On May 23, 2019, the First Department issued a decision in Elhanani v. Kuzinez, 2019 NY Slip Op. 04042, holding that the Statute of Frauds did not bar a claim based on an alleged oral contract for a real estate commission, explaining:

The complaint alleges that plaintiff Eran Elhanani, a real estate broker, and defendant Boris Kuzinez, a real estate developer, entered into an oral agreement pursuant to which Elhanani would lower his commission rate from the industry standard of 3% to 1% in exchange for exclusive rights to broker sales of residential luxury apartments to be developed in a building purchased by Kuzinez. Pursuant to the contract, Elhanani also agreed to promote the units by partnering with a national real estate sales and marketing agency approved by defendants. The complaint alleges that defendants accepted plaintiffs’ services, which included free consulting based on the alleged agreement, for almost two years, but once they had obtained the benefits of the bargain, defendants fired plaintiffs and refused to pay them anything for their work.

. . .

The complaint should not have been dismissed pursuant to the statute of frauds. As an initial matter, defendants did not move to dismiss based on the statute of frauds and plaintiffs were not afforded the opportunity to address the issue. Moreover, the statute of frauds is inapplicable here as General Obligations Law § 5-701(a)(10) specifically exempts contracts to pay compensation to licensed real estate brokers, which is the type of contract alleged by plaintiffs.

(Internal quotations and citations omitted).

New York contract law–usually straightforward–has traps for the unwary, like the requirement that some contracts be in writing (the statute of frauds). And as this decision shows, there are ways to escape from those traps, but the exceptions are narrow and difficult to meet. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.

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On May 13, 2019, Justice Borrok of the New York County Commercial Division issued a decision in Furuya v. Parry, 2019 NY Slip Op. 31354(U), excusing the late filing of an affidavit of service, explaining:

CPLR 306-b provides that a plaintiff must serve the summons and complaint within 120 days after commencement of an action. An action is commenced when the pleadings are filed with the court. The court may dismiss an action without prejudice for lack of personal jurisdiction if the plaintiff fails to serve the pleadings within 120 days. The court may also extend the plaintiff’s time for service of the pleadings for good cause shown or in the interest of justice.

Mr. Parry alleges that he was never served with the Summons and Complaint with respect to this action. However, Ms. Furuya submits an affidavit of service indicating that a true copy of the summons and complaint was affixed to Mr. Parry’s dwelling or usual place abode on December 20, 2018 at 2: 10 PM, and an affidavit of mailing indicating that the same was mailed to Mr. Parry at his dwelling or usual place of abode by First Class Mail on October 10, 2018. An affidavit of service in accordance with CPLR 302 is prima facie evidence that process was properly served. A conclusory assertion that a defendant was never properly served is insufficient to rebut the presumption of proper service. Here, Mr. Parry’s bare denial of service is insufficient to rebut the presumption of proper service to which the proof of service is entitled.

Mr. Parry also challenges the proof of service filed by Ms. Furuya on the ground that it was not timely filed. Mr. Parry argues that the proof of service was filed more than 50 days after the alleged service was completed and was therefore untimely under CPLR 308 [2], which requires proof of service to be filed within 20 days after the mailing of the summons and complaint. A plaintiff’s delay in filing proof of service pursuant to CPLR 308 is not a jurisdictional defect but a procedural irregularity that may be corrected by the court nunc pro tunc. CPLR 2001 allows a court to permit a mistake, omission, defect, or irregularity in the filing process to be corrected at any stage of an action, so long as it does not prejudice a substantial right of a party. CPLR 2004 permits the court to extend the time for any act by a party in an action for good cause shown. Here, Mr. Parry was properly served by “nail and mail” service pursuant to CPLR 308[4] and 313. The proof of service was filed on November 30, 2018, 50 days after service was completed and 31 days after the time to file proof of service had expired under CPLR 308[4]. The delay in filing proof of service was inadvertent and was promptly corrected. This delay constitutes a procedural irregularity and is not a jurisdictional defect that would support dismissal under CPLR 3211[a][8]. Deeming the proof of service to be timely filed would serve the interests of justice and judicial economy and would not prejudice a substantial right of any party. If the filing of the proof of service is deemed timely, Mr. Parry will be in the same position as he would have been had the proof of service been filed within 20 days. Accordingly, Mr. Parry’s motion to dismiss pursuant to CPLR 306-b and 3211[a][8] is denied, Ms. Furuya’s cross motion is granted, and the court deems the filing of the proof of service to be timely, nunc pro tunc. Mr. Parry shall have 20 days from the date of entry of this Decision and Order to file an answer.

