By: Jeffrey M. Haber “A” brings an action against “B”. The causes of action asserted against “B” are all timely for statute of limitations purposes. Following discovery, “A” learns that “C” played a material role in the facts and circumstances leading up to the claims asserted in the complaint. “A” wants to amend the complaint to include claims against “C”, who would be a new defendant. The claims that “A” plans to assert against “C” are, however, time-barred. Can “A” bring the untimely claims against “C”? Yes, if they relate back to the claims asserted in the original complaint against “B”. The foregoing is the basic fact pattern in Goldberg v. Torim, 2023 N.Y. Slip Op. 05097 (1st Dept. Oct. 10, 2023) (here). What is The Relation-Back Doctrine? Under the relation-back doctrine, new parties may be joined as defendants in a previously commenced action, after the statute of limitations has expired on the claims against them.[1] The doctrine is codified in CPLR 203. The doctrine is “[a]imed at liberalizing the strict, formalistic pleading requirements of the [nineteenth] century, while at the same time respecting the important policies inherent in statutory repose.”[2] It “enables a plaintiff to correct a pleading error – by adding either a new claim or a new party – after the statutory limitations period has expired.”[3] It is within court’s “sound judicial discretion to identify cases that justify relaxation of limitations strictures … to facilitate decisions on the merits if the correction will not cause undue prejudice to the plaintiff’s adversary.”[4] The Court of Appeals has recognized that a more relaxed standard applies where a plaintiff seeks to use the relation-back doctrine by adding a new claim against a defendant who is already a party to litigation as opposed to adding a new defendant.[5] Where a plaintiff proposes to add a new defendant, the Court of Appeals has adopted a three-part test for determining whether to apply relation back to an amended pleading that adds a new defendant.[6] No such test applies where a plaintiff seeks the relation back of a new claim.[7] In other words, where a proposed amended complaint contains an untimely claim against a defendant who is already a party to the litigation, the relevant considerations are simply (1) whether the original complaint gave the defendant notice of the transactions or occurrences at issue, and (2) whether there would be undue prejudice to the defendant if the amendment and relation back are permitted.[8] Under the three-part test applicable to the addition of a new defendant, the plaintiff must show that (1) the claims against the new defendant arises from the same conduct, transaction, or occurrence as the claims against the original defendant, (2) the new defendant is “united in interest” with the original defendant, and will not suffer prejudice due to the lack of notice, and (3) the new defendant knew or should have known that, but for the plaintiff’s mistake, he/she would have been included as a defendant.[9] The requirement of unity of interest is “more than a notice provision”.[10] “The test is whether ‘the interest of the parties in the subject-matter is such that they stand or fall together and that judgment against one will similarly affect the other.’”[11] Unity of interest will not be found unless there is some relationship between the parties giving rise to the vicarious liability of one for the conduct of the other.[12] Also, unity of interest will not be found if there is a possibility that the new defendant may have a defense unavailable to the original defendant.[13] Notably, a marital relationship is not, by itself, sufficient to find a unity in interest. Only “when the spouse is acting as [the other spouse’s] agent while committing the tort, or when the married person consents to, instigates, participates in, or coerces the spouse’s action” will there be a finding of unity in interest.[14] Goldberg v. Torim Goldberg arose from a real estate transaction between close friends that went awry. In February 2017, defendant Shloime Torim (“Shloime”) allegedly called plaintiff and told him that he found a property selling for $500,000 that plaintiff should buy and later sell for a profit. According to plaintiff, defendant insisted that the property could be flipped within one year for a ten percent profit. In early August 2017, defendant called plaintiff to tell him that the property had sold for $700,000. Plaintiff alleged that defendant paid him only $525,000.00 from the sale, instead of the $700,000 that defendant represented the property had sold for. Plaintiff demanded the remaining $175,000. Defendant did not pay the amount demanded. Plaintiff brought suit against defendant, asserting causes of action for breach of fiduciary duty, conversion and fraud. Defendant moved to dismiss the complaint. By order dated January 3, 2019, the motion court dismissed the causes of action for breach of fiduciary duty and fraud but sustained the cause of action for conversion. Plaintiff appealed. The Appellate Division, First Department affirmed, finding the breach of fiduciary claim conclusory and the fraud claim unsupported by the facts alleged.[15] Thereafter, plaintiff moved to amend the complaint to, among other things, bring defendant’s wife, Leah Torim (“Leah”), and son, Sholom Torim (“Sholom”) into the action. Plaintiff claimed that Leah was involved in the transactions that facilitated the sale of the disputed property, including executing certain documents, and created the purported profits that plaintiff claims were converted. The motion court held that those allegations were sufficient, for pleading purposes, to grant the motion to amend. Leah moved to dismiss the conversion cause of action asserted against her on the ground that the statute of limitations had expired. Leah argued that, among other things, they did not relate back to the claim against Shloime and, therefore, it was time-barred. With regard to the relation back doctrine, Leah maintained that her marriage to Shloime by itself was insufficient to find a unity of interest for purposes of the doctrine. Plaintiff opposed the motion, arguing that the statute of limitations had not run. Plaintiff maintained that since the claim was based upon fraud, the statute of limitations was governed by the six-year limitation period applicable to fraud claims.[16] Plaintiff also argued that the claim against Leah related back to the timely conversion claim asserted against Shloime and, therefore, the three-year statute of limitations had not run. Plaintiff maintained that there was unity in interest because Leah acted as Shloime’s agent while the tort was being committed, consented to, and participated in Shloime’s fraudulent conduct. The motion court denied the motion. The motion court found that the six-year limitation period applied even though the fraud claim had been dismissed. On appeal, the First Department affirmed on the basis of the relation-back doctrine. In so holding, the Court explained that although Leah and Shloime “were not ‘united in interest’ solely because they are husband and wife,” they were nevertheless united in interest due to “an agency relationship between” them.[17] Such a relationship, said the Court, was “sufficient to impose vicarious liability on defendant for codefendant’s acts, including but not limited to Leah having allegedly forged plaintiff’s signature on a deed as Shloime’s agent and transferring and selling the property in furtherance of the underlying conversion.”[18] ______________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. [1] Higgins v. City of New York, 144 A.D.3d 511, 513 (1st Dept. 2016). [2] Buran v. Coupal, 87 N.Y.2d 173, 177 (1995). [3] Id. [4] Id. at 178 (internal quotation marks and citation omitted). [5] Id.; see also Duffy v. Horton Mem. Hosp., 66 N.Y.2d 473, 477 (1985). [6] Id. [7] Id. [8] Id.; CPLR 203(f); CPLR 3025(b); see also Caffaro v. Trayna, 35 N.Y.2d 245, 251 (1974). [9] Id.; see also Higgins, 144 A.D.3d at 513; Garcia v. New York-Presbyt. Hosp., 114 A.D.3d 615 (1st Dept. 2014). [10] Higgins, 144 A.D.3d at 513 (quoting Mongardi v. BJ’s Wholesale Club, Inc., 45 A.D.3d 1149, 1151 (3d Dept. 2007) (internal quotation marks omitted)). [11] Id. (quoting Vanderburg v. Brodman, 231 A.D.2d 146, 147-148 (1st Dept. 1997) (internal quotation marks omitted)). [12] Id. (citations omitted). [13] Id. (citations omitted). [14] See L&L Plumbing & Heating v. DePalo, 253 A.D.2d 517, 518 (2d Dept. 1998) (vicarious liability related back where husband and wife owned property together and husband acted as agent for wife). [15] Goldberg v. Torim, 181 A.D.3d 443 (1st Dept. 2020). [16] A cause of action for conversion is subject to a three-year limitation period. CPLR 214(3); Sporn v. MCA Records, 58 N.Y.2d 482,488-489 (1983). However, where the conversion claim is “based upon fraud” the cause of action is governed by the six-year limitations period for fraud. See, e.g., Monteleone v. Monteleone, 162 A.D.3d 761 (2d Dept. 2022). [17] Slip Op. at *1. [18] Id. (citations omitted).

By: Jonathan H. Freiberger Today’s BLOG deals with the “Relation Back Doctrine” (the “Doctrine”)[1], which, inter alia, “allows a claim asserted against a defendant in an amended filing to relate back to claims previously asserted against a codefendant for Statute of Limitations purposes where the two defendants are “‘united in interest.’” Buran v. Coupal, 87 N.Y.2d 173, 177 (1995) (citation omitted). The Doctrine was codified by the CPLR. See, e.g., CPLR 203(b), (c), (e) and (f). As explained by the Court of Appeals, the “doctrine enables a plaintiff to correct a pleading error by adding either a new claim or a new party after the statutory limitations period has expired [and] thus gives courts the sound judicial discretion to identify cases that justify relaxation of limitations strictures to facilitate decisions on the merits if the correction will not cause undue prejudice to the plaintiff's adversary.” Id. at 177-178 (citations, internal quotation marks and ellipses omitted). Under the Doctrine, claims against a later added party would relate back to the commencement date of the action if: “(1) both claims arose out of the same conduct, transaction or occurrence; (2) the new party is united in interest with the original defendant, and by reason of that relationship can be charged with such notice of the institution of the action that they will not be prejudiced in maintaining their defense on the merits; and (3) the new party knew or should have known that, but for an excusable mistake by the plaintiff as to the identity of the proper parties, the action would have been brought against [them] as well.” Nemeth v. K-Tooling, 40 N.Y.3d 405, 411 (2023) (citations, internal quotation marks and brackets omitted); see also O’Halloran v. Metropolitan Transp. Authority, 154 A.D.3d 83, 86-87 (1st Dep’t 2017). A “more relaxed” standard is recognized in the application of the Doctrine when a party seeks to add a new claim against an existing party as opposed to adding a new party to an existing action. O’Halloran, 154 A.D.3d at 86. In such circumstances, “the relevant considerations are simply (1) whether the original complaint gave the defendant notice of the transactions or occurrences at issue and (2) whether there would be undue prejudice to the defendant if the amendment and relation back are permitted.” Id. at 87 (citations omitted). On July 30, 2025, the Appellate Division, Second Department, had occasion to address the Doctrine in U.S. Bank National Association v. 1702 Dean, LLC, a mortgage foreclosure action.[2] The facts of U.S. Bank are somewhat tortured and will be simplified herein for editorial purposes. In 2006 the borrower executed a note in the amount of $600,000 and secured her repayment obligations with a mortgage on residential property located in Brooklyn, New York. Upon the borrower’s death, the mortgaged premises was transferred to Gerald, one of the borrower’s sole surviving heirs. The lender commenced a foreclosure action against Gerald in 2010. In the complaint, the “Block” number in the tax map designation was incorrectly listed and that error was carried over to the filed notice of pendency.[3] Gerald defaulted in appearing and, in 2013, the lender’s motion for a default judgment and for the appointment of a referee to compute was granted.[4] Later in 2013, Gerald conveyed the property to an unrelated LLC. Thereafter, a second and a third notice of pendency was filed which, again, contained an incorrect “Block” numbers. A judgment of foreclosure and sale was issued in February of 2017. In April of 2017 a fourth notice of pendency was filed, which contained, for the first time, a proper property description. In November of 2017, the lender withdrew the judgment of foreclosure and sale. The LLC moved to intervene in the action in July of 2018, and, in October of 2018, the lender moved for leave to file a supplemental summons and amended complaint to add the LLC as a necessary party. Both motions were granted by the trial court. The supplemental summons and amended complaint were filed by the lender along with a notice of pendency containing a proper property description. “The LLC interposed an answer in which it asserted various affirmative defenses, including that the action was barred by the statute of limitations and that it was not bound by any proceedings in the action because the notice of pendency was not properly indexed against the premises.” The lender moved for summary judgment against the LLC and the LLC cross-moved for summary judgment dismissing the amended complaint as time barred. In support of its cross-motion, the sole member of the LLC submitted an affidavit in which he averred that “the LLC obtained its interest in the premises pursuant to the deed dated February 13, 2015, which was recorded on March 11, 2015, that no notice of pendency was filed against the premises at that time, and that he was not on notice of this foreclosure action when the LLC acquired the premises.” The lender opposed the cross-motion by arguing that the action was timely commenced against the LLC by virtue of the Doctrine. Both motions were denied. The LLC appealed. The Second Department reversed. The Court found that the LLC met its initial burden of demonstrating that the amended complaint was filed outside the six-year statute of limitations period for foreclosure actions[5] and, in opposition, the lender failed to meet its burden of demonstrating the applicability of the Doctrine. In addition to the legal issues previously discussed herein, the Court noted that the “linchpin of the relation-back doctrine is whether the new defendant had notice within the applicable limitations period. (Citations and internal quotation marks omitted.) The Court noted compliance with the first “prong” of the Doctrine’s test because the claim arose from the same conduct, transaction or occurrence. As to the second “prong,” however, the Court found that Gerald and the LLC were not united in interest. “Here, a judgment of foreclosure and sale would not similarly affect Gerald and the LLC, as Gerald no longer has an interest in the premises, while the LLC would have its interest in the premises foreclosed. Moreover, any claim of identical interests is undermined by Gerald's default in appearing or answering the complaint.” (Citations, internal quotation marks and ellipses omitted.) [1] This BLOG has previously addressed the “Relation Back Doctrine.” See, e.g., [here] and [here]. [2] This BLOG has written dozens of articles addressing numerous aspects of residential mortgage foreclosure. To find such articles, please see the BLOG tile on our website and search for any foreclosure, or other commercial litigation, issue that may be of interest you. [3] This BLOG has written numerous articles addressing notices of pendency. To find such articles, please see the BLOG tile on our website and type “notice of pendency” into the “search” box. Simply stated, a notice of pendency (or lis pendens) is a provisional remedy governed by Article 65 of the CPLR. The purpose of a notice of pendency is to put defendants and the world on constructive notice of the full scope of the rights claimed by plaintiff to defendant’s real property. Sjogren v. Land Assoc., LLC, 223 A.D.3d 963, 965 (3rd Dep’t 2024). [4] This BLOG has written numerous articles on Referee’s in mortgage foreclosure actions. See. e.g., [here], [here], [here], and [here]. [5] This BLOG has written numerous articles addressing statute of limitations issues in residential mortgage foreclosure actions. To find such articles, please see the BLOG tile on our website and type “statute of limitations mortgage foreclosure” into the “search” box.

