Justia Business Law Opinion Summaries

The case revolves around a dispute between MAK Technology Holdings Inc. (plaintiff) and Anyvision Interactive Technologies Ltd. (defendant). The defendant, an Israeli company selling facial-recognition software, engaged the plaintiff in 2017 to arrange introductions with potential customers in exchange for referral payments based on revenues generated from any resulting product-license agreements. The parties formalized their agreement in a written Referral Agreement with a defined "Effective Date" of November 23, 2017, and a term of three years. The agreement was amended twice in 2018 to include a compensation arrangement for equity investments in the defendant, separate from their arrangement with respect to product licenses.The plaintiff initiated a lawsuit to recover compensation allegedly owed under the amended Referral Agreement, claiming that a nonparty made an investment in the defendant in July 2021 for which the plaintiff is owed a $1.25 million fee under the Second Amendment. The defendant moved to dismiss this claim on the ground that the transaction occurred eight months after the Term of the Referral Agreement expired in November 2020. The Supreme Court denied the motion, and a divided Appellate Division affirmed, both concluding that the error-infected language in section 2 of the Second Amendment creates an ambiguity with respect to the length of the Term.The Court of Appeals of New York disagreed with the lower courts' decisions. The court held that the plaintiff is not entitled to a $1.25 million fee for a transaction consummated eight months after the "Term" of the parties' agreement expired. The court found that minor syntactic and spelling errors in the preamble of an amendment to the contract cannot reasonably be read as modifying the length of the Term. The court also rejected the plaintiff's argument that the amendment is a separate agreement with a distinct term. Therefore, the court reversed the order of the Appellate Division, granted the defendant's motion to dismiss the first cause of action for breach of contract to the extent based on the July 2021 transaction, and answered the certified question in the negative. View "MAK Tech. Holdings Inc. v Anyvision Interactive Tech. Ltd." on Justia Law

The case revolves around a dispute concerning a 2018 merger between FanDuel Ltd. and the U.S. assets of nonparty Paddy Power Betfair plc. The plaintiffs, founders and shareholders of FanDuel, alleged that the defendants, including FanDuel's board of directors and certain shareholders, deliberately undervalued FanDuel's assets during the merger negotiations, resulting in the preferred shareholders receiving all the benefits of the merger while the common shareholders received nothing. The plaintiffs claimed that the defendants breached their fiduciary duties by failing to obtain a fair valuation of the merger consideration and by promoting their own interests at the expense of the common shareholders.The Supreme Court of New York County partially granted and partially denied the defendants' motions to dismiss the complaint. The court held that New York law applied to the plaintiffs' claims because the internal affairs doctrine was inapplicable where the defendants were not current officers, directors, and shareholders at the time of the lawsuit. The court further held that the plaintiffs adequately stated their claims for breach of fiduciary duty under New York law.The Appellate Division reversed the order of the Supreme Court, holding that Scots law applied to the plaintiffs' claims under the internal affairs doctrine. The court stated that the directors of a company generally owe duties only to the company as a whole rather than to the shareholders, except in special factual circumstances not present in this case. Therefore, the court concluded that the plaintiffs failed to state a claim for breach of fiduciary duty under Scots law.The Court of Appeals of New York reversed the order of the Appellate Division, holding that while Scots law applied to the plaintiffs' claims, the plaintiffs' allegations could give rise to a possible inference that special circumstances were present, which could give rise to a cognizable fiduciary duty claim under Scots law. Therefore, the court held that the Appellate Division erroneously granted the defendants' motions to dismiss the first, second, and fourth causes of action. View "Eccles v Shamrock Capital Advisors, LLC" on Justia Law

