NY Commercial Division Blog

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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.

Commercial Division Rejects Piercing the Corporate Veil and Claims of Fraud and Unjust Enrichment Against the Sole Principal

In Salesmark Ventures, LLC v. Jay Singh, JJHM Trading Corp.[1],  Justice Joel M. Cohen dismissed, inter alia, the plaintiff’s claim to pierce the corporate veil of the defendant and impose personal liability on the defendant’s sole principal.  Underlying the dispute is a contract to purchase millions of synthetic nitrile gloves during the outbreak of COVID-19. 


[1] INDEX NO. 651394/2021, 2022 BL 127452 (Sup. Ct. N.Y. Cty. Mar. 11, 2022)

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Commercial Division Permanently Stays International Arbitration

Earlier this year, in In re New York State Dept. of Health (Rusi Tech. Co., Ltd.),[1] Albany County Commercial Division Justice Richard Platkin issued a decision to permanently stay the arbitration before the China International Economic and Trade Arbitration Commission ("CIETAC") brought by a Chinese company (“Rusi”) against the New York State Department of Health (“DOH”) regarding a purchase contract for KN-95 masks. This decision, which harkens back to the chaotic early days of the pandemic,  provides a good reminder for practitioners regarding the “meeting of the minds” requirement of a contract.


[1] No. 907022/2021 (Sup. Ct. Albany Cty. Jan. 25, 2022).

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First Judicial District Assigns All Securities Act of 1933 Matters to Hon. Andrew Borrok

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.” 

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First Department Announces Pilot Program for Interlocutory Appeals Relating Exclusively to Discovery Matters

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.” 


[1] Interlocutory Appeals from the Commercial Division of the Supreme Court Relating to Discovery Matters, N.Y. St. Unified Ct. Sys., https://www.nycourts.gov/courts/ad1/PDFs/Pilot%20Program-CommercialInterlocutoryAppealsDiscovery.pdf

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Does the COVID-19 Pandemic and Subsequent Emergency Actions by the Governor Make a Commercial Lease Voidable?

In the wake of the COVID-19 pandemic (“COVID”), a common question that arises is whether commercial leases are enforceable when COVID and subsequent governmental responses frustrate the purpose of the lease or render its performance impossible.  There is not a one-size-fits-all answer, as the answer will turn on the underlying facts, but the lack of a contractual force majeure provision in the lease will not bar the use of common law defenses.  This is evidenced in a recent Bronx County Commercial Division decision by Justice Eddie J. McShan in 1877 Webster Ave. Inc. v. Tremont Ctr., LLC.

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Two Court of Appeals Judges to Retire in 2021

Judge Leslie Stein and Judge Eugene Fahey were confirmed together and will retire together.  The two judges have been part of a group of judges who have cast the deciding votes in many of the Court’s cases.

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Rule 11-g Amended to Include “Attorneys Eyes Only” Designation

On September 23, 2020, Chief Administrative Judge Marks amended Commercial Division Rule 11-g and the Division’s Standard Form Confidentiality Order (SFO”) to allow parties to designate certain documents as highly confidential for attorneys eyes only (AEO”). Such a designation already exists in federal court, and it will be useful in the Commercial Division in matters involving particularly confidential issues such as the disclosure of confidential business information between competitors and disclosure of trade secrets.

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Rule 6 Amendment Increases the Font Size of Footnotes and Requires Hyperlinking to the NYSECF Docket

On September 29, 2020, Chief Administrative Judge Marks amended Commercial Division Rule 6 to increase the font size of footnotes in briefs and affidavits from 10-point to 12-point.  Additionally, it requires the use of a proportionally spaced serif typeface (e.g., Times New Roman, Baskerville, New Century Schoolbook) in all papers filed with the Court.  With Commercial Division Rule 17 establishing a word limit rather than a page limit, increasing the font size of footnotes will have no impact on the length of briefs.  Instead, a larger font size coupled with a proportionally spaced serif typeface will enhance readability and improve comprehension of long passages of text.

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The Commission to Reimagine the Future of New York’s Courts Releases Goals for Restarting in-Person Juries

In mid-June, Chief Judge Janet DiFiore appointed the Commission to Reimagine the Future of New York’s Courts, and charged it with examining technological, regulatory, and other long-term innovations for New York Courts.  Additionally, in the short-term, it was to provide recommendations for resuming in-person court operations amid the COVID-19 pandemic. 

