In McKissack Group, Inc. v. MacFarland , 2019 N.Y. Slip Op. 30694(U) (Sup. Ct. N.Y. County Mar. 18, 2019) ( here ), Justice Kathryn E. Freed of the Supreme Court, New York County, recently upheld a challenge to a claim for fraudulent inducement, finding that the plaintiff satisfied the elements of the claim and did so with the particularity required under CPLR § 3016(b). A Quick Primer on Pleading A Fraudulent Inducement Claim To state a claim for fraudulent inducement, “th

A common issue for litigators concerns the computation of time for statute of limitations purposes, answers to pleadings, and responses to motions and discovery requests. In particular, what to do when the last day for filing falls on a weekend or holiday. Under Rule 6(a)(1)(C) of the Federal Rules of Civil Procedure, when the last day to file falls on a weekend or holiday, the filing date is carried over to the next business day. See also Rule 26(a)(1)(C). Under the New

Statute of limitations issues frequently arise in residential mortgage foreclosure actions. Mortgage foreclosure actions are governed by a six-year statute of limitations. See CPLR 213(4) . Generally, the statute of limitations for each missed payment runs from the date of the missed payment. Bank of New York Mellon v. Celestin , 164 A.D.3d 733 (2 nd Dep’t 2018). In order to avoid having to sue on each missed payment or groups of missed payments, mortgages usually conta

On March 19, 2019, the Appellate Division, First Department, issued two decisions involving a number of issues related to the assertion of a fraudulent inducement claim – i.e. , whether (a) the claim was duplicative of a contract claim, (b) the plaintiff justifiably relied on the alleged misrepresentations, and (c) disclaimer and merger clauses operated to render reliance on the alleged misstatements unreasonable – and a fraud claim – i.e. , whether there was falsity. Ohm NYC

Stephen King is quoted as saying that “the truth is in the details. No matter how you see the world …, the truth is in the details.” This quote fairly sums up the pleading requirement that all plaintiffs must satisfy when alleging a fraud. They must provide sufficient details of the alleged misconduct to support a reasonable inference that the allegations of fraud are true. In Q Semiconductor Inc. v. GlobalFoundries U.S. 2 LLC , 2019 N.Y. Slip Op. 30603(U) (Sup. Ct., N.Y. Co

On March 14, 2019, the Appellate Division, First Department, unanimously affirmed the denial of a summary judgment motion seeking to dismiss a fraudulent inducement claim alleged in connection with the purchase of a mixed-use property on Union Avenue in the Bronx, New York (the “Subject Property”). Union Ave. Estates, LLC v. Garsan Realty Inc. , 2019 N.Y. Slip Op. 01827 (1st Dept. Mar. 14, 2019) ( here ). The decision, though short and concise, addresses a couple of principle

On March 11, 2019, the Securities and Exchange Commission (“SEC” or “Commission”) announced ( here ) that it had settled charges against 79 investment advisers who agreed to return more than $125 million to their clients (the “Actions”). A a substantial majority of the funds to be returned are earmarked for retail investors. The Actions arose from the SEC’s Share Class Selection Disclosure Initiative (“SCSDI” or the “Initiative”) ( here ), which the Division of Enforcement (

As a general matter, a faithless servant is one who acts contrary to the interests of his/her employer. When an employee or agent acts faithlessly, he/she must forfeit the compensation earned (whether wages or commissions) as a result of the wrongful act. A question that sometimes arises is whether an at-will employee is subject to the faithless servant doctrine. In TMT Entertainment Group, Inc. v. Gasparro , 2019 N.Y. Slip Op. 30542(U) (Sup. Ct., N.Y. County Mar. 4, 2019) (

On March 5, 2019, the Securities and Exchange Commission (“SEC”) announced (here) that BB&T Securities, LLC (“BB&T Securities”), a wholly owned brokerage subsidiary of BB&T Corp., had agreed to return more than $5 million to retail investors and pay a $500,000 penalty to settle charges that a firm it acquired, Valley Forge Asset Management, LLC (“Valley Forge”), misled its advisory clients into believing they were receiving full service brokerage services at a discount while

