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Motion To Compel Defendants’ Depositions Granted

Oftentimes during litigation, especially as the plaintiff, a litigant may encounter an opponent who refuses to cooperate and engages in dilatory tactics. This is especially so when it comes to discovery – the fact-finding stage of litigation. A party facing an opponent who refuses to comply with discovery demands may find it advantageous to file a motion with the court for an order pursuant to CPLR 3126 resolving the issues to which the information is relevant; prohibiting her opponent from supporting or opposing certain claims or defenses; or even striking the party’s initial pleading.

The plaintiff in Matthew v. Turst, 2018 NY Slip Op 30673(U) (Sup. Ct. N.Y. Co. 2018) moved for an order compelling defendants to appear for court-ordered depositions and precluding them from introducing evidence at trial or striking defendants’ answer based upon their failure to appear for court-ordered depositions. Upon a finding that defendants failed to comply with five previous court orders to appear for depositions, Judge Silvera granted plaintiff’s motion to compel and issued an order directing defendants to appear for depositions within 45 days. Judge Silvera further warned defendants that “failure to appear for depositions may result in an order precluding defendants from introducing evidence or testifying at trial for this action.” However, Judge Silvera declined to strike defendants’ answer, despite the fact that “it is within the court’s discretion” to do so, finding that plaintiff failed to provide concrete evidence of such willful, contumacious, or bad faith by the defendants sufficient to warrant the “extreme sanction of striking a party’s pleadings.”

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Court of Appeals in Altman Rules 20% Vacancy Increase Must Be Included When Determining Whether An Apartment Has Reached The Deregulation Threshold

In prior editions of this blog, we have referred to the much-anticipated “Altman Case” which could fundamentally impact high-rent vacancy deregulation in New York. After years of waiting and speculation, the decision in Altman v. 285 W. Fourth LLC, 2018 N.Y. LEXIS 810, 2018 NY Slip Op 02829 (N.Y. 2018) has finally been handed down by the Court of Appeals. And the ruling does not fare well for tenants in New York.  The issue on appeal was whether landlords could apply the 20 percent vacancy increase when calculating the legal regulated rent for the purpose of determining whether an apartment had reached the $2,000 deregulation threshold in the Rent Stabilization Law*.  In addition to statutory construction, the State’s High Court relied on legislative intent.  Following the enactment of Local Law No. 13 by the New York City Counsel providing that “a vacant housing accommodation becomes deregulated only where the maximum rent or legal regulated rent was two thousand dollars or more at the time the tenant vacated such housing accommodation,” the State Legislature quickly responded by enacting the Rent Regulation Reform Act of 1997 which added the clause: “or any housing accommodation which is or becomes vacant on or after the effective date of the rent regulation reform act of 1997 with a legal regulated rent of two thousand dollars or more per month.”  Indeed, the bill jacket stated that “[d]econtrol will be allowed at any time the vacant apartment has a maximum rent of $2,000 or more,” clearly demonstrating that the State Legislature’s intent “was specifically to counter the provision added by the City Council in Local Law No. 13.”  This decision is a windfall for landlords who have been saved from having to re-regulate as many as 150,000 market-rate apartments throughout the city.

* The deregulation threshold in New York City currently stands at $2,733.75.

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Confusing Prior Notice Precludes Eviction

As we have previously written, the waterways of NYC Housing Court can be tricky to navigate.  The landlord petitioner in Christ Pentacostal Temple Inc. v. Copeland, 2018 NY Slip Op 50553(U) (Civ. Ct. Q. Co. 2018) commenced a summary holdover proceeding after having allegedly terminated the respondent’s occupancy.  Respondent moved to dismiss the petition based on alleged defects in the predicate notice.  The court found that the predicate notice was confusing and ambiguous and was contradicted by allegations in the petition.  For example, the notice was addressed to Augustine Copeland despite the claim that she had previously passed away and alleged that respondent Natalia Copeland was a licensee of the tenant of record but also a month-to-month tenant under an oral lease agreement.  Citing the requirement that a predicate notice state “the facts necessary to establish the existence of a ground for eviction,” which must be specific “so as to provide a tenant with sufficient notice of the case against him” and provide him with the ability to properly prepare a defense to the action, Judge Kullas dismissed the petition without prejudice.  When attempting to evict, you may wish to ensure you have the proper guidance in ensuring the many relevant procedural formalities are diligently followed.

