Justia Business Law Opinion Summaries

Articles Posted in New York Court of Appeals
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This case arose from efforts of Verizon New England to collect a judgment awarded in 2009 by the U.S. district court against Global NAPs (GNAPs). Verizon served a restraining notice on GNAPs and companies with which it did business, one of which was Transcom Enhanced Services. Verizon subsequently commenced this special proceeding seeking a turnover of property and debts of the judgment debtor held by Transcom. Supreme Court denied turnover and dismissed the petition with prejudice, concluding that Transcom did not owe any debt to GNAPs and it did not hold property in which GNAPs had any interest. At issue on appeal was whether the at-will, prepayment service agreement between the parties, which lacked any obligation to continue services or a commitment to engage in future dealings, constituted a property interest or debt subject to a N.Y. C.P.L.R. 5222(b) restraining notice. The Appellate Division affirmed. The Court of Appeals affirmed, holding that, based on the nature of the agreement, the restraining notice was unenforceable. View "Verizon New England, Inc. v Transcom Enhanced Servs., Inc." on Justia Law

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Plaintiff and Defendant formed a partnership by oral agreement. Defendant later withdrew from the venture after Plaintiff refused his demand for majority ownership of the partnership. Plaintiff sued Defendant for breach of contract, claiming that Defendant could not unilaterally terminate his obligations under the agreement. Supreme Court dismissed the complaint, concluding that the complaint failed to allege that the partnership agreement provided for a definite term or a defined objective, and therefore, dissolution was permissible under N.Y. P'ship Law 62(1)(b). The Appellate Division modified by reinstating the breach of contract cause of action, reasoning that the complaint adequately described a definite term and alleged a particular undertaking. The Court of Appeals reversed with directions that the breach of contract cause of action of the complaint be dismissed, holding (1) the complaint did not satisfy the "definite term" element of section 62(1)(b) because it did not set forth a specific or a reasonably certain termination date; and (2) the alleged scheme of anticipated partnership events detailed in the complaint were too amorphous to meet the statutory "particular undertaking" standard for precluding unilateral dissolution of a partnership. View "Gelman v. Buehler" on Justia Law

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In one agreement, Cammeby's Equity Holdings LLC (Cam Equity) received an option to acquire 99.99 percent of the ownership units of SVCare at the strike price of $100 million. In a second agreement, Cammeby's Funding III LLC (Cam III) agreed to lend $100 million to SVCare. Cam III and Cam Equity were controlled by the same person. In anticipation that Cam Equity would exercise the option, SVCare commenced an action alleging that the option was unenforceable because the consideration underlying its agreement to offer the option was contingent on Cam III loaning it $100 million, which SVCare claimed was never paid. Cam Equity brought a separate lawsuit seeking specific performance of the option agreement. Supreme Court (1) found in in favor of Cam Equity in the first action, concluding that the option and loan were entirely separate agreements and that SVCare could not offer extrinsic evidence regarding the $100 million loan obligation that was not mentioned in the option agreement; and (2) in the second action, determined that Cam III had, in fact, fully funded the $100 million loan to SVCare pursuant to the loan agreement. The Court of Appeals affirmed, holding that the lower court did not err in its judgment. View "Schron v. Troutman Saunders LLP" on Justia Law

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Cammeby's Funding LLC (Cam Funding) and Fundamental Long Term Care Holdings LLC (Fundamental) entered into an option agreement entitling Cam Funding to acquire one-third of Fundamental's membership units for a strike price of $1,000. Cam Funding subsequently notified Fundamental that it was exercising the option and sent Fundamental a check for $1,000. Fundamental respondent that, pursuant to its operating agreement, no membership units in Fundamental would be issued until Cam Funding provided a required capital contribution of 33.33 percent. Fundamental then sought a declaration that Cam Funding was bound by the membership requirements in the operating agreement. Cam Funding filed a counterclaimed for breach of contract. The Supreme Court ruled that the option agreement unambiguously granted Cam Funding the right to acquire a one-third interest in Fundamental upon payment of $1,000 and that enforcement of the operating agreement would interfere with Cam Funding's rights under the terms of the option agreement. The Court of Appeals affirmed, holding that the mere reference in the option agreement to the operating agreement was not enough to evidence clear intent for the two separate contracts to be read as one. View "Fund. Long Term Care Holdings, LLC v. Cammeby's Funding, LLC" on Justia Law

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Defendant Inepar S.A. Industria e Construc es (IIC) was a Brazilian power company that held a sixty percent stake in Defendant Inepar Investments, S.A., a corporation organized under the laws of Uruguay. Plaintiff IRB-Brasi Resseguros S.A. (IRB), a fifty percent state-owned corporation organized under the laws of Brazil, purchased $14 million of Inepar's global notes. After the interest payments ceased, and IRB never received the payment of the principal, Plaintiff sued IIC and Inepar seeking payment of the global note principal and the unpaid accrued interest. Inepar defaulted in this action. IIC moved for summary judgment, arguing that the guarantee IIC provided to guarantee the punctual payment of principal and interest under the terms of the global notes was void under Brazilian law and that New York's choice-of-law principals should apply, resulting in the application of Brazilian substantive law. Supreme Court ruled the express choice of New York law in the parties' contract should be given mandatory effect and ruled in favor of IIC. The Court of Appeals affirmed, holding that a conflict-of-laws analysis need not be undertaken when there is an express choice of New York law in the parties' agreement. View "IRB-Brasil Resseguros, S.A. v. Inepar Invs., S.A." on Justia Law

