New York Business Lawyer Blog

In our last article, we spoke about expert witnesses and how they play an important, if often misunderstood, role in trials in New York. Their main function is to provide opinion evidence about important issues that may be beyond the understanding of the average person, because of the specialized skill or training involved. Scientists, engineers, forensic accountants, and doctors, each can be expert witnesses under the right circumstances. They will not be able to testify as expert witnesses merely because of their title or because of their superior knowledge. The jury actually has to need them to shed some light on an issue important to the case that is simply beyond the knowledge and experience of the average juror. Many times, if a jury can figure it out on their own, the trial court will let them do just that and prevent an expert from testifying on the given subject.

A few interesting cases clearly show the limits of expert testimony in New York. In Ferguson v. Hubbell, 97 N.Y. 507 (1884), the main issue was whether the defendant was liable for two fires that had been intentionally set to clear brush and vegetation off his land. The fires had spread, after the wind kicked up, to plaintiff's land and destroyed plaintiff's house and barn. The plaintiff claimed that the fires should not have been set because it was too dry and too windy to control them. At trial, the defendant established all the facts the jury needed in order to decide whether the fires had been properly, and safely, set. He and his witnesses testified about the weather conditions, the speed of the wind, and the condition of the land at the time of the fires. The defendant, however, evidently succumbed to the urge to overplay his hand. He and his witnesses offered their opinion that it was proper to set the fires when they did. This was based on their supposed superior knowledge and experience in clearing land as farmers. The defendant won at trial; the jury ruled in his favor. The verdict, however, was overturned on appeal. The court held that no one should have been allowed to offer their opinion as to whether the fires had been properly set; that was the central issue the jury had to decide. According to the court, the jury had the common knowledge and experience with fire, brush, and timber, necessary to determine, based on the evidence presented at trial, whether the fires had been properly set. The important thing was not that the defendant and his witnesses had superior knowledge; it was that there was no need for their superior knowledge. The jury had a sufficient understanding of the issue to allow it to make a rational, reasonable, and just decision, without the help of expert opinions.

The much more recent case of Christoforatos v. City of New York, 90 A.D.3d 970, 935 N.Y.S.2d 641 (2nd Dept. 2011), dealt with a situation which is more common today than the burning of a fallow field: The plaintiff slipped and fell when he was entering a portable restroom in a New York City park. He claimed that he slipped on a bare patch of ground that had become slippery in front of the entrance to the restroom. The plaintiff sought to offer expert testimony about whether it was proper to place the portable restroom on grass, rather than pavement, where people walking to and from the restroom could cause a bare spot that could become slippery when wet. The appellate court upheld the decision of the trial court to exclude the offered expert testimony because it was unnecessary; bare spots being caused by large numbers of people walking on grass and those bare spots becoming slippery when wet, was something well within the knowledge and experience of most jurors. It did not matter that the plaintiff's expert might have superior knowledge regarding the propensity of grass to wear out and die when trampled upon by a sufficiently large number of people or of the particular viscosity of the resultant bare ground when it became wet and turned to mud. What mattered most was that just about everyone has seen bare spots on grass, be it a self-made walking trail across a field in a park or a worn out section of a baseball field; everyone understands that the bare spots become slippery when wet; and jurors do not need an expert to tell them what this means or what can happen as a result.

As you can see, expert witnesses are not always necessary. You cannot use one at trial simply because you want to, even if she is most well-qualified, knowledgeable witness there is on a particular subject. If a jury needs an expert's opinion, then you can use an expert at trial; if they do not need one, then you cannot use one.

Trials are fascinating. People love to watch them. Crime dramas, police stories, and shows that feature the ins and outs of a law firm, and the lawyers that make it work, have filled prime time TV for generations. Just about everyone has their favorite. Trials, which form a big part of each, are just as interesting from the inside. In New York, there are intricate rules of evidence; the subtleness of persuasion without overt argument, as in a finely hewn opening statement; the art of insightful cross examination; and the passion of a good closing argument. But one of the most often misunderstood aspects of the trial is the expert witness, and the role she plays in persuading a jury and winning the case.

