Source: http://www.nycourts.gov/courts/comdiv/7thdistrict_decisions_archive.shtml
Timestamp: 2019-04-19 17:03:30+00:00

Document:
Summary judgment granting recission of stock redemption; breach of fiduciary duty by corporate officer, director and 50% shareholder of close corporation software development company; failure to disclose release to competitor of confidential proprietary information under non-disclosure agreement for pricing purposes.
Claimed appraiser malpractice; summary judgment denied despite unsettled law concerning whether a malpractice action against a real estate appraiser independent of the client's remedy for contractual breach should be upheld under N.Y. law.
Arbitration under the FAA required of dispute between local TV anchor and her employer of the public policy objections the employee has concerning her non-compete clause. Although the public policy argument goes to unconscionability, the Supreme Court has eviscerated the distinction between void and voidable contracts in Buckeye Check Cashing, Inc. v. Cardegna, 126 S.Ct. 1204 (Feb. 21, 2006).
Rescission of negotiated withdrawal package on ground of failure to inform partners of his drug abuse and forgeries of partners' names on prescriptions during the negotiations; effect is payment under Voluntary Withdrawal provision, not the Retirement provision of partnership agreement.
Prejudgment attachment of escrow funds scheduled for payment to non-resident/non-domicillary denied; no showing that "drastic action is required for security purposes" and jurisdiction was unquestioned.
Casco Security Systems, Inc. v. Davenport Machine, Inc.
Fraud in the inducement: expert opinion regarding code compliance; unreasonable failure to investigate the truth of the representation.
Statute of Limitations: breach of fiduciary duty claim against an investment broker seeking money damages only governed by a three-year period; breach of Contract claim not similarly dismissed because investment broker or specialist not considered a "professional" under CPLR 214(6); breach of NASD fules.
Clarion and Corning rule in New York regarding "book of business" or "expirations" is subject to agreement to the contrary; expulsion of LLC member relieves excluded member from paying withdrawal penalties under operating agreement; preliminary injunction granted.
Coopervision, Inc. v. Intek Integration Technologies, Inc.
Forum selection clause; multiple agreements for purchase and installation of industrial warehouse software system; order of precedence clause in installation agreement does not incorporate forum selection clause in software license agreement.
Preliminary injunction directed to former employees denied; would be tantamount to granting the ultimate relief sought in the complaint.
Suretyship defense of impairment of collateral; Art. 9 context; failure to dispose of collateral in reasonable manner; consumer credit transaction.
Commercial lease; rent abatement by reason of failure to replace anchor tenant with a "single-user equivalent replacement tenant." Summary judgment not precluded by waiver or by the voluntary payment doctrine.
George Miller Brick Co., Inc. v. Stark Ceramics, Inc.
Donnelly Act. Vertical restraint of trade. Per se rule. No mention of treble damages in bifurcated liability trial. Evidence of termination admissible.
Reargument of decision above; denial of motion seeking declaration that vertical resale price maintenance agreement does not violate the Donnely Act. Bid rigging.
BCL sec. 1118 election; method of valuation provided by shareholder's agreement upheld; In re Pace Photographers distinguished.
Notice of Pendency cancelled; restitution in specie of real property conveyed years ago impossible or inequitable because, even if right to rescission established by fraud in the inducement, because certainty of titles would be unduly interfered with and creditor rights would be impaired; New York still adheres to the inadequacy of legal remedies criterion for specific restitution, in part, despite the Second Restatement's abrogation of the criterion.
Nonsignatory may compel signatory to arbitrate under LLC operating agreement's arbitration clause.
Commercial real estate listing agreement; summary judgment precluded by question of fact on whether "best efforts" were used; damages held limited by the contract to $17,500.
Interpretation of shareholder agreements' complex termination provisions.
LaLoggia v. Document Security Systems, Inc.
Time barred counterclaims asserted only defensively may be interposed only as shield for recoupment purposes, not to obtain affirmative relief, but must arise out of reciprocal contractual obligations on the same set of facts or transaction. Even if arising from same contract, where the contract itself provides the business to be transacted as discrete and independent units, recoupment is unavailable.
Restrictive Covenants: Reasonableness test of BDO Seidman applies to analysis of covenant not to solicit employees. Because nonrecruit provision did not serve any legitimate employer interest in the circumstances, summary judgment for defendant was appropriate.
Restrictive covenants: Employee choice doctrine not applicable in absence of a provision in employment agreement for forfeiture of sums otherwise promised, i.e., a "forfeiture for competition" clause which did not otherwise restrict employment mobility. The agreement here barred future employment only and thus BDO Seidman scrutiny was required.
Preliminary injunction denied; former employee; no studied copying; use of memory permitted.
Municipal agreements in derogation of the Mined Land Reclamation Law (ECL §§23-2701, et seq.) are unenforceable: The Town cannot by agreement exact conditions for the exercise of its zoning power in the form of restrictive covenants which exceed the zoning power of the Town to achieve by local law; res judicatia cannot be applied to thwart the public policy of the state as expressed in the MLRC.
Action against executrix; denial of summary judgment against executrix on claim she made distributions with knowledge of valid claim in violation of SCPA 2002; failure to move in Surrogate's Court under SCPA 2004 for a reserve; statute of limitations for breach of fiduciary duty claim.
Dissolution of LLC lacking an operating agreement denied on ground the business is thriving and that dissention not so pervasive that it can be said that it is not reasonably practicable to carry on the business within the meaning of LLCL 702. Distinguish corporate dissolution statutes.
Arbitration waived by resort to the courts; LLC dissolution declared and LLC Law § 703(a) order entered granting judicial supervision of the winding up of Factors Walk LLC, appointing a receiver or liquidating trustee in furtherance of the same.
