Often, in the pre-action investigation of a client’s claims, it becomes evident that discovery would materially aid the client in framing his/her complaint or in learning the identities of the persons against whom the complaint should be brought. Obtaining such pre-action discovery, however, is not easy. The plaintiff must demonstrate the existence of a meritorious cause of action against the proposed defendant and the materiality and necessity of obtaining the information.

Our July 3, 2018 Blog post, entitled: “ OUT OF STATE ATTORNEYS ADMITTED IN NEW YORK, CANNOT RELY ON NEW YORK VIRTUAL OFFICES IF THEY INTEND TO PRACTICE IN NEW YORK ” (the full text of which is reprinted below), addressed issues related to the need for attorneys admitted to practice law in New York, but who do not reside in New York, to have physical offices in New York. One of the cases discussed in the Blog was , 154 A.D.3d 523 (1 st Dep’t 2017), in which the First Departm

As new technologies are developed, and the exchange of ideas proliferate, the risk that a company’s trade secrets and ideas will be misappropriated has become a part of doing business. As discussed by this Blog in a prior post (here), businesses can find protection from the misappropriation of trade secrets in the Uniform Trade Secrets Act (adopted in some form by every state other than New York) and/or the common law. In New York, when a plaintiff claims misappropriation of

Forum selection clauses are common in commercial contracts because they “provide certainty and predictability in the resolution of disputes.” , 6 N.Y.3d 242, 247 (2006), quoting , 87 N.Y.2d 530, 534 (1996). They come in two forms: mandatory and permissive. In the former, the parties are “required to bring any dispute to the designated forum,” while the latter “only confers jurisdiction in the designated forum, but does not deny plaintiff his choice of forum, if jurisdiction t

New York’s Business Corporation Law (“BCL”) provides shareholders owning 50% or more of a corporation two paths to judicial dissolution: a) BCL § 1104 – deadlock at the board or shareholder level such that the corporation “cannot continue to function effectively, and no alternative exists but dissolution”; or b) BCL § 1104-a – where directors or those in control of the corporation have been guilty of illegal, fraudulent or oppressive actions toward the complaining shareholder

Commercial contracts often include a liquidated damages clause that provides for the payment of a predetermined amount of damages in the event of a breach by one of the parties. Such clauses are often found in contracts for the sale of real property, commercial leases, and construction contracts. Given the consequences of liquidated damages clauses, it is important to understand when and how such a clause will be enforced. What are Liquidated Damages? A liquidated damages c

In the “classic indemnification case,” the one seeking indemnification “had committed no wrong, but by virtue of some relationship with the tort-feasor or obligation imposed by law, was nevertheless held liable to the injured party.” D’Ambrosio v. City of New York , 55 N.Y.2d 454, 461 (1982); Trustees of Columbia Univ. in City of N.Y. v. Mitchell/Giurgola Assoc. , 109 A.D.2d 449, 451 (1st Dept. 1985). Thus, “where one is held liable solely on account of the negligence of anot

It is not uncommon for practitioners to group multiple defendants together in a complaint when they are alleged to have collectively committed the wrong complained of. This form of pleading, commonly known as “group pleading,” generally runs afoul of the Federal Rules of Civil Procedure (“Federal Rules”) and the Civil Practice Law and Rules (“CPLR”). This is particularly so in the context of fraud. Both the Federal Rules and the CPLR require a plaintiff to provide sufficient

Generally, a business entity must be formed in order to conduct business. For example, “a nonexistent entity cannot acquire rights or assume liabilities, a corporation which has not yet been formed normally lacks capacity to enter into a contract.” Rubenstein v. Mayor , 41 A.D.3d 826, 828 (2 nd Dep’t 2007). Frequently, a new business entity is formed for the specific purpose of entering into a business transaction. What happens, though, if the entity is not properly or t

As readers of this Blog know, one of the elements of a fraud claim is “justifiable reliance.” In Ambac Assurance Corp. v. Countrywide Home Loans, Inc. , 31 N.Y.3d 569 (2018), the New York Court of Appeals emphasized the importance of the justifiable reliance element, noting that it is a “fundamental precept” of a fraud claim and is critical to the success of such a claim. Determining whether a plaintiff justifiably relied on a misrepresentation or omission, however, is “alwa

