Jeff Kinkle, Ph.D., Associate

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.

If a party hires an investment advisor that goes on to allegedly systematically abuse its role by engaging in self-dealing in violation of its contractual obligations and fiduciary duties, when does the applicable statute of limitations period begin?  Does the wrongdoing give rise to a single claim with a single statute of limitations period starting at the first incident of self-dealing, or does each individual incident of self-dealing give rise to multiple new claims, each with a new statute of limitations period?  In other words, is there just one wrong, with continuing effects, or a series of wrongs?  And what is the effect of a contractual provision that imposes ongoing obligations on the statute of limitations inquiry?  These questions are not only conceptually challenging.  When that investment advisor accused of malfeasance has been managing a multi-billion dollar portfolio for many years, the consequences for when the advisee can bring a timely claim in New York State are significant.

On August 17, 2020, the Appellate Division, First Department announced that starting in the September term, and continuing until further notice, it will hold oral arguments both in-person at the courthouse and remotely via Microsoft Teams.  In-person oral arguments will be held on Wednesdays and remote oral arguments will be held on Tuesdays, Thursdays, and Fridays. 

The Appellate Division, First Department has expanded the categories of appeals subject to e-filing through the New York State Court Electronic Filing System (NYSCEF).  Effective July 27, 2020, e-filing is now mandatory for all matters originating in Supreme Court, Criminal Term; Family Court; Surrogate’s Court; and Court of Claims in Bronx and New York Counties.  With this expansion, e-filing is now mandatory for all matters before the First Department, except Original Special Proceedings and Attorney Matters.

The expansion applies to appeals that have already been perfected, and is required regardless of whether the matters were e-filed at trial level.  Attorneys in matters where notices of appeal have been filed are encouraged to immediately enter the initial information required for e-filing under 22 NYCRR § 1245.3.  There are separate 22 NYCRR § 1245.3. considerations for criminal and family matters with assigned counsel, and such practitioners should consult the notice to the bar.

The reverberations from the collapse of Bernie Madoff’s massive Ponzi scheme continue to be felt in Manhattan’s Commercial Division.  On May 20, 2020, Judge Joel M. Cohen issued a decision in Matter of FGLS Equity LLC, No. 157170/2019, 2020 WL 2557877, 2020 NY Slip Op 31476(U) (Sup. Ct., N.Y. Ctny., May 20, 2020), approving the liquidation plan of FGLS Equity LLC, which was founded by accountant Steven Mendelow as a feeder fund to Bernard L. Madoff Investment Securities (BLMIS).  Mendelow, who passed away in 2016, was allegedly instrumental in funneling investors to the scheme.  The decision is notable, not least because it may be the first New York case in which a court has been asked to pass judgment on an LLC plan of liquidation proposed by a liquidator appointed by the LLC’s members pursuant to its operating agreement. 

The COVID-19 pandemic has had considerable effect on appellate practice in New York State’s intermediary appellate court, the Appellate Division.  The last months have seen historical firsts, such as all four appellate departments hosting virtual oral arguments on Zoom and Skype.  Many parties have not had the opportunity to take part in oral argument, as their cases have been decided on submission or adjourned.  The four departments have issued a flurry of notices to the bar revising their rules of practice and many of these changes could very well be permanent. 

In considering a motion to dismiss related to a real estate development joint-venture gone bad, a recent decision by Justice Andrea Masley in 3P-733, LLC v Davis (No. 650800/2018 [N.Y. Sup. Ct., N.Y. Cty., April 2, 2019]) highlights several issues that frequently arise at the motion to dismiss stage in the Commercial Division.

At her annual State of the Judiciary speech held on February 26, 2019 at Bronx County Supreme Court, Chief Judge Janet DiFiore announced that the Commercial Division will be expanding to Bronx County, effective April 1, 2019.  The Chief Judge explained that this expansion was in recognition of the Bronx’s ongoing economic resurgence and the growing number of commercial cases being filed there.  There has not yet been any announcement as to the jurisdiction of this new part or which judges will be assigned to it.