Archives: Contract

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Judge Rakoff Gives the City an Unpleasant Surprise

It’s very common in commercial contracts for one party to agree to obtain insurance coverage for its counter-party. But according to Judge Rakoff, the scope of that coverage may be less than meets the eye. In The City of New York v. Crothall Healthcare, the City hired Crothall to provide janitorial services to the city’s … Continue Reading

Judge Pauley’s Special Relationships

When sophisticated investors carefully document their relationship, it’s unusual to see a claim for negligent misrepresentation. After all, sophisticated parties typically are only held to those commitments they agree to in writing. But as Judge Pauley’s opinion in Kortright v Investcorp teaches, unusual is not the same as never. Investcorp, a well-known investment adviser, agreed to … Continue Reading

Judge Netburn Shrinks an Arbitration Clause

Here’s a pop a quiz, drawn from Judge Netburn’s Report and Recommendation in Borecki v. Raymours Furniture Co., Inc. Is the following arbitration provision in a contract between a store and its customer a broad or narrow arbitration requirement: “[A]ny claim, dispute, or controversy between you and us that in any way arises from or relates to the … Continue Reading

Judge Pauley Pierces the Veil

Judge Pauley’s opinion in LiquidX v. Brooklawn Capital, LLC is a good example of a company paying a steep price for trying to outwit its creditors. The Receivables Exchange (TRE), a financial startup that created an exchange for the purchase and sale of accounts receivable, was on the verge of a desperately needed round of financing. … Continue Reading

Judge Oetken Teaches Doctors a Hard Lesson about Promissory Estoppel

A promise made is a promise kept—unless it is made over the phone under an ERISA plan.  So ruled Judge Oetken last week, in a dismissal of a doctor’s lawsuit to collect payment allegedly promised by a healthcare benefit plan administrator.  McCulloch Orthopedic Surgical Servs., PLLC, a/k/a Dr. Kenneth E. McCulloch v. United Healthcare Ins. … Continue Reading

Judge Rakoff Issues First Verdict Ever For Insurer and Against Bank for Bad Mortgages

Judge Rakoff issued an opinion with significant implications for parties litigating cases involving mortgage backed securities. In Assured Guaranty v. Flagstar Bank, Assured sought to recover some $89 million in insurance claims it paid to bondholders who invested in Flagstar bonds secured by what turned out to be lousy mortgages. When the mortgage market collapsed, the … Continue Reading

Judge Nathan, the Family Corleone, and Contract Repudiation

Forty-three years after the publication of The Godfather, a prequel to the Corleone story now is the focus of a copyright battle before Judge Nathan in Paramount Pictures v. Puzo. In 1969, Mario Puzo sold Paramount Pictures certain copyrights to the novel, including “the sole and exclusive right: to make and cause to be made literary and … Continue Reading

Judge Engelmayer on Getting It Right and Summary Judgment

Once parties decide to litigate, it’s not so easy to extricate – as Judge Engelmayer’s opinion in First American Intern. Bank v. The Community’s Bank amply demonstrates. Community’s Bank entered into an agreement with FAIB to share any Award of local development funds it received from the federal government. Sure enough, Community’s Bank was awarded a … Continue Reading

Judge Holwell on Facebook

As Facebook prepares its much ballyhooed IPO, in Fteja v. Facebook Judge Holwell addressed the question of the enforceability of Facebook’s terms of use against individuals users.  Mustafa Fteja, a Staten Island resident, alleged that he suffered “mental anguish” when Facebook disabled his account “without justification and for discriminatory reasons.”  But because Fteja clicked that he agreed … Continue Reading

Judge Scheindlin on Reformation and Mutual Mistake

Subprime mortgage litigation doesn’t always pit shareholders against banks which invested unwisely. Banks have been suing each other, too.  Exhibit A is Judge Scheindlin’s most recent opinion in Citibank v. Morgan Stanley, which provides a great primer on reformation and mutual mistake between “two of the most sophisticated financial institutions in the world.” The opinion … Continue Reading

Judge Koeltl on the Implied Covenant of Good Faith and Fair Dealing

Judge Koeltl’s opinion in First American Intern. Bank v. The Community’s Bank (S.D.N.Y.) presents an interesting example of a claim for breach of the implied covenant of good faith and fair dealing.  Since the implied covenant of good faith occasionally serves as a “Hail Mary” for litigants who can’t identify a more conventional contract claim, it’s useful to see … Continue Reading

Judge Jones on Enforcing Liquidated Damages Clauses

The apparent certainty of a liquidated damages clause may seem to be an efficient remedy for a breach of contract.  But, the enforceability of liquidated damages clauses typically is hotly disputed.  Judge Jones’ opinion in L & L Wings, Inc. v. Marco Destin, Inc., No. 07 Civ. 4137 (S.D.N.Y.) contains a helpful analysis of when liquidated damages are appropriate, but … Continue Reading

Judge Preska on the “Sole Shareholder” Rule and Pleading Contract and Fraud Claims

Judge Preska’s valuable opinion in IMG Fragrance Brands, LLC v. Houbigant, Inc.,09 CV 3655 (LAP) untangles the financial dealings of Plaintiffs (IMG), the licensees of fragrance trademarks from the Defendants (Houbigant).  The opinion includes a neat summary of the application of the common law “sole shareholder rule” to claims of fiduciary breach.  The sole shareholder … Continue Reading

Judge Holwell on Lost Profits, Start Ups and the Wrongdoer Rule

Judge Holwell’s opinion in Ho Myung Moolsan v. Manitou Mineral Water (pdf), 07 Civ. 07843 (S.D.N.Y., Dec. 2, 2010) is a good read if you ever wrestle with proving “lost profits.”   Plaintiff Moolsan, a South Korean mineral water reseller, brought a breach of contract action against defendant Manitou, a mineral water manufacturer.  Moolsan claimed $133 … Continue Reading