By: Jeffrey M. Haber In today’s article, we examine three principles of law that can spell the end of a litigation: disclaimer clauses, merger or integration clauses, and derivative standing. The Merger Clause As a general matter, when parties negotiate an agreement in a clear and unambiguous document, their writing will be enforced according to its terms. Evidence outside the four corners of the document as to what the parties really intended ( i.e. , parole evidence) is gen

By Jonathan H. Freiberger In its December 10, 2021, article entitled: “ Service of Process and Personal Jurisdiction ,” this Blog discussed the notion of a court’s personal jurisdiction over a defendant and the importance of proper service of process. In today’s article we will discuss Everbank v. Kelly , a mortgage foreclosure action decided on February 2, 2022, by the Appellate Division, Second Department, in which the Court resolved: a simple question that has not previou

By: Jeffrey M. Haber On April 4, 2020, the New York Uniform Voidable Transactions Act (“NYUVTA”) became effective, replacing Article 10, Sections 270-281 of the Debtor and Creditor Law (“DCL”), the State’s almost century-old fraudulent conveyance law. This Blog previously examined the NYUVTA, the DCL and the changes the NYUVTA made to the DCL ( here ). Since the NYUVTA applies to cases filed on or after April 4, 2020, there remain many cases under the former DCL that are be

By Jonathan H. Freiberger A clear message that readers of this Blog are frequently left with is the importance of following the Court’s procedural rules, which often leads to the efficient flow of a litigation. Today’s Blog will discuss the requirement in subsection (a) of CPLR 3212 that a motion for summary judgment cannot be made until after issue is joined. Summary judgment is a procedural device that, if successful, can efficiently bring a matter to resolution without t

By: Jeffrey M. Haber To plead a cause of action for fraud or fraud in the inducement, a plaintiff must allege facts to support the claim that he or she justifiably relied on the alleged misrepresentation(s). As we have noted in prior articles, the justifiable reliance element of a fraud claim is often the most challenging one to satisfy. To demonstrate justifiable reliance, a plaintiff must allege (and prove) that he or she relied upon the misrepresentation to his or her detr

By: Jeffrey M. Haber As readers know, we write about cases involving fraud. The articles we write almost always concern the specific elements of the claim, such as scienter and justifiable reliance. Rarely have we examined defenses to a claim of fraud. Today, we do so – we examine the doctrines of ratification and estoppel. As a general matter, “ atification is the act of knowingly giving sanction or affirmance to an act that would otherwise be unauthorized and not binding.”

By: Jeffrey M. Haber Derivative actions are often brought by shareholders of a corporation (or limited liability company) to vindicate the entity’s rights. 1 Although shareholders are given the right to bring such lawsuits, they are not, however, favored because “they ask courts to second-guess the business judgment of the individuals charged with managing the company.” 2 Notwithstanding, “derivative actions serve the important purpose of protecting corporations and minorit

By Jonathan H. Freiberger Article 52 of the CPLR addresses the enforcement of money judgments. In the most simplistic terms, Article 52 addresses the property of a judgment debtor that is subject to enforcement and the various tools available to a judgment creditor to enforce a money judgment. On December 16, 2021, the New York Court of Appeals decided Plymouth Venture Partners, II, L.P. v. GTR Sources, LLC , in which the Court answered the following two questions certified

By: Jeffrey M. Haber The new year is days old, but that has not stopped the Securities and Exchange Commission (“SEC” or “Commission”) from awarding whistleblowers money under the Commission’s whistleblower program. During the past two weeks, the SEC announced that it awarded, in total, more than $14 million to several whistleblowers who provided information and assistance in three enforcement actions – one for “misconduct occurring overseas” and a second where the whistleblo

By Jonathan H. Freiberger A significant part of a mortgage foreclosure action is the calculation of the sums due and owing to the lender. The task of computing the amount due is typically performed by the referee appointed by the court for that purpose. What the referee is permitted to include in the calculations, which is generally governed by statute and the underlying loan documents, includes, among other things, outstanding principal, advances for taxes, insurance and o

By: Jeffrey M. Haber Yesterday, the Appellate Division, First Department decided three cases involving claims for fraudulent inducement. We examine each of these cases below. Artemus USA LLC v. Leila Taghinia-Milani Inc. Artemus involved artwork that was consigned by Artemus USA LLC (“Artemus”) to defendants pursuant to a consignment agreement (“Agreement”). Plaintiffs alleged that the artwork was damaged while consigned to the Defendants. In their opposition to plaintiffs

By: Jeffrey M. Haber Last April, this Blog wrote about Sodhi v. IAC/InterActiveCorp , 2021 N.Y. Slip Op. 31220(U) (Sup. Ct., N.Y. County Apr. 8, 2021) ( here ), an action to recover money claimed to be improperly withheld by IAC/Interacticecorp (“IAC”). The primary issue in the Sodhi was whether the releases in a settlement letter covered the claims asserted in the action. The motion court held that the releases were broad and covered plaintiffs’ claim to the money alleged

By Jonathan H. Freiberger On January 5, 2022, the Second Department decided Citibank, N.A. v. Kerszko . The appeal in Citibank raised numerous “interesting and unusual issues,” but the focus of today’s article is on an issue recognized by the Second Department to be addressed by it for the first time: “whether the presentment to a court of a proposed ex parte order to show cause for an order of reference, which is rejected by the court for defects inherent in the papers, qu

By Jonathan H. Freiberger This Blog’s December 17, 2021, article entitled: “ Second Department Holds that Envelopes Containing Pre-Foreclosure Notices to Borrowers Pursuant to RPAPL 1304 Cannot Contain Any Other Notices Or Information ,” discussed Bank or America, N.A. v. Kessler , in which the Second Department held that RPAPL 1304 ’s mailing requirements for the statutory notices contemplated thereby are to be strictly construed. kessler, and the blog articles hyperlinked

By: Jeffrey M. Haber To allege a cause of action based on fraud, plaintiffs must assert “a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury. 1 To withstand a motion to dismiss, plaintiffs must satisfy each element of the claim. One of the most difficult elements

By Jonathan H. Freiberger Generally speaking, usury statutes prevent excessive interest from being charged on a loan. The New York Court of Appeals has noted that “ tatutes prohibiting usurious loans were enacted in the 15 th century England, became part of New York’s colonial history, and have remained since” and that “ heir purpose is to protect desperately poor people from the consequences of their own desperation.” Seidel v. 18 East 17 th Street Owners, Inc. , 79 N.Y.2d

By: Jeffrey M. Haber “A transaction ... is usurious under criminal law when it imposes an annual interest rate exceeding 25%.” 1 General Obligations Law § 5–521 bars a corporation from asserting usury in any action, except in the case of criminal usury as defined in Penal Law § 190.40, and then only as a defense to an action to recover repayment of a loan, and not as the basis for a cause of action asserted by the corporation for affirmative relief. 2 As the Appellate Divis

By: Jeffrey M. Haber Broker-dealers are required to file suspicious activity reports (“SARs”) for transactions suspected to involve fraud or a lack of an apparent lawful business purpose. In that regard, under Section 17(a) of the Securities Exchange Act and Rule 17a-8 promulgated thereunder, a registered broker-dealer is required to file a SAR when it knows, suspects, or has reason to suspect that certain transactions (1) involve funds derived from illegal activity, (2) invo