To commence a special proceeding to compel arbitration in New York, pursuant to CPLR § 7503(a), a party must be “aggrieved by the failure of another to arbitrate.” In KPMG LLP v. Kirschner, Justice Barry R. Ostrager recently ruled that to be “aggrieved,” and thereby have standing, a party must be subject to litigation before filing a special proceeding to compel arbitration. According to the Court, a subsequently filed litigation or the risk of potential litigation is not sufficient to confer standing.
NY Commercial Division BlogVisit the Full Blog
Patterson Belknap’s Commercial Division Blog covers developments related to practice and case law in the Commercial Division of the New York State Supreme Court. The Commercial Division was formed in 1993 to enhance the quality of judicial adjudication and to improve efficiency in the case management of commercial disputes that are litigated in New York State courts. Since then, the Division has become a leading venue for judicial resolution of high-stakes and every-day commercial disputes. This Blog reviews key developments in the Commercial Division, including important decisions handed down by the Commercial Division, appellate court decisions reviewing Commercial Division decisions, and changes and proposed changes to Commercial Division rules and practices. Our aim is to provide you with thoughtful and succinct analysis of these issues. The Blog is written by experienced commercial litigators who have substantial practices in the Commercial Division. It is edited and managed by Stephen P. Younger and Muhammad U. Faridi, who spearheaded the publication of the New York Commercial Division Practice Guide, which is part of Bloomberg Law's Litigation Practice Portfolio Series.
As was recently reported in the New York Law Journal, New York is investing in courtroom technology for the Commercial Division in order to keep up with the demands of commercial trials. These efforts are designed to make trials more cost-effective and efficient for litigants, as well as easier for the judges and jurors to follow.
When Can an Outside Attorney Serve as a Special Litigation Committee in an LLC Derivative Suit? When the Parties’ Contract Says So, Says First Department
In a decision handed down on August 15, 2017, by the New York Appellate Division First Department, the court endorsed the practice of the appointment of a Special Litigation Committee (SLC) by a limited liability company (LLC) “at least where explicitly contemplated” by the LLC’s operating agreement. However, where the operating agreement does not explicitly provide for such an appointment or otherwise evince intent to delegate core governance functions to a nonmember, the LLC cannot appoint an SLC that has authority over a major decision of the LLC.
On October 11, 2016, in Matter of Skoler, 2016 BL 348290 (Sup. Ct. N.Y. Cnty.), Justice Lawrence K. Marks of the Commercial Division issued a decision regarding the strictures of judicial dissolution pursuant to Section 1104(a) of the New York Business Corporation Law (“BCL”). Petitioners sought judicial dissolution of County Group Inc. (“County Group”), a small, closely held New York domestic corporation. Petitioners hold 50% of the issued stock in County Group, and the “Responding Shareholders,” who opposed judicial dissolution, hold the remaining 50%. The Responding Shareholders cross-moved to dismiss the petition.
On September 23, 2016, in Pershing LLC v. Rochdale Securities, LLC, No. 651604, 2016 N.Y. Misc. LEXIS 3448 (Sup. Ct. N.Y. Cnty.), Justice Saliann Scarpulla of the Commercial Division issued a decision that reinforces the very significant burden a petitioner faces in order to successfully vacate an arbitration award under CPLR Article 75 and section 10 of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq.