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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. 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.

Virtual Court May Be the New Normal in New York City, At Least For Now

Although New York City’s state court judges are now back in their chambers, in-person hearings have not yet commenced. 

Administrative Judge Deborah A. Kaplan reported that her division has had success using “video-linked ‘virtual’ hearings for a wide range of matters.” In-person hearings will still be available when truly necessary.  For example, this option may be available to self-represented litigants without access to the requisite technology. 

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In a Valuation Dispute, Commercial Division Refuses to Credit “Unrealistic and Optimistic” Projections Made by a Corporation in Obtaining a Loan

A recent Commercial Division decision provides an example of a court rejecting “unrealistic and optimistic” business projections in determining the valuation of a petitioner’s shares in a corporation.  In Magarik v. Kraus USA, Inc., Index No. 606128/2015, Doc. No. 252 (Sup. Ct., Nassau Cnty. Apr. 28, 2020), Justice DeStefano refused to credit the valuation made by the petitioner’s expert, which depended heavily on a set of projections that the corporation at issue made in the process of obtaining a loan.

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Commercial Division Denies Cross-Petitions to Confirm and Vacate Appraisal Award Despite Strong Presumption in Favor of Summarily Confirming Such Awards

In Yakuel v. Gluck, Justice Joel M. Cohen of the New York County Commercial Division denied Petitioners’ application to confirm an appraisal award and denied Respondent Andrew Gluck’s (“Gluck”) cross-petition to vacate the same award in connection with the appraisal of Gluck’s ownership interest in Agency Within LLC (“Agency Within”), a digital marketing company.  The opinion addressed the legal standard for confirming or vacating an appraisal award pursuant to CPLR § 7601, as well as a party’s right to present evidence to an appraiser over the objection of a counterparty.

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Presiding Justices of the Appellate Division Participate in Virtual Town Hall

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. 

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E-Filing of New, Non-Essential Matters to Resume

On May 20, 2020, Justice Lawrence Marks, the Chief Administrative Judge of the New York Unified Court System, issued a memorandum announcing that, effective May 25, 2020, “e-filing through the NYSCEF system – including the filing of new non-essential matters – will be restored in those counties of the state that have not yet met the benchmarks required to participate in the Governor’s regional reopening plan.”  Those counties include the five counties that comprise New York City, as well as Nassau, Suffolk, Dutchess, Orange, Putnam, Rockland, Sullivan, Ulster, and Westchester.

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First Department Holds That “Sole and Absolute Discretion” Clause Does Not Preclude Breach of Fiduciary Duty Claim

In Shatz v. Chertok, the First Department affirmed in part and reversed in part a decision by Justice Jennifer G. Schechter of the Commercial Division. The key issue on appeal was whether a New York limited liability company’s operating agreement that provided the managing member “sole and absolute discretion” over investment decisions barred a derivative claim for breach of fiduciary duty.  The First Department held that this contractual language did not bar a breach of fiduciary duty claim against the company’s manager.

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Commercial Division Justices Discuss Litigating During COVID-19

On Monday, May 11, 2020, three Commercial Division justices from across the state participated in a virtual panel to discuss the state of litigating in the Commercial Division during COVID-19.  Justices Saliann Scarpulla (New York County), Timothy Driscoll (Nassau County), and Deborah Karalunas (Onondaga County) discussed the ways in which litigation can move forward while the courts operate in a virtual format.  The panel was presented by the New York State Bar Association’s Commercial and Federal Litigation Section.

