Blogs

Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
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

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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

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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

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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:

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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:

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Posted: October 14, 2013

Court of Appeals Affirms The Use of Default Judgment as a Discovery Sanction

On October 7, 2013, we noted that on September 10, 2013, the Court of Appeals heard argument in Merrill Lynch, Pierce, Fenner & Smith Inc., v. Global Strat, Inc., Docket No. 160, a case examining the extent to which a sanction of default can be imposed for discovery violations. On October 10, 2013, the Court of Appeals issued its decision

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Posted: October 11, 2013

Failure to Comply With Statute of Frauds Bars Any Kind of Action Based On The Alleged Promise

On October 4, 2013, Justice Emerson of the Suffolk County Commercial Division issued a decision in Saldano v. Precision CNC Corp., 2013 NY Slip Op. 51633(U), addressing whether parties which allegedly promised a co-tenant in the same commercial building (which was in default of its lease) that they would take over the lease and permit the co-tenant to continue its business in the same premises as a sub-tenant could be liable not only for breaching the promise but also fraud, for taking over the space and then using that as an opportunity to allegedly steal the co-tenant’s customer. In partially granting defendants motion to dismiss, Justice Emerson held that because the alleged promise concerning real property was unenforceable under the statute of frauds, it could not be the basis for either a breach of contract or fraud action:

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Posted in Commercial, Contracts
Posted: October 8, 2013

A Borrower’s Subsequent Bankruptcy Frees Lender from its Election of Remedies

On October 7, 2013, Justice Kornreich of the New York County Commercial Division issued a decision in 172 Madison (NY) LLC v. NMP-Group, LLC, 2013 NY Slip Op. 51618(U), addressing whether a lender is bound by its election to foreclose on a mortgage rather than sue on the debt when the right to sue on the debt did not arise until after the election was made.  Justice Kornreich held that it was not, writing:

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