Blogs

Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: October 25, 2013

False Warranty in Commercial Contract Can be Basis of Fraud Claim

On October 21, 2013, Justice Ramos of the New York County Commercial Division issued a decision in Wyle Inc. v. ITT Corp., 2013 NY Slip Op. 51707(U), addressing the availability of a fraudulent inducement claim based on a breach of warranty.
In Wyle, defendant ITT argued that a fraud claim based on a warranty in an agremeent "must be dismissed as duplicative of Plaintiffs' breach of contract claim."  Justice Ramos disagreed, writing that:

READ FULL POST

Posted in Commercial, Contracts
Posted: October 24, 2013

“Notwithstanding” Clause Controls Contract Even When It Reads Other Term Out of the Contract

On October 22, 2013, the First Department issued a decision in Warburg Opportunistic Trading Fund, L.P. v. GeoResources, Inc., 2013 N.Y. Slip Op. 06826, holding that a “notwithstanding” clause trumps all other clauses in a contract, even when that clause would effectively read another clause out of the agreement.
The appeal arose out of seemingly inconsistent anti-dilution provisions in warrants issued by the defendant that gave the holder the right to purchase certain number of shares of defendant’s common stock at an exercise price of $32.43 per share.  The anti-dilution provisions of the warrants contained formulae for adjustments of the exercise price, but also stated:  "Notwithstanding any other provisions of Section 8(f) to the contrary, no adjustment provided for in Section 8(f) shall result in a reduction of the Exercise Price to an amount less than $32.43 per Warrant Share (as appropriately adjusted for the occurrence of any events listed in [other anti-dilution clauses of Section 8])."  This in effect read Section 8(f) out of the agreement.  As the First Department noted:

READ FULL POST

Posted in Commercial, Contracts
Posted: October 21, 2013

Ten Questions for Justice Warshawsky

In an effort to foster communication between the Commercial Division bench and bar, from time to time we will be posting interviews with sitting or retired Commercial Division justices and court staff. Retired Nassau County Commercial Division Justice Ira B. Warshawsky has graciously agreed to serve as our inaugural interviewee from his new home at Meyer Suozzi English & Klein, P.C.'s Litigation and Alternative Dispute Resolution Practice.  Before retiring, Justice Warshawsky served as a Supreme Court Justice for fourteen years, the last ten of which were in the Commercial Division. In addition to his judicial duties, Justice Warshawsky has served as a director of the Nassau Bar, is the former Dean of the Nassau Academy of Law, is a frequent lecturer for the National Institute of Trial Advocacy, has served as a contributing editor of the Benchbook for New York Trial Judges, was the past-President and charter member of the American College of Business Court Judges, and is a member of the Advisory Board of the Sedona Conference.
With deep appreciation to the Justice, here are ten questions for Justice Warshawsky:

READ FULL POST

Posted in Commercial, Interviews
Posted: October 21, 2013

Second Circuit Declines to Follow Appellate Division Interpretation of New York Law

While we normally do not blog about Second Circuit decisions, that court's decision in Licci v. Lebanese Canadian Bank, SAL, No. 10-1306-cv (October 18, 2013), shows the difficulties that can arise when state and federal appellate courts interpret New York law differently. Licci involves claims by American, Canadian, and Israeli citizens who were killed in rocket attacks in Israel that were carried

READ FULL POST

Posted in EDNY, Jurisdiction
Posted: October 20, 2013

Equitable Claims Defeat Jury Demand

On October 17, 2013, Justice Bucaria of the Nassau County Commercial Division issued a decision in National Grid Corporate Services, LLC v. LeSchack & Grodensky, P.C., 2013 N.Y. Slip Op. 23354, highlighting a significant procedural difference between litigating commercial cases in New York's state and federal courts: which claims can be tried by a judge versus a jury. Unlike federal

READ FULL POST

Posted in Commercial, Jury Demand
Posted: October 20, 2013

Assignees of Purchaser of Residential Mortgage-Backed Securities Lack Standing to Sue and Assignor Failed to Adequately Plead Fraud Damages

On October 16, 2013, Justice Bransten of the New York County Commercial Division issued a decision in Dexia SA/NV v. Morgan Stanley, 2013 N.Y. Slip Op. 51696(U), dismissing on the pleadings causes of action sounding in common-law fraud brought against the underwriters and sponsors of residential mortgage-backed securities ("RMBS") by both the entity that purchased the RMBS for $626 million

READ FULL POST

Posted: October 19, 2013

Third Party Not Bound by Arbitation Agreement of Which He Was Not a Direct Beneficiary

On October 17, 2013, the Court of Appeals issued a decision in Matter of Belzberg v. Verus Invs. Holdings Inc., 2013 NY Slip Op. 06729, addressing the extent to which a person who is not a party to an agreement to arbitrate can nonetheless be required to arbitrate. The Court of Appeals started with the general proposition that "nonsignatories are generally not subject

READ FULL POST

Posted: October 17, 2013

Common Interest Privilege Limited to Litigation Context

On October 16, 2013, Justice Bransten of the New York County Commercial Division issued a decision in Ambac Assur. Corp. v. Countrywide Home Loans, Inc., 2013 NY Slip Op. 51673(U), addressing the scope of the common interest privilege in the context of a corporate merger. Justice Bransten held that, contrary to rule applied by some federal courts, "New York law

READ FULL POST

Posted: October 16, 2013

A Formal, Written Litigation Hold Not Necessary To Trigger Requirement To Preserve Documents

On October 3, 2013, Justice Friedman of the New York County Commercial Division held in Roberts v. Korwin, 2013 N.Y. Slip Op. 51637(U), a legal malpractice action, that a written, formal litigation hold memo was not necessary to trigger the obligation to preserve documents once a party was on notice of a possible claim, writing:

READ FULL POST

Posted: October 16, 2013

Court Orders Disclosure of Work Product When Counsel Creates the Appearance of Manipulating Witness Testimony

On October 3, 2013, Justice Kornreich of the New York County Commercial Division issued a decision in MBIA Ins. Corp. v Credit Suisse Sec.(USA) LLC, 2013 NY Slip Op 32404(U), addressing whether to order disclosure to defendant of "all communications between" certain key witnesses and plaintiff's counsel, including "all versions, drafts, or iterations of the affidavits that formed the basis for the" complaint "and the witnesses' deposition testimony." The court's recitation of the relevant facts shows the key issue—the apparent close involvement of plaintiff's counsel in the witnesses' testimony:

READ FULL POST