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Plaintiffs and Defendant formed and managed a limited liability company for the purpose of entering into a long-term lease on a building in Manhattan. Later, Defendant took sole possession of the property and bought Plaintiffs' membership interests in the LLC. Defendant subsequently assigned the lease to a subsidiary of a development company. Believing that Defendant surreptitiously negotiated the sale with the development company before he bought their interests in the LLC, Plaintiffs commenced this action against Defendant, claiming that, by failing to disclose the negotiations with the development company, Defendant breached his fiduciary duty to them. Supreme Court dismissed the complaint. A divided Appellate Division modified Supreme Court's order, allowing four of Plaintiffs' claims to proceed - breach of fiduciary duty, conversion, unjust enrichment, and fraud and misrepresentation. The Court of Appeals reversed ad dismissed Plaintiffs' complaint in its entirety, relying on its recent decision in Centro Empresarial Cempresa S.A. v. America Movil, S.A.B. de C.V. View "Pappas v. Tzolis" on Justia Law

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East Midtown Plaza Housing Company, a limited-profit housing company organized under the Mitchell-Lama Law, sought to withdraw from the Mitchell-Lama program and become a private cooperative apartment complex. A vote was taken on a revised privatization plan, and the proposal would have been approved if the votes were tallied using a one-vote-per-share rule, but not if counted under a one-vote-per-household formula as directed by the certificate of incorporation and City Department of Housing Preservation and Development (HPD). Following the vote, East Midtown filed a proposed second amendment stating that the plan had been adopted by the affirmative vote of at least two thirds of the outstanding shares of East Midtown. The Attorney General refused to accept the amendment. East Midtown responded by commencing this N.Y. C.P.L.R. 78 proceeding seeking to compel the Attorney General to accept the second amendment declaring the plan effective and to direct HPD to recognize that the plan achieved the necessary two-thirds shareholder vote. Supreme Court denied the petition. The Appellate Division affirmed. The Court of Appeal affirmed, holding that the courts below correctly held that the vote should be calculated using the one-vote-per-apartment formula, and therefore, the necessary two-thirds approval was not met. View "E. Midtown Plaza Hous. Co. v. Cuomo " on Justia Law

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Shareholders commenced this action against Corporation seeking a declaration that Corporation must repurchase their shares of preferred stock after Corporation merged with two other corporations. Shareholders owned preferred stock by Corporation by way of an agreement that conferred special benefits requiring that Corporation repurchase the preferred stock in the event that a "fundamental change" occurred. Shareholders argued that a fundamental change took place when the merger occurred. Supreme court denied Corporation's motion to dismiss. The appellate division reversed and dismissed the complaint, finding that details of the merger triggered an exception of the fundamental change provision. The Court of Appeals reversed, holding that, under the facts presented, there was ambiguity in the interpretation and effect of the preferred stock agreement and, as such, Corporation was not entitled to dismissal of Shareholders' complaint. View "Whitebox Concentrated Convertible Arbitrage Partners, L.P. v. Superior Well Servs., Inc." on Justia Law

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Nicole Tausend, the beneficiary of a trust together with her father, Ronald, commenced a N.Y.C.P.L.R. 78 proceeding against Ronald and the partnership (NJR) formed by Ronald for the purpose of acquiring and selling property. Nicole commenced the proceeding in order to obtain access to the partnership documents and an accounting of its finances. In response, NJR issued a demand for arbitration. Supreme Court ordered the parties to arbitration, and the appellate division affirmed. Nicole appeared in the arbitration and asserted several counterclaims, which lead to NJR's commencement of this court proceeding seeking to stay arbitration of the counterclaims on the basis of the expiration of the statute of limitations. Supreme Court granted the petition and stayed arbitration of the counterclaims. The appellate division modified by dismissing NJR's petition to stay arbitration of the counterclaims, reasoning that the partnership was precluded from obtaining a stay because it had initiated and participated in the arbitration. The Court of Appeals affirmed, holding that because NJR initiated and participated in the arbitration of issues stemming from the dispute, its timeliness challenge to the counterclaims must be decided by an arbitrator. View "N.J.R. Assocs. v. Tausend" on Justia Law

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This appeal arose out of an action commenced by the New York State Attorney General against defendants, seeking injunctive and monetary relief as well as civil penalties for violations of New York's Executive Law and Consumer Protection Act, Executive Law 63(12) and General Business Law 349, as well as the common law. The primary issue on appeal was whether federal law preempted these claims alleging fraud and violations of real estate appraisal independence rules. The court held that the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) governed the regulation of appraisal management companies and explicitly envisioned a cooperative effort between federal and state authorities to ensure that real estate appraisal reports comport with the Uniform Standards of Professional Appraisal Practice (USPAP). The court perceived no basis to conclude that the Home Owners' Loan Act (HOLA) itself or federal regulations promulgated under HOLA preempted the Attorney General from asserting both common law and statutory state law claims against defendants pursuant to its authority under Executive Law 63(12)and General Business Law 349. Thus, defendants' motion to dismiss on the grounds of federal preemption was properly denied. The court also agreed with the Appellate Division that the Attorney General had adequately pleaded a cause of action under General Business Law 349 and that the statute provided him with standing. Accordingly, the order of the Appellate Division was affirmed.