If supermodel Tyra Banks has taught us anything about the modeling industry, it’s that the competition is fierce. Unfortunately, one Manhattan-based modeling agency and former agent aren’t learning this lesson on the runway—they’re learning it in a courtroom.

In a recent decision, the First Department upheld a portion of Justice Andrea Masley’s Order which enjoined a defendant modeling agent and modeling agency from unfairly competing, disclosing or misappropriating plaintiff’s confidential information, and interfering with plaintiff’s contractual relationship with its models, but refused to extend the terms of the employment agreement which prohibited the agent from contacting and soliciting models throughout the pendency of the litigation.

In Marilyn Model Management, Inc. v Derek Saathoff, 1 Model Management, LLC d/b/a One Management, a modeling agency brought an action seeking injunctive relief and damages for “flagrant and repeated breaches” of the non-solicitation and confidentiality obligations of its former agent, Derek Saathoff.  Plaintiff’s complaint alleged that Saathoff unlawfully solicited at least six of the plaintiff’s models, two of which abandoned the plaintiff agency for Saathoff’s new agency, 1 Model Management LLC, also a named defendant in the action. Saathoff resigned from the plaintiff modeling agency to begin representing models with 1 Model, a direct competitor of the plaintiff. Despite his contractual obligations, one could assume Saathoff was not too concerned with keeping his actions a secret when he posted an image of a model, still under contract with the plaintiff, to his Instagram page, publicly welcoming her to his new agency.

Unfortunately for Saathoff, his employment agreement with the plaintiff included a series of non-solicitation obligations restricting Saathoff’s ability to solicit for the duration of his employment and for six months thereafter. Saathoff also agreed to keep plaintiff’s non-public information confidential during his employment and at all times thereafter.

The trial court underscored that pursuant to CPLR 6301, a party seeking injunctive relief must establish (1) the likelihood of success on the merits of the action; (2) the danger of irreparable harm in the absence of a preliminary injunction; and (3) a balance of equities in favor of the moving party (Gliklad v Cherney, 97 AD3d 401, 402 [1st Dept 2012] [citations omitted]).

As to the non-solicitation provision of the employment agreement, the lower court found a likelihood of success on the merits because plaintiff established the non-solicitation provision was reasonable: the restrictive covenant lasted only 6 months after termination, was restricted to the geographical limits of the tri-state area, and was based on an employer’s legitimate interest in “protection against misappropriation of [its] trade secrets or of confidential customer lists, or protection from competition by a former employee whose services are unique or extraordinary (BDO Seidman v Hirshberg, 93 NY2d 382, 388-389 [1999]). The lower court was satisfied that the plaintiff would suffer actual and imminent injury if Saathoff was not enjoined from soliciting plaintiff’s models and that money damages would unlikely make plaintiff whole if Saathoff continued to hire away plaintiff’s models. Lastly, the lower court found the balance of equities to tip in plaintiff’s favor, stating that prohibiting Saathoff from soliciting plaintiff’s models would not deprive him of his livelihood nor prevent him from being successful at 1 Model.

As to the confidentiality provision, the lower court found the provision to be reasonable, “especially in this field,” and thus enjoined both Saathoff and 1 Model from (1) using, disclosing and/or misappropriating any of plaintiff’s confidential information; (2) unfairly competing with plaintiff through confidential information; and (3) interfering with the contracts between plaintiff and its models.

On appeal, the First Department affirmed that plaintiff successfully demonstrated its entitlement to injunctive relief by clear and convincing evidence. However, as it pertained to the non-solicitation provision, the First Department split from the lower court’s ruling which enjoined Saathoff from contacting or soliciting plaintiff’s employees throughout the duration of the action. The First Department noted that by the terms of the employment agreement, the restrictive covenant only applied to a term of six months following the termination of Saathoff’s employment. Saathoff’s termination became effective on September 25, 2018 and thus, the contractual restrictive covenant, by its terms, expired on March 25, 2019. Accordingly, the First Department found no basis for the injunction to remain in place for the pendency of the action.

Takeaway: Counsel should closely analyze the terms of employment contracts before seeking injunctive relief for violations of restrictive covenants—the Commercial Division will not extend them beyond their contractual limits even while litigation is pending.

Three months ago very few of us regularly communicated by virtual videoconferencing.  Today, it’s fast become a daily routine, and in all likelihood will become a more permanent part of our practice.  Who would have guessed that by May 2020, we would be comfortably conducting mediations, hearings, court conferences and even trials by Skype, Zoom or other videoconferencing platform, from home nonetheless?  The adjustment has not been easy for all involved.  Prior to the pandemic, many justices had not permitted emails.  However, when the cases were limited to those deemed “essential” and attorneys were not able to use New York State Courts Electronic Filing (“NYSCEF”) for filing, there was simply no way to contact many of the judges.  However, as Plato recognized over 2,300 years ago, “necessity is the mother of invention”.  That’s when the courts decided to publish rules and/or set up Part emails.

As we embrace our new world, the Commercial and Federal Litigation Section of the New York State Bar Association has prepared a Virtual Courts Contact List based on preferences expressed by each Commercial Division Justice.  So we’re here to share the list with you (at the bottom of this post) and hope you find it helpful in navigating through the “work at home” routine.  Caution to all however: counsel should, of course, check (a) the temporary part rules, if any, on the website for the assigned Commercial Division Justice (see, e.g., https://www.nycourts.gov/LegacyPDFS/courts/comdiv/NY/PDFs/Part-54-Temporary-Rules.pdf) and (b) the website for the relevant county or judicial district’s Supreme Court to see if there are specific rules, procedures or forms to be used in requesting conferences.  For example, Nassau County Justice is using the attached form:  http://ww2.nycourts.gov/sites/default/files/document/files/2020-04/Email%20Request%20For%20Conference%20Form.pdf

And a Big Thanks  go out to Kathy Kass, Esq., Counsel in the Commercial Division Support Office, for providing us with specific links to the Commercial Division Justices in New York County:

~Justice Borrok –  requests for conferences in Part 53 may be made via email to sfc-part53@nycourts.gov

~Justice Cohen – requests for conferences in Part 3 may be made via email to sfc-part3@nycourts.gov

~Justice Friedman – see https://www.nycourts.gov/LegacyPDFS/courts/comdiv/NY/PDFs/Part-60-Temporary-Rules.pdf

~Justice Masley – see   https://www.nycourts.gov/LegacyPDFS/courts/comdiv/NY/PDFs/Part48-Temporary-Rules.pdf

~Justice Ostrager – requests for conferences in part 61 – sfc-part61@nycourts.gov

~Justice Scarpulla –  requests for conferences in Part 39 may be made via email to part-39@nycourts.gov

~Justice Schecter – https://www.nycourts.gov/LegacyPDFS/courts/comdiv/NY/PDFs/Part-54-Temporary-Rules.pdf

~Justice Sherwood – see https://www.nycourts.gov/LegacyPDFS/courts/comdiv/NY/PDFs/part49-temporary-rules.pdf

In addition, see there is also  a conference request email for all NY Supreme Civil parts, https://www.nycourts.gov/legacypdfs/courts/1jd/supctmanh/PDF/Remote-Conference-Protocol.pdf

 

County/ Judicial District Justice Best Remote Contact as of April 17th 2020
Albany County Hon. Richard Platkin Email: PlatkinChambers@nycourts.gov
Email requests for conference should copy counsel for all parties
Kings County / Brooklyn Hon. Lawrence Knipel

Email: lknipel@nycourts.gov

Law Clerk: Aaron Blinder
ablinder@nycourts.gov
Email requests for conference should copy counsel for all parties

Kings County / Brooklyn Hon. Larry D. Martin

Email: ldmartin@nycourts.gov

Law Clerk: David C. Pepper
dpepper@nycourts.gov

Assistant Law Clerk: Dorichael Rodriguez
drodrig3@nycourts.gov
Email requests for conference should copy counsel for all parties

Kings County / Brooklyn Hon. Leon Ruchelsman

Email: lruchels@nycourts.gov

Law Clerk: Mark Kagan
mkagan@nycourts.gov
Email requests for conference should copy counsel for all parties