By: Jeffrey M. Haber Under New York law, alter ego liability, often referred to as piercing the corporate veil, is a doctrine that permits a court to disregard the corporate form and hold an individual officer, director, or owner liable where that person exercised domination and control over the entity and used that domination and control to commit a fraud or wrong that injured the plaintiff. Courts emphasize that mere domination or control is insufficient; instead, a plaintiff must plead particularized facts demonstrating a misuse of the corporate form, reflecting New York’s strong presumption against disregarding corporate separateness. Against this backdrop, in Soleil Chartered Bank v. Breton Equity Co. Corp., 2026 NY Slip Op 03280 (1st Dept. May 26, 2026), the Appellate Division, First Department, affirmed dismissal of alter ego claims where the complaint relied on conclusory, information and belief, allegations of domination and failed to connect any alleged misuse of the corporate entity to a fraud or other cognizable wrong, reinforcing the heavy pleading burden required to sustain veil piercing claims in New York. Soleil Chartered Bank v. Breton Equity Co. Corp. Soleil Chartered was filed in connection with other actions pending in Supreme Court, New York County.[1] The first action was filed by Crestwood Services, LLC (“Crestwood”) against Soleil Chartered Bank (“Soleil Chartered”), seeking recovery from Soleil Chartered based on a standby letter of credit issued by Soleil Chartered in favor of Crestwood (the “2023 Action”). On or about February 2, 2024, the motion court in the first action issued a preliminary conference order that set forth, among other deadlines, the date by which the parties could implead additional parties. Following the deadline to implead, Soleil Chartered filed a third-party complaint impleading defendant, Breton Equity Co. Corp., into the 2023 case (the “2024 Action”). The third-party complaint sought relief only against Breton Equity and asserted, among other things, that if Soleil Chartered was found liable to Crestwood, then Breton Equity was obligated to indemnify Soleil Chartered based on a written indemnity agreement between Soleil Chartered and Breton Equity. Defendant, Ted Doukas, signed the indemnity agreement as an officer and owner of Breton Equity. Doukas was not named a third-party defendant in that action. One year later, Soleil Chartered commenced the action, seeking relief against Doukas personally and the same relief against Breton Equity that it sought in the 2024 Action. Soleil Chartered attempted to impose personal liability upon Doukas based on two theories: (a) Doukas signed the indemnification agreement in his individual capacity, as well as in his corporate capacity; and (b) alter ego liability – Doukas as the sole shareholder, principal and owner of Breton Equity directed, dominated, and controlled Breton Equity as if it was his alter ego. Soleil Chartered also alleged that Doukas wrongfully used Breton Equity to benefit himself and his family at the expenses of third parties, including Soleil Chartered. Doukas moved to dismiss. On or about November 17, 2025, the motion court granted the motion. The motion court found that “[t]here was no language in the indemnity agreement personally binding Mr. Doukas” and that “[t]o the extent the complaint allege[d] that Mr. Doukas signed the indemnification agreement in his personal capacity, it [was] dismissed.” The motion court further held that the part of the complaint that alleged Doukas was Breton Equity’s alter ego was dismissed. “Generally, 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 such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff’s injury.”[2] Importantly, it is not enough for the plaintiff to demonstrate that the officer, director, or shareholder dominated and controlled the corporate entity.[3] The plaintiff must show that the officer, director, or member used the corporation for his/her personal benefit and the corporation was nothing more than an “alter ego” or instrumentality of the officer or member.[4] Because “New York law disfavors disregard of the corporate form,”[5] conclusory allegations of domination and control are insufficient.[6] The plaintiff must demonstrate that there was a unity of interest and control between the defendant and the entity such that they are indistinguishable. While application of the doctrine depends on the facts and circumstances of each case,[7] several factors have emerged in determining whether the plaintiff has made the requisite showing. These factors include, among others: (1) the failure to adhere to corporate formalities; (2) inadequate capitalization (that is, the corporation or LLC does not have sufficient funds to operate); (3) a commingling of assets; (4) one person or a small group of closely related people were in complete control of the corporation or LLC; and (5) use of corporate funds for personal benefit.[8] No one factor controls the consideration.[9] The plaintiff must overcome a “heavy burden” to plead facts sufficient to establish alter ego liability.[10] Soleil Chartered appealed the dismissal. On appeal, Soleil Chartered only sought review of that portion of the motion court’s order finding that Soleil Chartered’s allegations of alter ego liability were insufficient to state a claim against Doukas. The First Department unanimously affirmed. The Court held that the motion court “properly declined to find that Doukas [was] the alter ego of defendant Breton Equity Company Corp. and that piercing the corporate veil [was] warranted to hold Doukas personally liable for Breton Equity’s indemnity obligation.”[11] The Court explained that the “complaint’s conclusory, information-and-belief allegation that Doukas exercised dominion and control over Breton Equity [was] insufficient to support alter ego liability.”[12] The Court also held that even if “the complaint sufficiently alleged that Doukas exercised dominion and control over Breton Equity,” that allegation alone was “insufficient to pierce the corporate veil.”[13] The Court noted that the “complaint allege[d] on information and belief and in conclusory fashion that Doukas misused or moved Breton Equity funds,” but did “not state how the alleged abuse of the corporate form was for the purpose of avoiding the obligation to indemnify,” or “how Doukas’s domination was the instrument of fraud.”[14] “Absent more particularized statements,” said the Court,[15] “the wrong or injury alleged is essentially that Breton Equity breached its contract in failing to indemnify plaintiff, and ‘a simple breach of contract, without more, does not constitute a fraud or wrong warranting the piercing of the corporate veil.’”[16] Takeaway Soleil Chartered underscores the heavy burden plaintiffs must overcome when pleading alter ego liability in New York and, in particular, the insufficiency of conclusory pleading. The Court reaffirmed that a plaintiff must do more than allege that an individual exercised control over a corporation; domination and control, even if adequately alleged, is only the first step and does not by itself justify piercing the corporate veil. Rather, the plaintiff must plead specific facts showing that such domination and control was used to commit a fraud or other cognizable wrong that caused the plaintiff’s injury. In Soleil Chartered, the complaint failed because it relied on generalized, information-and-belief allegations that defendant controlled the corporate entity and misused its funds, without explaining how that conduct was tied to the alleged harm. The Court emphasized that allegations of wrongdoing must be particularized and must demonstrate that the corporate form was abused for the purpose of perpetrating the claimed wrong. Absent such detail, courts will not infer the requisite nexus between control and misconduct. The Court's decision also highlights that a mere breach of contract does not constitute the type of wrong necessary to sustain an alter ego theory. Without additional allegations showing that the corporate structure itself was used as an instrument of wrongdoing, veil piercing is unavailable as a matter of law. Ultimately, the takeaway of Soleil Chartered is that New York courts continue to require plaintiffs to overcome a “heavy burden” to establish alter ego liability: plaintiffs must allege detailed, non-conclusory facts establishing both domination and control and their misuse to commit a wrong. Boilerplate allegations of control and misconduct, untethered to a concrete fraudulent or improper objective, will not survive a motion to dismiss. __________________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes only and is not intended to be, and should not be, taken as legal advice. Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions or litigation releases and not on matters handled by the firm. ___________________________________ [1] The facts of the action are taken from the motion court’s decision and the briefing on appeal. [2] Conason v. Megan Holding, LLC, 25 N.Y.3d 1, 18 (2015) (internal quotation marks omitted); TNS Holdings v. MKI Sec. Corp., 92 N.Y.2d 335, 339 (1998). [3] Matter of Morris v. New York State Dept. of Taxation & Fin., 82 N.Y.2d 135, 141-142 (1993); TNS Holdings, 92 N.Y.2d at 339. [4] TNS Holdings, 92 N.Y.2d at 339. [5] Sutton 58 Assoc. LLC v. Pilevsky, 189 A.D.3d 726, 729 (1st Dept. 2020) (internal quotation marks omitted). [6] East Hampton Union Free School Dist. v. Sandpebble Bldrs., Inc., 16 N.Y.3d 775, 776 (2011) (noting that at the pleading stage, “a plaintiff must do more than merely allege that [the defendant] engaged in improper acts or acted in ‘bad faith’ while representing the corporation”), aff’d, 16 N.Y.3d 775 (2011); Metropolitan Transp. Auth. v. Triumph Adv. Prods., 116 A.D.2d 526, 528 (1st Dept. 1986). [7] Ledy v. Wilson, 38 A.D.3d 214, 214 (1st Dept. 2007). [8] Shisgal v. Brown, 21 A.D.3d 845, 848 (1st Dept. 2005) (internal citation omitted). [9] Tap Holdings, LLC v. Orix Fin. Corp., 109 A.D.3d 167, 174 (1st Dept. 2013) (citation omitted). [10] TNS Holdings, 92 N.Y.2d at 339. [11] Slip Op. at *1. [12] Id., citing Board of Mgrs. of Gansevoort Condominium v. 325 W. 13th, LLC, 121 A.D.3d 554, 554 (1st Dept. 2014). [13] Id., citing TNS Holdings, 92 N.Y.2d at 339; Sutton 58 Assoc. LLC v. Pilevsky, 189 A.D.3d 726, 729 (1st Dept. 2020). [14] Id., citing Sheridan Broadcasting Corp. v. Small, 19 A.D.3d 331, 332 (1st Dept. 2005); see also Olshan Frome Wolosky, LLP v. Kestenbaum, 244 A.D.3d 490, 492 (1st Dept. 2025). [15] Id., citing Sheridan Broadcasting, 19 A.D.3d at 332. [16] Id., quoting Skanska USA Bldg. Inc. v. Atlantic Yards B2 Owner, LLC, 146 A.D.3d 1, 12 (1st Dept. 2016) (internal quotation marks omitted), aff’d, 31 N.Y.3d 1002 (2018).

