Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: February 8, 2015

CEO Should Have Been Allowed to Testify Regarding Damages

On February 3, 2015, the First Department issued a decision in Wathne Imports, Ltd. v. PLR USA, Inc., 2015 NY Slip Op. 00830, holding that a party's CEO should have been allowed to testify regarding that party's damages. In Wathne Imports the trial court granted the "defendants' motion in limine to preclude plaintiff's CEO from offering any testimony on damages." The First Department reversed, explaining:


Posted in Commercial, Evidence
Posted: February 7, 2015

Absent Covenant not to Compete, Selling Business Owner Can Advertise New Business

On January 20, 2015, Justice Pines of the Suffolk County Commercial Division issued a decision in Weiner v. Artura, 2015 NY Slip Op. 30102(U), examining the obligation of the seller of a business not to solicit former customers. In Weiner, the plaintiff and defendant asserted claims and counterclaims regarding a law firm merger. Both parties moved for summary judgment on the defendant's counterclaim for breach of the merger agreement by soliciting former customers. The court ultimately denied both motions, finding that there were factual issues. In deciding the motions, the court explained the applicable standard:


Posted in Commercial, Contracts
Posted: February 6, 2015

Extrinsic Documents Not Part of Agreement Unless Specifically Incorporated by Reference

On January 23, 2015, Justice Demarest of the Kings County Commercial Division issued an opinion in Zucker v. Waldmann, 2015 NY Slip Op. 30089(U), granting reargument and, on reargument, denying a motion to dismiss on statute of limitations grounds. In Zucker, the court initially dismissed the plaintiffs' claims on, among other reasons, statute of limitations grounds. The plaintiff granted reargument and, on reargument, the court denied the motion with respect to the statute of limitations, explaining:


Posted: February 5, 2015

Damages in Derivative Action Must go to Corporation, Not Plaintiff

On January 28, 2015, the Second Department issued a decision in Sakow v. Waldman, 2015 NY Slip Op. 00742, regarding the distribution of a damages award in a derivative action. In Sakow, the plaintiff, who brought an action both individually and derivativly regarding the management of a real estate investment, prevailed at trial and was awarded damages on his claims. On appeal, the Second Department explained that damages on the derivative should have been awarded to the corporation, not the shareholder that brought the suit, explaining:


Posted: February 4, 2015

Court Examines Absolute and Qualified Privilege to Defamation Claims

On January 15, 2015, Justice Bransten of the New York County Commercial Division issued a decision in International Publishing Concepts, LLC v. Locatelli, 2015 NY Slip Op. 50049(U), analyzing the contours of the litigation privilege and claims for defamation. In International Publishing Concepts, the plaintiff moved to dismiss counterclaims by the defendant and third-party defendant for defamation. The court granted


Posted in Commercial, Defamation
Posted: February 2, 2015

Shareholders’ Management of Close Corporation Not Enjoined Because it Elected to Purchase Other Shareholder’s Shares

On January 14, 2015, Justice Platkin of the Albany County Commercial Division issued a decision in O'Connor v. Coccadotts, Inc., 2015 NY Slip Op. 25013, denying a motion for a preliminary injunction under BCL § 1115, in a judicial dissolution proceeding, where the majority shareholders had elected under BCL § 1118 to purchase the petitioner's shares. In O'Connor, the 49% owner of three corporations brought a special proceeding for dissolution under BCL § 1104-a based on alleged wrongdoing by the majority owner, and also sought an injunction under BCL § 1118, restraining the majority owner from "taking any actions to change or affect the business, structure, management or value of the [corporations] prior to dissolution." The respondents exercised their right under BCL § 1118 to buyout the petitioner's shares, making the central issue in the case "the fair value" of the corporations, as of the day prior to the filing of the petition. The minority shareholder argued that it was nevertheless entitled to injunctive relief under BCL § 1115. The court disagreed and denied the injunction. Justice Platkin acknowledged that "a BCL § 1115 may issue at any stage of an action or special proceeding under BCL article 11, even following a BCL § 1118 election," but concluded that an injunction was not appropriate in this case:


Posted: February 1, 2015

Court Finds That Non-Mandatory UK Forum Selection Clause Supports Forum Non Conveniens Dismissal

On January 21, 2015, Justice Scarpulla of the New York County Commercial Division issued a decision in Rakuten Bank, Ltd. v. Royal Bank of Canada, 2015 NY Slip Op. 30096(U), finding that a UK forum selection clause in the parties' contract was non-mandatory but nevertheless supported dismissal on forum non conveniens grounds. In Rakuten Bank, the plaintiff, a Japanese bank,


Posted: January 31, 2015

Court Accepts Late Reply to Counterclaim Where Delay Was Result of Law Office Failure

On January 20, 2015, Justice Kornreich of the New York County Commercial Division issued a decision in West 17th St. & Tenth Ave, Realty, LLC v. The N.E.W. Corp., 2015 NY Slip Op. 30041(U), discussing the standard for law office failure sufficient to justify denying a default judgment. In West 17th St. & Tenth Ave, Realty, the plaintiff failed timely to reply to the defendant's counterclaims and then "move[ed] to compel defendant . . . to accept its reply to defendant's counterclaim, or in the alternative, to extend its time to file a reply to defendant's counterclaim." The defendant moved for default judgment. The court granted the plaintiff's motion, explaining:


Posted: January 30, 2015

Disclaimer of Coverage Not in Bad Faith When No Intent to Delay and Arguable Basis for Denial Existed

On January 22, 2015, the First Department issued a decision in S Bros. Inc. v. Leading Insurance Services, Inc., 2015 NY Slip Op. 00603, discussing the standard for bad faith refusal to defend under an insurance policy. In S Bros. Inc., the "[p]laintiff commenced [a] declaratory action approximately one month after asking defendant to reconsider its disclaimer of coverage in connection with the underlying action. Just over a month later, defendant rescinded its disclaimer of coverage and agreed to provide plaintiff with a defense in that action and to reimburse it for the reasonable legal fees it had already incurred therein." The First Department agreed with the trial court that the "defendant's initial refusal to defend" was not "an act of bad faith," explaining:


Posted in Commercial, Insurance