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 In Lantzy v. Advantage Builders, Inc., Eric Lantzy contracted with Advantage Builders to purchase a piece of property and construct a home in Kinderhook, New York.
Shortly after taking ownership of his home, Lantzy's basement flooded.
Dissatisfed with Advantage's response to his warranty claim, Lantzy filed suit in Colombia County Supreme Court. When that case was dismissed, Lantzy appealed to the Appellate Division, Third Department.
The AD3 was of the view the flooding damage didn't comprise "major structural defects," which was defined as "material defects resulting in 'actual physical damage' to load-bearing portions of the home and that render the home unsafe, unsanitary or otherwise unlivable."
Without that physical damage, and since Lantzy continued to occupy the home, the AD3 thought dismissal was appropriate.
No taking Advantage there!
 For a copy of the Appellate Division's decision, please use this link: Lantzy v. Advantage Builders, Inc.
 In Eidlisz v. New York University, Leonard Eidlisz sued NYU for breach of contract when the school refused to re-enroll him and award him his degree and diploma.
Previously admitted into NYU's dental school, Eidlisz sought readmission in 2002 and received a letter which indicated he would receive his degree after completing three courses and that his tuition would be adjusted accordingly.
After the school overcharged him, he was assured the billing error would be corrected. But, in actuality, the problem went unresolved and Eidlisz was ultimately de-enrolled.
Interestingly, Eidlisz was never advised of that development and continued to attend courses and took his final exams. In July 2003, he finally received a corrected bill and. several months after paying it, learned he'd been de-enrolled and his subsequent request for re-enrollment was denied.
When the New York County Supreme Court dismissed Eidlisz's complaint, he appealed to the Appellate Division, First Department.
The AD1 was of the view NYU's 2002 letter contractually obligated the institution to bill Eidlisz "per credit" and award him his degree upon completion of the three courses. As a result, NYU breached that contract when it didn't bill Eidlisz as represented, failed to correct that bill, and didn't award him his degree after he paid the corrected sum.
Clearly, NYU's position lacked teeth.
 To view a copy of the Appellate Division's decision, please use this link: Eidlisz v. New York University
 In Lelin v. Shrestha, Ross Lelin, a licensed mortgage broker, sued his former clients, Manohar and Renu Shrestha, to recover an unpaid commission.
The Shresthas had hired Lelin to secure a $682,000 mortgage loan and his fee, according to a written agreement, was two percent of the loan amount upon Shresthas's acceptance of a commitment.
When Lelin later applied for two separate mortgages, one for $545,600 and for $136,400, the lender only agreed to offer $545,600.
After the Suffolk County District Court found that the Shresthas hadn't breached the agreement, because a $682,000 hadn't been obtained, Lelin appealed to the Appellate Term, Second Department.
Since the Shresthas could have rejected the deal, the AT2 was of the view Lelin was entitled to payment once the Shresthas opted to accept the reduced sum. As a result, the defendants ended up owing Lelin $10,912 -- two percent of $545,600 loan.
Doubt that met with the couple's approval.
 For a copy of the Appellate Term's decision, please use this link: Lelin v. Shrestha
 After Burkhart, Wexler & Hirschberg, LLP (BW&H) was named a defendant in a federal suit, it sued its insurer, Liberty Insurance Underwriters, because that company refused to defend and indemnify the law firm.
When the Nassau County Supreme Court agreed with the insurer's position, BW&H appealed to the Appellate Division, Second Department.
In the federal litigation, the lawyers were reportedly sued for "'wanton, willful and malicious' breach of fiduciary duty for misappropriating [a client's] confidential information and trade secrets; tortious interference with contract for using this information to attempt to convert [the client's] members and prospective members to a newly-formed competing business entity; and for 'wanton, willful and malicious' misappropriation of trade secrets."
While an insurance carrier has a duty to defend when a complaint falls "within the scope of risk covered by the policy," in this case, the parties' contract limited coverage to "negligence or malpractice" arising out of the firm's performance (or non-performance) of legal services. Since the claims brought against BW&H weren't encompassed events, the AD2 agreed the insurer didn't have an obligation to defend.
In other words, Liberty was freed by the AD2.
To download a copy of the Appellate Division's decision, please use this link: Burkhart, Wexler & Hirschberg, LLP v. Liberty Ins. Underwriters, Inc.
 On April 5, 2005, a $360,000 loan made by Steven Surace to Andrew Stewart was secured by a piece of property. (For some reason, Surace didn't record that mortgage until January 30, 2006.)
On July 14, 2005, another person -- Rudolph Kats -- gave Stewart a $200,000 mortgage which was recorded against the property on August 1, 2005.
When Stewart ended up defaulting on both mortgages, Surace sued in Kings County Supreme Court for an order declaring him the first lien-holder. When that court agreed, Kats appealed to the Appellate Division, Second Department, which found Surace had an "equitable first mortgage lien" in the amount of $265,377.65 -- the amount used to satisfy a prior mortgage.
Was this Kats out of the bag?
 To download a copy of the Appellate Divisions decision, please use this link: Surace v. Stewart
 In Speranza v. Repro Lab Inc., Mark Speranza deposited some semen specimens with Repro Labs right before undergoing surgery and signed a document directing Repro to destroy the specimens upon his death.
Months later, when Mark died, his parents inquired about the specimens and, although the company was unwilling to release them, Repro agreed to maintain the specimens as long as the family continued to pay the storage fees.
After several years, the Speranzas sought to have a surrogate inseminated with Mark's sperm. When Repro refused to cooperate, the Speranzas sued to recover Mark's specimens and sought a preliminary injunction preventing their disposal until a judicial determination could be secured.
When New York County Supreme Court declined to grant relief and dismissed the case, an appeal to the Appellate Division, First Department, followed.
The AD1 was of the view the New York State Department of Health Regulations and the terms of Mark's contract precluded the specimens from becoming part of Mark's estate.
Since Mark was a "semen depositor" rather than a "semen donor," and hadn't been examined or screened before his death nor tested for infectious diseases (as required by State regulations), the specimens couldn't be released.
The AD1 also thought the governing contract reinforced Mark's intention that his specimens were intended "to protect his ability to procreate if he survived, not to protect any possibility that his genetic or biological issue could be created after his death."
Was that a fitting climax to this case?
 To download a copy of the Appellate Division's decision, please use this link: Speranza v. Repro Lab Inc.
 In Siebert v. Dermigny, Muriel Siebert gave Nicholas Dermigny a check, which Seibert claimed was a loan.
When Siebert sued to recover the funds, Dermigny argued that the check was repayment of a debt -- rent monies Dermigny advanced on Siebert's behalf.
After the New York County Supreme Court found neither side credible and dismissed the case, an appeal to the Appellate Division, First Department, followed.
Since Seibert never demanded repayment from Dermigny, and there was no written agreement or any indication that the money was a loan, the AD1 affirmed the outcome.
Check mate?
 To download a copy of the Appellate Division's decision, please use this link: Siebert v. Dermigny
 In Hardy v. Rose, Thomas Hardy sued Adam Rose for breach of an alleged employment agreement.
Rose purchased and funded an annuity contract and initially picked Hardy as the beneficiary. (Documents showed that Hardy was to receive $7,000 annually for life, regardless of whether or not he continued working for Rose.)
Not surprisingly, when Hardy later left his position, Rose appointed himself as the beneficiary.
After the Westchester County Supreme Court denied Rose's request to dismiss the lawsuit, he appealed to the Appellate Division, Second Department.
The AD2 thought dismissal was appropriate because Rose had voluntarily purchased the annuity contract and, under its terms, retained the right to change the beneficiary.
The appellate court thought that there wasn't a binding employment contract in place because the documents presented were unsigned and ambiguous. And, even if viewed as a gift, that wouldn't change the outcome as there was no "delivery" of the property. (Rose never gave up "dominion and control" of the annuity contract.)
Hardy sure got pricked by that Rose.
 For a copy of the Appellate Division's decision, please use this link: Hardy v. Rose
 In Lovelace v. Krauss, Carey Lovelace sued Eugene Krauss to get her $955,450 down-payment back.
Like most other cooperatives, the building in which Lovelace wanted to buy an apartment required Board approval not only of the purchaser, but any pets. Although the contract of sale specifically indicated Lovelace wished to have her dog occupy the unit with her, the Board conditioned the sale's approval upon the animal's "occasional" presence.
When the New York County Supreme Court ordered the return of Lovelace's deposit, Krauss appealed to the Appellate Division, First Department.
According to the AD1, the contract's unambiguous language permitted cancellation of the transaction if Lovelace couldn't get "unconditional" approval. Absent evidence the building would have "unconditionally" allowed Lovelace's pooch, the AD1 believed she had a bonafide basis to back out of the deal.
That must have ticked Krauss off.
 For a copy of the Appellate Division's decision, please use this link: Lovelace v. Krauss
 In Northern Trust v. Delly, Richard Sakris sued Patricia Delly for the return of "gifts" -- an engagement ring and an interest in real property -- which were supposedly given in anticipation of marriage.
When the engagement was called off, Richard wanted his stuff back.
In response to the parties' motion practice, the Monroe County Supreme Court sided (in part) with Richard and directed that the real property be held in "trust" until a trial was conducted.
On appeal, the Appellate Division, Fourth Department, was of the view Richard had submitted conflicting evidence as to the terms of the gifts made to Patricia.
In one account, Richard gave the ring as a birthday gift, while the real estate was transferred in contemplation of marriage. In another instance, Richard claimed both had been given as engagement gifts.
Faced with those contradictory statements, the AD4 thought the disposition of the entire matter needed to await a formal hearing.
Does any of this ring true?
 To download a copy of the Appellate Division's decision, please use this link: Northern Trust v. Delly
 In T.L.C. W., LLC v Fashion Outlets of Niagara, LLC, T.L.C. West -- doing business as Applebee's Neighborhood Grill and Bar ("Applebee's") -- sued its landlord, Fashion Outlets of Niagara ("FON"), claiming Fashion was responsible for trash removal.
Although the lease began in 1994, and the cost had never been demanded or sought, in 2006, when FON notified Applebee's that there would be a charge for trash removal, the restaurant filed suit.
After the Niagara County Supreme Court denied Applebee's request that the landlord be held responsible for that service, the company appealed to the Appellate Division, Fourth Department.
When a lease suffers from ambiguous language, a court may look at the evidence presented by the parties to resolve a dispute as to the agreement's meaning or import. Upon its review of the record, the Appellate Division, Fourth Department, thought trash removal was part of "common area" maintenance, which was FON's responsibility.
As a result, the AD4 modified the lower court's decision and sent the case back for a determination as to the dollar amount Applebee's should be reimbursed.
Guess who's eatin' good in the neighborhood?
 To download a copy of the Appellate Division's decision, please use this link: T.L.C. W., LLC v Fashion Outlets of Niagara, LLC
 In Smith v. James, Robert Smith was Shari James's landlord when the two agreed James would prematurely vacate the unit, new tenants would be accepted in her place, and, James would pay the rent differential for the balance of the lease term.
When James supposedly failed to honor the agreement and a lawsuit was filed, James countersued asking for a return of her rent payments -- which were allegedly associated with services Smith never provided -- together with the monies she paid pursuant to the surrender agreement.
After the City Court of Yonkers dismissed her counterclaim, James appealed to the Appellate Term, Second Department.
The AT2 found the parties had a "valid and enforceable surrender agreement." Since she never complained about the alleged lack of services, nor gave Smith and opportunity to provide same, James wasn't permitted to recoup the monies she had remitted.
Should James have given up?
 To download a copy of the Appellate Term's decision, please use this link: Smith v. James
 In Morgan Stanley Altabridge Ltd. v. ESE Funding SPC Ltd., Morgan Stanley sued Dynamic Credit Partners, LLC, and its affiliate -- ESE Funding SPC Ltd. -- for breach of contract.
When Dynamic sought to have Morgan Stanley's complaint dismissed, the New York County Supreme Court denied that request and an appeal to the Appellate Division, First Department, followed.
According to the AD1, Morgan Stanley's pleadings stated a valid cause of action -- namely, Dynamic breached a participation agreement which caused $3.2 million in damages when the latter failed to fund a portfolio so that ESE could meet its monetary obligations.
Will this have dynamic consequences?
 To download a copy of the Appellate Division's decision, please use this link: Morgan Stanley Altabridge Ltd. v. ESE Funding SPC Ltd.
 In Lasalle Bank National Association v. Ahearn, when Timothy Ahern received an $180,000 mortgage from Fremont Investment & Loan to purchase a home, the loan documents identified Mortgage Electronic Registration Systems, Inc. as the mortgagee of record -- meaning the latter entity had the right to foreclose in the event of a payment default. Yet, when Ahern later failed to pay his loan, Lasalle Bank claimed to be the holder of the mortgage and filed for foreclosure.
Interestingly, the Ulster County Supreme Court denied Lasalle's request for relief because the financial institution "lacked standing" -- it hadn't shown it had an interest in the mortgage when the action was filed.
On appeal, the Appellate Division, Third Department, found Lasalle, as an assignee of the mortgage, didn't have the ability to foreclose unless a "complete assignment" existed at the time the case was filed. (Apparently, the underlying paperwork had neither been completed nor delivered to the bank.)
In other words, LaSalle was foreclosed from seeking foreclosure.
 For a copy of the Appellate Division's decision, please use this link: Lasalle Bank National Association v. Ahearn
Our partner, Lucas A. Ferrara, was quoted in the Real Estate Section of Sunday's New York Times.
Here's the piece in its entirety:
Rent Liability After a Lease Ends
By Jay Romano
 I live in a rent-stabilized apartment in New York City, and I did not sign the lease renewal form that the landlord sent me because I am planning to leave. I recently received a letter from my management company stating that because I did not give notice within 60 days of the end of the lease, the lease is deemed to be in effect for another year and I will be responsible for the next year's rent unless someone is found to rent the apartment. The lease ends on May 31. If they don't rent the apartment, am I responsible for the rent for the next year?
"With few exceptions, a landlord is required to offer a rent-stabilized tenant a lease renewal," said Lucas A. Ferrara, a Manhattan real estate lawyer and adjunct professor at New York Law School. "If that offer is made 90 to 150 days before the lease is scheduled to expire, the tenant has 60 days from the offer's mailing date, or its receipt by personal delivery, to accept the renewal's terms."
Mr. Ferrara said that in the event a regulated tenant fails or refuses to renew, the law does not permit a landlord to deem a renewal in effect unless the tenant remains in possession of the space. "In other words," he added, "if the letter writer leaves the apartment on or before May 31, there should be no continuing liability for rent."
# # # To view a copy of the original article, please use this link: Rent Liability After a Lease Ends
 In Kaneb v. Lamay, Edward J. Kaneb wanted a court to declare him the owner of 6.91 acres of land which was situated between his property and that of an adjacent owner -- Scott Lamay.
Apparently, prior deeds showed the boundary lines of the properties had been in dispute since the mid-1840's.
Kaneb claimed the eastern boundary of his property was the tract line, while Lamay argued a western boundary -- located on Kaneb's parcel -- was the old fence line.
After the St. Lawrence County Supreme Court applied the "doctrine of practical location" and found the old fence line to be the controlling, Kaneb appealed to the Appellate Division, Third Department.
According to the AD3, prior deeds showed the parties' predecessors treated the fence line as the governing demarcation point.
And, because Kaneb couldn't "produce clear and convincing evidence of continuous, exclusive and hostile possession of the disputed parcel," he also wasn't able to show ownership by adverse possession.
Now that's fencing.
 To download a copy of the Appellate Division's decision, please use this link: Kaneb v. Lamay
 After a parcel was purchased at a foreclosure sale, LKE Family Ltd. Partnership entered into an agreement which gave it an option to acquire the property. When those owners refused to sell, LKE sued for "specific performance" -- to force the sale.
After the Suffolk County Supreme Court dismissed LKE's case, an appeal to the Appellate Division, Second Department, followed.
Since LKE failed to make rent payments -- a "condition precedent" to the property's purchase -- the AD2 thought the dispute's dismissal was appropriate.
Bet LKE, no likey that!
 To download a copy of the Appellate Divisions decision, please use this link: LKE Family Ltd. Partnership v. Gillen Living Trust
 In HSBC Mtge. Servs., Inc. v. Alphonso, when HSBC Mortgage Services Inc. filed suit to foreclose a mortgage, Point Holding Alpha, LLC claimed it had superior interest in the property because it recorded its mortgage, first.
On October 11, 2005, Kenyon Alphonso purchased a home from Chaim Parnes for $600,000, and, in exchange for a $480,000 loan, gave Encore Credit Corp. a mortgage on the property.
Several weeks later, on November 7, 2005, Alphonso sold the property to Point for only $20,000 and the latter recorded its deed on November 10, 2007.
Some eleven days later, on November 21, 2005, Alphonso's deed and mortgage with Encore were filed.
In June 2006, Encore assigned the mortgage to HSBC which filed a foreclosure case with the Kings County Supreme Court.
When Point claimed its interests superceded HSBC's, the Kings County Supreme Court found Point hadn't acquired the property as a "bona fide purchaser."
