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By: Jonathan H. Freiberger In today’s Blog, we revisit the requirement in RPAPL 1351(1) that a foreclosure sale occur within 90 days of the date of the judgment of foreclosure and sale. By way of brief background, and as previously discussed in this BLOG, the 90-day requirement became effective in December of 2016. However, the rule does not apply in situations where the sale occurred prior to the effective date of the amendment. U.S. Bank, N.A. v. Peralta , 191 A.D.3d 924, 925 (2 nd Dep’t 2021). Moreover, in order to set aside a foreclosure sale pursuant to RPAPL 1351(1), the borrower must demonstrate that the delay “prejudiced a substantial right.” Wells Fargo Bank, N.A. v. Singh , 204 A.D.3d 732, 734 (2 nd Dep’t 2022); Bank of America, N.A. v. Lynch , 85 Misc.3d 1273(A), *5 (Supreme Court Suffolk Co. 2025). Also relevant to today’s BLOG is CPLR 5015(a)(1) , which permits a court to “relieve a party” from a judgment or order on the ground of “excusable default, if such motion is made within one year after service of a copy of the judgment or order with written notice of its entry upon the moving party, or, if the moving party has entered the judgment or order, within one year after such entry.” “A party seeking to vacate a default pursuant to CPLR 5015(a)(1) must demonstrate a reasonable excuse for his or her delay in appearing and answering the complaint and a potentially meritorious defense to the action.” Wells Fargo Bank, N.A. v. Besemer , 131 A.D.3d 1047, 1049 (2 nd Dep’t 2015) (citations, internal quotation marks and brackets omitted). Whether an excuse is “reasonable” is a determination “within the sound discretion” of the motion court. HSBC Bank USA, N.A. v. Gias , 215 A.D.3d 810, 812 (2 nd Dep’t 2023). Against this backdrop, we can discuss HSBC Bank USA, N.A. v. Gallo , a mortgage foreclosure action decided on May 28, 2025, by the Appellate Division, Second Department. The borrower in Gallo defaulted in her repayment obligation under a note and mortgage. The lender commenced suit, and the defendant answered the complaint. The lender served motions for summary judgment and for a judgment of foreclosure and sale on the borrower’s counsel, who failed to oppose either motion. Both motions were granted. A judgment of foreclosure and sale was entered on January 18, 2017, and a foreclosure sale was held on September 28, 2018. The borrower moved, pursuant to CPLR 5015(a)(1), to vacate the summary judgment order and the judgment of foreclosure and sale, to set aside the foreclosure sale, and to vacate the referee’s deed because the property was not sold within 90 days of the judgment of foreclosure and sale. The borrower supported her application with, inter alia , the claim that her attorney was negligent and was publicly censured for professional misconduct. The lender opposed the motion by submitting evidence of the borrower’s bankruptcy proceeding and her two orders to show cause seeking to stay the foreclosure sale . The motion court denied the motion and the borrower appealed. In affirming, the Second Department rejected the borrower’s arguments under CPLR 5015(a)(1). The Court noted that even though CPLR 5015(a)(1) requires a motion to vacate be made within one year after the service of the order or judgment with notice of entry , “the Supreme Court has the inherent authority to vacate an order in the interest of justice, even where the statutory one-year period under CPLR 5015(a)(1) has expired.” (Citation omitted.) The borrower’s motion was made more than two and a half years after notice of entry of the judgment of foreclosure and sale. In any event, the Court found that the borrower failed to demonstrate a reasonable excuse for failing to oppose the summary judgment motion or the motion for a judgment of foreclosure and sale and, accordingly did not have to consider whether the borrower “demonstrated the existence of a potentially meritorious opposition to those motions.” (Citation omitted.) The Court also rejected the Borrower’s arguments pursuant to RPAPL 1351(1) and stated: The Supreme Court properly rejected the contention that the foreclosure sale should be set aside and the referee's deed should be vacated pursuant to RPAPL 1351(1). RPAPL 1351(1) was amended, effective December 20, 2016, to provide that a judgment of foreclosure and sale shall direct that the subject property be sold “within ninety days of the date of the judgment”. Here, the waived any objection to the omission of the language required by RPAPL 1351(1) by failing to oppose the plaintiff's motion to confirm the referee's report and for a judgment of foreclosure and sale, and by waiting more than two years to move to vacate the order and judgment of foreclosure and sale. In any event, under the circumstances of this case, the court providently exercised its discretion in excusing the 's delay in conducting the foreclosure sale pursuant to CPLR 2004 . (Citations and internal quotation marks omitted, hyperlink added.] Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. This BLOG has previously written about RPAPL 1351(1) < here =">here"> . This BLOG has written dozens of articles addressing numerous aspects of residential mortgage foreclosure. To find such articles, please see the BLOG tile on our website and search for any foreclosure, or other commercial litigation, issue that may be of interest you.

By:  Jeffrey M. Haber On many occasions, we have written about Ponzi schemes that have been the subject of enforcement actions brought by, and/or settlements with, the Securities and Exchange Commission (“SEC” or the “Commission”). We remain unsurprised by the frequency with which people operate a Ponzi scheme and do so by exploiting the trust and friendship that exist in groups of people who have something in common, such as a religious group, an ethnic group, or a community – also known as affinity fraud. Today, we examine an enforcement action brought by the SEC involving a Ponzi-like scheme that targeted retired senior citizens that the defendant met through his church community. S.E.C. v. Mattson On May 22, 2025, the SEC announced ( here ) that it charged the former CEO of LeFever Mattson (“defendant”), a real estate investment firm, with defrauding approximately 200 investors of at least $46 million by selling them fake interests in real estate investment limited partnerships. Many of these investors were retired senior citizens that defendant met through his church community. According to the SEC, from approximately 2007 through April 2024, defendant orchestrated a Ponzi-like scheme that involved offering and selling fake interests in various legitimate limited partnerships created and managed by his company LeFever Mattson, a California corporation (“LeFever Mattson”). The limited partnerships in which defendant purported to sell interests (the “affiliated limited partnerships”) were real and invested in residential and commercial real estate. The affiliated limited partnerships were managed and partly owned by LeFever Mattson, a Citrus Heights, California-based company, which defendant co-founded and ran as both the entity’s chief executive officer and chief financial officer. LeFever Mattson has been in business since 1989 and boasted an approximately $400 million portfolio of real estate investments, most of which consisted of ownership interests in 50 limited partnerships. While the affiliated limited partnerships were real, and were in fact owned by a defined set of real investors, the SEC alleged that defendant fraudulently raised funds from another set of investors by falsely purporting to sell them ownership stakes in those same affiliated limited partnerships. Defendant allegedly told the investors that their investments would buy them a portion of LeFever Mattson’s ownership interests in specific affiliated limited partnerships and would entitle them to proportional distributions of the income generated by the underlying properties. According to the SEC, these representations were materially false. The SEC alleged that defendant took steps to hide his alleged fraudulent scheme from people associated with LeFever Mattson, including by using a personal post office box to receive documents from investors, receiving investor funds and sending purported distributions from a bank account in the name of LeFever Mattson that only defendant could fully access, and instructing his personal assistant not to discuss the investors with anyone else at LeFever Mattson. According to the SEC , defendant kept documents related to his alleged fraudulent scheme, including commercial bookkeeping records, on his laptop, which the SEC alleged he deleted after receiving an investigative subpoena from the staff of the Commission’s Division of Enforcement that required him to produce certain records concerning, among other things, the affiliated limited partnerships. Because defendant allegedly concealed his fake limited partnership sales from people associated with LeFever Mattson, said the SEC, the fake sales were not reflected in the legitimate records demonstrating ownership percentages of the affiliated limited partnerships. As a result, the SEC alleged that the investors who purchased interests in the affiliated limited partnerships from defendant never became actual limited partners or acquired any actual ownership interests, and they never received legitimate distributions from the limited partnerships in which they thought they invested. Instead, alleged the SEC, defendant commingled new investor funds with other personal and business funds in a bank account that he controlled and allegedly used the commingled funds to make Ponzi-like payments to existing investors. The SEC also alleged that defendant misappropriated investor money to fund certain real estate transactions through his personal partnership, relief defendant KS Mattson Partners LP (“KS Mattson Partners”), pay expenses of KS Mattson Partners, and pay for personal expenses. According to the SEC, defendant concealed from investors the fact that he was orchestrating a Ponzi-like scheme by, among other things, using some new investor funds to make payments to deceive existing investors, and providing investors with altered limited partnership documents.  Defendant also allegedly prepared a separate set of false tax records for the defrauded investors , which contradicted the legitimate annual tax filings for the affiliated limited partnerships that he signed and submitted to the Internal Revenue Service. The SEC maintained that LeFever Mattson discovered defendant’s alleged misconduct in late 2023. In around April 2024, following an internal investigation, defendant resigned from his positions as chief executive officer and chief financial officer. In September 2024 and October 2024, LeFever Mattson and all of its affiliated limited partnerships filed for Chapter 11 bankruptcy protection. As a result of the conduct alleged in the SEC’s complaint ( here ), the SEC charged defendant with violating the antifraud provisions of the Securities Act of 1933 (“Securities Act”) and the Securities Exchange Act of 1934 (“Exchange Act”) as well as the securities registration provisions of the Securities Act. The SEC claimed that KS Mattson Partners was unjustly enriched by defendant’s violations. The SEC seeks a permanent injunction against defendant, disgorgement of ill-gotten gains with prejudgment interest , and civil monetary penalties. The Commission also seeks an order prohibiting defendant from serving as an officer or director of a public company as well as from participating in the issuance, purchase, offer, or sale of any security.  Finally, the SEC seeks disgorgement of ill-gotten gains with prejudgment interest from KS Mattson Partners.   __________________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. This Blog has examined Ponzi schemes and affinity fraud on numerous occasions. To find the articles related to Ponzi schemes and affinity fraud, visit the “ Blog ” tile on our website and enter “Ponzi scheme” or “affinity fraud” in the “search” box. This Blog has examined financial elder abuse on numerous occasions. To find the articles related to financial elder abuse or financial exploitation of seniors, visit the “ Blog ” tile on our website and enter “financial elder abuse” in the “search” box. The SEC filed its complaint in the U.S. District Court for the Northern District of California. It is important to remember that a complaint merely contains allegations. Until the claims in the complaint are fully adjudicated, readers should not interpret the allegations as anything more than statements of claimed facts made by the SEC against the defendant.