Every trial has witnesses. Some give live testimony. You get to hear what they say as they say it; watch their facial expressions and their body language as they testify; actually see how they react to tough questions. Others merely have their deposition testimony read. You get to hear a lawyer read what the witness testified to when she was deposed, when the attorneys questioned her before the trial even began; not exciting, but often necessary. Witnesses most often testify about facts, about what they saw, what they heard, or what they did. The reason for this is fairly simple: When witnesses testify falsely about facts, it is much easier to show they are lying, and to punish them accordingly, than if they testify falsely about their opinion. See Ferguson v. Hubbell 97 NY 507 (1884). It is one thing to show that an opinion is wrong; it is much more difficult to demonstrate that the person who gives an opinion does not really believe it.

Sometimes witnesses can testify as to their opinions. An expert witness can offer her opinion about why certain things happened. When a case involves an important matter involving art, science, or technical knowledge that requires special skill or knowledge that the average person does not normally have, an expert is allowed to give her opinion to help enlighten the court and the jury. An expert will not be permitted to offer her opinion at trial merely because she has greater knowledge or experience in a given area than the average juror. Her opinion also has to help clarify an important issue which is beyond the understanding of the average juror. See De Long v. Erie Cnty., 60 N.Y.2d 296, 307, 457 N.E.2d 717, 722 (1983). In other words, it's not enough that an expert is an expert; the jurors must need her opinion in order to be able to make informed judgements upon something that is beyond their knowledge and understanding.

Many cases in New York point out an obvious, and well-placed, bias toward allowing jurors to make up their own minds, to draw their own conclusions if possible, on the evidence before them, without the opinions of experts. J. Erie, a long time ago, speaking for the Court of Appeals in Ferguson v. Hubbell, 97 N.Y. 507, 513-514 (1884), said it best:

Better results will generally be reached by taking the impartial, unbiased judgments of twelve jurors of common sense and common experience than can be obtained by taking the opinions of experts, if not generally hired, at least friendly, whose opinions cannot fail generally to be warped by a desire to promote the cause in which they are enlisted.

There is a lot of truth in those words. It is easy to look at an expert as nothing more than a hired hand, who gives an opinion not because she believes it but because she thinks it will get her hired the next time; that is a common line of cross examination.

Sometimes, however, jurors will need expert testimony to fully understand how and why something happened. The expert testimony of a forensic accountant might be very helpful to a jury trying to figure out where the money went in a Ponzi scheme, or whether a business that made a fidelity claim because an employee allegedly stole money, actual had money taken from it. A jury trying to determine whether an insured intentionally set fire to his house or business to collect the proceeds of his homeowner's, landlord's, or business owner's policy of property insurance, first has to decide whether the fire was intentionally set; it's difficult to intentionally set an accidental fire. The testimony of a cause and origin expert, about what caused the fire, whether an accelerant was used, whether all accidental causes of the fire had been ruled out, or even where the fire actually started, probably would greatly aid that jury.

Even when an expert is allowed to testify, because her special knowledge and understanding is needed, a New York jury is not bound to accept the expert's conclusions; it can disagree with her findings. Allowing the jury to watch and listen to the expert as she gives her opinion, how it was reached and what it was based on, and having the jurors compare it to all the other evidence presented at the trial, allows them to use their common sense and experience to make up their own minds. Perhaps that's the best approach. After all, an expert is not right just because she is an expert, but neither is she inherently wrong merely because she is an expert. Her opinion should be judged, just as all the other evidence in the trial is, by the jury.

We are going to pick up where we left off in our last article on subrogation in New York. We were talking about a subrogation case I had that showed how to overcome an exculpatory clause in a contract that absolved one of the parties from liability for its own negligence. In my case, it was an alarm company that monitored a warehouse that had a break-in in which clothes valued at several hundred thousand dollars were stolen. If the alarm company's actions in responding to the alarms at the warehouse amounted to ordinary negligence, the subrogation action would fail because the insured, who signed the contract, could not recover, and therefore neither could the insurer. There could be a recovery, however, if the alarm company's actions amounted to gross negligence because, at least in New York, a party cannot absolve itself from liability for its own gross negligence. See Sommer v. Fed. Signal Corp., 79 N.Y.2d 540, 554, 593 N.E.2d 1365, 1370-71 (1992).