On appeal, the Appellate Division, Second Department, was of the view that, at the time Point acquired the property, a title search would have revealed Alphonso wasn't the record owner (Parnes was). And the fact it paid only $20,000 for a property which appraised for $600,000, didn't really help Point's position either.
Last, but not least, even though Point claimed to have taken the property subject to a mortgage, there was no evidence the company ever attempted to make any payments of that debt.
Which way do fingers point now?
 To download a copy of the Appellate Division's decision, please use this link: HSBC v. Alphonso
 In Harrison v. Harrison, Jeffrey Harrison had a couple of claims against his brother, Kevin. The first was "breach of contract," his second was for the imposition of a "constructive trust" based on Jeffrey's alleged entitlement to 25% of profits from Global Telecom, Inc., of which Kevin was 48% shareholder.
The brothers supposedly had an oral agreement whereby Jeffrey was to receive 25% of the profits from a designated account, plus 25% of the profits from any other account he brought to the company.
After the Steuben County Supreme Court granted Kevin's request to dismiss the contract-breach claim, and denied Jeffrey's request to impose a constructive trust, both brothers appealed to the Appellate Division, Fourth Department, which reversed the outcome -- finding for Jeffrey on the breach claim and for Kevin on the constructive-trust theory.
Since the AD4 was of the view the purported oral agreement was enforceable, the breach claim was allowed to survive.
But in order to establish an entitlement to a constructive trust, two elements needed to have been shown: a transfer in reliance of a promise, and, an unjust enrichment. Since Kevin didn't satisfy that standard, the AD4 was of the view he couldn't get that relief.
Brotherly love ain't what it's cut out to be, folks.
 To download a copy of the Appellate Division's decision, please use this link: Harrison v. Harrison
 In Fulton Chevrolet Cadillac Co., Inc. v. Gurda, Michael Gurda was sued by an automotive repair shop.
Gurda brought his car to Fulton Chevrolet Cadillac Company to be fixed in May of 2006 and paid $2,725.13. Three weeks later, when his vehicle again malfunctioned and was repaired, he was sent another invoice for $2,774.70 -- which went unpaid.
Some three months later, when the car wouldn't work, Gurda supposedly allowed Fulton to sell the vehicle and to keep up to the amount of the unpaid charges. But since the car sold for only $1,500, and a balance of $1,274.70 remained, Fulton sued Gurda in the City Court of Middletown, Orange County, for the outstanding monies.
After that case was dismissed, an appeal to the Appellate Term, Second Department, followed.
Although Gurda's son testified Fulton had orally agreed to accept ownership of the car in full satisfaction of Gurda's debt, title to the auto was never transferred. Without proof an agreement had been reached, the AT2 was of the view Fulton was entitled to the monies sought and reversed the underlying determination.
Not that was a lemon!
 To download a copy of the Appellate Term's decision, please use this link: Fulton Chevrolet Cadillac Co., Inc. v. Gurda
 In Cassis Family Ltd. Partnership v. Elsayed, Cassis Family Ltd. Partnership filed a summary holdover proceeding against Adel and Erika Elsayed to recover possession of a residential apartment.
Cassis claimed the Elsayeds violated their lease and perpetrated a "nuisance" by running a limousine business out of their unit and parking their vehicles in a neighboring lot. (The Elsayeds' lease only permitted residential use of the apartment.)
When the tenants asked for the case's dismissal (based on a defective notice to cure), the Westchester County Justice Court denied that request and found the Elsayeds had breached a substantial obligation of their tenancy and awarded the landlord possession of the space, together with a money judgment in the amount of $668.06.
On appeal, the Appellate Term, Second Department, thought the Elsayeds had substantially violated their lease when they continued to use their apartment for commercial purposes after the cure period expired. It also didn't help their cause that documents filed with Westchester County reinforced that the tenants were operating a business out of their home.
No free rides there!
 To download a copy of the Appellate Term's decision, please use the link: Cassis Family Ltd. Partnership v. Elsayed
 In Natixis N. Am., Inc. v. Solow Bldg. Co. II, L.L.C., when the New York County Supreme Court found Natixis wasn't in default of its lease, the landlord appealed to the Appellate Division, First Department.
The AD1 was of the view the tenant hadn't breached its lease by allowing "unaffiliated entities" use of the premises or by failing to remove refrigerant (as mandated by the Federal Clean Air Act).
And while an injunction had issued preventing the landlord from interfering with the tenant's renovations, challenging that relief was seen as "academic" as Natixis had already completed its work.
Did Solow's case earn a failing grade?
 To download a copy of the Appellate Division's decision, please use this link: Natixis N. Am., Inc. v. Solow Bldg. Co. II, L.L.C.
 In Dank v. Sears Holding Mgt. Corp., Warren Dank filed suit because he believed Sears, a national retailer, broke a promise to match the price of any item offered for sale by a competing merchant.
Dank was looking to buy a flat-screen television and found another establishment offering a better deal. Dank then visited three different Sears stores and attempted to purchase the set at the competitor's lower number.
Two of the stores refused to match the price, claiming each manager had the discretion whether or not to do so.
When Dank purchased the set at the third Sears, supposedly for an extra $400, he sued the company in Nassau County Supreme Court.
When the retailer's request to dismiss the case was denied, it appealed to the Appellate Division, Second Department, which affirmed the lower court's determination. The AD2 was of the view Dank stated a common-law fraud claim as well as a basis for relief under New York's General Business Law.
Where it begins ... may be where it ends.
To download a copy of the Appellate Division's decision, please use this link: Dank v. Sears Holding Mgt. Corp.
 In Group 88, Inc. v. AGA Capital NY, Inc., Group 88 went to a licensed mortgage broker -- AGA Capital -- for assistance with financing of a deal. But when the terms of that loan weren't as originally represented a lawsuit was filed.
Group 88 wanted to acquire nine cooperative apartments. After its loan request was rejected by one lender, AGA was able to get financing from another entity and Group 88 accepted the terms of that deal. Yet, it still sued alleging breach by AGA of certain oral representations.
After the Kings County Supreme Court dismissed the case, the Appellate Division, Second Department, agreed AGA hadn't guaranteed any deal related terms.
In other words, Group 88 couldn't Capitalize on that.
 To download a copy of the Appellate Division's decision, please use this link: Group 88, Inc. v. AGA Capital NY, Inc.
 In Cataract Sports & Entertainment Group, LLC v. Essex Ins. Co., Cataract Sports & Entertainment Group filed suit against its insurance company, Essex Insurance, seeking indemnification in a personal-injury case.
(Apparently, Frank Strangio was playing flag football when he stepped into a rut and was injured on a Cataract owned and operated field.)
After the Niagara County Supreme Court granted Essex's request to dismiss the indemnification claim -- on the grounds the parties' agreement didn't cover Strangio's injury -- Cataract appealed to the Appellate Division, Fourth Department.
Since the policy provided coverage for damages arising out of "ownership, maintenance or use of the premises," the AD4 was of the view Essex was obligated to defend and indemnify Cataract in the underlying negligence case.
Was Essex blinded by Cataract?
 For a copy of the Appellate Division's decision, please use this link: Cataract Sports & Entertainment Group, LLC v. Essex Ins. Co.
 In Mark Hotel LLC v. Madison Seventy-Seventh LLC, when Madison Seventy-Seventh LLC served its tenant, Mark Hotel LLC, with a notice of lease default, the Hotel sought relief from the New York County Supreme Court.
The tenant wanted to convert part of the building into a "cooperative hotel." Although it asked for the landlord's consent to the renovation plan, when the owner twice failed to object, the tenant relied on a lease provision which provided that the landlord's failure to respond comprised a form of consent to the construction.
After the Supreme Court found in the tenant's favor, the landlord appealed to the Appellate Division, First Department, which also didn't think the tenant violated its lease. While Madison argued the parties' agreement and governing law prohibited the conversion, the Appellate Court, First Department, didn't buy it.
The AD1 was of the view the lease unambiguously permitted the premises' use as a "cooperative hotel," and the contemplated change didn't violate the applicable statute.
Will Madison checkout?
 To download a copy of the Appellate Division's decision, please use this link: Mark Hotel LLC v. Madison Seventy-Seventh LLC
 In Rigney v. Ichabod Crane Central School District, Michele Rigney sued Ichabod Crane Central School District for injuries suffered during a step aerobics class offered by the school's adult education program.
An instructor supposedly told the participants to retrieve their exercise equipment from a storage closet, and Rigney was injured when weighted bars fell onto her back.
After the Columbia County Supreme Court granted the school's request to dismiss the case, Rigney appealed to the Appellate Division, Third Department.
Although she signed a release form wherein she agreed not to hold the school liable for any injuries arising from her participation in the class, the AD3 was of the view the document didn't exempt the school from liability arising from its own negligence.
That was a weight off Rigney's shoulders!
 For a copy of the Appellate Division's decision, please use this link: Rigney v. Ichabod Crane Central School District
 After Preferred Mutual Insurance Company denied coverage for property damage reportedly caused by a chemical plant explosion, Francis and Anita Trupo filed suit.
When the Monroe County Supreme Court found in the couple's favor, Preferred appealed to the Appellate Division, Fourth Department.
The AD4 was of the view the incident was a covered event and qualified as an "explosion" under the policy's terms and conditions. (A "contamination" exclusion didn't apply since this was a "sudden occurrence," rather than "wear and tear" or exposure "that occurred over time.")
Two dissenting judges would have denied the claim. While they agreed the incident qualified as an "explosion," they were of the belief the policy's language specifically disclaimed a recovery for any form of contamination.
Will Preferred be a trouper and honor the claim or will the company prefer to force the Trupos up to the Court of Appeals?
Fulminate over that!
For a copy of the Appellate Division's decision, please use this link: Trupo v. Preferred Mutual Insurance Company
 In Bryant v. Damiano, Anne Bryant sued Charles Damiano for damages caused by the installation of an allegedly defective drainage system some 18 years prior to her lawsuit.
When the Rockland County Justice Court dismissed the case on "statute of limitations" grounds, Bryant appealed to the Appellate Term, Second Department.
The AT2 noted that a case against a contractor for "contract breach" or "fraud" must be filed within 6 years from the date the work was completed, or two years from the time Bryant learned of the fraud, or, with "reasonable diligence" could have uncovered the misconduct.
Bryant admitted that a year after Damiano completed the work, she detected a problem with the drain and hired someone to fix the system.
Since she was aware of the defect for some 16 years, she was "time-barred" from seeking relief.
No flushing that out any further.
 To download a copy of the Appellate Term's decision, please use this link: Bryant v. Damiano
 After the New York County Supreme Court found Berkman Bottger & Rodd (BB&R) wasn't entitled to an award of its unpaid legal fees, an appeal to the Appellate Division, First Department, followed.
The AD1 thought BB&R complied with the governing retainer agreement's terms when it sent detailed monthly invoices which were forwarded to, and received by, its client. (The client's contention she orally objected to the bills was seen as conclusory in nature and "contradicted by her actions" -- including her failure to utilize offered arbitration.)
The AD1 also saw the client's letter -- which complained that bills were "too high" and that BB&R represented her spouse would be ultimately responsible for the case's legal bills -- as "vague and belated" and insufficient to defeat the firm's entitlement to payment.
There's no compensating for that.
 To download a copy of the Appellate Division's decision, please use this link: Berkman Bottger & Rodd, LLP v Moriarty
 In Zito v. Fischbein Badillo Wagner Harding, Robert Zito sued his former employer for unpaid compensation and retained the firm of Nimkoff Rosenberg & Schechter (Nimkoff) to represent him on a contingency-fee basis.
In December 2007, Nimkoff sought to withdraw from the case -- after the parties' relationship supposedly deteriorated and the client allegedly failed to pay for disbursements as required by the parties' written retainer agreement -- and asserted a "retaining lien" (which should have permitted Nimkoff to hold onto the client's files until all monies due were remitted).
On March 7, 2008, the New York County Supreme Court wasn't receptive to the retaining lien claim but permitted the firm's withdrawal and directed that a referee determine the amounts owed. Several days later, Zito asked Nimkoff to relinquish its case file and an appeal to the Appellate Division, First Department, followed.
Since the firm hadn't been discharged for cause, the AD1 was of the view the lawyers didn't have to surrender their former client's papers until such time as their bill was paid.
Did that retain your attention?
 To download a copy of the Appellate Division's decision, please use this link: Zito v. Fischbein Badillo Wagner
 In Kambousi Rest., Inc. v. Burlington Ins. Co., Burlington Insurance Company refused to defend and indemnify its insured, Kambousi Restaurant -- doing business as Royal Coach Diner -- on the grounds the insurer hadn't been given timely notice of the incident.
When the Bronx County Supreme Court granted Burlington's dismissal request, Kambousi appealed to the Appellate Division, First Department, which reversed.
Upon learning a woman had fallen in the parking lot, the establishment's manager inquired if the individual needed assistance and was supposedly told by that person's spouse not to "worry" since his wife was "clumsy" and had tripped over her own shoelaces.
The couple then left the area, leaving the manager to believe the restaurant wasn't going to be held responsible for the mishap.
That, according to the AD1, established a "good-faith belief of nonliability," which excused Kambousi's late notice.
We're thinking any other result would have been real awkward.
 To download a copy of the Appellate Division's decision, please use this link: Kambousi Rest., Inc. v. Burlington Ins. Co.
 In Camilleri v. Pena, tenant Miriam Pena asked for a jury trial in a holdover proceeding brought by her landlord, David Camilleri.
When the New York County Civil Court denied the owner's request to strike the jury demand, an appeal to the Appellate Term, First Department, followed.
The AT1 was of the view Camilleri's motion was properly denied since neither party could produce the original lease (which dated back three decades) nor was there evidence the lease ever had a jury waiver.
While a waiver clause appeared in later renewal leases, the AT1 refused to give it deference since Camilleri couldn't demonstrate compliance with Rent Stabilization Code section 2522.5(g) -- which (with few exceptions) requires lease renewals to be on the same terms and conditions as the underlying lease.
A per-jury-ious result for Pena?
 To download a copy of the Appellate Term's decision, please use this link: Camilleri v. Pena
In Connaught Tower Corp. v. Nagar, after the landlord sued its tenants for breach of a commerical lease, the New York County Supreme Court granted relief in Connaught's favor.
On appeal, the tenants claimed to have vacated the premises and to have delivered their keys to a person named "David," who supposedly accepted them on the landlord's behalf.
The Appellate Division, First Department, was of the view those acts didn't comprise a "surrender" absolving the tenants of liability.
The lease provided that delivery of keys to the landlord's agent or employee wouldn't operate to terminate the agreement. (Nor was there proof of any other arrangement or understanding as to a surrender's terms.)
We Connaught tell a lie. The AD1 sure-rendered a good result.
To download a copy of the Appellate Division's decision, please use this link: Connaught Tower Corp. v. Nagar
 In Alter v. Levine, Daniel Alter tried to sell his co-op to Richard Levine, but when the latter
was rejected by the building's board, Alter sued to retain the $62,000 down payment.
The contract of sale provided Alter could keep the money if Levine acted in "bad faith."
Although Alter claimed Levine submitted false data which, in turn, triggered the rejection, the Westchester County Supreme Court sided with the rejected buyer and directed the seller to return the money.
On appeal, the Appellate Division, Second Department, affirmed the outcome. Apparently, since he lacked any proof and his allegations were conclusory in nature, Alter was unable to establish the board's rejection was due to any misconduct by Levine.
(The AD2 also affirmed dismissal of Alter's anticipatory breach claim, because the board's refusal to approve the sale made the contract's performance impossible.)
O ye of little faith!
 To download a copy of the Appellate Division's decision, please use this link: Alter v. Levine
 In Racepoint Partners, LLC v. JPMorgan Chase Bank, N.A., Racepoint Partners sued JPMorgan for breach of contract and fiduciary duty.
After Enron Corporation filed for bankruptcy in 2001, Racepoint purchased Enron's notes. (JPMorgan served as the indenture Trustee.)
Racepoint alleged that, according to the indenture agreement, Enron was supposed to supply JPMorgan with financial statements which complied with federal securities law. Its failure to do so, Racepoint argued, comprised an event of default under the parties' agreement.
When the New York County Supreme Court dismissed Racepoint's case, an appeal to the Appellate Division, First Department, followed.
The AD1 found Enron only had to provide copies of the documents in question when those materials were filed with the SEC. Without those submissions, no default or breach of the agreement had been triggered.
Did the AD1 restore a bank's "trust?"
 To download a copy of the Appellate Division's decision, please use this link: Racepoint Partners, LLC v. JPMorgan Chase Bank, N.A.
 In KPSD Mineola, Inc. v. Jahn, KPSD Mineola contracted to buy some real estate from Myra Jahn, but after she refused to sell the parcel, KPSD sued in Nassau County Supreme Court for "specific performance" -- to force a sale.
When Jahn sought the case's dismissal, based on KPSD's noncompliance with the contract's mortgage contingency provision, the Supreme Court denied that request.
On appeal, the Appellate Division, Second Department, affirmed the lower court's decision.
