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
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
A confession of judgment has often been viewed as an important tool in settling a litigation or finalizing a transaction. In 2019, the New York State Legislature made some significant amendments to the Confession of Judgment law (CPLR § 3218), particularly eliminating the ability of creditors to file confessions of judgment against non-New York residents. As a result, the amended CPLR § 3218 provides that the confession must state the county in which “the defendant resided when it was executed,” and that the confession may only be filed in that county or, if the defendant moved to a different county within New York after signing the confession, “where the defendant resided at the time of filing.” In a recent decision, Kings County Commercial Division Justice Leon Ruchelsman addressed the damaging consequences of altering a confession of judgment to meet the “residency” requirements of CPLR § 3218.
Background
In Porges v Kleinman, plaintiff commenced an action stemming from a real estate investment opportunity in New Jersey. Specifically, plaintiff alleged that defendant pressured plaintiff to obtain a high cost loan to finance the purchase of the property while not allowing plaintiff to conduct any due diligence. Following the closing, plaintiff alleged that defendant pressured him into signing a promissory note and confession of judgment for $675,000.00. Approximately a year after the closing, defendant commenced a separate action, which was later consolidated with the present action, to enforce the confession of judgment due to plaintiff’s alleged failure to make any payments towards the promissory note.
During the course of the litigation, plaintiff brought a motion to vacate the confession of judgment, arguing that the confession of judgment (i) did not specify the county in which plaintiff resided; and (ii) was altered by striking out “County of New York” and writing in “County of Kings” in the caption. In opposition, defendant argued that the alteration of the caption was made at the express instruction of the Kings County Clerk’s office to allow for the confession of judgment to be filed in the appropriate venue.Continue Reading Altering a Confession of Judgment? Think Again!
A recent decision from Justice Fidel Gomez of the Bronx County Commercial Division, 1125 Morris Ave. Realty LLC v Title Issues Agency LLC, reminds us to closely review the language of general releases as New York courts continue to enforce such releases however broad in scope absent any fraud or wrongful conduct. Failure to do so may not only result in the waiver of certain future claims but also the imposition of sanctions.
Background
Plaintiff 1125 Morris Ave. Realty LLC (“Plaintiff”) obtained a mortgage loan (“2014 Mortgage”) on a property located at 1125 Morris Avenue, Bronx, New York (the “Property”). Defendants Kofman and Lowenthal represented the lender in the transaction. Kofman and Lowenthal transferred the loan proceeds to Defendant Title Company (the “Title Company”) to hold such proceeds in escrow until certain taxes and water/sewer charges for the Property had been settled with the City. Plaintiff thereafter obtained additional mortgages in order to pay off the 2014 Mortgage.
Following the payoff and satisfaction of the 2014 Mortgage, in July 2016 Plaintiff executed a broad general release discharging Defendants Kofman and Lowenthal as well as the Title Company (collectively the “Defendants”) from all “claims and demands whatsoever from the beginning of the world to the day of the date of this RELEASE.”
Plaintiff commenced an action against Defendants alleging, among other things, that Defendants committed fraud by failing to pay Plaintiff’s outstanding tax, water, and sewer charges for the Property, despite assuring Plaintiff that the loan proceeds would be used to satisfy the liens on the Property. Plaintiff further alleged that the Title Company only partially paid out the liens, and that only a portion of the loan proceeds were returned to Plaintiff.Continue Reading No Deceit, No Defeat: Commercial Division Enforces Broad General Release
When representing an aggrieved plaintiff in a commercial matter, there are certain business torts that I tend to rely on more heavily than others. If business torts were foods, for example, a claim like breach of contract would be an entrée, while tortious interference with prospective business relations would be more of a side dish. Those types of tort-lite claims are difficult to plead (and even more difficult to prove) because they require a showing of causation and culpability, the lack of which is fatal if not appropriately pleaded as Justice Robert R. Reed reminds us in Braddock v Shwarts and Vertical Group, Supreme Court, New York County (Index No. 158142/2018).Continue Reading Where’s the Beef? Causation and Culpability Are Fatal Pitfalls in Zaycon Foods Lawsuit
The COVID-19 pandemic has unsurprisingly resulted in many people in the business community, including lawyers, transacting business remotely. With that uptick comes more contracts utilizing electronic signatures and remote depositions and notarizations. Not only is the use of an e-signature generally more convenient for the parties involved in a transaction, but an e-sig provides many more layers of security and protection from claims of forgery than a wet-signature because the process requires the user to confirm her identity to bind her signature to that identity through a digital certificate.
So what happens when there’s a contractual dispute, and one of the parties is seeking to enforce a contract while the counterparty is claiming that its electronic signature has been forged? On October 26, 2023, Justice Daniel J. Doyle of the Monroe County Commercial Division dealt with just that in AJ Equity Group LLC v Office Connection, Inc., in which he held that the defendant’s mere denial that she e-signed an agreement was not sufficient to dismiss a breach of contract claim, but also that the plaintiff was not entitled to summary judgment on its breach claim for failure to explain the relevance and significance of the signature certificate showing that the electronic signature was valid.Continue Reading The Evidence Behind E-SIGS
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
The burden of establishing personal jurisdiction over a defendant rests with the plaintiff. Service of process is a necessary component of jurisdiction, and it is not complete until proof of service is filed. Ordinarily, defective service of process is not a jurisdictional defect and does not warrant dismissal. But when it comes to “affix and mail” service under CPLR § 308(4), the statutory requirement of “due diligence” must be strictly observed, otherwise dismissal may result. A recent decision from Manhattan Commercial Division Justice Robert Reed in Arena Special Opportunities Fund, LLC v McDermott discusses just how much diligence is required.Continue Reading If the Service Was Poor, You’ll Have to Do More – How Much Diligence Is Due for Affix and Mail Service?
The attorney-client privilege is an old and well-known evidentiary privilege. It fosters candor between attorney and client, protects confidential information from being revealed to others, and ensures that the attorney can render accurate and competent legal advice. On occasion, the privilege extends to third parties. For instance, the “common interest doctrine” may protect communications between business entities with common interests in a lawsuit. A recent decision from Manhattan Commercial Division Justice Robert R. Reed, West 87 LP v. Paul Hastings LLP, exemplifies how instrumental the doctrine can be in commercial practice.Continue Reading Keep it Secret, Keep it Safe: Commercial Division Protects Corporate Client Communications Under the Common-Interest Doctrine
The old game of “hide-and-seek” brings many of us back to our childhood as one of our favorite ways to pass time during the summer. As commercial practitioners know, the concept of serving a summons and complaint in a case can be similar to playing an adult version of “hide-and-seek.” However, the days in which service of a summons and complaint can only be accomplished by physical delivery to a defendant seem outdated in our ever-growing technology reliant society. A recent decision from Manhattan Commercial Division Justice Robert R. Reed confirms as much, finding that service of process by email will suffice when dealing with an elusive litigant.Continue Reading Ready or Not, Here I Come: The Expansion of Substitute Service by Email