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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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Commercial Division Reiterates That Claims Based on Harm to All Members of LLC are Derivative

The issues related to the bringing of claims involving a cancelled LLC were addressed in the Commercial Division’s recent decision in Hopkins v. Ackerman.  In November 2019, Justice Saliann Scarpulla dismissed most of Hopkins’s and his co-plaintiffs’ claims as derivative, and therefore unable to be brought on behalf of a cancelled LLC.  We covered that decision here.  Following that decision, Hopkins sought leave to bring additional direct claims, but Justice Scarpulla’s recent decision rejected all but one of the proposed claims—a breach of fiduciary duty claim based on allegations that Hopkins was frozen out of decision-making and membership rights.  The other claims were rejected as derivative because they concerned the alleged failure to distribute the LLCs’ assets, a harm felt equally by all members.  Justice Scarpulla also reaffirmed her earlier ruling that a challenge to an LLC’s cancellation status (which could re-open the door to derivative claims) must be brought in Delaware, where the entities were established and cancelled.

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Governor Andrew Cuomo Extends Tolling of Statute-of-Limitations

On May 7, 2020, New York Governor Andrew Cuomo issued Executive Order 202.28, which, among other things, “continue[d] the suspension and modifications of laws, and any directive, not superseded by a subsequent directive, made by Executive Order 202 and each successor Executive Order up to and including Executive Order 202.14, for thirty days until June 6, 2020, except as modified” in the May 7, 2020 Executive Order.

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Commercial Division Dismisses Derivative Shareholder Suit for Failure to Provide New Allegations of Pre-Suit Demand in an Amended Complaint

In derivative shareholder actions, New York law requires a plaintiff-shareholder seeking to vindicate the rights of a corporation to plead, with particularity, either that before filing suit a request was made on the corporation’s board of directors to initiate the action or that any such demand, if made, would have been futile.[1]  This pre-suit demand requirement may seem straightforward in theory, but a March 19, 2020 Commercial Division decision by Justice Andrea Masley serves as a cautionary reminder of tricky nuances in its application. 

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New York Courts Expand Virtual Operations Amid COVID-19 Emergency

Updated

May 4, 2020 - Update: On May 4, 2020 Chief Administrative Judge Marks promulgated an order that codifies the new policies delineated in his memorandum of April 30, 2020 and discussed in the below “Update” of May 1, 2020.

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COVID-19 Webinars Presented by Editors of the Blog

On April 17, 2020, Stephen Younger, Muhammad Faridi, and Timothy Smith presented a webinar for the Practicing Law Institute titled “COVID-19’s Impact on Commercial Transactions and Disputes.” This one-hour program addressed the legal challenges that many businesses may be facing in the wake of the pandemic.  Muhammad and Tim discussed...
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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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Commercial Division Holds that Imposition of Direct Liability on Directors Who Oversaw Fraudulent Conveyance Requires Piercing the Corporate Veil

Do the directors who oversaw the fraudulent conveyance of a corporation’s assets face direct liability for it?  Not unless the entities were shams and the directors exerted total dominion and control, according to Commercial Division Justice Andrew Borrok’s recent decision in Acacia Investments, B.S.C.(c) v. West End Equity I, Ltd.  In Acacia, Justice Borrok allowed fraudulent conveyance claims to proceed against the entities involved in an alleged transfer of judgment-debtors’ assets to a new family of companies, but did not allow direct claims against the directors of the entities.  He held that Delaware law does not create a claim for director liability, and that there was no factual basis for piercing the entities’ corporate veils to hold the directors liable for the alleged fraud.

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COVID-19’s Effect on New York Commercial Division

Over the last few days, Judge Lawrence K. Marks, the Chief Administrative Judge of the New York State Unified Court System, issued two memoranda bearing on COVID-19’s effect on the Commercial Division.

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Commercial Division Holds that Representatives of a Deceased Limited Partner’s Estate Do Not Have Standing to Maintain a Derivative Lawsuit

A recent Commercial Division decision demonstrates the ability of partnership agreement provisions to limit the executors of the plaintiff-limited-partner from continuing a derivative lawsuit after that partner’s death.  In Weinstein v. RAS Prop. Mgmt. LLC, 2020 NY Slip Op 30311(U) (Sup. Ct., N.Y. Cnty. Feb.5, 2020), Justice Andrew Borrok denied a motion to substitute a deceased plaintiff with the plaintiff’s executors  The court reasoned that the plaintiff’s executors lacked standing under the applicable partnership agreement.

