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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 29, 2013

Seller Cannot Unilaterally Make Time of the Essence

On December 26, 2013, the Second Department issued a decision in Revital Realty Group, LLC v. Ulano Corp., 2013 NY Slip Op. 08607, illustrating the application of "time is of the essence" in real estate transactions.
In Revital Realty Group, the defendant entered into a contract to sell commercial real estate to plaintiff. "The contract did not make time of the essence regarding the closing date, and it did not contain any mortgage contingency clause." Approximately two weeks before the closing date, defendant's "attorney wrote [plaintiff's] attorney, reminding him" of the closing date and "proclaiming that 'such date is time of the essence to the Contract.'" Defendant's attorney pointed out that there was no time is of the essence provision in the contract and proposed a later closing date. The transaction did not close. When plaintiff sued for specific performance of the contract, the defendant answered, asserted counterclaims and moved for summary judgment. The trial court not only denied the motion, it also dismissed defendant's counterclaims. The Second Department affirmed, explaining:

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Posted: December 28, 2013

Non-Party Subpoenas Quashed For Failure to Justify the Need for Discovery

On December 5, 2013, Justice Sherwood of the New York County Commercial Division issued a decision in Hildene Capital Mgt., LLC v. Bank of N.Y. Mellon, 2013 NY Slip Op. 33181(U), explaining the standard for obtaining non-party discovery.
In Hildene Capital Mgt., plaintiffs issued deposition subpoenas to two non-parties who already had been "deposed at great length in a previous" action in federal court regarding "the facts and circumstances leading to the preparation of an October 2009 opinion letter concerning the transaction that underlies the" Hildene Capital Mgt. action. The court granted the non-parties' motions to quash, holding that even though plaintiffs were not parties to the prior action and thus had never had an opportunity to depose the witnesses, plaintiffs had not sufficiently justified deposing the non-parties again. The court explained:

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Posted: December 27, 2013

No Part Performance Exception to Statute of Frauds for Obligations that Cannot be Performed Within a Year

On December 17, 2013, the First Department issued a decision in Gural v. Drasner, 2013 NY Slip Op. 08391, overruling earlier cases recognizing a part performance exception to the Statute of Frauds for contracts that are incapable of being performed within a year.
Plaintiff and defendant allegedly orally agreed that if plaintiff cleared defendant's land, he could use it for pasturing and that defendant would reimburse plaintiff's expenses when defendant sold the property. It took several years to clear and improve the land.  When defendant later sold his property, he refused to reimburse plaintiff's expenses.
Plaintiff sued to recover his expenses. Defendant moved for summary judgment because it took more than one year for plaintiff to perform the alleged oral agreement. Plaintiff argued that part performance took his claim out of the Statute of Frauds. The First Department assumed for purposes of the appeal that the task performed by plaintiff could not possibly have been performed in a year (although it expressed doubts on that score in dicta, noting that "the determination of whether an alleged oral contract can possibly be performed within one year of its making is not conducted by looking back at the actual performance; it requires analysis of what was possible, looking forward from the day the contract was entered into." (emphasis added)). The First Department then held that there was no part performance exception to the General Obligations Law's Statute of Frauds for obligations that could not be performed within a year:

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Posted in Commercial, Contracts
Posted: December 26, 2013

Late Motion for Summary Judgment Rejected, Even When Styled as a Cross-Motion to a Timely-Made Motion

On December 24, 2013, the First Department issued a decision in Kershaw v. Hospital for Special Surgery, 2013 NY Slip Op. 08548, clarifying that the CPLR-mandated deadline for filing a motion for summary judgment cannot be extended simply by styling the motion as a cross-motion to a timely made motion. Kershaw involved an appeal from a medical malpractice action, not a

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Posted: December 25, 2013

Attorneys’ Fees Award Limited Because Plaintiff Did Not Prevail on All Arguments

On December 24, 2013, the First Department issued a decision in RSB Bedford Assoc. LLC v. Ricky's Williamsburg, Inc., 2013 NY Slip Op. 08526, showing how a prevailing party's right to recover its litigation expenses can be limited by the degree to which it prevails.
In RSB Bedford Assoc., the First Department affirmed a damages award for breach of a real estate purchase contract. The First Department's decision on the damages point is interesting and we recommend that you read it in the linked decision. However, for this post we wish to focus on the First Department's discussion at the end of the decision regarding plaintiff's attorneys' fees. The court held:

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Posted: December 24, 2013

Auctioneer Exception to Statute of Frauds Satisfied by Multiple Writings

On December 17, 2013, the Court of Appeals issued a decision in William J. Jenack Estate Appraisers and Auctioneers, Inc., v. Albert Rabizadeh, Docket No. 229, addressing the Statute of Frauds' requirements for sales at auction.
William J. Jenack Estate Appraisers and Auctioneers involved an auction buyer who sought to avoid a $400,000 auction purchase on the ground that the auctioneer's documentation could not satisfy the UCC's Statute of Frauds, and the exception thereto contained in GOL 5-701(a)(6), which provides:

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Posted in Commercial, Contracts
Posted: December 23, 2013

Action Dismissed Due to Failure to Give Contractually-Required Notice and Opportunity to Cure Before Expiration of Limitations Period

On December 19, 2013, the First Department issued a decision in ACE Sec. Corp. v. DB Structured Prods., Inc., 2013 NY Slip Op. 08517, dismissing a mortgage-backed securities lawsuit as barred by the failure both to give the contractually-required notice and an opportunity to cure and to bring suit before the end of the limitations period. In ACE Sec. Corp., plaintiff alleged

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Posted: December 22, 2013

Inability to Read or Write English Does Not Excuse Failure to Answer

On November 11, 2013, Justice Whelan of the Suffolk County Commercial Division issued a decision in OneWest Bank, FSB v. Navarro, 2013 NY Slip Op. 52053(U), denying a motion for leave to serve a late answer despite the defendant's claim that she did not read or write English.
In OneWest Bank, the defendant claimed that she failed timely to answer because she did not understand the complaint or the legal process. The court denied her motion to file a late answer, explaining:

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Posted: December 21, 2013

Attempt To Certify Class Action by Tenants Injured By Hurricane Sandy Summarily Dismissed

On December 11, 2013, Justice Kornreich of the New York County Commercial Division issued a decision in Adler v. Ogden Cap Props., LLC, 2013 NY Slip Op. 23428, denying class certification to a plaintiff class purporting to represent all renters in the State of New York against a proposed defendant class of all landlords in the State of New York, with the goal of obtaining rent rebates for violations of the warranty of habitability, RPL § 253-b, caused by Superstorm Sandy.
The proposed class representatives asserted a number of claims, which Justice Kornreich addressed as follows:

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Posted: December 20, 2013

Legal Malpractice Claim Survives Despite No Allegation of Attorney-Client Relationship

On December 18, 2013, the Second Department issued a decision in Mr. San, LLC v. Zucker & Kwestel, LLP, 2013 NY Slip Op. 08416, holding that, in exceptional circumstances, a legal malpractice claim can survive a motion to dismiss despite the lack of an attorney-client relationship.
The Second Department's opinion was brief:

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