By:  Jeffrey M. Haber A claim for fraud requires “a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages.” In First Trinity Life Ins. Co. v. Advance Funding LLC , 2025 N.Y. Slip Op. 03133 (1st Dept. May 22, 2025) ( here ), discussed below, knowledge of falsity ( i.e. , scienter) and reliance were the elements at issue. First Trinity concerned the assignment of lottery winnings. A former defendant won a New York State Lottery game in April 2008 that had a minimum prize of $2 million. In August 2016, the former defendant entered into an agreement with defendant Advance Funding, LLC (“AF”) in which he agreed to assign 32 months of prize payments totaling over $800,000 in exchange for a lump sum payment of $465,000. AF then assigned its right to the money to plaintiff in exchange for a payment in excess of $500,000. Plaintiff alleged that although AF represented that the former defendant had been paid in full by AF (and even included a wire transfer), the former defendant never received what he was owed and, therefore, plaintiff paid AF but did not receive any lottery payments. In connection with the assignment to AF, the former defendant filed a petition in Schenectady, New York to approve the transfer. However, the former defendant later moved to strike the assignment and disavow an affidavit he signed in which he agreed to the transaction. He later withdrew the order to show cause in exchange for an increased lump sum payment. Thereafter, the former defendant brought an application seeking to stop any more payments by the state’s Lottery Commission because AF allegedly did not make the additional payments promised to him in the settlement. Defendant moved for summary judgment dismissing the action on the grounds that she was without knowledge of the circumstances underlying the action. Defendant claimed that, as a favor to her boss, she assisted his brother’s company, defendant AF, to broker structured settlements for various winners (such as lottery winners) with large institutional funders, such as plaintiff.  Defendant claimed that when she was reviewing documents to close AF’s transaction with plaintiff, she was provided with a wire transfer that plaintiff alleged to be fraudulent . This wire transfer showed that the former defendant was paid $335,000. Defendant claimed that she had no reason to doubt the authenticity of that document. According to defendant, she was employed by Northeastern Capital Funding LLC (“Northeastern”) from May 2006 until June 2017 and never had any ownership interest in that entity. She emphasized that her job responsibilities included contacting funding entities to inform them of transactions between Northeastern and winners/settlement recipients. Defendant argued that she never had interactions with winners or structured settlement recipients. Defendant provided similar services for AF.  Plaintiff maintained that defendant helped to facilitate hundreds of transactions for AF and Northeastern. It insisted that in each transaction it entered into with AF and Northeastern, its sole contact person was defendant and that she held herself out as a senior officer for AF. Plaintiff further alleged that for the transaction at issue—the purchase from AF of the former defendant’s lottery winnings for $552,000—it was defendant who provided the closing binder and other documents to plaintiff. Plaintiff claimed that it relied upon those documents and other representations from defendant when executing the transaction. Plaintiff alleged that the wire transfer was fraudulent, that the former defendant never received the money he was owed by AF, and that plaintiff did not receive the stream of lottery payments for which it paid $552,000. Plaintiff claimed that bank statements showed that defendant received significant payments from Majestic Funding LLC (“Majestic”), an LLC owned by the same principals that owned AF and Northeastern, despite the fact that she never worked for Majestic. Plaintiff contended that defendant was a key point person at AF and was not a mere low-level employee. Defendant argued that plaintiff did not show that she knew the wire confirmations were fake and that the agreement between AF and plaintiff was an arm’s length transaction, thereby vitiating plaintiff’s reliance on her statements. Defendant also argued that she could not be held personally liable for AF’s alleged fraud . Defendant moved for summary judgment, claiming, inter alia , that the court lacked personal jurisdiction over her and that plaintiff failed to demonstrate that she perpetrated a fraud on it. The motion court denied the motion. First, the motion court held it that it possessed jurisdiction over defendant. The motion court noted that “ here no dispute that this case involves a New York resident … who won a lottery in New York and a transaction between AF and about those lottery winnings in New York (including a litigation in New York to approve the transaction between AF and [the former defendant).” The motion court found that defendant “signed her emails with a signature block that indicated that she was the director of the legal department for AF and included an address on Wall Street.” Under such circumstances, the motion court concluded that defendant could not “claim surprise that she subject to a lawsuit in New York about a New York lottery winner when she worked for a company that did business out of a New York office and represented to others that she did business out of that New York office.” “Simply put,” concluded the motion court, “there numerous contacts to satisfy New York’s long-arm statute, even despite claim that she never lived in New York.” Second, the motion court found that issues of fact precluded the grant of summary judgment , noting that “a jury could conclude that was part of the fraudulent scheme as she was the main contact person involved on behalf of AF,” while at the same time believing “ account … that she was not a part of the alleged fraud.” The motion court found “multiple issues of fact” concerning defendant’s knowledge of the false wire transfer and her intent to induce reliance . Among other things, the motion court noted that defendant provided AF with a closing binder of transaction documents, which included, inter alia , identification documents for the former defendant, including his photo ID and W-9 form, affidavits by both AF and the former defendant indicating that the assignment was fully authorized, as well as the court documents approving the assignment. Most critically, said the motion court, plaintiff requested, and defendant provided, confirmation that the former defendant had been paid what he was due. According to plaintiff, defendant provided the sought after proof of funding and payment. The motion also found that there was an issue of fact regarding defendant’s personal liability for the alleged fraudulent scheme. Defendant maintained that she was a low-level employee even though she signed her emails with the signature line “Director, Legal Dept.”, which is an officer position. “That raises an issue about her role with AF and that she might be considered a corporate officer,” said the motion court. Under New York law, noted the motion court, “a corporate officer who participates in the commission of a tort may be held individually liable, regardless of whether the officer acted on behalf of the corporation in the course of official duties and regardless of whether the corporate veil is pierced.” Defendant appealed. The Appellate Division, First Department affirmed the portions of the motion court’s order involving personal jurisdiction and fraud. The Court held that the motion court “properly found that it had personal jurisdiction over under New York’s long-arm statute, as the second amended complaint allege that she engaged in purposeful actions directed at New York and that her actions substantially related to plaintiff’s claims.” The Court explained that, “ lthough an employee ‘acting on behalf of his employer does not create jurisdiction upon the employee individually’…, the record support a finding that was acting in her individual capacity as part of the fraudulent scheme, and not simply conducting business on behalf of defendant Advance Funding, LLC.” The Court noted that “ f it is true, as plaintiff allege , that knowingly sent a fake wire transfer to plaintiff in an effort to fraudulently induce the underlying transaction, she would not have been conducting legitimate business on behalf of the corporation.” Further, said the Court, “the transaction at issue was specifically tied to New York.” The Court found that defendant “allegedly consented to and benefitted from that transaction, and it uncontested that she was paid for the services she undertook on behalf of Advance Funding.” The Court also held that the motion court “properly denied motion with respect to the fraud cause of action.” “At a minimum,” said the Court, “there are factual issues surrounding whether made a material misrepresentation of fact with knowledge as to its falsity, and whether plaintiff relied on the representation and on the allegedly fraudulent wire transfer documentation.” The Court noted that in her motion, defendant merely raised issues of credibility which were more properly resolved by the jury: With respect to the underlying transaction, plaintiff requested confirmation that the lottery winner had been paid in full by Advance Funding. In response, provided a copy of a check that was issued to the winner and a purported wire transfer in the amount of $335,000, which was later discovered to be a fraud. also represented that the winner had been fully paid, and in fact that he had been overfunded by $10,000. Although asserts that she had no idea that the wire transfer was fraudulent, this assertion merely raises an issue of fact as to credibility that cannot be properly resolved on the summary judgment motion. The Court also found that there were “some factual issues regarding whether plaintiff’s reliance on the fraudulent wire transfer was reasonable.” The Court noted that defendant “provided Trinity with a closing binder containing more than 20 documents,” which “Trinity reviewed …, asked questions , and … requested written confirmation from Advance Funding regarding the accuracy of its representations.” In response to plaintiff’s inquiries, defendant “provided Trinity with the fraudulent wire transfer and her own assurances that the lottery winner had actually been paid more than he was owed.” The Court concluded that plaintiff “was entitled to rely on representations.” ____________________________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. Eurycleia Partners, LP v. Seward & Kissel, LLP , 12 N.Y.3d 553, 559 (2009); Braddock v. Braddock , 60 A.D.3d 84 (1st Dept.), appeal withdrawn 12 N.Y.3d 780 (2009). This Blog has examined cases involving fraud and personal jurisdiction on numerous occasions. To find articles related to these topic, visit the “ Blog ” tile on our website and enter “personal jurisdiction”, “fraud”, “fraudulent inducement” and any of the elements of a fraud claim in the “search” box. Am. Exp. Travel Related Services Co., Inc. v. N. Atl. Resources, Inc. , 261 A.D.2d 310, 311 (1st Dept. 1999). Slip Op. at *1 (citing, CPLR 302(a)(1); Deutsche Bank Sec., Inc. v. Montana Bd. of Invs. , 7 N.Y.3d 65, 71 (2006)). Id. (quoting Laufer v. Ostrow , 55 N.Y.2d 305, 313 (1982); and citing  Grosso v. Cy Twombly Found. , — A.D.3d —, 2025 N.Y. Slip Op. 02007, *1 (1st Dept. 2025)). Id. Id. Id. Id. (citing, Eurycleia , 12 N.Y.3d at 559 (2009). Id. Id. Id. at *1-*2. Id. Id. (citing, DDJ Mgmt., LLC v. Rhone Group LLC , 15 N.Y.3d 147, 156 (2010)).

