Blogs

Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: November 16, 2013

Decision Illustrates the Danger of Overreaching in Pleading

On November 7, 2013, Justice Schweitzer of the New York County Commercial Division issued a decision in U.S. Bank Natl. Assoc. v. Lightstone Holdings LLC, 2013 NY Slip Op. 32874(U), illustrating the dangers of overreaching in pleading. In U.S. Bank, the plaintiff amended its complaint in what had been a breach of contract action to "add[] two 'alternative' causes of action" for "fraudulent concealment" and "negligent omission and misrepresentation." We quote below several paragraphs of Justice Schweitzer's opinion, to show the court's reaction to the added claims: ...

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Posted: November 15, 2013

Shareholder Expulsion Provision Applied

On October 29, 2013, Justice Kornreich of the New York County Commercial Division issued a decision in Christou v. Koureli Rest. Group, Inc., 2013 NY Slip Op. 32743(U), denying a motion for a preliminary injunction by plaintiffs to enjoin the other shareholders of a private company from reducing their shares to zero pursuant to the shareholder agreement which enumerated certain ...

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Posted: November 15, 2013

Condition Precedent Strictly Interpreted

On November 1, 2013, Justice Kornreich of the New York County Commercial Division issued a decision in Kay Investments Series A, LLC v. Nordica Investments, LLC, 2013 NY Slip Op. 32834(U), reiterating the rule that when there is a doubt about the effect of contractual language, there is a presumption in New York against conditions precedent. In Kay Investments, Justice Kornreich denied a motion for a preliminary injunction by several members of an LLC moving to, inter alia, remove the managing member for alleged breaches of fiduciary duty. Justice Kornreich held that the underlying action was barred by a settlement agreement by the same parties. The plaintiffs argued that a condition precedent for the settlement, the closing of a certain loan, had not occurred. In rejecting this argument, Justice Kornreich held: ...

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Posted in Commercial, Contracts
Posted: November 14, 2013

Lease Clause Requiring Commercially Reasonable Efforts Strictly Construed Against Plaintiffs

On November 14, 2013, the Court of Appeals issued a decision in JFK Holding Company LLC v. City of New York, Docket No. 196, declining to apply a broad interpretation to a commercially reasonable efforts clause. In JFK Holding, plaintiff building owners sued the Salvation Army, "which operated" a building leased from plaintiffs "as a homeless shelter under an agreement with the ...

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Posted: November 14, 2013

First Department Addresses Scope of the Judicial Proceedings Privilege

On November 12, 2013, the First Department issued a decision in Hadar v. Pierce, 2013 NY Slip Op. 07414, dismissing claims based on, among things, the judicial proceedings privilege. The First Department noted that "[t]he judicial proceedings privilege applies to causes of action other than defamation. However, it does not apply to" allegations of "malpractice, because the gravamen of the ...

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Posted in Commercial, Defamation
Posted: November 13, 2013

New York Shareholder Derivative Plaintiffs Must Plead With Particularity Why Board’s Failure to Comply With Pre-Suit Demand Was Improper

On November 8, 2013, Justice Bransten of the New York County Commercial Division issued a decision in Kenney v. Immelt, 2013 NY Slip Op. 51831(U), dismissing with leave to replead a shareholder derivative claim filed by shareholders of General Electric Company against GE's officers and directors alleging that they breached their fiduciary duties by, among other things, cutting the quarterly ...

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Posted: November 12, 2013

Deponent not Required to Answer Questions About Legal Positions

Although our main focus is on Commercial Division opinions, many non-Commercial Division rulings will be of equal interest to Commercial Division practitioners. The recent opinion of Justice Dollinger of the Monroe County Supreme Court in White v. White, 2013 NY Slip Op. 23370, is a good example. In White, a party was asked during his deposition whether he was conditioning ...

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Posted: November 11, 2013

Statute of Frauds Does Not Bar Multi-Year Oral Agreement That Could Be Performed in One Year

On November 8, 2013, the Fourth Department issued a decision in DeJohn v. Speech, Language & Communication Assoc., SLP, OT, PT, PLLC, 2013 NY Slip Op. 07331, showing the narrow scope of the Statute of Frauds. In DeJohn, the parties allegedly entered into an oral agreement providing that "defendants would purchase plaintiff's business for $480,000 and make an initial payment of $10,000, followed by 23 monthly payments of $20,000 and a final payment of $10,000." Defendants moved to dismiss, arguing that an oral agreement envisioning performance over a period of more than a year was not enforceable under the Statute of Frauds. The Fourth Department affirmed the trial court's denial of that motion, holding: ...

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Posted in Commercial, Contracts
Posted: November 10, 2013

Extrinsic Evidence of Meaning of Contract Term Not Considered

On October 30, 2013, the Second Department issued a decision in Outstanding Transport, Inc. v. Interagency Council of Mental Retardation and Developmental Disabilities, Inc., 2013 N.Y. Slip Op. 07020, illustrating the broad scope of New York's parol evidence rule. In Outstanding Transport, the Second Department affirmed the trial court's refusal to consider extrinsic evidence of an oral agreement to clarify the interpretation of a word in a written contract, holding: ...

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Posted in Commercial, Contracts