The Recession Begins Flooding Into the Courts

In her courtroom, she said, people who were once climbing corporate ladders describe cascading disappointments: phones shut off, child care no longer affordable, couples separated. “You’re trying to wrap your head around all of this,” Judge Jackman-Brown said, “trying to find something that works.”

The ripple effects sometimes seem nearly infinite in the courts. New York judges are working through multimillion-dollar business deals that fell apart. They are processing what some judges call business divorces, the cases that can become as ugly as real divorces when partners turn on each other in bad times.

A hotel development company struck by the downturn argued unsuccessfully in State Supreme Court a few months ago that the “ongoing economic crisis” was akin to an act of God that ought to entitle it to a break in its obligation to pay the owner of the Lower Manhattan plot where the hotel was to rise.

State Supreme Court in Manhattan is at the center of the financial collapse. The view from the bench there lately, judges said, is of one industry after another pushing through the debris left from the last year or so.

Plaintiffs and defendants are the former high-flying hedge funds and investment banks, as well as the city’s less glamorous businesses like restaurants and clothing manufacturers.

“Suppliers are ordering goods, and they end up not being able to pay,” said a State Supreme Court justice, Bernard J. Fried.

The Civil Courts hum with stories of people who got credit too easily, people who are no longer earning what they were and people who are no longer earning anything at all. Sometimes, the debtor is a lawyer or a banker.

A Manhattan Civil Court judge, Anil C. Singh, said he often sees people who cannot afford lawyers but who qualified for one credit card after another in the years when people seemed to think the economy could only go up.

The credit card cases, some judges say, are like the one-act plays of the recession, not as complex as the dramas of foreclosure, but concise and gripping. “You see a lot of people,” said another Civil Court judge, Peter H. Moulton, “who have lost their jobs and were just a paycheck away from being destitute.”

Nationally, court administrators say budget pressures are forcing them to do more with less. That is certain to be the challenge for New York’s 1,253 state judges, said the state’s chief administrative judge, Ann Pfau.

With legal emergencies everywhere, Judge Pfau said, “we’re going to have to be making choices.”

Judge Singh of the Civil Court said that, from his bench, it was hard to see signs of a recovery.

“I would describe it as a train wreck,” he said, “and I think it’s going to get worse for the next couple of years.”