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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: 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
Posted: November 9, 2013

Foreign Derivative Claims Face Hurdles in NY Courts

On October 22, 2013, Justice Schweitzer of the New York County Commercial Division issued a decision in Gutstadt v. National Financial Partners Corp., 2013 NY Slip Op. 32733(U), illustrating the many hurdles that shareholders of foreign corporations face when they try to bring shareholder derivative suits against New York residents. Gutstadt was brought by two minority shareholders on behalf of an

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Posted: November 8, 2013

Default Judgment Should Be Entered Absent Specific Evidence of Lack of Service or Excuse for the Failure to Answer

On November 6, 2013, the Second Department issued a decision in Loaiza v. Guzman, 2013 NY Slip Op. 07159, illustrating that a failure to answer will not be excused without good reason.
The trial court in Loaiza refused to enter a default judgment against defendants who failed timely to answer and instead granted their motion to serve a late answer. The Second Department reversed, holding that the defendants had not justified the relief they had been granted:

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Posted: November 5, 2013

Courts Continue to Wrestle with Standard for Reasonable Reliance in Commercial Contexts

On October 31, 2013, Justice Ramos of the New York County Commercial Division issued a decision in Moshe v. Charles Rutenberg LLC, 2013 NY Slip Op. 51813(U), denying the defendant's summary judgment motion for dismissal of a fraudulent inducement cross-claim. The cross-claim defendant had argued that the reasonable reliance element of the fraud cross-claim had not been established as a matter

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Posted: November 4, 2013

“Best Efforts” Clause Enforced Notwithstanding Absence of Objective Criteria in Agreement Against Which Efforts Could Be Measured

On October 24, 2013, Justice Friedman of the New York County Commercial Division issued a decision in Glanzer & Co., LLC v. Air Line Pilots Association, 2013 NY Slip Op. 32713(U), denying defendant's motion for summary judgment dismissing plaintiff's breach of contract claim after concluding that material issues of fact existed with respect to whether defendant had breached a "best

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Posted in Commercial, Contracts
Posted: November 3, 2013

Public Not Third-Party Beneficiary of Lease Between City and Museum

On October 29, 2013, Justice Kornreich of the New York County Commercial Division issued a decision in Saska v. Metropolitan Museum of Art, 2013 NY Slip Op. 23366, addressing, among other things, the law of third-party beneficiaries as applied to the Metropolitan Museum of Art's "pay what you wish" admissions policy.
In Saska, the plaintiffs alleged that they were third-party beneficiaries of the lease entered into by the City and the museum in 1878 that prohibited the museum from charging for admission. The museum, they argued, had violated the lease by charging admission under its "pay what you wish" admissions policy, because that policy required almost all visitors to pay something to enter the museum, even if only a penny. Justice Kornreich found that the plaintiffs were not third-party beneficiaries of the lease, even though they were members of the public that the museum was founded to serve, and even if they were, they were not entitled to the remedy they were seeking:

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Posted in Commercial, Contracts
Posted: November 2, 2013

Failure to Timely Raise Discovery Disputes with the Court Waives Them

On October 21, 2013, Justice Bransten of the New York County Commercial Division issued a decision in Gama Aviation Inc. v. Sandton Capital Partners, LP, 2013 NY Slip Op. 32648(U), showing the importance of dilligently identifying and raising discovery disputes.
The Gama Aviation decision dealt with several issues, including two motions to compel the production of documents. Both were denied. Among the reasons for the denial was that the movants did not bring the motions until the close of discovery, as much as two years after document production began. As Justice Bransten held in connection with the motion to compel relating to a non-party:

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