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Petitioner Fails to Demonstrate Pre-Litigation Disclosure Under CPLR 3102(c) Warranted

It is often best to try to avoid costly, protracted litigation where possible.  Under CPLR 3102(c), a petitioner may initiate a special proceeding before commencing an action to obtain disclosure “to aid in bringing an action, to preserve information or to aid in arbitration.”  Pre-litigation discovery pursuant to CPLR 3102(c) may be used in two primary instances. First, a plaintiff might require the information in order to obtain the identity of a necessary party.  Second, a party may obtain pre-litigation discovery to preserve necessary evidence when there is a strong possibility that the evidence will be lost or destroyed.  However, CPLR 3102(c) cannot be used to determine whether the petitioner has a cause of action.  The petitioner in Matter of Saloman v. Porter, 2018 NY Slip Op 50463(U) at *1 (Sup. Ct. W. Co. 2018) commenced a special proceeding pursuant to CPLR §3102(c), seeking to compel depositions of respondents relating to assets.  The petitioner, “wanted to bring an action to recover those assets for the benefit of the estate and himself, but needs to obtain and preserve evidence from the respondents in order to do so.”   In opposition, respondent affirmed “she no longer has any files relating to transactions which occurred more than 25 years ago, that she had no recollection of the documents she would have had at the time, and that the documents submitted by petitioner, to the extent they may involve her, do not refresh her recollection.” In denying petitioner’s motion, the court held that petitioner failed “to meet the threshold set to warrant invoking the power of the court to grant pre-commencement disclosure” since petitioner “has not articulated that the estate has a cognizable cause of action or shown that respondents are exclusively in possession of information or documentation that may aid him in his pursuit.”

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Changes are Coming to New York City’s Housing Courts

         A commission created by Chief Judge Janet DiFiore has issued a report suggesting several major reforms to New York City’s Housing Court.  The report identified ways the court system could be ready for the roll out of the Universal Access to Legal Services law, enacted in 2017, that mandates a right to counsel in the courts for low-income litigants and suggested a number of changes that should be enforced in order to ready the courts for the impact of the law, due to be fully implemented by 2020; the law will likely lead to even more congestion and delay in an already over taxed court system.

           For example, the report recommended that assignment of counsel should occur at the earliest stage of litigation, in the hope that this will promote early resolution and diversion of cases away from already overcrowded dockets.  The report also suggested that counsel should regularly confer to extend the time before an answer is due so that attorneys and their clients have an opportunity to familiarize themselves with the case before submitting an answer. Tenants should also be informed of their rights as part of the court’s notice of petition.

           The report also aims to shed the common perception that the housing court is a second-class court system by introducing new policies and procedures to streamline proceedings and to demand greater professionalism of and accessibility to the courts themselves.  For example, the report urged that the court’s employees, including judges, receive training and practice to make the courts a more equitable and professional environment.  Unrepresented litigants should be treated more fairly with court personnel better explaining the process, and certain practices that allow attorneys to operate more freely in the courts than unrepresented litigants should come to an end. The report also called for a pilot project to stagger morning calendar start times, rather than the current 9:30 a.m. universal call that floods court rooms.  Finally, the report proposed that the total number of judges increase from the current figure of 50 to 60 and that the numbers of court staff, including court attorneys and clerks, need to increase as well.  Multiple structural changes to the courthouse buildings themselves should also take place.  

The full report can be viewed here.

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Landlord’s Witness Not Credible, Proceeding Dismissed for Failure to Serve

