A recent decision from the Manhattan Commercial Division reminds us of the ramifications of non-compliance with discovery obligations. Although in my experience courts (especially the Commercial Division) typically do not like to get involved in discovery disputes (see, e.g., ComDiv Rule 14 requiring parties to meet and confer to resolve all discovery disputes)

A confession of judgment has often been viewed as an important tool in settling a litigation or finalizing a transaction.  In 2019, the New York State Legislature made some significant amendments to the Confession of Judgment law (CPLR § 3218), particularly eliminating the ability of creditors to file confessions of judgment against non-New York residents.  As a result, the amended CPLR § 3218 provides that the confession must state the county in which “the defendant resided when it was executed,” and that the confession may only be filed in that county or, if the defendant moved to a different county within New York after signing the confession, “where the defendant resided at the time of filing.”  In a recent decision, Kings County Commercial Division Justice Leon Ruchelsman  addressed the damaging consequences of altering a confession of judgment to meet the “residency” requirements of CPLR § 3218.

Background

In Porges v Kleinman, plaintiff commenced an action stemming from a real estate investment opportunity in New Jersey.  Specifically, plaintiff alleged that defendant pressured plaintiff to obtain a high cost loan to finance the purchase of the property while not allowing plaintiff to conduct any due diligence.  Following the closing, plaintiff alleged that defendant pressured him into signing a promissory note and confession of judgment for $675,000.00.  Approximately a year after the closing, defendant commenced a separate action, which was later consolidated with the present action, to enforce the confession of judgment due to plaintiff’s alleged failure to make any payments towards the promissory note.

During the course of the litigation, plaintiff brought a motion to vacate the confession of judgment, arguing that the confession of judgment (i) did not specify the county in which plaintiff resided; and (ii) was altered by striking out “County of New York” and writing in “County of Kings” in the caption.  In opposition, defendant argued that the alteration of the caption was made at the express instruction of the Kings County Clerk’s office to allow for the confession of judgment to be filed in the appropriate venue.Continue Reading Altering a Confession of Judgment? Think Again!

A recent decision from Justice Fidel Gomez of the Bronx County Commercial Division, 1125 Morris Ave. Realty LLC v Title Issues Agency LLC, reminds us to closely review the language of general releases as New York courts continue to enforce such releases however broad in scope absent any fraud or wrongful conduct. Failure to do so may not only result in the waiver of certain future claims but also the imposition of sanctions.

Background

Plaintiff 1125 Morris Ave. Realty LLC (“Plaintiff”) obtained a mortgage loan (“2014 Mortgage”) on a property located at 1125 Morris Avenue, Bronx, New York (the “Property”). Defendants Kofman and Lowenthal represented the lender in the transaction. Kofman and Lowenthal transferred the loan proceeds to Defendant Title Company (the “Title Company”) to hold such proceeds in escrow until certain taxes and water/sewer charges for the Property had been settled with the City. Plaintiff thereafter obtained additional mortgages in order to pay off the 2014 Mortgage.

Following the payoff and satisfaction of the 2014 Mortgage, in July 2016 Plaintiff executed a broad general release discharging Defendants Kofman and Lowenthal as well as the Title Company (collectively the “Defendants”) from all “claims and demands whatsoever from the beginning of the world to the day of the date of this RELEASE.”

Plaintiff commenced an action against Defendants alleging, among other things, that Defendants committed fraud by failing to pay Plaintiff’s outstanding tax, water, and sewer charges for the Property, despite assuring Plaintiff that the loan proceeds would be used to satisfy the liens on the Property. Plaintiff further alleged that the Title Company only partially paid out the liens, and that only a portion of the loan proceeds were returned to Plaintiff.Continue Reading No Deceit, No Defeat: Commercial Division Enforces Broad General Release

When representing an aggrieved plaintiff in a commercial matter, there are certain business torts that I tend to rely on more heavily than others.  If business torts were foods, for example, a claim like breach of contract would be an entrée, while tortious interference with prospective business relations would be more of a side dish.  Those types of tort-lite claims are difficult to plead (and even more difficult to prove) because they require a showing of causation and culpability, the lack of which is fatal if not appropriately pleaded as Justice Robert R. Reed reminds us in Braddock v Shwarts and Vertical Group, Supreme Court, New York County (Index No. 158142/2018).Continue Reading Where’s the Beef? Causation and Culpability Are Fatal Pitfalls in Zaycon Foods Lawsuit

The COVID-19 pandemic has unsurprisingly resulted in many people in the business community, including lawyers, transacting business remotely. With that uptick comes more contracts utilizing electronic signatures and remote depositions and notarizations. Not only is the use of an e-signature generally more convenient for the parties involved in a transaction, but an e-sig provides many more layers of security and protection from claims of forgery than a wet-signature because the process requires the user to confirm her identity to bind her signature to that identity through a digital certificate.

So what happens when there’s a contractual dispute, and one of the parties is seeking to enforce a contract while the counterparty is claiming that its electronic signature has been forged? On October 26, 2023, Justice Daniel J. Doyle of the Monroe County Commercial Division dealt with just that in  AJ Equity Group LLC v Office Connection, Inc., in which he held that the defendant’s mere denial that she e-signed an agreement was not sufficient to dismiss a breach of contract claim, but also that the plaintiff was not entitled to summary judgment on its breach claim for failure to explain the relevance and significance of the signature certificate showing that the electronic signature was valid.Continue Reading The Evidence Behind E-SIGS

The burden of establishing personal jurisdiction over a defendant rests with the plaintiff. Service of process is a necessary component of jurisdiction, and it is not complete until proof of service is filed. Ordinarily, defective service of process is not a jurisdictional defect and does not warrant dismissal. But when it comes to “affix and mail” service under CPLR § 308(4), the statutory requirement of “due diligence” must be strictly observed, otherwise dismissal may result.  A recent decision from Manhattan Commercial Division Justice Robert Reed in Arena Special Opportunities Fund, LLC v McDermott discusses just how much diligence is required.Continue Reading If the Service Was Poor, You’ll Have to Do More – How Much Diligence Is Due for Affix and Mail Service?

Under Section 216.1(a) of the Uniform Rules for Trial Courts (“Section 216.1(a)”), courts are authorized to seal documents “upon a written finding of good cause, which shall specify the grounds thereof.” Section 216.1(a) states that “whether good cause has been shown, the court shall consider the interests of the public as well as of the parties.”  A recent decision from Justice Andrea Masley of the Manhattan Commercial Division in Aydus Worldwide DMCC v. Teva Pharmaceuticals Industries Ltd., serves as a gentle reminder that documents merely marked as “confidential,” “private,” or for “Attorneys’ Eyes Only” are not a sufficient to demonstrate “good cause,” triggering the court’s judicial discretion to seal the record.Continue Reading Signed, Sealed, Delivered

As any practitioner litigating a case before the Commercial Division knows, and as we have mentioned time and again on this blog, it is critical to know the Part Rules of the particular judge assigned to your case.  But getting to know your judge – including the judge’s individual preferences and style – may be

It is no secret that employees are often the most likely people to misappropriate an employer’s confidential information or valuable trade secrets. In this particular situation, employers have many options at their disposal, including asserting a claim under the faithless-servant doctrine. In a recent decision from the Manhattan Commercial Division, Justice Melissa A. Crane

An increasingly commonplace procedural mechanism for narrowing evidentiary issues before a hearing begins is the motion in limine.  A new proposal proffered by the Commercial Division Advisory Council (“CDAC”), put out for public comment on October 27 by the Office of Court Administration, seeks to amend Commercial Division Rule 27 in order to provide