Nassau County Hon. Stephen A. Bucaria

Attorneys may request a priority conference with the Court on pending matters by sending a standardized email request form to each Judge’s Chambers.  A group email address for each Judge’s Chambers has been established for this purpose as provided below.  Attorneys and unrepresented parties will indicate the reason for the requested conference.  Chambers shall then determine whether a conference is necessary or appropriate and direct the manner of the conference, i.e., by telephone or video.

judgebucariaremote@nycourts.gov
Email requests for conference should copy counsel for all parties

Nassau County Hon. Vito M. DeStefano

Attorneys may request a priority conference with the Court on pending matters by sending a standardized email request form to each Judge’s Chambers.  A group email address for each Judge’s Chambers has been established for this purpose as provided below.  Attorneys and unrepresented parties will indicate the reason for the requested conference.  Chambers shall then determine whether a conference is necessary or appropriate and direct the manner of the conference, i.e., by telephone or video.

judgedestefanoremote@nycourts.gov
Email requests for conference should copy counsel for all parties

Nassau County Hon. Timothy S. Driscoll

Attorneys may request a priority conference with the Court on pending matters by sending a standardized email request form to each Judge’s Chambers.  A group email address for each Judge’s Chambers has been established for this purpose as provided below.  Attorneys and unrepresented parties will indicate the reason for the requested conference.  Chambers shall then determine whether a conference is necessary or appropriate and direct the manner of the conference, i.e., by telephone or video.

judgedriscollremote@nycourts.gov
Email requests for conference should copy counsel for all parties

Nassau County Hon. Jerome Murphy

Attorneys may request a priority conference with the Court on pending matters by sending a standardized email request form to each Judge’s Chambers.  A group email address for each Judge’s Chambers has been established for this purpose as provided below.  Attorneys and unrepresented parties will indicate the reason for the requested conference.  Chambers shall then determine whether a conference is necessary or appropriate and direct the manner of the conference, i.e., by telephone or video.

judgemurphyremote@nycourts.gov
Email requests for conference should copy counsel for all parties

New York County Hon. Andrew Borrok Email: SFC-Part53@nycourts.gov
Email requests for conference should copy counsel for all parties
New York County Hon. Joel M. Cohen Email: sfc-part3@nycourts.gov
Email requests for conference should copy counsel for all parties
New York County Hon. Marcy Friedman Until further notice, communications with the Court should be directed to the Part 60 email
Eamil: SFC-PART60@nycourts.gov.
Email requests for conference should copy counsel for all parties
New York County Hon. Andrea Masley Email: sfc-part48@nycourts.gov
Email requests for conference should copy counsel for all parties
New York County Hon. Barry Ostrager Email: SFC-PART61@nycourts.gov
Email requests for conference should copy all parties
New York County Hon. Saliann Scarpulla Email: Part-39@nycourts.gov
Email requests for conference should copy counsel for all parties
New York County Hon. Jennifer G. Schecter All requests for conferences should be made by contacting Justice Schecter’s Principal Law Clerk Michael Rand by email at mrand@nycourts.gov, copying all counsel and setting forth the reason for and nature of the conference requested.
New York County Hon. O. Peter Sherwood

To schedule a conference, the attorneys should email the clerk assigned to their case.

Cases with even index numbers (excluding the year) are generally assigned to Ms. Crasson [scrasson@nycourts.gov].
Cases with odd index numbers are generally assigned to Mr. Rivera [mrivera@nycourts.gov].
Email requests for conference should copy counsel for all parties

Onondaga County Hon. Deborah H. Karalunas Email: Judge-Karalunas-Chambers@nycourts.gov
Email requests for conference should copy counsel for all parties
Onondaga County Hon. Anthony J. Paris Email: Judge-Paris-Chambers@nycourts.gov
Email requests for conference should copy counsel for all parties
Onondaga County Hon. Donald A. Greenwood Email: Judge-Greenwood-Chambers@nycourts.gov
Email requests for conference should copy counsel for all parties
Queens County Hon. Marguerite A. Grays Email:   QNSCDPTB@nycourts.gov
Email requests for conference should copy counsel for all parties
Queens County Hon. Leonard Livote Email: QNSCDPTA@nycourts.gov
Email requests for conference should copy counsel for all parties
Queens County Hon. Joseph Risi Email; QNSCDPTC@nycourts.gov
Email requests for conference should copy counsel for all parties
Suffolk County Hon. Elizabeth Hazlitt Emerson Emails have been created for each Judicial Part. These Part emails may be utilized by the bar to request a conference with the Court.
Contact via email @ Sufemerson@nycourts.gov
Email requests for conference should copy counsel for all parties
Suffolk County Hon. Jerry Garguilo Emails have been created for each Judicial Part. These Part emails may be utilized by the bar to request a conference with the Court.
Contact via email @ Sufgarguilo@nycourts.gov
Email requests for conference should copy counsel for all parties
Suffolk County Hon. James Hudson Emails have been created for each Judicial Part. These Part emails may be utilized by the bar to request a conference with the Court.
Contact via email @ Sufhudson@nycourts.gov
Email requests for conference should copy counsel for all parties
Westchester County Hon. Gretchen Walsh The best means to request a conference call is through assistant court attorney Ryan Wintermute rjwinter@nycourts.gov.
Email requests for conference should copy counsel for all parties
Westchester County Hon. Linda S. Jamieson Communication via email by contacting assistant court attorney, Joseph Hadala: jhadala@nycourts.gov
Email requests for conference should copy counsel for all parties
7th Judicial District Hon. J. Scott Odorisi The Court is available to conduct conferences – via either Skype for Business or the
telephone. If you would like to schedule a conference, e-mail Maureen Ware at
mware@nycourts.gov on notice to all parties.
8th Judicial District Hon. Emilio Colaiacovo Emaill: ecolaiac@nycourts.gov
Email requests for conference should copy counsel for all parties
8th Judicial District Hon. Timothy J. Walker Email: tjwalker@nycourts.gov
Law Clerk: Darryl J. Colosi, Esq.   Email: dcolosi@nycourts.gov
Email requests for conference should copy counsel for all parties

 

With global commerce massively affected by the COVID-19 pandemic, post-pandemic litigation will undoubtedly result in a rise of interstate depositions and discovery. In turn, litigants engaged in actions pending outside of New York State will seek depositions and discovery from individuals and businesses residing in New York. As a result, New York attorneys will likely be asked to provide guidance or even be retained to assist litigants in these endeavors. This blog post provides readers with a primer on the procedures for obtaining depositions and discovery in New York pursuant to the Uniform Interstate Deposition and Discovery Act found in New York Civil Practice Law and Rules (“CPLR”) § 3119 (the “Act”).

The following scenario illustrates the utility of the Act: AB, a plaintiff engaged in an action against CD pending in California, realizes during the course of discovery in the California action that CD’s accountant, EF, is in possession of CD’s records relevant to AB’s prosecution of the California action. The problem is EF is a resident of New York and AB does not have jurisdiction over EF in California. How can AB obtain CD’s records from EF and EF’s deposition in New York?

The Act allows AB or AB’s attorneys to obtain an “out-of-state” subpoena—California subpoena—“issued under authority of a court of record of a state other than this state” (CPLR 3119 [a] [1]; Patrick M. Connors, Practice Commentaries, McKinney’s Cons Laws of NY, C3119:2 [2018]). Thereafter, AB must then submit the California subpoena to the county clerk in the county in which discovery is sought, typically, the county in New York where EF resides or has its principal office (CPLR 3119 [b] [3]; CPLR 503). The county clerk will then issue a New York subpoena (hereinafter, the “subpoena”) to be served on EF in New York (CPLR 3119 [b] [2]). Alternatively, AB can retain a New York licensed attorney to issue the subpoena without the need to involve the county clerk or courts (CPLR 3119 [b] [4]). AB must provide the New York attorney with either an original or a true copy of the out-of-state subpoena (CPLR 3119 [b] [4]).

Under CPLR 3119, the subpoena requires a person (defined in the statute as “an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, public corporation, government, or governmental subdivision, agency or instrumentality, or any other legal or commercial entity”) to “attend and give testimony at a deposition;” “produce and permit inspection and copying of designated books, documents, records, electronically stored information, or tangible things in the possession, custody or control of the person;” or “permit inspection of premises under the control of the person” (CPLR 3119 [a] [2] and [a] [4] [i]-[3]; see also CPLR 3119 [d] [noting that CPLR 2303, 2305, 2306, 2307, and 2308 apply to subpoenas issued under CPLR 3119 [b]).

