Every commercial litigator is familiar with the burdens at the discovery phase of litigation, whether it is a dispute over production, privilege, or just the sheer volume and cost (both time and money) associated. Be that as it may, discovery also serves a critical and necessary purpose in commercial litigation. Determining what to ask for and how
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Playing Nice in the Litigation Sandbox
I think it’s fair to say that Commercial Division judges have little time for discovery disputes. If one peruses the individual practice rules of many of the ComDiv judges, one typically finds language all but prohibiting discovery motions. And ComDiv Rule 14, which itself provides that “[d]iscovery disputes are preferred to be resolved through court conference as opposed to motion practice,” expressly gives the judges the discretion to do so (“If the court’s Part Rules address discovery disputes, those Part Rules will govern discovery disputes in a pending case”). If a particular ComDiv judge’s individual rules are silent on the matter, then the default rule in Rule 14 applies. In which case, counsel are restricted to (i) making a good-faith attempt to resolve the dispute(s) amongst themselves; and (ii) if unsuccessful on their own, submitting competing letters outlining their respective positions and asking for the opportunity to conference the dispute(s) with the court.
Commercial Division judges also have little time for attorney gamesmanship. Again, the ComDiv Rules expressly support this sentiment, as one need look no further than the Preamble to the Rules, which was amended some five years ago to insist on, among other things, “that the practicing bar be held rigorously to a standard of commitment and professionalism of the highest caliber.” This includes conduct at depositions. Continue Reading Playing Nice in the Litigation Sandbox
Commercial Division Grants Award of Attorneys’ Fees, Despite Omnibus Objections Aimed to the Reasonableness of Services
Lawyers practicing in the Commercial Division are keenly aware of issues related to attorneys’ fee awards in commercial cases. Commercial agreements commonly contain a provision awarding attorneys’ fees to a prevailing party in a manner sufficient to satisfy entitlement to an award under the contractual exception to “American Rule.” However, entitlement to a fee award…
Changing the Status Quo: Commercial Division Issues Rare Mandatory Injunction
Most litigants associate injunctions as a remedy granted by a court to prevent a party from taking specific action. This is no surprise – as in most cases injunctions function to accomplish exactly that. However, in rare cases, courts will issue mandatory injunctions to force a party into taking specific action. Even though seldomly used, a mandatory injunction acts as an important judicial remedy to prevent irreparable harm by allowing courts to change the status quo.
The Dispute
The case of James Riv. Group Holdings, Ltd. v. Fleming Intermediate Holdings LLC illustrates a rare example of a court issuing a mandatory injunction. The case centers around the failed closing of the sale of Plaintiff’s reinsurance subsidiary to Defendant. In November 2023, the parties executed a Stock Purchase Agreement (“SPA”) concerning the sale of Plaintiff’s reinsurance subsidiary. As the closing approached, Plaintiff worked to fulfill its SPA obligations and complete all requisite pre-closing events. However, at the time of closing, Defendant failed to appear and instead sent a letter demanding further concessions to close – claiming that Plaintiff did not comply with its SPA obligations. Based on the failed closing, Plaintiff sought specific performance, seeking the Court’s intervention in forcing the Defendant to fulfill its obligations under the SPA and close on the transaction.Continue Reading Changing the Status Quo: Commercial Division Issues Rare Mandatory Injunction
Check Your Clauses: An Interesting Tale of the Missing Forum Selection Clause
Whether in employment agreements or business transactions, drafters often include certain clauses within these documents to protect their client if litigation arises (e.g., arbitration clauses, forum- selection clauses). However, when not clearly drafted, these clauses can lead to a battle over where the case may proceed. Recently, Manhattan Commercial Division Justice Joel M. Cohen handed…
Help, I Need to Get My Case into the Commercial Division!! Transfer and Determinations by the Administrative Judge
As one can easily glean, we here at the New York Commercial Division Practice Blog view New York’s Commercial Division as the heartbeat of business litigation in the United States. So, we think getting your business litigation in front of the Commercial Division is a big deal. But what happens when you have a case that meets the requirements for the Commercial Division, and you are not assigned to that Part?
Generally, there are two ways to be assigned to the Commercial Division under § 202.70[d] of the New York Code of Rules and Regulation (the “Rules”). The first is for any party to file an RJI with the accompanying Commercial Division Addendum 90 days following service of the complaint. The second is by consent of the parties via a forum – selection clause in the parties’ contract.
But what if a party files an RJI before the 90-day period runs without requesting assignment or submitting a Commercial Division Addendum? The answer lies in § 202.70[e] of the Rules, which permits a party to apply via letter to the Administrative Judge within 10 days of the RJI for transfer to the Commercial Division.
But what if the request is made outside the time limits in § 202.70[d] and [e] of the Rules? Again, § 202.70[e] of the Rules permits a letter application to the Administrative Judge showing “good cause” for the delay.
While the timing provisions are relatively simple to work though, the “good cause” standard under CPLR 2004, which requires reasoning for the delay, is a bit more subjective, as a finding of good cause is within the discretion of the Administrative Judge. It is imperative, therefore, to point the Administrative Judge to applications with analogous issues or facts to support your cause. As for where to find those decisions, never fear, the Commercial Division itself provides some help in this regard.
