Collateral estoppel.

Plaintiff previously litigated whether defendants were entitled to a fee in her matrimonial action. In support of her motion to vacate defendants' charging lien, plaintiff asserted that defendants' failure to present expert evidence regarding domestic abuse and the valuation of the family's closely held company constituted malpractice. At the hearing on the motion, plaintiff agreed by stipulation to withdraw with prejudice her motion to vacate the charging lien and to authorize the fee at issue to be withdrawn from counsel's Divorce IOLA account. However, in her amended complaint in this action, plaintiff reasserted the claim for malpractice. Where a client has challenged and lost on the issue of whether counsel is entitled to a fee, that determination collaterally estops a subsequent claim for legal malpractice. The resolution of the matter by stipulation does not make a difference because a withdrawal with prejudice has preclusive effect.

Rothman v. Sandra Radna, P.C., NY Slip Op 02102 (1st Dep't April 18, 2024)

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Consolidation.

When one action sounds in contract and the other in tort, the court should not grant consolidation. Here, the breach of contract and fraudulent conveyance actions present different questions of law and fact. Moreover, the fraudulent conveyance action will be moot if plaintiffs fail to win the breach of contract action. Finally, the two actions are at different stages, so that consolidation would lead to a delay in trying the breach of contract action.

3B Assoc. LLC v. Ecommission Solutions, LLC, NY Slip Op 02086 (1st Dep't April 18, 2024)

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Stipulations of settlement.

Stipulations of settlement are favored by the courts and are not lightly set aside.  A stipulation of settlement that is fair on its face will be enforced according to its terms unless there is proof of fraud, duress, overreaching, or unconscionability. The stipulation will not be vacated simply because, after the fact, a party believes that the agreement was improvident in some respect or that it constituted a bad bargain.

Tsikhiseli v. Colombo, NY Slip Op 02075 (2d Dep't April 17, 2024)

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Default judgments.

The default judgment was not vacated pursuant to CPLR 5015(a)(1) because defendant failed to establish a reasonable excuse for its default. The withdrawal order at issue was properly served on the Secretary of State as defendant's agent, pursuant to LLC Law § 303[a]. The failure to keep a current address on file with the Secretary of State is not a reasonable excuse for a default. Defendant concedes that the order was sent to its representative's correct email address. The ensuing default order and judgment were mailed to defendant at its admitted address. Its failure to take any steps to vacate the default until over three months later, after its assets were restrained, is not excusable.

San-Dar Assoc. v. Corporate Habitat NY, LLC, NY Slip Op 02028 (1st Dep't April 16, 2024)

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Piercing the corporate veil.

A plaintiff seeking to pierce the corporate veil must show that (1) the owners exercised complete domination of the corporation in respect to the transaction attacked; and (2) that the domination was used to commit a fraud or wrong against the plaintiff, resulting an injury to the plaintiff. In addition to complete domination of the corporation, the pleading must allege abuse of the privilege of doing business in the corporate form to perpetrate a wrong or injustice. Thus, in order to survive a motion to dismiss the complaint pursuant to CPLR 3211(a)(7), the plaintiff must allege facts that, if taken as true and accorded every favorable inference, would support a finding that the defendant abused the corporate form, such as the failure to adhere to corporate or LLC formalities, inadequate capitalization, commingling of assets, or the personal use of corporate or LLC funds.

Board of Mgrs. of the Brighton Tower II Condominium v. Brighton Bldr., LLC, NY Slip Op 01903 (2d Dep't April 10, 2024)

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Contract law.

The favorable allocation of risks to one party is not an implied duty inherent in an agreement, nor would it be reasonable for a promisee to believe that allocating risks in its favor is an inherent obligation of a promisor. Any claim concerning the allocation of the risk of a plaintiff's up-front investment costs could arise only from a negotiated contractual term or some other legal basis for undertaking the obligation. 

Mayville Engg. Co., Inc. v. Peloton Interactive, Inc., NY Slip Op 01990 (1st Dep't April 11, 2024)

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Appellate practice.

Rulings directed to an examination before trial, whether made upon motion papers or not, are not appealable as of right.

Ward v. City of New York, NY Slip Op 02001 (1st Dep't April 11, 2024)

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Expert witnesses.

A court has the inherent power to disqualify an expert witness in order to preserve the fairness and integrity of the judicial process. Disqualification based on a conflict of interest is required when the court finds both: (1) that it was objectively reasonable for a party claiming to have initially retained the expert to conclude that a confidential relationship existed between them, and (2) that confidential or privileged information was disclosed by the party to the expert.

Here, Supreme Court providently exercised its discretion in granting the motion to disqualify plaintiff's damages expert, due to the conflict of interest created when his firm hired an employee who worked for defendants' expert during the pendency of this action. Defendants demonstrated that the employee actively participated in the preparation of defense litigation strategies. The employee admittedly reviewed and analyzed plaintiff's documents on defendants' behalf, prepared or had input in drafting documents summarizing plaintiff's financial data, and communicated with and attended meetings with defendants' counsel. Accordingly, defendants had a reasonable expectation of a confidential relationship with the employee, and confidences were actually exchanged with him, satisfying both prongs of the disqualification test.

Manna Amsterdam Ave. LLC v. West 73rd Tenants Corp., NY Slip Op 01892 (1st Dep't April 9, 2024)

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Documentary evidence.

Under CPLR 3211(a)(1), dismissal based on documentary evidence is warranted only if the evidence utterly refutes plaintiff's factual allegations, conclusively establishing a defense as a matter of law. The burden is on the defendant to demonstrate that the evidence is documentary. In order to be considered documentary, the evidence must be unambiguous and of undisputed authenticity, such that it is unassailable. Judicial records, as well as documents reflecting out-of-court transactions such as mortgages, deeds, and unambiguous contracts may qualify as documentary evidence. 

7 Mansion, LLC v. Calvano, NY Slip Op 01900 (2d Dep't April 10, 2024)

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Injunctions.

Supreme Court providently exercised its discretion in granting plaintiff's motion for a preliminary injunction. Contrary to defendants' contention, the motion was not one for mandatory injunctive relief, as no affirmative action was required of them. The injunction merely enjoined defendants from interfering with or diverting monies that plaintiff was contractually entitled to receive. Plaintiff established the essential element of irreparable harm with its affidavit that, unless defendants were enjoined from diverting collections to themselves, it likely would default on its obligations to its lenders and go out of business.

BFG 104 LLC v. Greenwich Business Capital, LLC, NY Slip Op 01890 (1st Dep't April 9, 2024)

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SLAPP suits.

A SLAPP suit (Strategic Lawsuit Against Public Participation), typically sounding in defamation, is brought to intimidate or silence a person who has spoken out about a matter of public interest. The anti-SLAPP law, at Civil Rights Law §§ 70-a, 76-a, is designed to deter such suits and thus protect the free exercise of speech, petition, and association.

The anti-SLAPP law creates an accelerated summary dismissal procedure, which applies when a SLAPP suit defendant moves to dismiss pursuant to CPLR 3211(a)(7). Upon such a motion, the defendant bears the initial burden of showing that the action or claim actually is a SLAPP suit, pursuant to CPLR 3211[g][1]. If the defendant meets its burden, the burden shifts to the plaintiff to demonstrate that the claim has a substantial basis, which is a showing of such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact. If the claim is dismissed, the defendant recovers a mandatory award of attorneys' fees.

Karl Reeves, C.E.I.N.Y. Corp. v. Associated Newspapers, Ltd., NY Slip Op 01898 (1st Dep't April 9, 2024)

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