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Justice Scarpulla Appointed to the Appellate Division, First Department

On July 13, 2020, Governor Cuomo appointed four Supreme Court Justices to fill vacancies on the Appellate Division, First Department.  The Governor elevated Justices Saliann Scarpulla, Manuel Jacobo Mendez Olivero, Martin Shulman and Tanya R. Kennedy, who represent the diversity of New York’s judicial system.

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Repeal of Rule 23: the 60-Day Rule

On June 23, 2020, Chief Administrative Judge Marks approved the repeal of Rule 23 of the Commercial Division Rules.  Rule 23 (known as the “60-Day Rule”) required movant’s counsel to notify the court and other parties whenever a motion had not been decided within 60 days of its submission or oral argument. 

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Chief Judge DiFiore Announces Expanded In-Person Court Services in Five Upstate Regions

On June 15, 2020, Chief Judge DiFiore announced that the five upstate regions—Finger Lakes, Central New York, Mohawk Valley, Southern Tier, and North Country—that began Phase III reopening last Friday, June 12, will expand the number of in-person functions in their courthouses beginning June 17. Accordingly, these regions will now handle in-person matters including a limited number of bench trials in civil matters.

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Amendment to Rule 1 Allowing Video Appearances

On June 16, 2020, Chief Administrative Judge Marks approved an amendment to Rule 1 to the Commercial Division Rules.  The amendment is designed to allow counsel to request the court’s permission to appear though videoconferencing and other similar technology.

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Five Upstate Judicial Districts Begin Phase II of In-Person Court Operations

Chief Judge Janet DiFiore and Chief Administrative Judge Lawrence K. Marks announced that courts in the Fifth Judicial District, Sixth Judicial District, and Seventh Judicial District will enter Phase II of re-opening on June 3, 2020, and it will expand to the Eighth Judicial District and Fourth Judicial District on June 5, 2020. 
 

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Phase One Re-Opening of In-Person Court Operations

On May 13, 2020 the New York State Unified Court System announced a plan for the gradual return of judges, clerks, and court staff to courthouses in select upstate counties—with litigants being able to electronically file new cases in those counties.[1] 

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Gov. Cuomo Tolls Procedural Laws Including Statutes of Limitations

On March 20, 2020, in order to limit court operations in light of the evolving COVID-19 emergency, Governor Cuomo issued Executive Order 202.8.   That order, among other things, tolls through April 19, 2020 “any specific time limit for the commencement, filing, or service of any legal action, notice, motion, or other process or proceeding, as prescribed by the procedural laws of the state[.]”  This order means that parties who are facing a deadline to file a civil action have an extension up and until April 19, 2020 in order to do so, unless a further extension of this deadline is granted.

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Seventh Judicial District Assigns New Justice

Justice Craig Doran, the Administrative Judge of the Seventh Judicial District, assigned Justice J. Scott Odorisi to the Commercial Division.  Justice Odorisi replaces Justice Matthew Rosenbaum.  Justice Odorisi was elected to the New York State Supreme Court in 2013 and worked in private practice before going on the bench.

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Patterson Belknap Publishes an Updated, Second Edition of the New York Commercial Division Practice Guide

Patterson Belknap Webb & Tyler LLP is pleased to announce the publication of the second edition of its New York Commercial Division Practice Guide.  As with the first edition, the guide is organized into various chapters drafted by Patterson Belknap lawyers.  Each chapter contains useful information about litigating in the Commercial Division of the New York State Supreme Court, and an excerpt is available to download here.

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Advisory Council Proposes a Series of Commercial Division Rule Changes

The final month of summer has seen a flurry of rulemaking activity with the Commercial Division Advisory Council (the “Advisory Council”) proposing four changes to the Commercial Division Rules. The Office of Court Administration has requested public comment on each proposal, and we will provide an update if any of the proposed amendments are adopted.