On the New York Courts webpage, the Commercial Division has a page titled Administrative Judge on Transfer Applications. That page provides a list of all the Administrative Judge’s decisions on transfer applications from prior to the effective date of the Commercial Division Rules on January 17, 2006, to the present.
For example, what if a timely request for Commercial Division assignment was not filed, but you have a related case pending before a Commercial Division Judge? The Administrative Order in ABG HMX LLC v. Alba Longa Concepts LLC provides precedent for the Administrative Judge granting a transfer for “good cause”, in this context. And what if a request for Commercial Division assignment is rejected by the clerk’s office but was only a few days late? Curtis v. Merrill Lynch, et al provides precedent for the Administrative Judge granting a transfer if the request was “untimely albeit only by a matter of days.” But waiting years before filing a transfer application is not wise. In ABL Advisor LLC, et al. v. Ian S. Peck, et al, the Administrative Judge denied a transfer application made two years into the litigation, finding that the “rules are designed to ensure that appropriate cases are assigned to the Commercial Division at the inception of the case, not two years into the litigation.” Finally, what if you have a complex commercial case but one of the issues is arguably excluded from review by the Commercial Division? In City of New York v. FC 42nd Street Associates, L.P., the Administrative Judge granted transfer of a generally excluded real property case that dealt with the determination of fair market value in relation to rental income, agreeing that while the case “is not an action for the payment of rent only, … the complaint raises complex questions of commercial and arbitration law and belongs in the Commercial Division.” And there are many more helpful examples for litigators on the Commercial Division’s “Transfer Application” page.
In short, the next time you find yourself in a position where leave to the Administrative Judge is required for assignment to the Commercial Division, remember the Commercial Division and its readily available resources has you covered. Continue Reading Help, I Need to Get My Case into the Commercial Division!! Transfer and Determinations by the Administrative Judge
Affirmation in Lieu of an Affidavit, Now “with the Same Force and Effect”
As of January 1, 2024, the amended CPLR 2106 concerning affirmations provides that
…[t]he statement of any person wherever made, subscribed and affirmed by that person to be true under the penalties of perjury, may be used in an action in New York in lieu of and with the same force and effect as
Stop Blaming the Parents! – The Scope of Parental Liability for a Subsidiary’s Contract
Misbehaving children? Blame the parents, right? Not so in the corporate context, at least according to Manhattan Commercial Division Justice Robert R. Reed in a recent decision, Memorial Sloan Kettering Cancer Ctr., v. Bristol Myers Squibb Co., in which he found that parent corporations will not be automatically held liable for the contracts of…
Don’t Forget the Details: How Conclusory Pleadings Can Thwart Nonparty Disclosure
Nonparty subpoenas are a useful discovery tool in commercial disputes. Particularly when the dispute involves access to or control over funds on deposit with a financial institution, the institution’s account statements, and transaction records may be critical. But stringent requirements are imposed on a party seeking disclosure from a nonparty. If the requesting party does not include sufficient detail in the subpoena to demonstrate its relevance to the pleadings, then its request might prove fruitless. A recent decision from Manhattan Commercial Division Justice Robert Reed in UKI Freedom LLC v Organization for the Defense of Four Freedoms for Ukraine, Inc. exemplifies such a shortfall.
Background
Under CPLR 3101(a)(4), a party may obtain disclosure from a nonparty of “matter material and necessary in the prosecution or defense of an action.” When disclosure is sought from a nonparty, “more stringent requirements are imposed on the party seeking disclosure” (Velez v Hunts Point Multi-Serv. Ctr., Inc., 29 AD3d 104, 108 [1st Dept. 2006]). In practice, these “more stringent requirements” are fairly minimal, but the subpoenaing party must at least “sufficiently state the ‘circumstances or reasons’ underlying the subpoena” (Kapon v Koch, 23 NY3d 32, 34 [2014]).
The nonparty, or another party to the action, may move to quash the subpoena but bears “the initial burden of establishing either that the requested disclosure is utterly irrelevant to the action or that the futility of the process to uncover anything legitimate is inevitable or obvious” (Wells Fargo Bank, N.A. v Confino, 175 AD3d 533, 534-35 [2d Dept. 2019] [internal quotations omitted]). If the movant meets this burden, then the burden shifts to the subpoenaing party to “establish that the discovery sought is material and necessary to the prosecution of the action” (id. at 535).Continue Reading Don’t Forget the Details: How Conclusory Pleadings Can Thwart Nonparty Disclosure
What’s Your Contribution? A Cautionary Tale Surrounding Third-Party Complaints
As many practitioners know, it is common to dismiss a complaint for pleading defects that are readily apparent. However, another type of complaint has recently caused a significant amount of confusion in the Commercial Division – the third-party complaint. A recent decision from Bronx Commercial Division Justice Fidel E. Gomez confirms as much, dismissing a third-party complaint where the third-party plaintiffs failed to plead any claims against the third-party defendant that were “rooted in indemnity or contribution.”Continue Reading What’s Your Contribution? A Cautionary Tale Surrounding Third-Party Complaints