By: Jeffrey M. Haber In Libman v. Hershey Co. , 2025 N.Y. Slip Op. 31769(U), (Sup. Ct., N.Y. County May 5, 2025) ( here ), the motion court was asked to consider whether a front-of-the-package label on the Twizzlers candy wrapper violated General Business Law (“GBL”) §§ 349 and 350. Front-of-package labels are labels that manufacturers put on the front of packaged foods to give consumers basic nutrition information in a way that is easy to understand and allows them to compare different products more efficiently and effectively. These labels typically highlight when foods contain high levels of nutrients that are commonly overconsumed and linked to adverse health outcomes (e.g., sodium, added sugar, and saturated fat). By contrast, the nutritional facts label on the back of the packaging provides comprehensive nutrition information per serving for the product. It includes all nutrients, serving size, and % Daily Value, and is intended to help consumers understand the nutritional content of a specific food and how it fits into their overall diet. Thus, while front-of-package labeling focuses on key nutrients (like saturated fat, sodium, and added sugars) and may use a “Low,” “Med,” or “High” scale for easy understanding, the nutrition facts label provides comprehensive nutrition information per serving for the product. GBL Section 349 prohibits “ eceptive acts or practices,” and Section 350 bars “ alse advertising.”  To plead a cause of action under either section, a plaintiff must allege that the defendant “engaged in (1) consumer-oriented conduct that is (2) materially misleading and that (3) plaintiff suffered injury as a result of the allegedly deceptive act or practice.” Notably, the deceptive practice does not have to rise to “the level of common-law fraud to be actionable under section 349.” In fact, “ lthough General Business Law § 349 claims have been aptly characterized as similar to fraud claims, they are critically different.” For example, while reliance is an element of a fraud claim, it is not an element of a GBL § 349 claim. Whether a statement is misleading is governed by an objective reasonable consumer standard. Under that standard, the statement must be “likely to mislead a reasonable consumer acting reasonably under the circumstances.” “Accordingly, “plaintiffs must do more than plausibly allege that a label might conceivably be misunderstood by some few consumers.” Instead, “ laintiffs must plausibly allege that a significant portion of the general consuming public or of targeted customers, acting reasonably in the circumstances, could be misled.” “ court may determine as a matter of law that an allegedly deceptive advertisement would not have misled a reasonable consumer.” “ n determining whether a reasonable consumer would have been misled by a particular advertisement, context is crucial.” Relevant to today’s article, courts examining allegedly misleading product claims will rely on common-sense observations and judicial experience. “Courts have also found that the presence of a disclaimer or similar clarifying language, such as a Nutrition Fact Panel, may defeat a claim of deception.” “Thus, where the allegedly deceptive practice is fully disclosed, there is no deception claim.” Finally, a plaintiff must prove “actual” injury to recover under the statutes, though not necessarily pecuniary harm. And, the plaintiff must prove the deceptive act caused the injury. Libman v. Hershey Company Libman was brought as a putative class action in which plaintiffs asserted claims for deceptive business practices and false advertising pursuant to GBL §§ 349 and 350 on behalf of a proposed class of New York State consumers who purchased strawberry-flavored Twizzlers King-Size Candy (“Twizzlers”), which is produced by defendant. Plaintiffs alleged that the front-of-the-package branding of Twizzlers as a “low fat snack” mislead consumers into believing that Twizzlers is “specially made or altered” to be low fat and that the product is not just low fat but also low sugar. Defendant moved, pre-answer, to dismiss the amended complaint pursuant to CPLR 321l(a)(7) ( i.e. , failure to state a claim). Plaintiff opposed the motion. As discussed below, the motion court granted the motion. Plaintiff alleged that the front-of-the-package branding of Twizzlers as a “low fat snack” is misleading to consumers as it lulls them into believing the candy is “specially made or altered” to be low fat and that the candy is also low sugar. Plaintiffs admitted, however, that Twizzlers is “low fat,’ containing zero grams of “Total Fat,” as accurately reflected in the Nutrition Facts label on the reverse side of the product packaging. The motion court ruled that plaintiffs failed to adequately allege facts demonstrating that reasonable consumers were likely to be misled in the manner they claimed. The motion court noted that the “specially made or altered” claim was premised on an alleged technical violation of an FDA food-labelling regulation that allows for the use of “low fat” on food labels, but requires additional disclosure language on the label “ f the food meets these conditions without the benefit of special processing, alteration, formulation, or reformulation to lower fat content.” The motion court further noted that “private plaintiffs are not authorized to sue for violations of the Federal Food, Drug, and Cosmetic Act, FDA regulations, or identical New York labeling requirements under New York’s Agriculture and Markets Law. Thus, concluded the motion court, plaintiffs’ claim, that the Twizzlers’ packaging violated the FDA’s food-labelling regulation because it omitted the required additional disclosure language despite being a type of candy that is inherently low fat without any special alteration, had to be dismissed. Turning to the GBL allegations, the motion court held that plaintiffs failed to allege “facts sufficient to allow a reasonable inference that the labeling of Twizzlers as a ‘low fat snack’ constitute false advertising or a deceptive business practice.” The motion court explained that plaintiffs did not “allege that reasonable consumers aware of the federal regulation, much less that they incorporate the regulation into their day-to-day marketplace expectations.” Similarly, said the motion court, plaintiffs failed to “supply extrinsic evidence that the perceptions of ordinary consumers align with the FDA’s labeling standards, such that they would understand any product labelled as a ‘low fat snack’ as having been ‘specially made or altered’ to be low fat absent the regulation’s additional disclosure language.” In facts, noted the motion court, “plaintiffs concede that reasonable consumers that Twizzlers is ‘candy,’ as is … expressly stated on the front of the product’s packaging.” Accordingly, concluded the motion court, “it is beyond cavil that reasonable consumers understand that candy, as a category, is not inherently low fat.” With respect to plaintiffs’ other theory of liability – that "low fat snack" is likely to mislead consumers into thinking that Twizzlers are also low sugar – the motion court found that plaintiffs made several concessions that were fatal to their claims under GBL 349 and 350. For example, plaintiffs conceded “that: Twizzlers does not expressly market itself as ‘low sugar’; the Nutrition Facts and Ingredient List included on the product packaging accurately disclose its total and per-serving added sugar content and percentage Daily Value of added sugars; the front of the product packaging describes the product as ‘candy’; and reasonable consumers understand that Twizzlers is ‘candy’ made from sugar.” “These concessions,” concluded the motion court, were “fatal to plaintiffs’ claim, as no reasonable consumer, understanding that Twizzlers is candy made from sugar, would reasonably assume the product was low in sugar absent any express claim to that effect, especially given the accurate disclosure of the product’s sugar content on the reverse side of the product packaging.” ______________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. Koch v. Acker, Merrall & Condit Co. , 18 N.Y.3d 940, 941 (2012); Goshen v. Mut. Life Ins. Co. of New York , 98 N.Y.2d 314, 324 n.l (2002) (explaining the “standard for recovery under § 350, while specific to false advertising, is otherwise identical to section 349”). Boule v. Hutton , 328 F.3d 84, 94 (2d Cir. 2003) (citing Gaidon v. Guardian Life Ins. Co. , 94 N.Y.2d 330, 343 (1999)). Gaidon , 94 N.Y.2d at 343. Stutman v. Chemical Bank , 95 N.Y.2d 24, 29 (2000); Small v. Lorillard Tobacco Co. , 94 N.Y.2d 43, 55-56 (1999). Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank , 85 N.Y.2d 20, 26 (1995). Jessani v. Monini N. Am., Inc. , 744 Fed. App’x 18, 19 (2d Cir. 2018). Id. Fink v. Time Warner Cable , 714 F.3d 739, 741 (2d Cir. 2013) (citing Oswego , 85 N.Y.2d at 26). Id. at 742. See , e.g. , Warren v. Coca-Cola Co. , 670 F. Supp. 3d 72, 80-83 (S.D.N.Y. 2023). Mazella v. Coca-Cola Co. , 548 F. Supp. 3d 349, 357 (S.D.N.Y. 2021). Id. (citing Broder v. MBNA Corp. , 281 A.D.2d 369, 371 (1st Dept. 2001). Stutman v. Chemical Bank , 95 N.Y.2d 24, 29 (2000); Oswego , 85 N.Y.2d at 26. Id. ; Oswego , 85 N.Y.2d at 26. Slip at *3. Id. (quoting 21 C.F.R. § 101.62(b)(2)(ii)) (internal quotation marks omitted). Id. (citing 21 U.S.C. § 337(a); Steele v. Wegmans Food Markets, Inc., 472 F. Supp. 3d 47, 49 (S.D.N.Y. 2020)). Id. Id. Id. at *3-*4 (citing Warren v. Whole Foods Mkt. Grp., Inc. , 574 F. Supp. 3d 102, 113-14 (E.D.N.Y. 2021); N. Am. Olive Oil Ass’n v. Kangadis Food Inc. , 962 F. Supp. 2d 514, 519 (S.D.N.Y. 2013); Wynn v. Topco Assocs., LLC , No. 19-CV-11104 (RA), 2021 WL 168541, at *3 ([S.D.N.Y. Jan. 19, 2021)). Id. at *4. Id. Id. Id. Id.

