Sometimes, a lawsuit is dismissed based upon the concept of claim preclusion…

Sometimes, a lawsuit is dismissed based upon the concept of claim preclusion or collateral estoppel, which was defined by the court in Sang Seok Na v Schietroma, 172 AD3d 1263 [2d Dept 2019]:

“ The doctrine of collateral estoppel, a narrower species of res judicata, precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same ” (Ryan v. New York Tel. Co., 62 N.Y.2d 494, 500, 478 N.Y.S.2d 823, 467 N.E.2d 487). The doctrine of collateral estoppel applies when: “ (1) the issues in both proceedings are identical, (2) the issue in the prior proceeding was actually litigated and decided, (3) there was a full and fair opportunity to litigate in the prior proceeding, and (4) the issue previously litigated was necessary to support a valid and final judgment on the merits ” (Conason v. Megan Holding, LLC, 25 N.Y.3d 1, 17, 6 N.Y.S.3d 206, 29 N.E.3d 215 [internal quotation marks omitted] ).

R. A. Klass
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“Slow Down, You Move Too Fast”

Simon & Garfunkel,
The 59th Street Bridge Song (Feelin’ Groovy)

Rabbit with yellow fur standing next to gray and yellow turtle illustrating article by Richard Klass about nonresident plaintiffs posting Security for Costs.

A foreign company sued a New York State resident, seeking to force the sale of his house in order to satisfy its judgment.  The company existed under New Jersey law with a New Jersey corporate address.  The house was located in Nassau County.

Petition to Sell House

The judgment creditor’s petition to sell real property alleged that there was sufficient equity in the house exceeding the homestead exemption and existing mortgage lien.  The petition further alleged that attempts to execute on the judgment debtor’s personal property failed and the creditor had otherwise been unable to satisfy its judgment.  Combined, these allegations would normally be enough to satisfy the pleading requirements under CPLR 5203, 5206 and 5238.

In response to the petition, the debtor/homeowner retained Richard A. Klass, Your Court Street Lawyer, to defend the proceeding in order to retain his house.  The defenses put up included the fact that the mortgage lender had already begun foreclosure proceedings and there was a question as to the validity of the claim that there was any net equity in the property.  Further, since the house was owned by the debtor with his wife as a “ tenancy by the entirety, ” the house could not be sold without consideration of her property rights.

Stopping the Creditor in its tracks

Sometimes, a debtor needs a respite from the continual attacks by creditors.  One way to accomplish this is by a bankruptcy filing, in which the automatic stay imposed upon filing stops the pecking at a debtor’s assets by creditors.  Another way to slow down a creditor is to temporarily stay the lawsuit while the debtor and his family “ circle the wagons ” to either gather up strong defenses or develop an orderly plan in which debts will be repaid or settled.  An effective method of getting this pause is by requesting that the judge stay the lawsuit of a non-New York State creditor until the plaintiff/creditor posts security for the costs of the action.

Security for Costs

New York court rules require nonresident plaintiffs maintaining lawsuits in New York courts to post security for the costs for which they would be liable if their lawsuits were unsuccessful.  CPLR 8501(a) provides that, “ except where the plaintiff has been granted permission to proceed as a poor person or is the petitioner in a habeas corpus proceeding, upon motion by the defendant without notice, the court or judge thereof shall order security for costs to be given by the plaintiffs where none of them is a domestic corporation, a foreign corporation licensed to do business in the state or a resident of the state when the motion is made. ” CPLR 8502 provides that until security for costs is given pursuant to court order, all proceedings other than to review or vacate such order shall be stayed, and that if the plaintiff shall not have given security for costs at the expiration of 30 days from the date of the order, the court may dismiss the complaint upon motion by the defendant.

Security for costs is a device ordinarily used against a nonresident plaintiff to make sure if he loses the case, he will not return home and leave the defendant with a costs judgment that can be enforced only in the plaintiff’s home state.  By directing a nonresident to post a bond, the defendant is protected from frivolous lawsuits and is assured that, if successful, he will be able to recover costs from the plaintiff.