Laws are made to be followed. Eviction proceedings commenced under Article 7 of the Real Property Actions and Proceedings Law (RPAPL) in New York are governed by specific statutory provisions.  Following a motion by Respondent-Tenant in Hirakis v. Beepat, 2018 NYLJ LEXIS 892 (Civ. Ct. Q. Co. 2018) to dismiss the petition on the ground that she did not receive the notice of petition and petition, a traverse hearing was scheduled.  At the traverse hearing, the petitioner’s son (Emmanuel) claimed that he attempted service of the petition and notice of petition on the respondent on two different days at three different hours and then affixed the papers on the door of the subject premises in addition to mailing copies by certified mail and by regular mail.  After testifying, Emmanuel then stated that he was mistaken on his attempts and that he attempted service on only one day.  Emmanuel did not testify as to how many copies of the petition and notice of petition were affixed to the door.  Emmanuel further testified that he was not a licensed process server and did not serve more than five legal papers in the past year.  Noting Emmanuel’s multiple discrepancies in his testimony and his failure to testify as to how many copies of the papers were affixed to the door, Judge Hoyos ruled that Emmanuel was not a credible witness, and that petitioner failed to establish respondent was properly served under RPAPL §735.  Accordingly, Judge Hoyos dismissed the proceeding.  It is imperative that housing court litigants have savvy and experienced counsel.

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Landlord Ordered to Restore Tenant to Possession of Premises in Illegal Lockout Suit

The petitioner-tenant and respondent-landlord in Alcindor v. Raphael, 2018 NYLJ LEXIS 569 (Civ. Ct. N.Y. Co. 2018) executed a lease agreement for the subject premises in September 2016 that was to commence on November 1, 2016.  In addition, the landlord entered into a contract with the New York City Department of Housing Preservation and Development (“HPD”) under the Housing Assistance Program (“HAP”) wherein HPD was to pay the difference between the tenant’s share of the rent and the contract rent amount.  HPD subsequently sent the tenant a letter informing her that the subject premises had passed inspection and that she had to move into the subject premises by November 15, 2017 or she would lose her HAP subsidy.  

However, the landlord subsequently suspected that the tenant would be unable to afford her share of the rent and decided that he no longer wanted to rent the subject premises to her.  The landlord thus refused to sign an amended HAP contract.  After learning of the landlord’s decision, the tenant gained entry to the subject premises around November 21, 2017 or November 22, 2017 by changing the locks and moving in some of her personal property.  Around November 22, 2017, the landlord again changed the locks, thus depriving the tenant of possession.  As such, the tenant commenced a proceeding seeking possession of the subject premises on the ground that the landlord illegally locked her out.  

Finding that the parties had executed a valid lease agreement, that HPD had agreed to enter into a contract with the landlord for the full contract rent, that HPD had informed the tenant that she could move into the subject premises and that the tenant had a right to possession pursuant to the lease agreement, Judge Stoller ruled that the landlord’s denial of access based upon a belief that the tenant’s income would be insufficient to pay her share of the rent constitutes conduct giving rise to a cause of action sounding in illegal lockout. Accordingly, Judge Stoller awarded the tenant a final judgment of possession and ordered the landlord to restore the tenant to possession of the subject premises forthwith.

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Plaintiff’s Comparative Negligence Reduces Damages Award By One Third

New York State is a comparative negligence state.  Comparative negligence is an affirmative defense that reduces the amount that a plaintiff can recover based upon the degree to which the plaintiff’s own negligence contributed to the cause of the injury.  The plaintiff in Carone v. St. George Theater Restoration, Inc., 2018 NY Slip Op 50266(U) (Sup. Ct. R. Co. 2018) fell while exiting from her seat following a performance at St. George Theater.  According to plaintiff’s testimony, “I was in the seat.  I got up, moved to my right.  There was a half a step.  I slipped on that step.  I started to tumble [and fell] one or two steps, three steps” onto her back and then rolled.  Following a non-jury trial, Judge Marin concluded that the fall aggravated plaintiff’s degenerative lumbar spine condition.  Judge Marin stated that there were several elements to consider in determining liability, including “the adequacy of the lighting; whether there should have been hand railings; the depth of, and markings on, an access step; and the use of ushers for crowd control.”  The court found that plaintiff did not exercise adequate care for her own safety, given the fact that the lighting was adequate, she safely made her way up the steps and to her seat, which her companion managed to do in both directions, that the unusual configuration of the access steps was “open and obvious” and that there had been no prior comparable accidents. Although the court held the defendant liable for plaintiff’s injuries, the court also found the plaintiff to be one-third comparative negligent and reduced plaintiff’s damages award accordingly from $315,056.00.

