On February 14, 2024, Chief Administrative Judge Joseph Zayas signed an Administrative Order amending Section 202.70(b)(1) of the Uniform Rules for the Supreme and County Courts (Rules of the Commercial Division of the Supreme Court), and adding a new Rule 9-b to Section 202.70(g). But rather than vest the Commercial Division with new powers
Whether in employment agreements or business transactions, drafters often include certain clauses within these documents to protect their client if litigation arises (e.g., arbitration clauses, forum- selection clauses). However, when not clearly drafted, these clauses can lead to a battle over where the case may proceed. Recently, Manhattan Commercial Division Justice Joel M. Cohen handed
On April 2, 2024, the New York State Bar Association’s (“NYSBA”) Task Force on Artificial Intelligence released a report concerning the use of artificial intelligence (“AI”) in the legal profession (“Report”). New York joins select states, such as Florida and California, whose bar associations have published recommendations on the use of AI. The nearly 90-page Report examined the (1) evolution of AI and generative AI; (2) benefits and risks of AI and generative AI use; (3) impact of the technology on the legal profession; (4) legislative overview and recommendations; and (5) proposed guidelines. To date, the Report is the most comprehensive document provided by a state bar association regarding AI use.
Continue Reading AI Etiquette: A User’s Manual Provided by the NYSBAAs one can easily glean, we here at the New York Commercial Division Practice Blog view New York’s Commercial Division as the heartbeat of business litigation in the United States. So, we think getting your business litigation in front of the Commercial Division is a big deal. But what happens when you have a case that meets the requirements for the Commercial Division, and you are not assigned to that Part?
Generally, there are two ways to be assigned to the Commercial Division under § 202.70[d] of the New York Code of Rules and Regulation (the “Rules”). The first is for any party to file an RJI with the accompanying Commercial Division Addendum 90 days following service of the complaint. The second is by consent of the parties via a forum – selection clause in the parties’ contract.
But what if a party files an RJI before the 90-day period runs without requesting assignment or submitting a Commercial Division Addendum? The answer lies in § 202.70[e] of the Rules, which permits a party to apply via letter to the Administrative Judge within 10 days of the RJI for transfer to the Commercial Division.
But what if the request is made outside the time limits in § 202.70[d] and [e] of the Rules? Again, § 202.70[e] of the Rules permits a letter application to the Administrative Judge showing “good cause” for the delay.
While the timing provisions are relatively simple to work though, the “good cause” standard under CPLR 2004, which requires reasoning for the delay, is a bit more subjective, as a finding of good cause is within the discretion of the Administrative Judge. It is imperative, therefore, to point the Administrative Judge to applications with analogous issues or facts to support your cause. As for where to find those decisions, never fear, the Commercial Division itself provides some help in this regard.
On the New York Courts webpage, the Commercial Division has a page titled Administrative Judge on Transfer Applications. That page provides a list of all the Administrative Judge’s decisions on transfer applications from prior to the effective date of the Commercial Division Rules on January 17, 2006, to the present.
For example, what if a timely request for Commercial Division assignment was not filed, but you have a related case pending before a Commercial Division Judge? The Administrative Order in ABG HMX LLC v. Alba Longa Concepts LLC provides precedent for the Administrative Judge granting a transfer for “good cause”, in this context. And what if a request for Commercial Division assignment is rejected by the clerk’s office but was only a few days late? Curtis v. Merrill Lynch, et al provides precedent for the Administrative Judge granting a transfer if the request was “untimely albeit only by a matter of days.” But waiting years before filing a transfer application is not wise. In ABL Advisor LLC, et al. v. Ian S. Peck, et al, the Administrative Judge denied a transfer application made two years into the litigation, finding that the “rules are designed to ensure that appropriate cases are assigned to the Commercial Division at the inception of the case, not two years into the litigation.” Finally, what if you have a complex commercial case but one of the issues is arguably excluded from review by the Commercial Division? In City of New York v. FC 42nd Street Associates, L.P., the Administrative Judge granted transfer of a generally excluded real property case that dealt with the determination of fair market value in relation to rental income, agreeing that while the case “is not an action for the payment of rent only, … the complaint raises complex questions of commercial and arbitration law and belongs in the Commercial Division.” And there are many more helpful examples for litigators on the Commercial Division’s “Transfer Application” page.
In short, the next time you find yourself in a position where leave to the Administrative Judge is required for assignment to the Commercial Division, remember the Commercial Division and its readily available resources has you covered.
Continue Reading Help, I Need to Get My Case into the Commercial Division!! Transfer and Determinations by the Administrative Judge
As one might gather from the title of this blog, we here at New York Commercial Division Practice try to make a more-than-occasional point of extolling the virtues of the Commercial Division. From its well-established reputation as a sophisticated, cost-effective, predictable, and expeditious forum to its related ability to attract businesses nationwide to litigate their disputes in New York State, when it comes to litigating commercial cases in New York, the Commercial Division is the place to be.
Every year around this time, New York’s Chief Administrative Judge publishes an annual report, which “collect[s], compile[s] and publish[es] statistics and other data with respect to the unified court system and submit[s] annually, on or before the fifteenth day of March, to the legislature and governor a report of activities and the state of the unified court system during the preceding year.” The New York State Unified Court System’s 2023 Annual Report, which was just published last week, devoted a section to the Commercial Division under the heading “A Commitment to Society,” in which the Chief Administrator praised the work of the Commercial Division Advisory Council, which, under the leadership of Robert L. Haig, Esq., has helped develop the Commerical Division into becoming “a recognized leader in court system innovation, … demonstrating an unparalleled creativity and flexibility in [the] development of rules and practices.”
Continue Reading The Chief Administrative Judge’s 2023 Annual Report, the State of the Commercial Division, and Other ComDiv Goings-On[t]he statement of any person wherever made, subscribed and affirmed by that person to be true under the penalties of perjury, may be used in an action in New York in lieu of and with the same force and effect as
Commercial litigants often seek the provisional and equitable remedy of a preliminary injunction under Article 63 of the CPLR to protect the client’s rights that are difficult to monetize and quantify. The relief sought typically involves a party restraining from certain conduct and maintaining the status quo where it “appears that the defendant threatens or
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!