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

It is well settled that stipulations of settlement are favored by the courts. Hallock v. State , 64 N.Y.2d 224, 230 (1984). Stipulations of settlement not only serve the interests of efficient dispute resolution but also are essential to the management of court calendars and integrity of the litigation process. Id . For these reasons, stipulations of settlement are not lightly cast aside. Id . See also Matter of Galasso , 35 N.Y.2d 319, 321 (1972). Notwithstanding, a stipula

Securities fraud comes in all shapes and sizes. While the substance of a fraudulent investment scheme may change depending upon the circumstances and the fraudster involved, the types of securities fraud 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 abou

It is well settled that New York has a “long and strong public policy favoring arbitration,” such that the “courts interfere as little as possible with the freedom of consenting parties to submit disputes to arbitration.” Smith Barney Shearson v. Sacharow , 91 N.Y.2d 39, 49-50 (1997) (internal quotation marks omitted). In light of this public policy, arbitration is encouraged “as a means of conserving the time and resources of the courts and the contracting parties” to a dis

Like the iconic scene when a cruise ship is leaving the dock, the New York Supreme Court, Appellate Division, Second Department, in BAC Home Loans Servicing, LP v. Alvarado (January 30, 2019), has everyone waiving. CPLR 3018(b) requires that “ party plead all matters which if not pleaded would be likely to take the adverse party by surprise or would raise issues of fact not appearing on the face of a prior pleading….” Generally, affirmative defenses are waived by the def

Parties to commercial/business transactions are no doubt familiar with “term sheets”, “letters of intent”, “memoranda of understanding” and “agreements in principle”. As the parties to these documents know, they outline the fundamental terms of the transaction being negotiated. Not surprisingly, disputes arise over the enforceability of these documents. In A.J. Richard & Sons, Inc. v. Forest City Ratner Cos., LLC , 2019 N.Y. Slip Op. 30215(U) (Sup. Ct. Kings County Jan. 28,

Commercial litigation practitioners know that, as a general matter, courts will not permit a fraudulent inducement claim to survive a motion to dismiss when the claim arises from a breach of contract. Indeed, courts routinely dismiss a fraudulent inducement claim where “ he existence of a valid and enforceable written contract govern a particular subject matter” and the recovery sought arises out of the same facts and circumstances. Clark-Fitzpatrick v. Long Is. , 70 N.Y.2d

Statutes of limitations encourage plaintiffs to pursue the prosecution of their claims as soon as they are known. As the term implies, they are statutory mechanisms that limit the duration of a defendant’s liability for all types of alleged wrongdoing, e.g. , fraud, breach of fiduciary and negligence. These statutes “promote justice by preventing surprises through revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witne

Readers of this Blog know that we have addressed fiduciary duty claims in the past ( here ), most often in the context of a claim against a financial advisor, a corporate officer, or an LLC member ( e.g. , here , here , here ). There are, of course, other relationships that involve fiduciary duties, e.g. , lawyers, bankers, business partners, corporate officers and directors, managing shareholders, personal representatives (executors and administrators), and trustees. Fiducia