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Triable Issues and Conflicting Medical Opinions Bar Entry of Summary Judgment

Following plaintiff’s independent medical examination, defendants moved to dismiss in this motor vehicle accident case on the ground that the injuries plaintiff allegedly suffered failed to meet the “serious injury” threshold requirements of Insurance Law §5102(d).  Plaintiff opposed the motion by submitting copies of her medical records and the sworn medical report of her doctor.  Finding that the defendants had established their prima facie entitlement to judgment as a matter of law by submitting proof that plaintiff’s spine, shoulder and knee injuries were resolved and that plaintiff had full range of motion, the burden shifted to plaintiff. Judge Mayer concluded that plaintiff did meet her burden by raising triable issues of fact as to her range of motion limitations and that the injuries to plaintiff’s spine and knee were significant, permanent, and related to the accident.  As such, Judge Mayer denied defendants’ motion for summary judgment holding that the conflicting medical evidence was a question for the jury to resolve at trial.  Ordonez v Labor, 2018 N.Y. Misc. LEXIS 279, 2018 NY Slip Op 30151(U) (Sup. Ct. S. Co. 2018).  Litigants may wish to bear in mind that obtaining non-economic damages differs from obtaining economic damages.

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Summary Non-Payment Proceeding Stayed Pending Administrative Agency’s Determination on High-Rent Vacancy Deregulation

Following last week’s post regarding the potential far reaching impact an upcoming Court of Appeals proceeding (the “Altman Case”) could have on high-rent vacancy deregulation, the petitioner-landlord in 170 Irving Ave. LLC v. Attalla, 2018 NYLJ LEXIS 458 (Civ. Ct. K. Co. 2018) (“Attalla”) commenced a summary non-payment proceeding to recover possession of an apartment and outstanding rent on the ground that the respondent-tenant failed to pay rent pursuant to the Lease Agreement.  One year prior to the commencement of the non-payment proceeding, the respondent had filed an administrative rent overcharge complaint with the New York State Homes and Community Renewal (“HCR”) seeking a determination challenging the high rent vacancy de-regulation of the apartment and rent overcharge.  Upon the parties’ request, the court wrote to HCR and requested that it expedite its determination.  The HCR responded and advised the court that the HCR would be unable to issue a determination “since the question of which increases the owner may use to the achieve exemption under high-rent vacancy deregulation is being addressed under pending court proceedings related to [the Altman Case].”

 Accordingly, the Attalla respondent filed a motion to stay the non-payment proceeding pending the outcome of the HCR determination asserting that “the decision in Altman could be dispositive in determining whether respondent may avail herself of the protections of the Rent Stabilization Code (RSC).”  Concluding that there were overlapping issues and common questions of law and fact with the Altman Case and that the HCR is “an administrative agency which has the necessary expertise to dispose of an issue,” Judge Poley ruled that it was provident for the court stay the non-payment proceeding pending the resolution of the HCR determination.  You may wish to consider carefully your next steps if you are involved in a rent regulation matter.

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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As Tenant In Continuous Possession of Premises, Apartment Did Not Become Deregulated

Navigating the world of the New York City rental market can be expensive and cut-throat.  Tenants who get their hands on rent-stabilized apartments are reluctant to let them go, while landlords are constantly trying to find ways to deregulate apartments so that they can charge market rental rates. The petitioner-landlord in Gavrielov v. Unger Consulting Group Ltd., 2018 NY Slip Op 50106(U) at *1, 2018 WL 577741 asserted that following the expiration of a 421-a tax abatement, the subject apartment became vacant when the under-tenant, Unger Consulting Group Ltd (“Unger”), was substituted in as the tenant in a renewal lease agreement between the landlord and International Pension Systems Ltd. (“International”).  The landlord claimed that upon International’s vacancy, the property became deregulated and it was entitled to charge market rates for the apartment. However, the devil is in the details and the slightest nuance can mean the difference between paying regulated rental rates and market rates for your apartment.  In this case, the Appellate Term found that even though International had technically vacated the apartment, Unger had been continuously occupying the apartment as an under-tenant of International for at least six years when Unger was substituted for International in the renewal lease agreement and that therefore, the apartment did not, in fact, become vacant and was therefore not entitled to deregulation.  Stay tuned…. because the Court of Appeals is about to hear the “Altman Case,” which could fundamentally change the practice of deregulating rent-stabilized apartments in New York.