In rebuffing a challenge to the constitutionality of the requirement of security for costs imposed upon a nonresident plaintiff, the court in Clement v. Durban, 147 AD3d 39 [2016] aff’d 32 NY3d 337 [2018] cert denied 139 S.Ct. 2649 [2019] held that the court rules do not deprive nonresident plaintiffs of reasonable and adequate access to New York courts and, thus, are constitutional.  Where nonresidents are subject to different treatment than New York residents, there must be reasonable grounds for diversity of treatment (so as to prevent discrimination against citizens of other states).  Disparity of treatment of nonresidents is permitted in situations where there are valid, independent reasons for it; in this situation, deterring frivolous or harassing lawsuits and preventing prevailing defendants from having to chase plaintiffs into foreign jurisdictions to collect their judgments are considered valid reasons.

Upon motion by the defendant requesting that the plaintiff post a bond as security for costs, the judge granted the motion and directed the nonresident plaintiff to post security in the amount of $10,000 for costs.  The plaintiff did not do so within the 30 day period after the order and, accordingly, the court dismissed the lawsuit.

Richard A. Klass, Esq.

©2019 Richard A. Klass. Credits: Photo of Richard Klass by Rob Abruzzese, 2019. Marketing agency: The Innovation Works, Inc. (www.TheInnovationWorks.com)  Image at top of page: Shutterstock

R. A. Klass
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[ nonresident plaintiffs ]

Appellate court reversed the court order dismissing the action on the law firm’s motion to dismiss.

In an action by a client against a law firm for legal malpractice, the appellate court reversed the court order dismissing the action on the law firm’s motion to dismiss. The court held:

“ To state a cause of action to recover damages for legal malpractice, a plaintiff must allege: (1) that the attorney failed to exercise the ordinary reasonable skill and knowledge commonly possessed by a member of the legal profession; and (2) that the attorney’s breach of the duty proximately caused the plaintiff actual and ascertainable damages ” (Dempster v. Liotti, 86 A.D.3d 169, 176, 924 N.Y.S.2d 484 [internal quotation marks omitted]; see Leder v. Spiegel, 9 N.Y.3d 836, 837, 840 N.Y.S.2d 888, 872 N.E.2d 1194). Here, accepting the facts alleged in the complaint as true, and according the plaintiff the benefit of every possible favorable inference, the plaintiff stated a cause of action to recover damages for legal malpractice (see Tooma v. Grossbarth, 121 A.D.3d at 1095–1096, 995 N.Y.S.2d 593; Endless Ocean, LLC v. Twomey, Latham, Shea, Kelley, Dubin & Quartararo, 113 A.D.3d 587, 589, 979 N.Y.S.2d 84; Reynolds v. Picciano, 29 A.D.2d 1012, 1012, 289 N.Y.S.2d 436). The evidentiary submissions did not establish that a material fact alleged in the complaint is not a fact at all and that no significant dispute exists regarding it (see Bodden v. Kean, 86 A.D.3d at 526, 927 N.Y.S.2d 137). Contrary to the defendants’ contention, the plaintiff was entitled to commence this legal malpractice action even though the underlying personal injury action was still pending, as the legal malpractice action accrued, at the latest, in November 2014 (see Johnston v. Raskin, 193 A.D.2d 786, 787, 598 N.Y.S.2d 272).

Lopez v Lozner & Mastropietro, P.C., 166 AD3d 871 [2d Dept 2018]

 

R. A. Klass
Your Court Street Lawyer

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In Pari Delicto

In Pari Delicto — party’s wrongful doing — can bar a lawsuit.

“The doctrine of in pari delicto bars a party that has been injured as a result of its own intentional wrongdoing from recovering for those injuries from another party whose equal or lesser fault contributed to the loss (see Kirschner v KPMG, 15 N.Y.3d 446, 912 N.Y.S.2d 508, 938 N.E.2d 941 [2010]; [in pari delicto “mandates that the courts will not intercede to resolve a dispute between two wrongdoers”]; Chemical Bank v. Stahl, 237 A.D.2d 231, 232, 655 N.Y.S.2d 24 [1997] [in pari delicto “requires immoral or unconscionable conduct that makes the wrongdoing of the party against which it is asserted at least equal to that of the party asserting it”]).” Rosenbach v Diversified Group, Inc., 85 AD3d 569, 570 [1st Dept 2011].