By: Jeffrey M. Haber In commercial and business litigation, it is common for plaintiffs to assert claims against a business entity for wrongs committed by a corporate entity. Often, plaintiffs will try to “pierce the corporate veil,” or get behind the corporate form, to hold the entity’s officers or members liable for the alleged wrongdoing. “Generally, 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 such domination was used to commit a fraud or wrong against the plaintiff which resulted in plaintiff’s injury.”[1] Importantly, it is not enough for the plaintiff to demonstrate that the officer, director or shareholder dominated and controlled the corporate entity.[2] The plaintiff must show that the officer, director or member used the corporation for his/her personal benefit and the corporation was nothing more than an “alter ego” or instrumentality of the officer or member.[3] Because “New York law disfavors disregard of the corporate form,”[4] conclusory allegations of domination and control are insufficient.[5] The plaintiff must demonstrate that there was a unity of interest and control between the defendant and the entity such that they are indistinguishable. While application of the doctrine depends on the facts and circumstances of each case,[6] several factors have emerged in determining whether the plaintiff has made the requisite showing. These factors include, among others: (1) the failure to adhere to corporate formalities; (2) inadequate capitalization (that is, the corporation or LLC does not have sufficient funds to operate); (3) a commingling of assets; (4) one person or a small group of closely related people were in complete control of the corporation or LLC; and (5) use of corporate funds for personal benefit.[7] No one factor controls the consideration.[8] The alter ego liability doctrine has also been applied to pierce the veil between corporations when affiliate or subsidiary corporations are used by a dominating parent corporation to engage in fraudulent or wrongful conduct. Under New York law, a corporation is considered to be a “mere alter ego when it ‘has been so dominated by … another corporation … and its separate identity so disregarded, that it primarily transacted the dominator’s business rather than its own.’”[9] When that occurs, “the dominating corporation will be held liable for the actions of its subsidiary.…”[10] As with veil piercing, control is an important factor. The factors considered for veil piercing are also used to determine alter ego liability.[11] Again, no one factor is dispositive and “all need not be present to support a finding of alter ego status.”[12] Finally, a plaintiff must establish a causal connection between the domination and control of the corporate entity and the injury complained of.[13] [Eds. Note: This Blog has previously written about the benefits of forming a corporation or a limited liability corporation and the perils of ignoring the corporate formalities that are attendant thereto. See, e.g., here, here, here, here, here, and here.] In today’s article, we examine the alleged use of multiple corporate entities to commit a wrong and the court’s unwillingness to find alter ego liability based on their alleged collective actions in committing the wrongs complained of. Cortlandt St. Recovery Corp. v. Bonderman, 2024 N.Y. Slip Op. 01250 (1st Dept. Mar. 7, 2024) (here). [Eds. Note: the factual discussion below comes from the parties’ briefing on appeal.] Cortlandt Street arose from a 2006 corporate recapitalization involving TIM Hellas, a Greek telecommunications company, and certain of its affiliates (the “Hellas Group”). In early 2005, funds separately advised by two private equity firms agreed to invest indirectly in the Hellas Group. The TPG-advised funds and an Apax-advised fund each acquired a 41% indirect minority interest. Approximately eighteen months later, as part of a recapitalization (the “Recap”), Hellas Telecommunications Finance S.C.A. (“Hellas Finance”), a Luxembourg partnership, issued, and Hellas Telecommunications I, S.à.r.l. (“Hellas I”), a Luxembourg limited liability company, guaranteed, €200 million in payment-in-kind notes (the “Notes”) that were sold to European institutional investors. In 2009, the Notes went into default. Plaintiff Wilmington Trust Company (“WTC”), the successor Trustee on the Indenture and representative for all noteholders, contended that the Hellas Group was rendered insolvent as a result of the Recap payments. In 2014, WTC obtained a judgment (the “Judgment”) against Hellas Finance and Hellas I (the “Judgment Debtors”). The Judgment was based on the failure of the Judgment Debtors to pay the amounts due under the Notes. In April 2019, WTC filed an amended complaint, which asserted ten causes of action against the TPG defendants, various Apax-related entities, and two individuals. WTC alleged claims for breach of contract, unjust enrichment and imposition of a constructive trust, fraudulent conveyance (five counts), conversion, the payment of unlawful dividends, and judgment enforcement. Only one of those claims survived against nine of the original defendants: the third cause of action, seeking enforcement of the Judgment on an alter ego theory against the TPG defendants. Following discovery, defendants moved for summary judgment dismissing the action. The motion court denied the motion of the TPG defendants and granted the motion of defendants Giancarlo Aliberti, Matthias Calice, and Apax Partners, L.P. In denying the TPG defendants’ motion, the motion court treated the TPG defendants and numerous non-parties as a collective entity. The motion court did not identify the role played by any of the TPG defendants in dominating the Hellas Group to commit the wrongs complained of. Instead, the motion court allowed the TPG defendants to “be considered collectively for alter ego purposes” with each other and with other non-parties. On appeal, the Appellate Division, First Department modified the motion court’s order to grant the motion as to the TPG defendants, and otherwise affirmed the order as to the other moving defendants. The Court held that Plaintiff failed to raise an issue of fact precluding summary judgment in favor of the TPG defendants. The Court found that plaintiff failed to identify any evidence demonstrating the actions taken by each TPG defendant in the wrongs alleged by WTC. Instead, said the Court, “Plaintiff points to tangential relations of each of the TPG Defendants to the transaction at issue and contends that when the actions of each of the nine TPG Defendants are taken as a collective whole, the evidence supports an alter ego claim.”[14] However, explained the Court, the case authority upon which plaintiff relied did not support the collective approach advance by plaintiff.[15] Rather, said the Court, the cases required “each defendant” to be “the alter ego of another.”[16] The Court noted that even if it accepted plaintiff’s view of collective alter ego liability, plaintiff nonetheless failed to proffer “proof sufficient to raise an issue of fact as to how each of the TPG Defendants, … , exercised ‘complete domination’ over the purportedly dominated companies (the Hellas entities), let alone how ‘such domination was used to commit a fraud or wrong against the plaintiff.’”[17] Plaintiff offers no evidence sufficient to demonstrate how the individual TPG Defendants satisfy the alter ego factors. Notably, plaintiff has offered no particularized proof that the TPG Defendants: owned any stock in any Hellas entity; played any role in the issuance of the offering memorandum and eventual 2006 corporate recapitalization; disregarded any of the corporate formalities (as plaintiff's expert concedes); intermingled its funds with those of any Hellas entity; shared its officers, directors and corporate personnel or even common office space and telephone numbers with any Hellas entity; interfered with the ability of any Hellas entity to make independent business decisions; or failed to treat the Hellas entities as independent profit centers.[18] The Court, therefore, held that the motion court “erred in assessing [the] factors [showing domination] under a collective liability theory by treating the TPG Defendants as a single entity.”[19] The Court also held that the “alter ego claim was properly dismissed as against individual defendants Giancarlo Aliberti and Matthias Calice, as there [was] no evidence that they were ‘actually doing business in their individual capacities, shuttling their personal funds in and out of the corporations without regard to formality and to suit their immediate convenience.’”[20] Finally, the Court held that the “alter ego claim was also properly dismissed as against defendant Apax Partners, L.P., which had no involvement in the transaction at issue.”[21] Takeaway Cortlandt Street is notable because of its rejection of a collective alter ego theory of liability, which lumps together for alter ego purposes distinct corporate entities and/or non-parties without requiring the plaintiff to present evidence as to each defendant’s conduct and involvement in the transaction at issue. [1] Conason v. Megan Holding, LLC, 25 N.Y.3d 1, 18 (2015) (internal quotation marks omitted); TNS Holdings v. MKI Sec. Corp., 92 N.Y.2d 335, 339 (1998). [2] Matter of Morris v. New York State Dept. of Taxation & Fin., 82 N.Y.2d 135, 141-142 (1993); TNS Holdings, 92 N.Y.2d at 339. [3] TNS Holdings, 92 N.Y.2d at 339. [4] Sutton 58 Assoc. LLC v. Pilevsky, 189 A.D.3d 726, 729 (1st Dept. 2020) (internal quotation marks omitted). [5] East Hampton Union Free School Dist. v. Sandpebble Bldrs., Inc., 16 N.Y.3d 775, 776 (2011) (noting that at the pleading stage, “a plaintiff must do more than merely allege that [the defendant] engaged in improper acts or acted in ‘bad faith’ while representing the corporation”), aff’d, 16 N.Y.3d 775 (2011); Metropolitan Transp. Auth. v. Triumph Adv. Prods., 116 A.D.2d 526, 528 (1st Dept. 1986). [6] Ledy v. Wilson, 38 A.D.3d 214, 214 (1st Dept. 2007). [7] Shisgal v. Brown, 21 A.D.3d 845, 848 (1st Dept. 2005) (internal citation omitted). [8] Tap Holdings, LLC v. Orix Fin. Corp., 109 A.D.3d 167, 174 (1st Dept. 2013) (citation omitted). [9] Trabucco v. Intesa Sanpaolo, S.p.A, 695 F. Supp. 2d 98, 107 (S.D.N.Y. 2010). See also Austin Powder Co. v. McCullough, 216 A.D.2d 825, 827 (3d Dept. 1995) (commingling assets and operating corporations “as one entity”). [10] Trabucco, 695 F. Supp. 2d at 107. [11] Id. [12] N.Y. Dist. Council of Carpenters Pension Fund v. Perimeter Interiors, Inc., 657 F. Supp. 2d 410, 421 (S.D.N.Y. 2009). See also Tap Holdings, 109 A.D.3d at 174. [13] Matter of Morris, 82 N.Y.2d at 141; Guptill Holding Corp. v. State of N.Y., 33 A.D.2d 362, 365 (3d Dept. 1970) (noting that an element of veil piercing is “an injury proximately caused by said wrong”) (citation omitted); East Hampton Union Free School Dist., 66 A.D.3d at 132 (noting that the plaintiff must articulate conduct by the individual that creates a nexus between it and the “transactions or occurrences” alleged in the complaint). [14] Slip Op. at *1. [15] Id. [16] Id. at 1-2 (citing Perez v. Masonry Servs., Inc., 189 A.D.3d 703, 704 (1st Dept. 2020), lv. denied, 37 N.Y.3d 903 (2021) (specifically finding that the defendants treated two corporate entities “as a single entity,” and thus “abused the privilege of doing business in the corporate form”); Wm. Passalacqua Bldrs., Inc. v Resnick Devs. S., Inc., 933 F.2d at 139-141 (specifically detailing the evidence demonstrating the “blurred” “lines of corporate control and responsibility” and “high degree of intermingling” among various entities “all controlled either directly or indirectly by family members”)). [17] Id. at *2 (citing Matter of Morris, 82 N.Y.2d at 141). [18] Id. [19] Id. [20] Id. at 2-3 (quoting Walkovszky v. Carlton, 18 N.Y.2d 414, 420 (1966) (internal quotation marks omitted)). [21] Id. at *3.