According to the court, the basic facts were undisputed. The alarm company received alarms that something had happened at the warehouse, and notified the police and the designated representative of the business, as it was supposed to do. The police never arrived. The warehouse representative was told only that the alarms had been received. He thought they might be false alarms, as had happened in the past, and waited approximately a half hour for the alarm company guard to get to the warehouse, investigate, and call him back to let him know whether there had been an actual break in. When he did not get a call back, he went to bed. The alarm company, however, waited until the next shift, approximately three hours after it received the alarms, to have one of its guards respond to the warehouse to investigate, and it never told anyone from the warehouse that it would not be able to respond for so long; both were violations of its own guidelines. It also only had only a small number of guards on duty to respond to calls in a very large, populated area. In order to enter the warehouse the guards first had to travel back to the central station, get the key for the warehouse, and then drive a long distance back to the warehouse. Only then would they be able to investigate the alarms.

The key was not any one thing that the alarm company did wrong with this particular break in. The fact that it waited three hours to have a guard investigate the alarm, when it stated the guard would respond in 15 minutes, was not, by itself, gross negligence. Instead, I argued the evidence of gross negligence was found in a system that inevitably caused such delays: The evidence of the low number of guards on duty; the large area they had to cover; the long distance from the guard station to the warehouse that made it difficult even on a good night to make it to the warehouse in time; and the violation of its own guidelines. This was evidence of the gross disregard for the rights of others, of actions that smack of intentional wrongdoing, which is required to get to trial on claims of gross negligence.

Continue reading "Subrogation In New York V - Teamwork In Action " »

The last few articles have discussed the basic concepts and rules of subrogation in New York. It is the equitable doctrine that allows an insurer that pays a covered claim to its own insured to stand in the shoes of its insured to recover the money from the person or entity that caused the loss.

Subrogation, once you determine that the insurer can bring the claim, at least in claims involving property loss or damage to businesses, is really an exercise in commercial litigation. Whoever the insured could sue to recover for the loss it suffered, the insurance carrier also could sue; whoever the insured could not sue, the insurer also could not sue.

A good example of this is a subrogation claim I had that involved a theft of a few hundred thousand dollars of merchandise from a clothing warehouse. The thieves, who never were caught, were ingenious. They broke into the warehouse and jerry-rigged a conveyor system so that it brought the clothes right to the loading dock door. Once there, the thieves loaded the clothes into a waiting truck and drove off. The whole operation took approximately 2 hours; not bad for a night's work.

The warehouse, which had its own policy of property insurance, made a claim to recover for the value of the clothes, which its insurer paid because theft was a covered cause of loss under the policy. The insurance company then wanted to try to recover the money it paid the insured, from the parties responsible for the loss.

There was nothing that barred the insurance company from bringing a subrogation claim. The loss clearly was covered under the warehouse's own policy of insurance, which protected against losses caused by theft; the insurance company had to pay, it did not make a voluntary payment. The thieves were never found, so they could not be sued. The warehouse, however, had a central station alarm, and there was nothing in the alarm contract that barred a subrogation claim. There was a big obstacle, however, preventing the warehouse from recovering from the alarm company even if the alarm company's actions had caused the loss; and, if the warehouse could not recover, neither could the warehouse's insurer in subrogation. The alarm contract contained an exculpatory clause absolving the alarm company from liability for its own negligence. Unless the alarm company's actions amounted to more than ordinary negligence, there would be no recovery against it.

