Does an “agreement to agree” establish an enforceable contract?  Not if it fails to provide objective criteria for a court to enforce material terms, according to the Albany County Commercial Division’s decision in Media Logic USA, LLC v. Prinova US, LLC.[1]  But all may not be lost for plaintiffs spurned by a promise to do business, as Justice Richard M. Platkin explains how promissory estoppel may provide an alternative avenue for relief.  In the same opinion, a discovery-related allegation of unlawful recording prompted Justice Platkin to determine the scope of Illinois’s eavesdropping statute, explaining that it does not prohibit recording (and use thereof) of a participant’s own conversation, and does not apply at all to conversations recorded in New York.

On October 11, 2022, the Commercial Division Justice for Bronx County, Justice Gomez, issued a decision on a motion to dismiss in Chen v Fox Rehab. Servs., P.C., 175 N.Y.S.3d 713, 2022 NY Slip Op 50986(U) (Sup. Ct. Bronx Cnty. Oct. 11, 2022).  Justice Gomez dismissed nine of ten claims brought by the plaintiffs—for failures to state causes of action—and separately dismissed most of the claims brought by an out-of-state plaintiff—for lack of personal jurisdiction.  However, the Court did not dismiss the plaintiffs’ breach of contract claim, despite the defendants’ introducing of documentary evidence aimed at defeating that claim.[i]  The decision provides a unique example of a pre-answer motion to dismiss based on documentary evidence.

To state a claim for fraudulent misrepresentation in New York, the plaintiff typically must allege that the defendant made a false statement to the plaintiff.  But what if the defendant made the disputed statement to a third party, and the plaintiff claims to have been indirectly injured by that representation?  In Harel Alternative Real Est. L.P. v. All Brooklyn Mgmt. LLC, 175 N.Y.S.3d 199 (Sup. Ct. Kings Cnty. Sept. 29, 2022), Kings County Commercial Division Justice Reginald A. Boddie considered whether, and under what circumstances, such a claim is permissible

The onset of the COVID-19 pandemic in the Spring 2020 brought immense market uncertainty, which in turn placed serious strain on contractual relationships.  Amid that strain, a question on the minds of many commercial parties was the extent to which the underlying contract contained a termination option or other safety valve that could be exercised to relieve a party of the weight of its obligations.  While much has already been written on the subject, a recent decision by Commercial Division Justice Joel M. Cohen adds an interesting angle to the discussion: whether a counterparty may unilaterally extinguish a termination option for market disruption by actions deemed to be “off-market.”  In Cascade Funding LP – Series 6 v. Bancorp Bank,[1] Justice Cohen answered that question in the negative.

In our recent article What Rejected Renren Settlement Means for Investor Suits, we analyzed Justice Andrew Borrok’s decision rejecting a proposed $300 million settlement between Renren, Inc. (“Renren”) and minority shareholders in In re: Renren Inc. Derivative Litigation.[i] The article noted certain unresolved issues following Justice Borrok’s rejection of the settlement, including two issues that have been raised in recent rulings or filings: (1) the proper record date to be used to determine the minority shareholders who are entitled to potential recoveries, and (2) whether a prejudgment attachment order imposing restrictions on defendants’ transfer or sale of assets in an amount up to $560 million will remain in place. 

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.

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. 

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.” 

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]

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.

On October 19, 2021, Chief Administrative Judge Marks announced the new Commercial Division Rule 36, Virtual Evidentiary Hearing or Non-Jury Trial, effective December 13, 2021.

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.

In a recent decision in Amos Fin. LLC v. Crapanzano, et al., the New York Supreme Court, Rockland County, addressed one of the new Uniform Rules that went into effect on February 1, 2021—Uniform Rule 202.8-g(a).  Uniform Rule 202.8-g(a) provides that any party moving for summary judgment must “annex[] to the notice of motion a separate, short and concise statement, in numbered paragraphs, of the material facts as to which the moving party contends there is no genuine issue to be tried.”  Although it is derived from Commercial Division Rule 19-a, Uniform Rule 202.8-g differs from the Commercial Division Rule, which provides only that for a motion for summary judgment, “the court may direct” that the moving party annex such a statement to its motion.

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.”

Does an assignment by a co-songwriter of that co-songwriter’s rights in exchange for a performance and use royalty entitle the co-songwriter to a share of the sale proceeds when the rights are later sold by the other co-songwriter to a third party? No, according to Justice Barry Ostrager’s recent decision in Levy v. Zimmerman. In his decision, Justice Ostrager dismissed a suit filed by the estate of songwriter Jacques Levy in the New York County Commercial Division seeking a share of the more than $300 million in proceeds from the sale by Bob Dylan of his song catalog to Universal Music Group.  In dismissing the case, Justice Ostrager ruled that a 1975 contract unambiguously limited Levy’s rights to a 35% royalty on the performance and use of the ten songs he co-wrote with Dylan in the early 1970s. 

In In re Renren, Inc. Derivative Litigation, Justice Andrew Borrok of the New York County Commercial Division granted Plaintiffs’ order to show cause for prejudgment attachment against certain assets of defendants Oak Pacific Investment (“OPI”), Renren SF Holdings Inc. (“Renren SF”), and Renren Lianhe Holdings (“Renren Lianhe”) (collectively, “Defendants”). The opinion addresses whether allegations of defendants’ improper sale of assets for less than fair market value to frustrate a future judgment warrant a preliminary injunction or prejudgment attachment pursuant to CPLR § 6201.