(Internal citations omitted).

The rules regarding how you start a lawsuit and bring the defendants into it can sometimes be esoteric. As shown here, these are rules include filing proof of service of the summons and complaint on the defendant within a set period. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding the proper way to serve a defendant, bringing them into a lawsuit.

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On May 9, 2019, Justice Masley of the New York County Commercial Division issued a decision in Steadfast Ins. Co. v Allan Briteway Elec. Contr., Inc., 2019 NY Slip Op. 31363(U), holding that a plaintiff had adequately alleged a negligent misrepresentation claim, explaining:

Here, ABE states classic negligent misrepresentation in a project to construct a building. ABE alleges that the Design Defendants had the responsibility to produce a complete set of plans, that if followed, would result in an acceptable code compliant electrical system. ABE sufficiently alleges, the Design Defendants knew or should have known that their plans were to be used for the purpose of creating a code compliant electrical system. ABE alleges that it had a construction obligation to rely on these plans in preparing its bid to produce the code compliant electrical system. Indeed, ABE was part of a definable class that would rely on the bid documents.

ABE further alleges conduct linking it to the Design Defendants, evincing the Design Defendants’ understanding of ABE’s reliance because in many instances, the Design Defendants changed the plans and specifications after ABE completed installation and therefore, ABE had to tear out previously contract compliant work and reinstall work. The Design Defendant’ reliance on Beck v Studio Kenji, Ltd (90 AD3d 462 [1st Dept 2011]) is misplaced. There, plaintiff failed to establish that the architect of record had the functional equivalent of privity with the design architect where plaintiff failed to adequately allege that the design architect intended for the architect of record to rely on the design architect in determining whether the plans complied with building codes. The court also rejects the Design Defendants’ reliance on Yonkers Contracting Company, Inc. v The County of Westchester (63929/2015 [Sup Ct, Westchester County 2018]) where the plaintiff only alleged that all of the contracting and subcontracting parties are working toward the same goal and that each contracting party’s job performance may affect other contracting parties’ job performances; which was insufficient to establish the functional equivalence of privity. In any case, this court is not bound by that decision. Therefore, ABE has sufficiently alleged a relationship approaching privity.

ABE also sufficiently alleges the final two elements of negligent misrepresentation. ABE alleges that Design Defendants’ plans, on which ABE relied, did not accurately define the work to be performed to the tune of $10.5 million in excess of the bid price. Although ABE fails to use the magic words reasonable reliance, the court accepts the facts alleged as true and infers that ABE’s reliance was reasonable because ABE could only estimate prices for its bid using the plans created by the Design Defendants. In this manner, IFD Const. Corp v Corddry Carpenter Dietz and Zack is distinguishable because the bidder there was under a duty to inspect the work site and soil conditions. Such independent inspection is not possible here, where a building is to be constructed and the design team creates the universe of labor, materials, and specifications. Nor could ABE have known that the Design Defendants would significantly change the plans after ABE’s bid was accepted. Indeed, holding otherwise would create a perverse incentive in the industry to contract out of liability for design or architectural plans leaving contractors with no assurances that the information given to prepare their bids is reliable information. Unlike IFD, here ABE cannot create its own plans; it must rely on Design Defendants.

Furthermore, the cases on reliance cited by the Design Defendants are easily distinguished. In Marcellus Constr. Co. v Vill. of Broadalbin (302 AD2d 640, 642 [3d Dept 2003], the bidders’ instruction unequivocally advised bidders that they were required to conduct their own investigation concerning site conditions, while here such a site inspection was not possible. Here, the problem is with the plans to build a building, not site conditions that can be independently observed. In Schultz Constr, Inc. v Franbilt, Inc. (14 AD3d 895, 898 [3d Dept 2005]), unlike here, the contract provided that the inspections were solely for the benefit of the Authority, and thus Franbilt could not assert reliance. This court is confounded as to how contractors could bid on a project without relying on anything other than the design and architectural plans.