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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General Release Dismisses Complaint

              In 2007, the plaintiff in Koller v. Paul Stamati Galleries, 2018 NY Slip Op 30135(U) at *1 (Sup. Ct. N.Y. Co. 2018) paid the defendants $80,000 for a piece of art he was told had been created by the artist Edgar Brandt. According to plaintiff, he later discovered that the value of the artwork was artificially inflated and was worth only about $40,000. As such, in 2009 the parties negotiated a settlement wherein defendants paid $15,000 to plaintiff and the parties executed a general release. According to plaintiff, during settlement negotiations, defendants’ counsel falsely represented to plaintiff that the leading authority on works by Brandt (Joan Kahr) had inspected the piece and was going to include it in a book about Brandt.  

           Thereafter, in 2015 plaintiff decided to sell the artwork, however, after having trouble with an auction house accepting it, plaintiff contacted Kahr who said that she could not authenticate it because it did not have Brandt’s signature.  Plaintiff commenced the instant action alleging that he would not have settled the dispute for $15,000 but for defendants’ counsel’s misrepresentation that Kahr had inspected the artwork and confirmed that it was a Brandt.  The defendants moved to dismiss the complaint because the action was barred by the 2009 general release.  Plaintiff opposed the motion, asserting that the dispute in 2009 was about the purportedly inflated price of the artwork, while the current dispute was about the authenticity of the artwork.

           Citing well-established New York law that “[a] release may not be treated lightly.  It is a jural act of high significance without which the settlement of disputes would be rendered all but impossible,” Judge Bluth ruled in favor of defendants and dismissed the complaint. Judge Bluth reasoned that the general release “does not contemplate specific disputes… [i]t releases all claims” and had plaintiff wished to narrow the scope of the release then he “should have included conditional language” or “included language stating that the piece was an authentic Brandt.” Indeed, plaintiff could have had the artwork appraised to confirm that it was a Brandt before signing the release.  However, after failing to take adequate precautions, Judge Bluth concluded that plaintiff cannot now “avoid his obligations under the general release because he failed to exercise proper due diligence.”

           As this case illustrates, when executing legal documents, even when the parties appear to have reached a friendly agreement and are solely finalizing the end-game release, the specific verbiage is nonetheless critical.  Detail-oriented contract attorneys are key.  

(internal citations omitted)

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Labor Law §200 Claim Dismissed

          Although New York Administrative Codes do contain strict liability protections for construction workers in the state, liability under such provisions is not inescapable. Recently, the plaintiff in Warchol v. City of New York, 2018 NY Slip Op 50049(U) at * 1 (Sup. Ct. Q. Co. 2018), commenced an action against the City of New York and the New York City Department of Education after he was injured while climbing through a fence at the school where he was performing construction work. The construction site was bordered by a fence which had four gates through which the construction workers could enter and exit the construction site. According to the plaintiff, at around 8:00 p.m. on the day of the accident, he noticed that one of the gates was locked.  Plaintiff conceded that, despite the fact that there were additional gates, “he did not look for an open gate before he tried to squeeze through the opening in the iron fence” causing him to hit a metal bar with his knee.

           Plaintiff’s complaint included a cause of action for breach of Labor Law §200 which imposes a duty on employers, owners, and general contractors to use reasonable care and to provide “reasonable and adequate protection to the lives, health and safety” of workers. (Labor Law §200(1)). However, a plaintiff’s negligence can be applied to offset any liability to the defendant. Concluding that “the sole proximate cause of the plaintiff’s accident was his action in attempting to exit the school grounds by squeezing through the bent bars of the iron fence rather than using one of the other three construction gates or asking his foreman to open the construction gate,” Judge Weiss held that the defendants had demonstrated their entitlement to summary judgment dismissing plaintiff’s claim.

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Non-Compete Agreement Upheld Only to Extent of Enjoining Former Employee From Soliciting Clients For Two Years

Recent advances in technology have spurred companies to increasingly require their employees to sign restrictive covenant agreements limiting their ability to work and/or solicit within a certain distance and for a fixed period of time.  New York courts tend to uphold such agreements, provided the restraint “(1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public.”  