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Tender of Payment

A seldom-used tactic in litigation is the “tender” of payment by a defendant of an amount which is believed to be due to the plaintiff. If the proper amount is tendered, and the plaintiff does not accept that amount, then the defendant will not be found liable for interest and court costs.

This legal tactic was successfully used by the author in a case involving the building of a large boys’ yeshiva. The yeshiva purchased a building to tear it down and construct a new school. The prior owner took back a mortgage from the yeshiva for $900,000, with interest-only payments for 15 years and no prepayments allowed. Shortly after the purchase, the yeshiva obtained work permits to demolish the existing structure to build the new school building.

The mortgagee/prior owner brought an injunction action, claiming that the demolition of the existing structure violated the terms of the mortgage (a common clause in the form of mortgage states that the mortgagee’s consent is needed before alteration of the structure on the mortgaged premises in order to protect the value of the collateral). During the course of ongoing court conferences, the yeshiva offered to pay off the mortgage in full, but the mortgagee was insistent on obtaining not only the principal amount of $900,000 but also the future 14 1/2 years’ worth of interest (a windfall of about $1.2 million).

The mortgagee then decided to unilaterally declare a default under the mortgage, alleging that the disconnection of the water and electric lines amounted to an alteration of the structure; her attorney served an “acceleration notice,” demanding the payment of the mortgage in full plus accrued interest.

From an initial review of the situation, it looked bleak for the yeshiva. But, upon further examination, the concept of “tender” saved the day! The yeshiva collected pledges totaling $911,000 (the principal amount plus accrued interest to the date of tender) and deposited that amount with the Clerk of Kings County as a “tender.” A motion was then made to dismiss both the injunction and foreclosure actions based upon the tender.

The court held that there was a valid tender, since the mortgagee accelerated the mortgage note, seeking the unpaid principal amount with “accrued” interest. Based upon the ambiguity of the language of the mortgage note, “accrued interest” may have meant interest accrued only to the date of default or future interest past the date of default.

Tender can be effectively utilized in situations where the defendant expects to owe something to the plaintiff but nowhere near the amount claimed. A tender can place a greater onus on the plaintiff to substantiate additional damages. Further, it can be a good method of settling a case by offering the plaintiff an amount which it may be willing to accept to terminate the litigation.

— by Richard A. Klass, Esq.

R. A. Klass
Your Court Street Lawyer

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Debt Collection Tips: Motions to Dismiss Affirmative Defenses or Counterclaims

After a suit is filed against a debtor to collect upon a debt, the defendant will file an Answer which may include “affirmative defenses” or “counterclaims.”  These allegations must be handled with vigilance from the onset to attempt successful recovery in the litigation.

An “affirmative defense” is a defense to a law suit which must be proved by the defendant.  Examples of affirmative defenses would include, e.g., bankruptcy, statute of limitations, improper service, and accord and satisfaction.  The notion is that those types of defenses would likely be determinative to the claim.  Therefore, the defendant must assert them in the Answer so as not to “surprise” the plaintiff-creditor at the time of trial.  Some affirmative defenses must be asserted either pre-Answer or in the Answer, or they are deemed waived by the defendant.  After receipt of the Answer, the plaintiff’s counsel should scan the Answer to identify any affirmative defenses and assess their viability.  To the extent that an affirmative defense seems frivolous, meritless, or superfluous, an appropriate motion to dismiss the affirmative defense should be made sooner rather than later.  The court will then determine whether to sustain the affirmative defense or dismiss it from the onset of the litigation.

As to any counterclaims which may be asserted in the Answer, a careful review must take place as to whether it relates to the matter complained of in the complaint, or relates to a separate matter.  Sometimes, the plaintiff will have an insurance policy which covers the counterclaim, and the insurance company will provide a defense to the counterclaim separate from the prosecution of the underlying suit.  If it is deemed that the counterclaim “fails to state a valid cause of action,” then an appropriate motion may be brought to dismiss the same.

