New York has been a world business hub since the Dutch set up a trading post in New Amsterdam. New York Courts, both state and federal, have hosted many of the country’s most consequential real estate and commercial cases. Of the many innovations in the New York Court System, few have been as successful as the Commercial Division of the Supreme Court.
The Commercial Division was established in 1995 to handle complex commercial disputes. Starting with four judges sitting in Manhattan, it has expanded throughout the state. The Commercial Division has always operated under its own set of procedural rules.
Because the Commercial Division is specialized, it does not hear all commercial cases.. Residential real estate disputes, commercial real estate disputes which involve only non-payment of rent and many types of insurance cases are specifically excluded. The amount in issue (without interest, punitive damages or counsel fees) has to exceed a monetary limit ranging from $25,000 (Albany County) to $500,000 (Manhattan).
Because of the success of the Commercial Division, Lawrence Marks, the Chief Administrative Judge of the Courts recently modified many of the court rules for the rest of Supreme Court system to more closely track the Commercial Division. The new rules go into effect on February 1, 2021. Many of the changes also bring New York practice the into line with what is done in the federal courts.
The new wide-ranging rule changes apply from the very start of cases, through the discovery phase and on to trial. The streamlining of the discovery process is one of the most important changes
For instance, unless the court directs otherwise, a party may take a maximum of ten depositions (EBT’s or examinations before trial), each of which can last no more than seven hours. Interrogatories, written questions responded to under oath, are limited to a maximum of 25, including any subparts.
Another major change is the ability to take a deposition of a business entity by serving a subpoena on the entity noting the areas which the party wants to inquire into; the entity then must designate one or more witnesses with the knowledge to be deposed. This type of deposition, long a practice under the Federal Rules of Civil Procedure, permits a party to examine a business as if it were a person and get binding answers to its questions.
Many cases are decided on motions made to the court. A major change in the general rules is that on a motion for summary judgment (when a party asks the court to decide a case as a matter of law), the party making the motion will have to submit a statement of facts with specific reference to attached admissible proof which it believes should permit the court to make a determination without a trial. Each of those facts will be deemed admitted unless the party opposing the motion, in its own statement of facts, specifically controverts the fact and cites to evidence disproving it or calling it into question.
Many real estate cases are tried before a judge sitting without a jury. There has always been a potential problem holding a settlement conference before the judge who is assigned to the case since a party may wish to say things in negotiation that it does not want coming out at the trial. To address this problem, the new rules permit a joint application by all the litigants to hold a settlement conference before another judge.
Also in non-jury cases, the new rules allow the judge to require a party to present its witnesses’ testimony on direct examination by way of affidavit. The other party or parties still can object and can cross-examine the witness.
Of interest to lawyers, if not so much to clients, there are changes in the form of motion papers, including that memoranda of law, affidavits, and affirmations exceeding 4500 words must be electronically bookmarked; that unless a judge’s individual rules differ, oral argument of motions must be requested by letter; that objections to demands for discovery of papers and electronically stored information must be much more specific than is currently the case; and that there are various specific rules for conferences.
The new rules seek to make trials more efficient and quicker. They lay out what a litigant is required to do before trial, what must be provided to the court at or shortly before trial and what must be disclosed to the other side.
For law firms like the author’s, which regularly practice before the all-purpose parts of the Supreme Court and the Commercial Division as well as the federal courts, the change in rules is a welcome aligning of the procedures to follow in each. For residential and commercial landlord clients, the Rules now offer a more streamlined and less expensive route to the resolution of their disputes.