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As readers of this blog are well aware, we here at New York Commercial Division Practice take great pride in posting about proposed or amended rules of practice in the Commercial Division. Knowledge of the local rules is particularly relevant when filing documents. One recent local rule change that may catch our readers’ eyes is Nassau County Supreme Court’s new procedures for filing an order to show cause .

Litigants generally have two options when bringing a motion before a court in New York State: (i) a motion on notice; or (ii) a motion brought by order to show cause. An order to show cause is typically used for emergency applications or when a litigant is seeking some form of immediate relief, such as a stay or temporary restraining order. As part of an application for an order to show cause, a party’s attorney must submit an affirmation under 22 NYCRR § 202.7(f), which provides that the opposing party has been given notice of the date, place, and time that the application will be filed with the court in order to appear in response to the application. This is where things get interesting.Continue Reading A Good Lawyer Knows the Law; A Great Lawyer Also Knows the Local Rules

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Oleksandr Sushko, Unsplash

Under CPLR 3213, a plaintiff can move for summary judgment in lieu of complaint which, under the right circumstances, serves as a useful tool to avoid extensive litigation and obtain speedy relief. Recently, in JADR Consulting Group Pty Ltd. v Ault Alliance, Inc., some loan sharks attempted to take advantage of the device’s efficiency. Manhattan Commercial Division Justice Margaret A. Chan heard the legendary jaws theme music but was not deterred, instead denying summary judgment and granting the defendant’s cross-motion to dismiss.

Background:

In JADR, the plaintiff and the defendant entered into a promissory note in which the defendant promised to repay a principal of $2,756,245.10. However, plaintiff conceded that the defendant only received $2,249,996. The interest rate on the note was set at 16% per annum, and the default rate was set at 24% per annum or the maximum permitted by law.

That note was amended twice. First, a new section was added to include that in the event of a default, the principal would increase by $1,000,000. Second, the maturity date of the note was extended and included that any default would, at the plaintiff’s discretion, extend the maturity date by 30 days, but also add $250,000 to the principal to be repaid. Further, both amendments increased the principal amount despite the fact that the defendant never received additional consideration.Continue Reading You’re Gonna Need a Bigger Boat: Criminal Usury Statutes Prevent Loan Sharks

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Although discretionary, it is well-known among commercial practitioners that the Commercial Division justices generally like a Rule 19-a statement of material facts included with the submission of a summary judgment motion. When responding to a Rule 19-a statement, the responding party should be thinking a couple moves ahead. The ultimate goal should be to make things easier for the judge to accept clearly stated facts that cannot be contested before the commencement of a trial. The last thing that you want to happen is to be caught in a Steve Urkel “did i do that ” moment in failing to dispute a contested fact. A recent decision issued by Manhattan Commercial Division Justice Robert R. Reed sheds light on the consequences of that very scenario.

Background and Analysis:

Perella Weinberg Partners LLC et al. v Michael A. Kramer et al., involved a breach-of-contract dispute related to the defendants’ departure from the plaintiffs’ financial-advisory firm. During the course of the litigation, both parties moved for summary judgment on their respective claims and counterclaims. As part of their submissions, the parties submitted and responded to their respective Rule 19-a statements.Continue Reading A Cautious Reminder When Responding to a Rule 19-a Statement of Material Facts on a Motion for Summary Judgment

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As many practitioners are aware, the litigation process in New York often feels like a tortoise race, with many cases taking years to resolve. Section 3213 of the CPLR (“Summary Judgment in Lieu of Complaint”) is a bit of an outlier in New York practice, as it provides a mechanism to streamline cases without bearing the delay of protracted litigation. However, because a  CPLR 3213  motion provides for a remedy which precludes a litigant from presenting his evidence to a judge or jury, courts heavily scrutinize this type of motion.

For example, courts tend to dismiss CPLR 3213  motions where the instrument for payment (e.g., a promissory note) requires “outside proof … other than simple proof of nonpayment or a similar de minimis deviation from the face of the document” (Kitchen Winners NY, Inc. v Triptow, 226 AD3d 989, 991 [2d Dept 2024]). But what happens when an additional document (e.g., a Heter Iska) is required to be executed under religious law in connection with a promissory note? This question was recently addressed by Kings County Commercial Division Justice Leon Ruchelsman  in Junik v 61 N. 11 LLC.  Continue Reading The Proof Is in the Note: Commercial Division Holds a Heter Iska Is Not Outside Proof for Purposes of Summary Judgment in Lieu of Complaint

Baseball scoreboard against a beautiful sky.
Ray Shrewsberry, Unsplash

As my colleague, Matt Donovan, recently blogged, it is essential for litigants to “play[] nice in the litigation sandbox” or risk facing the ire of the Justices in the Commercial Division. Many litigants might think they are playing “nicely” by asserting “good cause” in their arguments. But what does it actually mean to have “good cause”? As illustrated by some recent decisions by Manhattan ComDiv Justice Robert Reed, a finding of good cause will depend on the circumstances, evidence, and respective law.

Case Spotlight #1: Designs by F.M.C. v. Unique First Ltd.  

In Designs, Justice Reed dealt with two motions seeking withdrawal as counsel. In assessing both motions, Justice Reed reiterated that an “attorney must demonstrate that good cause exists to end the relationship with the client.” Without showing good cause, a motion to withdraw will be denied.Continue Reading Good Cause or Gamesmanship: A Review of “Good Cause” in the Commercial Division

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As readers of this blog are aware, the most contentious battles during a lawsuit are fought during discovery. Among the various discovery battles is scheduling depositions. In many cases, parties tend to reschedule depositions, which typically drags out the length of a litigation. The worst decision a party can make is failing to appear for a deposition. As a recent decision from Manhattan Commercial Division Justice Margaret Chan shows, New York courts will dispose of a case (i.e., striking of a pleading) for a party’s repeated failure to appear for a scheduled deposition.

In O’Rourke v Hammerstein Ballroom,  Defendants moved separately, pursuant to CPLR §§ 3124 and 3126, requesting several forms of discovery sanctions against Plaintiff, including (i) dismissal and/or striking of the complaint; (ii) precluding Plaintiff from offering testimony or evidence in support of his claims; and (iii) monetary sanctions, for Plaintiff’s repeated failure to appear at court-ordered depositions. Specifically, between November 19, 2021, to January 24, 2024, the Court held eight discovery conferences with the parties and scheduled Plaintiff’s deposition each time. However, Plaintiff failed to appear for each of his eight separate court-ordered depositions.Continue Reading A Deposition Wake Up Call: Commercial Division Strikes Pleading for Repeated Failure to Appear for a Deposition

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As readers of this blog no doubt are aware, clients sometimes take a “shoot first, ask questions later” approach during the early stages of litigation. This is especially true when bringing a CPLR 3213 motion for summary judgment in lieu of complaint, which, under narrow circumstances, provides an accelerated procedure for litigants to obtain a…

New York law generally does not favor non-compete agreements, viewing them as unreasonable restraint of trade. As a result, New York courts apply a rigorous standard when deciding whether to enforce these restrictive agreements. The strict standard was demonstrated in Multiplier Inc. v. Moreno, et al. In Multiplier Inc., the Manhattan Commercial Division considered…

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)…

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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!