By:  Jeffrey M. Haber A contract is an agreement between two or more parties to do something ( e.g. , provide goods or services) in exchange for a benefit. When one or more parties to a contract fail to perform a term in their agreement, they are in breach of that agreement. Most breaches fall into one of two categories: actual or anticipatory. In the former, a party to the contract fails or refuses to perform his/her obligations under the agreement or performs his/her obligations incompletely. In the latter, a party to the contract declares, before performance is required, that he/she does not intend to perform the obligations under the agreement.   A breach of contract, regardless of the form it takes, entitles the non-breaching party to bring an action for damages. When one party unconditionally refuses to perform under the contract, regardless of when performance is supposed to take place, the refusal is called a “repudiation” of the contract.  A breach may be considered a repudiation even if it is not of an essential term or a material breach of an intermediate term. (This Blog previously wrote about the types of breaches  here .) Anticipatory Breach Examined There are two types of anticipatory breaches: (1) express, and (2) implied. In an express repudiation, a party to a contract announces, before performance is required, that he/she will not perform under the agreement. The repudiation must be clear, straightforward, and directed at the other party. The declaration cannot be qualified or ambiguous. (For example, “Unless it stops raining, I will not be able to fix the roof.”) In an implied repudiation, a party takes actions that put the performance of a contract out of his/her power to perform (such as when a contractor sells the tools required to fix his customer’s roof). If the breach can be shown to be repudiatory in nature, then the non-breaching party can terminate the contract, even though the date for performance has not yet occurred or proceed as if the contract is valid. Importantly, the non-repudiating party need not tender performance or prove its ability to perform the contract in the future. Rather, the non-repudiating party is relieved of his/her obligation of future performance and can recover the present value of his/her damages from the repudiating party’s breach of the contract. The decision whether to accept that the contract has been repudiated and terminate or wait until the date for performing the obligation passes and treat the defaulting party as being in actual breach, is not an easy one.  One commentator described the difficulty as follows: If the promisee regards the apparent repudiation as an anticipatory repudiation, terminates his or her own performance and sues for breach, the promisee is placed in jeopardy of being found to have breached if the court determines that the apparent repudiation was not sufficiently clear and unequivocal to constitute an anticipatory repudiation justifying nonperformance. If, on the other hand, the promisee continues to perform after perceiving an apparent repudiation, and it is subsequently determined that an anticipatory repudiation took place, the promisee may be denied recovery for post-repudiation expenditures because of his or her failure to avoid those expenses as part of a reasonable effort to mitigate damages after the repudiation. “When one party to a contract commits an anticipatory breach, the nonbreaching party, must choose one of two options: either treat the contract as terminated and seek damages, or ignore the breach and wait for the breaching party to perform.” The nonbreaching party must “make an election and cannot ‘at the same time treat the contract as broken and subsisting. One course of action excludes the other.’” “On learning of the breach, the other party has a reasonable time to elect its remedy.” “In determining which election the nonbreaching party has made, ‘the operative factor … is whether the non-breaching party has taken an action (or failed to take an action) that indicated to the breaching party that had made an election.’” Once the nonbreaching party has chosen a remedy, the choice becomes binding and cannot be altered. Accordingly, asserting a cause of action alleging breach of contract precludes pleading a cause of action alleging anticipatory breach of contract. Whether a party has anticipatorily breached a contract is ordinarily a question of fact reserved for a jury, but a court may decide the issue as a matter of law when the purported repudiation is embodied in an unambiguous writing. Can the Breaching Party Take Back the Repudiation? A breaching party can repudiate the contract and then later retract the repudiation, as long as the non-breaching party has not made a material change in his/her position because of the repudiation. Notwithstanding, retraction cannot be made if the only contractual obligation remaining is for one party to pay money to the other. In that case, the party seeking the payment must wait until the due date for the payment has passed. The Non-Breaching Party’s Duty to Mitigate If one party repudiates the contract, most courts require the non-breaching party to avoid incurring unnecessary costs or expenses. This is referred to as “mitigating damages” and generally means that the non-breaching party cannot sit on his/her rights and let the situation get worse. JP Pizza Eastport, LLC v. Luigi’s Main St. Pizza, Inc. The foregoing principles were recently addressed by the Appellate Division, Second Department , in JP Pizza Eastport, LLC v. Luigi’s Main St. Pizza, Inc. , 2025 N.Y. Slip Op. 02915 (2d Dept. May 14, 2025) ( here ). JP Pizza was an action, inter alia , to recover damages for breach of contract involving certain real property located in Eastport (hereinafter, the “subject premises”) that was owned by defendant Luigi’s on Main, LLC (“Luigi’s, LLC). The subject premises was a mixed-use property with a pizzeria business and residential apartments located thereon. Defendant Luigi’s Main Street Pizza, Inc. (hereinafter, “Luigi’s Pizza”) operated the pizzeria business. In July 2018, Luigi’s Pizza sold the pizzeria business to plaintiff JP Pizza Eastport, LLC (hereinafter, “JP Pizza”). On or around the same date as the closing of the sale of the pizzeria business, Luigi’s Pizza, as lessor, entered into a lease agreement with JP Pizza for a portion of the subject premises used for the operation of the pizzeria business. On or around July 16, 2018, plaintiff 491 Montauk Highway Eastport, LLC (hereinafter, “Montauk Highway, LLC”) entered into a contract to purchase the subject premises from Luigi’s, LLC. JP Pizza and Montauk Highway, LLC were related companies, sharing a common managing member. Pursuant to the contract, Montauk Highway, LLC paid a down payment of $33,250, which was deposited into an escrow account . The contract provided that the closing was to occur on or around September 15, 2018. The contract required Luigi’s, LLC to deliver a “ ertificate of ccupancy or other required certificate of compliance, or evidence that none was required, covering the building(s) and all of the other improvements located on the property authorizing their use as a commercial property with permit for restaurant, cottage and apartment rentals” at closing. The contract further provided that Luigi’s, LLC could adjourn the closing up to October 15, 2018, if necessary, in order to cure any defects or objections to title. By letter dated August 22, 2018, plaintiffs advised defendants they had discovered that the pizzeria business and the subject premises lacked “required approvals, permits, and licenses,” declared all agreements entered into between the parties “void ab initio,” and demanded the immediate return of the $33,250 down payment paid by Montauk Highway, LLC, in connection with the contract for the sale of the subject premises and the payment of certain monies allegedly expended by JP Pizza in connection with the purchase of the pizzeria business and the making of improvements to the subject premises. Plaintiffs further advised defendants that JP Pizza would cease operations of the pizzeria business on the following day and that it would return the subject premises to Luigi’s Pizza. JP Pizza vacated the subject premises and ceased operations in August 2018. By letter dated August 27, 2018, defendants responded that they would obtain any required certificates for the subject premises in accordance with the terms of the contract. On September 4, 2018, plaintiffs commenced the action asserting causes of action sounding in, among other things, fraud, rescission, and breach of contract. The complaint did not assert a cause of action seeking specific performance of the contract . Defendants interposed an answer, asserting, inter alia , an affirmative defense alleging that Montauk Highway, LLC, had repudiated the contract and that Luigi’s, LLC, was entitled to retain the down payment as liquidated damages. In May 2019, several months after JP Pizza had vacated the subject premises and stopped paying rent, Luigi’s, LLC, entered into a 10-year lease agreement for the subject premises with a third party. Thereafter, by letter dated November 25, 2019, plaintiffs purported to schedule a time-of-the-essence closing for December 9, 2019. After the completion of discovery, defendants moved, among other things, for summary judgment dismissing the cause of action alleging breach of contract . Plaintiffs cross-moved, inter alia , for summary judgment on that cause of action. In an order dated March 22, 2022, the Supreme Court , among other things, granted that branch of the defendants’ motion and denied that branch of the plaintiffs’ cross-motion. Plaintiffs appealed. The Appellate Division, Second Department affirmed . The Court held that “the Supreme Court properly granted that branch of the defendants’ motion which was for summary judgment dismissing the cause of action alleging breach of contract and denied that branch of the plaintiffs’ cross-motion which was for summary judgment on that cause of action.” The Court found that “defendants established their prima facie entitlement to summary judgment dismissing the cause of action alleging breach of contract.” The Court explained that defendant established that plaintiffs had anticipatorily breached the contract of sale: Pursuant to the contract, the defendants had until September 15, 2018, to obtain the requisite approvals and were entitled to extend that deadline to October 15, 2018. By declaring the contract void ab initio through their attorney’s letter dated August 22, 2018, and demanding the return of the down payment, the plaintiffs anticipatorily breached the contract. Having found that plaintiffs breached the contact of sale, the Court explained that defendants properly elected their remedy for said breach by ignoring the breach and waiting for plaintiffs to perform. But, as noted, plaintiffs did not perform. Under the circumstances, the Court found that plaintiffs repudiated the contract , entitling defendants to retain the down payment for the subject property: The plaintiffs’ conduct, first by the letter declaring the contract void ab initio and demanding the return of the down payment, and then by the commencement of this action, amounted to a positive and unequivocal expression of their intent not to perform, and the defendants, under the terms of the contract, were entitled to retain the down payment as liquidated damages for the plaintiffs’ anticipatory breach. _______________________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. This Blog has examined cases involving an anticipatory breach of contract on numerous occasions. To find articles related to this topic, visit the “ Blog ” tile on our website and enter “anticipatory breach” in the “search” box. Princes Point LLC v. Muss Dev. L.L.C. , 30 N.Y.3d 127, 133 (2017); Fuoco Group, LLP v. Weisman & Co. , 222 A.D.3d 619, 621-622 (2d Dept. 2023); see also 10-54 Corbin on Contracts § 54.1 (2017) (“An anticipatory breach of a contract by a promisor is a repudiation of contractual duty before the time fixed in the contract for . . . performance has arrived”); 13 Williston on Contracts § 39:37 (4th ed.). Norcon Power Partners v. Niagara Mohawk Power Corp. , 92 N.Y.2d 458, 463 (1998) (noting that an anticipatory repudiation “can be either a statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach or a voluntary affirmative act which renders the obligor unable or apparently unable to perform without such a breach”) (internal quotation marks omitted). Tenavision, Inc. v. Neuman , 45 N.Y.2d 145, 150 (1978) (noting that the expression of intent not to perform must be “positive and unequivocal”). See also Central Park Capital Grp., LLC v. Machin , 189 A.D.3d 984, 986 (2d Dept. 2020) (quoting, Princes Point , 30 N.Y.3d at133). Strasbourger v. Leerburger , 233 N.Y. 55, 59 (1922);  see also American List Corp. v. U.S. News & World Report , 75 N.Y.2d 38, 44 (1989). American List Corp. , 75 N.Y.2d at 44. Id. Norcon Power , 92 N.Y.2d at 463 (quoting, Crespi,  The Adequate Assurances Doctrine after U.C.C. § 2-609: A Test of the Efficiency of the Common Law , 38 Vill. L. Rev. 179, 183 (1993)). Contract Pharmacal Corp. v. Air Indus. Grp. , 224 A.D.3d 873, 874 (2d Dept. 2024); see Princes Point , 30 N.Y.3d at 133. Inter-Power of N.Y. v. Niagara Mohawk Power Corp. , 259 A.D.2d 932, 934 (3d 1999) (quoting, Strasbourger , 233 N.Y. at 59). Todd English Enters. LLC v. Hudson Home Grp., LLC , 206 A.D.3d 585, 587 (1st Dept. 2022). AG Props. of Kingston, LLC v. Besicorp-Empire Dev. Co., LLC , 14 A.D.3d 971, 973 (3d Dept. 2005) (quoting, Bigda v, Fischbach Corp. , 898 F. Supp. 1004, 1013 (S.D.N.Y. 1995), aff’d 101 F.3d 108 (2d Cir. 1996)). See Lucente v. International Bus. Machs. Corp. , 310 F.3d 243, 258-259 (2d Cir. 2002). Id. at 258-260. Briarwood Farms, Inc. v. Toll Bros., Inc. , 452 Fed. App’x. 59, 61 (2d Cir. 2011). Slip Op. at *3. Id. at *2. Id. Id. (citing Contract Pharmacal , 224 A.D.3d at 874). Id. at *2-*3 (citation omitted).

