In a ruling that has sparked debate among commercial litigators, the New York Appellate Division, First Department, affirmed the dismissal of a partnership dispute in Kesselman v. Bauer on January 8, 2026, relying on incomplete WhatsApp messages as documentary evidence to establish an accord and satisfaction. Critics, including appellant's counsel Scott Watnik of Wilk Auslander LLP, argue that the decision creates perilous loopholes for partners controlling financial accounts, potentially undermining longstanding protections under New York Partnership Law.

The Dispute and Lower Court Proceedings

The case stems from a 50-50 partnership between Jason Kesselman and Jason Bauer in a business venture operated through entities including JAK Advisors and Bauer Advisors LLC. According to the First Amended Complaint filed on May 31, 2024, in Supreme Court, New York County (Index No. 151067/2024), Bauer—described as the "CFO partner"—maintained exclusive access to the partnership's bank account. When the relationship soured, Bauer allegedly refused to provide Kesselman with a full accounting of funds, instead making a payment and claiming via WhatsApp messages that it settled all claims.

Kesselman sued on February 5, 2024, alleging breach of fiduciary duty, fraud, unjust enrichment, conversion, and seeking an accounting and dissolution. Defendants moved to dismiss on June 16, 2024, under CPLR 3211(a)(1) and (a)(7), asserting the messages constituted an accord and satisfaction. On October 30, 2024, Justice Lebovits granted the motion under CPLR 3211(a)(1), finding the WhatsApp exchanges "utterly refuted" the claims.

Appellate Affirmance and Key Holdings

Kesselman appealed, with briefs filed in 2025: appellant's opening on August 1, respondents' opposition on September 26, and reply on October 17. Oral argument occurred on December 2, 2025. The First Department affirmed on January 8, 2026, holding the messages as sufficient documentary evidence to bar the action.

The decision has drawn criticism for two primary reasons. First, it treated admittedly incomplete and unauthenticated WhatsApp messages—spanning months and potentially missing text, as conceded in defendants' filings—as conclusive proof of settlement. This overlooks the platform's vulnerabilities, where messages can be unilaterally deleted or altered without record. Second, it allows a partner with sole financial control to force a settlement without providing an accounting, contravening precedents like Hudson v. Yonkers Fruit Co. (1932), where Chief Judge Cardozo ruled fiduciaries cannot leverage withheld funds as a "negotiating ploy," and similar holdings from the Second and Fourth Departments.

The ruling creates a departmental split, potentially allowing such tactics in Manhattan and the Bronx while prohibiting them elsewhere. It also appears to sidestep New York Partnership Law §§ 40-45, which mandate accountings and transparency among partners.

Motion for Reargument or Leave to Appeal

On February 9, 2026, Kesselman filed a motion for reargument under CPLR 2221(d) and 22 NYCRR 1250.16(d), or alternatively, leave to appeal to the Court of Appeals under CPLR 5602(a)(1)(i) and (b)(1). The motion, supported by Watnik's affirmation, argues the Appellate Division overlooked the messages' incompleteness, lack of authentication, and controlling authorities on fiduciary duties. It also notes a contradiction: the same trial judge recently held in another case that incomplete WhatsApp messages cannot serve as conclusive evidence.

The motion was returnable on March 2, 2026. As of March 5, 2026, no decision on the motion has been reported, leaving the matter pending amid calls for higher court intervention to resolve inconsistencies.

Implications and Expert Commentary

Legal experts warn the decision could embolden partners with financial leverage to exploit digital communications, leaving co-partners "negotiating blind" without visibility into assets. Watnik has highlighted the ruling's potential to incentivize bad faith, stating that it "creates dangerous new loopholes for partners who have exclusive access to the partnership bank account—and leaves their co-owners vulnerable." He has further emphasized that informal texts, even incomplete ones, might now override statutory rights and weaken fiduciary duties precisely when disputes arise, adding that "the traditional protections of partnership law and fiduciary duties may not be as robust as you think."

If the Court of Appeals grants leave, the case could clarify standards for digital evidence in commercial litigation and reaffirm protections against fiduciary overreach. Until then, Kesselman v. Bauer serves as a cautionary tale for New York partnerships, highlighting how evolving technology may outpace traditional safeguards.