By: Jeffrey M. Haber Merger clauses and the duplication of claims doctrine often operate to limit the availability of fraudulent inducement claims alongside breach of contract claims. As a general matter, merger clauses are intended to preclude reliance on extrinsic representations, while the duplication of claims doctrine limits plaintiffs from recasting breach of contract claims as tort claims absent an independent legal duty. However, these doctrines are subject to important limitations: a merger clause will bar a fraudulent inducement claim only where it contains a sufficiently specific disclaimer of reliance on the particular misrepresentations at issue, and a fraud claim will not be deemed duplicative where it is predicated on misrepresentations of present fact collateral to the contract and implicating a distinct legal wrong. Against this backdrop, we examine the Appellate Division, First Department’s decision in CSN Realty Corp. v. Moussaieff, 2026 N.Y. Slip Op. 03228 (1st Dept. May 21, 2026). In CSN Realty, the Court held that a general merger clause did not foreclose a fraudulent inducement claim based on alleged misrepresentations made by non-parties to the contract, and further concluded that the fraud claim was not duplicative of the breach of contract claim because it rested on representations of then-existing fact that allegedly induced plaintiff to enter into the transaction. The decision also reaffirmed that fraud claims may proceed in the alternative, even where overlapping damages are alleged, in light of the distinct remedial framework applicable to fraud. In doing so, CSN Realty underscores a more nuanced and fact-sensitive application of these doctrines, confirming that fraud is not duplicative where it alleges a separate inducement-based injury grounded in extra-contractual misrepresentations. CSN Realty Corp. v. Moussaieff In or around March 2018, defendants, Roy Moussaieff (“Roy”) and Yousef Althkefati (“Althkefati”), among others, formed 2252 Third Avenue, LLC (“2252 Third Avenue” of “judgment debtor”) as the vehicle through which they would acquire the property located at 2252 Third Avenue in New York, New York (the “Property”).[1] As the transaction took shape, Roy and Althkefati represented to plaintiff that 2252 Third Avenue had sufficient capital to complete the $12,000,000 purchase. In response to that assurance, plaintiff required that the parties’ agreement expressly reflect them. Accordingly, the transaction agreement (the “Contract”) included specific provisions, set forth in a negotiated rider, stating that 2252 Third Avenue had “adequate funds to close” and that its obligations were not contingent upon financing. On March 19, 2018, the parties executed the Contract. Under its terms, plaintiff agreed to sell, and 2252 Third Avenue agreed to purchase, the Property for $12,000,000. 2252 Third Avenue was required to make a $600,000 down payment to be held in escrow, with the balance due at a closing scheduled for October 28, 2019. Among other provisions, the Contract included a general merger clause. As part of the Contract, the parties also entered into a rider (the “Rider”), which included a mortgage contingency clause and a general merger clause. Roy signed the Contract on behalf of 2252 Third Avenue. Plaintiff signed the Contract allegedly in reliance on the representations concerning 2252 Third Avenue’s financial ability to perform. Several months later, in or about October 2018, the parties entered into a first amendment to the Contract (the “First Amendment”). The amendment permitted 2252 Third Avenue to record a memorandum of contract against the Property, placing the transaction on public record. In exchange, $125,000 of the initial down payment was released from escrow to plaintiff. The recorded memorandum effectively signaled to the market that the Property was under contract. As the original closing date approached, 2252 Third Avenue had not completed the purchase. In October 2019, the parties negotiated a further extension, resulting in a second amendment to the Contract (the “Second Amendment”). The Second Amendment extended the closing date to March 1, 2020 and imposed additional payment obligations in the event of further delay, including a $2,000,000 payment and ongoing monthly fees. The Second Amendment also authorized additional releases of escrowed funds and reaffirmed the remaining contractual terms. 2252 Third Avenue did not close by the extended March 1, 2020 deadline. Nor did it make the $2,000,000 payment or the monthly payments required under the Second Amendment. After additional time passed without performance, on October 15, 2021, plaintiff issued a notice setting a time-of-the-essence closing for November 15, 2021. 2252 Third Avenue acknowledged the notice without objection. On the scheduled date, plaintiff appeared ready, willing, and able to complete the sale, but 2252 Third Avenue did not appear and did not tender performance. 2252 Third Avenue also did not pay the additional amounts that had accrued under the Second Amendment and did not remove the memorandum of contract from the Property. On December 30, 2021, plaintiff commenced the action against 2252 Third Avenue for breach of contract. On August 28, 2023, the motion court entered judgment in plaintiff’s favor and against 2252 Third Avenue in the amount of $3,000,000, plus interest (the “Judgment”).[2] Thereafter, in May 2024, plaintiff commenced the action, seeking to impose alter ego liability on the individual defendants, and alleging that Roy and Althkefati fraudulently induced plaintiff to enter into the Transaction. Defendants moved to dismiss the complaint. The motion court granted the motion. On appeal, the Appellate Division, First Department, reversed. The Court held that “Supreme Court should not have determined that the merger clause contained in the written contract barred plaintiff’s fraudulent inducement cause of action, which was interposed as against defendants Roy Moussaieff (Roy) and Yousef Althkefati.”[3] Under New York law, merger clauses are generally enforceable, but they will bar a fraudulent inducement claim only where the contract contains a sufficiently specific disclaimer of reliance on the particular misrepresentations at issue.[4] By contrast, a merger clause that is general and makes no reference to the particular representations alleged, does not bar an otherwise adequately pleaded fraudulent inducement claim.[5] Moreover, a merger clause does not apply to the representations made by third parties to an agreement.[6] With these principles in mind, the Court held that “[o]n its face, the merger clause agreed to by plaintiff and nonparty 2252 Third Avenue, LLC (the 2252 Third Avenue, LLC),” did not “apply to the representations by Roy and Althkefati,” because they were not parties to the Contract.[7] The Court also “reject[ed] defendants’ argument that the fraudulent inducement cause of action [was] duplicative of the breach of contract cause of action.”[8] In New York, fraudulent inducement claims are not duplicative of contract claims where the plaintiff alleges “misrepresentations of present fact” that are “collateral to the contract” and which “induced [plaintiff] to enter into the contract.”[9] So long as the plaintiff alleges a wrong “separate from or in addition to the contract duty,” a misrepresentation is “collateral to the contract” – and therefore can give rise to a fraudulent inducement claim – even if “the same circumstances give rise to the … breach of contract claim.”[10] This principle holds true even where the “alleged misrepresentations breached [] warranties made in” the agreement at issue.[11] In CSN Realty, the Court found that the “alleged representations by Roy and Althkefati that the 2252 Third Avenue, LLC had sufficient capital to close on the [P]roperty were representations of present fact, not future intent to perform.”[12] “Similarly, [the Court] reject[ed] defendants’ argument that plaintiff [sought] identical damages under the fraudulent inducement cause of action and the breach of contract cause of action.”[13] The Court explained that “[u]nder the circumstances of this case, at this early procedural stage plaintiff [was] entitled to maintain the fraudulent inducement claim in the alternative to the breach of contract claim.”[14] “This conclusion,” said the Court, was “especially true because the remedy available to plaintiff for fraudulent inducement under the ‘out-of-pocket rule’ [was] not lost profits but rather ‘the actual pecuniary loss sustained as the direct result of the wrong.’”[15] Takeaway CSN Realty highlights several nuanced takeaways about the interaction between merger clauses, fraudulent inducement, and the duplication of claims doctrine, particularly when viewed against the First Department’s broader jurisprudence. At the outset, CSN Realty reinforces the principle that general merger clauses are of limited preclusive effect. Consistent with settled law, the Court held that only a specific disclaimer of reliance tied to the particular alleged misrepresentation will bar a fraudulent inducement claim. Boilerplate merger language is insufficient. Notably, regardless of their specificity, the Court reiterated the point that merger clauses do not extend to representations made by non-parties to the contract, which was the case in CSN Realty. At the same time, the decision is notable because it departs from what is often a more restrictive approach taken by the First Department in analogous cases. In the First Department, fraud claims are frequently dismissed as duplicative where the damages sought in the fraud claim overlap with those recoverable for breach of contract. This is so even when the alleged misrepresentation is meaningfully distinct from the contractual undertaking – that is, the duty breached is independent of and collateral to the contract. CSN Realty represents, therefore, a more permissive application of the doctrine by making a distinction between lost profits and out-of-pocket damages. CSN Realty also reaffirms the point that a fraud claim may proceed where it is based on misrepresentations of present fact. In CSN Realty, those representations were memorialized in a contractual warranty (e.g., the Rider). Such statements are treated as assertions of then-existing fact, not mere promises of future performance, and therefore can support an independent fraud claim. __________________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes only and is not intended to be, and should not be, taken as legal advice. Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions or litigation releases and not on matters handled by the firm. [1] The fact section of this article comes from the briefing on appeal. [2] CSN Realty Corp v. 2252 Third Avenue LLC, Index No. 657221/2021 (Sup. Ct. N.Y. County). [3] Slip Op. at *1. [4] Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Wise Metals Group, LLC, 19 A.D.3d 273, 275 (1st Dept. 2005); see also LibertyPointe Bank v. 75 E. 125th St., LLC, 95 A.D.3d 706, 706 (1st Dept. 2012). [5] See Laduzinski v. Alvarez & Marsal Taxand LLC, 132 A.D.3d 164, 169 (1st Dept. 2015) (boilerplate merger clause did not bar fraudulent inducement claim because it “ma[de] no reference to the particular representations allegedly made here by [defendants]”). [6] See Remediation Capital Funding LLC v. Noto, 147 A.D.3d 469, 471 (1st Dept. 2017). [7] Slip Op. at *1, citing Remediation Capital, 147 A.D.3d at 471. [8] Id. [9] Wyle Inc. v. ITT Corp., 130 A.D.3d 438, 439 (1st Dept. 2015); see also GoSmile, Inc. v. Levine, 81 A.D.3d 77, 81 (1st Dept. 2010); Laduzinski, 132 A.D.3d at 168-69; TIAA Global Invs. v. One Astoria Sq. LLC, 127 A.D.3d 75, 87 (1st Dept. 2015). [10] Id. at at 440-41; MBIA Ins. Corp. v. Countrywide Home Loans, Inc., 87 A.D.3d 287, 293 (1st Dept. 2011). [11] Id.; VXI Lux Holdco, S.A.R.L. v. SIC Holdings, LLC, 194 A.D.3d 628, 630 (1st Dept. 2021); MBIA Ins. Corp., 87 A.D.3d at 294. [12] Slip Op. at *1. [13] Id. [14] Id., citing Scarola Zubatov Schaffzin PLLC v. Dynamic Credit Partners, LLC, 210 A.D.3d 605, 607 (1st Dept. 2022); Shear Enters., LLC v. Cohen, 189 A.D.3d 423, 424 (1st Dept. 2020). [15] Id., quoting Connaughton v. Chipotle Mexican Grill, Inc., 29 N.Y.3d 137, 142 (2017).

