Articles Posted in New York Court of Appeals

by
Plaintiff appealed from an order of the Appellate Division affirming Supreme Court’s dismissal of Plaintiff’s complaint for failure to state a cause of action for fraudulent inducement against Chipotle Mexican Grill and its chief executive officer. As grounds for its decision, the Appellate Division concluded that Plaintiff’s damages were speculative and the facts alleged did not support an inference of calculable damages. The dissent concluded that the case should proceed to discovery to allow Plaintiff to accumulate evidence of a pecuniary loss because the pleading must be construed liberally and damages need not be proven during the pleading stage. The Court of Appeals affirmed, holding that Plaintiff failed to plead a cause of action for fraudulent inducement because he did not allege any out-of-pocket loss and otherwise plead a recoverable harm. View "Connaughton v Chipotle Mexican Grill, Inc." on Justia Law

by
Jose and Ada Marin obtained an $8 million settlement for injuries Jose suffered when he fell forty feet while working on a building in Manhattan. At issue in this appeal was a fee dispute between Plaintiffs’ attorney-of-record in that action, Sheryl Menkes, and two attorneys she engaged to assist her, Jeffrey Manheimer and David Golomb. Supreme Court held that the fee-sharing agreements unambiguously entitled Manheimer to twenty percent of net attorneys’ fees and Golomb to forty percent of net attorneys’ fees. The Appellate Division affirmed. Menkes appealed. The Court of Appeals modified the order of the Appellate Division, holding that, based on the plain language of the parties’ respective fee-sharing agreements, Manheimer was entitled to twenty percent of net attorneys’ fees and Golomb was entitled to twelve percent of net attorneys’ fees. View "Marin v. Constitution Realty, LLC" on Justia Law

by
Plaintiffs were affiliated commercial entities that sought to enforce the auction sale of a syndicated loan against Bank. When Bank accepted Plaintiffs’ bid and then refused to transfer the loan, Plaintiffs brought this action alleging breach of contract and breach of the implied covenant of good faith and fair dealing. In response, Defendant argued that it had no obligation to transfer the loan because the parties never executed a written sales agreement and Plaintiffs failed to submit a timely cash deposit. Supreme Court granted Plaintiffs’ motion for summary judgment on the breach of contract cause of action. The Appellate Division reversed. The Court of Appeals reversed, holding that Plaintiffs established their entitlement to summary judgment because the prerequisites of executing a written sales agreement and submitting a timely cash deposit were not conditions precedent to formation of the parties’ contract and did not render their agreement unenforceable. View "Stonehill Capital Mgt., LLC v. Bank of the West" on Justia Law

by
The underlying federal action involved a dispute between General Motors LLC (GM), a franchisor and Chevrolet car manufacturer, and Beck Chevrolet Co., Inc., an automobile dealership with a Chevrolet franchise. Beck sued GM alleging violations of the Dealer Act. The district court ruled against Beck on its claims. On appeal, the United States Court of Appeals for the Second Circuit determined that resolution depended on unsettled New York law and certified two questions requiring the Court of Appeals’ interpretation of two provisions of New York’s Franchised Motor Vehicle Dealer Act. The Court of Appeals answered as follows: (1) the use of a franchisor sales performance standard that relies on statewide data and some local variances but fails to account for local brand popularity to determine compliance with a franchise agreement is unlawful under the Dealer Act; and (2) a franchisor’s unilateral change of a dealer’s geographic sales area does not constitute a prohibited modification to the franchise. View "Beck Chevrolet Co., Inc. v. General Motors LLC" on Justia Law

by
Plaintiffs (collectively, “Pegasus”) sued one defendant (“VarigLog”) for breach of contract and conversion and sought to hold other defendants (“MP defendants”) liable for VarigLog’s conduct on an alter ego theory. Pegasus served a notice to produce documents seeking electronically stores information (ESI) concerning Pegasus’s claims and VarigLog’s relationship with the MP defendants. VarigLog’s production was unsatisfactory to Pegasus. Supreme Court appointed a discovery referee to assist Pegasus and VarigLog in resolving the dispute. During the conferences it was established that computer crashes resulted in the loss of much of the ESI, and that data recovery efforts had proven unsuccessful. Pegasus moved for the imposition of spoliation sanctions against VarigLog and the MP defendants. Supreme Court granted the motion, concluding that the evidence was negligently destroyed. The Appellate Division reversed. The Court of Appeals reversed, holding that the Appellate Division erred in determining that Pegasus had not attempted to make a showing that the destroyed documents were relevant to its claim. Remanded to the trial court for a determination as to whether the evidence was relevant to the claims asserted against Defendants and for the imposition of an appropriate sanction should the trial court decide that a sanction is warranted. View "Pegasus Aviation I, Inc. v Varig Logistica S.A." on Justia Law

