Economic duress in contract.

The mere threat by one party to breach a contract by not delivering merchandise, though wrongful, does not, in and of itself, constitute economic duress. It must also appear that the threatened party could not obtain the goods from another source and the ordinary remedy of an action for breach of contract would be inadequate. In addition, one who seeks to recover based on economic duress must act promptly to make its claim known, and its failure to act can be viewed as a ratification of a contractual modification. Here, the court properly found that plaintiff failed to demonstrate a triable issue of fact as to why an action for breach of contract would have been inadequate at the time of the breach, and why it waited 2 ½ years to bring the action.

Gateway Overseas Inc. v. Sumec Textile & Light Indus. Co., Ltd., NY Slip Op 02342 (1st Dep't April 15, 2021)

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Advance payment retainers.

Where, as here, the retainer agreement is an advance payment retainer, the attorney is permitted to put the retainer funds in his operating account.

Gaulsh v. Diefenbach PLLC, NY Slip Op 02343 (1st Dep't April 15, 2021)

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Sanctions.

The Appellate Division reversed the Order which sua sponte imposed sanctions in the amount of $10,000 on each of the parties, pursuant to 22 NYCRR 130-1.1. Although Supreme Court has the authority to sua sponte raise the issue of sanctions, the parties must be given a reasonable opportunity to be heard before sanctions are actually imposed. Here, the parties' appearance before the court was in connection with an application to for an interim stay of an ongoing trial based upon a disputed arbitration agreement. Supreme Court raised the issue of sanctions for the first time during that appearance. The appearance was brief and mostly related to the issue of the interim stay. While Supreme Court raised valid concerns about whether the parties were wasting valuable court time, when after multiple days of trial had been completed they put before the court a disputed agreement to arbitrate the very issues that were being addressed at trial, the parties were not given a reasonable opportunity to address the court's concerns. The Appellate Division remanded to the Supreme Court to give the parties an opportunity to be heard on the issue of sanctions.

Melohn v. Melohn, NY Slip Op 02344 (1st Dep't April 15, 2021)

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Appellate practice.

There is no appeal from an order entered on default, pursuant to CPLR 5511. The proper procedure is to move to vacate the default and, if necessary, appeal from the denial of that motion 

Squitieri v. Kaufman, NY Slip Op 02350 (1st Dep't April 15, 2021)

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Appellate practice.

The Appellate Division affirmed the Order which denied defendants' motion to vacate an order, on defendants' default, granting plaintiff's motion to strike their answer and counterclaims and for a default judgment as to liability on plaintiff's claims against them. Contrary to plaintiff's contention, the order denying defendants' motion to vacate the order striking defendants' answer and counterclaims and entering default judgment is appealable. Since the underlying order was decided on defendants default, that order was not itself appealable, pursuant to CPLR 5511, and the proper procedure was for defendants to move to vacate pursuant to CPLR 5015.

Yes Contr. Inc. v. CLST Enters. LLC, NY Slip Op 02351 (1st Dep't April 15, 2021)

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Waiver of a defense.

Defendant did not waive his defense based on the release in the settlement agreement by failing to timely assert it, pursuant to CPLR 3211[e]), since he pleaded a defense based on contract in his answer, and a release is a contract. Plaintiffs could not be surprised or prejudiced by his assertion of the defense .

Riehm Corp. v. Brennan, NY Slip Op 02261 (1st Dep't April 13, 2021)

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Arbitrability.

The Appellate Division reversed the Order granting the petition to permanently stay arbitration, denied the petition, and dismissed the proceeding. Where a contract with an arbitration provision affects interstate commerce, disputes arising thereunder are subject to the Federal Arbitration Act (FAA). Here, the surety agency agreement between corporations from different states gave rise to a finding of interstate commerce, and, therefore, was subject to the FAA. Although a New York court applying the FAA decides whether there is a valid agreement to arbitrate the particular dispute, the parties can agree to arbitrate gateway issues of arbitrability.  The contract provides that, "If a dispute or disagreement arises in connection with this Agreement, including a dispute or disagreement as to its formation or validity, such dispute or disagreement shall be submitted to arbitration." Accordingly, the matter must proceed to arbitration.

Matter of Bergassi Group LLC v. Allied World Ins. Co., NY Slip Op 02265 (1st Dep't April 13, 2021)

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Stay of arbitrable and nonarbitrable matters.

Where there is a valid arbitration agreement, the court will direct the parties to arbitrate and the pending action is stayed, pursuant to to CPLR 7503(a). The arbitration itself should only be stayed when the only matter to be submitted to arbitration is clearly beyond the arbitrator's power. Where arbitrable and nonarbitrable claims are inextricably interwoven, the proper course is to stay judicial proceedings pending completion of the arbitration, particularly where.the determination of issues in arbitration may dispose of nonarbitrable matters.

Protostorm, Inc. v. Foley & Lardner LLP, NY Slip Op 02227 (1st Dep't April 8, 2021)

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A motion to amend the complaint.

Where, as here, significant discovery is outstanding, the prospect of additional discovery, extended litigation, and increased exposure to liability is not prejudice sufficient to warrant denial of plaintiff's motion to amend.

St. Nicholas W. 126 L.P. v. Republic Inv. Co., LLC, NY Slip Op 02228 (1st Dep't April 8, 2021)

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Violation of a court order.

A party seeking an order of contempt based on an alleged violation of a court order must establish that there was in effect a lawful order of the court, clearly expressing an unequivocal mandate.

Matter of Donique T. v. Administration for Children's Servs., NY Slip Op 02230 (1st Dep't April 8, 2021)

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Pleading alter ego.

Plaintiff's allegations that defendants share offices, officers, and ownership, along with conclusory allegations of "domination," are insufficient to allege alter ego liability.

Vitamin Realty Assoc. LLC v. Time Record Stor., LLC, NY Slip Op 02231 (1st Dep't April 8, 2021)

Here is the decision.