By: Jonathan H. Freiberger When a court issues a decision and order that is self-effectuating, nothing further from the parties is required. Sometimes, however, a court’s decision will direct that the prevailing party either: (a) submit an order or judgment for the court to consider; or, (b) submit or settle an order or judgment, on notice, for the court’s consideration.[1] This issue, which has been confusing lawyers for quite some time, is addressed in 22 N.Y.C.R.R. §202.48 – “Submission of orders, judgments and decrees for signature”, which provides, in relevant part: (a) Proposed orders or judgments, with proof of service on all parties where the order is directed to be settled or submitted on notice, must be submitted for signature, unless otherwise directed by the court, within 60 days after the signing and filing of the decision directing that the order be settled or submitted. (b) Failure to submit the order or judgment timely shall be deemed an abandonment of the motion or action, unless for good cause shown. The Court of Appeals, in Funk v. Barry, 89 N.Y.2d 364 (1996), explained the distinction between “submitting” an order or judgment and “submitting or settling an order or judgment on notice”: By its plain terms, section 202.48 (a) speaks to the circumstances where the court's decision expressly directs a party to submit or settle an order or judgment. When a decision ends with the directive to "submit order," the court is generally directing the prevailing party to draw the order and present it to the judge who looks it over to make sure it reflects the decision properly, and then signs or initials it. This procedure typically calls for no notice to the opponent. A directive to "settle," by contrast, is reserved for more complicated dispositions, such as orders involving restraints or contemplating a set of follow-up procedures. Because the decision ordinarily entails more complicated relief, the instruction contemplates notice to the opponent so that both parties may either agree on a draft or prepare counter proposals to be settled before the court. The common element in both directives is that further drafting and judicial approval of the judgment or order is contemplated. Funk, 89 N.Y.2d at 367 (citations, internal quotation marks, ellipses, and brackets omitted). The ramifications of the failure to timely settle an order when directed by the court to do so was made plain by the Second Department in Citibank, N.A. v. Velazquez, 284 A.D.2d 364 (2001). There, in a mortgage foreclosure action, lender moved to confirm a referee’s report of sale and for leave to enter a deficiency judgment, which motion was unopposed. Lender’s motion was granted with an instruction to “submit judgment on notice to the Clerk of the County of Westchester.” Id. at 364. Lender failed to timely submit the judgment and, accordingly, its subsequent motion for leave to enter a deficiency judgment against borrower was denied “on the ground that it had been abandoned.” Id. The motion court’s ruling was affirmed by the Second Department because, inter alia, lender “did not show good cause for the lengthy delay in filing the deficiency judgment.” Id. The Court was more forgiving in Bank of New York Mellon Trust Co., N.A. v. Ahmed, 243 A.D.3d 851 (2d Dept. 2025), another mortgage foreclosure action. There, the lender failed to timely “settle” an order in accordance with 22 NYCRR 202.48 and stated that “a court should not deem an action or judgment abandoned where the result would not bring the repose to court proceedings that 22 NYCRR 202.48 was designed to effectuate, and would waste judicial resources.” Ahmed, 243 A.D.3d at 853 (citation and internal quotation marks omitted). The Court found that vacatur was not warranted because the borrower “was not prejudiced” by the lender’s failure to timely settle the order and “the denial of vacatur pursuant to 22 NYCRR 202.48(b) brought repose to the proceedings and preserved judicial resources.” Id. (citations and internal quotation marks omitted). Against this backdrop, we discuss Rosenberg v. Tool Time Construction Corp., a breach of contract action decided by the Appellate Division, Second Department, on May 20, 2026. After the defendant failed to appear in the action the plaintiff moved for a default judgment. In October of 2021, the motion court granted the unopposed motion and scheduled an inquest for damages. In January of 2022, after the inquest, the motion court awarded the plaintiff monetary damages against the defendant. A proposed judgment was not submitted by the plaintiff until November 2022. The defendant appealed from the motion court’s denial of its motion pursuant to 22 NYCRR 202.48 to dismiss the complaint as abandoned. The Second Department affirmed. After quoting the substance of 22 NYCRR 202.48, and determining it was inapplicable, the Second Department stated: However, 22 NYCRR 202.48 does not apply where the court merely directs a party to submit an order or judgment without expressly directing that the order or judgment be submitted on notice. Here, since the Supreme Court did not direct that a judgment based on its decision after the inquest be settled or submitted on notice, the plaintiffs were not required to comply with 22 NYCRR 202.48. Accordingly, the court should have denied that branch of the defendants' motion which was pursuant to 22 NYCRR 202.48 to dismiss the complaint as abandoned. (Citations and internal quotation marks omitted.) Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions or litigation releases and not on matters handled by the firm. [1] This BLOG has previously written on this issue [here] [here], and some of the background in today’s article are derived therefrom.

By: Jonathan Freiberger According to Wikipedia, New York Senator William L. Marcy coined the phrase “to the victor belong the spoils” when “referring to the victory of Andrew Jackson in the election of 1828.” In certain situations, however, the failure of a litigant to act quickly when the Court issues a favorable decision on a motion could spoil the “spoils.” Sometimes the Court renders a decision on a motion instead of issuing an order or judgment. In such cases, it is often up to the prevailing litigant to take an additional step to effectuate the decision. In cases where Rule 202.48 of the Uniform Civil Rules for the Supreme Court and the County Court is applicable, the prevailing party must move quickly or run the risk of losing the benefit of a coveted victory. Rule 202.48 provides, in pertinent part: Section 202.48 Submission of orders, judgments and decrees for signature. (a) Proposed orders or judgments, with proof of service on all parties where the order is directed to be settled or submitted on notice, must be submitted for signature, unless otherwise directed by the court, within 60 days after the signing and filing of the decision directing that the order be settled or submitted. (b) Failure to submit the order or judgment timely shall be deemed an abandonment of the motion or action, unless for good cause shown. The Court of Appeals, in Funk v. Barry, 89 N.Y.2d 364 (1996), had occasion to resolve a “conflict among the Appellate Division Departments.” In Funk, the Court decided the question of “whether the 60-day time limit for the submission of proposed judgments for signature contained in 22 NYCRR 202.48 applies where the court’s decision contains no direction to submit or settle the order” by concluding that “the 60-day period applies only where the court explicitly directs that the proposed judgment or order be settled or submitted for signature.” Funk, 89 N.Y.2d at 365. After a bench trial, the supreme court in Funk found in favor of plaintiff in the amount of $5,000 on a conversion claim, but “did not direct any party to settle or submit the judgment for signature.” Funk, 89 N.Y.2d at 365. Eleven months after the verdict, counsel submitted a proposed judgment for entry and defense counsel objected. Plaintiff moved for an order permitting the entry of the judgment and defendant cross-moved for an order dismissing the action as abandoned pursuant to 22 NYCRR 202.48. Supreme court granted plaintiff’s motion and denied defendant’s cross-motion. The Appellate Division, Fourth Department, reversed and dismissed the action holding that the 60-day time limit applies “even where no direction to submit or settle an order or judgment is contained in the court’s decision.” Funk, 89 N.Y.2d at 366. In rendering its decision, the Funk Court of Appeals noted that a direction to “submit” an order is typically addressed to relatively simple cases where the court intends to look a draft order “over to make sure it reflects the decision properly, and then signs or initials it”, which procedure is typically done without notice to the opponent. Funk, 89 N.Y.2d at 367 (citation and internal quotation marks omitted). The Court noted that: A directive to “settle,” by contrast, is reserved for more complicated dispositions, such as orders involving restraints or contemplating a set of follow-up procedures. Because the decision ordinarily entails more complicated relief, the instruction contemplates notice to the opponent so that both parties may either agree on a draft or prepare counter proposals to be settled before the court. The common element in both directives is that further drafting and judicial approval of the judgment or order is contemplated. However, where no drafting by the parties is necessary because the matter involves an uncomplicated disposition or simple judgment for a sum of money which speaks for itself, or where the court or clerk draws the order, no direction to submit or settle will be utilized. In such cases, the order or judgment may then simply be entered by the clerk without prior submission to the court pursuant to CPLR 5016. Funk, 89 N.Y.2d at 367 (citation and some internal quotation marks omitted). Ultimately, the Court found that “the 60–day rule logically applies only where further court involvement in the drafting process is contemplated before entry.” Funk, 89 N.Y.2d at 368. The failure to timely “settle” an order pursuant to 22 NYCRR 202.48 can be excused upon the showing of “good cause”. 22 NYCRR 202.48(b). See also Parisi v. McElhatton, 209 A.D.2d 495 (2nd Dep’t 1994). On December 2, 2020, the Appellate Division, Second Department, addressed these issues in James B. Nutter & Co. v. McLaughlin. The plaintiff in James B. Nutter commenced an action to foreclose a mortgage and its unopposed motion for a judgment of foreclosure and sale was granted in a December 12, 2016 order that directed plaintiff to “submit” a judgment. While the James B. Nutter plaintiff submitted its proposed judgment, the court issued an order that “sua sponte, deemed the action abandoned, finding that the plaintiff failed to establish good cause for its failure to submit the judgment within 60 days of the order entered December 12, 2016.” In reversing the James B. Nutter supreme court, the Second Department stated: Pursuant to 22 NYCRR 202.48, an order or judgment which is directed to be settled or submitted on notice must be submitted for signature within 60 days after the signing and filing of the decision directing that the order or judgment be settled or submitted. A party who fails to submit the order or judgment within the 60-day time period will be deemed to have abandoned the action or motion, absent good cause shown. In this case, when the Supreme Court initially granted the plaintiff’s motion, inter alia, for a judgment of foreclosure and sale, it did not direct that the proposed judgment had to be settled or submitted on notice. 22 NYCRR 202.48 does not apply where, as here, the court merely directs a party to submit an order or judgment without expressly directing that the order or judgment be submitted on notice. Accordingly, the Supreme Court should not have denied the plaintiff’s motion for a judgment of foreclosure and sale for failure to comply with 22 NYCRR 202.48, and should not have deemed the action abandoned. (Citations omitted.) Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions or litigation releases and not on matters handled by the firm.