The case involves 21 U.S. citizens and the family of a deceased U.S. citizen who were victims of rocket attacks by the Hizbollah terrorist organization in Israel in 2006. The plaintiffs allege that the Lebanese Canadian Bank (LCB) provided financial services to Hizbollah, including facilitating millions of dollars in wire transfers through a New York-based correspondent bank. In 2011, LCB and Société Générale de Banque au Liban SAL (SGBL), a private company incorporated in Lebanon, executed a purchase agreement where SGBL acquired all of LCB's assets and liabilities. In 2019, the plaintiffs brought similar claims against SGBL, as LCB's successor, in the Eastern District of New York for damages stemming from the 2006 attacks.The federal district court dismissed the action for lack of personal jurisdiction over SGBL. The court interpreted several Appellate Division and federal decisions to allow imputation of jurisdictional status only in the event of a merger, not an acquisition of all assets and liabilities. On appeal, the Second Circuit certified two questions to the New York Court of Appeals, asking whether an entity that acquires all of another entity's liabilities and assets, but does not merge with that entity, inherits the acquired entity's status for purposes of specific personal jurisdiction, and under what circumstances the acquiring entity would be subject to specific personal jurisdiction in New York.The New York Court of Appeals answered the first question affirmatively, stating that where an entity acquires all of another entity's liabilities and assets, but does not merge with that entity, it inherits the acquired entity's status for purposes of specific personal jurisdiction. The court declined to answer the second question as unnecessary. The court reasoned that allowing a successor to acquire all assets and liabilities, but escape jurisdiction in a forum where its predecessor would have been answerable for those liabilities, would allow those assets to be shielded from direct claims for those liabilities in that forum. View "Lelchook v Société Générale de Banque au Liban SAL" on Justia Law

The case pertains to a dispute between the Department of Finance of the City of New York and Brookdale Physicians' Dialysis Associates, Inc. over the revocation of a real property tax exemption. The property in question was owned by Samuel and Bertha Schulman Institute for Nursing and Rehabilitation Fund, Inc., a not-for-profit entity, and was leased to Brookdale Dialysis, a for-profit corporation. The Department of Finance retroactively revoked the property's tax-exempt status in 2013, citing the fact that the property had been leased to a for-profit entity.The Supreme Court initially annulled the Department's determination, arguing that it failed to consider whether Brookdale Dialysis' services were reasonably incidental to the exemption purpose. The Department of Finance reassessed the property for the 2014-2015 tax year and again revoked the exemption after finding that the income from the lease exceeded the expenses for the property. The decision to revoke the exemption was subsequently affirmed by the Appellate Division.However, the Court of Appeals reversed these decisions, holding that the property was not exempt under New York Real Property Tax Law § 420-a. The court noted that the law mandatorily exempts from taxation any real property owned by certain not-for-profit entities and used exclusively for beneficial purposes without financial gain. The law does not apply to property leased by a for-profit corporation. Therefore, the court concluded that the property in this case was not exempt under this law, and the Department of Finance's decision to revoke the exemption was justified. View "Matter of Brookdale Physicians' Dialysis Assoc., Inc. v Department of Fin. of the City of N.Y." on Justia Law

This case revolves around the trial court's discretion to grant leave for amending a complaint under CPLR 3025 (b). The plaintiffs, a group of investors, filed an action against the defendants, the managers of their investment company, alleging breach of fiduciary duty and breach of the operating agreement. Their second amended complaint was dismissed by the Appellate Division due to lack of standing. The Supreme Court subsequently granted the plaintiffs' leave to file a third amended complaint to rectify the standing issue, attracting objections from the defendants who claimed that a new action was required.The Appellate Division sided with the defendants. It held that the Supreme Court possessed no discretion to allow amendment of a complaint that had been dismissed by the Appellate Division. The plaintiffs appealed this decision.The Court of Appeals reversed the decision of the Appellate Division. It held that if an appellate court has dismissed a complaint without prejudice and not on the merits, and the defect could be rectified by amendment, the trial court has the discretion to grant leave for amendment under CPLR 3025 (b). This ruling is in line with the trial court's general discretion to manage its docket for judicial economy. The Court also held that the motion to amend was timely, as it was filed well within the six months provided by CPLR 205 (a), even after accounting for the tolling period due to Executive Order 202.8. The case was remitted to the Appellate Division for further proceedings following this judgement. View "Favourite Ltd. v Cico" on Justia Law

In 2016, Venezuela's state-owned oil company, Petróleos de Venezuela S.A. (PDVSA), offered a bond swap whereby its noteholders could exchange unsecured notes due in 2017 for new, secured notes due in 2020. PDVSA defaulted in 2019, and the National Assembly of Venezuela passed a resolution declaring the bond swap a "national public contract" requiring its approval under Article 150 of the Venezuelan Constitution. PDVSA, along with its subsidiaries PDVSA Petróleo S.A. and PDV Holding, Inc., initiated a lawsuit seeking a judgment declaring the 2020 Notes and their governing documents "invalid, illegal, null, and void ab initio, and thus unenforceable." The case was taken to the United States Court of Appeals for the Second Circuit, which certified three questions to the New York Court of Appeals.The New York Court of Appeals, in answering the first question, ruled that Venezuelan law governs the validity of the notes under Uniform Commercial Code § 8-110 (a) (1), which encompasses plaintiffs' arguments concerning whether the issuance of the notes was duly authorized by the Venezuelan National Assembly under the Venezuelan Constitution. However, New York law governs the transaction in all other respects, including the consequences if a security was "issued with a defect going to its validity." Given the court's answer to the first certified question, it did not answer the remaining questions. View "Petróleos de Venezuela S.A. v MUFG Union Bank, N.A." on Justia Law

