Justia Business Law Opinion Summaries

Articles Posted in New York Court of Appeals
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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

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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

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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

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The Court of Appeals answered a certified question from the United States Court of Appeals for the Second Circuit concerning the meaning of N.Y. Gen. Bus. Law 518 in the affirmative, holding that a merchant complies with the statute so long as the merchant posts the total dollars and cents price charged to credit card users.Section 518 states that no seller in any sales transaction may impose a surcharge on a holder who uses a credit card to pay rather than cash, check, or similar means. The parties in this case agreed that the statute allows for differential pricing, in which a merchant offers discounts to customers who pay by cash so that customers buying the same item pay a higher price if they use a credit card than if they paid cash. The Court of Appeals concluded that a merchant may describe the difference between the credit card price and the cash price as a “surcharge, “additional fee,” or “extra costs” so long as the merchant posts the total dollars-and-cents price charged to credit card users rather than requiring consumers to engage in an arithmetical calculation. View "Expressions Hair Design v. Schneiderman" on Justia Law

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Under New York law, a plaintiff asserting claims of misappropriation of a trade secret, unfair competition, and unjust enrichment may not recover damages that are measured by the costs the defendant avoided due to its unlawful activity because, under the common law, compensatory damages must return the plaintiff, as nearly as possible, to the position it would have been in had the wrongdoing not occurred, but no more.This case was tried in federal court on three theories of trade secret theft, unfair competition and unjust enrichment. The jury returned a verdict for Plaintiff. The United States Court of Appeals for the Second Circuit asked the Court of Appeals to resolve three questions of New York’s law relating to damages, specifically, whether, as a matter of law, any plaintiff may recover a defendant’s avoided costs on one or another of these three theories of liability. The Court of Appeals held that, in any of these three actions, a plaintiff may not elect to measure its damages by the defendant’s avoided costs in lieu of its own losses. View "E.J. Brooks Co. v. Cambridge Security Seals" on Justia Law

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The agreement establishing a partnership in this case dictated that Defendant, a partner, wrongfully dissolved the partnership, but it was error to include the legal fees incurred by the remaining partners in the damages owed to them by Defendant.In 1985, Defendant and seven others entered into a written agreement to form a general partnership. In the mid-2000s, Defendant withdrew from the partnership. Plaintiffs, as the partnership’s executive committee and on behalf of the partnership, brought this breach of contract action seeking a declaratory ruling that Defendant had wrongfully dissolved the partnership, as well as damages. Supreme Court granted summary judgment to Plaintiffs, determining that the partnership was not an “at-will” partnership and therefore could not be dissolved without violation of the partnership agreement. The Appellate Division upheld Supreme Court’s ruling, concluding that Defendant wrongfully dissolved the partnership. On remand for the second time, Supreme Court awarded attorneys’ fees and experts’ fees. The Court of Appeals held (1) the lower courts erred in applying N.Y. P'ship Law 62(1)(b) to decide that Defendant violated the agreement, but they correctly concluded that Defendant’s dissolution was wrongful; but (2) Supreme Court erred in awarding fees to Plaintiffs as part of the statutory damages. View "Congel v. Malfitano" on Justia Law

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The agreement establishing a partnership in this case dictated that Defendant, a partner, wrongfully dissolved the partnership, but it was error to include the legal fees incurred by the remaining partners in the damages owed to them by Defendant.In 1985, Defendant and seven others entered into a written agreement to form a general partnership. In the mid-2000s, Defendant withdrew from the partnership. Plaintiffs, as the partnership’s executive committee and on behalf of the partnership, brought this breach of contract action seeking a declaratory ruling that Defendant had wrongfully dissolved the partnership, as well as damages. Supreme Court granted summary judgment to Plaintiffs, determining that the partnership was not an “at-will” partnership and therefore could not be dissolved without violation of the partnership agreement. The Appellate Division upheld Supreme Court’s ruling, concluding that Defendant wrongfully dissolved the partnership. On remand for the second time, Supreme Court awarded attorneys’ fees and experts’ fees. The Court of Appeals held (1) the lower courts erred in applying N.Y. P'ship Law 62(1)(b) to decide that Defendant violated the agreement, but they correctly concluded that Defendant’s dissolution was wrongful; but (2) Supreme Court erred in awarding fees to Plaintiffs as part of the statutory damages. View "Congel v. Malfitano" on Justia Law

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An indenture may seek recovery on behalf of noteholders for Defendants’ alleged fraudulent redemptions intended to siphon off assets, leaving corporate obligators unable to pay the noteholders.Appellate Division denied Defendants’ motion to dismiss insofar as asserted by the indenture trustee, concluding that the relevant language of the indenture conferred standing on the trustee to pursue the fraudulent conveyance claims and other claims seeking recovery for the amounts due under the notes and that the complaint sufficiently stated a cause of action against Defendants under a veil-piercing theory. The Court of Appeals affirmed, holding (1) the language of the indenture gave the trustee authority to pursue the causes of action at issue in this appeal; and (2) the alleged facts in the complaint and inferences drawn from them established the basic elements of the doctrine of piercing the corporate veil. View "Cortlandt Street Recovery Corp. v. Bonderman" on Justia Law

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Rule 12A, contained in Order 15 of the Cayman Islands Grand Court Rules 1995, is procedural and therefore does not apply where, as here, a plaintiff seeks to litigate his derivative claims in New York.Plaintiff owned ordinary shares in Scottish Re Group, Limited, a Cayman Islands company formerly engaged in the business of reinsurance. Plaintiff asserted both direct and derivative causes of action against Scottish Re and others. The only claims relevant to this appeal were Plaintiff’s derivative claims. Supreme Court dismissed Plaintiff’s derivative causes of action, ruling that, under Cayman Islands law, Plaintiff had not established standing because he did not seek leave of court to commence a derivative action under Rule 12A of the Rules of the Grand Court of the Cayman Islands. The Appellate Division affirmed based on Plaintiff’s noncompliance with Rule 12A, concluding that the rule applied because it was substantive rather than procedural. The Court of Appeals reversed, holding that Plaintiff’s derivative claims should not have been dismissed on the ground that he failed to comply with Rule 12A where Rule 12A is a procedural rule that does not apply in New York courts. View "Davis v. Scottish Re Group Ltd." on Justia Law

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There was personal jurisdiction over Defendant - a winery located in Pontevedra, Spain - under New York’s long-arm jurisdiction statute and, consequently, subject matter jurisdiction over the parties’ dispute under N.Y. Bus. Corp. Law 1314(b)(4).Supreme Court denied Defendant’s motion for summary judgment based on lack of personal and subject matter jurisdiction. The Appellate Division reversed, concluding that Defendant was not subject to personal jurisdiction under N.Y. C.P.L.R. 302(a)(1) of New York’s long-arm jurisdiction statute. The Court of Appeals reversed, holding that the exercise of long-arm jurisdiction over Defendant comported with federal due process because Defendant availed itself of the privilege of conducting business in New York by promoting its wine in the state, soliciting a distributor in the state, and selling wine to that New York-based distributor. View "D&R Global Selections, S.L. v Bodega Olegario Falcon Pineiro" on Justia Law