By: Jonathan H. Freiberger On July 12, 2023, the Appellate Division, Second Department, in U.S. Bank Trust, N.A. v. Rahman, addressed an issue that has been confusing lawyers for quite some time involving 22 N.Y.C.R.R. §202.48 – “Submission of orders, judgments and decrees for signature”, which provides, in relevant part: (a) Proposed orders or judgments, with proof of service on all parties where the order is directed to be settled or submitted on notice, must be submitted for signature, unless otherwise directed by the court, within 60 days after the signing and filing of the decision directing that the order be settled or submitted. (b) Failure to submit the order or judgment timely shall be deemed an abandonment of the motion or action, unless for good cause shown. Many times, a court will issue a decision and order that requires nothing further from the parties. Frequently, however, a decision will direct that the prevailing party either: (a) submit an order or judgment for the court to consider; or, (b) submit or settle an order or judgment, on notice, for the court’s consideration. The choice that the court makes could have serious ramifications to the parties. As set forth in 22 N.Y.C.R.R § 202.48, if the prevailing party on a motion is directed to “submit or settle an order or judgment on notice”, the failure to do so within sixty days could operate as an abandonment of movant’s short-lived victory. The Court of Appeals, in Funk v. Barry, 89 N.Y.2d 364 (1996), explained the distinction between “submitting” an order or judgment and “submitting or settling an order or judgment on notice”: By its plain terms, section 202.48 (a) speaks to the circumstances where the court's decision expressly directs a party to submit or settle an order or judgment. When a decision ends with the directive to "submit order," the court is generally directing the prevailing party to draw the order and present it to the judge who looks it over to make sure it reflects the decision properly, and then signs or initials it. This procedure typically calls for no notice to the opponent. A directive to "settle," by contrast, is reserved for more complicated dispositions, such as orders involving restraints or contemplating a set of follow-up procedures. Because the decision ordinarily entails more complicated relief, the instruction contemplates notice to the opponent so that both parties may either agree on a draft or prepare counter proposals to be settled before the court. The common element in both directives is that further drafting and judicial approval of the judgment or order is contemplated. Funk, 89 N.Y.2d at 367 (citations, internal quotation marks, ellipses and brackets omitted). The ramifications of the failure to timely settle an order when directed by the court to do so was made plain by the Second Department in Citibank, N.A. v. Velazquez, 284 A.D.2d 364 (2001). There, in a mortgage foreclosure action, lender moved to confirm a referee’s report of sale and for leave to enter a deficiency judgment, which motion was unopposed. Lender’s motion was granted with an instruction to “submit judgment on notice to the Clerk of the County of Westchester.” Lender failed to timely submit the judgment and, accordingly, its subsequent motion for leave to enter a deficiency judgment against borrower was denied “on the ground that it had been abandoned.” The motion court’s ruling was affirmed by the Second Department because, inter alia, lender “did not show good cause for the lengthy delay in filing the deficiency judgment.” Rahman was also a mortgage foreclosure action in which borrower defaulted in appearing. [Eds. Note: the facts as set forth herein are simplified for editorial purposes.] On October 15, 2015, the motion court granted lender’s motion for a default judgment and for an order of reference in a decision that directed lender to “submit order” (the “October 2015 Decision”). Six months later, a proposed order was submitted by lender and an order was signed by the court three months thereafter. Subsequently, on August 13, 2018 (the “August 2018 Decision”), the court rendered another decision granting lender’s motion to confirm the referee’s report and for a judgment of foreclosure and sale. The August 2018 Decision directed lender to “settle a judgment on notice … on or before September 11, 2018.” Lender waited until October 29, 2018, to present a notice of settlement and proposed judgment to the court. Nonetheless, the judgment of foreclosure and sale was entered on November 21, 2018. In May of 2019, pursuant to, inter alia, 22 N.Y.C.R.R § 202.48, borrower moved to vacate the October 15 Decision and the related order as well as the August 13 Decision and the related judgment of foreclosure and sale. Lender appealed the denial of its motion and the Second Department affirmed. As to the October 15 Decision and related order the Court stated: 22 NYCRR 202.48 does not apply where the court merely directs a party to submit an order or judgment without expressly directing that the order or judgment be submitted on notice. Here, since the [October 2015 Decision] did not require that the proposed order of reference be settled or submitted on notice, the [lender] was not required to comply with 22 NYCRR 202.48. [Citations and internal quotation marks omitted.] As to the judgment of foreclosure and sale, the Court stated: Regarding the judgment of foreclosure and sale, it is within the sound discretion of the court to accept a belated order or judgment for settlement. Moreover, a court should not deem an action or judgment abandoned where the result would not bring the repose to court proceedings that 22 NYCRR 202.48 was designed to effectuate, and would waste judicial resources. Here, the Supreme Court providently exercised its discretion in accepting the judgment of foreclosure and sale, which was submitted to the court on notice 48 days after the deadline set forth in the court's [August 2018 Decision]. TAKEAWAY While the court may be forgiving (as it was in Rahman), such is not always the case. Practitioners should be mindful of the relevant rules and time periods and strive to comply with same. Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions or litigation releases and not on matters handled by the firm.

By: Jeffrey M. Haber Contract interpretation principles require courts to give effect to the parties’ intent as expressed in the plain language of their agreement, while reading the contract as a whole and avoiding constructions that render provisions meaningless. Where contractual terms introduce discretion or conditional performance, such as provisions allowing one party to determine whether services will be requested, questions of ambiguity may arise concerning the scope of the parties’ obligations. In such circumstances, courts often consider whether the agreement reflects a performance-based bargain or a broader allocation of risk and responsibility. These principles are illustrated in Prosight Specialty Mgt. Co., Inc. v. Altruis Group, LLC, 2026 N.Y. Slip Op. 03131 (1st Dept. May 19, 2026), a case concerning the interpretation of a services agreement and whether its discretionary language limited the provider’s obligations or affected its entitlement to compensation. Applicable Principles When interpreting contracts, a court’s “function is to apply the meaning intended by the parties, as derived from the language of the contract in question.”[1] For this reason, a “written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms.”[2] “When the parties have a dispute over the meaning, the court first asks if the contract contains any ambiguity, which is a legal matter for the court to decide.”[3] Whether there is an ambiguity “is determined by looking within the four corners of the document, not to outside sources.”[4] However, courts may “examine the entire contract and consider the relation of the parties and the circumstances under which it was executed” in determining whether an agreement is ambiguous.[5] “A contract is unambiguous if, on its face, it is reasonably susceptible of only one meaning.”[6] “To the extent that any of [an] agreement’s terms may be ambiguous, indefinite or uncertain, it is well settled that extrinsic or parol evidence is admissible to determine their meaning.”[7] Moreover, “[c]ontracts must be read as a whole and all terms of a contract must be harmonized whenever reasonably possible.”[8] “An interpretation that gives effect to all the terms of an agreement is preferable to one that ignores terms or accords them an unreasonable interpretation.”[9] Thus, courts “must examine the parties’ obligations and intentions as manifested in the entire agreement and seek to afford the language an interpretation that is sensible, practical, fair and reasonable.”[10] The courts should not, however, “rewrite the plain contractual language in an effort to right some perceived inequity in the parties’ bargain.”[11] Against the foregoing principles of contract interpretation, we examine Prosight Specialty Mgt. Co., Inc. v. Altruis Group, LLC. Prosight Specialty Mgt. Co., Inc. v. Altruis Group, LLC Prosight concerned a contract dispute between defendant, Altruis Group, LLC, and plaintiff, ProSight Specialty Insurance Company, Inc.; namely, whether defendant fulfilled its contractual obligations under a Niche Management Agreement (“NMA”) with plaintiff, and was entitled to commissions for services performed in 2021.[12] The parties entered into the NMA on February 4, 2020. Pursuant to the NMA, defendant agreed to serve as a managing general agent and provide services supporting plaintiff’s captive insurance business, including soliciting business and performing specified “Minimum Services.” The NMA appointed defendant as plaintiff’s niche administrator and authorized representative to act on plaintiff’s behalf in performing such services. The agreement applied on a calendar-year basis and was set to expire on December 31, 2021. On May 4, 2020, the parties executed an amendment to the NMA (“NMA Amendment”). Among other things, the amendment added a provision that, at plaintiff’s sole discretion, required defendant to perform “some, all or none” of the identified Minimum Services with respect to captive transactions. During 2020, defendant performed services requested by plaintiff, including sourcing captive business opportunities and supporting collateral management and reporting functions. In connection with defendant’s performance, plaintiff paid defendant commissions consistent with the terms of the NMA. In 2021, defendant continued to provide services in support of plaintiff’s captive program in response to requests from plaintiff. According to defendant, it performed all services requested of it, consistent with the NMA Amendment, which made the performance of Minimum Services contingent on plaintiff’s requests. Plaintiff, by contrast, contended that defendant failed to perform certain Minimum Services and did not develop the full range of capabilities contemplated by the agreement. By September 2021, plaintiff decided to exit the captive insurance business, although defendant continued to perform services and engage in business development activities through the fourth quarter of 2021. On November 15, 2021, plaintiff issued notice purporting to terminate the NMA for alleged material breach, asserting that defendant failed to provide certain Minimum Services required under the NMA Amendment. Defendant disputed the alleged breach and termination, maintaining that it performed all services requested by plaintiff and that, under the NMA Amendment, it was not required to perform services that plaintiff did not request. Defendant further contended that plaintiff failed to comply with the NMA’s contractual termination provisions, including the requirement to provide notice and an opportunity to cure any alleged breach. Plaintiff maintained its position that defendant failed to satisfy its contractual obligations and that full commission payments were not owed. Plaintiff moved for summary judgment on its breach of contract and declaratory judgment claims and on defendant’s counterclaim for breach of contract. The motion court denied plaintiff’s motion. The Appellate Division, First Department, unanimously affirmed. The First Department’s Decision The Court held that the motion court correctly “found that the contractual language at issue was ambiguous” and, therefore, “properly considered extrinsic evidence to interpret its meaning.”[13] The Court explained that, while the first sentence of the relevant contractual provision both authorized and required defendant to perform “all” of the specified Minimum Services under the NMA and the NMA Amendment, the second sentence provided that, at plaintiffs’ sole discretion, defendant would perform “some, all, or none” of those services.[14] Read together, said the Court, those provisions created ambiguity as to which, if any, of the Minimum Services defendant was obligated to perform absent a specific request from plaintiffs.[15] The Court also noted that “[d]eposition testimony and other evidence bolstered defendant’s interpretation that under the NMA Amendment, defendant was obligated to perform any of the delineated Minimum Services for a ‘captive insurance customer’ (Captive) when specifically requested to do so by plaintiffs, as plaintiffs were exploring and developing their Captive business.”[16] “Given the parties’ obligations and intentions,” concluded the Court, “defendant’s interpretation was ‘sensible, practical, fair, and reasonable.’”[17] Takeaway Prosight highlights three principal lessons regarding contract interpretation and the allocation of performance obligations. First, it underscores that ambiguity can arise even in seemingly straightforward contractual language when provisions conflict or introduce discretion. In Prosight, the juxtaposition of a clause requiring defendant to perform “all” Minimum Services with another permitting performance of “some, all, or none” of the Minimum Services created an internal inconsistency. When read as a whole, the agreement failed to clearly define defendant’s obligations, illustrating that ambiguity is not limited to vague terms but may emerge from competing obligations within the same provision. Second, Prosight emphasizes that courts will consider extrinsic evidence once ambiguity is found and may adopt the interpretation that best reflects a practical and commercially reasonable understanding of the parties’ relationship. In Prosight, deposition testimony and course-of-performance evidence supported defendant’s position that its duties were contingent on plaintiff’s requests. The Court favored this interpretation because, among other reasons, it aligned with how the parties actually conducted themselves. Third, Prosight demonstrates that discretionary performance provisions can affect entitlement to compensation, particularly where compensation is tied to the services performed. By making the performance of “Minimum Services” dependent on plaintiff’s election, the NMA and its amendment shifted control over both performance and payment. As a result, disputes over whether services were required, and whether they were adequately performed, raised factual issues that precluded summary judgment. __________________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes only and is not intended to be, and should not be, taken as legal advice. Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions or litigation releases and not on matters handled by the firm. ___________________________________ [1] Duane Reade, Inc. v. Cardtronics, LP, 54 A.D.3d 137, 140 (1st Dept. 2008) (citation omitted). [2] Id., quoting Greenfield v. Philles Records, 98 N.Y.2d 562, 569 (2002)). [3] MPEG LA, LLC v. Samsung Elecs. Co., 166 A.D.3d 13, 17 (1st Dept. 2018), lv. denied, 32 N.Y.3d 912 (2018), citing Ashwood Capital, Inc. v. OTG Mgt., Inc., 99 A.D.3d 1, 7-8 (1st Dept. 2012). [4] Id., 166 A.D.3d at 17, quoting Kass v. Kass, 91 N.Y.2d 554, 566 (1998). [5] Kass, 91 N.Y.2d at 566; see also W.W.W. Assoc. v. Giancontieri, 77 N.Y.2d 157, 162 (1990). [6] B.D. v. E.D., 218 A.D.3d 9, 14-15 (1st Dept. 2023) (citations omitted); see also Breed v. Insurance Co. of N. Am., 46 N.Y.2d 351, 355 (1978) (a contract is unambiguous if the language has “a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion”); Broad St., LLC v. Gulf Ins. Co., 37 A.D.3d 126, 131 (1st Dept. 2006) (citations omitted).. [7] Korff v. Corbett, 18 A.D.3d 248, 251 (1st Dept. 2005); see also W.W.W. Assoc., 77 N.Y.2d at 162. [8] Teliman Holding Corp. v. VCW Assoc., 211 A.D.3d 499, 500 (1st Dept. 2022). [9] Perlbinder v. Bd. of Managers of 411 E. 53rd St. Condo., 65 A.D.3d 985, 986-987 (1st Dept. 2009). [10] MPEG, 166 A.D.3d at 17 (citations omitted); see also Duane Reade, 54 A.D.3d at 140. [11] B.D., 218 A.D.3d at 18, citing Greenfield, 98 N.Y.2d at 570 (“a court is not free to alter the contract to reflect its personal notions of fairness and equity”). [12] The discussion of the facts of Prosight comes from the briefing on appeal. [13] Slip Op. at *1, citing Nova Cas. Co. v. Peter Thomas Roth Labs, LLC, 178 A.D.3d 468, 468 (1st Dept. 2019). [14] Id. [15] Id. (“Taking both sentences together, it is unclear which—some, all, or none—of the Minimum Services defendant was to provide, unless specifically requested to do so by plaintiffs.”) [16] Id. [17] Id., citing MPEG, 166 A.D.3d at 17.

