A parent corporation's liability for a subsidiary.

The Appellate Division unanimously reversed the Order which granted plaintiff's cross motion for leave to amend its complaint to assert a claim of alter ego liability against defendant TPR Holdings, LLC, and denied the cross motion. In New York, a parent corporation generally cannot be held liable for the debts of its wholly owned subsidiary, nor can it be bound by the contract of that subsidiary. There are two circumstances under which a parent will be held liable as a party to its subsidiary's contract: (1) if the parent manifests an intent to be bound by the contract; or (2) if there are the elements of a claim for piercing the corporate veil. Here, the Appellate Division found neither. An intent to be bound can be inferred from the parent's participation in the negotiations of the contract, but the amended complaint is silent on how the business relationship between plaintiff and the subsidiary defendants had evolved. It appears that TPR Holdings initially approached plaintiff about three separate credit accounts for its three subsidiaries. However, there is no allegation about who negotiated the pricing or the general terms of each transaction. Plaintiff acknowledged that the purchase orders were issued separately by the subsidiary defendants. While it appears that TPR Holdings' employees were frequently, but not always, involved in the transactions' creative aspect by approving the order designs, there is no allegation that TPR Holdings directly participated or micro-managed each transaction underlying the purchase orders or acknowledged that it was the actual party in interest. In addition, the complaint is silent on who paid for plaintiff's services. The Appellate Division also found the claim for piercing corporate veils insufficient. Even if TPR Holdings exercised complete domination of the subsidiary defendants, plaintiff failed to allege that the abuse of the corporate form was for the purpose of defrauding plaintiff and causing it an injury. Specifically, plaintiff did not allege that the subsidiary defendants were not legitimate businesses or that they were created for an improper purpose of cutting off plaintiff's ability to collect on the contract, or that corporate funds were purposefully diverted to make any of the three companies judgment proof. The allegation that TPR Holdings caused the subsidiary defendants to breach a contract is not enough to show the requisite wrongdoing.

World Wide Packaging, LLC v. Cargo Cosmetics, LLC, NY Slip Op 02088 (1st Dep't April 1, 2021)

Here is the decision.

Expert disclosures.

The court providently struck plaintiffs' expert disclosure, which failed to disclose the substance of the facts and opinions on which the expert was expected to testify, pursuant to CPLR 3101[d][1] and Rules of the Commercial Division of the Supreme Court, 13[c].

30-32 W. 31st St. LLC v. Heena Hotel, NY Slip Op 02055 (1st Dep't April 1, 2021)

Here is the decision.

Dies irae.

"Quid est veritas?"

The common interest privilege.

The privilege applies where the communication is otherwise protected under the attorney-client privilege and is in furtherance of a legal interest or strategy common to the parties asserting the privilege. The proponent bears the burden of establishing that the information sought is immune from disclosure.

Stafford v. A&E Real Estate Holdings, LLC, NY Slip Op 01956 (1st Dep't March 30, 2021)

Here is the decision.

A claim for unpaid fees.

The Appellate Division unanimously affirmed dismissal of defendants' counterclaims for unpaid fees for services rendered before they failed to comply with a deadline set in an action in federal court. Where the attorney is discharged without cause, the recovery, in quantum merit, is limited to the reasonable value of the services rendered. However, where the discharge is for cause, the attorney has no right to compensation or a retaining lien, notwithstanding a specific retainer agreement. Here, as defendants do not challenge Supreme Court's finding, after a hearing, that plaintiff terminated them for cause in the prior action, recovery of unpaid fees is barred.

Vioni v. Carey & Assoc., LLC, NY Slip Op 01880 (1st Dep't March 25, 2021)

Here is the decision.

Limitations period for fraud.

The Appellate Division rejected the argument that the limitations period on the claim for aiding and abetting breach of fiduciary duty is three years because plaintiff seeks damages, not equitable relief, noting that where, as here, the claim is based on allegations of actual fraud, it is subject to a six-year limitations period.

Wimbledon Fin. Master Fund, Ltd. v. Hallac, NY Slip Op 01881 (1st Dep't March 26, 2021)

Here is the decision.

Limitations period for breach of fiduciary duty.

The breach of fiduciary duty claim was dismissed as barred by the three-year statute of limitations, pursuant to CPLR 214[4]. In seeking recovery of compensation that plaintiff paid its decedent-employee during the time he allegedly engaged in an insider trading scheme, plaintiff seeks purely monetary relief, not equitable relief for which an award of monetary damages would be inadequate. Plaintiff's characterization of that relief as "disgorgement" of compensation does not convert it into a claim for equitable relief to which the six-year statute of limitations would apply, pursuant to CPLR 213[1].

VA Mgt. LP. v. Estate of Valvani, NY Slip Op 01878 (1st Dep't March 25, 2021)

Here is the decision.

Dismissal based on documentary evidence.

The Appellate Division unanimously affirmed, with costs,  the Order which granted defendants' motion to dismiss the complaint. Plaintiff's allegations are conclusively refuted by documentary evidence, namely, plaintiff's assignment of its interest in the condominium's sponsor entity and the subsequent deeds in which title to the unit appurtenant to the parking ramp at the center of the dispute was transferred to another entity, showing that plaintiff did not own the ramp. Plaintiff's bad faith in filing an unauthorized amendment to the condominium declaration, after assigning away its interest, to purport to obtain title to the ramp, without any colorable basis for doing so, renders its urging for equity unavailing.

Sackman Enters. Inc. v. Board of Mgrs. of the Chesterfield Condominium, NY Slip Op 01732 (1st Dep't March 23, 2021)

Here is the decision.

The single motion rule.

CPLR 3211(e) states that, "At any time before service of the responsive pleading is required, a party may move on one or more of the grounds set forth in subdivision (a), and no more than one such motion shall be permitted." A second motion to dismiss is permitted where the movant takes its cue from the court's earlier decision to supply evidence that was found lacking on the first motion. Here, the Appellate Division held that the arguments relating to the application of the statute of limitations are barred by the single motion rule. Defendants-appellants previously moved to dismiss the fourth and fifth causes of action in the Second Amended Complaint, which are the exact same fourth and fifth causes of action asserted in the Third Amended Complaint. 

Simon v. FrancInvest, S.A., NY Slip Op 01733 (1st Dep't March 23, 2021)

Here is the decision.