One way to overcome an exculpatory clause in a contract which absolves a party from liability for its own negligence, is to prove gross negligence. Gross negligence is the failure to use even slight care, or conduct that is so careless as to show complete disregard for the rights and safety of others; it smacks of intentional wrongdoing. At least in New York, a party cannot absolve itself from liability for its own gross negligence and, most often, whether a party's actions amount to gross negligence is an issue of fact to be tried be a jury rather than determined on a motion for summary judgement. See Sommer v. Fed. Signal Corp., 79 N.Y.2d 540, 554, 593 N.E.2d 1365, 1370-71 (1992).

The insured, its representatives, and I worked as a team to obtain evidence that the alarm company was grossly negligent in how it responded to the alarms at the warehouse. The court said this was enough to defeat the alarm company's motion for summary judgement. We'll show how this was done, in our next article.

The last two articles discussed the rules behind the equitable doctrine of subrogation in New York and how they all boil down to an application of the basic idea of fairness. Someone who damages another's property should not be able to avoid liability merely because he was lucky enough to harm a business or person who had the foresight to purchase an insurance policy that fully insured, and reimbursed the insured for, the loss. Subrogation, in effect, holds the wrongdoer to account. Even if the insurer has paid the insured for the property loss, the wrongdoer still has to pay the insurer.

Subrogation claims come in all shapes and sizes, at least for commercial insurance policies which protect against property damage and business interruption. Recently, Lloyd's of London made the news by bringing a subrogation action against a New Hampshire utility to recover the money it paid its insured as a result of a fire. According to news reports, a fire engulfed a block of businesses in Hampton Beach, New Hampshire, in February 2010. One of those stores, Decalomania, was insured by Lloyd's of London. The water used to put out the fire allegedly damaged Decalomania's property and, pursuant to the policy of insurance it issued to Decalomania, Lloyd's of London paid Decalomania $33,000.00 as reimbursement for that property damage. Lloyd's of London has brought suit against the local electrical utility, Unitil, to recover the $33,000.00 it paid Decalomania. It alleges that the fire started due to a fault in an electrical feeder line owned by Unitil and that Unitil failed to use reasonable care when maintaining the line, which was under its exclusive control.

Whether or not Lloyd's of London will be successful in recovering, from Unitil, any of the $33,000.00 it paid to Decalomania, will depend on a number of factors. If the subrogation action had been brought in New York, rather than New Hampshire, Unitil first would be able to challenge whether the policy required Lloyd's of London to pay Decalomania for the loss. If the policy did not provide coverage for Decalomania for the loss, then Lloyd's of London made a voluntary payment for which it could not maintain a subrogation action. See Fid. & Cas. Co. of N.Y. v. Finch, 3 A.D.2d 141, 145, 159 N.Y.S.2d 391, 396 (3rd Dept. 1957).

Continue reading "SUBROGATION III - RECOVERING FOR PROPERTY DAMAGE CLAIMS IN NEW YORK " »

In our last article, we discussed subrogation, a legal concept that plays a large role in commercial property insurance coverage in New York. It is the equitable doctrine that allows an insurer, once it has paid its insured for a covered loss under its insurance policy, to try to recoup the money it paid from the party that caused the loss.

Once an insurer pays its insured for a covered loss, it stands in the insured's shoes, at least up to the amount of the payment. If the insured can sue someone for causing the loss, so, too, can the insurer, to try to get its money back. The insurer does not even always have to name itself in the subrogation action. If the insured properly assigns its rights to recover for the loss to the insurer, for example by signing a subrogation receipt, the insurer can name the insured as the only Plaintiff, even though the real party in interest is the insurer. See CPLR 1004.

When the insurer tries to recover its money, it does not do it alone; the insured has a duty under the policy to cooperate with the subrogation action. Basically, the money the insured receives for the loss from the insurer comes with strings attached; the insured has to try to help the insurer get its money back from the party that has caused the loss. Most policies, however, allow the insured to waive subrogation, as long as the agreement to do so is in place before the loss occurs. This means the insured can waive the right of its insurer, which pays it for a covered loss, to recover in subrogation from the party which has caused the loss. A common example is found in a lease, in which the tenant and the landlord each give up the right of its insurer to recover from the other for a covered loss, such as a fire loss, that it might suffer due to the negligence of the other. See Kaf-Kaf, Inc. v. Rodless Decorations, Inc., 90 N.Y.2d 654, 660, 687 N.E.2d 1330, 1332-33 (1997).

