Receiving a summons and complaint is a high-stakes moment for any New York business owner. Whether it involves a breach of contract, a dispute between shareholders, or a consumer class action, the way you handle the first 72 hours can determine the eventual survival of your company. New York's legal landscape is governed by the Civil Practice Law and Rules (CPLR), a complex set of regulations that rewards proactive defendants and penalizes those who delay.
What are the most common types of business lawsuits in New York?
Most business litigation in New York centers on breaches of contract, partnership disputes, or employment-related claims. Because New York City serves as a global financial hub, the state has specialized "Commercial Divisions" within the Supreme Court designed specifically to handle high-value, complex business disputes with specialized judges.
- Breach of Contract: Claims that your business failed to deliver goods, pay for services, or adhere to the terms of a commercial lease.
- Shareholder and Partnership Disputes: Internal "business divorces" where owners disagree on management, profit distribution, or fiduciary duties.
- Tortious Interference: Allegations that your business intentionally disrupted the plaintiff's contractual relationship with a third party.
- Consumer Class Actions: Lawsuits alleging deceptive business practices, often involving New York General Business Law Section 349.
- Employment Claims: Disputes regarding wage and hour laws, non-compete agreements, or workplace discrimination.
How do these differ in New York?
New York courts strictly enforce written contracts. If your agreement includes a "merger clause," the court will generally refuse to look at outside evidence or verbal promises, focusing solely on the written text of the document.
What should you do immediately after being served with a summons?
You must immediately record the date and method of service, notify your insurance carrier, and issue a litigation hold to all relevant employees. Taking these steps ensures that you do not waive your right to defend the case and that you satisfy your legal obligations regarding evidence preservation.
- Verify the Service Date: Note exactly when and how the papers were delivered. This date starts the "clock" for your legal response.
- Contact Your Insurance Broker: Many business owners forget that their General Liability, Professional Liability (E&O), or Directors & Officers (D&O) insurance may cover the defense costs of a lawsuit.
- Implement a Litigation Hold: You have a mandatory duty to preserve evidence. Send a formal memo to employees instructing them not to delete emails, text messages, or physical files related to the parties involved in the lawsuit.
- Secure an Attorney: In New York, CPLR 321(a) requires that corporations and voluntary associations be represented by an attorney; you generally cannot represent your own business "pro se" in court.
Why is a litigation hold so important?
In New York, "spoliation of evidence"-the destruction of records-can lead to severe sanctions. A judge may instruct the jury to assume the deleted evidence was harmful to your case, effectively guaranteeing a loss.
What are the key New York deadlines to answer or move to dismiss?
In New York State courts, you typically have 20 days to respond if you were served personally within the state, or 30 days if service was made by other methods, such as through the Secretary of State or by mail. These deadlines are found in CPLR Section 3012 and are strictly enforced.
| Method of Service | Deadline to Respond |
|---|---|
| Personal Delivery (Handed to you in NY) | 20 Days |
| Service via NY Secretary of State | 30 Days |
| Substituted Service (Left with a person of age) | 30 Days |
| Service via Mail (with acknowledgement) | 20-30 Days from signing |
How do you respond? Your response typically takes one of two forms:
- An Answer: A formal document where you admit or deny each allegation and assert "Affirmative Defenses" (e.g., the statute of limitations has expired).
- A Motion to Dismiss: A request for the judge to throw out the case immediately because the complaint is legally deficient, even if the facts alleged are true.
What happens if you miss the deadline?
If you fail to respond, the plaintiff can move for a "Default Judgment." Once entered, the plaintiff can freeze your business bank accounts and place liens on your company property without further notice to you.
How do you preserve evidence and communicate safely?
To protect your business, you must immediately halt any automatic document deletion policies and funnel all communications regarding the dispute through your legal counsel. This ensures that your internal discussions remain protected by attorney-client privilege and cannot be used against you during the discovery phase of the lawsuit.
- Identify Key Custodians: Determine which employees were involved in the transaction or dispute and secure their hard drives and cloud storage accounts.
- Stop Auto-Delete: If your company email system automatically deletes messages after 90 days, you must disable this feature for relevant accounts immediately.
