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7th Judicial District


Decisions of Interest - September 2006 - June 2007


Nalge Nunc International Corp. v. Warren

Index #2006/11195 (Sup. Ct. Monroe Co. October 2, 2006)
Preliminary Injunction denied; restrictive covenant declared unreasonable; vocation not learned profession nor was employee unique or extraordinary; although trade secret CD disk misappropriated, undisputed that it was destroyed and not shared; severance and partial enforcement denied; misappropriation claim requires both possession and use or likely threatened use.

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The Plastic Surgery Group of Rochester LLC v. Evangelisti

Index #2005/04911 (Sup. Ct. Monroe Co. September 5, 2006).
No common law accountant’s or taxpayer’s privilege; disclosure not limited by price fixing standard provided by stockholder’s agreement; price-fixing standard may be a legally enforceable determinant but does not preclude discovery when the accountant’s report is directly challenged; waiver of attorney-client privilege by reason of use of the privileged material offensively to obtain summary judgment.

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Carroll v. Abaie

Index #2002/06732 (Sup. Ct. Monroe Co. October 11, 2006).
Partnership dissolution; partnership was formed, not employment contract, because express agreement to share in both profits and losses; written trial partnership for a term transformed into oral one at will; claimed oral dissolution agreement failed for want of proof; parties cannot revert to default dissolution provisions of prior written trial partnership agreement because those provisions now impossible of performance; repayment of capital contribution limited to proportion of partner’s contribution even if profits and losses are divided in equal shares under Partnership Law §40(1)(first clause).

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Lippman v. Shaffer

Index #2003/10180 (Sup. Ct. Monroe Co. October 26, 2006).
Business Judgment Rule does not protect interested directors’ decision, taken outside their authority to make under by laws or existing corporate contracts, to approve disproportionate cash distributions, denominated severance payments, when the termination provisions of the director’s employment contracts were not triggered. Nor can the director’s tax avoidance objective bring such distributions within the ambit of the business judgment rule when no corresponding corporate obligation to make the payments exists; unequal treatment of stockholders by gift of corporate assets; director self-interested transaction does not by itself establish liability, but non-moving party raised no issue of fact on the “entire fairness” issue.

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Birnbaum v. ROHM Services Corp., Inc.

Index #2001/12235 (Sup. Ct. Monroe Co. December 4, 2006).
Accounting action dismissed because plaintiff had full knowledge of challenged transactions, had received a comprehensive review of all fees challenged and knew of the formula involved, never demanded an accounting, never was denied one, himself signed the checks in question; and otherwise waived his claims by failing timely to object.

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Amyell Dev . Corp. v. IKON Office Solutions, Inc.

Index #2005/01087 (Sup. Ct. Monroe Co. December 13, 2006).
Commercial lease; surrender or acceptance implied by operation of law from assignment of lease by tenant to third party and landlord’s subsequent and separate agreement between landlord and assignee; new agreement between landlord and assignee made without notice to original tenant and which materially altered and changed terms of original lease, by extending term for additional year, obligating assignee to lease 3,900 square feet of additional space and which called for $100,000 of additional improvements to the premises, all of which created substantial additional liabilities of the assignee that the original tenant did not consent to or have notice of; consent of landlord to original tenant’s assignment not necessary to imply surrender by operation of law.

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Petereit v. Battaglia

Index #2006/09097 (Sup. Ct. Monroe Co. January 11, 2007).
Shareholder Agreement providing for remaining shareholders’ right of first refusal to purchase employee’s 10% stake upon termination by the corporation held not to entitle dismissed employee to compel purchase of his shares by unwilling owners; dismissed shareholder/employee’s suit against remaining owner/shareholder/director/officer insufficiently separate from alleged wrong that would otherwise be brought derivatively against the corporation to support a private cause of action for breach of fiduciary duty.

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Commissioners of State Insurance Fund v. Cruz Constr. of Rochester, Inc., et al

Index #2003/10412 (Sup. Ct. Monroe Co. January 22, 2007).
Vacate default judgment under CPLR 5015(a)(1), 5015(a)(3) and inherent power of court under Woodson v. Mendon Leasing Corporation, 100 N.Y.2d 62 (2003) on ground of misconduct of third party not a party or co-party to the action, i.e., a lawyer jointly and concurrently representing adverse co-defendants controlled by one which obligated the moving party moving to joint and several liability on plaintiff’s claims for non-payment of premiums; controlling defendant sold the stock of the moving party while retaining its assets without disclosing to the new owner the joint and several liability imposed.

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Evolution Impressions, Inc. v. Lewandowski

Index #2005/06051 (Sup. Ct. Monroe Co. January 25, 2007).
Motion to vacate order granting summary judgment denied on the ground of excusable default, but original motion was improperly granted summarily by reason of non-appearance, so determination must be made on motion to vacate whether initial showing on summary judgment motion was sufficient to entitle moving party to relief; accounting required on claim for damages under faithless servant doctrine.

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Rochester Linoleum & Carpet Center, Inc. v. Homestead Development Corp.

Index #2006/01874 (Sup. Ct. Monroe Co. January 30, 2007).
Construction contract; owner not liable to subcontractor not in privity with owner, either in breach of contract or unjust enrichment, in the absence of an agreement by owner to pay or circumstances giving rise to such an obligation; events subsequent to performance of work by sub cannot overcome this presumptive rule because owner can become liable only when owner prompts sub to undertake or continue work upon promise to pay; sub’s invoices unilaterally listing owner as obligor cannot create liability for account stated where no liability was established before.

