Corporations.

Practice point: An action seeking an accounting of a partnership on the basis that a former partner withdrew excess profits will be dismissed if the partnership’s tax returns indicate that the former partner had a positive capital account balance.

Practitioners should note that representations made in the partnership’s tax returns are binding.

Case: Peterson v. Neville, NY Slip Op 00124 (1st Dept. 2009)

The opinion is here.

Monday’s issue: Foreclosures.

Disbarment.

Practice point: A federal felony conviction triggers automatic disbarment if the offense is essentially similar to a felony under New York law, pursuant to Judiciary Law § 90[4][e].

Practitioners should note that a conviction for bankruptcy fraud under 18 USC § 157, for knowingly and intentionally filing bankruptcy petitions in which an attorney fraudulently misrepresented and omitted material and substantial assets, is essentially similar to the New York felonies of offering a false instrument for filing in the first degree and perjury in the first degree, and, therefore, results in automatic disbarment.

Case: Matter of Yagman, NY Slip Op 00138 (1st Dept. 2009)

The opinion is here.

Tomorrow’s issue: Corporations.

Civil contempt.

Practice point: There is a civil contempt when an individual's rights have been harmed by a party's failure to obey a court order.

Practitioners should note that it must be established that a lawful court order was in effect, clearly expressing an unequivocal mandate. It must also appear with reasonable certainty that the alleged contemnor knew of the court’s mandate and, in fact, disobeyed it.

Case: Gryphon Dom. VI, LLC v. APP Intl. Fin. Co., NY Slip Op 00135 (1st Dept. 2009)

The opinion is here.

Tomorrow’s issue: Disbarment.

Employment Law.

Practice point: Defendant’s motion to compel arbitration will be denied when defendant failed to raise it as an affirmative defense, asserted counterclaims, made a dispositive motion and otherwise actively participated in litigation, including extensive disclosure and the filing of a note of issue.

Practitioners should note that, on these facts, it does not avail defendant that plaintiff did not timely respond to defendant's untimely arbitration demand.

Case: Ryan v. Kellogg Partners Institutional Servs., NY Slip Op 00113 (1st Dept. 2009)

The opinion is here.

Tomorrow’s issue: Civil contempt.

Pleadings.

Practice point: While leave to amend a pleading will be liberally granted, pursuant to CPLR 3025[b]), leave will be denied when the proposed amendment is plainly insufficient as a matter of law or is totally devoid of merit.

Practitioners should note that, for pleading purposes, a demand for punitive damages does not constitute a separate cause of action.

Case: Rosenblum v. Frankl, NY Slip Op 10599 (2d Dept. 2008)

The opinion is here.

Tomorrow’s issue: Employment Law.

Duty of care.

Practice point: A property owner has a duty to take reasonable measures to control the foreseeable conduct of third parties on the property, and to prevent them from harming or creating an unreasonable risk of harm to others.

Practitioners should note that this duty arises when the owner has the ability and opportunity to control such conduct, and is aware of the need to do so.

Case: Hillen v. Queens Long Is. Med. Group, P.C., NY Slip Op 10586 (2d Dept. 2008)

The opinion is here.

Monday’s issue: Pleadings.

Construction Law.

Practice point: A contractor is justified in relying on the plans and specifications which it has contracted to follow.

Practitioners should note that the contractor who performs the work in accordance with the contract plans may not be held liable unless those plans are so patently defective as to put a contractor of ordinary prudence on notice that the project, if completed according to the plans, is potentially dangerous.

Case: Hartofil v. McCourt & Trudden Funeral Home, Inc., NY Slip Op 10585 (2d Dept. 2008)

The opinion is here.

Tomorrow’s issue: Duty of care.

Motion practice.

Practice point: Where a plaintiff fails to seek leave to enter a default judgment within one year after the default, the action is deemed abandoned, pursuant to CPLR 3215[c].

Practitioners should note that, to avoid dismissal of its complaint, a plaintiff must demonstrate both a reasonable excuse for the delay in seeking a default judgment and the existence of a meritorious cause of action.

Case: Butindaro v. Grinberg, NY Slip Op 10574 (2d Dept. 2008)

The opinion is here.

Tomorrow’s issue: Construction Law.

School Law.

Practice point: Service of a timely notice of claim is a condition precedent to a claim against a school district on an action alleging breach of contract or promissory estoppel based on a contract.

Practitioners should note that compliance with this condition precedent must be alleged in the complaint.

Case: Boakye-Yiadom v. Roosevelt Union Free School Dist., NY Slip Op 10572 (2d Dept. 2008)

The opinion is here.

Tomorrow’s issue: Motion practice.

The business judgment rule.

Practice point: The rule does not foreclose inquiry into the disinterested independence of the board members chosen to make a corporate decision on the board’s behalf.

Practitioners should note that the rule shields such directors only if they possess a disinterested independence and do not have dual relations that prevent an unprejudicial exercise of judgment.

Case: Allannic v. Levin, NY Slip Op 10212 (1st Dept. 2008)

The opinion is here.

Tomorrow's issue: School Law.

Motion practice.

Practice point: Sanctions may result from a motion to vacate a default judgment when, having had ample opportunity to avoid the judgment’s entry, movant failed to demonstrate either a reasonable excuse for the default or a meritorious defense to the counterclaims asserted.

Practitioners should note that a default is considered intentional when a party takes no steps to vacate it until after the judgment has been entered.

Case: Melnick v. Khoroushi, NY Slip Op 10206 (1st Dept. 2008)

The opinion is here.

Monday's issue: The business judgment rule.