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New York Amends Its Fraudulent Conveyance Law by Enacting the Uniform Voidable Transactions Act

Last month, New York enacted the Uniform Voidable Transactions Act (“UVTA”), which seeks to modernize the state’s fraudulent conveyance law. 

Since its introduction by the Uniform Law Commission in 2014, the UVTA has now been adopted by 21 states.  The UVTA was originally drafted by the Uniform Law Commission as an amendment to the 1984 Uniform Fraudulent Transfer Act (“UFTA”); New York was one of only seven states that did not adopt the original UFTA.

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Commercial Division Advisory Council Proposes Requiring Briefs to Include Hyperlinks to NYSCEF Docket Entries

The Administrative Board of the Courts is seeking public comment on a proposal by the Commercial Division Advisory Council to amend Commercial Division Rule 6 to (i) require legal memoranda to include hyperlinks to cited documents that have already been filed on NYSCEF and (ii) give judges discretion to require that citations include hyperlinks to legal databases such as LexisNexis, Westlaw, or government websites. 

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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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Commercial Division Closes Door to Derivative Claims on Behalf of Cancelled LLC

The Commercial Division recently ruled, in a case captioned as Hopkins v. Ackerman, that derivative claims on behalf of an LLC need to be brought before the LLC ceases to exist.  In Hopkins, Justice Saliann Scarpulla granted a motion to dismiss several derivative claims involving now-cancelled Delaware LLCs because, under Delaware law, a cancelled LLC does not have the ability to bring legal claims.  The Court also rejected the plaintiffs’ efforts to cast most of the claims as direct claims on behalf of a specific member in the LLCs.

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Commercial Division Holds That Russian Law Restrictions on Document Discovery Do Not Absolve Russian Party From Responsibility to Produce Documents

The Commercial Division regularly hears suits involving foreign parties, in part because contract parties, anywhere in the world, can choose to have a dispute heard by the Commercial Division as long as the transaction at issue concerns $1 million or more. However, the Commercial Division’s rules sometimes provide for more extensive discovery than would be allowed in a foreign party’s home country.  And in some instances, the Commercial Division’s rules may even provide for discovery that would be illegal in the foreign party’s home country.  Justice Andrew Borrok’s recent decision in Starr Russia Investments III B.V. v. Deloitte Touche Tohmatsu Ltd. provides an illustration of how the Commercial Division may navigate this thorny issue.

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New York’s Chief Judge Announces Proposal to Restructure State Court System

New York’s Chief Judge Janet DiFiore issued a press release on September 25, 2019 announcing proposed amendments to the New York State Constitution that would streamline and simplify the State’s Unified Court System.  The Chief Judge’s proposal calls for the elimination of “New York’s complex maze of 11 separate trial courts” and would “replace it with a simplified three-level structure to make the courts easier to navigate, increase operational efficiency and reduce costs to litigants, among other potential benefits.”  If successful, these structural changes would represent the first major Constitutional changes to court system organizations since reforms were passed over 40 years ago in 1977. These changes are also likely to affect the Commercial Division parts because, if adopted, they have the potential of increasing the overall efficiency of the state court system and the way judges are appointed to the Appellate Division.  These reforms, in turn, would likely help shape the development of commercial law in the State.

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Commercial Division Declines to Certify Class and Approve Settlement in Xerox-Fuji Case

There has been a new development in the Xerox and Fujifilm (“Fuji”) litigation:  Justice Ostrager of the New York Commercial Division declined to (i) certify the putative class, (ii) approve the proposed class settlement, and (iii) award the class attorney’s fees pursuant to a memorandum of understanding that was reached by defendant Xerox and putative class plaintiffs.  The material terms of this agreement—changes to the Xerox Board of Directors—already took effect prior to the Justice Ostrager ruling.