The plaintiff in Cindy Hoffman, D.O., P.C. v. Raftopol, 2018 N.Y. Misc. LEXIS 34 at *1 (Sup. Ct. W. Co. 2018), a dermatologist and owner of several dermatology offices throughout New York State, hired defendant, a physician’s assistant, in July 2012.  As a condition of her employment, defendant was required to sign a non-compete agreement wherein she agreed that for two years after the date of termination of her employment she would not be employed by a competitor of plaintiff within a fifteen-mile radius of any of plaintiff’s three offices.  Defendant terminated her employment with plaintiff on May 31, 2017.  Thereafter, plaintiff learned that defendant was working for Hudson Dermatology, which had several offices within fifteen miles of plaintiff’s offices. Accordingly, plaintiff commenced an action and moved by order to show cause for a preliminary injunction to enforce the non-compete agreement.  

When the parties appeared in court regarding the order to show cause, they signed a stipulation wherein defendant agreed that she “will not solicit clients of plaintiff’s practice.”  In opposition to plaintiff’s motion, defendant contended that her job with plaintiff was her first as a physician’s assistant, that signing the non-compete agreement was a pre-condition of her employment, that there was no negotiation as to its terms and that her inability to work in multiple offices belonging to her new employer “had resulted in her being unable to work enough hours to pay her expenses.”  In analyzing the enforceability of the non-compete agreement, Judge Ruderman drew a distinction between restrictive covenants against professionals, which are common and generally acceptable, because the services of “members of a learned profession… are unique or extraordinary” compared to that of average employees.  

Concluding that “it is far from clear, on this record, that a physician’s assistant… who works under, and at the direction of, a physician provides the type of unique services” that prior New York cases have found to meet the standard of a “learned profession,” and that “there are powerful considerations of public policy which militate against sanctioning the loss of a person’s livelihood,” Judge Ruderman granted plaintiff’s motion for a preliminary injunction “only to the extent that defendant is enjoined from affirmatively soliciting clients of plaintiff’s practice for a period of two years from the date of termination of her employment with plaintiff.”  In reaching this decision, the court reasoned that plaintiff’s concern that defendant could “help plaintiff’s competitor to affirmatively poach clients… can largely be addressed by” the restriction against defendant soliciting plaintiff’s patients as agreed upon in the earlier stipulation.

(internal citations omitted)

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Tortious Interference With Business Relations Claims in New York

A plaintiff alleging a cause of action for tortious interference with business relations must allege “the existence of a valid contract between the plaintiff and a third-party, and the defendant’s knowledge of such contract, the defendant’s intentional and improper procurement of the breach of such contract by the third-party,” the third party’s breach and damages. Burrowes v. Combs, 25 A.D.3d 370, 373, 808 NYS2d 50 (1st Dept. 2006). A tortious interference with prospective business relations is harder to demonstrate because, in that case, the plaintiff cannot rely on an established contractual relationship with the third-party. Accordingly, a plaintiff alleging a tortious interference with prospective business relations must allege the existence of a profitable business relationship, defendant’s knowledge of the same, intent to interfere with said relations, defendant’s use of dishonest, unfair, improper or wrongful means, and damages.  American Baptist Churches of Metropolitan New York, et. al. v. Galloway, et. al., 271 A.D.2d 92, 100, 710 N.Y.S.2d 12 (1st Dept. 2000).  Such wrongful conduct must amount to a crime or an independent tort, such as the threat or use of “physical violence, fraud or misrepresentation, civil suits and criminal prosecutions.”  Guard-Life Corp. v. Parker Hardware Mfg. Corp., 50 NY2d 183, 191 (N.Y. 1980).  In the alternative, a plaintiff can demonstrate that the defendant was motivated solely by malice or an intent to inflict injury on the plaintiff, however, this exception will not apply if the defendant was motivated by business or economic objectives.  These amplified pleading requirements for breach of prospective business relations assist in avoiding stifling competition.  

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Default Judgment Denied; Plaintiff Failed to Show Defendant Subject to Personal Jurisdiction

          One of the initial challenges you may face in litigation is obtaining personal jurisdiction over your opponent.  Personal jurisdiction refers to the power a court has to make a decision regarding the party being sued.  Under New York law, there are four ways that you can obtain personal jurisdiction over a defendant who does not reside in the State of New York: when the defendant: 1. transacts any business within the state; 2. commits a tortious act within the state; 3. commits a tortious act without the state causing injury to a person or property in New York; 4. owns, uses or possesses any real property within New York.  The determination of whether a non-resident defendant has transacted business in New York sufficient to subject it to the jurisdiction of the Courts of New York “rests on whether the defendant, by some act or acts, has purposefully availed itself of the privilege of conducting activities within New York.”  In addition, there must be “an articulable nexus or a substantial relationship between a defendant’s in-state activity and the cause of action asserted.”