By: Jonathan H. Freiberger In today’s article, we will discuss Yesmin v. Aliobaba, LLC , an Opinion and Order rendered on May 14, 2025, in which the Appellate Division, Second Department, held that “a notice of pendency that was unexpired at the time of the foreclosure sale has no effect on the title acquired by a good faith purchaser for value from a sale conducted pursuant to the judgment of foreclosure and sale.” By way of brief background, the borrower in Yesmin secured a $600,000 loan with a mortgage on a residential property in Queens, New York. Upon the borrower’s default, the lender commenced a mortgage foreclosure action in which a notice of pendency was filed and extended. In 2017, the motion court entered a judgment of foreclosure and sale (“JFS”). The borrower appealed from the JFS but did not seek a stay of its enforcement pursuant to CPLR 5519 during the pendency of the appeal. Within ninety days of the entry of the JFS, a foreclosure sale occurred and the property was sold. Thereafter, the purchaser took title to the property by referee’s deed. Three years later, the Second Department reversed the JFS and denied the lender’s motion to confirm the referee’s report and for a judgment of foreclosure and sale finding, inter alia , that the report was not supported by admissible evidence. Thereafter, the borrower commenced an action pursuant to RPAPL Article 15 against the purchaser to cancel and discharge the referee’s deed. The Borrower argued that “since the that authorized the sale had been reversed, the referee’s deed must be canceled” and that the purchaser “took title subject to a valid notice of pendency, which had not expired by the time of the foreclosure sale , and, therefore, ’s title, taken by the referee’s deed, was invalidated by the reversal of the .” The purchaser cross-moved for summary judgment and for the imposition of an equitable lien on the property arguing, inter alia , that “it was a good faith purchaser for value whose title was protected from the effects of the reversal of the .” The purchaser appealed from the motion court’s order granting the borrower’s motion. The Court framed the issue to be decided as “whether the referee’s deed was invalidated by the reversal of the .” The Court noted that it must first examine “the statutory authority vested in the courts to remedy the effects that a judgment of foreclosure and sale, subsequently reversed, vacated, or otherwise set aside, may have had on the rights of the parties with regard to the property at issue.” The Court stated that CPLR 5523 permits an “appellate court reversing or modifying a final judgment order restitution of property or rights lost by the judgment.” It further noted that its order reversing the JFS “left untouched” the motion court’s grant of summary judgment and “did not order restitution of the property or rights lost by the .” The Court further stated that: ursuant to CPLR 5015(d) where a judgment has been set aside or vacated, the Supreme Court is authorized to direct and enforce restitution in like manner and subject to the same conditions as where a judgment is reversed or modified on appeal. Of significance, the ability of a trial or appellate court to order restitution of property is qualified by the condition that “where the title of a purchaser in good faith and for value would be affected, the court may order the value or the purchase price restored or deposited in court” ( id. § 5523). The effect of this provision is that where title to the property has been transferred to a purchaser in good faith and for value, in the event of an appellate reversal, restitution of the property is no longer available and the successful appellant must content itself with restoration of the value or purchase price already paid. It was undisputed that the purchaser was a purchaser for value at the foreclosure sale . The borrower, however, argued that the purchaser could not be a “good faith” purchaser because a valid notice of pendency was of record at the time of the foreclosure sale. The Court rejected this contention noting, inter alia , that a notice of pendency serves to “prevent a defendant from thwarting the objective of an action by transferring the property to an unwitting third party” and “to provide constructive notice of a plaintiff’s claim to potential purchasers or incumbrancers, and not for a defendant’s benefit.” (Citations and internal quotation marks omitted.) The Court further recognized that constructive notice is unnecessary at a foreclosure sale because “the purchaser has actual notice of the plaintiff’s claim to a lien on the property and is well aware that the title to the property is transferring through foreclosure.” Further, the Court noted that the entry of a judgment of foreclosure and sale: transforms the lender’s rights from “potential” to “real”; are conclusive unless overturned on appeal; and, are fully enforceable in the absence of a judicially issued stay pending disposition of the appeal.” (Citations and internal quotation marks omitted.) Because no stay was obtained, the lender was free to proceed with a foreclosure sale. Because notices of pendency are frequently in place at the time of a foreclosure sale, the Court found “untenable” the borrower’s contention that “title acquired by referee’s deed, otherwise taken in good faith and for value, is nonetheless negated upon reversal of the judgment because the notice of pendency of the foreclosure action had not yet expired at the time of the foreclosure sale…. If the Court was to find to the contrary, it “would render meaningless the need to obtain a stay and run contrary to the established caselaw requiring a stay pending disposition of the appeal in order to protect title and restrict alienability.” (Citations omitted.) The Court found that the purchaser “established that no stay was issued precluding the foreclosure sale and that it was a purchaser in good faith and for value, whose title is insulated from the effects of the reversal of the .” Thus: Contrary to 's contention, the referee's deed was not rendered void merely by the reversal of the . Her reliance on cases in which the judgment was found void for lack of personal jurisdiction are inapposite, as the judgment here was not found void. Furthermore, we note that has not sought to set aside the foreclosure sale itself. Since no party argues that the referee's deed cannot be set aside without also setting aside the foreclosure sale, that issue is not before us. Since established that it is “a purchaser in good faith and for value” whose title would be affected by restitution of 's property rights lost by the , may not seek restitution by canceling the referee's deed and, instead, is limited to monetary relief against the plaintiff to the foreclosure action. Thus, the Court reversed the order appealed from, denied the borrower’s motion for summary judgment , and granted the purchaser’s motion for summary judgment dismissing the complaint. Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. This BLOG has written dozens of articles addressing numerous aspects of residential mortgage foreclosure. To find such articles, please see the BLOG tile on our website and search for any foreclosure, or other commercial litigation, issue that may be of interest you. This BLOG has written numerous articles addressing notices of pendency. To find such articles, please see the BLOG tile on our website and type “notice of pendency” into the “search” box. Simply stated, a notice of pendency (or lis pendens) is a provisional remedy governed by Article 65 of the CPLR. The purpose of a notice of pendency is to put defendants and the world on constructive notice of the full scope of the rights claimed by plaintiff to defendant’s real property. Sjogren v. Land Assoc., LLC , 223 A.D.3d 963, 965 (3 rd Dep’t 2024). This BLOG has written numerous articles on referee reports. See, e.g., < here =">here"> , < here =">here"> and < here =">here"> .

By:  Jeffrey M. Haber The allure of guaranteed profits from sophisticated crypto asset and foreign exchange trading served as the underlying predicate for the claims asserted by the Securities and Exchange Commission (“SEC”) against Ramil Palafox (“Defendant”), the founder of Praetorian Group International Corporation (“PGI Global”), a now-defunct entity he controlled, in S.E.C. v. Palafox , Case 1:25-cv-00681 (E.D. Va. 2025). The case marks the first crypto enforcement action under Paul Atkins, the new Chairman of the SEC. According to the SEC, from in or about January 2020 through in or about October 2021 (the “Relevant Period”), Defendant orchestrated an international securities fraud scheme to misappropriate millions of dollars of investor funds he obtained through PGI Global. PGI Global claimed to be a crypto asset and foreign exchange (“Forex”) trading company . The SEC alleged that Defendant and PGI Global associates working at his direction represented to investors that PGI Global was generating large returns from crypto asset trading and Forex trading. According to the SEC, investors who purchased PGI Global “membership packages” were promised large passive returns from these purported trading operations . Though investors were promised such returns merely in exchange for their investments in PGI Global, said the SEC, PGI Global also allegedly offered members a multi-level marketing style system of referral incentives to encourage PGI Global membership package holders to recruit new investors. Defendant allegedly secured over $198 million in Bitcoin (BTC) and fiat currency investments for PGI Global during the Relevant Period. The SEC maintained that Defendant obtained these funds from victims who purchased PGI Global membership packages based on false promises that their investments would guarantee them large low-risk returns from Forex and crypto asset trading. According to the SEC, Defendant misappropriated over $57 million of the funds he obtained through PGI Global’s unregistered securities offerings. Rather than trade with these funds as promised, the SEC alleged that Defendant used investor money to enrich himself and various insiders, including members of his family and certain other PGI Global associates—purchasing, among other things, real estate, Lamborghinis, and items from retailers including Cartier, Versace, and Louis Vuitton. The SEC also alleged that Defendant transferred funds, assets, vehicles, and other items purchased with PGI Global investor funds to the relief defendants. The SEC claimed that Defendant used the vast majority of the remaining PGI Global investor funds to pay certain other investors—payments that ostensibly represented profits and other rewards those investors had earned from PGI Global’s trading operations.  The SEC alleged that this money represented funds circulated from new investors to old investors. The SEC further alleged that these payments allowed Defendant to continue PGI Global’s Ponzi-like scheme until its collapse in late 2021.  According to the SEC, PGI Global never filed a registration statement in connection with its offerings of securities in the form of PGI Global membership packages. Defendant and others nevertheless offered and sold these PGI Global securities via general solicitations to investors worldwide, alleged the SEC. Commenting on the action, Scott Thompson, Associate Director of the SEC’s Philadelphia Regional Office, said: “As alleged in our complaint, attracted investors with the allure of guaranteed profits from sophisticated crypto asset and foreign exchange trading, but instead of trading, bought himself and his family cars, watches, and homes using millions of dollars of investor funds . We will continue to investigate and take action against bad actors who take advantage of investors with promises of guaranteed passive income and other lies and deceit.” “ used the guise of innovation to lure investors into lining his pockets with millions of dollars while leaving many victims empty-handed,” said Laura D’Allaird, Chief of the Commission’s new Cyber and Emerging Technologies Unit. “In reality, his false claims of crypto industry expertise and a supposed AI-powered auto-trading platform were just masking an international securities fraud.” The SEC’s complaint ( here ), filed in the U.S. District Court for the Eastern District of Virginia, charges Defendant with violating the anti-fraud and registration provisions of the federal securities laws. The complaint seeks permanent injunctive relief, conduct-based injunctions preventing Defendant from participating in multi-level-marketing programs involving the offer or sale of securities and offerings of crypto assets bought or sold as a security, disgorgement of ill-gotten gains with prejudgment interest , and civil penalties. The complaint also names several persons and entities as relief defendants and seeks disgorgement of their ill-gotten gains and prejudgment interest. In a parallel action, Defendant was arraigned on criminal charges brought by the U.S. Attorney’s Office for the Eastern District of Virginia. ___________________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice A multi-level marketing program is a relative of a pyramid scheme. “ pyramid scheme is an illegal investment scam based on a hierarchical setup.” See  Investopedia.com,  What Is a Pyramid Scheme? How Does It Work?  (Updated June 3, 2024) ( here ). In the classic pyramid scheme, “participants attempt to make money solely by recruiting new participants, usually where: he promoter promises a high return in a short period of time; o genuine product or service is actually sold; and he primary emphasis is on recruiting new participants.” See  Investor.gov,  Pyramid Schemes  ( here ). To lure recruits into the scheme, pyramid scheme promoters work hard to make the operation look legitimate. But they are not and ultimately collapse because the promoter cannot raise enough money from new investors to pay earlier ones. This Blog has examined multi-level marketing schemes on numerous occasions. To find articles related to multi-level marketing schemes, visit the “ Blog ” tile on our website and enter “Multi-Level” or “Multi-Level Marketing Schemes” in the “search” box. It is important to remember that a complaint merely contains allegations. Until the claims in the complaint are fully adjudicated, readers should not interpret the allegations as anything more than statements of claimed facts made by the SEC against the defendant.

