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Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: December 18, 2013

Settlement by Related Party In Earlier Action Does Not Bind Plaintiffs in New Action

On December 17, 2013, the First Department issued a decision in BDCM Opportunity Fund II, LP v. Yucaipa Am. Alliance Fund I, LP, 2013 NY Slip Op. 08387, addressing whether plaintiffs were bound by a settlement agreement entered into by a related party in another action. The First Department agreed with the trial court that plaintiffs were not bound, writing: ...

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Posted: December 17, 2013

Whether Liquidated Damages Clause is Unenforceable Penalty is Fact Question

On December 6, 2013, Justice Friedman of the New York County Commercial Division issued a decision in 412 W. 12th St. 1N LLC v. C and A Capital LLC, 2013 NY Slip Op. 33099(U), ruling that whether a liquidated damages clause was an unenforcable penalty was a fact question that could not be resolved on a motion to dismiss. In 412 W. 12th St., the parties executed a mortgage providing that upon default, defendant was entitled to, among other things, default interest at "a rate of interest  equal to the lesser of 24% . . . per annum or the maximum legal rate at the time any such interest is to be calculated" plus a "late charge of 4¢ for each $1 so overdue."  Plaintiff defaulted, subsequently paid default interest and liquidated damages, and then sued for their return, alleging that they constituted an unenforcable penalty. In response to defendant's motion to dismiss, the court ruled that it could not determine on a motion to dismiss whether the late payment charge and default interest were unenforceable penalties, writing: ...

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Posted: December 14, 2013

Lease Amendment Invalid Because Landlord’s President Lacked Authority to Amend Lease

On December 12, 2013, the First Department issued a decision in Site Five Hous. Dev. Fund Corp. v. Bullock, 2013 NY Slip Op. 08344, affirming a decision holding that a corporate landlord's president lacked the authority to modify a lease, rendering the modification upon which the commercial tenant relied invalid. In Five Site, the First Department explained that "a December 2001 amendment to a store lease" was "null and void, and awarded plaintiff possession of premises" because: ...

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Posted: December 13, 2013

Dispute Over Authentiticy Precludes Dismissal Based on Documentary Evidence

On December 12, 2013, the First Department issued a decision in Laurel Hill Advisory Group, LLC v. American Stock Transfer & Trust Co., LLC, 2013 NY Slip Op. 08351, illustrating one limit to a motion to dismiss based on documentary evidence: a dispute about the authenticity of the documents relied upon in the motion. In Laurel Hill, the plaintiff moved to dismiss the counterclaims against it based on documentary evidence--a written operating agreement. The First Department reversed the trial court's decision to the extent it dismissed the breach of contract counterclaim, writing: ...

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Posted: December 12, 2013

Motion to Compel Denied Because of Delay in Bringing It

On December 10, 2013, the First Department issued a decision in GoSMILE, Inc. v. Levine, 2013 NY Slip Op. 08215, affirming the denial of a motion to compel because of the movant's delay in making the motion. In GoSMILE, the plaintiff served a document demand on May 4, 2009. Defendant objected to producing documents generated after January 28, 2009, the date on which the action was commenced. Plaintiff "subsequently served new discovery demands, seeking documents generated before March 29, 2010." Defendant once again objected to producing documents generated after January 28, 2009. On February 28, 2012--approximately two and a half years after defendant's initial objection--plaintiff moved to compel the production of the documents withheld based on that objection. The trial court--based on a Special Referee's recommendation--denied the motion. The First Department affirmed the denial, writing: ...

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Posted: December 9, 2013

Failure to Give Required Notice of Termination a Failure to Perform a Condition Precedent to Entitlement to Termination Payments

On December 3, 2013, Justice Demarest of the Kings County Commercial Division issued a decision in Sutton v. E&B Giftware LLC, 2013 NY Slip Op. 33019(U), holding that the failure to give a contractually required notice of termination was a failure to perform a condition precedent to the plaintiff's entitlement to post-termination payments. In Sutton, the plaintiff alleged that the defendant breached the consulting agreement between them by failing to pay plaintiff "consulting fees and bonus payments . . . following his termination of his retention under the Agreement." The court found that plaintiff was not entitled to those payments because he had failed to give the required sixty days' notice required by the agreement. The court explained: ...

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Posted in Commercial, Contracts