(Internal quotations and citations omitted).

We frequently litigate disputes regarding commercial property. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you are involved in a dispute regarding a commercial real estate transaction.

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On May 15, 2019, Justice Scarpulla of the New York County Commercial Division issued a decision in Poms v. Dominion Diamond Corp., 2019 NY Slip Op. 31364(U), holding that being listed on the New York Stock Exchange is insufficient to create personal jurisdiction in New York, explaining:

Under CPLR 302(a)(l), jurisdiction may only be exercised over an out-of-state defendant if that defendant has purposefully transacted business within the state and there is a substantial relationship between the transaction and the claim asserted. Poms first argues that New York courts may exercise specific jurisdiction over Defendants because Dominion is traded on the New York Stock Exchange. However, it has been long held that a corporation is not doing business in New York for the purposes of conferring jurisdiction merely because its shares are listed on a New York Stock Exchange. Therefore, this is an insufficient basis to confer jurisdiction over Defendants.

(Internal quotations and citations omitted).

This decision illustrates an issue that often arises in commercial litigation in New York. Whether the defendant is located on the other side of the world or across the Hudson in New Jersey, a New York court cannot assert jurisdiction over the defendant (that is, hear a case against it) unless there is a proper connection between the defendant and New York. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure whether there is jurisdiction over you, or over a party with which you are having a dispute, in New York.

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On May 6, 2019, Justice Masley of the New York County Commercial Division issued a decision in Kaye v. Levine Prospect, LLC, 2019 NY Slip Op. 31299(U), rejecting a economic duress defense, explaining:

A contract is voidable on the ground of duress when it is established that the party making the claim was forced to agree to it by means of a wrongful threat precluding the exercise of that party’s free will. A claim for economic duress must be premised on an entitlement to performance. Further, a contract is not voidable if the defendant refused to do that which it was not legally required to do.

Here, plaintiff claims that Levine threatened to breach the operating agreements of the parties’ numerous entities formed for each business venture property they purchased. Specifically, plaintiff propounds only vague, unsupported statements that the parties had, and defendants breached, obligations under the parties’ agreements, the parties’ contracts, and the parties’ entities’ operating agreements. Plaintiff explains vaguely, and without any support or detail regarding the terms of particular contracts at issue, that,

under the operating agreements of each of the parties’ real estate entities, LP and plaintiff, either directly or indirectly through [a particular property entity, would provide capital contributions to purchase properties, LP’s primary responsibility was to provide financing and obtain investments from third parties, whereas plaintiff’s primary responsibility was to operate and manage the properties through his management company, Stone.

First, plaintiff’s failure to identify with any specificity the agreements or the terms of the agreements that applied to the W. 18th and 47th Properties is fatal to its claim for economic duress with regard to Levine’s alleged threats to derail the sale and refinancing transactions for those two properties if plaintiff did not sign the Note. Plaintiff’s unsupported assertion that the operating agreements governing all of the parties’ 18 identified joint venture· properties-including those for the W. 18th and 47th Properties-obligated LP and plaintiff, either directly or indirectly through a special purpose entity, to provide capital contributions to purchase properties does not bear upon Levine’s alleged threats to refuse to sign paperwork to sell and/or refinance the W. 18th or 47th Properties, which the parties had already purchased.

Further, plaintiff’s generalized allegation that, under the operating agreements for those 18 different properties, LP’s primary responsibility was to provide financing and obtain third-party investments and plaintiff’s primary responsibility was to manage the properties is, likewise, far too vague to state a claim for economic duress as plaintiff has, not established that either defendant had any contractual obligation under any agreement to cooperate in a sale or refinancing of the W. 18th or 47th Properties. The allegations are devoid of necessary detail as to any alleged agreement for those two properties; for example, plaintiff does not state the actual parties to, the scope or duration of, or other necessary terms of any agreements controlling the W. 18th or 4 7th Properties, let alone defendants’ obligations under such agreements.