By: Jeffrey M. Haber 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 and future prospects ( id .). One of the frauds mentioned above – Ponzi schemes – occur all too often, notwithstanding regulatory efforts to stop such frauds. A Ponzi scheme is intended to give investors the false impression that their investment is profitable. In a Ponzi scheme, the fraudster/promoter pays early investors with money that the investor believes is the return on his/her/its investment. In actuality, the money used to pay the investor comes from the investor’s own principal investment dollars or the pooled investment dollars of subsequent investors. As previous investors are “paid” their investment returns, the fraudster/promoter seeks new investors to fund the payments being made. Since Ponzi schemes need a steady supply of new investors to fund payments to early investors, Ponzi schemes ultimately collapse as the fraudster/promoter fails to lure enough new investors to cover the payments due to the prior investors. Once the Ponzi scheme has collapsed, recovering funds can be extremely difficult, especially if all the funds were paid out to earlier investors or misappropriated by the fraudster/promoter. In today’s post, this Blog looks at SEC v. Alexander, et al. , Case No. 4:25-cv-00446 (E.D. Tex. Apr. 29, 2025), an enforcement action brought by the U.S. Securities and Exchange Commission (“SEC” or the “Commission”) in which the defendants are alleged to have employed a Ponzi scheme that bilked 200 investors out of at least $91 million. Between May 2021 and February 2024, defendants Kenneth W. Alexander II (“Defendant A”) and Robert D. Welsh (“Defendant B”) allegedly orchestrated a Ponzi scheme, with Defendant Caedrynn E. Conner’s (“Defendant C”) substantial assistance and participation, that raised at least $91 million from more than 200 investors in an unregistered securities offering . Defendants A and B allegedly operated the scheme, which they called the Vanguard JV Cash Program, through Vanguard Holdings Group Irrevocable Trust (“VHG”), a Texas common law trust controlled by Defendant A. Defendants A and B allegedly promoted VHG as a highly profitable international bond trading business that held billions in assets. According to the SEC, they told investors that VHG or its affiliates would use investor funds to trade, or engage in other dealmaking, in the international bond markets. They also allegedly told investors that investments in VHG would have a14-month term, and that investors would receive 12 guaranteed monthly payments of between 3% to 6%, with the principal to be returned at the end of the 14-month term. In truth, said the SEC, VHG used investor funds – not profits from bond trading – to make these payments. As part of their scheme, alleged the SEC, Defendants A and B offered investors the option, for an additional fee, to protect their investments from risk of loss through purported financial instruments that Defendants A and B called “pay orders”. According to the SEC, investors who purchased the pay orders were required to enter into “pooling agreements” with other investors and a purported fiduciary (the “Fiduciary”). The SEC alleged that the Fiduciary was owned and controlled by a longtime associate of Defendants A and B and acted at Defendant A and B’s direction at all relevant times. The SEC further alleged that, pursuant to the pooling agreements, in the event VHG failed to make the guaranteed monthly payments, the Fiduciary was responsible for liquidating the pay order and distributing the proceeds to investors. However, said the SEC, the purported protection offered by the pay orders and the Fiduciary was illusory. The SEC alleged that VHG’s bank records did not reflect the purchase of any pay orders, and the Fiduciary never attempted to liquidate them. The SEC alleged that in July 2022, Defendants A and B authorized Defendant C, who was an early VHG investor and promoter, to create an investment program to pool funds to invest in the Vanguard JV Cash Program. According to the SEC, Defendant C operated this program (the “Benchmark JV Cash Program”) through Benchmark Capital Holdings Irrevocable Trust (“Benchmark”), a Texas common law trust that he controlled. According to the SEC, the Benchmark JV Cash Program was structured like the Vanguard JV Cash Program, including the pay order protection feature, except Benchmark generally promised even higher guaranteed monthly returns. The SEC alleged that Defendant C represented to Benchmark investors that their funds would be pooled to invest in VHG, and that the returns Benchmark received from VHG would fund the guaranteed monthly returns paid to Benchmark investors. Through Benchmark, said the SEC, Defendant C raised approximately $54.9 million from investors, more than $46 million of which he allegedly directed to VHG. According to the SEC, the Fiduciary also served as the purported fiduciary for Benchmark investors who purchased pay orders. The SEC alleged that during all relevant times, VHG had no material sources of revenue. The SEC also alleged that Defendant A misappropriated millions of dollars of investor funds for his personal use and Defendant B received more than a million dollars of investor funds. According to the SEC, Defendants A and B misused investor funds by using them to make Ponzi payments to Vanguard JV Cash Program investors – i.e. , using funds from earlier investors to make monthly payments to later investors – and to pay victims of another apparent scheme that they started before, and then operated in parallel with, the VHG Ponzi scheme. For his part, said the SEC, Defendant C misappropriated millions of dollars of Benchmark investor funds. According to the SEC, in or around February 2023, the VHG and Benchmark schemes began to collapse when VHG and Benchmark ceased paying the purported guaranteed monthly returns to nearly all investors. Throughout 2023, said the SEC, Defendants A and B made, and directed the Fiduciary to make, false excuses (such as blaming banks and attorneys) for VHG’s failure to make the monthly payments. Defendant C allegedly repeated, and directed others to repeat, many of the same false statements to Benchmark investors. The SEC alleged that these statements had the effect of prolonging the Ponzi scheme because Defendants continued to solicit new investments and to encourage existing investors to roll over their principal to new l4-month terms, rather than withdraw their funds as their investment terms expired. Ultimately, the SEC claimed that the VHG and Benchmark schemes resulted in tens of millions of dollars of investor losses. Commenting on the complaint, Sam Waldon, Acting Director of the SEC’s Division of Enforcement , said: “As we allege, the defendants conducted a large-scale Ponzi scheme that caused devastating losses to investor victims, while [Defendants A and C misappropriated millions of dollars of investor funds. We remain unwavering in our commitment to hold individuals accountable for defrauding investors.” The SEC’s complaint ( here ), filed in the U.S. District Court for the Eastern District of Texas, charged defendants with violating the antifraud and registration provisions of the federal securities laws. The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest , and civil penalties against each of the defendants. A copy of the press release announcing the enforcement action can be found here . ___________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice This Blog has examined Ponzi schemes on numerous occasions. To find the articles related to Ponzi schemes, visit the “ Blog ” tile on our website and enter “Ponzi scheme” in the “search” box. According to the SEC, Defendant C used the money from the alleged Ponzi scheme to purchase a $5 million home. It is important to remember that a complaint merely contains allegations. Until the claims in the complaint are fully adjudicated, readers should not interpret the allegations as anything more than statements of claimed facts made by the SEC against the defendants.

By: Jonathan H. Freiberger Today’s article relates to a decision in a mortgage foreclosure action that combines numerous concepts about which we have previously written. We will quickly revisit CPLR 3215(c) , which provides, in pertinent part, that: If the plaintiff fails to take proceedings for the entry of judgment within one year after the default, the court shall not enter judgment but shall dismiss the complaint as abandoned, without costs, upon its own initiative or on motion, unless sufficient cause is shown why the complaint should not be dismissed…. Courts have held that the language of CPLR 3215(c) is “mandatory” in the first instance unless plaintiff demonstrates “sufficient cause” for the failure to timely take proceedings for the entry of a default judgment. U.S. Bank N.A. v. Pane , __ N.Y.S.3d __, 2025 N.Y. Slip Op. 02619 (2 nd Dep’t April 30, 2025). We have also addressed the consequences of the death of a party during the pendency of a litigation. See, e.g. , < here =">here"> , < here =">here"> and < here =">here"> . Because litigation can be a drawn-out process, it is not uncommon for a party to die in the process. CPLR § 1015 , which addresses this circumstance, provides, inter alia , that “ f a party dies and the claim for or against him is not thereby extinguished the court shall order substitution of the proper parties.” Significantly, the “death of a party divests the court of jurisdiction and stays the proceedings until a proper substitution has been made pursuant to CPLR 1015(a). Moreover, any determination rendered without such substitution will generally be deemed a nullity.” Hayden v. Brown , 230 A.D.3d 657, 658 (2 nd Dep’t 2024) (citations and internal quotation marks omitted); see also Sorcigli v. Lombardo , __ N.Y.S.3d __, 2025 N.Y. Slip Op. 02365 (2 nd Dep’t April 23, 2025). The proceedings are generally stayed “pending the substitution of a personal representative for the decedent.” Wells Fargo Bank, N.A. v. Miglio , 197 A.D.3d 776, 777 (2 nd Dep’t 2021) (citations and internal quotation marks omitted); see also Sorcigli , supra, at *1. However, “if a party’s death does not affect the merits of a case, there is no need for strict adherence to the requirement that the proceedings be stayed pending substitution.” Wells Fargo Bank, N.A. v. Miglio , 197 A.D.3d 776, 777 (2 nd Dep’t 2021)(citation and internal quotation marks omitted); see also Nationstar Mortgage, LLC v. Persaud , 231 A.D.3d 842 (2 nd Dep’t 2024). Against this backdrop, today we discuss U.S. Bank N.A. v. Sanon , a case decided by the Appellate Division, Second Department, on May 7, 2025. In January 2009, the lender in Sanon commenced an action to foreclose a mortgage delivered by the borrower to secure the repayment of his obligations under a promissory note . The borrower was promptly served with process but failed to appear in the action or answer the complaint and, accordingly, was in default in or about February of 2009. The borrower died in July of 2012. Subsequently, the lender moved for leave to enter a default judgment and for an order of reference. While the motion was unopposed, it was denied by the motion court by an order entered in October of 2015, in which the motion court “also directed dismissal of the complaint pursuant to CPLR 3215(c ) based on the 's failure to take proceedings for the entry of judgment within one year of 's default in appearing or answering the complaint….” Thereafter, in 2020, the lender moved pursuant to CPLR 5015(a)(4) to vacate the dismissal order and to restore the action to the active calendar “arguing that the Supreme Court was without jurisdiction to enter the order because had died prior to the issuance of the dismissal order and, thus, the court was divested of jurisdiction until such time as a legal representative of the estate was substituted for the deceased defendant in this action.” The motion was denied and the lender appealed. The Second Department affirmed. After discussing some of the legal issues addressed , supra , the Court stated: However, if a party’s death does not affect the merits of a case, there is no need for strict adherence to the requirement that the proceedings be stayed pending substitution. Indeed, a mortgagor who has been duly served with notice of a foreclosure action and defaults in appearing is not entitled to notice of any subsequent judgment or sale. …It is undisputed that failed to appear or answer the complaint. Since defaulted in appearing or answering the complaint approximately 3½ years prior to his death, neither he nor any of his successors in interest was entitled to notice of a judgment of foreclosure or of an ensuing sale of the subject property. Pursuant to CPLR 3215(c), the ’s time to take proceedings for the entry of judgment expired approximately 2½ years prior to ’s death. Under the circumstances, the Supreme Court correctly determined that ’s death did not affect the merits of this action, and there was no need to strictly adhere to the requirement for a stay pending substitution. Since the court was not divested of jurisdiction upon ’s death, the dismissal order was properly issued. Accordingly, the court properly denied the ’s motion pursuant to CPLR 5015(a)(4) to vacate the dismissal order, to restore the action to the active calendar, and to substitute the administrator of estate in place of . Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. This BLOG has written dozens of articles addressing various aspects of residential mortgage foreclosure. To find such articles, please see the BLOG tile on our website and search for any foreclosure, or other commercial litigation, issue that may be of interest to you. This BLOG has written numerous articles addressing CPLR 3215(c). To find such articles, please see the BLOG tile on our website and type “3215(c)” into the “search” box. This BLOG has previously written about Persaud < here =">here"> . This BLOG has addressed various issues related to service of process. See, e.g., < here =">here"> , < here =">here"> , < here =">here"> , < here =">here"> , < here =">here"> and < here =">here"> . This BLOG has previously addressed default judgments. See, e.g ., < here =">here"> , < here =">here"> , < here =">here"> and < here =">here"> . CPLR 5015 permits the court to vacate its own judgment or order under certain circumstances set forth therein. This BLOG has previously written about CPLR 5015 . See, e.g ., < here =">here"> , < here =">here"> , < here =">here"> , < here =">here"> .