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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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Commercial Division Dismisses Shareholder Derivative Suit Because General News Reports and Articles Were Insufficient to Plead Demand Futility with Particularity

Before filing a shareholder derivative suit, the plaintiff must typically serve a pre-litigation demand upon the company’s Board of Directors, except in narrow circumstances where the demand may be futile.  In Gammel v. Immelt, Justice Andrea Masley of the New York Commercial Division dismissed the shareholder derivative suit because the plaintiff did not meet the pre-litigation demand requirement and failed to plead with particularity the circumstances establishing the futility exception.

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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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First Department Confirms Award of Attorney’s Fees, But Vacates Damages Award for Counterclaim as Non-Arbitrable

On July 2, 2019, the First Department, in a unanimous decision written by Justice Dianne T. Renwick, reversed a decision of former Commercial Division Justice Eileen Bransten confirming an arbitration award.  The First Department concluded that the arbitrator’s award of attorney’s fees was not in manifest disregard of New York law, but that the arbitrator did not have jurisdiction over counterclaims brought by a related-third-party pursuant to an agreement that did not contain an arbitration clause.   The opinion provides a helpful review of New York law regarding both the award of attorney’s fees in arbitration and on jurisdictional objections to arbitration.

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Commercial Division Asserts its Role in Securities Litigation

In Hoffman v. AT&T Inc., Justice Ostrager of the Commercial Division recently denied a motion to stay a securities class action in favor of a subsequently filed and more comprehensive action brought in the Southern District of New York (SDNY).  In doing so, he asserted the Commercial Division’s role in securities litigation following the U.S. Supreme Court’s decision in Cyan, Inc. v. Beaver Cty. Emps. Ret. Fund, 138 S. Ct. 1061 (2018).    

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Commercial Division Holds That Electronic Communications Between Out-of-State Defendant and New York-Based Company Can Support the Exercise of Personal Jurisdiction Over Defendants in New York

In High Street Capital Partners, LLC v. ICC Holdings, LLC, Justice Joel M. Cohen of the Commercial Division denied defendants ICC Holdings, LLC (“ICC”) and related entities’ (collectively, “Defendants”) motion to dismiss plaintiff High Street Capital Partners, LLC’s (“High Street”) action for breach of contract for lack of personal jurisdiction and forum non conveniens.  The court’s decision addressed issues of whether electronic communications between an out-of-state defendant and a New York-based company are sufficient to satisfy the requirements of New York’s long-arm statute and render New York a convenient forum.

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New York Announces Statewide “Presumptive” Alternative Dispute Resolution Program

On May 14, 2019, the New York State Unified Court System announced that it will begin rollout and implementation of a “presumptive” alternative dispute resolution (“ADR”) program.[1]  Under the new program, parties in civil cases will be referred to either mediation or some other form of ADR as an initial step for most lawsuits filed in New York State courts.  The “presumptive” ADR program will apply to a broad range of civil cases, including commercial disputes.

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Commercial Litigation Update: First Department Drops Down to Four-Justice Panels for Arguments

Beginning in April 2019, the First Department has changed its practice to assign panels of four justices for oral argument, as opposed to five justices as has been the traditional practice of the court.  This change is the result of three ongoing vacancies on the First Department that have remained unfilled by Governor Cuomo.  The Presiding Justice of the First Department, Hon. Rolando Acosta, explained that the move to four justice panels is necessary because there are not enough judges to hear all the pending appeals.  Aware that four justice panels could create a two-to-two split, Presiding Justice Acosta explained that a fifth judge can be brought in to issue a decision if needed.  Parties can preserve their right to reargue or submit the case to a fifth justice by making a statement on the oral argument record.  This change will likely remain in place until new judges are appointed to the court. 

