mi. Messier in which he, through M p , provided advice to both sides in large

acquisition transactions involving major publicly traded companies. This advising both sides was

not disclosed by him to the clients and is wholly improper.

Denial of Mv Renuat for A c c w to Defeadant’e Boob and Records

29. Following my dismissal, I retained my membership interest in Defendant and the other

Messier Companies. I repeatedly requested information from Mr. Messier regarding the financial

affairs of Defendant in which I still owned a 25% interest. He refused to provide any information.

I then engaged the New York law firm of Salisbury & Ryan LLP to request access to the books

anarecordmfM ’ i-asi j m m

York and Delaware law.

I

30. In response to my attorney’s first request for access to the financial records of MP, Mr.

Messier asked that I prove that I was a member of MP. Notably, this is an entity with just two

owners, Mr. Messier and I. In his letter Mr. Messier did not deny that I was a member of Messier

Partners. A copy of the first letter from my attorney requesting financial information dated

October 25,2006 and Mr. Messier’s responsive letter dated October 27,2006 are attached as

Exhibits “F” and “G.”

3 1. Subsequently, Mr. Messier claimed through his New York attorney in a telephone call

that I was only an employee, suggesting that he could somehow “terminate” my ownership

interest in M p . A copy of my attorney’s letter dated January 18,2007 summarizing that phone

call is attached as Exhibit “H,”

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32. Ultimately, MP agreed to let me review only the tax returns of Messier Partners for

2004,2005 and 2006 (when it becomes available,) Mi. Messier knows that I already have the

2004 and 2005 U.S. tax returns of Defendant, and thus proposes giving me nothing as the 2006 tax

return is not available now and will not be available for months. A copy of this letter dated

January 22, 2007 is attached as Exhibit 9.’’

33. In view of Defendant’s further claim that some of M p ’ s information is confidential,

which I regard as a transparently pretextual, I am willing to execute a confidentiality order

regarding any client information of M p and to abide by any other restrictions on review of that

information that the court may deem appropriate.

Purmw for the Reqeestfx! Ex amination and Necessary Documents

(a) To Establish and Value M y Owners hip Meres t in the Company.

biven that Messier Partn em has denied that 1 have an ownership interest in the company,

I need to examine the files of Messier Partners relating to the payments made to me and the

corporate records of M p which will demonstrate my ownership interest in MP. In addition, to

value my interest in MP, I need to see all of MP’s advisory agreements with clients, its bank

account statements which will show receipts and payments and the accountant’s work papers

which will provide the information on the finances of MP needed to value MP.

. .

(b) To Investigate Diversion and Misuse Q f Messier Partner’s funds by Mr. Messier.

Mr. Messier clearly used MP’s fimds to pay his legal fees in other matters related to Mr.

Messier’s many difficulties while at Vivendi. These attorneys did no work for MP. A review of

the attorney’s billing statements paid by MP will demonstrate that the legal work paid for by M P

was unrelated to MP’s business.

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Mr. Messier also employed his girlfriend, Ms. Delaval, for personal purposes and paid

her with MP’s funds. Ms. Delaval provided no services to M p and has no experience in the

business in which M P is involved. Mr. Messier also used MP’s finds to pay for extensive and

costly international travel by Ms. Delaval who accompanied Mr. Messier to such places as the

Dominican Republic where she lives and where the MP does no business. I have become aware

of other payments siphoned from MF for purposes unrelated to the consulting business of

Defendant.

I have also become aware of potentially improper commissions being paid to

representatives of clients relating to advisory work being performed by Mr. Messier, through

Defendant, for both sides of large transactions involving major public companies.

In order to investigate the potential diversion of substantial profits from M p and the other

t

improper business activities 01 Mr. Messier, 1 need to examine the expenses paid by Uetendant

and documents connecting such payments to Defendant’s consulting projects.

(c) To Determine Income of Messier P m e rs in Order to Pay Mv U.$, Inc~m e Tax.

Finally, I need access to the financial records of M p to determine Messier Partners’

actual income, including only valid deductible expenses, in order to pay U.S. income taxes on

my share of the profits in the U.S. I paid my previous U.S. taxes, but have no informatian on

which to base my 2006 tax payments. A limited liability company such as Defendant is taxed as

a “partnership” for U.S. income tax purposes. Therefore, I must pay tax on my 25% of its

earnings even if these amounts are not distributed to me. Further, if MP has improperly reduced

its profits by improperly deducting payments made by MP at Mr. Messier’s direction for his

personal legal expenses, the expenses of his girlfiiend, etc, it may underreport income subjecting

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P

me to possible civil or criminal penalties. Without access to Defendant's financial records, I

cannot determine my U.S. tax liability for 2006.

34. No prior application for the relief requested herein has been made.

WHEREFORE, it is respectfully requested that this application for an order compelling

access to the books and records of Defendant Messier Partners LLC be granted, together with

such other relief as the court deems just and proper.

Paris, France

Fatine Layt 4 I - sworn to berore me tnis /Iz/ day of February 2007

1 ',

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Plaintiff, --against--

MESSIER PARTNERS LLC,

ORDER TO SHOW CAUSE AND APPLICATION OF FATlNE LAYT FOR AN ORDER COMPELLING ACCESS TO BOOKS AND RECORDS

Salisbury & Ryan, LLP

Counsel to PlaintzE Funtine Layt

1325 Avenue of the Americas, Suite 704 New York, New York 10019

(2 12) 977-4660


Layt vs Messier NY

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