by
In IRB-Brasil Resseguros, S.A. v. Inepar Invs., S.A., the Court of Appeals held that, where parties include a New York choice-of-law clause in a contract, such a provision demonstrates the parties’ intent that courts not conduct a conflict-of-laws analysis. In the instant case, Plaintiff was a New York not-for-profit corporation that administered a retirement plan and a death benefit plan. Decedent was enrolled in both plans. Decedent named Appellants as beneficiaries. Both plans stated that they shall be governed by and construed in accordance with New York law. After Decedent died, a Colorado court admitted his will to probate. Plaintiff was unsure to whom the plan benefits should be paid after Decedent’s death and commenced a federal interpleader action against Decedent’s Estate, the personal representative (PR) of the Estate, and Appellants. A federal district court directed Plaintiff to pay the disputed funds to the PR, concluding that Colorado’s revocation law terminated any claims to the plans by Appellants. On appeal, the Second Circuit Court of Appeals certified questions to the Court of Appeals. The Court of Appeals answered by extending the holding in IRB to contracts that do not fall under Gen. Oblig. Law 5-1401 and clarifying that this rule obviates the application and both common-law and conflict-of-laws principles and statutory choice-of-law directives, unless the parties expressly indicate otherwise. View "Ministers & Missionaries Benefit Bd. v. Snow" on Justia Law

by
James Pyne, who died during these proceedings, was the founder and sole stockholder of Remet Corporation. Pyne sold Remet’s stock and facilities, along with real property he had been leasing to Remet, to Burmah Castro Holding, Inc. The sales agreement contained an indemnification provision obligating Pyne to indemnify, defendant, and holder the buyer harmless for certain environmental losses. Remet later received a letter from the Department of Environmental Conservation (DEC) notifying Remet that it was a potentially responsible party for environmental contamination at the Erie Canal Site adjacent to Remet’s real property. Remet filed notices of claim against Pyne’s estate seeking indemnification for environmental liabilities under the sales agreement. Remet then brought this action against the Estate asserting claims for contractual and common-law indemnification. Supreme Court granted Remet summary judgment on liability. The Appellate Division reversed, concluding that DEC’s letter did not require Remet to take action. The Court of Appeals reversed, holding (1) the letter was sufficiently coercive and adversarial as to require action in connection with any environmental law pursuant to the sales agreement; and (2) Remet was entitled to contractual indemnification for past and future environmental losses arising out of DEC’s investigation and remediation of the Erie Canal Site. View "Remet Corp. v. Estate of Pyne" on Justia Law

by
Plaintiff sued several defendants in the Delaware Court of Chancery for alleged wrongdoing related to notes purchased by Plaintiff and issued by one of the defendants. Defendants moved to dismiss, claiming that Plaintiff’s claims were barred by a no-action clause contained in the indenture agreement governing Plaintiff’s notes. The Delaware Supreme Court remanded the case for the Court of Chancery for consideration of the issues under New York law. On remand, the Court of Chancery concluded that the majority of Plaintiff’s claims were not barred under the no-action clause and that dismissal and partial dismissal were warranted with respect to the remaining claims because only those claims arose under the indenture. In response to certified questions from the Delaware Supreme Court, the Court of Appeals concluded (1) a trust indenture’s no-action clause that specifically precludes enforcement of contractual claims arising under the indenture, but omits reference to “the Securities,” does not bar a securityholder’s independent common law or statutory claims; and (2) the Court of Chancery correctly found that the no-action clause in this case, which referred only to “this Indenture,” precluded enforcement only of contractual claims arising under the Indenture. View "Quadrant Structured Prods. Co., Ltd. v. Vertin" on Justia Law

by
Plaintiff entered into a financial brokerage agreement with Defendant providing that Plaintiff would serve as financial advisor and investment banker in the proposed sale of certain student loan assets owned by Defendant. After Defendant transferred certain distressed assets to a fund created by the Swiss National Bank as part of a 2008 bailout, Plaintiff demanded a commission pursuant to the agreement. Defendant refused to pay. Plaintiff subsequently commenced this action for breach of contract and breach of the covenant of good faith and fair dealing. Supreme Court granted Defendant’s motion to dismiss, concluding that the financial crises and the bailout constituted an unforeseeable event that undermined the purpose of the agreement, which was “the introduction of [Defendant] by [Plaintiff] to a third party buyer.” The Appellate Division reversed. The Court of Appeals reversed, holding that Plaintiffs’ causes of action were conclusively contradicted by the language of the parties’ contract, mandating dismissal of the complaint. View "Morpheus Capital Advisors, LLC v. UBS AG" on Justia Law

by
IDT Corp. and Tyco International Ltd. litigated and negotiated for fifteen years over the development and use of a telecommunications system. In 2004, IDT claimed that Tyco breached its obligation under a 2000 settlement agreement to negotiate additional agreements in good faith. The Supreme Court dismissed the complaint, concluding that IDT’s claim was unsupported by the record. After the Court’s decision, more negotiations took place. In 2010, IDT again sued Tyco for breach of contract and breach of the duty to negotiate in good faith. The Court of Appeals rejected IDT’s claim, holding that the parties’ obligation to negotiate in good faith came to an end without a breach by either party because the parties had reached a “good faith impasse.” View "IDT Corp. v Tyco Group, S.A.R.L." on Justia Law