The New York subpoena must: “(i) incorporate the [same] terms used in the out-of-state subpoena” and “(ii) contain or be accompanied by the names, addresses and telephone numbers of all counsel of record in the proceeding to which the subpoena relates and of any party not represented by counsel” (CPLR 3119 [b] [3]).

Once issued, AB or AB’s New York attorney must serve the subpoena in accordance with CPLR 2302 (i.e., cause the subpoena to be issued with or without a court order) and CPLR 2303 (i.e., serve the subpoena in the same manner as a summons and pay in advance a witness fee for travel and attendance) (CPLR 3119 [c]).

Since there is no action or proceeding pending before any court in New York, a proceeding related to the subpoena (e.g., for protective orders or to enforce, quash or modify the subpoena) must be brought as special proceedings in the supreme court in the county where the subpoena is returnable (CPLR 3119 [e]).

In this regard, if EF fails to comply with the subpoena issued by the county clerk or a New York attorney (a non-judicial subpoena), AB can commence a special proceeding to enforce the subpoena and compel EF’s compliance pursuant to Art. 4 of the CPLR (CPLR 3119 [e]; CPLR 2308 [b] [disobedience of non-judicial subpoena]; Margulis v Zlochiver, No. 155201/2019 [Sup Ct, New York County Nov. 20, 2019] [ordering the appearance of a witness for an examination before trial “previously duly noticed . . . pursuant to the Uniform Interstate Deposition and Discovery Act and CPLR § 3119, and [to] have copies of records material to his testimony”). Likewise, if EF believes that it has grounds to seek a protective order, EF can commence a proceeding to quash or modify the subpoena (CPLR 3119 [e]; CPLR 2304). A special proceeding is commenced by filing a petition either on Notice of Petition or by Order to Show Cause (CPLR 402 and 403).

Be aware that failing to strictly comply with CPLR 3119 and the laws of New York can result in the court denying an application to compel compliance with the subpoena or for a protective order (Matter of Boyarsky, No. 53667/2014 [Sup Ct, Westchester County May 9, 2014] [denying an application for order compelling production of documents where no evidence exists that the subpoena was “issued under authority of the court of record in Massachusetts”]; Hyatt v State Franchise Tax Bd., 105 AD3d 186, 194 [2d Dept 2013] [New York law on attorney-client privilege applies on a motion for a protective order]).

Moreover, an out-of-state party cannot use a subpoena to go on a fishing expedition but only to “compel the production of specific documents that are relevant and material to the factual issues in a pending proceeding” (Matter of Home Box Office Inc. v Laster, No. 153946/2019 [Sup Ct, New York County Jun. 5, 2019] [granting motion to quash out-of-state Florida subpoena in its entirety] citing Mestel & Co., Inc. v Smythe Masterson & Judd, Inc., 215 AD2d 329 [1st Dept 1995]; Hyatt v State Franchise Tax Bd., 105 AD3d at 200-201 [citing the Recommendations of the Advisory Committee on Civil Practice: “The Act recognizes that the discovery state has a significant interest in protecting its residents who become non-party witnesses in an action pending in another jurisdiction from unreasonable or burdensome discovery requests.”] [citation omitted]).

Lastly, remember that CPLR 3119 only “provides a mechanism for disclosure in New York for use in an action that is pending in another state . . . , not the other way around” (see, e.g., Lerner v Newmark & Co. Real Estate, Inc., 178 AD3d 418 [1st Dept Dec. 5, 2019] citing Matter of 91 St. Crane Collapse Litig., 159 AD3d 511, 512 [1st Dept 2018]). In the latter case, CPLR 3108 controls in instances when the other state does not have a similar Uniform Depositions and Discovery Act (see Genesis Merchant Partners, LP v Gilbride, Tusa, Last & Spellane LLC, No. 653145/2014 [Sup Ct, New York County Feb. 23, 2020] [issuing a commission pursuant to CPLR 3108 for information via deposition in Connecticut] citing Wiseman v American Motors Sales Corp., 103 AD2d 230, 235 [1st Dept 1984]).

The COVID-19 pandemic has had widespread impact on litigation, with some courts and most cases coming to a screeching halt.  Some courts have responded with Orders or rules (Massachusetts Sup. Jud. Ct. Order OE-144 [March 20, 2020]; Wisconsin S. Ct. Order [March 25, 2020]; Florida S. Ct., No. AOSC20-16 [March 18, 2020]), while others have not, leaving the practitioner to determine the logistics under existing procedural rules and whatever Executive or Administrative Orders are in place.

As of this writing, we thought it might be helpful to provide the landscape in the state and federal courts in New York, and the impact, if any, Governor Cuomo’s Executive Order 202.7 may have.  We also provide links to helpful resources as you near your first virtual deposition.  We intend to update this as the landscape changes.

New York Law on Remote Depositions

New York Civil Practice Law and Rules (“CPLR”) 3113(b) mandates that an “officer” put the deponent under oath. The officer, or someone acting under the direction of the officer, must record the testimony.  Typically, a notary public or a stenographer serves the function of an officer who then records the testimony.

Pursuant to CPLR 3113(d), the officer administering the oath and transcribing the testimony must be physically present at the location where the deponent is testifying. Put simply, the statute does not permit the officer to be at a remote location and accessible by telephone. The rationale makes sense:  the officer who swears in the witness must have proof that the person before them is the actual witness.  SIgnifciantly, however, the statute allows the parties to stipulate otherwise (CPLR 3113[d]; In re Estate of Smith, 29 Misc 3d 832, 834 [Sur Ct 2010] [The court notes that “unless otherwise stipulated to by parties, the officer administering the oath shall be physically present at the place of the deposition”]). CPLR 3113(d), in part, states that “[u]nless otherwise stipulated to by the parties, the officer administering the oath shall be physically present at the place of the deposition and the additional costs of conducting the deposition by telephonic or other remote electronic means, such as telephone charges, shall be borne by the party requesting that the deposition be conducted by such means.”  In Washington v Montefiore Hospital et al., the Third Department held that because the court reporter who administered the oath was not present in the deponent’s office during his testimony, and rather, was present by telephone, the deposition was not conducted in accordance with CPLR 3113. However, there, the Court held that because there was no objection to the manner in which the oath was administered, thus preventing any correction of defect, the objection was waived (see Matter of Washington v Montefiore Hosp., 7 AD3d 945, 948 [3d Dept 2004]).

The rule further provides,that the testimony can be recorded by “stenographic or other means.” Indeed, CPLR 3113(d) permits the parties to “stipulate that a deposition be taken by telephone or other remote electronic means and that a party may participate electronically.” The stipulation must be agreed to by all the parties to a litigation and must detail 1) the method of recording; 2) the use of exhibits; and 3) who must and may be physically present.

Federal Law on Remote Depositions

Pursuant to Federal Rule of Civil Procedure (“FRCP”) 30(b)(4), “the parties may stipulate – or the court may on motion order – that a deposition be taken by telephone or other remote means.” In other words, under federal law, the court can order that a deposition be taken by telephone or other remote electronic means even in the absence of an agreement between the parties (Fed R Civ P 30[b][4]). Rule 30(b)(3) further states that testimony may be recorded by “audio, audiovisual, or stenographic means” and that the party who notices the deposition bears the recording costs.  In addition, any party can arrange to have the deposition testimony transcribed.

The COVID-19 pandemic has even caused certain federal judges to temporarily supplement their individual rules to permit all depositions to be taken by remote means, including telephone and videoconference (see Judge Lewis J. Liman’s COVID-19 Emergency Individual Practices in Civil and Criminal Cases).  The rule also provides that “[f]or avoidance of doubt, a deposition will be deemed to have been conducted “before” an officer so long as that officer attends the deposition via the same remote means (e.g., telephone conference call or video conference) used to connect all other remote participants, and so long as all participants (including the officer) can clearly hear and be heard by all other participants” (see id.).

