Jacqueline L. Bonneau, Counsel

A few months ago, a Commercial Division court granted summary judgment in favor of the plaintiff-landlord in a case involving a commercial lease for a gym that was closed due to COVID-19 restrictions.  The decision in Amherst II UE LLC v. Fitness Int’l, LLC, No. 806643/2021, 2021 NY Slip Op 51289(U) (Sup. Ct. Erie Cty. Dec. 8, 2021)—with extensive citations to recent cases—ultimately rejected the Defendant’s force majeure arguments and provides a good overview of the legal issues that have come up with commercial leases during the COVID-19 pandemic.

In Real Estate Webmasters Inc. v. Rodeo Realty, Inc., Justice Richard Platkin of the Albany County Commercial Division granted plaintiff’s motion to strike Rodeo’s jury demand in connection with Real Estate Webmasters Inc.’s (“REW”) complaint against Rodeo for anticipatory breach of contract.[i]  The Court held that Rodeo waived its right to a jury trial by interposing an equitable defense of rescission and related counterclaim for fraudulent inducement arising from the same transaction underlying REW’s complaint. 

On April 11, 2022, the New York State Unified Court System will adopt additional rules and guidelines for Electronically Stored Information (“ESI”).  As we explained in our earlier post on these changes, “[t]he goal of the revisions is to address e-discovery in a more consolidated way, modify the rules for clarity and consistency, expand the rules to address important ESI topics consistent with the CPLR and caselaw.”

New York’s maze-like trial court system includes 11 separate trial courts, the most in the country.  As New York practitioners are well aware, a single dispute may require a litigant to file related claims in multiple courts, resulting in redundant court appearances, duplicative briefs, and unnecessary costs to attorneys and their clients.  Critics of New York’s centuries-old system have long advocated for reform.  As we explained in a previous post, Chief Judge Janet DiFiore first announced a proposal to streamline the State’s trial court structure in September 2019.  Although that initial call for reform did not gain immediate traction in the legislature, on March 3, 2022, Chief Judge DiFiore announced a renewed proposal “to achieve long-overdue reform and simplification of the State’s overly complicated court structure.”[i] 

In December 2020, the Suffolk County Supreme Court decided a novel question of personal jurisdiction law in Black Diamond Aviation Group LLC v. Spirit Avionics, Ltd.[i]  Justice James Hudson determined that personal jurisdiction was not established when the contractor defendant released an aircraft for transport to a New York airport in order for its subcontractor to perform necessary upgrade and maintenance work there.  In so holding, the Court provided a helpful recitation of the type of contacts necessary to establish personal jurisdiction under New York’s long-arm statute and the Due Process clause.

On November 10, 2021, a Commercial Division Court issued a decision on a motion to dismiss the claims brought by Wilmington Trust Company (“WTC”) against a wide range of parties that WTC alleged to be alter egos of an insolvent entity. This decision, in Cortlandt St. Recovery Corp. v. Bonderman, No. 653357/2011, Doc. No. 757 (Sup. Ct. N.Y. Cty. Nov. 10, 2021), provides a good introduction into the variety of issues that can arise when a party brings claims against alleged foreign alter egos.

On December 30, 2021, Administrative Judge Deborah A. Kaplan of the First Judicial District announced that, for judicial economy, any pending actions or future actions commenced pursuant to The Securities Act of 1933 (15 U.S.C. § 77a et seq) shall be assigned to the Hon. Andrew Borrok of the New York County Commercial Division.  These types of cases, by their nature, are typically assigned to the Commercial Division when filed in state court.  Although similar consolidation orders have been issued in the Commercial Division in the past—for example, all new residential-mortgage-backed-securities cases were consolidated in Part 60 for a period of time—this appears to be the first time that all cases involving a particular statute have been consolidated before a single Commercial Division justice.  In order to effectuate the consolidation, when e-filing a new Securities Act of 1933 matter, practitioners should select “Securities Act of 1933” as the case type from the “Other Commercial” drop-down menu.  For pending Securities Act of 1933 cases, practitioners should e-file for Judicial Intervention.  When prompted with the question “Will the ‘Nature of the Action’ stay as . . .”, “No” should be selected and the case action type should be updated to “Securities Act of 1933.” 

On January 7, 2022, the Commercial Division amended Rule 30 of section 202.70(g) of the Rules of the Commercial Division of the Supreme Court.  Rule 30 is entitled “Settlement and Pretrial Conferences,” and the amendment is effective as of February 1, 2022.  The amendment adds a new provision to Rule 30 that provides for mandatory settlement conferences in Commercial Division cases following the filing of a Note of Issue. 

Following up on the recent addition of a new rule governing virtual evidentiary hearings and trials (https://www.pbwt.com/ny-commercial-division-blog/new-commercial-division-rule-on-virtual-evidentiary-hearings-and-trials/), last week, the Commercial Division promulgated Rule 37 of section 202.70(g) of the Rules of the Commercial Division of the Supreme Court.  Rule 37 is entitled “Remote Depositions,” and it is effective as of December 15, 2021.  Along with Rule 37, the Commercial Division also added Appendix G as a form protocol for parties to use for remote depositions.

A recent decision in the Suffolk County Commercial Division clarifies the requirements for establishing a joint venture and provides litigants with a clear example of a potential pleading pitfall with respect to claims relating to joint ventures.

In Ronald Benderson 1995 Trust v. Erie County Medical Center Corporation, Justice Walker of the Erie County Commercial Division granted Plaintiff’s request for a Yellowstone injunction where the defendant landlord provided a faulty notice of default to the plaintiff tenant.  This decision highlights the importance of proper notice in order to successfully defend against a Yellowstone injunction.

On September 7, 2021, the New York State Unified Court System published a request for comment on proposed additional rules and guidelines for Electronically Stored Information (“ESI”).  According to the proposal, “[t]he goal of the revisions is to address e-discovery in a more consolidated way, modify the rules for clarity and consistency, expand the rules to address important ESI topics consistent with the CPLR and caselaw, and to provide further detail in Appendix A – Proposed ESI Guidelines than is practical in the Commercial Division Rules.”

Recently, in F.W. Sims, Inc. v. Simonelli, Index No. 022942/2014, Doc. No. 412 (Sup. Ct., Suffolk Cnty., May 7, 2021), the Commercial Division Court denied a motion to dismiss on statute of limitation as well as full faith and credit grounds.  This decision provides a good refresher on common limitations period issues that arise in commercial cases and is also an example of the impact, or lack thereof, of a settlement in a related matter.

Unjust enrichment offers an avenue for recovery in situations where no actual agreement exists between parties to a dispute. But this theory of quasi-contract does not apply to just any type of commercial arrangement. 

Administrative Order 270/2020—which adopts certain Commercial Division Rules into the Uniform Civil Rules for the Supreme Court in New York—went into effect on February 1, 2021.  In signing this order, Chief Judge Marks described the Commercial Division as “an efficient, sophisticated, up-to-date court, dealing with challenging commercial cases” that “has had as its primary goal the cost-effective, predictable and fair adjudication of complex commercial cases[.]”  Further, he acknowledged the Commercial Division’s role in dealing with the “unique problems of commercial practice,” and praised its “function[] as an incubator, becoming a recognized leader in court system innovation, and demonstrating an unparalleled creativity and flexibility in development of rules and practices[.]”