The case involves Consolidated Restaurant Operations (CRO), a company that owns and operates dozens of restaurants, and Westport Insurance Corporation (Westport). CRO had an "all-risk" commercial property insurance policy with Westport, which covered "all risks of direct physical loss or damage to insured property." When the COVID-19 pandemic hit, causing CRO to suspend or substantially curtail its operations due to the presence of the virus in its restaurants and government restrictions on nonessential businesses, CRO sought coverage for the ensuing loss of revenue. Westport denied coverage, stating that the coronavirus did not cause "direct physical loss or damage" to CRO's properties. CRO filed a lawsuit seeking a declaration of Westport's obligations under the policy and damages for breach of contract.The Supreme Court of New York dismissed the complaint, declaring that the policy did not cover CRO's alleged losses. The Appellate Division affirmed this decision, interpreting "direct physical loss or damage" to require a tangible alteration of the property, which CRO had not demonstrated.The case was then brought to the New York Court of Appeals. The court held that "direct physical loss or damage" requires a material alteration or a complete and persistent dispossession of insured property. The presence of the virus in the restaurants and the resulting cessation of in-person dining services did not meet this requirement. The court thus affirmed the lower courts’ dismissal of the complaint. View "Consolidated Rest. Operations, Inc. v Westport Insurance Corp." on Justia Law

The Court of Appeals held that when an employer pays premiums to a mutual insurance company to obtain a policy for its employee and the insurance company demutualizes, the employee is entitled to the proceeds from demutualization.Medical Liability Mutual Insurance Company (MLMIC) issued professional liability insurance policies to eight medical professionals who were litigants in the cases before the Court of Appeals on appeal. The premiums for the policies were paid by the professionals' employers. After MLMIC demutualized and was acquired by National Indemnity Company, MLMIC sought to distribute $2.502 billion in cash consideration to eligible policyholders pursuant to its plan of conversion. At issue was the employers' claim of legal entitlement to receive the demutualization proceeds. The Supreme Court held that, absent contrary terms in the contract of employment, insurance policy, or separate agreement, the employee, who is the policyholder, is entitled to the proceeds. View "Columbia Memorial Hospital v. Hinds" on Justia Law

The Court of Appeals answered questions certified by the Second Circuit Court of Appeals regarding the validity of tort claims brought by a judgment debtor against its judgment creditors, holding that a judgment debtor's exclusive avenue for relief under the circumstances set forth in this case is to bring an appropriate action pursuant to N.Y. C.P.L.R. 52.In two cases brought in federal court, the judgment debtor asserted tort claims against its judgment creditors and a New York City marshal, alleging violations of the C.P.L.R. article 52 service requirements committed in the execution of valid judgments issued by New York courts. The Second Circuit certified questions as to the validity of such tort claims, particularly with respect to damages the judgment debtor could show under such circumstances. The Court of Appeals held that the better course is to require that such claims be brought pursuant to article 52. View "Plymouth Venture Partners, II, L.P. v GTR Source, LLC" on Justia Law

The Court of Appeals affirmed the order of the Appellate Division affirming the decision of Supreme Court dismissing Plaintiffs' complaint alleging that Defendant engaged in deceptive business practices in violation of N.Y. Gen. Bus. Law (GBL) 349, holding that Plaintiffs' GBL 349 cause of action was properly dismissed.In its motion to dismiss, Defendant argued that Plaintiffs failed to plead the necessary elements of a GBL 349 cause of action. Supreme Court granted Defendant's motion and dismissed the complaint in its entirety. The Appellate Division affirmed. The Court of Appeals affirmed, holding (1) Supreme Court erred in determining that Plaintiffs failed to demonstrate that the allegedly deceptive conduct was consumer oriented; but (2) the complaint was properly dismissed because Plaintiffs did not adequately plead the element of the cause of action that Defendant's act or practice was deceptive or misleading in a material way. View "Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v Matthew Bender & Co., Inc." on Justia Law