Blogs

Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: March 8, 2014

Court Identifies Elements of Claim for Aiding and Abetting Undue Influence

On February 28, 2014, Justice Scarpulla of the New York County Commercial Division issued a decision in Goldberg v. HSBC Securities (USA), Inc., 2014 NY Slip Op. 30481(U), examining the elements of a claim of aiding and abetting undue influence. In Goldberg, the executor of an estate brought claims related to alleged undue influence over the decedent, including a claim for aiding and abetting undue influence against two defendants. In deciding the motion to dismiss brought by those defendants, the court considered whether such a tort existed and, if so, what its elements were, explaining:

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Posted: March 7, 2014

Standard for Pre-Award Attachment Under CPLR 7502(c) is that Award Must Otherwise Be “Rendered Ineffectual”

On March 6, 2014, the First Department issued a decision in Matter of Kadish v. First Midwest Securities, Inc., 2014 NY Slip Op. 01517, addressing the standard in deciding motions for CPLR 7502(c) attachments. In Matter of Kadish, the First Department addressed whether, in addition to the grounds stated in CPLR 7502(c)--that without the attachment, the award will be rendered ineffectual--a petitioner seeking a pre-award attachment also must also demonstrate the traditional factors for injunctive relief under CPLR article 63. Without making a clear statement, the court implied that the "rendered ineffectual" standard is the only one governing Article 75 attachments, writing:

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Posted: March 5, 2014

Buyer’s Broker Not Third-Party Beneficiary of Real Estate Sales Contract That Refers Only to Commission to Seller’s Broker

On February 20, 2014, Justice Pines of the Suffolk County Commercial Division issued a decision in Saunders Ventures, Inc. v. Morrow, 2014 NY Slip Op. 30455(U), holding that a buyer's broker was not a third-party beneficiary of a real estate sales contract. In Saunders Ventures, the plaintiffs, who alleged that they procured the buyer of real property sold by the trust of which the moving defendants' were successor trustees, sued for unpaid real estate commissions. The moving defendants moved to dismiss on the ground that the only contract relating to commissions to which the trust was a party was the contract with the seller's broker. The plaintiffs opposed the motion, arguing that they were third-party beneficiaries of the contract of sale for the property which referred to the selling broker's commission. The trial court held that the plaintiffs were not third-party beneficiaries, explaining:

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Posted in Commercial, Contracts
Posted: March 4, 2014

Unjust Enrichment Claim Viable Even Though Defendant Committed No Wrongful Act Against the Defendant

On February 26, 2014, the Second Department issued a decision in Alan B. Greenfield, M.D., P.C. v. Beach Imaging Holdings, LLC, 2014 NY Slip Op. 01285, reversing the dismissal of an unjust enrichment claim. In Greenfield, the trial court dismissed the plaintiff's claim for unjust enrichment. The Second Department reversed, ruling that:

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Posted: March 3, 2014

Court of Appeals Rules That Issues of Fact Preclude Dismissal On Summary Judgment of Negligence Claim Against Insurance Broker

On February 25, 2014, the Court of Appeals issued a decision in Voss v. Netherlands Insurance Co., 2014 NY Slip Op. 01259, finding that a question of fact on the existence of a "special relationship" between insureds and their insurance broker precluded dismissal of a negligence claim against the broker for failure to advise the insureds to obtain additional business interruption coverage. The individual plaintiff in

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Posted in Commercial, Insurance
Posted: March 2, 2014

Case Dismissed for Champerty

On February 24, 2014, Justice Kornreich of the New York County Commercial Division issued a decision in Justinian Capital SPC v. WestLB AG, 2014 NY Slip Op. 24046, granting a motion for summary judgment and dismissal on the grounds of champerty. Justinian Capital arose from an investment portfolio that contained mortgage-backed securities that did not meet the portfolio’s investment guidelines. The defendant, WestLB, was the portfolio’s investment manager.  The original holder of the notes, non-party DPAG, is a non-party German bank that relies on the German government for funding. Because WestLB is partially owned by the German government, DPAG was unwilling to sue it.  Instead, DPAG agreed with the plaintiff, Justinian, that Justinian would sue WestLB and would remit the litigation recovery to DPAG minus a 15% cut. When the Court learned of the arrangement, it directed the parties to conduct limited discovery on the issue of champerty. Although champerty has been abolished as a defense almost everywhere in the United States, it still exists in New York under Judiciary Law § 489:

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Posted: February 28, 2014

Complaint Dismissed for Failure to Comply With Contract’s Mandatory Mediation Provisions

On February 20, 2014, Justice Schweitzer of the New York County Commercial Division issued a decision in Key Restoration Corp. v. Union Theological Seminary, 2014 NY Slip Op. 30437(U), dismissing a lawsuit for failure to exhaust pre-litigation ADR obligations. In Key Restoration Corp., the plaintiff brought claims of foreclosure on a mechanic's lien, breach of contract and unjust enrichment relating to construction work it did for the defendant. The defendant moved to dismiss on the ground that the plaintiff had failed to comply with the pre-litigation dispute resolution provisions of the parties' contract. The trial court agreed, dismissing the complaint.  The trial court found that the parties' contract required that the parties mediate any dispute between them before litigating it and rejected the plaintiff's arguments for not doing so, explaining:

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Posted: February 27, 2014

Court of Appeals Agrees to Hear Certified Questions Regarding Application of “Separate Entity Rule” to Post-Judgment Enforcement Proceedings

On January 18, 2014, we posted that in Tire Engineering & Distribution, L.L.C., et al. v. Bank of China Ltd., and Motorola Credit Corp. v. Standard Chartered Bank, the Second Circuit certified questions to the New York Court of Appeals concerning the application of the "separate entity rule" to post-judgment enforcement proceedings under CPLR Article 52. On February 18, 2014, the Court

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