Continue reading "SUBROGATION II - The Just Details" »

There are many terms, related both to insurance and business, which seem too intimidating for most people even to want to try to understand. Subrogation is one such term. It sounds like an impressively dense legal concept that only can be understood through the use of skilled professionals pouring over thick stacks of documents trying to decipher obtuse language to discern some hidden meaning or obtain some pearl of wisdom. Well, so much for fantasy. It really is a straightforward legal concept that every New York business and insurance adjuster should become familiar with, because it can affect the business' recovery after a property or casualty loss.

Subrogation is an equitable doctrine that allows an insurer, which has paid its insured for a covered loss, to stand in the shoes of its insured to try to recover the money it paid, from the party that caused the loss in the first place. See Kaf-Kaf, Inc. v. Rodless Decorations, Inc., 90 N.Y.2d 654, 660, 687 N.E.2d 1330, 1332-33 (1997).

The easiest way to think of subrogation is in terms of an insurance policy that provides coverage for property damage. Just about every New York business has one. For the most part, every insurance policy protects the insured, to one degree or another, from responsibility, or liability, for its own negligence. Homeowners' policies, and many business owners' policies, also known as "BOP" policies, often also provide property coverage. That is, the policies require that the insurer pay the insured for the loss or damage to the insured's real or personal property when the loss or damage results from a cause of loss covered under the policy. When the insured makes a claim to recover under its own policy for damage caused to its own property, called a first-party property claim, the insurer will evaluate, or adjust, the claim. If the damage was caused by a covered cause of loss, the insurer will pay the insured either the value of the property at the time of the loss, including depreciation, or the cost to repair or replace the property if the repair or replacement is done within a certain amount of time after the loss.

Once the insurer pays the insured's first-party property claim, the insurer can try to recover the money it paid to its insured, from the person or entity that caused the damage in the first place. This is subrogation. By paying the insured's claim, the insurer becomes subrogated to the insured's right to recover from the party that caused the damage, to the full amount it paid the insured under the policy. The insurer can sue in the insured's name, even when trying to recover the insured's uninsured loss, when the insured assigns all its rights to recovery to the insurer, which it often does in a subrogation receipt. See CPLR 1004, and CNA Ins. Co. v. Carl R. Cacioppo Elec. Contractors, Inc., 206 A.D.2d 399, 400, 616 N.Y.S.2d 187 (2nd Dept. 1994).

Continue reading "SUBROGATION IN NEW YORK: THE BASICS - IF THE SHOE FITS " »

The last time we spoke about injunctions, we described what they are and how to obtain them. These effective, if hard to get, remedies play a pivotal role in New York litigation, in all sorts of disputes, ranging from those involving businesses large and small, to neighbors fighting over a boundary line. Illustrating how they have been used is a good way to know how they can be used to effectively protect your business' rights and interests in New York.

One of the biggest recent commercial disputes in which a preliminary injunction played a key role was the patent dispute between Apple and Samsung Electronics, in which Apple claimed that Samsung smartphones and tablet computers impinged on Apple's patents for its versions of those products. Apple twice asked the United States District Court for the Northern District of California to issue a preliminary injunction forbidding the sale and distribution of Samsung's Tab 10.1 tablet. The first time, the court refused because it held that Apple was not likely to succeed on the merits at trial. The second time, after the appellate court ruled that Apple was likely to succeed on the merits, at least as to the enforceability of its relevant patent, the trial court issued the preliminary injunction. That was a large victory in an even larger case. Apple and Samsung are two of the largest competitors in the tablet computer market and one was ordered not to sell its product anywhere in the United States, even before the merits of the dispute could be fully decide at trial. According to news reports, Samsung sells approximately 300,000 tablets in the United States every three months. That is a large amount of product that a major corporation no longer could sell and a large share of the tablet computer market that no longer was available for the purchasing public to buy.