By: Jeffrey M. Haber In today’s article, we examine Kingdom Assoc., Inc. v. WBC Servs. Inc., 2026 N.Y. Slip Op. 03070 (1st Dept. May 14, 2026), a case arising from a proposed subcontract for excavation and foundation work on a New York City project. Plaintiff alleged that defendant accepted its $8.28 million proposal and that it procured materials, obtained insurance, and prepared shop drawings in reliance thereon. Defendant argued that no binding contract existed because the proposal was never executed and required owner approval. After defendant stated the owner had not authorized the work, plaintiff filed a $1.075 million lien and sued. The Appellate Division, First Department held that plaintiff adequately stated claims for, among others, breach of contract and promissory estoppel, reversing the motion court’s dismissal of the causes of action. Kingdom Assoc., Inc. v. WBC Servs. Inc. Kingdom Associates arose from a proposed subcontract for excavation and foundation work at a New York City project.[1] Plaintiff alleged that defendant accepted its $8.28 million proposal in July 2024, creating a binding agreement, and that plaintiff began performance by procuring materials, obtaining insurance, and preparing shop drawings. Defendant maintained that no contract was formed because the proposal was never formally executed and required owner approval. Plaintiff alleged that defendant breached the contract and, alternatively, repudiated a clear promise on which it reasonably relied, causing damages of $1.075 million. The dispute began in April 2024, when plaintiff solicited bids for a portion of the project, including excavation, waterproofing, and foundation concrete. In response, defendant submitted a proposal and engaged in a series of email communications with plaintiff throughout July 2024. During these exchanges, the parties discussed project specifications, including drawings and scope changes. Plaintiff submitted a revised proposal on July 18, 2024, incorporating updated plans. That same day, defendant requested further details in the form of an itemized breakdown and also asked whether plaintiff could lower its price by $100,000. Plaintiff agreed and, shortly thereafter, submitted a revised proposal to defendant. On August 16, 2024, nearly a month after the final proposal was submitted, defendant informed plaintiff that the project owner had not authorized it to award the subcontract work and was still evaluating its options. Defendant thus took the position that no subcontract could be awarded at that time. Plaintiff argued that this communication was a unilateral termination of the agreement. It maintained that defendant never indicated during negotiations that owner approval was a prerequisite to contract formation and that it had already undertaken significant efforts in reliance on defendant’s representations. Thereafter, on August 23, 2024, plaintiff filed a mechanic’s lien against the project in the amount of $1,075,000. The lien was based on several categories of alleged costs, including insurance premiums, materials such as pipes and steel bars, shop drawings, and preconstruction services. Plaintiff subsequently commenced the action, asserting multiple causes of action. Those included: breach of contract, on the theory that an agreement existed and was wrongfully terminated; quantum meruit, seeking recovery for the value of services provided; promissory estoppel, based on alleged reliance on a clear promise of award; and unjust enrichment, alleging that the contractor benefited from plaintiff’s work without compensation. Defendant moved to dismiss. The motion court denied the motion. On appeal, the First Department reversed. The Court held that plaintiff stated a breach of contract claim.[2] To state a claim for breach of contract, a plaintiff must allege the “existence of a contract, the plaintiff's performance thereunder, the defendant’s breach thereof, and resulting damages.”[3] The Court found that plaintiff satisfied the elements of the claim by alleging that plaintiff: (1) “entered into an agreement with [defendant] to provide construction services,” (2) “performed under the agreement by providing labor and materials until [defendant] breached by unilaterally rescinding its agreement,” and (3) “suffered $1.075 million in expenses.”[4] Based on the foregoing, the Court concluded that “plaintiff stated the cause of action.”[5] The Court also held that plaintiff stated a claim for promissory estoppel.[6] “The elements of a claim for promissory estoppel are: (1) a promise that is sufficiently clear and unambiguous; (2) reasonable reliance on the promise by a party; and (3) injury caused by the reliance.”[7] The Court found that plaintiff satisfied the elements of the claim by pleading that: (1) “[defendant] made a clear and unambiguous promise that it was awarding the [subcontract] to” plaintiff; (2) “it was reasonable and foreseeable that [p]laintiff would rely on this unambiguous promise by [defendant] and commence work”; (3) “[defendant] violated its unambiguous promise to award the work” to plaintiff; and (4) “[d]ue to its detrimental reliance on [defendant’s] unambiguous promise, [p]laintiff [had] been damaged in the sum of [$1.075 million].”[8] The Court also noted that “[w]hile the email chain submitted by [defendant did] not contain a clear promise to award plaintiff the subcontract, it at least suggest[ed] the possibility that [defendant] made the promise to plaintiff in another manner.”[9] Based on the foregoing, the Court concluded that plaintiff stated a claim for promissory estoppel. Takeaway Kingdom Associates reaffirms the principle that, at the pleading stage, a plaintiff need not prove contract formation to survive dismissal. Allegations that the parties reached an agreement through negotiations, that performance began, and that the defendant repudiated the arrangement can suffice to state a breach of contract claim, even where there is no executed written agreement. Equally important, Kingdom Associates highlights the vitality of promissory estoppel as an alternative theory of liability. The Court recognized that a plaintiff’s allegations of a clear promise, coupled with reasonable reliance through performance, can support a claim for relief independent of a formal contract. In fact, the Court was willing to allow that a promise might be inferred from communications or proven through evidence beyond the written record. __________________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes only and is not intended to be, and should not be, taken as legal advice. Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions or litigation releases and not on matters handled by the firm. ___________________________________ [1] The background facts and party assertions are taken from the briefing on appeal. [2] Slip Op. at *1. [3] Heijung Park v. Nam Yong Kim, 205 A.D.3d 429, 430 (1st Dept. 2022). [4] Slip Op. at *1. [5] Id. [6] Id. at *2. [7] Id. (quoting MatlinPatterson ATA Holdings LLC v. Federal Express Corp., 87 A.D.3d 836, 841-842 (1st Dept. 2011), lv. denied, 21 N.Y.3d 853 (2013)). [8] Id. (internal quotation marks omitted) [9] Id.