Rule 30(b)(5) states that, unless the parties stipulate otherwise, the “deposition must be conducted before an officer appointed or designated under FRCP 28 (Nowlin v Lusk, 2014 WL 298155, at *5 [WD NY Jan. 28, 2014]).  Under FRCP 28, the deposition must be taken before either: 1) an officer authorized by federal law or by the law in the place of examination to administer oaths; or 2) a person appointed by the court where the action is pending. Rule 28 defines “officer” as a “person appointed by the court under this rule or designated by the parties under Rule 29(a).”  Notably, under FRCP 29(a), the parties can stipulate that “a deposition may be taken before any person, at any time or place, on any notice, and in the manner specified – in which event it may be used in the same way as any other deposition.” Put simply, the parties can stipulate that remote video depositions will be conducted by a person who is not a notary. The stipulation can also address the remote participation of the officer. The Rule does not require the parties to obtain the court’s approval of these stipulations. However, it is important to note that local rules can require approval for these stipulations.  Therefore, it is critical to consult both the Local Rules of the operative District Court, and the Individual Rules of the assigned Magistrate and Article III Judge.

Although the parties can stipulate otherwise, federal courts have held that a deposition is deemed to have been conducted before an officer if that officer “attends the deposition via the same remote means (e.g., telephone conference call or video conference) used to connect all other remote parties, and so long as all participants (including the officer) can clearly hear and be heard by all other participants)” (see Sinceno v Riverside Church in City of New York, 2020 WL 1302053, at *1 [SD NY Mar. 18, 2020] [permitting all depositions to be taken by telephone, video conference, or other remote means in light of the COVID-19 pandemic]).

In sum, federal law, unlike New York State law, does not require the physical presence of the officer in the same location as the deponent.

Executive Order 202.7 and Depositions

In light of the COVID-19 pandemic, on March 19, 2020, Governor Cuomo issued Executive Order 202.7 (“EO”), which suspended until April 18, 2020 the rule requiring the physical appearance of a notary public for the signing of documents.  To date, it is unclear whether the suspension will be extended. It is also not clear what impact, if any, the EO has on CPLR 3113’s physical presence requirement.  The EO addresses the witnessing of document signings, not the administration of oaths at depositions. Specifically, Executive Order 202.7 permits notary services to be performed by video provided the following conditions are met:

  • The person seeking the Notary’s services, if not personally known to the Notary, must present valid photo ID to the Notary during the video conference, not merely transmit it prior to or after;
  • The video conference must allow for direct interaction between the person seeking the Notary’s services and the Notary (g., no pre-recorded videos of the person signing);
  • The person seeking the Notary’s services must affirmatively represent that he or she is physically situated in the State of New York;
  • The person seeking the Notary’s services must transmit by fax or electronic means a legible copy of the signed document directly to the Notary on the same date it was signed;
  • The Notary may notarize the transmitted copy of the document and transmit the same back to the person seeking the Notary’s services; and
  • The Notary may repeat the notarization of the original signed document as of the date of execution provided the Notary receives such original signed document together with the electronically notarized copy within thirty days after the date of execution.

The New York Department of State has issued guidance to notaries regarding Executive Order 202.7.  Below are the additional considerations for notaries:

  • Notaries public using audio-video technology must continue to follow existing requirements for notarizations that were unaltered by the Executive Order. This includes, but is not limited to, placing the notary’s expiration date and county where the notary is commissioned upon the document.
  • If the notary and signatory are in different counties, the notary should indicate on the document the county where each person is located.
  • An electronically transmitted document sent to the notary can be sent in any electronic format (e.g., PDF, JPEG, TIFF), provided it is a legible copy.
  • The notary must print and sign the document, in ink, and may not use an electronic signature to officiate the document.
  • The signatory may use an electronic signature, provided the document can be signed electronically under the Electronic Signatures and Records Act (Article 3 of the State Technology Law). If the signer uses an electronic signature, the notary must witness the electronic signature being applied to the document, as required under Executive Order 202.7.
  • The Executive Order does not authorize other officials to administer oaths or to take acknowledgments, and only applies to notary publics commissioned by the Secretary of State’s office.
  • Following remote notarization, if the notary receives the original document within 30 days, the notary may notarize the document again (i.e., physically affixing a notary stamp and hand signing the document) using the original remote notary date.
  • Additionally, when performing remote notarization pursuant to this Executive Order, the Department recommends the following best practices. (However, not following these two recommendations will not invalidate the act or be cause for discipline):
    • Keep a notary log of each remote notarization;
    • Indicate on the document that the notarization was made pursuant to Executive Order 202.7.

Some Helpful Links and Advice From Court Reporters

So what are court reporters doing in light of the pandemic?  Adapting of course!  Many are offering free virtual or on-line demonstrations of how to conduct a remote deposition, or helpful  information on how the depositions would proceed.  Some examples can be found at Enright, Veritext or Bee Reporting, to name a few.  You might want to share these “tutorials” with your witness or clients so they understand the process before “taking the stand”.

 

 

A few weeks back, my colleague Chris Clarke reported on the response of the New York court system to the commercial chaos arising out of the COVID-19 pandemic, including in the court system generally, the Appellate Division, and of course, the Commercial Division.

Among other developments, Chris’s post highlighted Chief Administrative Judge Lawrence K. Marks’s March 15 statewide Memorandum — which postponed until further notice all “non-essential” court functions as part of a “continuing and evolving effort to assure the operation of the courts in the safest possible manner for the public and our employees in this time of medical emergency” — as well as his March 19 Administrative Order — which “strongly discouraged” in-person litigation or other actions “inconsistent with prevailing health and safety directives relating to the coronavirus health emergency.”

Recent decisions throughout the state, including in New York County, suggest that courts are adhering to these directives, particularly as it relates to discovery.

For example, the day after Judge Marks’s Administrative Order, the Supreme Court in Brielmeier v Legacy Yards Tenany, LLC granted a motion to compel a post-Note of Issue IME and allowed the parties to further adjourn the IME — already more than two years delinquent due to “law office failure” — by an additional 60 days “if the IME cannot be conducted due to the COVID-19 pandemic.”

A week later, in Galas v. Thor 1231 Third Ave. LLC, New York County Supreme denied a pre-mature motion for summary judgment and directed the parties to proceed with depositions — with the caveat that “to the extent that the parties are unable to conduct their depositions as scheduled in their last conference order due to the current COVID-19 (coronavirus) crisis, they may reschedule them at the next conference.”

Elsewhere around Foley Square, certain SDNY judges have developed standing orders dealing with the crisis that are being adopted and issued in dozens of cases across the board.

For example, District Judge Lewis J. Liman , as well as Magistrate Judges Katherine H. Parker and Barbara Moses — in light of the federal government’s ongoing efforts “to minimize person-to-person contact” — have been issuing the following standing order concerning depositions:

ORDERED, … that all depositions in this action may be taken via telephone, videoconference, or other remote means, and may be recorded by any reliable audio or audiovisual means…. For avoidance of doubt, a deposition will be deemed to have been conducted “before” an officer so long as that officer attends the deposition via the same remote means (e.g., telephone conference call or video conference) used to connect all other remote participants, and so long as all participants (including the officer) can clearly hear and be heard by all other participants.

District Judge P. Kevin Castel, for his part, has been issuing a standing order directing that all upcoming court conferences “will be held by teleconferencing” and requiring all plaintiffs’ counsel to “contact all defendants’ counsel to provide defense counsel with call-in information; [and] email the call-in information to [Judge Castel].”

Taking the award for the “Most Humane Standing Order,” however, is Magistrate Judge Ona T. Wang, whose order not only insists on the now all-too-familiar “shelter-in-place” protocol…

ORDERED, that counsel shall conduct work remotely. This includes, but is not limited to, client meetings, work meetings, and hand deliveries of courtesy copies to the Court (courtesy copies can be sent via email or mail)

… but also expresses a certain sensitivity to what may be going on in the personal lives of litigants during this crisis…

ORDERED that if any party or counsel has any private, personal, familial or medical concerns that they need to share with the Court that would necessitate further orders, counsel may email [Judge Wang] ex parte provided that they advise the other parties that they will be contacting the Court ex parte.