Plaintiff’s conclusory statement that Levine was fully aware of his obligations to [plaintiff] under the parties’ agreement and, in spite of that awareness, threatened that he would not sign the paperwork for the sale of W. 18th Property or the refinancing [of 47th Property, nor would he contribute another dollar in capital for the E. 18th Property, are also entirely vague and unsupported. Whether the agreements plaintiff asserts existed between the parties were oral partnership agreements, operating agreements of the property-business entities, or other contracts, the allegations are inadequate to state a claim for economic duress; as a threshold matter, plaintiff must state, with more than bare legal conclusions, unsupported or contradicted assertions, and obscure generalities, that defendants had an obligation to perform that which they improperly threatened to withhold. Absent a legal obligation to execute paperwork for the sale of the W. 18th Property or the refinancing of the 47th Property, there can be no economic duress arising from defendants’ threat not to consummate those transactions.

Plaintiff’s allegations do not establish that defendants had a contractual obligation to facilitate or consummate the transactions that were being negotiated for the w. 18th and 47th Properties, and, therefore, Levine’s alleged threat not to perform the sale or refinancing of those properties does not adequately state a wrongful act to support a claim for economic duress. In fact, the operating agreement for the W. 18th Property demonstrates that unanimous consent of the parties (as members of the relevant property entity) is required to effectuate any refinance or sale of that property; thus, there is no contractual obligation to effectuate a sale or refinance of that property under the applicable agreement.

Plaintiff’s allegations that Levine also threatened not to contribute additional capital or sign a guarantee in support of the parties’ E. 18th Property endeavor also do not support a claim for economic duress. Even if the E. 18th Property assertions in the complaint are not subject to the MIPRA’s claims release provisions-as discussed below-plaintiff’s allegations pertaining to an agreement for the E. 18th Property are also unsupported, vague assertions that are insufficient to demonstrate a legal obligation to perform those actions.

While plaintiff may have been subject to financial pressures and may have lacked equal bargaining power, that alone does not constitute a valid claim for economic duress.

Accordingly, the first cause of action for a declaratory judgment voiding the Note as procured under economic duress is dismissed.

(Internal quotations and citations omitted).

As this decisions discusses, a claim of duress can relate to economic duress, and not just the paradigm case of someone being forced to sign a contract with a gun to their head. But, as this decision also shows, the standards for pleading duress are demanding. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding a contract entered into under duress.

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On May 7, 2019, Justice Ostrager of the New York County Commercial Division issued a decision in 514 W. 24th Owner LLC v. Pryor, 2019 NY Slip Op. 31300(U), holding that a property owner cannot base a claim on the Lien Law, explaining:

Article 3-A of the Lien Law establishes a comprehensive series of trusts to ensure that monies an owner or contractor receives for a construction project are used to pay contractors and subcontractors. A statutory trust is created for funds received in connection with improvements to real property and either the owner of property or the general contractor on the project is a fiduciary over this statutory trust. Subcontractors, as beneficiaries of the statutory trust, may make claims against the trust for work performed. If, prior to payment of all claims brought by subcontractors against the trust, funds are used for purposes unrelated to the project, there is a diversion of trust funds and a corresponding breach of fiduciary duty. For example, where subcontractors have not been paid for their work they may assert a cause of action against an owner or general contractor for diversion of Lien Law trust funds.

Thus, Article 3-A of the Lien Law creates trust funds out qf certain construction payments or funds to assure payment of subcontractors, suppliers, architects, engineers, laborers, as well as specified taxes and expenses of construction.. We have repeatedly recognized that the primary purpose of article 3-A and its predecessors is to ensure that those who have expended labor and materials to improve real property or a public improvement at the direction of the owner or a general contractor receive payment for the work actually performed..

As the Lien Law makes clear, the purpose of the Lien Law was to ensure that subcontractors get paid for their work without necessarily having to resort to the filing of a mechanic’s lien on the real property. Thus, beneficiaries of the Lien Law are primarily subcontractors who have not been paid by owners or general contractors for work done on real property.

Plaintiffs seek to flip the purpose of the Lien Law on its head by claiming that they, as real property owners, are beneficiaries under the Lien Law. However, Lien Law § 71 identifies those considered trust beneficiaries, and owners of property are not included as beneficiaries under the statute. The only potentially applicable exception to this rule provides that owners who enter into a home improvement contract with a home improvement contractor can be trust beneficiaries. This is clearly not the case where, as here, Plaintiffs are owners of a large, multi-unit condominium development.