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Commercial Division: Past, Present and Future - New York City Bar Association Program

On Monday February 26, 2019, four retired Justices of the Commercial Division, New York County – Justices Ellen Bransten, Shirley Kornreich, Charles Ramos, and Melvin Schweitzer – took the stage at the New York City Bar to discuss the past, present and future of the Commercial Division, as well as their own experiences on the court.  The discussion was moderated by retired Justice Carolyn Demarest of the Commercial Division, Kings County. 

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Non-Party to Arbitration Agreement Successfully Petitions the Commercial Division to Avoid Being Compelled to Join Arbitration

Arbitration is a matter of contract and, as such, non-parties generally cannot be compelled to arbitrate under agreements that they have not signed or agreed to.  In IQVIA RDS Inc. v. Eisai Co. Ltd., the Commercial Division recently highlighted two exceptions to this general rule.  Although the Court ultimately found neither exception to be applicable, the case raises important issues that merit attention.

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Commercial Division Amends Rule 3 to Encourage Mediation

On December 5, 2018, New York’s Chief Administrative Judge, Lawrence K. Marks, issued an administrative order amending Commercial Division Rule 3(a), which addresses alternative dispute resolution (“ADR”).[1]  This new amendment encourages opposing counsel to work together to select a mediator for commercial cases, including by consulting rosters of neutral mediators provided by Commercial Division courts. 

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Corporate Officer Escapes Corporate-Capacity Fraud Claims in Alleged Ponzi Scheme Case in Commercial Division

Coast-to-Coast-Energy-Inc-v-Ga.pdfIn corporate fraud suits, it is common for plaintiffs to file claims against executives in their capacity as corporate officers.  However, to succeed on a corporate-capacity claim, a plaintiff must be able to show that the corporate veil should be pierced so as to hold an officer personally liable for the corporation’s legal obligations.  This issue is illustrated by the Commercial Division’s recent decision in Coast to Coast Energy, Inc. v. Gasarch.

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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 Holds that Declaratory Judgment Against Creditor’s Principal Does not Preclude Claims By the Creditor Itself

Can a debtor obtain declaratory judgment shielding himself from liability to a creditor’s officers or associates personally and then use that judgment to preclude subsequent claims by the creditor itself?  Not in the First Department, following the recent decision in Avilon Automotive Group v. Leontiev.[i]  In Avilon, a unanimous panel reversed the res judicata-based dismissal of fraudulent transfer and other related claims arising from several Russian loan transactions because the claims by the creditors themselves were not the subject of a prior declaratory judgment concerning the debtor’s liability to the creditors’ representative.Avilon_Auto._Grp._v._Leontiev.pdf

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Commercial Division Issues Verdict for Plaintiffs Following Bench Trial in Family Feud Over the Palm Restaurant

On November 13, 2018, Justice Masley issued a decision following a bench trial in Ganzi v. Ganzi,[1] which concerns a family feud over the Palm Restaurant empire.  Ganzi provides a vivid illustration of the importance of observing corporate formalities, the need to be vigilant for self-dealing when shareholders hold ownership interests in multiple intertwined businesses, and, of course, the pitfalls of mixing family and business.

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Compelling Arbitration under CPLR § 7503(a): Timing Matters

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. 

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Release from the 1970s Forecloses Family’s Suit to Reclaim Art Lost During the Holocaust

So ruled Justice Andrea Masley of the Commercial Division in a recent summary judgment motion in the case Frenk v. Solomon, Index No. 650298/2013, holding that a standardized form release signed by the plaintiff’s mother in 1973 to settle a case primarily involving one piece of artwork barred the plaintiff’s present suit to recover other pieces of art that were believed lost at the time of the 1973 settlement.

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Commercial Division Holds That Venue Is Proper Even Though Plaintiff Is Wrong About Defendants' Residence

In 2017, the New York legislature amended CPLR 503(a) to provide for venue in “[(1)] the county in which one of the parties resided when it was commenced; [(2)] the county in which a substantial part of the events or omissions giving rise to the claim occurred; or, [(3)] if none of the parties then resided in the state, in any county designated by the plaintiff.”   Before the amendment, CPLR 503(a) did not provide for venue based on where the events or omissions giving rise to the claim occurred.