Although she showed KPSD never obtained a mortgage commitment nor provided a signed agreement to close as contractually mandated, KPSD raised a "triable issue of fact" as to whether Jahn had waived the contract's requirements. (While she raised additional arguments in support of the case's dismissal, the AD2 refused to consider them, as they were raised for the first time on appeal and thus not properly before the appellate court.)
How's that for a closing?
 To download a copy of the Appellate Division's decision, please use this link: KPSD Mineola, Inc. v. Jahn
Here are some poll results released earlier today by Rasmussen Reports -- "an electronic publishing firm specializing in the collection, publication, and distribution of public opinion polling information."
56% Support Six-Month Moratorium on Foreclosures
Wednesday, February 25, 2009
 Fifty-six percent (56%) of Americans favor a plan forcing banks to stop all mortgage foreclosures for the next six months, according to a new Rasmussen Reports national telephone survey.
Thirty percent (30%) oppose such a plan, while 13% are not sure if it's a good idea or not.
Among homeowners, 54% favor a six-month moratorium on all mortgage foreclosures, while 34% oppose the idea.
According to a Fox News report, 52 million Americans have home mortgages, and more than 2.3 million homeowners faced foreclosure in 2008, last year, up 81% from the year before.
Seventy-one percent (71%) of Democrats support a plan forcing banks to stop foreclosures for six months, and a majority of unaffiliated adults (51%) agree. Forty-two percent (42%) of Republicans support a moratorium on foreclosures, but 46% are opposed.
Forty-nine percent (49%) of investors like the idea, along with 65% of non-investors.
California has initiated a 90-day moratorium on foreclosures, and Ohio is considering a temporary halt to foreclosures for up to six months. Several banks, among them Bank of America, Citigroup and Wells Fargo, have taken similar steps. Also, a number of law enforcement officials around the country have temporarily stopped enforcing foreclosures.
Rep. Barney Frank, the chairman of the House Financial Services Committee, has said he supports legislation for a government-imposed moratorium on some foreclosures.
Seventy-five percent (75%) of African-Americans favor a six-month moratorium on foreclosures, as do 51% of whites. Fifty-two percent (52%) of married Americans support a temporary halt on foreclosures, compared to 63% who are not married.
The findings follow President Obama's announcement last week of a $275-billion federal government program to help up to nine million homeowners who are most at risk of being foreclosed on. The plan includes subsidizing their mortgage payments, an idea which most Americans think helps people who bought more house than they could afford and thus rewards bad behavior.
Forty-five percent (45%) oppose the federal government subsidizing mortgage payments for financially troubled homeowners.
# # #
 To view a copy of the original report, please use this link: Six-Month Moratorium?
 In Fada Int'l Corp. v. Cheung, Fada International sued Rowena Cheung, a former employee, claiming the latter purloined confidential information and used Fada's customer lists to solicit business for a new company.
After the New York County Supreme Court dismissed the case, Fada appealed to the Appellate Division, First Department.
The AD1 was of the view Cheung didn't "steal" anything since the data was readily ascertainable elsewhere. Also, without an agreement prohibiting competition by Cheung, there was little the court could do to restrict her conduct on behalf of her new employer.
Will Fada fade away?
 To download a copy of the Appellate Division's decision, please use this link: Fada Int'l Corp. v. Cheung
 In Matter of Taddonio v. Wasserman-Taddonio, Keith Taddonio sought a credit for child-support payments made to Julie, his ex-wife.
The parties' separation agreement provided Keith would pay Julie $1,300 a month for their two kids -- who would become emancipated at the age of 21.
In March of 2006, when their daughter turned 21, Keith sought to decrease his child support obligation and, in November of 2006, a Family Court Support Magistrate obliged and directed Keith to make monthly support payments in the amount of $853.06 (retroactive to March).
Keith then asked he be given a credit for over-payments made from March 2006 to November 2006. When that request was denied, and the Suffolk County Family Court sided with the Support Magistrate, Keith appealed to the Appellate Division, Second Department.
The appellate court agreed Keith wasn't entitled to a refund since "[t]here is a strong public policy in this state ... against restitution or recoupment of the overpayment of child support." However, the AD2 thought Keith was entitled to an offset for "arrears" paid to the Support Collections Unit during that same timeframe, and sent the matter back for a determination of the amount to be credited.
CHARGE!
 To download a copy of the Appellate Division's decision, please use this link: Matter of Taddonio v. Wasserman-Taddonio
 In Blakney v. Leathers, after Nashon Blakney was injured in a car accident, his lawyer negotiated a settlement with GEICO Insurance Company for $35,000 and forwarded a stipulation of discontinuance and a general release, which Blakney purportedly signed.
While the company sent a settlement check to his attorney, Blakney claimed he was unable to reach counsel and first learned of the settlement four months after the case had been resolved. (Blakney also claimed he neither authorized nor consented to the settlement and that his attorney forged his signature on the release and settlement check.)
After the Kings County Supreme Court granted Blakney's request to vacate the settlement and to restore the case to the calendar, an appeal to the Appellate Division, Second Department, followed.
The AD2 reiterated the long-standing requirement that an attorney be specifically authorized to resolve a claim. And, in this instance, since the attorney was unable to show Blakney approved the settlement, the deal was appropriately vacated.
With that, we're signing off.
 To download a copy of the Appellate Division's decision, please use this link: Blakney v. Leathers
 In Matter of People of State of New York v. Applied Card System, Inc., former Attorney General Eliot Spitzer, pictured right, filed suit on behalf of New Yorkers who had been solicited for credit cards by Cross Country Bank (CCB).
CCB targeted "sub-prime credit market" consumers -- those who normally wouldn't "qualify for credit under traditional underwriting guidelines and principles."
The then Attorney General alleged that, in violation of New York law, CCB had "misrepresented the credit limits that sub-prime consumers could obtain and that it failed to disclose the effect that its origination and annual fees would have on the amount of initially available credit."
CCB informed customers they would be automatically pre-approved for a credit limit "up to" $2,500, when that number was often as low as $350. CCB supposedly told its customers there would be no late fees or collection calls, but later "clarified that such fees would be imposed and such calls made in certain instances."
There was also deceptive conduct relating to coverage for "death, disability, unemployment, or family leave," in a benefits program, and a "re-aging process" for "severely delinquent cardholders to bring their accounts current through a series of payments." (CCB failed to explain the late charges that would still accrue during that process.)
CCB countered it complied with the Federal Truth-in-Lending Act (TILA) and, according to the Fair Credit and Charge Card Disclosure Act of 1988 (FCCCDA), TILA overrode "any provision of the law of any State relating to the disclosure of information in any credit or charge card application," and preempted New York's Executive Law and Consumer Protection Act.
The Albany County Supreme Court found the Attorney General's claims weren't overridden by TILA and "permanently enjoined [CCB] from engaging in future fraud, deception, and false advertising." On appeal, the Appellate Division, Third Department, affirmed.
When the case reached the New York State Court of Appeals, that court found FCCCDA and TILA only overrode "those state laws that relate to 'disclosure of information,'" including annual percentage rates, annual fees, minimum finances and transaction charges, grace periods, late fees, over-the-limit fees, and the like. New York laws, on the other hand, addressed a credit card company's duty to "refrain from fraud, deception, and false advertising when communicating with New York customers."
Since the Attorney General's claims didn't "relate to the disclosure of credit information" but sought to address an "affirmative deception," our state's unfair trade practices law was unaffected by the federal statutes.
A lone dissenter, Judge Read, thought FCCCDA and TILA "set out comprehensive requirements and established a singular federal mechanism to add to or modify these requirements." Therefore, Read believed New York was prohibited from imposing any of its consumer protections laws on a nationwide industry.
You gotta give the court credit for that.
For a copy of the Court of Appeals' decision, please use this link: Matter of People of State of New York v. Applied Card System, Inc.
 In Matter of Friends of Stanford Home V. Town of Niskayuna, Friends of Stanford Home sought to annul a special-use permit granted to Highbridge Development BR, LLC.
Ingersoll Adult Home, Inc. agreed to sell property on which it operated an adult residential facility, subject to Highbridge's construction of a new facility a mile down the road. The Town approved a special-use permit for both the new facility and for Highbridge's construction of a commercial complex at the old site.
Friends brought a case seeking to reverse the Board's approvals and to stop the complex's development. When the Schenectady County Supreme Court granted Friends' request, and found the two projects should be jointly analyzed, an appeal to the Appellate Division, Third Department, ensued.
Finding the parties' agreement didn't create a sufficient link between the two projects to warrant joint or "cumulative" review, the AD3 reversed. (The parties' contractual contingencies weren't enough to create a "geographic or environmental interrelationship between the two projects.")
You gotta have Friends!
 To download a copy of the Appellate Division's decision, please use this link: Matter of Friends of Stanford Home V. Town of Niskayuna
 In GMAC Mtge. Corp. v. Chan, when GMAC sought to foreclose on a property's mortgage the owners claimed the debt obligation and underlying conveyance weren't valid.
Although three brothers originally owned the parcel, one brother executed a deed conveying the property to himself (and another sibling), took out a mortgage with GMAC, filed for bankruptcy, and died. When GMAC tried to collect the sums due, the remaining brothers claimed their signatures on the loan documents and deed had been forged.
After the Richmond County Supreme Court decided a trial was necessary -- because of the possibility of fraudulent conduct -- the lender appealed to the Appellate Division, Second Department, which agreed with the lower court's determination and sent the case back for a hearing to determine the documents' validity.
Oh, brother!
 To download a copy of the Appellate Division's decision, please use this link: GMAC Mtge. Corp. v. Chan
 In 216 Jamaica Avenue, LLC v. S & R Playhouse Realty Co., the parties disputed the enforceability of a lease's "gold clause."
The 1912 agreement's original term was for 99 years, with an option to renew until the year 2110, and the annual rent was to be "paid in gold coin of the United States of the present standard of weight and fineness." (A custom and practice of the time.)
In the 1930's, as part of President Roosevelt's "overhaul of American monetary policy," Congress withdrew gold coins from circulation, banned their private ownership and use, and, made monetary obligations -- like lease payments -- payable in paper currency.
In 1977, Congress repealed the ban, but ambiguously provided the 1930's resolution wouldn't apply to leases issued on or after the 1977 amendment. After a series of lawsuits, in 1996, Congress passed a law which allowed owners to enforce pre-1977 gold clauses only when the parties specifically agreed to that obligation.
In 1982, S & R Playhouse assumed the lease and paid the annual rent in paper currency. In 2006, when 216 Jamaica Avenue purchased the land, the new owner demanded the "rent equivalent to the value of 35,000 1912 gold dollar coins." Upon S & R Playhouse's refusal to comply, 216 filed suit and the District Court for the Northern District of Ohio found the gold clause unenforceable.
On appeal, the Sixth Circuit Court of Appeals was of the opinion the 1912 gold clause was "resuscitated" by S & R's assumption of the lease and could be enforced against the tenant. The argument there was no "meeting of the minds" fell on deaf ears as the Sixth Circuit found "nothing unclear" about the lease's terms.
How fine was that?
 To download a copy of the Circuit Court's decision, please click here: 216 Jamaica Avenue, LLC v. S & R Playhouse Realty Co
 In Greenspan v. Greenspan, Richard agreed to be responsible for one-half of his kids' schooling expenses -- including tuition, room and board, books and uniforms. He also agreed to allow his ex, Michele, to have direct communication with their children's health-insurance provider and his life-insurance carrier.
Six and a half years after their divorce, when Michele asked the Nassau County Supreme Court to compel her former husband's compliance with the agreement, Richard was ordered to reimburse Michele for the sums sought and found Richard in civil contempt for his refusal to supply the insurance related authorizations.
On appeal, the Appellate Division, Second Department, ended up fully supporting that.
 To download a copy of the Appellate Division's decision, please use this link: Greenspan v. Greenspan
 In Weiner v. Weiner, Jay Weiner was allowed use of Edie Weiner's vacation home as part of the couple's separation agreement.
When the New York County Supreme Court granted Edie's request to stop Jay's use of the property, an appeal to the Appellate Division, First Department, followed.
The AD1 noted a promise not to bother or "harass" a former spouse is an independent part of a separation agreement. And, even when that representation is violated, the violator is typically able to enjoy the separation agreement's benefits.
In this case, however, the AD1 found fundamental principles of fairness outweighed the governing law, and Jay's egregious behavior toward Edie, required the forfeiture of rights reserved by the stipulation to share living space.
"Ex" marks the spot?
 To download a copy of the Appellate Division's decision, please use this link:Weiner v. Weiner
 In Cole Mechanical Corp. v. AWL Industries, Inc., the Appellate Division, Second Department, was asked to address a contract dispute.
AWL hired Cole as a subcontractor to do steam-fitting work as part of a Queens County courthouse's renovation. Although the parties never entered into a written contract, AWL sent a purchase order which reflected Cole would be paid $250,000 over 12 weeks and every payment invoice AWL sent recited a "contract price" of $250,000. Cole contended that AWL orally agreed to pay $250,000, or "an amount sufficient" for Cole's work, and when Cole was paid only $250,000 this suit ensued.
After a Queens County Supreme Court jury found AWL breached the contract and awarded Cole $400,000, an appeal to the Appellate Division, Second Department followed. Based on its review of the record, the AD2 was of the opinion that AWL never agreed to pay more than $250,000 and set aside the verdict.
Was that too mechanical?
 To download a copy of the Appellate Division's decision, please use this link: Cole Mechanical Corp. v. AWL Industries, Inc.
In Kibler v. Gillard Constr., Inc., Stephen Kibler sued Gillard Construction, Inc. (GCI) and its resident, John Gillard, for breach of contract and negligence.
 Kibler hired GCI to build a single-family home. Although the company successfully constructed the structure, Kibler alleged GCI failed "to provide for positive drainage," or "to construct the home in accordance with applicable building codes." He also alleged GCI was negligent in fulfilling the contract's terms.
When the Orleans County Supreme Court granted GCI's request to dismiss the case, Kibler appealed to the Appellate Division, Fourth Department, which modified the outcome.
Because the parties' agreement failed to define "positive drainage," GCI couldn't show the term was unambiguous. Without a clear definition, that aspect of the dispute couldn't be resolved on the parties' submissions and a formal hearing or trial was required.
But since the town's code enforcement officer submitted an unrefuted affidavit, which attested to the company's compliance with all laws, the AD4 was of the view GCI was entitled to dismissal of the remaining parts of Kibler's case.
That must have been draining.
To download a copy of the Appellate Division's decision, please use this link: Kibler v. Gillard Constr., Inc.
 In J.G. v. The Board of Education of the Rochester City School District, parents of disabled students attending the Rochester City School District sued claiming there was a failure to provide "free, appropriate public education to special education students in the Rochester City Schools."
A 1981 complaint filed by "J.G." alleged the School District hadn't been evaluating or placing students in educational programs in a timely manner nor involving parents in the process.
In 1983, the parties entered into a Consent Decree, wherein the School District pledged to "improve the way it provided special education services to special needs students." It agreed to improve programs, placement procedures, extra-curricular opportunities for special needs students, to undergo a self-assessment, and to train teachers and staff "to be more aware and responsive to the needs of disabled students."
In 1993, J.G. sought and secured an Enforcement Order compelling the School District to adhere to the Consent Decree. In 1996 -- after J.G. filed a motion for contempt, alleging that the District wasn't in compliance with the 1983 Consent Decree or the 1993 Enforcement Order -- the parties entered into another Consent Decree which set forth "specific numeric goals" such as: "(1) timely recommendation by the Committee on Special Education and Committee on Preschool Special Education; (2) timely placement of students in appropriate programs once evaluations had occurred; (3) parental participation and satisfaction; (4) nondiscrimination and equal access; and (5) inclusion in mainstream curriculum and education in the least restrictive environment." This latter Consent Decree set May 1, 2000 as its termination date "after which the Court would no longer retain jurisdiction over the matter."
In 2001, when Judge Michael Telesca -- a United States District Court Judge of the Western District of New York -- hadn't heard from the parties concerning the School District's compliance with the 1997 Consent Decree, he issued an "Order to Show Cause why this case should not be dismissed with prejudice."
J.G. responded the School District wasn't in substantial compliance with the terms of the 1997 Decree's terms. Of course, the School District disagreed and contended that even though all of the standards hadn't been met, it was unreasonable to expect "statistical perfection" in only three years. It further argued it had expended considerable resources paying J.G.'s attorneys fees and generating "reports and data for review by [J.G.'s] attorneys" which could have been better spent on special needs students, and that the School District had begun development of a "Rochester Plan" -- a self-monitoring program designed to "ensure compliance with all regulations, specifically including regulations involving students with disabilities."
J.G. debunked the "Rochester Plan" as a sham and asked the Court to keep the Consent Decree in place.
Judge Telesca concluded the 1997 Consent Decree had expired on its own terms and the Court no longer retained jurisdiction.
Even though the case had been inactive for a considerable period of time, the Judge noted he wasn't arbitrarily terminating the Consent Decree without passing on the significant improvements the School District had made in its supervision and care of special needs students. Specifically, during the 1999-2000 school year, almost 87% of school-age children and 76% percent of preschool children were evaluated within 30 days of a request. The School District also retained a group known as the Advocacy Center to "conduct parent workshops at which parents of special education students are trained and shown how to actively participate in their child's education."