A final note of caution with regard to this recent trend of coronavirus compassion from the courts:

Lest any litigant be tempted to take advantage of the slack cut by these decisions and orders, one would be well-advised to heed the recent admonishment from District Judge Kenneth M. Karas in Koch v Preuss following an appeal from the dismissal of a bankruptcy proceeding for lack of prosecution:

Appellant’s attempt to invoke the recent coronavirus pandemic to excuse his failures over the past eleven months is, frankly, appalling. Over the past few days, this Court has granted every request for an extension or telephone conference with which it has been presented based on the coronavirus. The Court is acutely aware of the hardships and dislocations associated with the current pandemic, and the Court has assumed good faith by those making related requests. Appellant’s request, however, is different. While the coronavirus outbreak is recent, appearing in the United States and coming to public attention within the last month, Appellant’s failures have been lengthy, repeated and ongoing for nearly a year…. In sum, Appellant cannot excuse his longstanding failure to prosecute his appeal by retroactively capitalizing on a recent crisis.

It works the same way in small businesses as it does in major investment firms: the executives reach agreement on the terms of a deal, then leave the lawyers to paper things accordingly.  But sometimes the papered deal differs from the agreement the parties actually reached, and neither side notices the differences until long after the papers are executed.  Or, one side notices the differences, but—realizing that they like the terms of the papered deal better than the one they had discussed—chooses to remain quiet.

In both cases, the aggrieved party is likely to claim mistake: that the parties’ had “a different understanding than the contract’s plain meaning.”  Chimart Assoc. v. Paul.  “The businesspeople reached deal X, but the lawyers papered deal Y.”  In these circumstances, the party claiming mistake must tread carefully: a claim of mistake easily can implicate privileged communications, resulting in an “at issue” waiver of the attorney-client privilege with respect to the negotiation and drafting of the written agreements.

In Securitized Asset Funding 2011-2, Ltd., v. Canadian Imperial Bank of Commerce, No. 653911/2015 (NY County March 3, 2020), Justice Scarpulla becomes the most recent Commercial Division Justice to consider the scope of the “at issue” waiver as it relates to a party claiming mistake in the terms of a contract.

Bonds, Swaps, and a Tangled Web of Cross-References

The dispute in Securitized Asset Funding centers on a $750 million loan from Cerberus Capital Management (“Cerberus”) to the Canadian Imperial Bank of Commerce (“CIBC”).  Because the deal was designed so that Cerburus would assume some of CIBC’s exposure to the U.S. residential mortgage market, the note was repayable from only two groups of securities: cash assets and “Synthetic Assets” (mostly derivative obligations).  The Synthetic Assets generated three income streams: Synthetic Principal, Synthetic Interest, and Synthetic LIBOR, all of which were carefully defined in the written agreements.

According to CIBC, the parties intended to define a portion of “Synthetic LIBOR” as a function of certain underlying assets, the Altius 4 Bonds, such that CIBC’s Synthetic LIBOR payments to Cerberus would gradually reduce as principal payments on the Altius 4 Bonds were made.  But the written agreements that CIBC drafted do not say that.  Rather, they employ a tangled knot of cross-references and defined terms that ultimately define “Synthetic LIBOR” by reference to the “Relevant Notional Amount” of the Altius 4 Swaps (derivatives of the Altius 4 Bonds).  Under ordinary circumstances, this would have been a workable shortcut to accomplish the CIBC’s intent; generally, the notional amount of a swap decreases as principal payments on the underlying bond are made, so tying Synthetic LIBOR to the notional amount of the swap makes abstract sense.  But here, the defined term, “Relevant Notional Amount” of the Altius 4 Swaps had a key feature: it would “freeze”—stop reducing—upon a physical settlement of the swaps.  As an unintended consequence, then, if the Altius 4 Swaps were physically settled, Synthetic LIBOR would also freeze.  This meant that CIBC would continue to owe Cerberus Synthetic LIBOR payments—in an amount fixed at the freeze date—even after the liquidation of the Altius 4 Swaps.

After physical settlement of the Altius 4 Swaps, Cerberus sued to enforce the deal as written: where the Synthetic LIBOR payment was frozen as of the physical settlement of the swaps and not further reduced in accordance with future principal payments on the bonds.  CIBC maintained that the parties never intended the Synthetic LIBOR to freeze, and “[i]f Cerberus’ new interpretation is accepted by the Court, then the agreements at issue were entered into under mutual mistake as they do reflect the meeting of the minds of the parties.”

CIBC Claims Mistake, Asserts Privilege Over Communications Regarding its “Business Understanding” of the Deal

CIBC argues that its executives reached a business understanding of the deal, but that through a mistake of its attorneys—the drafters of the deal documents—the papered deal was materially different than its “business understanding.”  Specifically, CIBC contends that its business understanding of the deal was that the Synthetic LIBOR was tied to the principal payments on the Altius 4 Bonds, which—unlike the notional amount on the swaps—would not freeze upon physical settlement of the swaps.  CIBC’s in-house attorney, the drafter of the Synthetic LIBOR definition, testified that the reference to notional amount (presumably, insofar as it incorporated the “freeze” provision of the swaps) was a “mistake,” and the parties had in fact intended to define Synthetic LIBOR by reference to the principal on the bonds.

Cerberus sought to explore CIBC’s claimed “business understanding” in discovery.  What about their “business understanding” of the deal did CIBC’s executives convey to its attorney drafters?  Was this “business understanding” ever conveyed to the drafters?  Did the drafters ever explain the terms (and all the cross references) they used to define Synthetic LIBOR?  Did anyone ever discuss the impact of physical settlement of the swaps on Synthetic LIBOR?  To all these questions, Cerberus was met with a claim of attorney-client privilege.

Cerberus Moves to Compel

Cerberus argued that by placing its “understanding” of the contracts that it drafted at issue, CIBC waived privilege over the communications between its executives and attorneys.  In other words, CIBC should not be able to both (i) assert a different understanding than the plain meaning of the written agreements that it prepared and (ii) assert privilege over discussions related to that “understanding.”

CIBC argued that it had not waived privilege because it does not intend to rely on privileged material to prove its defense of mistake.  Rather, CIBC would prove mistake by, inter alia, the course of performance of the parties (Cerberus accepted reduced Synthetic LIBOR for years after physical settlement of the swaps before claiming that the reductions had frozen), testimony from Cerberus’ executives who spotted the mistake before the deal was finalized but chose to remain quiet, and rational economics (too much of a tangent for this blog, but CIBC let a call option lapse—a decision that, had Synthetic LIBOR been frozen, made no economic sense).  CIBC maintained that because it expressly disclaimed its own reliance on any privileged communications to support its claim of mistake, no waiver could be found.

In reply, Cerberus argued that CIBC’s definition of wavier was far too narrow.  Waiver applies not only to circumstances where a party directly implicates privileged communications in its claim or defense, but also where “truth of the parties’ position can only be assessed by examination of a privileged communication.”   Tupi Cambios, S.A. v. Morgenthau.  In plain English, Cerberus argued: how could it possibly dispute CIBC’s contention that its executives’ business understanding differed from the terms CIBC’s lawyers put forth without the communications between the executives and the lawyers?

So, after a Masters-level course in derivative finance (and the peril of defined terms and layered cross-references), the question submitted to Court was straightforward: Can a party asserting mistake as a defense to a breach of contract action avoid waiver of attorney-client privilege by disclaiming its intent to rely on privileged materials?

The Court’s Decision

Justice Scarpulla sided with CIBC: because CIBC did not intend to rely on any privileged communications to establish its defense of mistake, and because Cerberus could not point to any testimony where CIBC had made a limited waiver of such privileged material, the Court denied Cerberus’ motion to compel.  In so doing, the Court rejected Cerberus’ contention that it could not test the veracity of CIBC’s “business understanding” of the agreements without seeing how that business understanding was conveyed (or whether it was ever conveyed at all) to the drafters of the deal documents.  The Court reasoned that because CIBC had not opened the door to privileged communications in its own case, Cerberus could not access those communications.

Practical Considerations

The Securitized Asset Funding decision casts serious doubt on whether there are any circumstances where a Court will find “at issue” waiver even though the party asserting the privilege does not intend to directly rely on the privileged communications in its own claims or defenses.  The decision follows several courts that have suggested (or outright held) that a party’s affirmative reliance on the privileged materials in its own claims or defenses is the sine qua non of an “at issue” waiver.  See Pivotal Payments, Inc. v. Phillips; Deutsche Bank Tr. Co. of Americas v. Tri-Links Inv. Tr.