If anyone is wondering why seemingly high-cost “loans” by litigation funding companies are not considered usurious, the Appellate Division, First Department, explained why in Cash4Cases, Inc. v. Brunetti (December 6, 2018). First, however, a bit about usury. Section 5-501 (1) of New York’s General Obligations Law , which addresses civil usury, provides that, with some exceptions, “ he rate of interest, as computed pursuant to this title, upon the loan or forbearance of any

“Law of the case” is a phrase that litigators use all of the time, often without thought or explanation. But what is the law of the case doctrine? And, when does it apply? The law of the case doctrine is part of a larger group of related concepts – i.e. , res judicata (claim preclusion) and collateral estoppel (issue preclusion) – that are designed to limit the relitigation of issues. Like res judicata and collateral estoppel, the law of the case doctrine contemplates that t

In litigation, the prevailing party is frequently entitled to the reimbursement of statutory costs. See, e.g., CPLR § 8101 . What happens if a defendant is awarded costs, but the plaintiff refuses to pay? Certainly, if the defendant is within the jurisdiction, the plaintiff can decide if it is cost effective to pursue the defendant to collect the costs. If, however, the plaintiff is in a different jurisdiction, efforts to collect awarded costs could be more difficult. Th

Plaintiffs claiming that they have been the victims of fraud must satisfy heightened pleading standards to enter the courthouse. Under the New York Civil Practice Law and Rules, CPLR 3016(b), and the Federal Rules of Civil Procedure, Rule 9(b), the circumstances constituting the alleged fraud must be stated in detail. here).=">here</a>)."> Proving fraud in New York becomes even more difficult for plaintiffs – they must prove fraud by “clear and convincing evidence,” a high

In March of this year, this Blog wrote about the voluntary payment doctrine ( here ) and how it is alive and well in New York. On November 15, 2018, the Appellate Division, First Department, addressed the doctrine and the defense of economic duress in affirming the dismissal of a complaint under the doctrine. Beltway 7 & Props., Ltd. v. Blackrock Realty Advisers, Inc. , 2018 NY Slip Op. 07844 (1st Dept. Nov. 15, 2018) ( here ). The “voluntary payment doctrine … bars recovery

In business divorce cases, it is often necessary for the parties’ experts to prepare valuation reports – that is, reports that value an owner’s interest in a business or venture. Sometimes, however, valuation reports are prepared by non-testifying consultants. When valuation reports are prepared by consultants, disputes often arise over whether those reports are discoverable. The answer depends on when they are prepared ( i.e. , in the ordinary course or in anticipation of li

If there is one thing people like less than attorneys, it is paying attorneys’ fees. Accordingly, great effort is made in contracts to shift to another party, the obligation for the payment of attorneys’ fees in the event of dispute. “Under the general rule attorneys’ fees and disbursements are incidents of litigation and the prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties or by statute or court rule.” A.

Dismissal of Securities Fraud Claim in Federal Court Has No Preclusive Effect on Common Law Fraud Claims Brought in State Court Securities fraud and common law fraud have much in common. The core elements required to prevail on both claims are similar. Yet, dismissal of a federal securities fraud claim is not necessarily the death knell of a common law fraud claim. Recently, Justice O. Peter Sherwood of the Supreme Court, New York County, Commercial Division, reached this co

< editor's note: this article has been edited. > editor's note: this article has been edited.> As discussed in previous Blog posts ( here and here ), business owners and entrepreneurs wishing to insulate themselves from personal liability for the acts taken in the name of their business can generally do so by forming a corporation ( e.g. , C-Corp. or an S-Corp.) or limited liability company (“LLC”). Such protection, however, is not absolute; there are exceptions to the rule

Practitioners and their clients involved in bond offerings or other credit instruments are no strangers to trust indentures. These agreements typically contain a no-action clause, the primary purpose of which is to deter minority securityholders from filing duplicative, economically inefficient, or otherwise meritless lawsuits against the issuer, servicer, or other third party at the expense of the majority’s interest. No-action clauses generally achieve these purposes by fu