In Ambac Assur. v. Countrywide , 31 N.Y.3d 569, 579 (2018) ( here ), the Court of Appeals described the justifiable reliance requirement of a fraud claim as a “fundamental precept” of the cause of action. As such, the justifiable reliance requirement is considered to be a necessary tool to weed out fraud claims by plaintiffs who “are lax in protecting themselves”. See ACA Fin. Guar. Corp. v. Goldman, Sachs & Co. , 25 N.Y.3d 1043, 1051 (2015) (Read, J., dissenting on other gro

Around two centuries ago, German writer and statesman, Johann Wolfgang von Goethe, wrote that “precaution is better than cure.” While von Goethe’s quote is applicable to a variety of situations, it seems particularly prescient in the context of Yellowstone injunctions as made plain in the recent decision of the Supreme Court of the State of New York, Appellate Division, First Department, in Bliss World LLC v. 10 West 57 th Street Realty LLC , decided on March 5, 2019. Thi

The title of a today’s post sums up the difficulties a plaintiff encounters when trying to pierce the corporate veil to hold a corporate officer, director or shareholder responsible for the wrongs alleged to have been perpetrated on the plaintiff. This is not to say that a plaintiff can never prevail. Rather, it is a reflection of the fact that the plaintiff bears a heavy burden to do so. ABN AMRO Bank, N.V. v. MBIA Inc. , 17 N.Y.3d 208, 235 (2011). In Town-Line Car Wash, In

It is not uncommon for the owners of a business wishing to remove or buy-out one of their own, or who wish to dissolve the entity, to retain a valuation expert to perform an appraisal of the entity or the ownership interest at stake. When the parties cannot reach an agreement and choose to litigate their dispute, the question arises whether the valuation report is discoverable? Like many questions under the law, the answer depends upon the circumstances under which report was

There are five elements to a fraud claim: “(1) a material misrepresentation of a fact, (2) knowledge of its falsity, (3) an intent to induce reliance, (4) justifiable reliance by the plaintiff, and (5) damages.” Eurycleia Partners, LP v. Seward & Kissel, LLP , 12 N.Y.3d 553, 559 (2009). A plaintiff alleging fraud must meet each element in order to prevail, whether it be on a motion or at trial. Menaco v. New York Univ. Med. Ctr. , 213 A.D.2d 167 (1st Dept. 1995). The failure

As readers of this Blog know, we cover a broad range of issues that fall under the umbrella of commercial and business litigation. Two issues that often receive treatment from this Blog are the application of the statute of limitations to fraud-based claims, and the court’s ability to exercise jurisdiction over a defendant. Recently, Justice Saliann Scarpulla of the Supreme Court, New York County, Commercial Division, issued an opinion that involves both of these issues. Mago

In today’s world of e-commerce, a person cannot buy something online, subscribe to a service, or join a club or organization without agreeing to the provider’s “terms of service”. These terms are often lengthy and difficult to read ( i.e. , they are not written in plain English). For these reasons, among others, most consumers simply click the “I agree” button or link without reading the text or thinking about what they agreed to. To many consumer advocates, such electronic

A shareholder’s derivative action is a lawsuit “brought in the right of a … corporation to procure a judgment in its favor, by a holder of shares or of voting trust certificates of the corporation or of a beneficial interest in such shares or certificates.” Marx v. Akers , 88 N.Y.2d 189, 193 (1996) (quoting Business Corporation Law § 626 (a)). Derivative claims against corporate officers and directors belong to the corporation itself. Auerbach v. Bennett , 47 N.Y.2d 619, 631

Section 470 of New York’s Judiciary Law , provides: A person, regularly admitted to practice as an attorney and counsellor, in the courts of record of this state, whose office for the transaction of law business is within the state, may practice as such attorney or counsellor, although he resides in an adjoining state. Section 470 requires that “non-resident attorneys must maintain an office within New York to practice in .” ( Schoenefeld v. State , 25 N.Y.3d 22 (2015).) O