By: Jonathan H. Freiberger By way of brief background, and as set forth in one of our prior Blogs, Rule 3215(c) of the New York Civil Practice Law and Rules provides, in pertinent part, that: If the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned, without costs, upon its own initiative or on motion, unless sufficient cause is shown why the complaint should not be dismissed…. [Emphasis added.] Courts have noted that the language of CPLR 3215(c) is mandatory in the first instance unless plaintiff demonstrates “sufficient cause” for the failure to timely “take proceedings for the entry of [a default] judgment]”. See, e.g., U.S. Bank Trust N.A. v. Valle, 247 A.D.3d 1086, 1088 (2nd Dep’t 2026); Wells Fargo Bank v. Cafasso, 158 A.D.3d 848, 849 (2nd Dep’t 2018). The Cafasso Court (quoting Giglio v. NTIMP, Inc., 86 A.D.3d 301 (2nd Dep’t 2011)), noted that “sufficient cause” “‘requir[es] both a reasonable excuse for the delay in timely moving for a default judgment, plus a demonstration that the cause of action is potentially meritorious.’” Cafasso, 158 A.D.3d at 849; see also Valle, 247 A.D.3d at 1089; Wells Fargo Bank, N.A. v. Robinson-John, 220 A.D.3d 974, 977 (2nd Dep’t 2023). The “reasonableness” of an excuse is within the sound discretion of the motion court. See, e.g., US Bank, N.A v. Onuoha, 162 A.D.3d 1094, 1095–96 (2nd Dep’t 2018) (citations omitted); Cafasso, 158 A.D.3d at 849 (citations omitted). Finally, a default judgment need not be obtained within one year, as long as proceedings to obtain a default judgment that “manifest an intent not to abandon the case, but to seek a judgment” have been initiated. Citizens Bank, N.A. v. Abrams, 2026 WL 1236819 at *3 (2nd Dep’t May 6, 2026) (citations and internal quotation marks omitted); see also Bank of America, N.A. v. Bhola, 219 A.D.3d 430, 432 (2nd Dep’t 2023). In mortgage foreclosure actions, the preliminary step of moving for an order of reference is deemed to be a sufficient “proceeding” toward the entry of judgment to satisfy the one-year time frame of CPLR 3215(c). See, e.g., Deutsche Bank v. Delisser, 161 A.D.3d 942, 943 (2nd Dep’t 2018); Bank of Am., N.A. v. Lucido, 163 A.D.3d 614, 615 (2nd Dep’t 2018); Mort. Electronic Registration Systems, Inc. v. McVicar, 203 A.D.3d 915, 916-17 (2nd Dep’t 2022). In Citibank, N.A. v. Kerszko, 203 A.D.3d 42 (2nd Dep’t 2022), the Court answered in the affirmative, the “interesting” question of “whether the presentment to a court of a proposed ex parte order to show cause for an order of reference, which is rejected by the court for defects inherent in the papers, qualifies as a taking of proceedings for the entry of judgment pursuant to CPLR 3215(c), so as to avoid dismissal of the complaint as abandoned under that statute.” Kerszko, 203 A.D.3d at 43 – 44. In so doing, the Kerszko Court, provided a thoughtful analysis of, inter alia, what it means to “take proceedings” under CPLR 3215(c). The Second Department, in U.S. Bank N.A. v. Jerriho-Cadogan, 224 A.D.3d 788, 790 (2nd Dep’t 2024), held that the plaintiff took the necessary “proceedings” by filing an RJI seeking a foreclosure settlement conference within a foreclosure action as mandated by CPLR 3408 because a “settlement conference is a necessary prerequisite to obtaining a default judgment.” (Citations omitted.) On May 13, 2026, the Appellate Division, Second Department, decided U.S. Bank N. A. v. Islam, a mortgage foreclosure action decided under CPLR 3215(c). In 2012, the lender in Islam commenced a mortgage foreclosure action against the borrower, who failed to timely answer or otherwise appear in the action. Three years later, the lender moved for a default judgment and an order of reference. Shortly thereafter, the motion court granted the lender’s motion and referred the matter to a referee to compute the amounts due under the mortgage. Four years after that, in 2019, the motion court conditionally dismissed the action as abandoned. In 2021, the borrower moved to dismiss the complaint pursuant to CPLR 3215(c). The lender cross-moved to vacate the 2019 dismissal order and for a judgment of foreclosure and sale. The motion court denied the borrower’s motion and granted the lender’s cross-motion. On the borrower’s appeal the Second Department reversed. First, the Court found that the lender failed to “take proceedings for the entry of judgment within one year after the [borrower]'s default.” Like in Jerriho-Cadogan, the lender filed an RJI for a foreclosure settlement conference. However, the Court, finding the filing insufficient in this case, stated: Although the [lender] filed a request for judicial intervention requesting a foreclosure settlement conference within the one-year period after the defendant's default, a settlement conference was not required in this case because the defendant did not reside at the property subject to foreclosure (see CPLR 3408[a][1]). As such, the filing of the request for judicial intervention did not constitute the taking of proceedings for the entry of a judgment pursuant to CPLR 3215(c) and did not toll the one-year deadline to do so (see US Bank N.A. v Pane, [237 A.D.3d 1237, 1239 (2nd Dep’t 2025)]. [Hyperlinks added.] Finally, the Court, unmoved by the lender’s excuse for not taking timely proceedings for the entry of judgment, stated: Moreover, the [lender] failed demonstrate a reasonable excuse for its failure to timely take proceedings for the entry of judgment. Contrary to the [lender]'s contention, the [lender]'s change of attorney does not constitute a reasonable excuse for its delay in taking proceedings for the entry of judgment under these circumstances, and in any event, the change of attorney occurred after the statutory one year period expired. Since the [lender] failed to proffer a reasonable excuse for its delay, this Court need not consider whether the [lender] had a potentially meritorious cause of action. Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice.

By: Jeffrey M. Haber In Kellinger v. Fox Media LLC, 2025 N.Y. Slip Op. 33835(U) (Sup. Ct., N.Y. County Oct. 8, 2025) (here), the New York Supreme Court granted a motion brought by defendants to enforce a $15,000 settlement agreement with plaintiff. The motion court found that plaintiff had confirmed the settlement by email, satisfying CPLR 2104’s requirement for a written agreement. Although plaintiff later claimed he only agreed to review the documents, the motion court held that his email constituted a binding acceptance of the settlement. In New York, settlement agreements “are judicially favored, will not lightly be set aside,” and will be enforced “with rigor and without a searching examination into their substance.”[1] A court called upon to enforce a settlement must be satisfied that the agreement is “clear, final and the product of mutual accord.”[2] Thus, an out-of-court agreement settling an action is binding on each party to the agreement only if “it is in a writing subscribed by him or his attorney.”[3] “In addition, since settlement agreements are subject to the principles of contract law, for an enforceable agreement to exist, all material terms must be set forth” in that writing, “and there must be a manifestation of mutual assent.”[4] One of the first cases in New York to analyze whether emails satisfy the requirements of CPLR 2104 was Forcelli v. Gelco Corp. In Forcelli, the plaintiff sued the defendant for damages resulting from an automobile accident. Following discovery, the parties each moved for summary judgment. On the same day that the parties filed their motions, the parties appeared for mediation. Although a settlement was not reached at the mediation, the parties continued their discussions. In a subsequent phone conversation, the plaintiff’s counsel orally agreed to accept a settlement offer made by the insurance carrier’s adjuster. The adjuster memorialized the agreement to settle in an email to the plaintiff’s counsel. Under the agreement, the insurer agreed to pay $230,000 to the plaintiff in exchange for a release from the plaintiff. The plaintiff’s attorney was to prepare the settlement documentation. The adjuster “signed” the email as follows: “Thanks Brenda Greene.” On May 4, 2011, the plaintiff executed a release. One week later, the motion court granted the defendant’s cross-motion to dismiss the complaint. The same day, the defendant’s attorney served the order with notice of entry on the plaintiff, and the plaintiff’s counsel sent the release and a signed stipulation of discontinuance to the adjuster. The adjuster received the “settlement documents” and forwarded them to the defendant’s counsel, who promptly “rejected” the release and stipulation of discontinuance. The defendant’s attorney asserted that a “settlement [was never] consummated under CPLR 2104 between the parties” and that the defendant considered the matter dismissed by [the motion] court’s order resolving the cross-motion. The plaintiff moved to vacate the order dismissing the case, arguing that the adjuster’s email “constituted a binding written settlement agreement pursuant to CPLR 2104”.[5] The plaintiff opposed the motion, arguing there was a binding settlement. The motion court granted the plaintiff’s motion. On appeal, the Appellate Division, Second Department, affirmed. The Court found that the adjuster’s email set forth the material terms of the parties’ settlement. According to the Court, the parties entered a valid settlement agreement on May 11, 2011, even though the release was not fully executed.[6] The Court rejected the defendant’s argument that the settlement agreement was invalid because neither the defendant nor its counsel executed the release and draft stipulation, holding that the adjuster was an agent with apparent authority to settle the case.[7] As to the “subscription” requirement of CPLR 2104, the Court noted that while emails cannot be signed in the traditional sense, “the lack of ‘subscription’ in the form of a handwritten signature has not prevented other courts from concluding that an email message, which is otherwise valid as a stipulation between parties, can be enforced pursuant to CPLR 2104.”[8] The Court also recognized the “widespread use of email” and how “unreasonable” it would be to determine that, due to the absence of a traditional signature, an email could not conform to CPLR 2104. The Court further noted that the adjuster purposely added her name at the end of the e-mail and that it was not automatically generated by the email software.[9] The Appellate Division, First Department, has cited Forcelli with approval, finding it to be of persuasive value.[10] Against the foregoing, we examine Kellinger v. Fox Media LLC.[11] In Kellinger, the parties verbally agreed to settle the action for $15,000, which defendant’s counsel attempted to confirm via email dated November 17, 2023. In the email, counsel wrote: “We will prepare the settlement agreement/general release and hold harmless and send to you on this email chain. Can you please confirm for me that we have agreed to settle for $15,000?” Plaintiff responded, “Yes we have agreed on $15,000 and I am awaiting settlement documents. Jim.” On November 27, 2023, counsel emailed the proposed general release/settlement agreement and the hold harmless agreement. Neither party disputed that plaintiff did not return a signed executed copy of these documents. Defendants moved to enforce the purported written settlement agreement between them and plaintiff. Defendants argued that the November 27 email satisfied the legal requirements under CPLR 2104 and, therefore, constituted an enforceable agreement. The motion court granted the motion, finding that “plaintiff, in subscribing to the settlement offer in the email, ha[d] entered into an enforceable agreement.”[12] The motion court noted that plaintiff did not “deny that he sent the email that confirmed the material terms of a settlement for $15,000 in exchange for the ‘settlement agreement/general release and hold harmless [agreement].’”[13] Instead, plaintiff tried to walk back the agreement, claiming his email merely indicated a willingness to review the documents—not a final acceptance. The motion court rejected this attempt as an effort to “distort the plain, declarative meaning of plaintiff’s whole statement, which, as the full context of the email conversation reveal[ed], was to confirm, per counsel’s request, the oral agreement that had already been agreed to in previous discussions.”[14] “This is especially true,” said the motion court, “as plaintiff does not ever reject the terms of the release in his emails to defendants’ counsel.”[15] The motion court reasoned that “plaintiff’s post-hoc rationalization strain[ed] credulity: had he intended, plaintiff could have explicitly conditioned the settlement on ‘an examination’ of the release documents, or, if the release contained terms beyond those he believed he had agreed to, he could have rejected them immediately after receiving it.”[16] But, plaintiff had done none of the foregoing. “In other words,” said the motion court, “to the extent that plaintiff now relies on the confidentiality provision in the release as creating a material term to which he did not agree, plaintiff did not provide a credible explanation for his failure to expeditiously deny the existence of the settlement on this ground when the release was first sent to him in November of 2023.”[17] “As such,” concluded the motion court, “defendants [had] demonstrated that plaintiff agreed to the material terms of the settlement.”[18] Takeaway Kellinger reaffirms the principle that under CPLR 2104, a settlement agreement can be enforceable if it is in writing and subscribed by the party or their attorney—even if the agreement is made via email. The decision also reflects a strong judicial preference for enforcing settlements that appear clear and mutually agreed upon, even if not formally executed. In Kellinger, the motion court reiterated that once parties reach an agreement, even by email, courts should enforce it “with rigor,” provided the essential terms are clear, and there is mutual assent. ___________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. [1] Forcelli v. Gelco Corp., 109 A.D.3d 244, 247-248 (2d Dept. 2013) (internal quotation marks omitted). [2] Id. [3] CPLR § 2014. CPLR 2104 provides, in relevant part that “An agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered.” [4] Forcelli, 109 A.D.3d at 248 (internal quotation marks omitted). [5] Forcelli, 109 A.D.3d at 247. [6] Id. [7] Id. at 248 (citations omitted). [8] Id. [9] Id. at 251. [10] Jimenez v. Yanne, 152 A.D.3d 434, 434 (1st Dept. 2017) (finding email communications between counsel sufficiently set forth an enforceable agreement to settle the plaintiffs’ personal injury claims where plaintiffs’ counsel typed his name at the end of the email accepting the offer, thus satisfying CPLR 2104’s requirements); Matter of Phila. Ins. Indem. Co. v. Kendall, 197 A.D.3d 75, 79 (1st Dept. 2021). [11] This Blog previously examined emails and the subscription requirement of CPLR 2104 on numerous occasions. Some examples include: Second Department Reaffirms That E-mails Between Counsel Can Be Sufficient to Satisfy the Writing and Signature Requirement for Stipulations Pursuant to CPLR 2104; Did You Unintentionally Enter Into A Settlement Agreement by Email?; and Emails Following Mediation Sufficient to Confirm Settlement of Third-Party Contractual Indemnification Claim. To read additional articles in which we examined the enforceability of emails, please see the BLOG tile on our website and search for “email”, or any other commercial litigation issue that may be of interest you. [12] Slip Op. at *2 (citing Jimenez, 152 A.D.3d at 434). [13] Id. at *3. [14] Id. [15] Id. [16] Id. [17] Id. (citations omitted). [18] Id. at 3-4 (citation omitted).