By:  Jeffrey M. Haber In Tiburcio v. Grant Ave. Bronx Realty Corp. , 2025 N.Y. Slip Op. 02669 (1st Dept. May 01, 2025) ( here ), the Appellate Division, First Department was asked to decide whether the statute of limitations expired on all causes of action alleged by the plaintiff or whether the continuing wrong doctrine applied to toll the applicable limitations periods. As discussed below, the Court held that the continuing wrong doctrine to did not apply to save the complaint from dismissal. The continuous wrong doctrine is an exception to the general rule that the statute of limitations runs from the date a cause of action accrues. The doctrine “is usually employed where there is a series of continuing wrongs and serves to toll the running of a period of limitations to the date of the commission of the last wrongful act.” Where applicable, the doctrine will save all claims for recovery of damages but only to the extent of wrongs committed within the applicable statute of limitations. The doctrine “may only be predicated on continuing unlawful acts and not on the continuing effects of earlier unlawful conduct. The distinction is between a single wrong that has continuing effects and a series of independent, distinct wrongs.” The doctrine is inapplicable where there is one tortious act complained of since the cause of action accrues in those cases at the time that the wrongful act first injured plaintiff and it does not change as a result of “‘continuing consequential damages.’”. In contract actions, the doctrine is applied to extend the statute of limitations when the contract imposes a continuing duty on the breaching party. Thus, where a plaintiff asserts a single breach—with damages increasing as the breach continued—the continuing wrong theory does not apply. E.g.,="E.g.," here,=">here," and="and" >here.=">here." To="To" find="find" additional="additional" articles="articles" related="related" to="to" doctrine,="doctrine," visit="visit" “ Blog”=">Blog”" tile="tile" our  website and=">website and" enter="enter" “continuing="“continuing" wrong”="wrong”" or="or" “continuous="“continuous" in="in" “search”="“search”" box.="box."> Tiburcio involved an alleged fraudulent conveyance of real property located in the Bronx, New York (the “Property”). On March 26, 2014, the parties entered into a contract pursuant to which plaintiff transferred ownership of the Property to defendant for $559,000.00. The purchase price included the underlying remaining mortgage on the property of $534,000, as well as a $25,000 cash payment to the plaintiffs. According to plaintiffs, defendant approached them in connection with a foreclosure proceeding that had commenced in January 14, 2014, and advised them that it would negotiate with plaintiffs’ lender on their behalf, locate a bona-fide purchaser who would buy the Property by way of short sale, and relieve plaintiffs of their obligation under the mortgage. All the foregoing representations, said plaintiffs, were memorized in the written purchase agreement. Based on the alleged fraudulent representation that the mortgage would be paid off, plaintiffs transferred the deed to defendant, which plaintiffs allegedly believed was part of a standard short sale transaction. Consequently, on March 26, 2014, plaintiffs sold the Property to defendant for an additional $25,000.00 subject to the mortgage and all liens. The deed was recorded on April 11, 2014. Plaintiffs alleged that they never received the $25,000 payment and did not receive any consideration for the execution of the deed. Plaintiffs maintained that their attempts to contact defendant regarding the short sale transaction went unanswered. Plaintiff alleged that defendant never had any intention of entering into a short sale agreement and only wanted to use the Property for its own enrichment. According to plaintiffs, they were notified in May 2016 that defendant failed to make payment towards the mortgage in violation of their agreement and, as such, another foreclosure action was commenced. On July 22, 2016, plaintiffs filed a conversion action seeking to nullify and/or void the deed, asserting that it was fraudulently created because defendant never intended to pay the mortgage. On April 20, 2017, the lender/mortgage holder filed a foreclosure action on the Property and against plaintiffs. Defendants moved to dismiss the complaint on the grounds that, inter alia , the statute of limitations expired on plaintiffs’ claims. Plaintiff argued that defendant’s repeated failure to make the payment required under the purchase agreement and the ongoing prosecution of the foreclosure action constituted a “continuous wrong” that rendered all the causes of action asserted in the complaint timely. The motion court granted defendant’s motion to dismiss. On appeal, the First Department unanimously affirmed. tiburcio were taken from the motion court’s decision, the briefing on appeal, and the first department’s decision and order.> tiburcio were taken from the motion court’s decision, the briefing on appeal, and the first department’s decision and order.> In a pithy decision, the Court held that “Supreme Court correctly determined that defendant’s alleged failure to pay off the mortgage, resulting in the 2017 foreclosure action, did not qualify as ‘a series of independent, distinct wrongs’ to toll the applicable statutes of limitations under the ‘continuous wrong doctrine’”. The Court explained that the doctrine did not apply because there was only one tortious act complained of – that is, the causes of action ( e.g. , fraud, conversion, and breach of contract) accrued “at the time that the wrongful act first injured plaintiff” and did “not change as a result of ‘continuing consequential damages.’” Accordingly, the Court held that plaintiffs’ claims were time-barred. ________________________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice Ely-Cruikshank Co. v. Bank of Montreal , 81 N.Y.2d 399, 402 (1993). Henry v. Bank of Am. , 147 A.D.3d 599, 601 (1st Dept. 2017); Selkirk v. State of New York , 249 A.D.2d 818, 819 (3d Dept. 1998). Jensen v. General Elec. Co. , 82 N.Y.2d 77, 83-85, 88 (1993); Sutton Investing Corp. v. City of Syracuse , 48 A.D.3d 1141, 1143 (4th Dept. 2008), lv. dismissed 10 N.Y.3d 858 (2008). Doukas v. Ballard , 39 Misc. 3d 1227(A), 2013 N.Y. Slip Op. 50776(U), *6 (Sup. Ct., Suffolk County 2013) (citation omitted); see also Henry , 147 A.D.3d at 601; Roslyn Sav. Bank v. National Westminster Bank USA , 266 A.D.2d 272 (2d Dept. 1999). Town of Oyster Bay v. Lizza Indus., Inc. , 22 N.Y.3d 1024, 1032 (2013); see also Quintana v. Wiener , 717 F. Supp. 77, 80 (S.D.N.Y. 1989); Henry , 147 A.D.3d at 601. Henry , 147 A.D.3d at 601 (citing cases). Id. ; see also Kahn v. Kohlberg, Kravis, Roberts & Co. , 970 F.2d 1030, 1041 (2d Cir. 1992), cert. denied 506 U.S. 986 (1992). Defendant moved to dismiss pursuant to CPLR 3211(a)(5). To prevail on the latter, the movant must establish a prima facie case that the plaintiff’s time to commence an action has expired; then the burden shifts to the plaintiff to raise a question of fact as to whether it commenced the action within the applicable limitations period, or whether an exception or tolling applies. Williams v. City of Yonkers , 160 A.D.3d 1017, 1019 (2d Dept. 2018) (citation omitted); Aozora Bank, Ltd. v. Deutsche Bank Sec. Inc. , 137 A.D.3d 685, 689 (1st Dept. 2016). Slip Op. at *1 (citing Henry , 147 A.D.3d at 601). Id. (citing id. )

By: Jonathan H. Freiberger The tedious task of compiling hard copies of exhibits to annex to motion papers in supreme court litigation practice was ameliorated in 2014 when the CPLR was amended to permit litigants, in e-filed cases, to simply refer in their briefs and affirmations to docket numbers on the e-filing system. Thus, CPLR 2214(c) provides: Each party shall furnish to the court all papers served by that party. The moving party shall furnish all other papers not already in the possession of the court necessary to the consideration of the questions involved. Except when the rules of the court provide otherwise, in an e-filed action, a party that files papers in connection with a motion need not include copies of papers that were filed previously electronically with the court, but may make reference to them, giving the docket numbers on the e-filing system. … Only papers served in accordance with the provisions of this rule shall be read in support of, or in opposition to, the motion, unless the court for good cause shall otherwise direct. However, litigants should not be so quick to rely on CPLR 2214(c) in appellate practice. Among other things, CPLR 5526 requires that the “record on appeal from an interlocutory judgment or any order shall consist of the notice of appeal, the judgment or order appealed from, the transcript, if any, the papers and other exhibits upon which the judgment or order was founded and any opinions in the case.” See also CPLR 5528 . “‘Pursuant to CPLR 5526 it is the obligation of the appellant to assemble a proper record on appeal, and the record must contain all of the relevant papers that were before the Supreme Court.’” Fitzpatrick v. CSS Industries, Inc. , 236 A.D.3d 863 (2 nd Dep’t 2025) (quoting Fitzpatrick v. Affairs & Banquets Floral Servs., Inc. , 227 A.D.3d 954 (2 nd Dep’t 2024). When necessary papers are omitted from an appellate record, an appeal will be dismissed because such omissions will “render[] meaningful review of the court’s order virtually impossible.” Fitzpatrick , 236 A.D.3d at 863. That appellate records must be reproduced in hard copy form is also made plain by the New York Codes , Rules and Regulations (“NYCRR”). See 22 NYCRR §§ 1250.5 , 1250.6 , 1250.7 . On April 30, 2025, the Appellate Division, Second Department, in Sterling Trust Limited v. Stern , dismissed an appeal because the appellant, relying on references to e-filed documents, neglected to include in the record on appeal, copies of all documents necessary for the Appellate Division to consider the appeal. The Court, in rejecting the incomplete record, stated: Here, the plaintiff properly placed the pleadings and the underlying summary judgment motion papers before the Supreme Court in this electronically filed action by referencing them in the plaintiff's attorney affirmation in support of the motion, in effect, for leave to renew and giving the docket numbers on the e-filing system ( see CPLR 2214 ; Nationstar Mtge., LLC v Bailey , 175 AD3d 697, 698). However, the plaintiff failed to reproduce the pleadings and underlying motion papers in the record on appeal ( see 22 NYCRR 1250.5 ; 1250.6 ; 1250.7 ). Without those papers, this Court cannot meaningfully review the Supreme Court's order denying the plaintiff's motion, in effect, for leave to renew its opposition to the defendant's motion for summary judgment dismissing the complaint insofar as asserted against her ( see Fitzpatrick v Affairs & Banquets Floral Servs., Inc. , 227 AD3d at 955; Eleven Stars, LLC v Central Baptist Church , 206 AD3d at 885). Accordingly, the appeal must be dismissed. A review of the briefing, which was available on the NYSCEF system, reveals that this issue was not argued by the parties. Accordingly, it appears that the dismissal was made sua sponte by the Court. TAKEAWAY The current rules generally require that appellate records be reproduced on paper and submitted to the Court in the required form, and reliance on references to e-filed documents is misplaced and could result in the dismissal of an appeal. Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice.