Continue reading "Injunctions in New York II - 2 Bites of the Apple" »

Perhaps one of the most misunderstood tools found in New York law is the injunction. Injunctions affect businesses big and small because they often are used in commercial litigation. Injunctions frequently make the news, especially when one is granted in a high profile case. Many times there will be news coverage of two parties just outside a courtroom, one triumphantly telling all who will listen that the end of the world has been averted; the other, down-faced and glum, saying only that he will live to fight another day. More often than not, the second one is right; for the injunction they most often talk about is a preliminary injunction, which is a provisional remedy that only lasts until the underlying case is decided on the merits.

Most recently, New York State tried to withhold school aid from New York City because the City and the local teacher's union have not agreed on a teacher evaluation plan. Some parents of children who attend New York City public schools sued to stop the aid from being cut. A New York state judge ordered the State not to cut the education aid; he did so by issuing a preliminary injunction. This doesn't mean that the parents won, the State lost, and the aid won't ever be cut. It does mean that the aid will not be cut for now, at least until the court renders a final judgement on the parents' lawsuit.

There actually are three different types of what commonly are known as injunctions. Though they might seem confusing, they really are straightforward:

- A Permanent Injunction.

This is a final judgement of the court after a trial on the merits of the case, which normally restrains or enjoins one of the parties from taking some action. It is an equitable remedy issued after all the relevant facts have been gathered, all the necessary discovery has been had, and a verdict has been rendered. A court does not have the power to issue a permanent injunction in advance of trial. See Oppenheim v. Thanasoulis, 123 App.Div. 494, 108 N.Y.S. 505 (1st Dept.1908).

- A Preliminary Injunction.

This stops a party from doing something, or, less frequently, orders that he take certain actions, even before the court has decided the case on the merits. This interim step, also known an injunction pendente lite, is a provisional remedy, often done to keep things as they are, to maintain the status quo, until the case itself has been decided. See CPLR 6301.

- A Temporary Restraining Order.

This is an instantaneous freeze issued while the court decides whether to order a preliminary injunction. That is, even before the court decides whether to stop someone from doing something, it stops that person from doing it, at least temporarily. See CPLR 6301.

Continue reading "Injunctions in New York - A TKO Before The Final Bell?" »

Collapse coverage for first-party property claims in New York is important because of the large building damages involved and the various policy exclusions that help determine whether the policy affords coverage for the claimed loss. As with any other complex problem, however, you should start with the basics: the definition of collapse.

In our last article on the subject, we discussed what constitutes a collapse in New York. Some courts have concluded that a collapse occurs when the structural integrity of a building is substantially impaired. Royal Indem. Co. v. Grunberg, 155 A.D.2d 187, 553 N.Y.S.2d 527(3rd Dept. 1990). Others require that a collapse include an element of suddenness, a falling in, and total or near total destruction. See Graffeo v. U.S. Fid. & Guar. Co., 20 A.D.2d 643, 246 N.Y.S.2d 258 (2nd Dept. 1964), motion for leave to appeal denied, 14 N.Y.2d 685, 198 N.E.2d 911 (1964).

It's also important to know the reasoning behind the rules in order to understand how they apply to any given claim. In this article we are going to discuss the reasoning behind the substantial impairment rule, set out in Royal Indem. Co. v. Grunberg, supra. A close examination of the facts of that case expose the reasons why the rule has been implemented in so many jurisdictions.

In Royal v Grunberg, supra, the insureds were homeowners who purchased land on which to build their house. It was a modular home, in which the pre-fabricated sections are transported to the site and, as they are placed on the foundation, joined together into a finished home. The land on which it was built was hilly and overlooked a ravine; it must have had a gorgeous view.

