Blogs

Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: July 27, 2014

Class Not Certified When Plaintiff’s Evidence of Class Size is Insufficient

On June 24, 2014, Justice Platkin of the Albany County Commercial Division issued an opinion in Picard v. Bigsbee Enterprises, Inc., 2014 NY Slip Op. 51113(U), denying a motion for class certification for failure to establish numerosity. In Picard, the plaintiff brought a class action "premised on alleged violations of New York Labor Law § 196-d." The court denied the plaintiff's motion for class certification on the ground that the plaintiff had not established the numerosity element for certification as a class action, explaining:

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Posted: July 26, 2014

Commercial Division Rules Amended to Increase Monetary Thresholds and Encourage Early Exchange of Documents Facilitating Settlement

The Chief Administrative Judge has signed orders (1) raising most of the monetary thresholds for assignment of cases to the Commercial Division and (2) amending Rule 8 to provide for the voluntary exchange of documents that would facilitate early settlement. The amended NYCRR § 202.70(a), which goes into effect on September 2, 2014, changes the monetary thresholds for assignment of cases to the Commercial Division. Here are the thresholds effective September 2, 2014:

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Posted: July 25, 2014

Even Where CPLR 3211(a)(4) Does Not Require Dismissal, Cases Can be Consolidated

On July 10, 2014, Justice Schweitzer of the New York County Commercial Division issued a decision in 11 E. 68th St. LLC v. Madison 68 Realty LLC, 2014 NY Slip Op. 31872(U), analyzing the rules for dismissal or consolidation when there are two pending actions regarding similar subject matter. In 11 E. 68th St. LLC, the defendant filed an action relating to a real estate deal done bad. The next day, the plaintiff filed a similar action. The defendant moved to dismiss the second-filed action pursuant to CPLR 3211(a)(4). The court ultimately decided to consolidate the actions, rather than dismiss the second-filed on, but in doing so, it explained a number of issues relevant to a motion to dismiss in favor of a prior pending proceeding:

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Posted: July 24, 2014

BCL § 1112 is Controlling for Determining Venue In an Action Seeking Judicial Dissolution

On July 21, 2014, Justice Demarest of the Kings County Commercial Division issued a decision in Sicignano v. Hymowitz, 2014 NY Slip Op. 51100(U), refusing to change venue in an action seeking judicial dissolution. In Sicignano, the defendants in an action seeking "judicial dissolution . . . pursuant to Business Corporation Law § 1104-a" and asserting claims for negligence and breach of fiduciary moved for a change of venue. The court denied the motion, explaining:

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Posted: July 23, 2014

Commercial Division Applies Delaware Demand Futility Pleading Rules

On July 3, 2014, Justice Schweitzer of the New York County Commercial Division issued a decision in David Shaev Profit Sharing Account v. Riggio, 2014 NY Slip Op. 31776(U), dismissing a derivative action for failure adequately to plead demand futility. In David Shaev Profit Sharing Account, the plaintiff filed a derivative action against the individual directors of Barnes & Noble, accusing them

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Posted: July 22, 2014

Policy Exclusions Bar Coverage For Banks Sued By Investors Who Lost Funds In Madoff Ponzi Scheme

On June 24, 2014, the First Department issued a decision in Associated Community Bancorp, Inc. v. St. Paul Mercury Ins. Co., 2014 NY Slip Op. 04697, affirming the dismissal of insurance coverage claims by banks that were sued by customers who suffered losses as a result of investments in Bernard L. Madoff Investment Securities through custodial accounts managed by the banks. In Associated Community Bancorp, the First Department found that several exclusions to the plaintiff banks' "Bankers Professional Liability Insuring Agreements" barred coverage, including (1) an exclusion for claims arising from a loss of "money, securities, property or other items of value" in the possession of the bank, and (2) an exclusion for claims arising from the "insolvency" of any "investment company, investment bank or [] broker dealer":

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Posted in Commercial, Insurance
Posted: July 21, 2014

Court Examines Scope of Claim for Fraudulent Conveyance

On July 7, 2014, Justice Ramos of the New York County Commercial Division issued a decision in 135 E. 57th St., LLC v. 57th St. Day Spa, LLC, 2014 NY Slip Op. 31802(U), examining multiple alleged fraudulent conveyances. In 135 E. 57th St., LLC, the plaintiff building owner and landlord brought an action to collect a judgment "for rent" obtained "against its former tenant, defendant 57th Street Day Spa, LLC (the Tenant)," "from the owners of the Tenant on theories of piercing the corporate veil, successor liability, civil conspiracy, and pursuant to Debtor and Creditor Law (DCL) § 270, et seq." In deciding a motion for summary judgment brought by several defendants, the court analyzed the plaintiff's fraudulent conveyance claims as follows:

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Posted: July 20, 2014

Double Derivative Claim Dismissed For Failure to Show Control of Subsidiary

On July 9, 2014, Justice Schweitzer of the New York County Commercial Division issued a decision in USHA SOHA Terrace, LLC v. Robinson Brog Leinwand Greene Genovese & Gluck, P.C., 2014 NY Slip Op. 31813(U), dismissing derivative claims for lack of standing. In USHA SOHA Terrace, the plaintiff "assert[ed] both direct and derivative claims against legal counsel for the owner and the developer with regard to a construction project in which plaintiff . . . was a minority investor in the developer." The court granted the defendants' motion to dismiss, holding that the plaintiff lacked standing to bring either direct or derivative claims. With respect to the plaintiff's double derivative claim, the court explained:

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Posted: July 19, 2014

Agreement Lacking Formula for Computing Compensation not Void for Indefiniteness

On July 9, 2014, Justice Scarpulla of the New York County Commercial Division issued a decision in Basu v. Alphabet Management LLC, 2014 NY Slip Op. 31807(U), holding that an alleged oral employment agreement was not unenforceably vague because it lacked a formula for calculating the plaintiff's compensation. In Basu, the defendant moved to dismiss the plaintiff's claim for breach of contract on multiple grounds, including that it was void for indefiniteness. The trial court denied the motion, explaining:

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Posted in Commercial, Contracts
Posted: July 18, 2014

Absent Precise Language To the Contrary, Limitations Period In Insurance Policy Runs From Date Coverage Was Denied, Not Date of Underlying Loss

On June 30, 2014, Justice Schweitzer of the New York County Commercial Division issued a decision in Flat Ridge 2 Wind Energy LLC v. Those Underwriter at Lloyd's, 2014 NY Slip Op. 31804(U), holding that unless an insurance policy contains precise language to the contrary, a limitations period provided for the in the policy runs from the date the insurance company denies coverage, rather than the date of the underlying injury. In Flat Ridge 2, the plaintiff (a wind power generation company) brought an action against its insurer, seeking coverage for damages to a wind farm caused by a tornado. The insurer moved to dismiss the complaint as time barred under a provision of the policy requiring that any suit against the insurance company be “commenced within twelve (12) months next after the happening becomes known to the Insured." The insurer argued that this 12-month limitations period ran from the date of the underlying loss and therefore the insured’s claim was time barred. The Court rejected this argument and found the claim timely because it was filed within 12 months of the insurance company’s denial of coverage:

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