— by Richard A. Klass, Esq.

———–
copyr. 2014 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.


R. A. Klass
Your Court Street Lawyer

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Cause of Action for Interference with Contract

A cause of action is properly alleged against defendants for their interference with contract when the following elements are set forth:

The Second Department held, in Miller v. Theodore-Tassy, 92 AD3d 650 [2012], that:

To prevail on a cause of action alleging tortious interference with contract, a plaintiff must establish “the existence of a valid contract between the plaintiff and a third party, defendant’s knowledge of that contract, defendant’s intentional procurement of the third-party’s breach of the contract without justification, actual breach of the contract, and damages resulting therefrom” citing Lama Holding Co. v. Smith Barney, 88 NY2d 413, 424.

— by Richard A. Klass, Esq.

———–
copyr. 2014 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.


R. A. Klass
Your Court Street Lawyer

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Statute Of Limitations For Actions Against Public Authority

A person has one year from the date a claim accrues to commence an action against a public authority such as LIRR (Public Authorities Law Section 1276(2). The complaint must contain an allegation that at least 30 days have elapsed since the authority was presented with a demand or claim and that the authority has neglected or refused to adjust or pay the claim. This “stay” of 30 days is not counted as part of the limitations period and the plaintiff therefore may serve a complaint at any time up to one year and 30 days after the claim has accrued.
by Richard A. Klass, Esq.

———–
copyr. 2014 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.


R. A. Klass
Your Court Street Lawyer

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An attorney maintains a common law and statutory charging lien in the judgment

Under common law, an attorney was originally only entitled to a lien upon the judgment but the scope of the charging lien was extended by statute [Judiciary Law Section 475] to give the attorney a lien upon the client’s cause of action as well. The lien comes into existence, without notice or filing, upon commencement of the action or proceeding. See, Matter of Heinsheimer, 241 NY 361 [1915]. In Matter of Heinsheimer, Judge Cardozo stated,

If the attorney got possession of the fund, he had a general lien. If he did not get possession, his lien was for the services that brought the fund into existence. This charging lien still exists under our statutes. It has been enlarged to the extent that it now attaches to a cause of action even before judgment. ‘From the commencement of an action or special proceeding‘ the attorney now has a lien ‘upon his client’s cause of action, claim or counterclaim, which attaches to a verdict, report, decision, judgment or final order in his client’s favor, and the proceeds thereof in whosoever hands they may come.‘ (Judiciary Law, Cons. Laws, ch. 30, section 475.) Except as thus changed, the charging lien is today what it was at common law.

The concept of protecting an attorney’s lien in litigation from inception through and after entry of judgment is an old one. As stated in the decision of Fischer-Hansen v. The Brooklyn Heights Railroad Company, 173 NY 492 [1903].

There is much learning in the books relating to the lien of an attorney upon a judgment for his costs as it existed before the statute, and though now virtually obsolete, it shows the fixed determination of the courts to protect attorneys against fraudulent settlements. The lien upon a judgment was not created by statute, but was ‘a device invented by the courts for the protection of attorneys against the knavery of their clients by disabling their clients from receiving the fruits of recoveries without paying for the valuable services by which the recoveries were obtained.’ Goodrich v. McDonald, 112 NY 157 [1889].

In Peri v. The New York Central and Hudson River Railroad Company, 152 NY 521 [1897], the Court of Appeals held that an attorney’s charging lien is a statutory lien “of which all the world must take notice, and any one settling with a plaintiff without the knowledge of his attorney, does so at his own risk.” In this case, that risk is borne by all of the defendants.

New York Judiciary Law Section 475 provides:

From the commencement of an action, special or other proceeding in any court or before any state, municipal or federal department, except a department of labor, or the service of an answer containing a counterclaim, or the initiation of any means of alternative dispute resolution including, but not limited to, mediation or arbitration, or the provision of services in a settlement negotiation at any stage of the dispute, the attorney who appears for a party has a lien upon his client’s cause of action, claim or counterclaim, which attaches to a verdict, report, determination, decision, award, settlement, judgment or final order in his client’s favor, and the proceeds thereof in whatever hands they may come; and the lien cannot be affected by any settlement between the parties before or after judgment, final order or determination. The court upon the petition of the client or attorney may determine and enforce the lien.