This line of cases gives parties asserting mistake in a contract an easy roadmap to prevent waiver: avoid affirmative reliance on privileged material—and, if met with a motion to compel, disclaim such affirmative reliance—and the privilege will remain intact.  According to Securitized Asset Funding, this roadmap works even if the party asserting the mistake drafted the documents containing the terms it now denounces.

But also consider the possibility that these cases too narrowly construe the “at issue” waiver.  After all, waiver is a flexible doctrine rooted in fairness.  And it is not difficult to imagine a compelling fairness argument supporting a broader application of the doctrine.  Here, for example, should Cerberus be required to take CIBC at its word regarding the existence of CIBC’s “business understanding,” when there are privileged documents that potentially rebut that claim?  In MBIA Ins. Corp. v. Patriarch Partners VIII, LLC, a similar argument carried the day.  That Court (applying New York Law) found implied waiver even where the party asserting the privilege did not intend to rely on privileged communications in its own case because the parties made factual assertions about their “understanding” of the agreement, which differed from the agreement drafted.

Cerberus plans to appeal the Court’s denial of its motion to compel, so we may soon see some additional guidance from the First Department.  In the meantime, however, litigants should be keenly sensitive to the likelihood that claiming mistake in a breach of contract action invites argument on the complex and inconsistently applied “at issue” waiver.

 

Winning at the blame game is difficult to do.  This holds especially true where the “blame game” is actually a claim for legal malpractice.

In a recent decision, the First Department affirmed Justice Sherwood’s Orders, which granted defendants’ motions to dismiss the complaint against them.  In Binn v. Muchnick, Golieb & Golieb, P.C., plaintiffs filed legal malpractice claims against multiple law firms and their attorneys, alleging that defendants provided plaintiffs with poor advice in connection with numerous business transactions by failing to inform plaintiffs of the necessary information relevant to each transaction and without performing due diligence.

After defendants moved to dismiss the complaint, the lower Court considered the parties’ numerous email communications as documentary evidence.  After reviewing the email communications leading up to the transactions at issue, the Court determined that not only were plaintiffs fully informed as to the nature of each transaction, their conversations actually refuted the factual allegations which formed plaintiffs’ causes of action for legal malpractice.  Furthermore, even if defendants improperly advised plaintiffs, the attorneys’ advice was not a proximate cause of the alleged harm where plaintiffs were unable to demonstrate their own likelihood of success absent the defendants’ advice.  Lastly, one of plaintiffs’ four malpractice claims was barred by NY’s statute of limitations.

The lower Court noted that “a plaintiff alleging legal malpractice must allege ‘that counsel failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession and that ‘but for’ the attorney’s negligence the plaintiff would have prevailed in the matter or would have avoided damages” (Ulico Cas. Co. v. Wilson, Elser, Moskowitz, Edelman & Dicker).  In that respect, a plaintiff’s allegations must show that damages attributable to the attorney’s conduct can be reasonably inferred.  However, even if an attorney improperly advised the plaintiff, if the client is, ultimately, unable to demonstrate its own likelihood of success absent the attorney’s advice, then the attorney’s advice is not the proximate cause of the harm.

Here, plaintiffs’ legal malpractice claims failed because their allegations that defendants failed to advise them as to parts of the transactions were refuted not only by the email communications between the parties but also by the expressly stated terms of the written agreements that plaintiffs executed.  Plaintiffs contentions that their attorneys advised them to execute signature pages separate from the body of the agreements also did not pass muster as the Court noted that ABC Rug & Carpet Cleaning Serv. Inc. v. ABC Rug Cleaners, Inc. plaintiffs were required to read and know what they signed.

Further, plaintiffs’ argument that they relied on their attorney’s advice when they voted in favor of an acquisition which, ultimately, led to the devaluation and dilution of their investment was meritless because plaintiffs could not demonstrate that but for their attorney’s allegedly deficient representation, there would have been a more favorable outcome.  Lastly, plaintiffs could not rely on tolling the statute of limitations based on the continuous representation doctrine where, even though defendants continued to provide plaintiffs with legal advice concerning their business, there was no mutual understanding on the need for further representation on the specific transactions underlying plaintiffs’ malpractice claims.  Thus, the three-year statute of limitations began to run when the malpractice was committed, not when plaintiffs discovered it.

Takeaway:  Counsel should be cognizant of the various nuances and possible repercussions of each transaction and ensure that their clients are properly advised with a record of such advisement, including email chains.  Clients, on the other hand, should be mindful to read and understand what they sign and not rely blindly on their attorney’s assurances.

 

 

 

 

 

 

Generally speaking, a court does not have the discretion to extend a statute of limitations.  A court can, however, consistent with its inherent equitable powers, preclude a defendant from asserting a statute of limitations defense where the defendant’s own intentional misconduct prevented the plaintiff from timely filing suit.  This equitable doctrine, known as equitable estoppel – or, “equitable tolling” – is consistent with the principle that a wrongdoer should not be able to benefit from his own wrong, and is often raised by a plaintiff in response to a statute of limitations defense.  But, as recently illustrated by the Suffolk County Commercial Division in Shoreham Hills, LLC v Sagaponack Dream House, LLC (2020 NY Slip Op 50326[U] [Sup Ct, Suffolk County Mar. 4, 2020]),  its application is rare, and “estopping” a defendant from asserting a statute of limitations defense where it is otherwise appropriate is no simple feat.

In Shoreham Hills, the plaintiffs, Shoreham Hills, LLC (“Shoreham”) and Clinton Heights I, LLC (“Clinton”) (together, “Plaintiffs”), and the defendants, MP Sagaponack, LLC (“MP”) and DH Sagaponack, LLC (“DH”), formed the defendant Sagaponack Dream House, LLC (“SDH”) (collectively, “Defendants”) to purchase and develop 30 parcels of land located in Sagaponack, New York.  The parties’ membership interests were 40% each to MP and DH and 20% collectively to Shoreham and Clinton.  SDH’s operating agreement, which designated MP as the administrative member, required MP to make cash distributions to the members within 30 business days following the sale, disposition or refinance of any of the 30 parcels.

In 2008, SDH sold one of the parcels for $3.55 million and distributed $2 million from the proceeds of the sale to its members in proportion to each member’s percentage stake.  In July 2019, however, Plaintiffs commenced an action against Defendants, claiming that they never received their 20% distribution from the proceeds of the sale, and that they had no knowledge of the distribution until 2018, nearly ten years later.  Defendants moved to dismiss the complaint as, among other things, time-barred.  In response, Plaintiffs argued that the doctrine of equitable estoppel applied to toll the statute of limitations because Defendants allegedly concealed the 2008 distribution from them.

The Suffolk County Commercial Division (Emerson, J.) rejected Plaintiffs’ equitable estoppel argument and concluded that the claims were time-barred.   As the Court explained,

“To benefit from the equitable tolling doctrine under New York law, a plaintiff must establish that subsequent and specific actions were taken by the defendant, separate from those that provide the factual basis for the underlying cause of action, and that those subsequent actions by the defendant somehow kept the plaintiff from timely bringing suit . . . Moreover, when the alleged concealment consists of nothing but the defendant’s failure to disclose the wrong committed, New York courts have held that the defendant is not estopped from pleading the statute of limitations as a defense.”

In other words, equitable tolling is only triggered by some affirmative conduct on the part of the defendant after the initial wrongdoing – the mere failure to disclose the wrongdoing is insufficient.  The Plaintiffs in Shoreham Hills alleged that Defendants knew in 2008 that a distribution had not been made to Plaintiffs, failed to correct the problem, and failed to notify Plaintiffs that the distribution had not been made.  In the Court’s view, these allegations “amount[ed] to nothing more than a failure by the defendants to disclose their wrongdoing,” and did not allege any subsequent and specific conduct on the part of Defendants that prevented Plaintiffs from timely commencing their action.

The importance of the “subsequent and specific” requirement was emphasized by the Court of Appeals in Zumpano v Quinn (6 NY3d 666 [2006]).  In Zumpano, multiple plaintiffs sued several priests, a Monsignor and both the Bishop and the Roman Catholic Diocese of Brooklyn, alleging sexual abuse by the priests while they were children.  Although all of the claims were initiated after the statute of limitations had expired, the plaintiffs argued that the defendants should be equitably estopped from asserting a statute of limitations defense, since the defendants knew about the ongoing abuse and failed to notify or warn plaintiffs about it.