Not only was the School District's placement rate of students in special education programs over 90%, but the number of special needs students routinely placed in general curriculum classes had dramatically improved. As a result, Judge Telesca concluded that "where a court determines that a party to a consent decree is operating in compliance with the commands of the Constitution, and that it is unlikely that the party would revert to non-compliance, the court may terminate a consent decree."
That was the end of that.
 To download a copy of the District Court's decision, please use this link: J.G. v. The Board of Education of the Rochester City School District
 In Aison v. Hudson River Black River Regulating District, Howard Aison argued the Hudson River Black River Regulating District violated an agreement which governed the use of the Sacandaga Park's beach and swimming area.
In 2003, Aison and other homeowners entered into an agreement which allowed the District to "regulate and control the beach and swimming area, ... make reasonable rules and regulations governing the use of said beach and swimming area," and promulgate an annual permit system. Aison thought the District violated that arrangement by "allowing boat docks, a pontoon boat and personal watercraft."
When Aison asked the District be held in contempt of court for its breach, the Fulton County Supreme Court denied that request.
On appeal, the Appellate Division, Third Department, reiterated that civil contempt is available when "to a reasonable degree of certainty, a party has knowingly disobeyed a clear and unequivocal mandate of the court which results in prejudice to the rights of another party."
While the parties' stipulation specifically prohibited "pets, glass, cooler, cooking or barbeque equipment" on the beach and in the swimming area, since there was no mention of pontoon boats or boat docks, the District wasn't in violation of the agreement.
Bet those homeowners were singing the Hudson River Blues.
 To download a copy of the Appellate Division's decision, please use this link: Aison v. Hudson River Black River Regulating District
 In WTC Captive Insurance Company, Inc. v. Liberty Mutual, WTC Captive Insurance questioned whether the United States District Court for the Southern District of New York (SDNY) had subject matter jurisdiction over a lawsuit involving the insurance companies which covered the World Trade Center's cleanup efforts. (After the September 11, 2001 attacks, the City of New York realized massive work was needed to clear Ground Zero debris.)
The City first sought coverage from Liberty Mutual to protect the "contractors and consultants for bodily injury occurring in connection with the World Trade Center clean-up effort." The City then secured excess coverage from a group referred to as the "London Insurers." Two years after the attacks, the City "obtained additional protection for itself and its contractors from the Federal Emergency Management Agency (FEMA)."
With a $1 billion FEMA grant, the WTC Captive Insurance Company was formed to "protect the City and its contractors against loss, liability and expense that exceeded the City's existing insurance protection."
Approximately 10,000 lawsuits were filed against the City by individuals allegedly injured during the course of clean-up efforts. When the City demanded protection by its carriers, only WTC Captive responded and suit was filed against Liberty Mutual and the London Insurers.
When the London Insurers sought to dismiss the case for lack of "subject matter jurisdiction," the SDNY found it had the requisite power to hear the case since "all these workers' suits arose from, or were related to, the terrorist-related aircraft crashes into the World Trade Center, regardless if the injuries complained of arose immediately after September 11, or at any time thereafter until clean-up work was completed approximately eight months later, in May 2002."
When the London Insurers asked the court to reconsider its position, the SDNY denied the request, noting such motions are only granted to "correct clear error; prevent manifest injustice; or consider newly available evidence."
The SDNY noted that "displeasure with a result is not a basis for the [reconsideration] motion," and that the movants were offering a mere "rehash" of arguments that had been previously presented.
The court also pointed to the Air Transportation Safety and System Stabilization Act (ATSSSA), passed less than two weeks after the 9/11 attacks, which gave the SDNY "original and exclusive jurisdiction over all actions brought for any claim." The law's purpose was to ensure "uniformity and expertise could be concentrated in a single court dealing with all 9/11-related litigation, and to avoid the possibility of inconsistent judgments."
The SDNY found the exercise of its jurisdiction appropriate given the United States Supreme Court's direction district courts "consider the values of judicial economy, convenience, fairness and comity in deciding whether to exercise supplemental jurisdiction."
ATSSSA all there is?
 To download a copy of the District Court's decision, please use this link: WTC Captive Insurance Company, Inc. v. Liberty Mutual
 In 2246 Holding Corp. v. Nolasco, 2246 Holding brought a holdover proceeding against Maria Nolasco, a 30-year tenant in its building, due to a pattern of late rent payments. While the parties agreed Maria would pay back rent and the landlord's legal fees by the next month, since the Human Resources Administration (HRA) was paying part of the tenant's arrears, a 10-day delay was contemplated to allow HRA to cut a check.
More than a month later, when Maria remitted her share of the rent, 2246 refused to accept it. Maria got several stays of a warrant of eviction's execution on the grounds HRA had failed to fork over its share. Some five months later, when the agency finally made payment, 2246 claimed the tender was untimely and asked for the eviction to proceed.
The New York County Civil Court found the tardiness attributable to HRA and excused the lapses. After 2246 appealed, the Appellate Term, First Department, reversed, finding Maria's repeated failure to adhere to the "time of the essence" requirements of the parties' agreement justified an eviction.
On appeal, the Appellate Division, First Department, ended up siding with the Civil Court and found "[t]he policies underlying the rent stabilization laws are generally better served by holding out to a tenant the opportunity usually afforded in a nonpayment proceeding to cure the breach of his rent obligations." It believed Maria shouldn't be penalized since she was a long-term "indigent tenant" who made good-faith efforts to comply with the stipulation "only to be stymied by events beyond her control."
Actually, wasn't 2246 the one stymied by that outcome?
How was forgiving compliance with the TOE's terms consistent with the parties' original intentions? Wasn't the agreement's essence lost?
 To download a copy of the Appellate Division's decision, please use this link: 2246 Holding Corp. v. Nolasco
 In Garber v. New Idea By S.E.P., Vladimir Garber sued New Idea to recover a security deposit he had paid for a furniture order.
Garber ordered some custom-made furniture from New Idea but noticed it didn't conform to his specifications and immediately advised the merchant of the defect. After some four weeks, New Idea supposedly refused to accept the furniture's return.
When the Kings County Civil Court awarded Garber $3,000, representing the amount of the deposit, New Idea appealed to the Appellate Term, Second Department.
The AT2 required Garber to make the furniture available to New Idea within 30 days of its Order or face dismissal of his claim. (There was no evidence New Idea was going to deliver the correct furniture, and had neglected to do so in the seven month period since the initial nonconforming delivery.)
In a dissenting opinion, Justice Golia noted that since the parties' agreement provided "custom special orders may take up to 6 months for delivery," the four week period that Garber waited before filing his case didn't allow the company a sufficient opportunity to effect a cure. Golia believed New Idea had initially attempted to remedy the breach, and justifiably suspended efforts to address any irregularity once Garber's case was filed.
While it wouldn't be new, it'd probably be a good idea for this merchant to appeal to the Appellate Division, Second Department.
 To download a copy of the Appellate Term's decision, please use this link: Garber v. New Idea By S.E.P
 When Brock Bennett lost his wallet, he immediately reported the loss of his debit card to Bank of America (BOA). Yet, when his bank statements reflected fraudulent activity, BOA refused to reverse the charges and Bennett was forced to sue the bank in small claims court.
After Bennett was awarded $5,000, BOA appealed to the Appellate Term, Second Department, which affirmed. The AT2 deferred to the District Court's credibility findings and found the outcome based on a "fair interpretation of the evidence."
How constricting was that?
 To download a copy of the Appellate Term's decision, please use this link: Bennett v. Bank of America
 In Rivera v. Alaimo, Luis Rivera and Vincent Alaimo had a $12,000 lease-deposit dispute.
The two men signed a handwritten agreement which indicated that "material terms" of a lease and fixtures sale were going to memorialized in a "Final Lease Agreement." (But, for some undisclosed reason, that "final" lease was never signed.)
Since the parties' handwritten document didn't identify the landlord, the tenant, nor described the space to be rented, the Orange County Supreme Court saw the transaction as nothing more than a "mere agreement to agree" -- which meant there wasn't an enforceable deal in place and Rivera was entitled to the deposit's return.
On appeal, the Appellate Division, Second Department, agreed the men "never reached an agreement for the lease of the subject premises or contracted for the sale of fixtures."
That, my friends, was the battle of the Alaimo.
 To download a copy of the Appellate Division's decision, please use this link: Rivera v. Alaimo
According to NYC Comptroller Bill Thompson, if the MTA gets it way, disabled riders are facing a 150% fare increase.
Here's a joint press release issued by Thompson and Manhattan Borough President Scott Stringer:
THOMPSON, STRINGER, ADVOCATES URGE MTA AND CITY TO PUT THE BRAKES ON PARATRANSIT FARE INCREASE
-Comptroller says 1993 agreement prevents MTA from moving ahead without City approval-
Citing a 1993 measure that requires City approval, New York City Comptroller William C. Thompson Jr. today called on City Hall to reject a Metropolitan Transportation Authority (MTA) proposal to drastically increase Access-A-Ride fares.
Under the MTA's proposal, the Access-A-Ride fare would likely jump from $2 to $5 - a 150 percent increase. Currently, the paratransit fare is pegged to the base price for a subway or bus ride. But Thompson cited a 1993 Memorandum of Understanding (MOU) between the City and MTA requiring the Mayor's approval before any increase can occur.
"Raising these fares would place an incredible burden on people who already are, as a group, among the most economically vulnerable of New Yorkers," Thompson said. "Under the MOU, the Mayor has the legal power to stop this increase from moving forward. I call on both the MTA to the City to do the right thing for Access-A-Ride users."
Thompson - joined by Manhattan Borough President Scott Stringer and advocates for disabled persons, and senior advocates - made his announcement one day before the MTA votes on its 2009 budget, including the paratransit increase.
"The MTA's proposal to double fares for Access-A-Ride and cutback on bus service is a double blow for the disabled community, not a solution to this fiscal crisis. The savings amounts to a rounding error in the overall budget. My office has collected over 1,800 petition signatures from New Yorkers who agree this is unreasonable. If leaving home becomes a luxury - we all lose," said Manhattan Borough President Scott Stringer. "I urge the MTA to find an alternative solution that does not attempt to balance its budget on the backs of the disabled."
Paratransit users would be hit very hard by a $5 one-way fare. For someone traveling to and from work, the cost would be $10 a day; just two weeks worth of back-and-forth trips via paratransit would cost $100 - about the same cost as a monthly transit pass, which gives purchasers as many rides as they want.
The Comptroller noted that if the Mayor simply declared that the City would not renegotiate the MOU, the fare would remain pegged to the base fare and any increase would be halted. Thompson previously had urged the Mayor to oppose any tolling at the East and Harlem River bridges.
The MOU - which the MTA refers to in its November 2008 budget proposal - clearly describes the City's role:
"No decision by the MTA to set the Paratransit fare for trips within New York City at a level higher than that charged on a non-discounted basis for a one-fare trip on non-express mass transit shall take effect, except on the written agreement of the City and following approval by the FTA...." (Section 5.02, page 13)
The MOU, signed by MTA Chairman Peter Stangl and Mayor David Dinkins in May 1993, was agreed to when the paratransit system was transferred from City control to the MTA. It also permits a "private right of action" by paratransit users if the City or MTA violate the MOU.
"We applaud Comptroller Thompson's call to stop the unfair fare increase for passengers with disabilities," said Lawrence Carter-Long, Director of Advocacy for the Disabilities Network of NYC. "By using existing memorandum of understanding to put an end to the Access-A-Ride fare debate, the Mayor can -- with the swipe of a pen -- put the city on track toward finding real, workable budget solutions. It is a well-reasoned approach that places responsibility back where it belongs. An approach that stands in sharp contrast to the ill-conceived proposals put forth, to date, by the MTA."
"We appreciate Comptroller Thompson's efforts to call attention to this important agreement. At the time this was negotiated, I worked with the parties to the MOU to ensure that riders would be protected against regressive fare increases," said Jim Weisman, Senior Vice-President of the United Spinal Association. "We call upon the Mayor to use the power afforded him in this agreement to make sure that the MTA lives up to its end of the bargain regarding the paratransit fare. If not, it will be up to the riders."
"We are very concerned that the needs of people with disabilities are once more going unrecognized or disregarded. We know that the Mayor has the power to stop this foolhardy plan which will impact people with disabilities in every aspect of our lives," said Edith Prentiss Vice-President of Legislative Affairs for Disabled In Action. "We wonder why the Mayor has failed to speak out."
"People with disabilities rely on Access-A-Ride as an economical means of going to medical appointments, meeting friends and family, and going to work," said Marvin Wasserman, Executive Director of the Brooklyn Center for Independence of the Disabled. "They have few other options, which is one reason such a massive increase in the fare must be rejected."
Advocates say they are prepared to sue if the fare rises.
Federal law does allow paratransit providers to charge double the base fare, but the MOU between the City and the MTA requires that the Federal Transit Administration (FTA) approve such a change and only if there is demonstrated financial hardship for the provider.
Since the MTA is likely to recover a very small amount - about $15 million - in relationship to its $11.4 billion budget, it is unlikely that the FTA would approve the MTA's proposal. But the Mayor could eliminate that as a possibility if he took action.
"While it is unclear," Thompson said, "one likely reason the MTA wants this big Access-A-Ride fare hike is that it believes it would suppress demand. The program now costs $233 million annually, with costs almost doubling by 2012."
However, Thompson offered one solution to curtail costs: convert the taxi fleets so that they are accessible. A number of current paratransit riders would then be able to use vouchers for taxis instead, costing the MTA substantially less.
However, the City's Taxi and Limousine Commission has resisted a mandate and only 237 of the City's 13,087 yellow cabs are accessible.
"If the City were actually interested in reducing Access-A-Right demand in a fair way, it would mandate wheelchair-accessible taxis," Thompson said. "However, City Hall has dismissed this idea, even though such a system would make Access-A-Ride more economical and efficient while giving Access-A-Ride users more choice."
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 In Li Gang Ma v. Hong Guang Hu, Ma filed suit against Hu for breach of a partnership agreement and when Hu failed to appear on the scheduled trial date the Queens County Supreme Court entered a default judgment against him.
When that court refused to vacate the judgment, Hu appealed to the Appellate Division, Second Department, alleging he had a reasonable excuse for not appearing and a "meritorious defense" to Ma's claim.
Accordinging to the AD2, after Ma's suit was filed, the parties entered into a written agreement which supposedly provided for the case's end. While there was some difficulty translating the document from Chinese to English, and the parties disputed what they intended by the wording utilized, the AD2 thought the document provided "a reasonable excuse for [Hu's] default" and that it was consistent with "public policy" for the matter to be heard on its "merits."
Hu's up next? I don't know.
 To download a copy of the Appellate Division's decision, please use this link: Li Gang Ma v. Hong Guang Hu
 In Karo v. Paine, a real-estate deal faltered when the seller sold the property to a third party.
In March 2006, Rafael Karo entered into a contract to purchase George Paine's property. After they agreed upon the price of $400,000, Karo gave a $10,000 down payment. Four days before the transfer was to occur, Paine asked for more time and the closing was pushed back -- during which time the property was sold to someone else. When Karo learned of that news, he filed suit.
After the Kings County Supreme Court refused to decide in the buyer's favor -- because he hadn't shown he was "ready, willing, and able" to close -- an appeal ensued.
The Appellate Division, Second Department, thought that as a result of the seller's breach the "ready, willing, and able" standard didn't apply, and the case was sent back for a hearing on damages.
That must have numbed that Paine.
 To download a copy of the Appellate Division's decision, please use this link: Karo v. Paine
 In Matter of Port Auth. Police Benevolent Assn., Inc. v. Anglin, Barry McCarthy sued New York State and its Local Police and Fire Retirement System (NYSLPFRS) for the recalculation of his "final average salary."
McCarthy worked as a Port Authority Sergeant for thirty years and, after 9/11, McCarthy was required to work on vacation days but was paid at an enhanced rate as determined by a collective bargaining agreement. When McCarthy retired, the Deputy Comptroller opted to exclude McCarthy's paid vacation days from his "final average salary."
When his request for a salary recalculation was denied, McCarthy filed a special proceeding with the Albany County Supreme Court, which transferred the matter to the Appellate Division, Third Department.
The AD3 was of the view McCarthy's lost vacation days didn't amount to "overtime" -- payments made for work performed beyond regular hours -- but were compensation for "the loss of time when he would not have worked."
Justice Kavanagh -- a lone dissenter -- didn't agree with the distinction. Since McCarthy had no choice whether or not to work on what would have been his vacation days, his hours were "in excess of [his] regularly established hours of employment," and should have been part of the NYSLPFRS's calculation.
Since it granted leave just a few weeks ago, it's now going to be up to our state's highest court to figure this one out.
 To download a copy of the Appellate Division's decision, please use this link: Matter of Port Auth. Police Benevolent Assn., Inc. v, Anglin
 In Milone v. Milone, Angelo Milone made a motion to direct his ex-wife to comply with a settlement agreement's "visitation provisions."
Upon their divorce, Maria and Angelo Milone entered into an arrangement which provided that Maria -- who was awarded custody of their children -- wouldn't "do anything which estrange the children" from Angelo.
When the children turned 10 years of age, they no longer wanted to hang with their dad, and Angelo claimed Maria "poisoned" their minds.
After the Westchester County Supreme Court sided with Angelo, Maria appealed to the Appellate Division, Second Department, which found his request had been incorrectly granted because he failed to provide evidence that Maria was "estranging the children from him." In fact, the evidence revealed Maria actively encouraged the children to have a relationship with their father. And since she was complying with her obligations under the agreement, there was no basis to compel her to do so.
That wasn't estranging.
 To download a copy of the Appellate Division's decision, please use this link: Milone v. Milone
 In Sparozic v. Bovis Lend Lease LMB, Inc., Suzy Sparozic tripped and fell in a Grand Central Terminal passageway when she "caught her toe on a section of the floor raised about one inch above a sunken expansion joint cover."
Typically, a landlord is responsible for injuries when it retains control of the property in question or is contractually obligated to maintain and repair the premises. In this instance, America Premiere Underwriters, Inc. and New York & Harlem Railroad Company established as "out-of-possession" landlords they had no such duty. (As did several of the other defendants in the case, like GCT Venture, Inc., Bovis Lend Lease LMB, Inc, and Jones Lang LaSalle Incorporated.)
When the Putnam County Supreme Court granted the defendants' request, Sparozic appealed to the Appellate Division, Second Department, which affirmed the outcome.
Was that the last stop?
 To download a copy of the Appellate Division's decision, please use this link: Sparozic v. Bovis Lend Lease LMB, Inc.
In Kasten v. Golden, Avi Kasten entered into a contract to buy an abandoned home from Howard Golden. The agreement provided the property was being sold "as is" and the purchaser was required to undertake his own inspections before consummating the deal. An amendment further provided the house was being sold "without any claims, promises, or express or implied warranties regarding its condition." Of course, after purchasing the home, pipes burst and the basement was flooded.
When litigation ensued, the Nassau County Supreme Court granted Golden's request to dismiss the case. On appeal, the Appellate Division, Second Department, affirmed the dismissal.
Since he agreed to purchase the property "as is" -- with faulty plumbing system and all -- Kasten couldn't claim that the property hadn't been delivered as promised. Furthermore, he signed a contract amendment disclaiming reliance on any promises as to the home's condition and releasing Golden from all liability.
Think Kasten was flooded with emotion?
 To download a copy of the Appellate Division's decision, please use this link: Kasten v. Golden
 Noted attorneys, Joshua Stein and S. H. Compton, have co-authored an extremely informative article, entitled "Landlord's Checklist of Silent Lease Issues," which examines an array of provisions which are the subject of commercial lease negotiations.
The piece originally appeared in the Spring 2008 issue of the New York State Bar Association's N.Y. Real Property Law Journal.
To download a copy of the piece, please use this link: Landlord's Checklist of Silent Lease Issues
 In Lodhi v Stewart's Shops Corp., Ziaunnisa Lodhi sued Stewart's Shops Corp. after she was injured in one of the company's stores.
Although her attorney initially negotiated a $5,000 settlement, Lodhi declined to accept that deal. Some three years later, the lawyer sent Lodhi a letter terminating the attorney-client relationship and advising her to find other counsel.
Instead, on June 26, 2006, she met with another attorney at the same firm and signed an agreement to release Stewart's from liability in exchange for $5,000. Of course, Lodhi later had a change of heart and opted to end the attorney-client relationship and retracted the release. However, the law firm had already delivered the document to Stewart's and had received the $5,000 payment.
Lodhi then claimed her signature was fraudulently obtained since the attorney didn't "explain the release or its import or permit her sufficient time to read the document."
When the Ulster County Supreme Court granted Stewart's motion to dismiss the case, Lodhi appealed to the Appellate Division, Third Department, which also wasn't buying Lodhi's arguments.
The AD3 found that Lodhi was bound by the release unless she could show "duress, illegality, fraud or mutual mistake." Since Stewart's wasn't alleged to have committed any wrongdoing here, the agreement could not be attacked. Additionally, Lodhi's contention that the law firm lacked authority to enter into the settlement wasn't supported by the record.
Could you just hear the sigh of release?
To download a copy of the Appellate Division's decision, please use this link: Lodhi v Stewart's Shops Corp.
"What should landlords and tenants be thinking about in this depressed-market environment?"
It's a question we're asked virtually every day.
Our firm's transactional counsel, Robert C. Epstein, has some insightful and timely analysis -- which should be particularly useful for commercial tenants about to enter into new lease agreements or renewals.
 With the tightening of the credit markets and increasing economic concerns, some tenants appear to be postponing leasing decisions while awaiting the impact on the leasing market. Obviously, as the market softens, rents will drop, rent concessions will increase and work letters will improve. All of that is good news for tenants. On the other hand, a softening market will lead to other risks for tenants, and therefore will require tenants to shift their focus in negotiating leases.
Here's a list of some lease issues that will become more important to tenants if the market continues to soften.
1. Nondisturbance Protection. Almost all leases provide that the lease is subordinate to the lien of existing and future mortgages and ground leases. That means that if the mortgagee were to foreclose or the ground lease were to terminate, the mortgagee or ground lessor would have the right to terminate the existing leases and evict the tenants. While credit was readily available and building values were increasing, buildings and ground leases were being sold and refinanced over and over again, resulting in corresponding increases in the size of loan payments. Accordingly, unless market rents continue to rise enough to cover mortgage payments, the risk of mortgage and ground lease defaults will rise.
Due to the potential increase in the incidence of defaults, tenants should try to require their landlords to provide nondisturbance agreements from their mortgagees and ground lessors. In essence, nondisturbance agreements prohibit lenders and ground lessors from terminating leases and evicting tenants in the event of a default so long as the tenants continue to abide by the provisions of their leases. The lease remains in place between the tenant and the successor landlord. In the absence of nondisturbance protection, a tenant could find itself with a terminated lease after investing substantial sums in improving its space or negotiating a below-market rent. While it is unlikely that a performing tenant will be evicted in a softening market, it is better to avoid that risk altogether by obtaining a nondisturbance agreement. If a tenant is unable to obtain a nondisturbance agreement, it should at least request a representation from its landlord that it has not received a notice of default from its mortgagee or superior lessor; although this will not protect a tenant from a future such default, at least the tenant will know that it is not signing a lease with a landlord who may already be having problems with its lender or lessor.
2. Subleasing. Leases almost always provide that the landlord's approval is required before a tenant may sublet its premises or assign its lease. In order to prevent a tenant from circumventing such approval requirement, an assignment is typically defined to include the transfer of a majority of the interest in the tenant (for example, if the tenant were a limited liability company, a transfer of more than 50% of the interest therein would be deemed to be an assignment). There are typically a number of other limitations, such as prohibitions against subleasing to to other tenants or prospective tenants of the building or at rental rates below the rates then being offered by the landlord, that make it more difficult for a tenant to sublease or assign in a softening market. In the event of a business slowdown, a tenant may find itself with the need to reduce the size of its premises or restructure, including by recapitalizing, selling or merging. Consequently, a tenant expecting a slowdown should focus on softening the provisions in its lease that will make it more difficult to dispose of its premises. For example, at minimum the landlord should not be permitted to unreasonably withhold its approval to a sublease or assignment (or, in the provision addressing tenant alterations, to alterations that may be necessary in order to sublease or assign). The tenant should also be permitted to sublease its space at a rental lower than the rent it pays, even if below market, and to sublease or assign to other building tenants or prospective tenants so long as the landlord does not then have comparable space available. The use permitted by the tenant in the premises should be sufficiently broad to enable the tenant to sublease or assign to as many prospects as possible (for example, the use clause should permit office use as opposed to law firm use). The tenant should also be permitted to engage its own broker to assist it in its efforts to assign or sublease as opposed to using the landlord's leasing agent; the landlord's leasing agent may have a conflict of interest since it might seek to lease the landlord's space ahead of the tenant's. With respect to restructuring, the tenant should be permitted to merge or sell a majority interest so long as it maintains a minimum net worth. The net worth should ideally be pegged to the lease obligation, such as a net worth equal to some multiple of the annual rent. Most leases provide that the minimum net worth must be the greater of the tenant's net worth on the date of the lease or the date immediately preceding the sale or merger, but this might require a net worth that is much greater than is reasonably required to assure the availability of assets needed to pay the rent during the lease term.
3. Build-Out. Leases often provide that the landlord will furnish the tenant with funds for the tenant to use in improving their premises or that the landlord will carry out all or some of the work needed to improve the premises for the tenant's occupancy. If a tenant is concerned that the landlord might default in its obligations to provide such funds or perform such work due to the weakening economy, it needs to protect itself. With regard to the funding of the improvements, the tenant could require the landlord to place the funds in escrow upon lease signing to ensure their availability or require that the landlord's contractor furnish a labor and material payment bond or a performance bond. Another alternative would be for the tenant to reserve the right to complete the work if the landlord fails to do so and offset the cost of such completion against the rent.
4. Services. Most leases require the landlord to provide some services and utilities to the tenants, such as cleaning, common area maintenance and repair, heating and air-conditioning, electrical power and water, and elevator services. If the landlord fails to provide such services due to insufficient funds, the tenant might not be able to continue to occupy its premises. Accordingly, if a tenant is concerned that such a situation could arise and does not want to be limited to attempting to terminate the lease by suing for constructive eviction, it should try to negotiate for the right to provide its own such services and deduct the cost from rent. Obviously, in a multi-tenant building, it would be more difficult for a tenant to provide a service that is furnished by the landlord on a building-wide basis, such as air-conditioning. However, a tenant might be able to make arrangements that are sufficient in the short term to enable it to remain in occupancy pending resolution of the landlord's situation.
5. Termination Option. If a tenant is concerned that its business might slow due to a recession and therefore that it might be unable to pay the rent, it may want to try to negotiate for a termination option. Termination options are difficult to achieve, and when they are obtained they typically include a number of landlord protections. These include the obligation of the tenant to reimburse the landlord for its out of pocket expenses incurred in connection with the lease, such as the unamortized cost of the build-out, free rent and commissions. They also typically require that the tenant provide a few months of notice prior to the effectiveness of the termination in order to afford the landlord the opportunity to re-rent the space, as well as the payment of a few months of rent to provide the landlord with a cushion in case it has trouble re-leasing the premises. Termination options also normally may not be exercised until after a minimum portion of the lease term has expired. Such options may also be limited to a portion of the premises, as opposed to the entirety of the space, such as a particular floor or floors of a multi-tenant premises.
Obviously, if a tenant is a single purpose entity or is otherwise insolvent and there is no guaranty of the lease by a third party, the tenant will have a de facto termination option. In such event, it can just shut its doors and its exposure will be limited to its security deposit. Also, as discussed above, a tenant can still take advantage of its ability to sublease or assign in order to reduce its leasehold obligations if it is unable to negotiate for a termination right.
The softening of the economy will improve the leverage tenants have in negotiating their leases. This should result in lower rents and increased concessions. However, it will also require tenants to place a greater emphasis on issues that were of less concern when the economy was strengthening. A failure to focus on these issues could cause more harm than the higher rents and smaller concessions faced by tenants in a strengthening market.
 In Breen v. Law Offices of Bruce A. Barket, P.C., Eileen Breen alleged malpractice after allegedly losing a portion of her property in a divorce settlement.
Eileen and her ex-husband, George Breen, jointly owned two pieces of land in Connecticut, which had been "conveyed to them in a single deed."
The couple agreed George would purchase Eileen's interest in one parcel and the second would be sold and the proceeds shared.
George's attorney, Gerald Hecht, drew up a quitclaim deed which Eileen's attorney reviewed and Eileen signed. However, Eileen later learned that the property's description "resulted in the conveyance of both parcels to George Breen."
When the Nassau County Supreme Court refused to dismiss Breen's case against Hecht, an appeal to the Appellate Division, Second Department, ensued.
The AD2 didn't believe Hecht had participated in any "fraud, collusion, [or] malicious acts" against Eileen. He also couldn't be held liable for "professional negligence" because he wasn't in "privity" -- didn't have a relationship -- with her. Rather, Hecht had been hired by George and "never had any contact" with Eileen.
By George!
 To download a copy of the Appellate Division's decision, please use this link: Breen v. Law Offices of Bruce A. Barket, P.C
This past weekend, our colleague, Suzanne R. Albin, was quoted in a New York Times Real Estate section article.
Here's the piece in its entirety:
When It's Permissible to Break a Lease
By Jay Romano
My mother has lived in a rent-stabilized apartment for 25 years. She is 92 years old and may have to go into a home soon. This will mean breaking her lease. Will the family be responsible for the rest of the lease?
"No," said Suzanne R. Albin, a Manhattan real estate lawyer. New York's Real Property Law permits the early termination of a residential lease by someone 62 or older who is relocating to a family member's residence, an adult-care or residential health care facility, subsidized low-income housing, or less expensive senior-citizen housing. "Once that termination occurs, a tenant is released from further rent liability," Ms. Albin said.
She noted, however, that certain steps must be followed in order for this "release" to be triggered. First, the tenant must deliver to the building's owner or agent written notice of an intention to terminate the lease. That notice must be accompanied by proof of admission (or pending admission) to one of the above types of housing, and it is considered delivered five days after it is mailed. "Termination will be effective a month after the next rental payment is due," Ms. Albin said.
For example, if the notice were mailed on Dec. 5, it would be deemed received on Dec. 10. Assuming the next rental payment were due on Jan. 1, the termination would be effective on Feb. 1.
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To download a copy of the article, please use this link: When It's Permissible to Break a Lease
# # #
 In Smith v. Meridian Tech., Inc., David Smith sued his former employer, Meridian Technologies (Meridian) when the company interfered with his contract with another employer.
As part of his employment agreement, Smith had signed a "restrictive covenant" -- a promise that he wouldn't work for any of Meridian's competitors.
When Smith was later hired by Multidyne Electronics, Inc. (Multidyne), Meridian sent a letter to that company informing the company that since it was a "competitor," Smith was "unlawfully employed." (Smith lost his job a day later.)
When the Nassau County Supreme Court denied Meridian's request to dismiss Smith's case, the company appealed to the Appellate Division, Second Department.
Because there were questions as to whether Multidyne was Meridian's direct competitor and whether Smith was falsely accused of misappropriating trade secrets, the AD2 concluded the case needed to proceed to a formal hearing or trial. Interestingly, the appellate court didn't agree the parties' agreement was unenforceable.
Was the AD2 giving Meridian a little latitude?
 For a copy of the Appellate Division's decision, please use this link: Smith v. Meridian Tech., Inc.
 In Mirra v. Tastee Pattee, Salvatore Mirra started a holdover proceeding when his commercial tenant, Tastee Pattee, remained in its space after its month-to-month tenancy ended.
Tastee claimed that it paid $100,000 to Mirra in exchange for a written lease. However, Mirra and his witnesses countered that the money was repayment of a debt owed to the landlord under a "profit sharing" arrangement.
The Kings County Civil Court found Mirra's testimony "credible" and awarded him possession of the space. Notwithstanding a typo on the deed, Mirra proved he was the property's owner and the appropriate notices terminating the tenancy had been given.
On appeal, the Appellate Term, Second Department, concluded the $100,000 payment was not a defense to the holdover, particularly in the absence of any allegations or proof as to what the terms of that "future lease" were.
In other words, Tastee Pattee got cooked real good.
To download a copy of the Appellate Term's decision, please use this link: Mirra v. Tastee Pattee
 In 5576 Realty, LLC v. Bourdeau, 5576 Realty filed a nonpayment proceeding against its tenant, Chantal Bourdeau. When Bourdeau failed to show up for trial, the Kings County Civil Court awarded 5576 Realty possession of her apartment and a money judgment in the amount of $4,524.02.
Bourdeau later filed an order to show cause to vacate the judgment, alleging that the amount sought by her landlord was incorrect and that she was actually entitled to a credit due to a rent overcharge.
A few days later, the parties entered into an agreement which provided the possessory judgment would remain in place, and the eviction stayed for a month, to allow Bourdeau to pay the amount owed.
Bourdeau didn't make the payment and brought another order to show cause alleging 5576 wouldn't give her a lease which was necessary for her to get financial assistance. Although the Civil Court found Bourdeau had received a lease, the judgment was stayed for another 15 days to allow Bourdeau to get financial assistance and remit payment. When Bourdeau failed to meet that deadline, she brought another order to show cause, this time claiming she needed more time to get the money. Although that request was denied by the Civil Court, the Appellate Term, Second Department, granted relief -- based on CPLR 5704(b) -- and the Department of Social Services then paid most of Bourdeau's rent. But the Civil Court ultimately denied her request to vacate the stipulation and judgment because she was unable to pay her share of the rent.
On appeal, the Appellate Term, Second Department, found Bourdeau "repeatedly failed to abide by the terms of the stipulation and did not show an ability to pay her share of the rent, she failed to demonstrate good cause to vacate the warrant."
That Bordeau turned.
 To download a copy of the Appellate Term's decision, please use this link: 5576 Realty, LLC v. Bourdeau
 In Klein v. Antebi, Elliot Klein sued to recover a real-estate brokerage commission from Morris Antebi.
Klein was a licensed New York real-estate broker who entered into a confidentiality agreement and a commission agreement with Antebi concerning three parcels of land in Harrisburg, Pennsylvania.The latter document provided that upon closing, Antebi would be obligated to pay Klein a "brokerage commission of a certain percentage of the purchase price."
Klein drove with Antebi to Pennsylvania, introduced him to the seller of the properties, and viewed the properties with the buyer. Of course, once the deal closed, Antebi refused to pay the brokerage commission, citing a Pennsylvania law -- Real Estate Licensing and Registration Act -- which exempted him from having to pay the fee since Klein wasn't a licensed broker in that state.
Klein argued the law didn't apply because he hadn't supplied "any significant brokerage services" in that jurisdiction.
When the Kings County Supreme Court eventually dismissed the case, Klein appealed to the Appellate Division, Second Department, which affirmed. The AD2 thought the mere introduction of the parties fell within the law's purview and, without a Pennsylvanian license, Klein was precluded from recovering a fee.
We're sure that got no Penn State cheer.
 For a copy of the Appellate Division's decision, please use this link: Klein v. Antebi
 In Fleet Business Credit v. Costelloe, Fleet Business Credit sought to enforce a Michigan judgment entered against Costelloe, Inc., on default.
Costelloe alleged the Michigan court lacked in personam and subject matter jurisdiction. When motion practice ensued, the Civil Court dismissed the personal jurisdiction defense, but refused to strike the latter defense.
The Appellate Term, Second Department, held Fleet's motion to dismiss Costelloe's second affirmative defense was properly denied, as was the lendor's request for judgment. In the AT2's view, an "issue of fact" had been raised as to whether the lease agreement gave Michigan jurisdiction over the dispute. (Costelloe claimed the document hadn't been signed by a person with authority.)
Abbott!
 To download a copy of the Appellate Term's decision, please use this link: Fleet Business Credit v. Costelloe
 Rose Savino's husband entered into a agreement which provided that after his death Precision Testing & Balancing, Inc., would buy his capital stock in the company from his Estate's representative thirty days after that individual was appointed.
When her later died, Rose became the Estate's representative and, soon thereafter, sought payment from Precision for her husband's shares. But her request was denied because she supposedly failed to submit proof of her authority to act on the Estate's behalf.
When suit was filed, the Bronx County Supreme Court granted relief in Rose's favor, and declined to address Precision's "set-off" counterclaim. (Apparently, Rose's husband didn't maintain a life insurance policy which Precision claimed was to be used to fund the shares' redemption.)
On appeal, the Appellate Division, First Department, found Rose was obligated to provide adequate proof of her appointment but had failed to do so. Although she supplied some documents which showed letters testamentary issued to her, since appropriate evidence wasn't part of the appellate record her victory was reversed and she was directed to provide proof of her representative status and Precision was given 30 days thereafter to remit payment or continue its defense of the case.
The AD1 dismissed Precision's "setoff" counterclaim because the company couldn't establish it was entitled to relief based on the insurance policy's lapse. Apparently, the agreement didn't require the maintenance of the insurance as a condition of the stock's purchase.
How's that for Precision?
"'Cause I really want to know ...."
To download a copy of the Appellate Division's decision, please use this link: Savino v. Precision Testing & Balancing, Inc.
 In Sassi-Lehner v. Charlton Tenants Corp., Christina Sassi-Lehner wanted a court to declare her the holder of unsold shares in a cooperative corporation and that she could "assign, sell or transfer the shares without board approval.
Charlton Tenants Corp. owned a six-story residential apartment building. In 1982, when the cooperative was formed, the non-purchasing, rent-controlled tenants living in apartment 4C declined to purchase their unit and the shares attributable to the apartment took on "unsold" status and were retained by the sponsor. Three years later, Mark Greenbaum acquired the shares (as reflected in amendments to the cooperative's offering plan). He later defaulted on his mortgage, and the shares were sold by the Federal National Mortgage Association ("Fannie Mae") to Michael and Christina Sassi.
In 2001, when Michael died, the shares were transferred to his daughters, Christina Sassi-Lehner and Gabriella Sassi-Hill. However, after Greenbaum, none of the subsequent shareholders were identified in any amendments to the cooperative's offering plan. When the tenants of 4C stopped paying rent and surrendered possession, the Sassis sought to sell the unit, but Charlton Tenants Corp. wouldn't permit the sale unless the Sassi sisters complied with the co-op's rules governing such transfers
Because they were never officially designated "holders of unsold shares," the New York County Supreme Court concluded the ladies couldn't claim such status. On appeal, the duo contended that the offering plan wasn't controlling and the certificate of incorporation, the bylaws, and proprietary lease were of critical importance. They argued that, according to the lease, "the person owning the shares has all the rights of a holder of unsold shares until such time as he or she occupies the apartment or the shares are owned by a purchaser who occupies the apartment." Because the Sassis never lived in the unit, they claimed to be owners of "unsold shares."
Since who was a "holder of the unsold shares" was determined by the offering plan (and its amendments), and Greenbaum was the last person cited in those documents, the Appellate Division, First Department, found the sisters weren't exempt from complying with the co-op's procedures.
Now, wasn't that sassy?
 To download a copy of the Appellate Division's decision, please use this link: Sassi-Lehner v. Charlton Tenants Corp.
 In Pludeman v. Northern Leasing Sys., Inc., small business owners from the states of Missouri, Texas, Washington, and New York, sued Northern Leasing after realizing they had been tricked into signing lease agreements for credit card terminals and other business equipment.
Kevin Pludeman, and others, alleged Northern had presented them with what they thought was a single page contract resting on a clip board when, in actuality, it was concealing three other pages.
While the first page seemingly covered all the pertinent contract terms, the other three pages contained "a no-cancellation clause, and no warranties clause, absolute liability for insurance obligations, a late charge clause, a provisions for attorney's fees and New York as the chosen forum."
Pludeman acknowledged that the initial page noted "page 1 of 4," but countered that "microprint" deprived customers of the ability to knowingly consent to the transaction's terms.
After Northern moved to dismiss the case, the New York County Supreme Court found the complaint sufficiently stated a fraud claim against the sales representatives responsible for the alleged fraud. On appeal, the Appellate Division, First Department, affirmed.
When the case reached the New York State Court of Appeals, our state's highest court agreed that Pludeman and the other business owners offered enough details about the alleged scam to state a "fraud" claim. While a state law -- CPLR 3016(b) -- requires specificity in such cases, the Court noted that the standard should not be "so strictly interpreted" when there is a great risk that a viable cause of action may be lost.
Since many of the disputed facts were "peculiarly within the knowledge" of Northern, the governing pleading requirement was satisfied "when the facts [were] sufficient to permit a reasonable inference" of fraud. As this was a long-term, "nation-wide scheme," the Court of Appeals found such an inference was warranted here.
A lone dissenter -- Judge Smith -- thought the business owners didn't meet the law's specificity requirement as they failed to raise "allegations specific to individual defendants." Additionally, since the individual salespeople were not Northern employees, Smith believed that company's officers couldn't be "blamed for any trickery in which the salespeople engaged."
Were these business owners trying to back-out of a bad deal?
Judge Smith certainly thought so.
Gotta give them credit for trying.
To download a copy of the Court of Appeals' decision, please use this link: Pludeman v. Northern Leasing Sys., Inc.
 In Garcia v. Konkul, Jose Garcia sued Jakub Konkul for property damage and personal injuries suffered in a car accident.
Before the case was brought, Garcia entered into an agreement releasing Konkul of all liability in exchange for $1,377.40.
Garcia later claimed the agreement was unenforceable since he didn't speak English and didn't understand the release's nature and scope.
When the Queens County Civil Court granted Konkul's request to dismiss the case, Garcia appealed to the Appellate Term, Second Department, which didn't appreciate Garcia's arguments, particularly since the law presumes that the signor of an agreement is familiar with "its contents and ... assented to its terms."
Because he didn't make an independent effort to ascertain what the agreement meant, and there was no indication he was misled in any way, the AD2 allowed the dismissal to remain undisturbed.
Comprende?
 To download a copy of the Appellate Term's decision, please use this link: Garcia v. Konkul
 In Harry Casper Inc. v. Pines Associates, Harry Casper Inc. -- a limited partner of Pines Associates -- filed suit against Pines, Cornelius E. Sigety and Milton Koenigsberg alleging an option agreement to acquire certain real property was "the product of fraud."
When Koenigsberg and Sigety sought to change the case's location or venue to New York County pursuant to the agreement's "forum selection" clause, the Tompkins County Supreme Court denied their request and an appeal to the Appellate Division, Third Department, ensued.
Casper's conclusory allegation that Koenigsberg and Sigety committed fraud wasn't enough to invalidate the choice of venue provision. Such clauses are honored by courts unless a party can demonstrate the terms are "unreasonable and unjust or that the clause is invalid because of fraud or overreaching, such that a trial in the contractual forum would be so gravely difficult and inconvenient that the challenging party would, for all practical purposes, be deprived of his or her day in court."
Since that standard wasn't met in this case, the AD3 reversed the lower court's determination and sent the parties packing.
Boo!
 To download a copy of the Appellate Division's decision, please use this link: Harry Casper Inc. v. Pines Associates
 In 377 Broome St. Corp. v. McManamon, Kathleen McManamon appealed from an order of the New York County Civil Court which denied her request to stop an eviction which had been triggered by late rent payments.
The Appellate Term, First Department, found McManamon repeatedly breached the terms of a settlement which delineated the payment deadlines as "time is of the essence."
Since such court ordered agreements or stipulations are "strictly enforced," the AT1 refused to further delay or set aside the eviction.
Guess you could say the AT1 gave McManamon the broom.
 To download a copy of the Appellate Term's decision, please use this link: 377 Broome St. Corp. v. McManamon
 In Randall v. McGrath, Christine Randall sued to recover possession of a John Deere track loader from her neighbor, Austin McGrath.
McGrath claimed that prior to Randall's husband death, the decedent -- who suffered from Alzheimer's -- offered to give McGrath the machine if he could get it started. At the time, the equipment was sitting in a field in a state of disrepair. Once he was able to get it started, McGrath moved the track loader onto his property and made substantial repairs to the machine over the course of a year.
When Randall claimed her husband couldn't remember giving the track loader to McGrath, McGrath counterclaimed seeking to recoup his labor and other restoration costs together with "other unrelated work he had allegedly performed for [Randall's husband] throughout the years."
After the Rensselaer County Supreme Court granted Randall's request to dismiss the case, McGrath appealed to the Appellate Division, Third Department.
Because it was unclear whether Randall's husband intended to gift the track loader to McGrath and whether delivery of the gift was established even though "no keys, locks, accessory equipment, paperwork, or other proof of ownership of the track loader were provided to [McGrath]," the AD3 reversed and sent the back for a formal hearing or trial.
Clearly, nothing comes between a man and his Deere!
 To download a copy of the Appellate Division's decision, please use this link: Randall v. McGrath
 In Koeppel v. 895 West End Avenue Coop. Corp, John Koeppel sued 895 West End Avenue Coop (895 WEA) to recover damages for alleged apartment related damage and efects.
After the New York County Small Claims Court awarded Koeppel $5,000, 895 WEA appealed to the Appellate Term, First Department, which reversed the outcome.
Not only did Koeppel agree to accept the apartment "as is," he "specifically disclaimed his reliance on any promises or warranties concerning the [apartment's] condition."
The AT1 also found Koeppel's assertion that the apartment's defects were hidden or "latent" to be unpersuasive, since he failed to present "any professional opinion or ... competent evidence" as to what caused a wall within his unit to collapse some 16 months after the apartment had been purchased.
The AT1 certainly didn't have any latent disdain for this case.
 To download a copy of the Appellate Term's decision, please use this link: Koeppel v. 895 West End Avenue Coop. Corp
 In P.A. Building Co. v. City of New York, the City rented space in P.A. Building Company's Manhattan building from 1978 and 1994.
The parties' lease defined "operating expenses" as any "costs charged to P.A. 'for services, materials and supplies furnished in connection with the operation, repair and maintenance of ... the Building.'"
When a new law was passed, and P.A. charged the City for its "asbestos abatement project" as an operating expense, a multi-year battle ensued.
After the New York County Supreme Court deemed the pass-along improper, the Appellate Division, First Department, found the parties' lease "partially shift[ed] responsibility for asbestos abatement from the landlord to the tenant." When the dispute reached our state's highest court, the Court of Appeals sided with the tenant.
If a lease doesn't "expressly shift" a burden -- such as asbestos abatement -- to a tenant, it remains a landlord's ultimate responsibility to provide for the "safe maintenance of a building and its facilities."
While the operating expense clause was meant to shift some responsibility from P.A. to the City, when this lease was signed, asbestos abatement wasn't "generally recognized" as an operating expense and hadn't been contemplated by the parties.
A lone dissenter -- Justice Smith -- was of the opinion escalation clauses "are supposed to protect against unforeseen developments that make running a building more expensive." As far as Smith was concerned, it didn't matter whether asbestos abatement had been anticipated since it was indistinguishable from "normal" operating expenses such as window guard installations, or paying higher wages.
How do you operate with a decision like that?
 To download a copy of the Court of Appeals's decision, please use this link: P.A. Building Co. v. City of New York
 In Kaufman v. Torkan, Ivan Kaufman supposedly agreed to give Kouros Torkan 90% of the financing needed to buy a disparate commercial property in Chelsea, in return for a first mortgage and Torkan's promise to withdraw his bid on a waterfront parcel. But, a year later, when the Chelsea deal didn't materialize, Torkan and his wife acquired the waterfront property.
When Kaufman later sued Torkan alleging fraud and breach of a "joint venture agreement," the Nassau County Supreme Court denied Torkan's dismissal request.
On appeal, the Appellate Division, Second Department, found Kaufman's "joint venture" claim unconvincing, because there was no provision in their alleged agreement for the sharing of profits and losses. Kaufman and Torkan were more like lender and borrower, rather than joint venturers, with Kaufman lacking any control over the waterfront property's development.
Kaufman's fraud claim also failed because it related to a breach of contract and wasn't "collateral or extraneous" to the parties' supposed agreement.
Will Kaufman profit from this loss?
 To download a copy of the Appellate Division's decision, please use this link: Kaufman v. Torkan
 In Remax Shores, Inc v. Wilson, a Remax real-estate agent claimed she informed Richard and Zenith Wilson that a broker's fee of a month's rent would be due if they rented a house shown to them. The realtor also claimed Richard informed her that he had no objection paying the commission. Yet, the couple later claimed they weren't told about the charge until after they leased the home.
When the Suffolk County District Court considered the evidence and awarded Remax $1,400, the Wilsons appealed to the Appellate Term, Second Department, which affirmed.
The AT2 noted it will typically give "deference" to a court's credibility findings particularly those made in small claims cases "given the limited standard of review."
How incredible was all of that?
To download a copy of the Appellate Term's decision, please use this link: Remax Shores, Inc v. Wilson
 In Moughrabie v. Citibank, Michael Moughrabie sued to recover $6,200 that his bank removed from his account.
Moughrabie deposited a cashier's check in the amount of $19,000, and withdrew the $6,200 after he was supposedly told by a teller that the check had cleared and the funds were available for use. However, Citibank claimed it later called and wrote Moughrabie the day the check was determined to be counterfeit.
After the Kings County Civil Court denied Citibank's request to dismiss the case, an appeal to the Appellate Term, Second Department, followed.
The AT2 reversed, noting that "[u]ntil the time that final settlement of the check was made, the risk of non-collection remained with [Moughrabie] and any settlement made thereon by [Citibank] was provisional only." Since his conversation with the teller took place before a "final settlement," Moughrabie couldn't reasonably rely on any representation made by the institution's employees.
You can take that to the bank!
 To download a copy of the Appellate Term's decision, please use this link: Moughrabie v. Citibank
 In Matter of Interboro Ins. Co. v. Coronel, Interboro Insurance Company petitioned to permanently stay arbitration of a number of uninsured motorist claims.
In 2001, Patricia Coronel was driving a vehicle owned by Manuel Coronel when she and three relatives were involved in an accident on the Grand Central Parkway with a vehicle operated by Katherine Langadakis. Both Coronel and Langadakis reported to police officers that Langadakis was forced to stop short after being cut off by another vehicle which was "allegedly uninsured." Unable to stop in time, Coronel rear-ended Langadakis. (Neither were hit by the "allegedly uninsured" driver.)
When Interboro Insurance's "predecessor-in-interest" (Interboro Mutual Indemnity Insurance Company) was served with a demand for arbitration, that company was undergoing "rehabilitation" and there was a 2005 court order issued by the Nassau County Supreme Court restraining "all persons ... from commencing or prosecuting any actions, lawsuits, or proceedings against Interboro."
In February 2007, when the rehabilitation ended and the American Arbitration Association (AAA) sent a notice advising the company of a pre-hearing telephone conference, Interboro sought injunctive relief.
After the Queens County Supreme Court denied Interboro's request and dismissed the case, Interboro appealed to the Appellate Division, Second Department.
The AD2 noted that an insurer who doesn't seek a stay within 20 days after being served with an arbitration notice is unable to object to that proceedings' continuation. In this instance, Interboro complied with that rule because it had been subject to that 2005 Nassau County order and sought relief within 20 days of the AAA's February 2007 notice.
The AD2 also concluded the lower court should have granted Interboro's request to stay arbitration because there was no proof the uninsured driver made "physical contact" with either of the two vehicles.
We're staying with that. 
To download a copy of the Appellate Division's decision, please use this link: Matter of Interboro Ins. Co. v. Coronel
In Selinger Enterprises, Inc. v. Cassuto, Selinger Enterprises sought to recover a broker's commission from David Cassuto.
According to an exclusive broker's agreement Cassuto reached on behalf of Premium Capital Funding (PCF), Selinger was to receive a broker's commission if PCF leased space from a landlord Selinger introduced. A few days later, Selinger showed Cassuto a rental space and, several months later, while Cassuto was an employed with Franklin First Financial (FFF), the latter company ending up leasing the space.
FFF and Cassuto got sued when neither of them paid Selinger a commission. After the Nassau County Supreme Court denied the defendants' motion to dismiss the case, an appeal to the Appellate Division, Second Department, followed.
The AD2 found Selinger couldn't recover on a breach of contract theory because Cassuto signed the brokerage agreement on PCF's behalf (rather than in his personal capacity). The same was true for FFF, because that company didn't execute the underlying document. However, Selinger was permitted to maintain a fraud claim against the two defendants because the pleadings adequately alleged that Cassuto was acting under FFF's direction when he signed the brokerage agreement and that it was the defendants' intent to avoid paying Selinger a brokerage fee.
That got FFF'd up!
To download a copy of the Appellate Division's decision, please use this link: Selinger Enterprises, Inc. v. Cassuto
 In New York City Economic Dev. Corp. v. Harborside Mini Storage, Inc., New York City sought possession of commercial space occupied by Harborside Mini Storage.
In 1989, the City of New York leased out the Bush Terminal Industrial Complex to Harborside Management's predecessor, for a 10-year term ending February of 1999.
In June of 1999, four months after its lease expired, Management entered into a sublease with Mini Storage's predecessor, U.S. Movers, which rented out a building within the Complex. Although Management negotiated a renewal with the City, and sued to declare that renewal effective, Management ultimately surrendered its interest to the City, which then leased the Complex to the New York City Economic Development Corporation (NYCEDC). Mini Storage thereafter remained in possession and paid rent directly to NYCEDC.
NYCEDC later filed an eviction case against Mini Storage alleging Management was only a "month-to-month tenant" when the sublease was executed. Mini Storage argued that its sublease had been "validated" by NYCEDC's acceptance of Mini Storage's rent payments. When the Kings County Civil Court found against Mini Storage, an appeal to the Appellate Term, Second Department, followed.
Since the City never executed a renewal lease, the AT2 concluded Management was nothing more than a month-to-month tenant and, as a subtenant, Mini Storage had no greater rights than those held by Management.
NYCEDC didn't "validate" the sublease by the mere acceptance of sublease payments, particularly in view of the parties' procedural history and interaction -- such as a Civil Court nonpayment stipulation which characterized Mini as a "monthly tenant," notices sent to Mini informing Mini that payments were accepted as "use and occupancy" rather than "rent," together with the fact NYCEDC neither sought nor collected a rent increase, as provided by the "sublease."
What a Mini mess!
 To download a copy of the Appellate Term's decision, please use this link: New York City Economic Dev. Corp. v. Harborside Mini Storage, Inc.
 In Bouchard v. Champlain Enterprises, Inc., Gilles Bouchard and Champlain Enterprises were general partners in a venture to construct and operate a Lake Champlain marina and boat storage facility.
Enterprises contributed an initial $500,000, but each was obligated to pay one half of all capital improvements.
While Enterprises continued to remit payments, Bouchard refused to make any contributions. When the partnership later defaulted on its mortgage, Enterprises purchased the marina at a foreclosure sale and excluded Bouchard from the marina's operations.
After suit was filed, the Clinton County Supreme Court found Bouchard breached the partnership agreement and owed Enterprises $1,144,319.
On appeal, the Appellate Division, Third Department discredited Bouchard's argument he never consented to marina expenditures -- such as a pool, a gazebo, tennis courts, and boat house -- since his construction company built the boat house and his signature was required for the payment of those improvements.
Will these parties be sailing to the Court of Appeals?
 To download a copy of the Appellate Division's decision, please use this link: Bouchard v. Champlain Enterprises, Inc.
 In Duane Reade, Inc. v. Cardtronics, LP, Duane Reade sued Cardtronics for breach of an ATM-placement agreement.
In 1999, American Express Travel Related Services Company (Amexco) entered into a contract to place Amexco ATMs in Duane Reade stores. In 2003, Amexco assigned its rights under the agreement to Cardtronics, and the parties amended the contract shortly thereafter to expand the number of Duane Reade locations that would be equipped with ATMs.
The amendment provided the ATMs could be branded with a bank's name and trademark, but would continue to be operated by Cardtronics. The bank's customers would be able to use the ATM without any surcharge whereas, previously, all cardholders paid a transaction fee.
To compensate for the lost revenue, the agreement provided Cardtronics would look at "the number of surcharged transactions conducted by said bank's customers during the immediately preceding month at all of the ATMs covered by such arrangement ... and thereafter through the term of this Agreement on a monthly basis [would] credit [Duane Reade] with the full amount of the Branding Surcharge Transactions."
In 2005, Cardtronics and Chase entered into a branding agreement, and later that year, Duane Reade claimed the payments it received were incorrect, because the agreement required a monthly transaction-based calculation credit. Cardtronics alleged the credit was limited to the number of Chase transactions that occurred the month prior to the branding agreement's effective date.
When the New York County Supreme Court agreed with Cardtronics's interpretation of the contract and dismissed Duane Reade's breach of contract claim, an appeal to the Appellate Division, First Department, followed.
Because it viewed the document as "ambiguous," and questioned the "logic" of Cardtronics' position, the AD1 reversed the lower court's determination and sent the matter back for a formal hearing or trial.
The AD1 branded that one real good.
 To download a copy of the Appellate Division's decision, please use this link: Duane Reade, Inc. v. Cardtronics, LP
 In Matter of Sanders v. Slater, Kristian Sanders, Daphne Slater, and Frederick Burdick each sought to modify an agreement which granted them joint legal custody of a four-year-old girl and gave "physical placement" to Slater -- the child's grandmother.
Burdick -- the father -- had "difficulty managing his daily life and the lives of his children." He had no phone, no "consistent" means of transportation, wasn't steadily employed, and lived in a two-bedroom apartment with his wife and their two children. (Interestingly, a "recurring lice problem" wasn't abated until the child stopped visiting her dad.)
By contrast, Sanders -- the girl's mother -- was employed, addressed her daughter's medical needs and her own "psychological condition," improved her "living situation" and demonstrated appropriate parenting skills.
After the Tompkins County Family Court awarded Sanders sole legal custody (as long as she lived with Slater) and only gave Burdick visitation rights, he appealed to the Appellate Division, Third Department.
Based on the evidence presented, "and giving due deference to Family Court," the AD3 was of the opinion that the custody arrangement's modification had a "sound and substantial" basis.
What will they do for an encore?
 To download a copy of the Appellate Division's decision, please use this link: Matter of Sanders v. Slater
 In Lafleur v. MLB Industries Inc., Roderick Lafleur -- an employee of Alltek Energy Systems (Alltek) -- was injured while renovating a large exhaust hood in a grocery store.
Hannaford Bros., Inc. contracted with MLB Industries Inc. (MLB) to do the work, which then subcontracted the project out to Alltek.
While an indemnification agreement between MLB and Alltek existed when an exhaust hood was originally installed, that agreement wasn't renewed until after Lafleur was injured installing the second hood.
Since New York's Workers Compensation Law requires indemnity agreements be in place before an accident occurs, the Rensselaer County Supreme Court granted Alltek's request to dismiss the case.
On appeal, the Appellate Division, Third Department, affirmed. Unless the parties specifically provide to the contrary, indemnification contracts aren't retroactive.
Don't know about you, but we're exhausted.
 To download a copy of the Appellate Division's decision, please use this link: Lafleur v. MLB Industries Inc.
 In Friedman v. Eisner, landlords David and Rachel Friedman sued Ben Eisner based on his failure to pay seven months' rent.
While the parties' lease cited a monthly rate of $1,200, David testified he had negotiated the sum of $1,240 with Eisner's brother. And although court papers reflected that he was suing for $1,250 per month, David insisted that latter sum was a typographical error. (Interestingly, Eisner claimed he wasn't a party to any agreement reached with his brother and, inexplicably, his brother wasn't called to testify at trial.)
Despite all those inconsistencies, the Kings County Civil Court awarded the Friedmans seven months' rent at the rate of $1,240 per month.
On appeal, the Appellate Term, Second Department, modified the outcome. While it agreed the Friedmans had sufficiently established that seven months' rent was due, and the typographical error was "de minimis," the Friedmans were unable to prove the existence of an agreement which bound the tenant to a higher rate. As a result, the amount owed for the period was reduced to $1,200 per month (less $400 for conditions which justified a rent reduction).
Oh, brothers!
 To download a copy of the Appellate Term's decision, please use this link: Friedman v. Eisner
 In Trakis v. Manhattanville Coll., Louis Trakis sued Manhattanville College after he was fired for "breach of employment contract, civil rights violations, and defamation."
Trakis taught Art at Manhattanville College as an "at will" employee who held the title of "professor emeritus." In 2002, Trakis recommended a colleague be denied tenure because she was "lacking in her performance as a teacher, in research, and in her service to the college."
When that teacher asked for reconsideration, she alleged Trakis had made "sexist and racist comments." An investigation was conducted and the College concluded there had been misconduct and relieved Trakis of his duties.
After the Kings County Supreme Court only granted the College's request to dismiss the defamation component of the case (leaving "breach of an employment contract" and "civil rights violations" in place), the school appealed to the Appellate Division, Second Department, which threw the whole thing out.
Because Trakis was an "at will" employee, he could be discharged for any or no reason. And since the AD2 could discern no other irregularity or misconduct on the school's part, it believed Trakis's suit warranted dismissal in its entirety.
We ain't tracking that one any further.
 For a copy of the Appellate Division's decision, please use this link: Trakis v. Manhattanville Coll.
 In Matter of Yitzhak "James" Pastreich v. New York State Div. of Hous. & Community Renewal, Pastreich sued his landlord to keep a "preferential rent" in place.
In 1991, Pastreich and his landlord entered into a lease which acknowledged that even though the monthly rent was $5,747.52, Pastreich only needed to pay $3,000, provided he accepted the apartment in "as is" condition. (The parties renewed this lease five more times, for two years each.)
In 2004, when the landlord refused to allow Pastreich to pay the reduced rent, the tenant filed a "rent overcharge complaint" with the New York State Division of Housing and Community Renewal (DHCR). And, interestingly, the DHCR denied the tenant's request as time-barred.
On review -- when a case was filed (pursuant to CPLR Article 78) -- the New York County Supreme Court agreed. But, on appeal, the Appellate Division, First Department, reversed and found DHCR should have conducted a hearing.
According to the AD1, since each subsequent renewal was based on the original 1991 "preferential rent," the underlying rate wasn't barred from review, particularly in view of the uncertainty as to that reduction's duration.
For some reason, we're thinking that's not the result this landlord would have preferred.
 To download a copy of the Appellate Division's decision, please use this link: Matter of Yitzhak "James" Pastreich v. New York State Div. of Hous. & Community Renewal
 In Baccash v. Sayegh, Iman Baccash owned "Bridal Couture" a bridal gown boutique, and decided to purchase "Peggy Peters," a nearby bridal shop, after its owner died.
Instead of structuring the deal as an asset purchase, Iman's attorney, Andrew Sayegh, negotiated a stock purchase, which obligated Baccash to "assume [Peggy Peter's] trade debt and a bank loan guaranteed by the prior owner."
Baccash claimed her lawyer committed malpractice by failing to advise her of the deal's terms and by defaulting in a lawsuit creditors had started against the two companies.
The Nassau County Supreme Court found Sayegh hadn't exercised the "ordinary reasonable skill and knowledge" an attorney in his position should have and awarded Baccash $53,000.
On appeal, the Appellate Division, Second Department, found Baccash "failed to prove that she suffered any direct damages as a consequence of [her attorney's] alleged acts of legal malpractice."
Since Baccash wasn't personally affected by Sayegh's actions -- her corporate entity was -- and the company had a "separate legal existence," Baccash couldn't prove the entity was her "alter ego" and that she (personally) sustained any damage as a result of the purported malpractice, the AD2 concluded that case should be dismissed.
Did the AD2 leave Baccash at the altar?
 To download a copy of the Appellate Division's decision, please use this link: Baccash v. Sayegh
Congratulations to our partner, Glenn H. Spiegel, who recently responded to a question posed by a New York Times reader. Here's the piece in its entirety:
September 12, 2008, 2:59 pm
After Subletting Apartment, Is Holder of Lease Still Liable?
By Jay Romano
My wife recently sublet her market-rate apartment on the Upper West Side to two people. The subtenants, along with a third person, did not move out when my wife's lease expired on July 31, but asked if they could sign a renewal lease. The management company has stated that everyone has to be out of the apartment or the landlord will take legal action. Is my wife liable for anything relating to the subletters after her lease expired?
"In free-market situations, when a lease expires, a tenant on the lease is typically expected to surrender the space free and clear of any occupants and personal belongings," said Glenn H. Spiegel, a Manhattan real estate lawyer. So, Mr. Spiegel said, the wife, as the named tenant on the lease, would be liable for the fair market "rent" or "use and occupancy" that comes due until the landlord can recover possession of the apartment.
"If an eviction proceeding is commenced, the tenant on the lease may also be responsible for other charges including, but not limited to, the landlord's reasonable attorneys' fees," he said. "The tenant may also be liable for any apartment repair costs -- other than for ordinary wear and tear -- and for cleaning, locksmith, movers and other eviction related expenses."
Mr. Spiegel said that to determine the extent of the tenant's liability, she should review the provisions of the lease and any sublease with a lawyer.
* * *
To download the actual piece, please use this link: After Subletting Apartment, Is Holder of Lease Still Liable?
 In Hoft v. Frenkel, Joanne Hoft sued for breach of contract after Baila Frenkel cancelled an agreement to purchase Hoft's home. (Hoft believed she was entitled to keep the $54,500 down payment.)
The sale had been conditioned upon Baila's ability to secure a mortgage commitment within 30 days. Although her mortgage application was "provisionally" approved, when it was later denied, Bailia's attorney informed Hoft the buyer wanted to cancel the deal according to the "mortgage contingency clause."
After the Rockland County Supreme Court granted Baila's request for relief in her favor, Hoft appealed to the Appellate Division, Second Department.
Baila established that she made a good-faith effort to obtain financing and was denied because she failed to meet certain qualifying criteria. According to the AD2, that entitled her to the lawsuit's dismissal and return of her contract deposit.
The AD2 certainly bailed Baila out of that one.
 To download a copy of the Appellate Division's decision, please use this link: Hoft v. Frenkel
 In Master Mech. Corp. v Macaluso, Master Mechanical Corp. (MMC) hired James Macaluso to secure bids for "heating, ventilating, and air conditioning (HVAC) work" and entered into a non-disclosure contract wherein Macaluso agreed not disclose certain "trade secrets" acquired over the course of his employment. He was also prohibited from engaging in any HVAC and/or plumbing business with any of MMC's customers for up to two years following termination.
When he later formed his own company and left MMC, his former employer sought a "preliminary injunction" from the Suffolk County Supreme Court stopping Macaluso from disclosing confidential information and soliciting business from MMC's clients.
After the Suffolk County Supreme Court denied MMC's request, an appeal to the Appellate Division, Second Department, followed.
By the time the appeal was heard, part of MMC's case was found to be "academic," since two years had elapsed since Macaluso's departure and he was thus free to solicit clients. As for the injunction preventing the disclosure of confidential information, MMC was unable to establish two essential elements upon which such equitable remedies are predicated -- that it could "succeed on the merits" and that it would suffer "irreparable harm." Therefore, the denial of injunctive relief was allowed to remain undisturbed.
How masterly mechanical was that?
 To download a copy of the Appellate Division's decision, please use this link: Master Mech. Corp. v Macaluso
 In Hearst v. Hearst, John Randolph Hearst, Jr. fought to protect his family fortune and inheritance from his wife, Barbara Hearst, after she filed for divorce.
John and Barbara were married in 1990, the year after John suffered a stroke. When Barbara filed for divorce in 2004, John allegedly "discovered that Barbara, with the aid of their attorney [Leonard Ackerman] ... fraudulently deprived him of title and use of more than $20 million in real property and other investments."