The Court of Appeals noted, in Matter of City of New York (United States of America-Coblentz), 5 NY2d 300 [1959], that the statute gives an attorney a lien on the cause of action which attaches to the judgment from the commencement of the action. In the decision, the Court stated that Section 475, in substance, declares the common law. The origin of an attorney’s lien, whether as retaining or as charging, is obscure, but in all events, irrespective of type, has been recognized and enforced by the courts from very early times (see Fourth Annual Report of N. Y. Judicial Council, 1938, p. 49; 7 C. J. S., Attorney and Client, Section 210 et seq.; 5 Am. Jur., Attorneys at Law, Section 208 et seq.). The underlying purpose at both common law and now, by statute, is to protect an attorney against the ‘knavery of his client’ (Matter of Rosentover v. Weiss, 247 AD 137 affirmed 272 N.Y 557; Goodrich v. McDonald, 112 NY 157) and, being created by statute, does not require the giving of any notice in order to bring it into existence (Matter of Drake v. Pierce Butler Radiator Corp., 202 Misc. 935) for it is generally regarded as an equitable assignment to the attorney of the fund procured by his efforts to the extent of the amount of his lien (Matter of Herlihy, 274 AD 342).

Other parties do not have the ability to destroy the attorney’s vested property rights in and to the Judgment. See, LMWT Realty Corp. v. Davis Agency, Inc., 85 NY2d 462 [1995] (“Manifestly, then, an attorney’s charging lien is something more than a mere claim against either property or proceeds; an attorney’s charging lien “is a vested property right created by law and not a priority of payment”).

In enforcing the charging lien, the attorney is not required to solely chase after his client for the money he is owed; he can also pursue the other defendants. In Haser v. Haser, 271 AD2d 253 [1 Dept. 2000], the court held that, under New York law, a plaintiff’s attorney may enforce her statutory charging lien against the defendant’s own assets, if he still possesses the settlement proceeds or knowingly paid them to the plaintiff so as to deprive the attorney of her compensation (citing to Kaplan v Reuss, 113 AD2d 184, 186-187, affd 68 NY2d 693; Fischer-Hansen v Brooklyn Hgts. R. R. Co., 173 NY 492, 502). The lien which attaches in the attorney’s favor cannot be impaired by a collusive settlement.

by Richard A. Klass, Esq.

———–
copyr. 2014 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.


R. A. Klass
Your Court Street Lawyer

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Klass in the News: Yoko Ono’s publicist sues Eataly for $20M after bouncer ‘beatdown’

By Julia Marsh and Natasha Velez
PageSix

August 29, 2014 | 11:52am

Maybe the security guards at Mario Batali‘s Eataly need to give peace a chance.

Yoko Ono‘s publicist is suing the Manhattan pasta emporium for at least $20 million after he was allegedly beaten up by bouncers, thrown through a glass window and then called a “p—–” and a “f—–.”

Kip Kouri, head of Tell All Your Friends PR, was trying to get a table at Eataly’s popular rooftop beer garden Birreria on July 17 when he was “violently assaulted by” 10 unnamed security guards, according to his Manhattan civil suit.

His attorney, Richard Klass, told The Post his client was at the Fifth Avenue eatery with his boyfriend, sister and stepmother and got into an argument with the hostess about his reservation….(more)

———–
copyr. 2014 Richard A. Klass, Esq.
The firm’s website: www.CourtStreetLaw.com
Richard A. Klass, Esq., maintains a law firm engaged in civil litigation in Brooklyn Heights, New York.
He may be reached at (718) COURT-ST or e-ml to RichKlass@courtstreetlaw.com with any questions.
Prior results do not guarantee a similar outcome.


R. A. Klass
Your Court Street Lawyer

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