The Court of Appeals rejected this argument, finding that there was no subsequent and specific conduct on the part of the defendants that prevented plaintiffs from timely initiating suit.  Indeed, the plaintiffs knew that they had been abused, the identity of their abusers, and that the abusers were employed by the Diocese.  According to the Court, “[s]ubsequent conduct by the dioceses did not appear in any way to alter plaintiffs’ early awareness of the essential facts and circumstances underlying their causes of action or their ability to timely bring their claims.”  And so, because the plaintiffs could not demonstrate that the defendants’ actions contributed to the delay in bringing their claims, their claims were time-barred.

The Court of Appeals reached a different conclusion in Simcuski v Saeli (44 NY2d 442 [1978]) and General Stencils, Inc. v Chiappa (18 NY2d 125 [1966]), two of New York’s leading cases on equitable estoppel.  In Simcuski, the plaintiff alleged that the defendant negligently severed one of her nerves during an operation, and subsequently concealed his malpractice by falsely assuring the plaintiff that her postoperative pain would disappear if she continued her prescribed regimen of physical therapy.  In response to the defendant’s motion to dismiss based on the statute of limitations, the Court of Appeals applied the doctrine of equitable estoppel, reasoning that the defendant “intentionally concealed the alleged malpractice from plaintiff and falsely assured her of effective treatment, as a result of which plaintiff did not discover the injury” until after the statute of limitations had expired.

Similarly, in General Stencils, Inc., the defendant was plaintiff’s head bookkeeper who stole from her employer and concealed her theft for several years by misrepresenting the state of plaintiff’s finances.  The Court of Appeals held that the defendant was equitably estopped from asserting a statute of limitations defense as a result of her affirmative conduct in concealing the crime, which prevented plaintiff from timely bringing its action.

There are two common factors in Simcuski and General Stencils.  First, in each case, the defendant had control and superior (if not exclusive) knowledge of the facts necessary for the plaintiff to assert a claim.  Second, the defendant, by subsequent, affirmative actions or misrepresentations, concealed these essential facts from the plaintiff.  In Simcuski, the defendant’s false assurances regarding curative treatment precluded the plaintiff from earlier discovery of the defendant’s malpractice and, consequently, produced the delay in filing suit.  Similarly, in General Stencils, the defendant bookkeeper’s subsequent manipulation of the books concealed her conversion, thereby preventing the plaintiff from timely commencing an action.

Takeaway:

Equitable estoppel, or “equitable tolling,” may be raised by a plaintiff in opposition to a statute of limitations defense.  But,  for equitable estoppel to apply, there must be some conduct on the part of defendant after the initial wrongdoing:  mere silence or the failure to disclose the wrongdoing is insufficient.  The plaintiff has the burden of showing that subsequent and specific action by the defendant somehow prevented the commencement of the action in a timely manner.

As a result of the COVID-19 (Coronavirus) pandemic, court systems throughout the United States have had to rapidly adapt and issue temporary rules and procedures in order to keep court personnel, litigants and attorneys safe while continuing to serve their important societal function of administration of justice.

We wanted to provide a resource to readily access the various and ever-changing temporary rules and procedures of New York State’s Appellate and Commercial Divisions of the Supreme Court.  We will continue to monitor and post updates and other useful information at a time when policies are changing on a seemingly minute-by-minute basis.

New York State Executive Action

In keeping with Chief Administrative Judge of the Courts, Hon. Lawrence K. Marks, Memorandum of March 15, 2020, which postponed all non-essential court functions effective at 5:00 p.m. on March 16, 2020, Governor Andrew Cuomo signed Executive Order No. 202.8 on March 20, 2020 which, among other things, tolled until April 19, 2020 “any specific time limit for the commencement, filing, or service of any legal action, notice, motion, or other process or proceeding, as prescribed by the procedural laws of the state, including but not limited to . . . the civil practice law and rules, . . . and the uniform court acts, or by any other statute, local law, ordinance, order, rule, or regulation, or part thereof.” For other Executive Orders related to the Coronavirus, click here. Correspondingly, Judge Marks issued Administrative Order 78/20 on March 22, 2020, directing an immediate prohibition to filing any papers in any matter with any county clerk’s office until further notice. This directive applies to both hard copy and electronic filings. However, certain matters deemed essential are permitted and contained on the list annexed as Exhibit A to Administrative Order 78/20.

Additional pertinent Executive actions taken include allowing NY notaries to perform notarial services using video conferencing technology provided certain conditions are met, such as the person seeking the service must transmit a valid photo ID during the video conference, be on the video conference at the time of signing and affirmatively present themselves as being physically situated in NY. See Executive Order No. 202.7.

New York Court System Generally

On March 19, 2020, Judge Marks issued Administrative Order No. 71/20 strongly discouraging litigants engaged in pending civil matters from prosecuting such matters in a manner that would require appearing in-person or travel during this health crisis. See AO 71/20 (1). Additionally, this Order directs litigants (parties and attorneys) affected by COVID-19 to use best efforts to enter agreements to adjourn discovery-related matters for a period not exceeding ninety (90) days. See AO 71/20 (2). If litigants cannot reach an agreement, the court has the ability to review the matter and issue the appropriate order once court returns to normal operation. See id.

In keeping with Judge Marks’ Memorandum and Administrative Orders, most, if not all, courts of New York State implemented temporary policies and procedures (highlighted below) to handle essential court functions virtually.

Now in an effort to ease restrictions placed on non-essential court functions, on April 7, 2020, Judge Marks circulated a new Memorandum offering the Courts preliminary steps to transition non-essential court functions to a remote/virtual court system on an ongoing basis beginning on April 13, 2020, including Judges being available to conduct conferences to aid counsel with discovery disputes via Skype or telephone. Judge Marks then issued Administrative Order dated April 8, 2020 (AO/85/20) providing additional procedures and protocols concerning specific matters trial courts will address such as conferencing pending cases, deciding fully submitted motions, discovery, and video technology. Nevertheless, litigants are still unable to file new non-essential matters until further notice.

Appellate Division

Generally, on March 17, 2020, all the Appellate Divisions of New York’s four (4) Judicial Departments issued emergency Orders. While similar in substance, each Judicial Department’s temporary rules and procedures vary slightly. We urge you to review the particular rules and procedures pertinent to your matter.

First Department

On March 17, 2020, the First Department issued an Order temporarily suspending deadlines, with the exception of matters perfected for May 2020 and June 2020 terms, the Court suspended indefinitely deadlines for all perfection, filing and other deadlines set forth by court order, Parts 1240 and 1250 of the Rules of the Appellate Division, Parts 600 and 603 of the Rules of the Appellate Division First Department, or Part 1245 of the Electronic Filing Rules of the Appellate Division. Additionally, and again, with the exception of all matters perfected for the May 2020 and June 2020 term, the March 17th Order granted all motions or applications for extensions of time to perfect or file that were pending as of March 17, 2020. See Order. Contemporaneous to the March 17th Order, the First Department also issued emergency procedures. See Covid-19 Emergency Procedures as of March 17, 2020.

Second Department

Unlike the First Department’s March 17th Order, the Second Department’s March 17th Order did not place a limitation on when suspensions or extensions would commence and indefinitely suspended deadlines, granted pending motions or applications for extension of time until further order of the Court. All dates for perfecting, filing, motions or applications for extensions, and all other motions were suspended until further directive of the Court.

The Second Department also issued additional Notices regarding:

(i) Limitation of Court Operations – Presently, the Court is processing its calendars through April 2, 2020. But for appeals between March 17, 2020 and April 2, 2020, such appeals will be on submission only unless a request to hear such appeal via Skype is made to Court via email at ad2clerk@nycourts.gov. Also, for emergency applications and motions presently pending considered to be an emergency, you should contact the Court via email to ad2clerk@nycourts.gov indicating that the matter is urgent.

(ii) Hard copy filings at the Court’s Clerk’s Office – Hard copy filings are NOT permitted and e-filing is mandatory until further notice.

(iii) Oral arguments before the Court – Beginning on March 17, 2020, all matters are on submission but the Court will permit oral argument via Skype on request to the Court at ad2clerk@nycourts.gov to make arrangements.

