Jacqueline L. Bonneau, Counsel

A recent ruling in the Suffolk County Commercial Division highlights the risk a party faces when agreeing to, and later attempting to, enforce an oral modification to a written contract.  In Castle Restoration LLC v. Castle Restoration & Construction, Inc.,[1] Commercial Division Justice Elizabeth Emerson determined that New York’s statute of frauds rendered an oral modification unenforceable and, ultimately, left the enforcing party with no remedy in its commercial dispute.

Citing “substantial documentary evidence” consisting of emails and letters, Justice Borrok of Manhattan’s Commercial Division concluded that a legal malpractice claim brought by former president of Universal Music Group’s (“UMG’s”) Republic Records, Charlie Walk was based on a “false narrative” and consequently dismissed the complaint pursuant to CPLR 3211(a)(1) and (a)(7). 

The Commercial Division’s decision in Rockmore v. Plastic Surgery Associates, LLP[i] demonstrates the broad scope of ERISA preemption and the difficulty of pleading breach of fiduciary duty and conversion claims alongside breach of contract claims.  In Rockmore, Albany County Supreme Court Justice Richard M. Platkin dismissed several claims brought by the departing member of a partnership of physicians.  The core claims—which concerned the funding of the partnership’s defined benefit plan—were preempted by ERISA.  Separately, Justice Platkin also dismissed breach of fiduciary duty and conversion claims as duplicative of a claim alleging a breach of the operative Partnership Agreement.

Justice Borrok of Manhattan’s Commercial Division presided over a bench trial between a contractor and a sub-contractor concerning payments connected to work on New York City Housing Authority’s (NYCHA) Harlem River Houses.[i]   The sub-contractor, Citi Building Renovation (Citi), brought an action claiming monies due on the amended sub-contract signed with the contractor, Neelam Construction Corp. (Neelam).  At trial, Citi asserted three causes of action—breach of contract; promissory estoppel; and unjust enrichment—claiming damages of $426,688 plus interest. 

Recently, the New York Court of Appeals issued another ruling in a long-running insurance coverage dispute concerning $140 million in disgorgement paid by Bear Stearns pursuant to an SEC settlement over fifteen years ago. 

Update:  As un update to our earlier post on the amendment of Commercial Division Rule 30 to expand the scope of mandatory settlement conferences—the new amendment is now in effect.  As of February 1, 2022, absent an exemption, “the parties in every case pending in the Commercial Division must participate in a court-ordered mandatory settlement conference (MSC) following the filing of a Note of Issue.”  Under the new provision, parties must submit a request seeking assignment to one of the following four tracks for an MSC, and all parties must send a representative with knowledge of the case and authority to settle it to the court-ordered MSC once it has been assigned to one of these tracks:

In an earlier post, we reported that beginning January 2022 all oral arguments in the First and Second Departments would be conducted virtually out of concern for the health and safety of the public and court employees. As the number of new COVID-19 cases has since decreased, both courts have announced that in-person oral arguments will resume on Monday, February 28, 2022.[1] After this change, the courts will not grant requests for remote arguments—all appeals will be argued in person or submitted without argument.

As the number of new COVID-19 cases reached record levels, the First and Second Departments announced that beginning January 2022, and until further notice, oral arguments will be conducted virtually. The return to remote proceedings marks the latest challenge practitioners and parties have faced during the COVID-19 pandemic. Proceedings in both courts will continue to be livestreamed over the internet. In a joint statement, the Presiding Justices of the First and Second Departments, Rolando Acosta and Hector LaSalle, expressed hope that both courts “will be able to safely recommence in-person proceedings in February.”[1] Until then, the Justices committed to “closely monitor the trends regarding the virus and stand ready to swiftly adapt as needed to protect the public.”[2]

Recently, the First Department announced a new pilot program for interlocutory appeals from the Commercial Division related to discovery matters.[1]  Beginning on January 1, 2022, the perfection period for interlocutory appeals of discovery disputes will be shortened from six months to four months.  The goal of the program is to “promptly resolve issues involving discovery disputes that should be addressed before a litigation can proceed.” 

In Costello v. Molloy, Justice Gretchen Walsh of the Westchester County Commercial Division denied Plaintiff William Costello’s request for a mandatory injunction against Defendants Ronald Molloy and Curis Partners, LLC reinstating Costello as a member of the LLC.  Although the Court found that Costello demonstrated a likelihood of success on the merits of his claim that his LLC membership was wrongfully terminated, the Court held he failed to clearly establish the type of extraordinary circumstances necessary to warrant the granting of mandatory injunctive relief reinstating his membership in Curis.

In Cty. Waste & Recycling Serv., Inc. v. Twin Bridges Waste & Recycling, LLC, Justice Platkin of the Albany County Commercial Division Court considered plaintiffs’ (County Waste and Recycling Service, Inc. (“County Waste”),  Robert Wright Disposal, Inc.(“Wright Disposal”), and third-party defendants Waste Connections, Inc. and Waste Connections US, Inc. (“Waste Connections”)), joint motion under CPLR 3211(a)(7) and (8) to dismiss the Amended Counterclaims and Third-Party Complaint (“ACTC”) of defendant Twin Bridges Waste and Recycling, LLC (“Twin Bridges”).  Justice Platkin’s opinion touches on various issues concerning anti-competitive behavior in New York State, as well as personal jurisdiction.

In Certain Underwriters at Lloyd’s v. AT&T Corp.,[1] Justice Cohen of the New York County Commercial Division Court granted a motion for partial summary judgment and determined that Nokia, through its predecessor Lucent, had the right by assignment to seek coverage under certain insurance policies issued to AT&T that contained anti-assignment clauses.  Although the general rule in New York is that such anti-assignment clauses are enforceable, this decision highlights how it can be more challenging to bar assignment in the special context of an insurance policy.

Litigants arguing that their adversary should be judicially estopped from pursing a particular position in litigation face a relatively high burden to invoke the doctrine successfully.  Two recent decisions from Justice Borrok help illustrate the specific circumstances under which courts are most likely to estop a litigation pursuant to this doctrine.

On December 4, 2020, the Administrative Board of the Courts sought public comment on the Commercial Division Advisory Council’s (“CDAC”) proposed amendment to Commercial Division Rule 3(a), 22 NYCRR § 202.70(g). The current language of Rule 3 permits the court to direct, or for counsel to seek, the appointment of an uncompensated mediator for the purpose of mediating a resolution of all or some issues presented in the litigation  The CDAC’s Rule 3(a) proposal would “permit the use of neutral evaluation as an [alternative dispute resolution (“ADR”)] mechanism and to allow for the inclusion of neutral evaluators in rosters of court-approved neutrals.”  Currently, under Part 146 of the Rules of the Chief Administrative Judge, “neutral evaluation” is “a confidential, non-binding process in which a neutral third party (the neutral evaluator) with expertise in the subject matter relating to the dispute provides an assessment of likely court outcomes of a case or an issue in an effort to help parties reach a settlement.”  The Chief Administrative Judge’s rules already set forth the training prerequisites to become a neutral evaluator.