Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: September 8, 2014
Arguments the weeks of September 8, 2014 and September 15, 2014, in the Court of Appeals that may be of interest to commercial litigators. No. 156: Ellington v. EMI Music Inc. (To be argued Thursday, September 11, 2014) (regarding the interpretation of the provisions of a royalty agreement between the family of Duke Ellington and music publishers concerning the allocation of revenues from foreign publication of
Posted: September 7, 2014
On August 28, 2014, Justice Bransten of the New York County Commercial Division issued a decision in Town New Development Sales & Marketing LLC v. Price, 2014 NY Slip Op. 32307(U), explaining the application of CPLR 3106 when a party seeks to depose an opponent's employees.
In Town New Development Sales & Marketing, an employment contract dispute, the defendant moved to compel discovery, including "the depositions of two of Plaintiffs' employees, nonparties Andrew Heiberger and Wendy Maitland." The court denied that part of the defendant's motion, explaining:
Posted: September 6, 2014
On August 27, 2014, Justice Kornreich of the New York County Commercial Division issued a decision in QBE Americas, Inc. v. ACE America Insurance Co., 2014 NY Slip Op. 51330(U), granting in part and denying in part a motion a summary judgment motion seeking advancement of defense costs. This insurance coverage dispute arose from underlying litigations where consumers sued QBE for
Posted: September 5, 2014
On August 27, 2014, Justice Bransten of the New York County Commercial Division issued a decision in ZV NY, Inc. v. Moskowitz, 2014 NY Slip Op. 51338(U), explaining the circumstances in which an attorney affidavit may be used to support a motion for summary judgment.
In ZV NY, a commercial landlord-tenant dispute, the defendant opposed the plaintiff's motion for partial summary judgment on several grounds, including that the motion was "procedurally deficient because Plaintiff failed to submit an affidavit by a person having knowledge of the facts as required by CPLR 3212(b). Instead, Plaintiff submitted an affirmation of its attorney, along with accompanying exhibits." (Internal quotations and elision omitted). Notwithstanding many cases providing--as a general matter--that attorney affidavits are not sufficient support for a motion for summary judgment, the court rejected the defendant's argument, explaining:
Posted: September 4, 2014
On August 28, 2014, the Court of Appeals accepted two certified questions from the Second Circuit in Beardslee v. Inflection Energy, LLC, 12-4897-CV, a case involving the interpretation of oil and gas leases. At issue in Beardslee is the interplay between two provisions in the leases: (1) the so-called "habendum" clause, which sets the duration of the lease, and (2) a force majeure clause, which concerns delays or interruptions in drilling. The habendum clauses at issue provided for a five year initial term, and an option for a secondary term, which would extend "as long thereafter" as the land "is operated by the Lessee in the production of oil or gas." The force majeure clauses stated: "If and when drilling . . . [is] delayed or interrupted . . . as a result of some order, rule regulation . . . or necessity of the government, or as the result of any other cause whatsoever beyond the control of the Lessee, the time of such delay or interruption shall not be counted against the Lessee, anything in this lease to the contrary notwithstanding."
After the expiration of the five-year term, the lessee had still not commenced drilling because the only "commercially viable" method of drilling in the property—high-volume hydraulic fracturing, or "fracking"—was subject to a regulatory moratorium in New York (although permits for other unprofitable methods were in theory available). The lessees took the position that the regulations amounted to a force majeure event under the leases, and that the force majeure clause extended the term in the habendum clause. The landowners brought a declaratory judgment action in the Northern District of New York, alleging that the leases expired by their terms after five years because the lessees had not begun drilling. The district judge granted summary judgment to the landowners, declaring the leases expired.
Finding that the case raised novel and important questions of New York law that had not been addressed by the Court of Appeals, or any lower courts, the Second Circuit certified two questions to the Court of Appeals:
Posted: September 3, 2014
On August 28, 2014, the First Department issued decisions in Amsterdam Hospitality Group, LLC v. Marshall-Alan Assoc., Inc., 2014 NY Slip Op. 06007, and Art & Fashion Group Corp. v. Cyclops Production, Inc., 2014 NY Slip Op. 06008, addressing the use of email correspondence as "documentary evidence" for purposes of a motion to dismiss.
One unique feature of New York State motion practice is that, in addition to the motion to dismiss for failure to state a cause of action, the CPLR permits a motion to dismiss on the "ground that . . . a defense is founded upon documentary evidence." CPLR 3211(a)(1). Amsterdam Hospitality Group and Art Fashion Group are commercial cases (the former a fraud action brought against an executive search firm and the latter an action for breach of an oral joint venture agreement) in which the defendants filed 3211(a)(1) motions based on email correspondence between the parties that allegedly refuted the claims. As the majority observed in Amsterdam Hospitality Group, the New York courts "have grappled with the issue of what writings do and do not constitute documentary evidence, since the term is not defined by statute":
Posted: September 2, 2014
On August 27, 2014, the Second Department issued a decision in Mochkin v. Mochkin, 2014 NY Slip Op. 05963, affirming a trial court decision modifying a settlement agreement that had been entered on the record before it.
In Mochkin, the parties settled a dispute between them "in a stipulation of settlement dated July 25, 2011, which was so-ordered by the Supreme Court." The stipulation "provided that the Supreme Court would retain jurisdiction 'in all matters related hereto.'" When the defendant was unable to perform the agreement because the plaintiff had filed a notice of pendency against property involved in the dispute, "the defendant moved for a further extension of time to pay the remaining $700,000," which the trial court granted. The Second Department affirmed, explaining:
Posted: September 1, 2014
On August 19, 2014, Justice Sherwood of the New York County Commercial Division issued a decision in Melcher v. Greenberg Traurig LLP, 2014 NY Slip Op. 51296(U), citing New York's champerty law in denying a motion to substitute parties.
In Melcher, the 74 year-old plaintiff in a Judiciary Law §487 action moved to substitute "a limited liability company, LJBD Recovery LLC (LJBD) for himself as plaintiff" on the ground that "the substitution will avoid delay in prosecuting the case in the event of his death." The court denied the motion, explaining: