Business Litigation - Breach of Fiduciary Duty & Fraud
Breach of Fiduciary Duty, Fraud & Other Torts (U.S. Dist. Ct., S.D.N.Y.) (2008)
In a case brought in the United States District Court in and for the Southern District of New York, Robert H. Rosh and Robert M. Redis successfully defended an action brought against one of our clients alleging various federal and state law claims, including claims under the Federal Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961-68, New York’s General Business Law §349, breach of fiduciary duty, aiding and abetting a breach of fiduciary duty and fraud.
Our lawyers sometimes represent corporate and individual fiduciaries in contested accounting proceedings. In one such case, Robert M. Redis and the firm sought, through a summary judgment motion in the Surrogate’s Court, to dismiss objections asserted to an accounting of our client, a co-trustee, by the remaindermen of the trust. The remaindermen filed objections to the accounting, alleging violation of the diversification requirement of the Prudent Investor Act, even though they were aware of the challenged transactions and even though they later became co-trustees and continued to hold the same challenged investments. The Surrogate dismissed the objections as to the original co-trustee, who had previously resigned as co-trustee, but basically denied our motion to dismiss the objections to the accounting of our client. In Matter of Bloomingdale, 48 A.D.3d 559, 853 N.Y.S.2d 92 (2d Dep’t 2008), the Appellate Division partially reversed the Surrogate, holding that because co-fiduciaries are one entity, the remaindermen could not maintain objections for the period in which they served as co-trustees.
Business Litigation - Breach of Warranty Agreement - Settled the Day Before Jury Selection
Breach of Warranty Agreement - Settled the Day Before Jury Selection
Robert M. Redis and Phillip C. Landrigan were trial counsel in a Seattle based retailer’s multi-million dollar dispute with a national cellular phone warranty provider. The Seattle retailer sold cellular phones and services together with warranties supplementing the manufacturer’s warranty to include breakage and other failure of the phones’ operation. After a history of customer complaints and general dissatisfaction with the warranty provider, including often long delayed return of physical phones to customers that continued to be non-operational, the client assumed responsibility for satisfying customer claims and sought damages against the warranty provider for its costs in doing so. Efforts by the warranty company to secrete assets were prevented by obtaining a pre-judgment restraint on its assets. Ultimately, a settlement for virtually all costs claimed by the client was obtained the day before jury selection.
Phil and Bob thwarted efforts by the warranty company’s counsel to prevent introduction of damages evidence in summary form. Having streamlined the trial by preventing the need to introduce the actual defective phones and their corresponding warranty claim forms and coverage determinations, the likelihood of both a favorable and timely decision was greatly enhanced.
Ultimately, the settlement was paid out of a contingency fund established under a post litigation asset purchase agreement. Phil’s detailed, well documented and legally compelling opinion as to the reasonableness of the settlement convinced the acquiring company to release the settlement funds without further litigation.
Our lawyers defend corporate executors and trustees against unwarranted charges made against such clients. Here, Robert M. Redis successfully represented The Bank of New York (now BNY Mellon, N.A.) in dismissing a $300 million action in Supreme Court, New York County, against the Bank and a Hong Kong businessman arising out of actions that Bank took as executor of an estate and ancillary proceedings on that same estate in Hong Kong. Justice Ramos, after extensive briefings, dismissed the complaint on grounds of preclusion since the matters had been previously litigated or could have been both in Hong Kong and New York. Justice Ramos also imposed sanctions of $10,000 on the plaintiff and awarded the Bank its reasonable attorney fees as part of those sanctions. Bob also persuaded the Appellate Division, First Department, to unanimously affirm the lower court determination.
Will and Trust Contests comes in different forms. Here, the Surrogate's Court faced the fairly novel issue of whether an attorney-in-fact could use the authority conferred on her in a power of attorney form to amend a trust created by another person to grant to herself a limited power of appointment over the trust remainder. Pursuant to the terms of the trust in question, the grantor reserved to himself the right to amend or revoke its terms during his lifetime. Representing a client that was adversely affected by the trust amendment, Gail M. Boggio and Robert M. Redis successfully argued that the attorney-in-fact had no authority to make the trust amendment and that the trust amendment was invalid. The Surrogate held, among other things, that although the terms of the subject trust gave the grantor himself the right to revoke the trust or amend its terms, it did not confer the same authority upon the grantor's agent or upon any other person.
In contested accounting proceedings, success or failure often depends upon identifying and then seeking surcharges on arcane accounting principles. In the Estate of Thomas Carvel, Tom's wife, Agnes, as income beneficiary of a trust under Tom's Will, had not received any distributions of income from the trust created for her benefit. After a lengthy trial, Robert M. Redis successfully obtained a decree in an accounting proceeding that Agnes was entitled to some $9 million in trust income (including interest) from the Estate of Thomas Carvel. Bob, assisted by his partner, Frank W. Streng, successfully argued in the lower court that the executors improperly wiped out Agnes' income share by attributing expenses to the income beneficiary’s account that should have been charged against the principal account under EPTL 11-1.3. Bob also persuaded the Appellate Division, Second Department, to uphold the decree on appeal.
Developers sometimes come to McCarthy Fingar and our Business Litigation group to deal with disputes with municipalities on the terms and conditions of a development deal. Here, Robert M. Redis and the firm successfully sued the Planning Board of the Village of North Hills and its building department over the failure of the municipality to release staged infra structure subdivision and bonds, as called for in the enabling municipal approvals. The development was a high end project in a wealthy Long Island community. The municipality had refused to release the bonds until other matters unrelated to the bonds were resolved. Those other issues involved substantial amounts of money and would have harmed the client if the bonds were not released. After the municipality wrongfully refused to release the bonds. Bob commenced a CPLR Article 78 Proceeding to have the bonds released and persuaded the trial court to make an order mandating the release of the bonds. The municipality immediately appealed the order, holding up the release of the bonds, but the Appellate Divsion, Second Department unanimously upheld the lower court decision, and the bonds were released.
"Will Contests" take different forms, and the lawyers in our Surrogate's Court Litigation group have experience in virtually every area. Trustees of a purported revocable inter vivos trust may claim title to property that would otherwise be disposed of under a Will or by intestacy (without a Will). In a relatively novel case, in Hoffman, the firm represented a client who was a beneficiary under her husband's Will of a membership in the New York Stock Exchange. However, even before the execution of his Will, the decedent allegedly created a revocable trust agreement for the benefit of a child of a prior marriage and allegedly transferred his NYSE seat to the trust. The NYSE seat had not been transferred to the trust through any assignment process but had been listed on a schedule of assets of the trust, with the following notation: "1. Membership in the New York Stock Exchange. The NY Stock Exchange does not permit registration of memberships in the name of trustees. Grantor and Trustees recognize this to be the case." Citing the provisions of a relatively new statute, EPTL 7-1.18, McCarthy Fingar lawyers, Frank W. Streng, Deborah Yurchuk McCarthy and Robert M. Redis, sought summary judgment against the trustees strictly on the question of the effectiveness of the transfer, arguing, among other things, that the recital of the NYSE seat as an asset of the trust in a schedule was not enough to consummate the transfer. The Court agreed and dismissed this portion of the trustees' case.
In this case, Robert H. Rosh and Robert M. Redis successfully represented two (2) individuals at both the lower court and appellate levels in a fee dispute with their former counsel involving a condemnation proceeding. The dispute arose after the individuals discharged their former counsel and negotiated a sale of their properties on their own. The court held that the individuals had the right to settle their case on their own, and that their former counsel were only entitled to recover in quantum meruit for the legal services rendered to the individuals in connection with the condemnation proceeding.
Business Litigation - Settlement during Jury Selection - Claim by Commercial Broker for Commissions
Decnos v. Argueso, 01 Civ. 2617 (LMS) (USDC, SDNY)
Our lawyers are sometimes retained on disputes for claims for brokerage commissions. Here, Robert M. Redis and his co-counsel was able to successfully settle a multimillion dollar claim of breach of contract, fraud and misrepresentation made by a commercial business broker. The claim, filed in Federal court, arose out of a multimillion dollar stock purchase agreement of a international manufacturer of industrial resins, waxes and ceramics. After pretrial discovery the matter was set for trial; and, during the jury selection process, Bob was able to negotiate a settlement on favorable terms.
Our lawyers often represent beneficiaries in contested accountings of executors and trustees. In one such case, Frank W. Streng and Robert M. Redis succeeded at the trial court level and obtained a surcharge against a former executor in excess of $1.6 million and an award of attorneys fees against that former fiduciary in the amount of $250,000. Bob and Frank then succeeded in upholding the Surrogate's Court's determinations on all appeals.
Business Litigation - Summary Judgment Motion - Sale of Business Assets
Daniel Drug Med World v. D and A Drug (Sup. Ct., Rockland 1999) (7040/1997)
Controversies, and, then, litigation, sometimes takes place after the sale of company assets. Here, Robert M. Redis successfully obtained summary judgment in favor of his client, the defendant, the seller of a wholesale pharmacy, against allegations of breach of contract, fraud and misrepresentation involving a multimillion dollar asset purchase agreement.
Our lawyers represent clients in disputes over different types of real estate matters. Here, Robert H. Rosh and Robert M. Redis intervened on behalf of St. John’s Riverside Hospital and successfully defended it in the lower court in an Article 78 proceeding, and on an appeal to the Appellate Division, Second Department. In this case, a coalition sought to overturn certain administrative determinations as to the siting and design of St. John’s proposed nursing home facility in Yonkers, New York.
Our lawyers represent companies in disputes on sophisticated business transactions, sometimes involving real estate. Here, Robert M. Redis, on appeal, convinced the the Appellate Division, First Department, to reverse a lower court's denial of a motion for summary judgment. The outcome was that Bob's client obtained stock warrants as part of the rent on a large commercial property located in Connecticut
This matter involved a commercial net leasing arrangement between our client -lessor (Middlebury) and defendant-lessee (General Datacomm) (GDC). The lease was subsequently amended to provide GDC a rent reduction in return for its issuance of warrants to purchase its common stock, pursuant to a separate warrant agreement. Specifically, the original lease, executed in 1984, provided for two forms of rent. The first was a scheduled rent, which initially consisted of a fixed amount but which, during the course of the 12-year lease, became an indexation of a fixed amount. The second was “additional rent”, which essentially passed on to GDC all costs, expenses or obligations of maintaining the property, such as real estate taxes, utilities, insurance, repairs, etc. The additional rent provisions remained unchanged under any of the three amendments to the lease.
The lease was first amended in 1992, to lower the scheduled rent by eliminating the indexation and lowering the fixed amount, in consideration for the warrant agreement, which provided for the issuance of warrants by GDC to Middlebury allowing the latter to purchase shares of the former's common stock. The number of warrants issued would be determined by a formula applied to the “net rental savings”, the difference between the fixed rent under the original lease and that under the amended lease.
Pursuant to this formulation of the warrant agreement, GDC duly issued warrants to Middlebury in October 1993. Although earlier that year Middlebury had made a claim against GDC for indemnification regarding environmental damages alleged by third parties, which subsequently evolved into a Federal action, the lessee GDC did not factor this claim or any other “additional rent” item into the calculation of the number of warrants issued. This was true despite the executions of the first amendment to the warrant agreement just after the environmental claim was made, and the second amendment to the warrant agreement at the time the warrants were issued. Also within this period, the second and third lease amendments were made, further reducing the scheduled rent.
The second amendment to the warrant agreement provided that the “net rental savings” be determined by the difference between what would have been the scheduled annual rent under the original lease and the scheduled annual rent paid as set forth in the second amended lease. GDC, however, declined to issue warrants for 1994 and 1995, claiming that due to the pending environmental indemnification claim, it was unable to calculate the number of warrants to be issued.
Bob on behalf of Middlebury commenced an action seeking specific performance of the obligation to undertaken by GDC to issue the stock warrants. The motion for summary judgment was denied. Bob on behalf of Middlebury took an appeal. After oral argument on the appeal, the Appellate Division, First Departmentreversed the denial of summary judgment and ordered GDC to issue the stock warrants to our client.
St. Andrews Condominium Corp. v. Chemical Bank (Sup. Ct., Westchester County)
Our Business Litigation and Commercial Finance lawyers have experience in all types of commercial lending issues, including lender liability claims. Here, Robert M. Redis successfully resolved lender liability and related claims including alleged violation of the condominium offering plan, construction and design defects against our client, a major national bank, which acted as a $70 million construction lender. The project was a large cluster zoned residential condominium and a redesign of the adjacent St. Andrews Golf Club course. The project was developed by various Jack Nicklaus entities. Mr. Nicklaus also redesigned the St. Andrews Golf Club course, which was adjacent to the condominium and which the owners of the condominium units were able to join. As part of his work, Bob was able to negotiate a settlement among the home owners, the St. Andrews Golf Club and curling rink, the Nicklaus group and the Town of Greenburgh, so that all claims were dropped against our client, the lender. We were also able to establish necessary rights of way and easements for the units, saving our client, the lender, significant exposure and defense costs in what would have been protracted litigation.
McCarthy Fingar's Business Litigation and Real Estate Transactions groups have also represented clients on real estate title disputes. Here, Robert M. Redis successfully obtained summary judgment at the trial court after extensive discovery. The issues involved restrictions on land use, historic preservation, zoning matters and doctrines of merger of ownership. The plaintiff commenced this action for declaration that the prior owner’s 1980 "subdivision" of Lot No. 4 violated the restrictive covenant prohibiting a lot subdivision without the approval of the owners of the other three lots. If the plaintiff's position was correct, Bob's clients could lose their homes. Their property was adjacent to a property listed on the New York State Historic Registry because of it involvement in the American Revolution. The trial court determined that, insofar as the prior owners of the property, the Benjamin family, either individually, or through their controlled corporation, Andros Realty Co., owned all of the parcels as of 1922, the restrictive covenant at issue was extinguished by the doctrine of merger. This determination was contested on appeal. The Appellate Division, Second Department, disagreed with the lower court and found that the merger had not occurred; but Bob won the appeal when they agreed with his alternative argument that the plaintiff's action was barred by laches. The laches argument was that the plaintiff sat back and did nothing, knowing that the homeowners were engaged in substantial construction on the lot. The plaintiff delayed seeking to enforce the restrictive covenant until after the homeowners had completed the bulk of the construction and incurred a great deal of expense with the knowledge of the plaintiff.
Our lawyers often represent clients in dealing with beneficiary designations on pension and qualified plans. In one such case, Howell Bramson, Robert M. Redis and other lawyers at the firm successfully represented a surviving spouse’s estate and persuaded the lower court to invalidate a beneficiary designation on a qualified plan for the Decedent’s child (to the exclusion of the decedent’s spouse) on the grounds that the beneficiary designation violated the spousal consent rules under ERISA. The trial court's determination was upheld, on appeal, by the Second Circuit Court of Appeals. The appeal also deal with significant legal questions, such as the applicability of ERISA to controlled foreign corporations and whether these sufficiently implicated the Interstate Commerce Clause of the United States Constitution.
Our lawyers often represent beneficiaries that suffer financial injury through improper actions of executors and trustees. Here, Frank W. Streng represented a beneficiary at a trial to obtain the removal of a preliminary executor who had acted improperly in the administration of the estate. The removed fiduciary appealed, and Frank and other McCarthy Fingar lawyers, Robert M. Redis and Deborah Yurchuck McCarthy, successfully persuaded the appellate court to affirm the trial court's decision to remove the fiduciary.
McCarthy Fingar's Business Litigation and Real Estate Transactions groups have large experience in real estate development issues, whether representing developers or local towns or municipalities. Here, Robert M. Redis represented the Town of Lewisboro in Northern Westchester, in upholding its local law requiring a developer of a clustered residential development to pay recreational fees in lieu of dedicating land in the development for park purposes. Previously the developer could designate certain property in the cluster development to be set aside for purposes of parks and recreation facilities, irrespective of whether the amount of nearby park and recreation facilities adequately served the specific development and the development's impact on town-wide recreational facilities.
Bob successfully upheld the law in the lower court against myriad challenges, including one arguing that the local law constituted an unconstitutional taking under the Fifth Amendment. Bob then successful defended the trial court's opinion before the Appellate Division, Second Department, and, then, before the New York Court of Appeals, in a matter of first impression.
Years later Bob was retained by his opponent, the developer, Bayswater, to handle litigation and appeals against a different municipality located on Long Island.
Robert M. Redis, who has substantially experience on First Amendment issues, successfully obtained summary judgment against a former supervisor of the County of Putnam, who sued Bob's newspaper client for libel and defamation. In the lower court, Bob successfully argued that the former supervisor was a public figure and that the standard of "constitutional malice, set forth by the United States Supreme Court in the New York Timescase, i.e., a knowing lie or reckless disregard as to whether the statement was true, should apply. On appeal, Bob persuaded the Appellate Division, Second Department, to uphold the lower court decision.
Robert M. Redis, who has substantial experience in First Amendment and privacy issues, obtained dismissal of an action against a newspaper publisher that sought damages for an alleged invasion of privacy. Here, Bob defended a newspaper in an invasion of privacy action brought under New York’s Privacy Law (Civil Rights Law Section 50-51). The plaintiff claimed that, irrespective of the truth of the article, the newspaper should not have published the article. However, New York‘s right of privacy law only protects commercial usage of a person’s name and usage. And, since the newspaper was not exploiting the individual's name or likeness for commercial reasons, Bob succesffuly argued in the trial court that the claim must be dismissed. Bob also convinced the Appellate Division, Second Department, to uphold the dismissal on appeal.