Category: Business Litigation
Commercial Division Reiterates that ‘No-Damages for Delay Clauses are Enforceable and a Party Challenging Such Clauses Bears a Heavy Burden’
Commercial Division Enforces Standard for Amending Pleadings
The Commercial Division’s decision in Magnetic Parts Trading Limited v. National Air Cargo Group, Inc[1] demonstrates the flexibility and leniency courts embody when adjudicating motions to amend pleadings. In Magnetic Parts, New York County Supreme Court Justice Robert R. Reed granted National Airlines Cargo Group’s (National Airlines) motion for leave to amend its answer to assert counterclaims against Magnetic Parts Trading Limited (Magnetic Parts) and denied Magnetic Parts’ motion to impose sanctions.
[1] Magnetic Parts Trading Ltd. v. National Air Cargo Group, Inc, 77 Misc. 3d 1220(A) (Jan. 5, 2023).
Commercial Division Allows Promissory Estoppel to Proceed After Dismissing Contract Claim; Limits Scope of Out-of-State Eavesdropping Law
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.
Commercial Division Reiterates Broad Scope of ERISA Preemption and Difficulty of Pleading Breach of Fiduciary Duty and Conversion Claims Alongside Breach of Contract Claims
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.
[i] Rockmore v. Plastic Surgery Assocs., LLP, 2020 BL 478175, 69 Misc. 3d 1222(A), 135 N.Y.S.3d 259 (Sup. Ct. Albany Cnty. Dec. 2, 2020).
Defendant’s Unsuccessful About-Face Results in $5 Million Judgment
Litigants arguing that their adversary should be judicially estopped from pursing a particular position in litigation face a relatively high burden to invoke the doctrine successfully. Two recent decisions from Justice Borrok help illustrate the specific circumstances under which courts are most likely to estop a litigation pursuant to this doctrine.
Commercial Division Enforces Forum-Selection Clause
Can the purchasers of promissory notes containing non-New York forum-selection clauses enforce the notes in the Commercial Division? Not without an extraordinary showing as to why the clauses should be set aside, according to Commercial Division Justice Elizabeth Emerson’s recent decision in Stein v. United Wind, Inc. In Stein, Justice Emerson granted a motion to dismiss an action to enforce promissory notes where the notes designated Delaware as the exclusive forum for any disputes arising in connection with the notes.
First Department Clarifies Circumstances Under Which Acknowledgment of a Debt Will Toll Limitations Period for Action to Recover on a Promissory Note
In Hawk Mountain LLC v. RAM Capital Group LLC, the First Department held that, under New York General Obligations Law (“G.O.L.”) § 17-101, an acknowledgment of a debt tolled the limitations period for an action to recover a debt owed on a promissory note, even though the acknowledgment did not specifically mention the note at issue or the precise amount due on the note. This decision clarifies that “there is no requirement that an acknowledgement of a debt pursuant to [G.O.L.] § 17–101 leave no room for doubt as to the nature and quantum of the debt to be acknowledged.”
Commercial Division Declines to Dismiss Breach of Contract Action Involving Conditions Precedent
In a recent decision in SL Globetrotter L.P., Global Blue Group Holding AG v. Suvretta Capital Management, LLC, Toms Capital Investment Management LP, Justice Peter Sherwood declined to dismiss plaintiffs’ breach of contract claims, which arose out of a dispute over investment, through a special purpose acquisition vehicle (“SPAC”), in a new public company.[1] The opinion sheds light on the interpretation of conditions precedent in a contract, particularly when they deal with the consistency of relevant financial information.
Commercial Division Holds Corporate Directors May Be Individually Liable When Informally Dissolved Company Forgoes Notice to Creditors
In Morse v. LoveLive TV US, Inc., a recent decision by Justice Robert R. Reed of the New York County Commercial Division, the Court denied a defendant’s motion to dismiss, holding that where it is impossible or futile to obtain a judgment against a defunct corporation that has defaulted on debts by “informal dissolution,” creditors can maintain an action directly against the directors of that company.