(Internal quotations and citations omitted).

We frequently litigate disputes over the sale or leasing of commercial property. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you are involved in a dispute regarding a commercial real estate transaction.

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On May 15, 2019, the Second Department issued a decision in Rutella v. National Sec. Corp., 2019 NY Slip Op. 03833, reversing an order requiring class arbitration based on FINRA rules, explaining:

The plaintiff . . . commenced this putative class action to recover damages for violations of Labor Law articles 6 and 19 on behalf of himself and others similarly situated, alleging that the defendants had failed to pay required minimum and overtime wages. The defendants moved, inter alia, pursuant to CPLR 7503 to compel arbitration of the plaintiff’s individual claims and to stay all proceedings in this action pending the arbitration. The plaintiff opposed the motion, arguing that his claims in the action, since they were asserted as class claims, did not fall within the parties’ [*2]arbitration agreement. The Supreme Court, in effect, granted that branch of the motion, and the plaintiff appeals.

Arbitration is a matter of contract, and arbitration clauses, which are subject to ordinary principles of contract interpretation, must be enforced according to their terms.

Here, the plaintiff correctly contends that the parties did not agree to arbitrate the claims asserted by the plaintiff in this putative class action. The parties’ agreement required that any controversy between the parties arising out of the Agreement would be settled by FINRA arbitration. Any claim settled by FINRA arbitration must be settled according to FINRA rules. Under FINRA Rule 13204(a)(4), the defendants are not permitted to enforce an arbitration agreement against a member of a putative class action with respect to any claim that is the subject of the putative class action, unless, among other things, class certification is denied. By agreeing to apply this rule to any arbitration between the parties, the defendants agreed not to arbitrate any claim that is the subject of a putative class action.

The defendants’ contention that the Agreement contained a broad and unequivocal arbitration provision that required the parties to arbitrate all disputes without exception ignores the clause “settled by FINRA arbitration” and the implications of agreeing to arbitrate before that forum. The defendants further contend that the plaintiff is using the class action as a device to avoid arbitration and that he should not be permitted to avoid arbitration so easily, particularly given the public policy favoring arbitration. However, the prohibition against enforcing arbitration agreements against members of a putative class action becomes inapplicable if class certification is denied. Thus, to actually avoid arbitration, the plaintiff cannot merely allege class claims in a complaint. The plaintiff must ultimately establish his entitlement to class certification. To do so, the plaintiff must prove, among other things, that a class action is superior to other available methods for the fair and efficient adjudication of the controversy. In short, the defendants’ contention that the assertion of a class action provides a ready means to circumvent the parties’ arbitration agreement is without merit.

Accordingly, the Supreme Court should have denied that branch of the defendants’ motion which was pursuant to CPLR 7503 to compel arbitration of the plaintiff’s individual claims and to stay all proceedings in this action pending the arbitration.

(Internal quotations and citations omitted).

Complex commercial litigation involves more than courts. Disputes often are–by agreement–decided by private arbitrators. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding a dispute that is subject to an arbitration agreement.

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On May 8, 2019, the Second Department issued a decision in U.S. Bank N.A. v. Roque, 2019 NY Slip Op. 03648, holding that a party asserting lack of service as an affirmative defense must move for judgment on that defense within 60 days of answering, explaining:

An objection that the summons and complaint was not properly served is waived if, having raised such an objection in a pleading, the objecting party does not move for judgment on that ground within sixty days after serving the pleading, unless the court extends the time upon the ground of undue hardship. Here, the defendant waived his defense of lack of personal jurisdiction on the basis of improper service of process, as he failed to move for judgment on that ground within 60 days after serving his answer.

Contrary to the defendant’s contention, the requirement in CPLR 3211(e) that a party move for judgment upon the ground of improper service within 60 days after service of the responsive pleading is not limited to motions made pursuant to CPLR 3211 and applies with equal force to motions made pursuant to CPLR 3212. The purpose of the 1996 amendment to CPLR 3211(e), which added the 60-day time limit, was to require a party with a genuine objection to service to deal with the issue promptly and at the outset of the action ferret out unjustified objections and provide for the prompt resolution of those that have merit.