By: Jeffrey M. Haber The elements of a claim for breach of contract are straightforward. The movant must establish: (1) the existence of a valid contract, (2) the plaintiff’s performance of the contract, (3) the defendant’s breach of the contract, and (4) damages resulting from the defendant’s breach. As readers of this Blog know, “ hen the terms of a written contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving practical interpretation to the language employed and the parties’ reasonable expectations.” Under New York law “when a party materially breaches a contract, the non-breaching party must choose between two remedies: it can elect to terminate the contract or continue it. If it chooses the latter course, it loses its right to terminate the contract because of the default.” “The election of remedies doctrine requires knowledge of the alleged breach and an affirmative action that constitutes an election to continue performance.” “Typically, where courts find that a breach claim is barred by the doctrine of ‘election of remedies,’ the claimant has not only continued to perform under the contract, but received benefits under the contract.” “Under New York law, when a party to a contract materially breaches that contract, it cannot then enforce that contract against a non-breaching party.” Sometimes a contract requires an event or occurrence to happen before the contract becomes effective . This requirement, known as a condition precedent,  is defined as “an act or event, other than a lapse of time, which, unless the condition is excused, must occur before a duty to perform a promise in the agreement arises.” “Most conditions precedent describe acts or events which must occur before a party is obliged to perform a promise made pursuant to an existing contract, a situation to be distinguished conceptually from a condition precedent to the formation or existence of the contract itself.” In the latter situation, no contract arises “unless and until the condition occurs”. “Conditions can be express or implied. Express conditions are those agreed to and imposed by the parties themselves. Implied or constructive conditions are those ‘imposed by law to do justice.” “Express conditions must be literally performed, whereas constructive conditions, which ordinarily arise from language of promise, are subject to the precept that substantial compliance is sufficient.” In determining whether a particular agreement makes an event a condition, courts will interpret doubtful language as embodying a promise or constructive condition rather than an express condition. “This interpretive preference is especially strong when a finding of express condition would increase the risk of forfeiture by the oblige.” “Interpretation as a means of reducing the risk of forfeiture cannot be employed if ‘the occurrence of the event as a condition is expressed in unmistakable language.’” Nonetheless, the nonoccurrence of the condition may yet be excused by waiver, breach or forfeiture. The doctrine of substantial performance ( i.e. , substantial compliance) is flexible one and “stands in sharp contrast to the requirement of strict compliance that protects a party that has taken the precaution of making its duty expressly conditional.” If the parties “have made an event a condition of their agreement, there is no mitigating standard of materiality or substantiality applicable to the non-occurrence of that event.” Substantial performance in this context is not sufficient, “and if relief is to be had under the contract, it must be through excuse of the non-occurrence of the condition to avoid forfeiture.” The substantial performance doctrine does not apply in every instance. Thus, “ o the extent that the non-occurrence of a condition would cause disproportionate forfeiture, a court may excuse the non-occurrence of that condition unless its occurrence was a material part of the agreed exchange.” In other words, when the non-performance is trivial, courts will not find an actionable breach. With the foregoing principles in mind, we examine Manorhaven Capital LLC v. Marc J. Bern & Partners, LLP , 2025 N.Y. Slip Op. 02551 (1st Dept. Apr. 29, 2025) ( here ). In August 2021, plaintiff  and defendant entered into an agreement pursuant to which defendant retained plaintiff to serve as its exclusive investment banker for procuring a debt refinancing (the “Agreement”). Pursuant to one section of the Agreement (Section 3), defendant agreed to pay plaintiff, at each closing of debt refinancing, a cash fee equal to 2% of loan proceeds “actually received” by defendant (the “Fee”) with respect to any debt refinancing transaction during the term of the Agreement, from August 16, 2021 through December 31, 2021 (the “Fee Provision”). Section 5 of the Agreement (the “Fee Tail Provision”) provided that defendant’s obligation to pay the Fee extended for another year, to December 31, 2022, with respect to any debt refinancing transaction entered into by defendant with a lender or investor that had been “contacted” by plaintiff during the Term of the Agreement (the “Tail Period”), “provided that, shall have kept apprised on a contemporaneous and continuing basis with the names, key contact information and status of conversations with potential lenders for the Transaction, which information shall be set forth in Schedule 1, as amended from time to time” (the “Notice Provision”). The record established, which, according to the Court, defendant did “not dispute”, that plaintiff “contacted” nonparty D.E. Shaw during the term of the Agreement, and that defendant entered into a financing transaction with D.E. Shaw less than a year after the Agreement expired. However, noted the Court, defendant had not paid plaintiff the Fee earned under the Agreement. The Court concluded that “ n the face of this clear contractual language and the undisputed facts , Supreme Court properly awarded summary judgment to .” In affirming the motion court’s grant of summary judgment to plaintiff, the Court rejected defendant’s contention that plaintiff did not strictly comply with the Notice Provision of Section 5. Defendant maintained that the updates provided from plaintiff to defendant were not continuous, in writing, and in real time, and that such communications did not include “key contact information” and were not provided under the title of “Schedule 1”. The Court explained that “the record firmly establishe that indisputably informed of its contacts with D.E. Shaw and that D.E. Shaw had passed on the deal (such that there would be no further updates to provide).” The Court concluded that “ his was enough to establish compliance with the Notice Provision.” The Court went on to say that “ ven assuming that did not strictly comply with Section 5 of the Agreement, would still be obligated to pay the Fee because the minutiae of the Notice Provision amounted to more than a ‘matter of form, not substance.’” “The failure to provide any additional updates or contact information with respect to D.E. Shaw, who had already passed on the deal,” explained the Court, “would have amounted to a relatively trivial breach.” Finally, the Court held that the motion court “properly awarded summary judgment to with respect to damages.” In doing so, the Court rejected defendant’s interpretation of the Fee Provision in which they contended that the motion court “improperly awarded damages based on the total funds that were disbursed to under the credit facility (some $233 million), rather than the amount of funds that had been ‘actually received’ by (some $45 million).” The Court found that the “Fee Provision’s language relating to the loans ‘actually received’ plainly mean the amount of the loan facility that was actually drawn down by ($233 million) as opposed to the total amount that had been committed under the Credit Agreement ($250 million).” Given the plain meaning of the Agreement, the Court concluded that the motion court “properly found that ’s proffered interpretation — excluding from the Fee the loan proceeds that had been directed to third party creditors, because they had not been ‘actually received’ by — as overly technical and leading to a result that not supported by the record or the Fee Provision.” ______________________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. See , e.g. , Harris v. Seward Park Housing Corp. , 79 A.D.3d 425, 426 (1st Dept. 2010); Morris v. 702 E. Fifth St. HDFC , 46 A.D.3d 478, 479 (1st Dept. 2007). Franklin Apt. Assoc., Inc. v. Westbrook Tenants Corp. , 43 A.D.3d 860, 861 (1st Dept. 2007). Awards.com v. Kinko’s, Inc. , 42 A.D.3d 178, 187 (1st Dept. 2007). MBIA Ins. Corp. v. Patriarch Partners VIII, LLC , 842 F. Supp. 2d 682, 710 (S.D.N.Y. 2012). Hallinan v. Republic & Trust Co. , 519 F. Supp. 2d 340, 352 (S.D.N.Y. 2007) (citing ARP Films, Inc. v. Marvel Entertainment Group, Inc. , 952 F.2d 643, 649 (2d Cir. 1991)). Nadeau v. Equity Residential Props. Mgmt. Corp. , 251 F. Supp. 3d 637, 641 (S.D.N.Y. 2017). See also Gaviria v. El Tawil , 2019 WL 103724 at *5 (Sup. Ct., N.Y. County Jan. 4, 2019) (finding that the defendant could not make a breach of contract claim against the plaintiff because the defendant was in breach of the agreement). Oppenheimer & Co. v. Oppenheim , 86 N.Y.2d 685, 690 (1995) (citations omitted). Id. (citation omitted). Id. (citation omitted). Id. (citing Calamari and Perillo, Contracts § 11-8, at 444 (3d ed.)). Id. Id. at 691. Id. (citing Restatement (Second) of Contracts § 227 (1)). Id. (citing Restatement (Second) of Contracts § 229, comment a, at 185; and § 227, comment b (where language is clear, “ he policy favoring freedom of contract requires that, within broad limits, the agreement of the parties should be honored even though forfeiture results”)). Id. 2 Farnsworth, Contracts § 8.12, at 415 (2d ed. 1990). Restatement (Second) of Contracts § 237, comment d, at 220. Id. Oppenheimer , 86 N.Y.2d at 691 (citation omitted). Plaintiff is an investment bank. Defendant is a national law firm concentrating primarily in the areas of personal injury, mass tort, and medical malpractice. Slip Op. at *1. Id. Id. at *1-*2. Id. at *2. Id. (quoting PDL Biopharma, Inc. v. Wohlstadter , 2019 N.Y. Slip Op. 32693(U), 19-20 (Sup. Ct., N.Y. County 2019)). Id. (citing PDL Biopharma , 2019 N.Y. Slip Op. 32693(U) at 19-20). Id. Id. Id.