Summary Judgment dismissing misappropriation of corporate opportunity claim: items up for bid involved expectancies which no reasonable trier of fact could find were tangible. Full disclosure otherwise made and reliance not shown; no civil cause of action grounded in harassment.
Maxon v. Mirror Show Management, Inc.
Dissolution proceeding; BCL 1118 buyout election made; discovery of corporate waste or diversion permitted on inextricably intertwined breach of fiduciary duty and shareholder derivative claims, as well as valuation.
Corporation cannot raise criminal usury for the purpose of obtaining affirmative relief.
Employee theft of trade secrets established; preliminary injunction granted on detailed showing of their use for unfair competition and in violation of restrictive covenant.
Arbitration; motion to renew confirmation of award on ground one of the letters said to constitute the award was, in reality, procured by a petitioner's counsel's ex parte conference with the arbitrators after the original award was made.
Proper manner of interposition of attorney-client privilege claim when in camera review sought to sustain the privilege; rejection on facts of claimed joint defense exception to the attorney-client privilege; when a former officer or director is suing the company for his or her own personal gain, the privilege belongs to the corporation and if asserted is effective to prevent disclosure to the former officer or director. The decision also rejects the claimed fiduciary exception to the privilege articulated in the Fifth Circuit's decision in Garner v. Wolfinbarger.
Noncompete agreement among doctors; BDO Seidman analysis required notwithstanding the nature of services required; Gelder Group and Kapinski distinguished.
Optic Plus Enterprises, Ltd. v. Bausch & Lomb, Inc.
Breach of contract claim grounded in company's officers establishment of competing business cannot be avoided on a supposed theory that company's principals are not bound to the terms of the company's agreements when they do not individually sign them; principals are bound as fiduciaries to abide the company's contractual obligations and the business judgment rule constitutes no grant of authority in the directors to take actions in excess of the company's contractual authority.
Pre-answer motion to dismiss veil piercing claim denied, even though papers opposing motion might not withstand a summary judgment motion post discovery.
Subcontract agreement providing for arbitration did not expressly make mediation a condition precedent to arbitration.
Motion for preliminary injunction denied; no request for permanent injunction in complaint.
Portfolio Management Assoc., LLC v. Long Consulting and Management Group Inc.
Disqualification of counsel: simultaneous representation of plaintiff and defendant; application of per se rule; continuous representation of PMA, during a period in which it is alleged that PMA acquired a 98% interest in LCMG, and during a time when plaintiff's counsel, in fact, represented LCMG in another matter involving one of LCMG's employees, precludes counsel from undertaking the prosecution of this matter against LCMG on behalf of PMA.
Internal affairs of Deleware corporation are decided under the law of the state of incorporation despite BCL 1319; derivative action and claim for breach of fiduciary duty to be decided under Delaware law, precluding claims brought exclusively under BCL 715, 717; claims fail under Delaware law anyway; breach of fiduciary duty claims also precluded by Delaware three year Statute of Limitations, CPLR 202; time barred claim for appointment of receiver seeking application of exception under Delaware statute allowing Court of Chancery to appoint one at any time for good cause shown must be brought in the court of Chancery.
Summary Judgment precluding claim for further damages for 1997 billings on res judicata, law of the case, abandonment by failing to appeal, and improper claim splitting doctrines denied; plaintiff properly reserved claim in reply papers on prior summary judgment motion under CPLR 3212(e); rule that new arguments presented in reply papers should not be considered only applies to new arguments in support of summary judgment, not those intended to withdraw claim from consideration on motion.
Indemnity agreement enforced; no issue of fact on defenses of bad faith and failure to investigate claim.
Rochester Drug Co-operative, Inc. v. Marcott Pharmacy North Corp.
Dismissal of third party claim against law firm for contribution and indemnification; malpractice not alleged.
Dismissal pre-answer of common law trespass claim and putative cause of action for "Computer Trespass" under Penal Law 156.10; no trespass or conversion alleged by reference only to employee's remote access of confidential information using unauthorized username and password; no trespass to land claim because no physical entry accomplished; no trespass to chattels claim because no interference with the employer's use and enjoyment of the information remotely accessed was alleged (i.e., no deletion of files or other interference with the owner's possession and use); no conversion claim because no allegation that employee did anything to exclude employer's excercise of rights over their property; no private right of action to enforce Penal Law 156.10.
Rockwood Automatic Machine, Inc. v. Lear Corp.
Arbitration (FAA case); Nolde Bros presumption of arbitrability not rebutted concerning dispute over provision of expired agreement; the Nolde Bros presumption applies to ordinary commercial contracts, and applies to the question whether an arbitration agreement has expired or been terminated when the plaintiff seeks to enforce disputed contractual rights alleged (by reference to normal principals of contract interpretation) to survive expiration of the remainder of the agreement. Matter of Waldron (Goddess), distinguished.
SBA Network Services v. Fred A. Nudd Corp.
Forum non conveniens; multistate engineering project for installation of cell phone towers; laches preclude motion.
Partial summary judgment on liability granted by reason of contractor's failure to supply (as agreed) cell phone towers meeting "design specs" specified in the purchase order; contractor's breach of express and implied warranty; dismissal of cross-claim for contribution and/or indemnification because CPLR 1401 may not be invoked to apportion a defendant's liability arising from breach of contract.
Confirm arbitration; bias of arbitrator waived by proceeding with arbitration.
University Plaza Tx. Limited Partnership v. Larry's Mexican Restaurant, Inc.
Stay of Arbitration granted; waived by resort to courts on same issues conceded to be arbitrable; effort to compartmentalize issues in one form from issues in the other rejected; issues of fact presented on oral modification by reason of part performance referable to the alleged oral modification.
Guidelines and Attorney Certification Form.

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