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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: April 5, 2014

Agency Agreement Within the Statute of Frauds

On March 26, 2014, Justice Ramos of the New York County Commercial Division issued a decision in William Morris Endeavor Entertainment, LLC v. Rivera, 2014 NY Slip Op. 50458(U), dismissing claims against TV personality Geraldo Rivera on Statute of Fraud grounds. In William Morris, the plaintiff, the well-known William Morris talent agency, sued its former client Geraldo Rivera for unpaid commissions. The complaint alleged that the parties entered into a series of three-year written contracts between 1985 and 1994, and that WME had continued to represent Rivera until he had stopped paying commissions in 2010. Rivera claimed that the last written contract stated that he was to be represented only by one particular agent, and when that agent left WME in 2010, Rivera went with him, continued paying him commissions, and had never been represented or advised by any other WME agent. Rivera moved to dismiss on the grounds that WME had failed to allege the existence of a written agreement that satisfied the Statute of Frauds. The court agreed, rejecting WME's argument that the parties' course of conduct since the last written contract expired in 1997 created an enforceable agreement:

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Posted in Commercial, Contracts
Posted: April 3, 2014

Schlam Stone & Dolan Blogs

Last fall, Schlam Stone & Dolan LLP launched this Commercial Division Blog. We are pleased to announce that today we made our 200th post! The Commercial Division Blog is just part of what we have been doing. Building on our long years of experience in the U.S. District Court for the Eastern District of New York, including over twenty years of

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Posted in Upcoming Events
Posted: April 3, 2014

Motion to Disqualify Granted Despite Absence of “Significant Harm”

On March 28, 2014, Justice Kornreich of the New York County Commercial Division issued a decision in Mayers v. Stone Castle Partners, LLC, 2014 NY Slip Op. 50461(U), granting the plaintiff's motion to disqualify a law firm from representing the defendants. In Mayers, the plaintiff's motion was premised upon a conversation the plaintiff had with a litigator at the law firm before the present action began. The plaintiff made an unsolicited call a lawyer at the firm seeking to have the firm represent him in a related matter. The lawyer declined due to conflicts. Although that conversation, "on its own, does not warrant disqualifying," the firm, the lawyer subsequently discussed the call with his colleague, the defendants' lead counsel, and information regarding the plaintiff's call to the firm was included in the complaint. Indeed, the complaint specifically mentioned that the plaintiff "contacted an attorney about the possibility of representing him [and] falsely told the attorney that he was no longer with" the defendant. The court found that these disclosures violated the law firm's fiduciary obligation to preserve the confidential secrets of prospective clients pursuant to Rule 1.18 of the New York Rules of Professional Conduct:

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Posted: April 2, 2014

Lost Re-sale Profits Recoverable as General Damages When Those Profits Were Contemplated By the Contract

On March 27, 2014, the Court of Appeals issued a decision in Biotronik A.G. v. Conor Medsystems Ireland, Ltd., 2014 NY Slip Op. 02101, holding that the plaintiff's lost re-sale profits were recoverable as "general damages" on a claim for breach of a distribution contract and did not fall within a contract provision that eliminated liability for "consequential damages." In Biotronik, the plaintiff (a distributor of medical devices) sued the developer and manufacturer of a "drug-eluting coronary stent" for breaching the parties' distribution agreement by failing to provide the stent. The lawsuit sought to recover the distributor's lost profits from sales of the stents. The First Department affirmed the trial court's dismissal of the claim based on a damages limitation provision in the distribution agreement that restricted the parties to general (as opposed to consequential) damages. In a decision by Judge Rivera (joined by Judges Lippman, Graffeo and Smith), the Court of Appeals reversed, concluding that under the distribution agreement at issue, the distributor's "lost profits were the direct and probable result of the breach of the parties' agreement and thus constitute general damages." The Court explained the sometimes "elusive" distinction between general and consequential damages:

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Posted in Commercial, Contracts
Posted: April 1, 2014

Court of Appeals Rules That Limitations Period for Judiciary Law § 487 Claims is Six Years

On April 1, 2014, the Court of Appeals issued a decision in Melcher v. Greenberg Traurig, 2014 NY Slip Op. 02213, holding that the limitations period for claims under Judiciary Law § 487 is six years. "Judiciary Law § 487 exposes an attorney who is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent

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Posted: April 1, 2014

Financial Advisor’s Claims Dismissed on Statute of Fraud Grounds

On March 25, 2014, the First Department issued a decision in JF Capital Advisors, LLC v. Lightstone Group, LLC, 2014 NY Slip Op. 01984, affirming the dismissal of quantum meruit and unjust enrichment claims under the statute of frauds. In JF Capital Advisors, the plaintiff ("an investment advisory firm composed of hotel and hospitality industry experts") alleged that it had an oral agreement with the defendants (a group of "real estate investment companies") to provide "financial advisory services . . . in connection with defendants' acquisition of certain hotels and other investment opportunities." The plaintiff claimed that the defendants failed to compensate it for a "broad range of advisory services" "in connection with eight different projects that defendants were interested in pursuing." The court concluded that the plaintiff's claims for quantum meruit and unjust enrichment were barred by GOL § 5-701(a)(10), which provides that a contract to pay compensation for "negotiating the purchase, sale, exchange, renting or leasing of any real estate or . . . of a business opportunity" is void unless it is in writing:

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Posted in Commercial, Contracts
Posted: March 31, 2014

Summary Judgment Granted in Favor of Veil-Piercing Claim

On March 19, 2014, Justice Friedman of the New York County Commercial Division issued a decision in Webmediabrands, Inc. v. Latinvision, Inc., 2014 NY Slip Op. 30700(U), granting plaintiffs' motion for summary judgment piercing the defendants' corporate veil. In Webmediabrands, the plaintiffs were judgment creditors of defendant Latinvision ("LVI") who sued LVI's principal shareholder, officer and director, Vassallo, and another company wholly owned by Vassallo, LVM, seeking to hold them liable for LVI's obligation. "Vassallo was the principal shareholder and officer of both LVI and LVM." In support of their motion, the plaintiffs presented undisputed evidence that the three defendants routinely commingled funds, including numerous undocumented "loans" to Vassallo by the entities, as well as the lack of "any documentary evidence showing the existence of corporate governance mechanisms." Based upon that evidence, the court awarded summary judgment to plaintiffs, explaining:

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