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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 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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Posted: March 30, 2014

Appellant Sanctioned for Submitting Deficient Record on Appeal

On March 27, 2014, the First Department issued a decision in Getty Properties Corp. v. Getty Petroleum Marketing Inc., 2014 NY Slip Op. 02139, sanctioning a defendant that submitted a deficient record on appeal. In Getty Properties, the First Department both denied the defendants' appeal and sanctioned them for submitting a "deficient" record on appeal, writing:

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Posted: March 29, 2014

Judiciary Law Section 487 Claims Must Be Brought in Forum in Which Misconduct Occurred

On March 20, 2014, Justice Bransten of the New York County Commercial Division issued a decision in Alliance Network, LLC v. Sidley Austin LLP, 2014 NY Slip Op. 50430(U), dismissing Judiciary Law Section 487 claims because they were not brought in the action in which the alleged misconduct occurred. In Alliance Network, the plaintiffs brought a number of claims relating to a failed real estate development, including claims against several lawyers and law firms alleging that they had violated Judiciary Law § 487 in an earlier, related litigation. The court dismissed those claims, explaining:

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Posted: March 28, 2014

Defendant Whose CPLR 3220 Offer Was Rejected is Entitled to Her Attorneys’ Fees Related to Proving Damages From Time of Offer

On March 27, 2014, the First Department issued a decision in Abreu v. Barkin & Associates Realty, Inc., 2014 NY Slip Op. 02146, clarifying that an offer of judgment under CPLR 3220 entitles the offering party not just to costs but also to its attorneys' fees related to proving damages. (more…)

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Posted: March 27, 2014

LLC Member Not Permitted to Withdraw From LLC

On March 12, 2014, Justice Kitzes of the Queens County Commercial Division issued a decision in In the Matter of Kassab, Index No. 14428/2013, ruling on two pending motions in a special proceeding involving claims for judicial dissolution of two closely-held entities and related relief. This post focuses on the resolution of the respondent's motion to dismiss the petitioner's third cause of action to withdraw as a member of an LLC. Section 606(a) of the LLC Law provides that member of an LLC may only withdraw if the right of withdrawal is provided for in the operating agreement "unless an operating agreement provides otherwise, a member may not withdraw from a limited liability company prior to the dissolution and winding up of the limited liability company." In Kassab, Justice Kitzes dismissed the petitioner's claim to withdraw, writing:

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