Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: November 28, 2013

Court of Appeals Enforces Lease as Written, Even Though it Leads to Harsh Result for Commercial Tenant

On October 7, 2013, we noted that on October 8, 2013, the Court of Appeals would hear argument in Eujoy Realty Corp. v. Van Wagner Communications, LLC, Docket No. 179. On November 26, 2013, the Court of Appeals issued its decision in Eujoy Realty Corp. v. Van Wagner Communications, LLC, 2013 NY Slip Op. 07823, strictly enforcing the written terms of a lease even though that resulted in a commercial tenant forfeiting almost a year's rent. The commercial lease at issue in Eujoy, provided that the yearly rent for a billboard was to be paid "in advance on January 1" and that if the lease were "terminated for any reason prior to the date of its expiration," the tenant advertising company would "not be entitled to the return of . . . any basic rent paid in advance and covering a period beyond the date on which the Lease is terminated," with exceptions not relevant here. "In early January 2007," the tenant sent the landlord a check for the "annual basic rent," but soon thereafter stopped payment on the check. A few weeks later, the tenant termminated the lease. The landlord sued for the unpaid rent. The Court of Appeals held that the tenant owed the annual rent, even though the year was only two weeks old when the tenant terminated the lease. The court explained: ...


Posted in Commercial, Contracts
Posted: November 27, 2013

Arbitration Provisions in LLC Operating Agreements May Be Enforced by LLCs Even If LLCs Are Not Parties to the Agreements

On November 15, 2013, Justice Kapnick of the New York County Commercial Division issued a decision in Kellman v. Whyte, 2013 NY Slip Op. 32938(U), granting in part and denying in part the defendants’ motion to compel arbitration. In Kellman, plaintiff asserted claims against her former employer, an affiliate of her former employer and the LLC for which she had ...


Posted: November 26, 2013

No Private Right of Action Against Banks Under the Exempt Income Protection Act

On October 26, 2013, we noted that on October 15, 2013, the Court of Appeals had heard argument in Cruz v. TD Bank, N.A., Docket No. 191, a matter considering two questions certified from the Second Circuit on whether there is a private right of action under the Exempt Income Protection Act of 2008 ("EIPA"). On November 21, 2013, the Court of ...


Posted: November 25, 2013

Default Judgment Entered Against Defendant As Discovery Sanction

On November 8, 2013, Justice Schweitzer of the New York County Commercial Division issued a decision in Grober v. Bronson, 2013 NY Slip Op. 32935(U), granting a default judgment against the defendant as to liability on plaintiffs' breach of contract and Labor Law claims based on defendant's repeated failure to comply with discovery demands and appear at court conferences. In granting this extreme remedy, Justice Schweitzer rejected the argument offered by defendant's newly retained counsel that he had for five years been suffering from a medical condition that caused him to be bed ridden for most of the time. Justice Schweitzer found that, under the New York Rules of Professional Conduct, defendant's counsel should not have agreed to represent defendant if he suffered from a physical condition that made it unreasonably difficult for him to represent his client. Justice Schweitzer could not have been more blunt when he wrote: ...


Posted: November 24, 2013

Leave to Re-Plead Already Dismissed Claims Denied

On November 12, 2013, Justice Sherwood of the New York County Commercial Division issued a decision in Broadway West Enterprises, Ltd. v. Doral Money, Inc., 2013 NY Slip Op. 32912(U), denying plaintiff's motion, made shortly before the close of discovery, for leave to file a second amended complaint to supplement factual allegations contained in the first amended complaint, re-join two ...


Posted: November 23, 2013

Jurisdictional Claims Survive But Only Jurisdictional Discovery Allowed

On November 20, 2013, the Second Department issued a decision in Goel v. Ramachandran, 2013 N.Y. Slip Op. 07708, illustrating the liberal standard applied to jurisdictional claims prior to discovery. In Goel, the plaintiffs alleged that there was jurisdiction over a foreign defendant because it was a "mere department of" its US parent. The Second Department affirmed the denial of ...


Posted: November 22, 2013

Defendant Sanctioned for Filing Inaccurate Note of Issue and Certificate of Readiness

On November 12, 2013, Justice Bransten of the New York County Commercial Division issued a decision in Vladeck, Waldman, Elias & Engelhard, P.C. v. Paramount Leasehold, L.P., 2013 NY Slip Op. 32908(U), sanctioning a litigant for filling a Note of Issue and Certificate of Readiness that falsely indicated that discovery was complete. In Vladeck, the defendant filed a Note of Issue and Certificate of Readiness "two and half months before the deadline scheduled by the Court," arguing that discovery was complete because the plaintiff had not, in defendant's view, "pursu[ed] pretrial discovery with sufficient vigor." Defendant did not withdraw the Note of Issue even after plaintiff informed defendant that the Certificate of Readiness was inaccurate and that plaintiff had filed a motion to compel within the time provided by the court's scheduling order. The Court granted plaintiff's motion to vacate the Note of Issue and sanction defendant for filing it, writing: ...


Posted: November 21, 2013

Laches Defense from Events of WWII Fails for Lack of Prejudice

On November 14, 2013, the Court of Appeals issued a decision in In re: Flamenbaum, Docket No. 178, holding that a laches defense based on events going back to WWII failed because of the failure to show prejudice. In a probate proceeding, a German museum sought to recover a 3,000 year-old gold tablet from the estate of Riven Flamenbaum.  German archeologists discovered the tablet in Iraq before WWI and gave it to the museum.  During WWII, the tablet disappeared. It resurfaced in 2003, when it was discovered among Flamenbaum's possessions. The museum filed a notice of appearance and claim with the Surrogate's Court. After a trial, the Surrogate held that the museum's claim was barred by laches. The Appellate Division, Second Department reversed, holding that, inter alia, the estate had not shown prejudice. The Court of Appeals affirmed, writing: ...


Posted: November 20, 2013

Work Product Protection Not Waived by Referring to Work Product in Complaint

On November 14, 2013, the First Department issued a decision in Assured Guaranty Municipal Corp. v. DB Structured Products, Inc., 2013 NY Slip Op. 07558, affirming the grant of a protective concerning attorney work product. In Assured Guaranty, "plaintiff insurer issued a policy guaranteeing payment of certain classes of the securities issued and when the loans began to default at what it considered to be a high rate, it retained a law firm that hired consultants to conduct a forensic reunderwriting review of the loans. Based on the consultant's findings, plaintiff" brought an action alleging, inter alia, fraudulent inducement and breach of representations and warranties," referring to the consultant's analysis in the complaint.  Defendants sought all documents concerning the analysis, including correspondence between plaintiff's counsel and the consultant, arguing that plaintiff waived work product protection by discussing the consultant's work in the complaint.  The First Department disagreed, holding: ...