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New Commercial Division Rule Encourages Pre-Trial Evidentiary Hearings or Immediate Trial on Dispositive Issues

On July 25, 2018, Chief Administrative Judge of the Courts, Lawrence K. Marks, issued an administrative order promulgating Rule 9-a of the Commercial Division Rules. See 22 N.Y.C.R.R. 202.70.  The Rule, entitled “Immediate Trial or Pre-Trial Evidentiary Hearing,” encourages parties to move for a pre-trial evidentiary hearing or immediate trial on factual issues that could resolve a material part of the case. 

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The Commercial Division Gets a New Rule on Technology-Assisted Review in Discovery

On July 19, 2018, Chief Administrative Judge of the Courts, Lawrence K. Marks, issued an administrative order promulgating a new subdivision of Rule 11-e of the Commercial Division Rules. Rule 11-e governs Responses and Objections to Document Requests, and the newly added subdivision specifically addresses the use of technology-assisted review in the discovery process. 

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Court Denies Attachment in Case Involving Exiled Chinese Billionaire Guo Wengui

Since high net worth individuals often operate and own assets through LLCs and other business entities, including foreign corporate entities, a plaintiff must satisfy the requirements of a veil-piercing claim in order to attach assets owned by such entities.  Failing to do so could frustrate a plaintiff’s ability to satisfy a judgment, as illustrated by Commercial Division Justice Barry Ostrager’s recent decision in Pacific Alliance Asia Opportunity Fund L.P. v. Kwok Ho Wan.

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Commercial Division Finds Jurisdiction over Foreign Defendant on an Alter Ego Theory in Estate’s Action to Recover Painting Plundered in Nazi-Occupied France

In a decision issued last month in Gowen v. Helly Nahmad Gallery, Inc., No. 650646/2014, 2018 NY Slip Op 28142, 2018 BL 164601, Commercial Division Justice Eileen Bransten found personal jurisdiction over foreign defendants in an action brought by the estate of a Jewish art dealer to recover a valuable painting plundered by the Nazis in occupied Paris.  Justice Bransten further held that New York’s substantive law applies to the dispute over the painting’s ownership, proclaiming that “New York markets are not now, and shall not become, a safe harbor for the fruits of property pillaged during the course of the Nazi genocide.”  Beyond its compelling subject matter, the opinion provides useful guidance for plaintiffs considering pleading jurisdiction over non-domiciliary defendants on an alter ego theory.

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Broadway Producers Denied Motion to Set Aside Damages Verdict against Former Publicist

In Rebecca Broadway LP v. Thibodeau, Justice Andrea Masley of the Commercial Division denied plaintiff Rebecca Broadway Limited Partnership’s (“RBLP”) motion to set aside a damages verdict after it prevailed at trial against Defendant Marc Thibodeau (“Thibodeau”) on claims for breach of contract and tortious interference with business relationships.[1] The case raised issues of whether a jury’s damages verdict is supported by a rational interpretation of the trial evidence and the circumstances under which a retrial solely on the issue of damages is appropriate.

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Unfair Competition and Trade Secrets Damages Limited to Plaintiff’s Losses Under New York Law

When a defendant avoids the cost of developing its own technology by stealing proprietary information, can that defendant be required to re-pay the cost it saved as compensatory damages?  Not under New York trade secret or unfair competition law.  In E.J. Brooks Co. v. Cambridge Security Seals,[1] a divided New York Court of Appeals announced – over a lively dissent – that compensatory damages for misappropriation of trade secrets and unfair competition are limited to the plaintiff’s own losses, and may not include the development costs avoided by defendants.  The Court further held that an accompanying claim for unjust enrichment does not provide a basis to expand the recovery beyond the plaintiff’s own losses.

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