Click here for all other Second Department Notices related to Covid-19.

Third Department

Similar to the Second Department, the Third Department’s March 17, 2020 Order indefinitely suspended deadlines, granted pending motions or applications for extension of time. However, the Third Department’s extension did not apply where a statute confers a deadline.

Beginning on March 17, 2020, the Third Department began only entertaining emergency matters. However, if you deem a matter an emergency, the Court requests that you notify it in writing, on notice to your adversaries, as a request that “the Court treat your matter as urgent” to ad3clerksoffice@nycourts.gov with the subject indicating that the matter is urgent. Also, calendared matters for the March term will be heard on submission and matters for the April term are adjourned to a date in a later term. See Third Department’s Covid-19 Emergency Procedures as of March 17, 2020. Click here for additional Third Department Covid-19 related updates.

Fourth Department

The Fourth Department’s March 17, 2020 Order substantially mirrors the Order issued by the Third Department. The Fourth Department also intends to only entertain matters on an emergency basis with staffing significantly reduced. Matters calendared for the March and April terms are being considered on submission only and matters scheduled for the May term are adjourned to be re-calendared for a later term. Requests for emergency relief should be made by email to ad4-clerk@nycourts.gov. For additional information, contact the Fourth Department Clerk’s office at (585) 530-3100.

Commercial Division

Presently, all of the Justices of the Commercial Division, New York County have issued temporary rules or procedures, including procedures for requesting remote conferences in keeping AO/85/20.

Given the rapid changes, we plan to maintain regular updates to this blog for the foreseeable future. For this reason, each Commercial Division of the New York Supreme Court is listed below. Please check back regularly for updates.

7th Judicial District – Cayuga, Livingston, Monroe, Ontario, Seneca, Steuben, Wayne, and Yates Counties

For essential and emergency court matters, contact court staff directly. Click here for a list of contact numbers and links to additional important information about the 7th Judicial District.

o Hon. J. Scott Odorisi

8th Judicial District – Erie County

o Hon. Deborah Chimes
o Hon. Emilio Colaiacovo
o Hon. Henry J. Nowak
o Hon. Timothy J. Walker

Albany County

o Hon. Richard Platkin

Kings County

o Hon. Lawrence Knipel
o Hon. Larry D. Martin
o Hon. Leon Ruchelsman

Nassau County

Supreme Court, Nassau County has implemented virtual chambers protocols and provided a list of virtual chambers contacts and conference request forms. For additional important information concerning Nassau County Courts operations during COVID-19, click here.

o Hon. Stephen A. Bucaria
o Hon. Vito M. DeStefano
o Hon. Timothy S. Driscoll
o Hon. Jerome Murphy

New York County

o Hon. Andrew Borrok – Requests for conferences in Part 53 may be made via email to sfc-part53@nycourts.gov.

o Hon. Joel M. Cohen – Requests for conferences in Part 3 may be made via email to sfc-part3@nycourts.gov.

o Hon. Marcy Friedman
o Hon. Andrea Masley

o Hon. Barry Ostranger – Requests for conferences in part 61 – sfc-part61@nycourts.gov.

o Hon. Saliann Scarpulla – Requests for conferences in Part 39 may be made via email to part-39@nycourts.gov.

o Hon. Jennifer G. Schecter
o Hon. O. Peter Sherwood

In addition, a party wishing to request a remote conference in all New York County Supreme Court Civil Parts can complete the request form found annexed to the below link and email the completed form to sfcconferencerequest@nycourts.gov. The completed form will be forwarded to the assigned judge. See https://www.nycourts.gov/legacypdfs/courts/1jd/supctmanh/PDF/Remote-Conference-Protocol.pdf for more information.

Onondaga County

o Hon. Deborah H. Karalunas
o Hon. Anthony J. Paris
o Hon. Donald A. Greenwood

Queens County

o Hon. Marguerite A. Grays
o Hon. Leonard Livote
o Hon. Joseph Risi

Suffolk County

o Hon. Jerry Garguilo
o Hon. Elizabeth H. Emerson
o Hon. James Hudson

Westchester County

o Hon. Linda S. Jamieson
o Hon. Gretchen Walsh

For general Coronavirus updates from the New York State Courts, visit https://www.nycourts.gov/ or call the Court’s Coronavirus Hotline at (833) 503-0447.

A life lesson you likely heard growing up applies to contracts: take a hard look at yourself before criticizing others. By the same token, a party who is in material breach of a contract cannot succeed on a claim alleging an anticipatory breach by the other party.

In Rapson Invs. LLC v 45 E. 22nd St. Prop. LLC, Plaintiffs – as Purchasers – entered into multiple Purchase Agreements with the Sponsor – the owner of the property and developer of the Condominium – for the purchase of certain condominium units at a property in New York City. However, Purchasers could not timely close on the sale even by exercising all their adjournment rights. Purchasers notified Sponsor of the fact that they were not prepared to pay the purchase price for the units by email, dated July 25, 2017. Although the Sponsor had the right to terminate the Purchase Agreements, the Sponsor nevertheless agreed to give the Purchasers additional time to close on the condition that they 1) waive all rights to the escrowed down payments, and 2) pay the carrying charges of the units until closing. Although Purchasers agreed, they failed to pay the carrying charges of the units. Notably, the Purchase Agreements contained a 30 day cure period in the event of default.

In response, on September 7, 2017, the Sponsor issued a Notice of Default. However, shortly before the 30 day period to cure had run, Sponsor issued a Notice of Termination. Purchasers then sent the Sponsor a letter advising that the termination was defective because the 30 day cure period had not run. Although the Sponsor did not rescind its termination notice, on October 7, 2017, after the 30 day cure period had run, Sponsor issued a second Notice of Termination.

Purchasers then filed an Amended Complaint alleging that the Sponsor anticipatorily breached the Purchase Agreement by sending the notice of default before the expiration of the 30 day cure period and failing to rescind the first termination notice. Purchasers alleged that they were relieved of all their obligations under the Purchase Agreements and were entitled to a return of the down payments. The Sponsor subsequently moved for summary judgment to dismiss the amended complaint.

In his Decision and Order, Justice Andrew S. Borrok held that Petitioner’s July 25th email advising the Sponsor that they are not prepared to timely close, constituted an anticipatory breach of contract.   The Purchasers were thus in default of the Purchase Agreements. The Commercial Division further noted that Purchasers never escrowed the carrying fees as they were required to do or, otherwise, indicated that they were ready, willing, and able to close before the 30 day cure period had run. Justice Borrok noted that the doctrine of anticipatory repudiation is intended to be a “shield, not a sword,” and that the Purchasers “cannot take advantage of this equitable doctrine to escape the fact that they were not ready to close” once the 30 day cure period had fun.

The First Department affirmed Justice Borrok’s Decision and Order, entered on March 11, 2019, granting the Sponsor’s motion for summary judgment dismissing Purchasers’ complaint and denying the Purchasers’ cross-motion for summary judgment.  The First Department held that

“Given that plaintiffs do not deny that they were in breach of their respective purchase agreements and the amendments thereto when defendant sent out premature notices of termination, plaintiffs’ cause of action for anticipatory breach must fail. By definition, an anticipatory breach cannot be committed where, as here, one party is already in material breach of the contract”

The First Department has held that “anticipatory breach cannot be committed by a party already in material breach of an executory contract” (Kaplan v Madison Park Group Owners, LLC).  In that regard, an anticipatory breach of a contract is one that occurs before performance by the breaching party is due (see id.)  Courts have held that the rationale behind the doctrine is it permits the nonrepudiating party an opportunity to “treat a repudiation as an anticipatory breach without having to futilely tender performance or wait for the other party’s time for performance to arrive” (see id.).  

In sum, when the non-repudiating party is confronted with an anticipatory repudiation, the non-repudiating party has two options. “He may (a) elect to treat the repudiation as an anticipatory breach and seek damages for breach of contract, thereby terminating the contractual relation between the parties, or (b) he may continue to treat the contract as valid and await the designated time for performance before bringing suit” (Lucente v Intl. Bus. Machines Corp.). 

Notably, you need to carefully evaluate your own actions if you are relying on anticipatory repudiation in filing suit. You will not be able to bring suit for anticipatory breach if you are already in breach of the contract.