           The plaintiff in Ford v. Bhatoe, 2017 N.Y. Misc. LEXIS 4820, 2017 NY Slip Op 51740(U) at *1 (Sup. Ct. K. Co. 2017) sued defendant Bhatoe, a resident of Canada, following a car accident in Pennsylvania.  According to Ford, Bhatoe’s negligent operation of the vehicle he was driving was the cause of the accident.  Bhatoe failed to answer the complaint and, instead, filed a motion to dismiss the complaint for lack of personal jurisdiction.  Ford responded by filing a motion for default judgment.  In support of his motion for a default judgment, Ford asserted that New York State Courts obtained personal jurisdiction over Bhatoe because the summons and complaint were served on Bhatoe, pursuant to CPLR 308, while he was present within the State of New York.  However, Judge Rivera disagreed, holding that “the fact that service was effectuated in accordance with CPLR 308 on an individual who is not domiciled in the State of New York is not sufficient by itself to confer Constitutional personal jurisdiction” absent a showing that Bhatoe had contact with the State of New York sufficient to meet the standard articulated above.  Judge Rivera denied Ford’s motion for a default judgment, without prejudice, and further stayed Bhatoe’s motion to dismiss pending completion of discovery on the issue of Bhatoe’s contacts with the State of New York.

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)

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Can Blockchains Revolutionize The Way We Store Data?

           2017 was the year of cryptocurrencies.  In September, cryptocurrency posted a record $11 billion in trading volume and toward the end of 2017, there was a trading frenzy around bitcoin as its value soared to nearly $20,000.  It comes as no surprise then that bitcoin was one of the most googled terms of 2017.  The proliferation of cryptocurrencies such as bitcoin is quickly changing the landscape of global e-commerce, financial markets and business investment in addition to the way that individuals transfer money or make purchases overseas.  Cryptocurrencies are also causing a sharp divide among investors, economists and academics, with many labeling bitcoin a fraud, likening the trading frenzy it has spawned to past economic bubbles.  They maintain that prices may be high now because there is a lot of interest, however, the concern is that the higher prices are based upon nothing but speculation.  Cryptocurrencies have no inherent value, are not tangible assets, and their only real value comes from the belief that they are worth something.  

           And while many are skeptical about cryptocurrencies themselves, it is the software that records every cryptocurrency transaction – the blockchain – which has many people excited. So, what exactly is a blockchain?  It is basically a ledger that records each purchase and sale of bitcoin.  The difference between blockchain and traditional ledgers is that it is decentralized and hosted simultaneously by millions of computers spread across multiple continents.  Each transaction is logged and verified by multiple “miners,” and information stored on a blockchain is accessible to anyone on the internet so the data on a blockchain is easily verifiable, up-to-date and incorruptible.  Miners are like auditors who use special hardware and software to solve the complex math problems that each bitcoin transaction creates. Each time a miner solves the problem, it is uploaded to the block and that transaction is forever part of the blockchain.  

            Moreover, the blockchain platform is not just limited to the financial services industry; it can also be utilized by virtually every other aspect of society.  For example, blockchains can be programmed to record birth and death certificates, deeds and titles of ownership, electoral ballots and health care records.  Many world leaders are already starting to take notice of this revolutionary technology.  The Prime Minister of Slovenia has declared that he wants Slovenia to be recognized as the blockchain destination in the European Union, Estonia has utilized block chain technology to maintain health records and support its government database system, Georgia has recently moved its land registry onto the blockchain and in late 2017 Dubai launched its plan to become the first blockchain-powered government with all government transactions and papers secured on a blockchain by 2020.

           It remains to be seen how bitcoin will fare in 2018, however, one thing is clear: blockchain will revolutionize the way that governments, individuals and businesses conduct business and transfer and store and protect critical data.

The Law Office of Aaron M. Schlossberg, Esq., P.L.L.C.

(This writing is for general information purposes only, should not be construed as legal advice and does not establish an attorney-client relationship)