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Five Star Equipment, Inc. v. M.P. Lones Companies

Index #2006/09043 (Sup. Ct. January 30, 2007).
Vacate default judgment on ground that affidavit by party of facts not provided on prior motion for default and nor was verified complaint provided, CPLR 3215(f); follows 4th Department precedent declaring such a judgment a “nullity” and declines to follow 2d Dept. authority holding that the omission is a “procedural failure” thus permitting the party moving to vacate to show excusable default and meritorious defense.

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Cadlerock Joint Venture, L.P. v. Kleen Brite Laboratories

Index #2003/12091 (Sup. Ct. Monroe Co. January 31, 2007).
Reargument granted of order directing trial of damages following default and forced liquidation of secured collateral; secured creditor under Article 9 has no duty to mitigate independent of the standard of commercial reasonableness under Article 9; duty to mitigate coterminous with standard of commercial reasonableness, and in any event, under the UCC, duty to mitigate is generally a limitation on consequential damages, which were not claimed.

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D’Angelo v. Leone

Index #2005/09815 (Sup. Ct. Monroe Co. February 13, 2007).
Buy-sell agreement of the Texas shoot-out or Russian-Roulette variety; summary judgment declaring such deadlock provision invoked not precluded by claim that moving party looted corporation and therefore had unclean hands; unclean hands doctrine only precludes equitable relief where the moving party has dealt unjustly in the very transaction of which he complains; the moving party here is not seeking to enforce a contractual duty (entered into long before defendant’s alleged wrongdoing) against which illegibility could be argued; claims between the parties may be dealt with as set-offs to the accounting.

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Matter of Atkin v. Bd. of Assessors Town of Greece

Index #02/08757; 03/08677; 03/08659; 03/08678; 04/08407; 04/08404; 04/08405.
Tax Cert. valuation must take account of contamination clean-up costs of property that is the subject of a DEC voluntary clean-up agreement (VCA); DEC oversight of the three parcel site as a single economic unit permitted petitioner’s appraiser to value site as a whole because clean-up costs well exceeded the value as clean figure, a result that could not be sustained if there was any remaining value to the parcels which would have to be allocated to the individual parcels via a separate appraisal for each.

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Pramco v. Partners Trust Bank

Index #2006/02318 (Sup. Ct. Monroe Co. February 23, 2007).
Summary judgment rescinding distress loan sale at auction, on the ground of failure to keep bid documents relating to collateral valuation up to date, denied; bid was not irrevocable for all purposes under governing bid procedures; questions of fact presented from a breach of warranty perspective whether the breach was so substantial and fundamental as to strongly tend to defeat the object of the parties, especially because the truth of the contents of the bid document review files was expressly not warranted; the non-disclosure of updated collateral valuation reduction must be considered in light of the other disclosures in the bid documents showing the same thing; viewed as a non-occurrence of a condition precedent, question of fact presented whether non-occurrence may be excused to avoid disproportionate forfeiture and whether, in the context, the particular non-occurrence of the condition was a material part of the agreed exchange.

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Lee v. Tetra Tech, Inc.

Index #2006/07131 (Sup. Ct. Monroe Co. February 28, 2007)
Summary judgment declaring plaintiff-employees not subject to written employment agreement containing a restructure covenant granted; employer unilaterally changed employee’s status to at-will the following year and had employee sign new restrictive covenant geared from the date of signing, not the date of termination; elements of fraud, estoppel, and mistake do not create issue of fact whether the remedy of reformation should be ordered; alleged admissions of employee during negotiations are precluded by the parole evidence rule and raise no issue of fact - - contract documents unambiguous.

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Frontier Telephone of Rochester v. City of Rochester Assessor

Index ## 2004/07127; 2005/05573; 2006/06008 (Sup. Ct. Monroe Co. March 16, 2007).
Tax Cert. - Intra Building Network Cable within customer buildings is not exempt “station connections” within the meaning of Real Property Tax Law §102(12)(d) and (i); such cable was never de-tariffed by the FCC during partial deregulation in the 1980's and remains the property of Frontier; distinguishes the concept of inside or customer premises wiring on the customer’s side of the demarcation point.

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Security Mortgage Group LLC v. Oak Hill Family Park LLC

Index #2006/11718 (Sup. Ct. Monroe Co. March 22, 2007)
Question of fact whether entitlement to brokerage fee was conditioned upon closing or consummation of transaction; contract language ambiguous on the point; long-arm jurisdiction supported by two years worth of negotiations by Massachusetts firm, once lapsed and then resumed at the foreign firms’ initiative, and use of a New York bank for financing; individual defendant did not sign in personal capacity.

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The Pike Co., Inc. v. Oneida Indian Nation

Index #2006/05958 (Sup. Ct. Monroe Co. March 28, 2007)
Breach of Notice of Termination Clause; summary ejectment of contractor from site in violation of 7 day notice of termination clause precludes owner’s post-termination completion cost claim; summary judgment on liability awarded contractor on its breach of the notice of termination clause because contractor established as a matter of law that it did not repudiate contract or otherwise abandon performance.

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