- The "No Contact" Rule: Instruct your staff not to speak with the plaintiff or their employees. Anything said "off the record" can be used as an admission in court.
- Privileged Communications: When discussing the case internally, always include your attorney. Labeling an email "Attorney-Client Privileged" does not make it so, but it helps identify sensitive documents later.
What about social media?
In New York, private social media posts are often discoverable if they are relevant to the claims. Advise employees not to post about the company or the ongoing litigation on platforms like LinkedIn or X (formerly Twitter).
When should you negotiate a settlement vs. fighting in court?
The decision to settle or litigate should be based on a cold calculation of the "Maximum Exposure" versus the "Cost of Defense." In New York, where legal fees for commercial litigation can quickly reach six figures, many businesses opt for early mediation to control costs and keep the dispute confidential.
- Choose Settlement if: The legal fees will likely exceed the settlement amount, the facts of the case are unfavorable, or a public trial would damage your brand's reputation.
- Choose Litigation if: The plaintiff's demands are extortionate, you need to set a "no-settlement" precedent for future claims, or the case is purely a matter of law that a judge can decide quickly.
- Consider Arbitration: If your contract has an arbitration clause, you may be able to move the case out of the public court system and into a private forum like the American Arbitration Association (AAA).
What is the "Commercial Division"?
If your case involves more than $500,000 (in Manhattan) or lower thresholds in other counties, it may be eligible for the Commercial Division of the New York Supreme Court. This division is highly efficient and uses rules designed to move business cases through the system faster than standard civil parts.
Common Misconceptions About New York Lawsuits
Myth 1: "I wasn't served personally, so the lawsuit isn't valid." In New York, service can be legally achieved by delivering papers to the NY Secretary of State or by "Nail and Mail" (affixing the papers to your door and mailing a copy). If the Secretary of State has your old address on file because you failed to update it, you can still be legally served even if you never see the papers.
Myth 2: "My LLC protects me from all liability." While an LLC provides a "corporate veil," New York courts may "pierce the veil" if the owner commingled personal and business funds or used the business to commit a fraud. Furthermore, business owners can be held personally liable for certain unpaid wages under New York Labor Law.
FAQ
Can I sue the person back if they sue my business?
Yes. This is called a "Counterclaim." If the plaintiff owes you money or breached the same contract they are suing you for, your attorney will include these claims in your formal Answer.
How much does it cost to defend a business lawsuit in New York?
Costs vary wildly based on the complexity. A simple contract dispute may cost $10,000 to $30,000 to resolve, while complex commercial litigation involving extensive "discovery" (document exchange) can cost hundreds of thousands of dollars.
What is a "Summons with Notice"?
In New York, a plaintiff sometimes serves a Summons with Notice instead of a full Complaint. This document briefly states the nature of the case. You must still "Appear" through an attorney to demand the full Complaint, or you risk a default.
Can I settle a lawsuit without an attorney?
While you can negotiate, any formal settlement should be drafted or reviewed by a lawyer. A poorly written "Release" might leave the door open for the plaintiff to sue you again for a related issue.
When to Hire a Lawyer
You should hire a litigation lawyer the moment you receive a summons, a "demand letter," or even a credible threat of a lawsuit. Because New York's procedural rules are famously "trap-heavy," a single missed deadline or a failure to properly verify a pleading can result in the loss of your case regardless of the facts.
An experienced New York business litigator will:
- Evaluate the strength of the plaintiff's claims.
- Identify "jurisdictional defenses" (e.g., you don't do enough business in NY to be sued here).
- Handle the aggressive timelines of the New York court system.
- Negotiate from a position of strength to reach a favorable settlement.
Next Steps
- Gather the Documents: Print a copy of the Summons and Complaint and find the original contract or emails associated with the dispute.
- Check Your Insurance: Review your policy for "Duty to Defend" clauses and notify your agent immediately.
- Find the "Affidavit of Service": Ask your attorney to check the court's electronic filing system (NYSCEF) to see when the process server claims you were served.
- Draft a Timeline: Create a chronological list of events related to the dispute to help your lawyer understand the case quickly.
- Schedule a Consultation: Meet with a commercial litigation attorney who has experience in the specific New York county where the case was filed.