Where a party objecting to service elects not to move to dismiss but to interpose a pleading containing that objection, CPLR 3211(e) requires that a motion for summary judgment on that ground be made within the 60-day time limit provided by that statute. That the temporal restriction on such motions for judgment was placed by the Legislature in CPLR 3211, which deals with motions to dismiss, rather than in CPLR 3212, which governs summary judgment motions, is of no moment. The guiding consideration is the clear legislative intent that service objections be dealt with promptly. CPLR 3211(e) expressly requires that a motion for judgment be made within 60 days after service of the responsive pleading. A motion pursuant to CPLR 3212 is such a motion and is made after issue is joined by the service of an answer.

Accordingly, the defendant’s cross motion for summary judgment dismissing the complaint insofar as asserted against him should have been denied.

(Internal quotations and citations omitted).

The rules regarding how you start a lawsuit and bring the defendants into it can sometimes be esoteric. As shown here, there are rules regarding how long a defendant has to move for dismissal based on improper service. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding the proper way to serve a defendant, bringing them into a lawsuit, and what to do if the defendant .

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On May 9, 2019, the First Department issued a decision in Interventure 77 Hudson LLC v. Falcon Real Estate Inv. Co., LP, 2019 NY Slip Op. 03670, holding that where a company lacked a principal place of business in any one state, its residence for purposes of the borrowing statute was its state of incorporation, explaining:

The motion court correctly granted defendant Hill’s motion for summary judgment dismissing all but the claim for breach of fiduciary duty, and granted defendant IRES’s motion in its entirety, finding plaintiffs’ claims time barred under the Delaware statute of limitations, and our application of New York’s borrowing statute. Plaintiffs hold commercial real estate across the country, and there is no evidence that they have a principal place of business in any one state. Accordingly, the motion court reasonably designated plaintiffs’ residence as Delaware, their state of incorporation. In addition, given that plaintiffs’ injury was purely economic, the place of their injury for purposes of the borrowing statue is normally deemed their residence, where the economic impact of defendants’ conduct is sustained. Accordingly, the Delaware statute of limitations applies to this action.

(Internal quotations and citations omitted).

It is not unusual for the statute of limitations to be an issue in complex commercial litigation. And the particular issue here–the rule in CPLR 202 that the statute of limitations used by a New York court sometimes is the statute of limitations of another state (or even country)–is an issue our clients, which are located all over the world, sometimes face. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding which statute of limitations applies to an action brought by a non-New York litigant.

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On April 19, 2019, Justice Borrok of the New York County Commercial Division issued a decision in Tufenkian v. Tirakian, 2019 NY Slip Op. 31052(U), appointing a receiver to perform a long-delayed winding-up, explaining:

CPLR 6401(a) also authorizes the appointment of a temporary receiver as a provisional remedy when property that is the subject of litigation is in danger of harm, injury or damage and such remedy is necessary to protect the interests of the parties. Specifically, 6401(a) provides: Upon motion of a person having an apparent interest in property which is the subject of an action in the supreme or a county court, a temporary receiver of the property may be appointed, before or after service of summons and at any time prior to judgment, or during the pendency of an appeal, where there is danger that the property will be removed from the state, or lost, materially injured or destroyed. A motion made by a person not already a party to the action constitutes an appearance in the action and the person shall be joined as a party.

Although the appointment of a temporary receiver is a an extreme remedy resulting in the taking and withholding of possession of property from a party without an adjudication on the merits, which should be granted only where the moving party has made a clear evidentiary showing of the necessity for the conservation of the property at issue and the need to protect the moving party’s interests, here, the appointment of a receiver is necessary to wind up the affairs of Harvest Song and provide a proper accounting. In the three years since the Dissolution Order was issued, Mr. Tufenkian has not wound up Harvest Song’s affairs in any way and, in fact, has continued to pursue consignment and licensing arrangements on its behalf. Under these circumstances, Ms. Tirakian has met her burden of establishing that a temporary receiver is appropriate and necessary to protect the parties’ interests.

(Internal quotations and citations omitted).

This decision relates to a significant part of our practice: business divorce (a break-up between the owners of a closely-held business). Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding a business divorce.

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