Blogs

Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: January 29, 2015

First Department Affirms Injunction Pending Arbitration Based, In Part, On Agreement Limiting Damages

On January 22, 2015, the First Department issued a decision in Matter of Rockwood Pigments NA, Inc. v. Elementis Chromium LP, 2015 NY Slip Op. 00612, affirming the grant of a preliminary injunction prohibiting the termination of a distributorship agreement pending arbitration of the parties' dispute. This post focuses on one aspect of the Rockwood Pigments decision: the First Department's discussion of irreparable harm. One would think that damages from the termination of a commercial agreement could be compensated for with money damages. However, the First Department explained:

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Posted: January 28, 2015

First Department Analyzes “Manifest Intent” Requirement in Fidelity Bond

On January 22, 2015, the First Department issued a decision in Keybank N.A. v. National Union Fire Insurance Co. of Pittsburgh, PA, 2015 NY Slip Op. 00614, analyzing the "manifest intent" requirement in a fidelity bond. In Keybank, the plaintiff sought to recover on a fidelity bond. The First Department affirmed the trial court's denial of summary judgment on the ground that there were questions of fact regarding whether the losses were the result of an employee's "'manifest intent' to cause plaintiff to sustain a loss or to obtain a financial benefit for himself or the developer," explaining:

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Posted in Commercial, Insurance
Posted: January 27, 2015

Debt Not Acknowledged in Writing Does Not Revive Statute of Limitations

On January 21, 2015, the Second Department issued a decision in Mosab Construction Corp. v. Prospect Park Yeshiva, Inc., 2015 NY Slip Op. 00505, holding that the defendants had not acknowledged the debt in a writing, restarting the statute of limitations period. In Mosab Construction Corp, the trial court granted the defendants' motion to dismiss the breach of contract claim against them as time-barred. The Second Department affirmed, explaining:

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Posted: January 26, 2015

Court Denies Motion to Amend Petition for Judicial Dissolution of Corporation to Add Allegations to Post-Commencement Wrongdoing

On January 16, 2015, Justice Platkin of the Albany County Commercial Division issued a decision in Matter of Digeser v. Flach, 2015 NY Slip Op 50041(U), ruling that a petitioner seeking judicial dissolution of a corporation could not amend the petition to add allegations of post-commencement wrongdoing, while preserving the original valuation date for purposes of the respondent's buyout right. Where a shareholder seeks dissolution under that BCL § 1104-a, the respondents "ha[ve] the right under BCL § 1118 to elect to purchase petitioner's shares for their fair value as of the day prior to the commencement." In Matter of Digeser, the respondent declined to exercise the buyout right. Later, the petitioner sought leave to amend his petition to add additional grounds for dissolution based on alleged post-commencement conduct. However, he asked that the valuation for purposes of the buyout right be determined based on the original filing date – presumably because the corporation's value had decreased since the filing of the initial petition. Justice Platkin denied the motion, finding that retaining the original valuation date would unfairly prejudice the respondents:

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Posted: January 25, 2015

Insured Not Entitled to Coverage When it Fails to Set Fire Alarm as Required by Policy

On January 21, 2015, the Second Department issued a decision in Triple Diamond Café, Inc. v. Those Certain Underwriters at Lloyd's London, 2015 NY Slip Op. 00527, affirming summary judgment in favor of an insurer because of the insured's failure to observe a policy warranty. In Triple Diamond Café, the trial court granted the defendant insurer summary judgment on the plaintiff bar and lounge's claim that the insurer improperly "denied coverage on the basis that the plaintiff failed to comply with a" policy provision providing "Warranted Automatic extinguishing system and hood and duct cleaning, central station fire and burglar alarms will be fully operational throughout the period of the policy," because the alarm had not been set. The Second Department affirmed, explaining:

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Posted in Commercial, Insurance
Posted: January 24, 2015

Court Enforces Choice of Law Provision Notwithstanding Dispute’s Lack of Connection to New York

On January 9, 2015, Justice Bransten of the New York County Commercial Division issued a decision in Marsh USA Inc. v. Doerfler, 2015 NY Slip Op 50020(U), holding that, as written in the parties' agreement, a New York choice of law provision precluded an argument that New York law should not be applied because the parties and the agreement had

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Posted: January 23, 2015

SEC Administrative Order Insufficient to Establish Dishonesty Triggering Insurance Policy Dishonest Acts Exclusion

On January 15, 2015, the First Department issued a decision in J.P. Morgan Securities Inc. v. Vigilant Insurance Co., 2015 NY Slip Op. 00462, holding that an SEC administrative order, arising from an investigation of improper "market timing" by Bear Stearns, did not constitute an "adjudication" of wrongdoing sufficient to trigger a Dishonest Acts Exclusion in Bear Stearns' professional liability

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Posted in Commercial, Insurance
Posted: January 21, 2015

“But for” Standard for Legal Malpractice Applies Equally to Accountant Malpractice Claim

On January 8, 2015, Justice Friedman of the New York County Commercial Division issued a decision in Hamadeh v. Spaulding, 2015 NY Slip Op. 30027(U), examining the causation standard for an accounting malpractice claim. In Hamadeh, the defendants moved to dismiss the accounting malpractice claims against them. In deciding that motion, the court reviewed the causation standard for such a claim:

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Posted: January 20, 2015

Consequential Damages Claim Dismissed Because Such Damages Not Contemplated at Time of Contracting

On January 14, 2015, Justice Friedman of the New York County Commercial Division issued a decision in ERC 16W L.P. v. Xanadu Mezz Holdings LLC, 2015 NY Slip Op. 50035(U), dismissing a claim for consequential damages. In ERC 16W L.P., the plaintiff sought, among other things, consequential damages on its claim for breach of contract. The Court dismissed the claim for consequential damages, explaining:

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Posted in Commercial, Damages