Parties to a contract generally can include in their agreement a provision preventing assignment of the agreement’s rights and remedies without the consent of both parties.  Because a party’s assignment of rights under a contract to a third party may have serious implications for both sides in the performance of that agreement, anti-assignment clauses protect the contracting parties by ensuring that no transfer of the agreement’s rights occurs without the consent of all involved.  Dance with the date you brought.  And absent fraud, unconscionability, or some other reason to invalidate the contract, courts generally enforce those anti-assignment clauses.

In the insurance context, however, the enforcement of anti-assignment clauses is more complicated.  Because insurers—like any contractual party—have a legitimate interest in protecting themselves from insureds’ assignment of the insurance agreement to a different, perhaps more risky party, anti-assignment clauses in insurance agreements are enforceable against assignments that occur prior to a covered loss.  Arrowood Indem. Co. v. Atlantic Mut. Ins. Co., 96 AD3d 693, 694 [1st Dept 2012].  But in circumstances where the assignment occurs after the covered loss, New York courts are more critical of anti-assignment clauses.  In those circumstances, courts reason, there is no increased risk to the insured; the loss already occurred, and the only thing that changes as a result of the assignment is who the insurer will need to pay for that loss.

In Certain Underwriters At Lloyd’s, London v AT&T, Corp., 2021 N.Y. Slip Op. 31740[U], a recent decision by New York Commercial Division Justice Cohen, the Court explores the exceptions to the general rules regarding anti-assignment clauses in insurance policies.  Ultimately, the case underscores the difficulties insurers face in disclaiming coverage by enforcement of an anti-assignment clause in the policy.Continue Reading Can You Assign Your Rights Under an Insurance Contract that Prohibits Assignment? Only for Prior, Fixed Losses

The Full Faith and Credit Clause of the United States Constitution provides that “Full Faith and Credit shall be given in each State to the public acts, records, and judicial proceedings of every other state.” In terms of stipulations of settlement, New York courts favor such stipulations and will rarely set them aside absent the…

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Earlier this year, my colleague, Madeline Greenblatt, wrote about the emergence of a new body of case law emanating from the myriad effects the COVID-19 pandemic has had on the real estate industry.  In her blog, Madeline discussed a recent decision from the Manhattan Commercial Division (Borrok, J.), rejecting a commercial tenant’s argument…

A cause of action accrues, triggering the commencement of the statute of limitations period, when “all of the factual circumstances necessary to establish a right of action have occurred, so that the plaintiff would be entitled to relief” (Gaidon v. Guardian Life Ins. Co. of Am.).  The “continuing wrong” doctrine is an exception…

Under the Commercial Division Rules, a court may seal court records “upon a written finding of good cause.”[1] So, what led Justice Robert R. Reed to deny two unopposed motions to seal in a recent decision in the New York Commercial Division? Lack of specificity.

In Cortlandt St Recovery Corp v Bonderman…

A critical inquiry to be considered at the outset of any litigation is whether the party seeking relief is, in fact, a proper party to seek the court’s adjudication of the dispute.  This concept is known as “standing,” which is a threshold determination to be made by the court, the absence of which warrants dismissal…

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In December 2020, the New York Law Journal commented on the measures the New York State court system would enact to handle the recent $300 million budget cut.  These measures included “adopting a strict hiring freeze, deferring raises, suspending countless programs, and declining to extend the judicial service of 46 retired trial and appellate judges.” …

The statute of limitations to recover on a breach of contract is six years.  Parties can extend that limitations periods by agreement, and New York General Obligations Law 17-101 governs the form of such agreements.  It provides that, “[a]n acknowledgment or promise contained in a writing signed by the party to be charged thereby is the only competent evidence of a new or continuing contract whereby to take an action out of the operation of the provisions of limitations of time for commencing actions under the civil practice law and rules. . . ”  Per GOL 17-101, only signed writings acknowledging the indebtedness and promising to pay are sufficient to extend the statute of limitations.

In considering whether a writing satisfies GOL 17-101 and extends a statute of limitations, Courts require three elements: Signature, Content, and Delivery.

First, the acknowledgement must be “signed by the party to be charged thereby.”  See 20 Plaza Hous. Corp. v. 20 Plaza E. Realty, 950 N.Y.S.2d 871, 874 (Sup. Ct. N.Y. Cty. Aug. 30, 2012) (Section 17-101 inapplicable because acknowledgment was “not signed by defendant”).

Second, the acknowledgment must convey “an intention to pay Plaintiff’s debt.”  See Knoll v. Datek Sec. Corp., 2 A.D.3d 594, 595 (2d Dep’t 2003) (“[T]he critical determination is whether the acknowledgment imports an intention to pay.”).  If the writing is at all inconsistent with an unequivocal intention to repay the debt, the writing fails the requirements of GOL 17-101.

Third, the acknowledgment “must have been communicated to the plaintiff or someone acting on his behalf, or intended to influence the plaintiff’s conduct.”  See Lynford v. Williams, 34 A.D.3d 761, 763 (2d Dep’t 2006) (Section 17-101 inapplicable where “plaintiff did not learn of the [purported acknowledgments] until after he commenced this action”).

In part because GOL 17-101 was intended to limit the instances in which an acknowledgment revives a cause of action, Courts strictly enforce each of the three requirements.  A writing failing any of the Signature, Content, or Delivery requirements is insufficient to restart the statute of limitations.  While the requirements of GOL 17-101 are strictly enforced, not every ambiguity in the acknowledgment will defeat its enforcement.  Recently, in Hawk Mtn. LLC v. RAM Capital Group LLC, 2021 NY Slip Op. 01349, the First Department held that an acknowledgement was sufficient to satisfy GOL 17-101 and restart the statute of limitations, despite its failure to specifically refer to the debt and inconsistencies between the acknowledgment and the underling note.Continue Reading General Statement of Indebtedness is Sufficient to Restart Statute of Limitations Despite Ambiguities

Most commercial contracts contain a choice of law provision and/or forum-selection clause. Under New York law, it is well recognized “that parties to a contract may freely select a forum which will resolve any disputes over the interpretation or performance of the contract” (Brooke Group Ltd v JCH Syndicate 488 et al). Recently,…

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The CPLR 3123 notice to admit can be a useful device in litigation.  Its primary purpose is to expedite a trial by eliminating the necessity of proving a “readily admittable fact” or matter not in dispute.  But, as efficient as it sounds, the notice to admit is a limited device, and may only be used…