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Current Developments in the Commercial Divisions of the
New York State Courts
Posted: October 8, 2015

Claims Direct, Not Derivative, Because Harm Alleged and Relief Sought Were to Plaintiffs

On October 6, 2015, the First Department issued a decision in SFR Holdings Ltd. v. Rice, 2015 NY Slip Op. 07222, upholding claims as direct, not derivative, explaining:

As the motion court correctly found, in determining whether plaintiffs’ complaint alleges direct or derivative claims, the relevant analysis is who suffered the alleged harm and who would receive the benefit of any recovery or other remedy. Here, plaintiffs’ fraud claim was properly brought as a direct claim, as the plaintiffs individually suffered the alleged harm and would benefit from any recovery.

(Internal quotations and citations omitted) (emphasis added).

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