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Bronx County Commercial Division Begins its Inaugural Term on September 3, 2019

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.  On August 4, 2019, the Bronx County Supreme Court designated the Honorable Eddie McShan, who is a Supreme Court Justice from Bronx County, as the Commercial Division Justice presiding over the newly-created Part 32 beginning September 3, 2019.  The Honorable Kenneth L. Thompson will handle the Alternative Dispute Resolution (“ADR”) component.

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A Fond Farewell to Two of the Commercial Division’s Most Senior Judges

The arrival of the new year is a bittersweet time for the Commercial Division as it bids farewell to two of its most senior judges: Justice Charles E. Ramos and Justice Eileen Bransten.  Notably, both will be staying on to serve the Court as Judicial Hearing Officers.

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First Department Rules that Arbitrators Did Not Manifestly Disregard the Law and Confirms Arbitration Award

On September 27, 2018, in a widely followed arbitration case, a unanimous panel of the Appellate Division, First Department concluded that the New York County, Commercial Division (Ramos, J.) erred when it partially vacated an arbitration award on the ground that the arbitrators’ disregarded the law.  As a result, the Appellate Division confirmed the arbitration award. [1]

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Commercial Division Finds Foreign Corporations Lack Sufficient Contacts with New York for Personal Jurisdiction

On July 5, 2018, Justice Saliann Scarpulla of the Commercial Division granted a motion to dismiss by All Nippon Airways, Co. Ltd., ANA Aircraft Technics, Co., Ltd., ANA Base Maintenance Technics, Co., Ltd., ANA Holdings, Inc., and All Nippon Airways Co., Ltd. (collectively “ANA”) in Kyowa Seni, Co. v. ANA Aircraft Technics Co.[i], ruling that the Court lacked both general and specific jurisdiction over ANA.

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Alter Ego Claim Survives Pre-Answer Motion to Dismiss on an Equitable Ownership Theory

On July 2, 2018, Justice Barry R. Ostrager of the Commercial Division denied a motion to dismiss by UMG Recordings, Inc. (“Universal”), an alter ego theory of liability against it in Aspire Music Group, LLC v. Cash Money Records, Inc., concluding that Aspire sufficiently alleged that Universal was the equitable owner of Cash Money to survive the pre-answer motion to dismiss.

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Court of Appeals Rules: What the “Value of His Interest in the Partnership” Means under New York Partnership Law

The New York Court of Appeals, in Congel v. Malfitano,[1] recently ruled that the “Poughkeepsie Galleria Company” (the “Partnership”) was not an at-will partnership and that therefore Defendant Marc Malfitano’s (the “Defendant”) unilateral dissolution of the partnership breached the partnership agreement.  In addition, under Section 69 of the New York Partnership Law, the Court sustained the Appellate Division’s valuation of the Defendant’s partnership interest, including application of a minority discount.  The Court modified the order on appeal, holding that the Second Department erred in awarding legal fees in contravention of the American Rule on attorneys’ fee awards.

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Second Department Finds Commercial Tenants Can Waive Their Right to a Yellowstone Injunction

On January 31, 2018, the Appellate Division, Second Department affirmed, in a 3-1 decision, the Kings County Supreme Court Commercial Division’s decision, denying 159 MP Corp. and 240 Bedford Ave Realty Holding Corp.’s (collectively the “Tenants”) motion for a Yellowstone injunction.  The case raised an issue of first impression for New York appellate courts: whether a written lease provision that expressly waives a commercial tenant’s right to declarative relief is enforceable at law and as a matter of public policy.  The Second Department ruled in the affirmative for both.

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Special Proceeding Seeking a Judicial Decree to Dissolve an LLC

In Advanced 23, LLC v. Chambers House Partners, LLC, No. 650025/2016, 2017 BL 462831 (NY. Sup. Ct. Dec. 15, 2017), Justice Saliann Scarpulla of the Commercial Division ruled that Advanced 23, LLC (“Advanced”) and David Shusterman’s (“Shusterman” and collectively, “Petitioners”) petition for judicial dissolution of Chambers House Partners, LLC (“CHP”) needed to be held in abeyance pending an evidentiary hearing on whether Shusterman had breached his duties under the Operating Agreement. Advanced 23 confirms that although a corporate deadlock is not an independent ground to dissolve an LLC, the court must still examine whether the managers’ disagreement breaches the managers’ obligations under the LLC operating agreement.

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