In today’s commercial world, businesses claiming breach of an agreement often seek lost profits resulting from the breach. The hurdle that the plaintiff must overcome when seeking such relief, however, can be high. As discussed below, the reason has to do with the type of damages sought and the applicable standard of proof. There are two types of damages recoverable as lost profits: (1) lost profits that are general damages; and (2) lost profits that are consequential or spe

In Pari Delicto, the Adverse Interest Exception and the Alleged Failure to Uncover Fraudulent Activity The doctrine of in pari delicto has been a part of the common law for at least two centuries. Kirschner v. KPMG LLP , 15 N.Y.3d 446 (2010), citing Woodworth v. Janes , 2 Johns Cas 417, 423 (N.Y. 1800) (parties in equal fault have no rights in equity); Sebring v. Rathbun , 1 Johns Cas 331, 332 (N.Y. 1800) (where both parties are equally culpable, courts will not “interpose

Specific Performance is an equitable remedy used to compel a party to perform under a contract. McGinnis v. Cowhey , 24 A.D.3d 629 (2 nd Dep’t 2005). Specific Performance is frequently used to enforce a party’s rights under real estate contracts. In EMF General Contracting Corp. v. Bisbee , 6 A.D.3d 45 (2004), the First Department set forth the elements of a specific performance claim: The elements of a cause of action for specific performance of a contract are that the p

It is not uncommon for a client to claim that he/she had an agreement with another based on oral representations that were not memorialized in the writing between them. The question for practitioners and the courts is whether the oral assurances constitute a binding agreement. In LiTrenta v. Chappaqua Cent. Sch. Dist. , 2019 N.Y. Slip Op. 51556(U) (Sup. Ct., Westchester County Oct. 4, 2019) ( here ), the Court answered the question in the negative. LiTrenta involved an actio

The Foreign Corrupt Practices Act (“FCPA”) requires issuers to “devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that” all transactions are “executed” and “recorded … to permit preparation of financial statements in conformity with generally accepted accounting principles or any other criteria applicable to such statements, and … to maintain accountability for assets.” 15 U.S.C. §§ 78m(b)(2)(B). As discussed below, com

In New York, to plead (and prove) a fraud claim, a plaintiff must demonstrate the following: “a misrepresentation or a material omission of fact which was false and known to be false by the 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.” Pasternack v. Laboratory Corp. of Am. Holdings , 27 N.Y.3d 817, 827 (2016) (internal citations and quotation mark

This Blog has previously addressed issues surrounding various evidentiary issues faced by foreclosing mortgage lenders, among others, in proving their prima facie case on summary judgment. < HERE =">HERE</a>"> , < HERE =">HERE</a>"> , < HERE =">HERE</a>"> and < HERE =">HERE</a>"> . On September 25, 2019, the Appellate Division, Second Department, in JPMorgan Chase Bank v. Grennan , yet again analyzed the sufficiency of the foreclosing lender’s evidence submitted on its moti

The title of this post comes from the observation Justice Saliann Scarpulla made in Jobar Holding Corp. v. Halio , 2019 N.Y. Slip Op. 32813(U) (Sup. Ct., N.Y. County Sept. 23, 2019) ( here ), wherein she was asked to decide a motion to dismiss a complaint that asserted both direct and derivative claims. As discussed below, because, among other things, the complaint “mingled” the direct and derivative claims and otherwise failed to differentiate between the causes of action,

On September 19, 2013, Andrew Ceresney, then Co-Director of the Division of Enforcement of the Securities and Exchange Commission (“SEC” or the “Commission”), told an audience attending a continuing legal education program at the American Law Institute in Washington, D.C. about the importance of pursuing those who commit financial and accounting fraud (here). Comprehensive, accurate and reliable financial reporting is the bedrock upon which our markets are based because fals

As this Blog has noted previously, the courts (in New York and Delaware) have refused to approve the settlement of shareholder litigation where class members receive no financial benefit and are asked to give broad releases to the defendants that are inimical to their rights. The latest court to follow this path is the Supreme Court, New York County, Commercial Division. In Matter of Xerox Corp. Consol. Shareholder Litig. , 2019 N.Y. Slip Op. 51467(U) (Sept. 10, 2019), Justic

This Blog has often noted that “securities fraud comes in all shapes and sizes.” (E.g., here.) Though the alleged fraudulent scheme may differ, the types of schemes implemented tend to fall into one of the following (non-exclusive) categories: financial statement/accounting fraud; pyramid schemes; Ponzi schemes; pump-and-dump schemes; affinity fraud; promissory note fraud; Internet fraud; “microcap” stock fraud; and fraud concerning information about a company, its operations

A temporary receivership, which is one of the provisional remedies available during litigation, is governed by Article 64 of the CPLR. CPLR 6401 addresses the “appointment and powers” of a temporary receiver and provides, in pertinent part: (a) Appointment of temporary receiver; joinder of moving party. Upon motion of a person having an apparent interest in property which is the subject of an action in the supreme or a county court, a temporary receiver of the property may

The elements of a common law fraud claim in New York are well known to readers of this Blog: “a misrepresentation or a material omission of fact which was false and known to be false by the 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.” Pasternack v. Laboratory Corp. of Am. Holdings , 27 N.Y.3d 817, 827 (2016) (internal citations and quotation mark

This Blog has often written about contract issues; in particular, the enforceability of a contract whether it be oral or written. In today’s post, we examine an implied contract – that is, an agreement arising from the conduct of the parties. In K2 Intelligence, LLC v. Frydman , 2019 N.Y. Slip Op. 32684(U) (Sup. Ct., N.Y. County Sept. 9, 2019) ( here ), the Court denied a motion to dismiss an implied contract action, holding that there was an issue of material fact as to whe

It is well settled that when an agreement is clear and unambiguous, the parties’ rights are to be governed exclusively by that agreement and the courts are to give the words of that agreement their plain, ordinary, and usual meaning. It is equally well-settled law that parties engaged in an arm's-length business transaction are not fiduciaries, especially when the parties are sophisticated businesspeople. Despite the clarity of these principles, they are, nevertheless, tested

In today’s post, this Blog looks at enforcements actions brought by the Securities and Exchange Commission (“SEC”) that involve fraudulent misconduct and the failure to comply with the registration requirements for the offering of securities. Securities and Exchange Commission v. Toon Goggles Inc. On September 6, 2019, the SEC announced ( here ) that it charged Toon Goggles Inc. (“Toon Goggles”), a Los Angeles-based company that offers on-demand entertainment content for chil

Attorneys are often asked whether an oral agreement is enforceable. Most will say that the answer depends on the law and the facts surrounding the agreement. As an initial matter, to be enforceable, an oral agreement must contain the elements of a binding contract, e.g. , an offer, acceptance, consideration, mutual assent, an intent to be bound, and agreement on all essential terms. Even if these elements are present, the agreement must still satisfy the Statute of Frauds.

On August 29, 2018, the Securities and Exchange Commission (”SEC”) announced (here) that it charged a Tallahassee-based investment advisory firm and its two former principals with defrauding investors, most of whom were retired NFL players who had joined the class-action lawsuit against the National Football League (“NFL”) claiming they suffered brain injuries as a result of concussions. The SEC charged Cambridge Capital Group Advisors, LLC (f/k/a Cambridge Capital Advisors,