Because of John's poor health, he entrusted Barbara with the day-to-day financial affairs and was often "induced to execute" documents. Eventually Barbara was "able to transfer assets controlled by [John] to a joint back account and then to several accounts solely controlled by her." At the time of the divorce, Barbara's accounts reflected $8 million and another $10 million in real estate owned by John prior to their marriage -- effectively disinheriting John's daughter and grandchildren.
After John filed suit against Barbara and attorney Ackerman for fraud, breach of fiduciary duty, conversion, and legal malpractice, the Suffolk County Supreme Court dismissed the case.
On appeal, the Appellate Division, Second Department, noted that to establish undue influence, "there must be evidence that [Barbara's] influence amounted to a moral coercion, which restrained independent action and destroyed free agency." The AD2 felt that there were unresolved questions as to whether "[John] and Barbara were in a confidential relationship and whether the various executed documents and transfers of property were procured through undue influence," resulting from John's "severely weakened condition [which] left him housebound." The AD2 also reinstated John's claim for legal malpractice against Ackerman, finding that if the lawyer represented both Hearsts, that was a "conflict of interest."
Who'll be the king of that castle?
To download a copy of the Appellate Division's decision, please use this link: Hearst v. Hearst
 In 936 Second Ave. L.P. v. Second Corporate Dev. Co., Inc., Second Corporate Development Co. (Second) leased three adjoining buildings -- with 22 rent-regulated apartments and four retail stores -- to 936 Second Avenue by way of a 20-year net lease. The parties' agreement provided that if 936 exercised a renewal option, "the annual rent would be seven percent of the value of the [leased] premises as of the date of commencement of each successive 10-year period."
The document provided that if the parties couldn't agree on the property's value, they could each seek their own appraisal.
When a dispute arose, Second's appraiser valued the property at $7.1 million, 936's appraiser came back with $3.43 million -- with the latter expert having "considered the effect of the net lease on the value of the premises."
936 later filed suit asking a court to declare that the net lease and all its terms had to be considered when calculating the property's value. When the New York County Supreme Court disagreed with 936's position, the company appealed to the Appellate Division, First Department, which affirmed.
On appeal to our state's highest court, the New York State Court of Appeals determined "valuations of land must take into consideration all encumbrances, including restrictions as to its use, unless there is a clear provision to the contrary." Since it impeded the property's "highest and best use," the net lease couldn't be disregarded. ["If the parties to a lease desire to exclude that encumbrance in valuing the property, they need only include language to that effect in their agreement. Indeed, courts have routinely enforced such provisions."]
We'll second that!
 To download a copy of the Court of Appeals' decision, please use this link: 936 Second Ave. L.P. v. Second Corporate Dev. Co., Inc.
 In Arthur Glick Leasing, Inc. v. William J. Petzold, Inc., after Glick Leasing acquired a 52-foot yacht -- manufactured by Ocean Yachts, Inc. -- from William J. Petzold, Glick decided to upgrade to a twin diesel Caterpillar engine.
After Glick began having problems with the boat's acceleration and temperature controls, suit was filed against Petzold, Ocean Yachts, and Caterpillar alleging misrepresentation, breach of contract, negligence, breach of implied and express warranties, and violation of the Magnuson-Moss Warranty Act (MMWA) -- a federal law which governs warranties on consumer products.
The Sullivan County Supreme Court dismissed everything but those claims made against Caterpillar for breach of implied and express warranties and MMWA violations and, after trial, a jury awarded Glick $130,400 in damages.
On appeal, the Appellate Division, Third Department, vacated the award and dismissed Glick's case in its entirety.
As to the express warranties, Caterpillar merely promised that their engines would be "free from defects in material or workmanship." It was Ocean Yachts who advertised that Caterpillar's engines delivered "exceptional power with excellent acceleration response."
Since Glick's complaints about the engines were "performance-based," and had nothing to do with technical defects, Caterpillar hadn't breached any express warranties. Further, there was no breach of "implied warranties" because Glick and Caterpillar weren't in "privity of contract" -- meaning that Glick was a "remote purchaser" of the upgraded engine since it was purchased through Ocean Yachts. Finally, since privity of contract was a necessary element for a MMWA violation, that claim also couldn't survive.
In other words, Glick's case got sunk.
 To download a copy of the Appellate Division's decision, please use this link: Arthur Glick Leasing, Inc. v. William J. Petzold, Inc.
 In Pizzo v. Goor, Janet Pizzo sued Rabbi Joel Goor on an agreement which provided Pizzo would be paid a sum of money upon the termination of the couple's "cohabitation relationship" which consisted of "companionship (both platonic and sexual)."
When the Bronx County Supreme Court granted the Rabbi's motion to dismiss the case, Pizzo appealed to the Appellate Division, First Department, which found the agreement unenforceable.
And, since her fraud, unjust enrichment, constructive trust, and intentional infliction of emotional distress claims all arose from that questionable "deal," they also couldn't survive.
We're just wondering who got the benefit of that bargain?
 Anyone wanna take a slice?
To download a copy of the Appellate Division's decision, please use the following link: Pizzo v. Goor
 In Leiderman v. Leiderman, Susan Leiderman wasn't pleased when the Nassau County Supreme Court denied her request for an award of attorneys' fees against her ex-husband, Jeffrey, who defaulted on an agreement reached when they divorced.
The terms provided that if either side breached, the non-defaulting party could ask the court to award reasonable attorneys' fees.
When the Nassau County Supreme Court denied her request, Susan appealed to the Appellate Division, Second Department, which found since Susan was "successful in obtaining a settlement" of a disputed term, Jeffrey was required to pay her fees. But because he hadn't been given the opportunity to oppose his former spouse's application, the case was sent back for a determination as to the "reasonableness" of the charges incurred.
A reasonable outcome, no?
 To download a copy of the Appellate Division's decision, please use this link: Leiderman v. Leiderman
 In Weadick v. Herlihy, Pamela Weadick sued attorney Carol Anne Herlihy claiming a constructive trust -- an ownership right to an interest in property Herlihy had acquired.
Herlihy had discussed an opportunity to purchase a Tribeca building with Weadick and David Tullock. However, the latter two opted to go with another partner and bid separately on the structure. Herlihy still managed to acquire a 50% interest while Weadick and her partners secured the remaining 50% interest from another seller.
Weadick later claimed that Herlihy betrayed a "fiduciary duty" by secretly compelling the seller to exclude Weadick and Tullock from the sale, and by raising funds and bidding on the building on her own.
Interestingly, tape-recorded conversations revealed that Weadick and Tullock were the ones who had acted inappropriately. The recordings disclosed that the duo had approached the seller about excluding Herlihy and had recruited another partner before they parted ways with her.
While the New York County Supreme Court originally denied Herlihy's request to dismiss the case, it later granted her relief based on this "newly discovered evidence" and also awarded her "costs and sanctions." On appeal, the Appellate Division, First Department, affirmed.
The AD1 held that Herlihy "upheld her fiduciary duty," "did not undertake to divert the opportunity to herself prior to termination" and "did not abandon plaintiffs." Furthermore, the AD1 saw no basis to disturb the lower court's finding that Herlihy was entitled to "costs and sanctions."
By Decision and Order dated April 18, 2008, the New York County Supreme Court assessed sanctions in the amount of $3,000.00 and awarded Herlihy reasonable attorneys' fees in the amount of $52,158.60.
You go, Carol Anne!
To download a copy of the Appellate Division's decision, please use this link: Weadick v. Herlihy
* * *
To download a copy of Justice Kapnick's order granting Herlihy fees, please use this link: Decision and Order dated April 18, 2008
To download a copy of JHO Beverly S. Cohen's recommendations (with respect to fees and sanctions), please use this link: Referee Report with Recommendations
To download a copy the underlying Supreme Court order affirmed by the Appellate Division, please use this link: Decision and Order dated January 2, 2007
 In Matter of Johna M.S. v. Russell E.S., Johna and Russell entered into a separation agreement wherein Russell agreed to pay Johna $100 per week in spousal maintenance, and $250 per week in child support, and, Johna could later seek additional maintenance by addressing it with Russell or asking the court to modify the arrangement. Any application made by Johna was to be treated as a new or "de novo" request -- because the agreement didn't consider Johna's future needs or Russell's future earnings.
When Johna later filed for an increase, the Otsego County Family Court denied the request citing the "lack of jurisdiction," and both the Appellate Division, Third Department, and, the New York State Court of Appeals, agreed.
According to our state's highest court, the Family Court lacked the power to alter or rescind a valid separation agreement, unless the spouse was "likely to become in need of public assistance or care." Finding the statutory exception inapplicable here, the parties' agreement didn't give the Family Court the necessary power. The court further noted that Johna wasn't really bringing a "de novo" application for maintenance, but was asking for the agreement's "modification," which could only be achieved by way of a Supreme Court action for separation or divorce.
How divorcing is that?
To download a copy of the Court of Appeals' decision, please use this link: Matter of Johna M.S. v. Russell E.S.
 In Rios v. Carrillo, Maria Rios leased a residential apartment to Alfredo Carrillo for a period of two years. A year into that lease, Carrillo left the apartment, stopped paying rent, and claimed he did so with Rios' consent. Rios didn't agree and filed suit in 2003 seeking the monies due.
Since Rios hadn't demonstrated that she attempted to "mitigate" or reduce her damages by re-renting the space, advertising its availability and/or listing the apartment with real-estate brokers, the Queens County Supreme Court decided Rios wasn't entitled to the cash and dismissed her case.
On appeal, the Appellate Division, Second Department, reversed.
While Carrillo argued that a landlord should have a duty to take action, the AD2 found that "well-settled law in [New York] imposes no duty on a residential landlord to mitigate damages."
Relying on the Court of Appeals' decision in Holy Props. v. Cole Prods., 87 N.Y.2d 130, 637 N.Y.S.2d 964 (1995), the AD2 noted that unlike other contracts, "'leases have been historically recognized as a present transfer of an estate in real property,'" a sort of "hybrid" between a contract and a conveyance in land. Therefore, since landlords aren't required to re-rent or otherwise assist the tenant find a replacement during the lease term, Carrillo remained liable for all monies that accrued in his absence.
Only the Court of Appeals can mitigate that.
For a copy of the Appellate Division's decision, please use this link: Rios v. Carrillo
Yesterday, July 23, 2008, our partner, Lucas A. Ferrara, was quoted in a New York Times Q&A feature on the enforceability of early termination provisions.
Here's the piece in its entirety:
July 23, 2008
Can a Landlord End a Lease Prematurely?
By Jay Romano
I signed an agreement to rent an apartment that allows the landlord to give me 90 days' notice to vacate regardless of when the lease expires. My broker advised me to sign the lease, saying that the clause is likely to be unenforceable. Do you agree with her?
"Whether or not such early-vacate provisions are enforceable will depend, in large part, on the nature of the tenancy," said Lucas A. Ferrara, a Manhattan lawyer and adjunct professor at New York Law School. Mr. Ferrara said that if the letter writer signed a lease for an unregulated apartment, the parties are free to agree to a wide array of mutually acceptable conditions, including the right for one or both sides to prematurely end the occupancy arrangement. "Absent any unusual or extenuating circumstances, such an early termination provision would be honored by our courts," he said.
Rent-regulated tenants, on the other hand, benefit from an extensive set of statutory protections. By law, Mr. Ferrara said, tenants signing a stabilized lease must be offered the choice of a one- or two-year term and landlords may not circumvent that right by inserting early- termination language. "If this letter writer is a rent-stabilized tenant, the maneuver would likely be viewed as an attempt to circumvent regulatory safeguards and would not be enforceable," Mr. Ferrara said.
It probably would be prudent, he noted, for the letter writer to have a lawyer review the agreement. "He or she would be in a better position to give the writer more particularized legal advice," he said.
To download a copy of the Q&A piece, please use this link: Can A Landlord End A Lease Prematurely?
 In Allen v. Harlem Intl. Community School, LaShawn Allen - parent of an expelled student -- sought to recover the tuition paid to Harlem International -- a "private charter grammar school."
LaShawn's daughter and the school's principal, Ms. Simpson, had an "acrimonious" relationship which worsened when Ms. Simpson directed the child to write "I will not say shut up," 1000 times, as a disciplinary assignment.
LaShawn was none too pleased when she heard of the punishment and filed harassment charges against the principal. Soon thereafter, LaShawn's daughter was expelled for "incorrigible behavior."
After the New York County Small Claims Court found in LaShawn's favor and awarded her $1,500, an appeal to the Appellate Term, First Department, ensued.
Relying on the School's "Rules and Regulations," the AT1 found that the only situations warranting expulsion were a "student's use of illegal drugs or resort to violent behavior." Since neither basis applied, the AT1 thought the expulsion was wrongful.
Justice Douglas McKeon, a lone dissenter, was of the opinion the school's "Rules and Regulations" shouldn't be read so narrowly. Private schools, such as Harlem International, have "broad discretion" when it comes to disciplining students and "a private school may expel a pupil when such action is in the best interest of the school, child, or other students." Further, LaShawn was fully aware of the school's rules before she enrolled her daughter and, if she felt they were too strict, was free to choose another institution. However, the dissent noted LaShawn "got what she bargained for: an ultra-strict private school run by a no nonsense principal who is a strict disciplinarian."
As there was no evidence of "corporal punishment or criminal conduct," McKeon believed the claim should have been dismissed.
 This school's out!
To download a copy of the Appellate Term's decision, please use this link: Allen v. Harlem Intl. Community School
 In F. Richard Wolff & Son, Inc. v. Tutora, F. Richard Wolff & Son (Wolff) sued Anthony Tutora for a commission Tutora allegedly owed to the company.
Tutora hired Wolff as a real-estate broker to sell Tutora's "adult care resident facility" business and accompanying real estate, "as a package." The terms of their contract provided that Wolff's commission would be 6.5% of the selling price.
After Wolff found a prospective buyer, Tutora agreed to a $1.3 million deal, but the sale was subject to the purchaser getting a substantial bank loan. When that fell through, the parties continued their negotiations and the purchaser bought the business and leased the real property from Tutora, months after the brokerage agreement expired.
Wolff felt that it was still owed a commission based on the $1.3 million price because the company had procured a "ready and willing" buyer. The Westchester County Supreme Court felt otherwise and dismissed the case.
On appeal, the Appellate Division, Second Department, reiterated the established rule that "a real estate broker will be deemed to have earned his or her commission when he or she produces a purchaser who is not only ready and willing to purchase ... but able to do so as well." As the sale of the business and real estate was contingent upon bank financing, and the purchaser was unable to close the deal originally contemplated without those proceeds, Wolff wasn't entitled to a commission.
The AD2 wasn't afraid of no Wolff.
 For a copy of the Appellate Division's decision, please use this link: F. Richard Wolff & Son, Inc. v. Tutora
 In Hakimi v. Cantwell Landscaping & Design, Inc., Farhad Hakimi claimed breach of contract stemming from landscaping work Cantwell performed on the homeowner's property.
Apparently, when Hakimi hired the company, Cantwell wasn't a licensed home improvement contactor as required by Suffolk County Law.
After a suit was filed, Cantwell countered with its own claim for the unpaid balance, and sought to foreclose on a mechanic's lien it filed on Hakimi's property.
Hakimi argued that Cantwell wasn't entitled to the monies since the company wasn't licensed when it performed the services. Cantwell contended that the work fell within a license exemption for "new construction," and the Suffolk County Supreme Court agreed with the landscaper's position.
On appeal, the Appellate Division, Second Department, looked at the law's wording and found the loophole only applied to the actual construction of a new structure. The AD2 noted that "interpreting the phrase to include landscaping work performed at a property ... would require this Court to 'impermissibly rewrite a clearly worded statute to obtain a desired result.'" Therefore, since the work didn't fall within the governing licensing exemption, Cantwell couldn't get paid for its services and its lien was vacated.
Do you share that view of the landscape?
 To download a copy of the Appellate Division's decision, please use this link: Hakimi v. Cantwell Landscaping & Design, Inc.
 In Tower Ins. Co. of N.Y. v. Lin Hsin Long Co., Tower wanted a court to rule that it wasn't obligated to defend or indemnify Lin Hsin Long Co. -- known as Hunan Ritz Restaurant -- in connection with a personal injury suit filed against the establishment.
When it received notice some nine months after Charlotte Theodoratos fell in defendant's place of business, Tower filed its own lawsuit contending that, since neither Lin Hsin nor Theodoratos timely notified the insurer of a possible claim, Tower wasn't responsible for the payment of any sums found due to Theodoratos.
After the New York County Supreme Court denied Tower's motion for relief in its favor, the insurer appealed to the Appellate Division, First Department, which agreed Tower hadn't been given notice of the accident within a "reasonable period of time."
While Lin Hsin argued that it didn't contact Tower because it didn't believe there would be a claim, the AD1 was of the opinion the restaurant wasn't in a position to make that kind of assessment. (The AD1 also found Theodoratos' counsel failed to exercise "due dilgence" when he merely urged the restaurant to notify its carrier.)
A lone dissenter -- Justice Andrias -- didn't believe Theodoratos or her attorney did anything wrong, and that the governing standard should have been less stringently applied to an injured party (rather that the insured).
If the Court of Appeals doesn't intervene, this Tower will be insurmountable.
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