During the course of construction, however, the Insureds noticed serious problems. One wall of the house, which faced the east, or the downslope of the hill, as well as a deck, were seven inches out of plumb. Certain windows and doors wouldn't open or close. A large number of cracks developed throughout the house, including a four inch deep crack that ran along the entire basement floor. The foundation wall on the east, or downslope, side of the house, bowed outward; and the house itself tilted in the same direction. The house, in other words, looked like it was leaning downhill. It did not, however, fall down or fall in; its walls still stood; and it was not reduced to rubble. It still was a house, not a pile of debris. The Insureds repaired the damage and made a claim to recover under their policy of homeowner's insurance for the cost of the repairs. The carrier disclaimed coverage and commenced a declaratory judgement action seeking a declaration that the Insureds' claim was not covered by the policy.

The main issue in the case was whether the house had collapsed, even though it had never fallen down.

Continue reading "Collapse Coverage In New York II - Huff & Puff & Blow Your House Down" »

Is there really a simple sales contract in New York? As we pointed out previously, the answer is no. Every business should know that there is always much more to even the simplest sales contract than meets the eye; unspoken promises included.

A simple sales contract, to most people, means nothing more than a contract to buy and sell goods. This does not have to be, and often is not, what most people think of as a full-blown written contract, which sets out in great detail what each party promises to do and is promised to receive in return. That, of course, would be best; but it's not feasible or necessary.

Most sales contracts for the purchase of goods in New York fall under the special set of rules known as the Statute of Frauds, which govern sales of goods worth $500 or more. The only writing that requires is a simple note, memorandum, or correspondence, which states just the type and amount of the goods to be sold. It does not even necessarily have to include the price; oral evidence can be used to fill in the blanks. It can be enforced against the parties who signed the writing. It can be established through partial performance, even without any writing; i.e., if the Buyer accepts delivery of the goods, he can be forced to pay the agreed price for them. Likewise, if the Seller accepts the Buyer's payment, the Seller can be forced to deliver the goods the Buyer has paid for. If between two merchants, the sales contract can be established where one of them sends the other a written confirmation of a contract, which often can be nothing more than an invoice, and the other fails to respond, or object, within ten days. See UCC 2-201.

Even with writings that record only the bare essentials of a sales contract, a New York business that sells goods can be liable for promises that it did not expressly make and are not specifically written anywhere. One, as we previously discussed, is the implied warranty of merchantability.

Continue reading "A Simple Sales Contract in New York (II) - A Story of Few Words" »

Everyone might think they know what a collapse is. Everyone probably says they know a collapse when they see it. Most New York businesses and homeowners have policies of property insurance to protect them and their property from major, and sometimes minor, damage. But has anyone ever really taken the time to figure out whether a collapse is actually covered under their policy of property insurance? Even if the policy states that it provides additional coverage for collapse, whether or not the policyholder will be able to recover depends, in large part, on the definition of collapse.

There have been a number of major collapses in the news recently. There have been crane collapses in New York City. The blizzard of February 8-February 9, 2013, aka winter storm Nemo, dumped more than two and one half feet of snow on many parts of eastern Long Island. As a result, the roof of a local bowling alley in Smithtown, New York collapsed, and the nearby Smithhaven Mall was evacuated because authorities feared the roof would collapse when large amounts of water gushed through the ceiling of multiple stores within it.

The two recent incidents on Long Island point out the key aspects of what constitutes a collapse under New York law and whether a policy of property insurance will provide coverage for it when it occurs. To be clear, we are talking about a specific type of claim: A first party property claim. This is one in which the policyholder, which is normally the business owner or the homeowner, makes a claim to recover for what they allege is damage that occurred as a result of a loss for which the policy provides coverage; i.e., they try to recover under their own policy of insurance.

Under New York law, there are two definitions of collapse. The first is the significant impairment of the structural integrity of a building or part of a building. This means that a building or part of a building does not have to fall down, fall in, or be nearly destroyed in order to collapse; it can just be in imminent danger of doing so. See Royal Indem. Co. v. Grunberg, 155 A.D.2d 187, 553 N.Y.S.2d 527(3rd Dept. 1990). This seems to be the view of the majority of courts and jurisdictions across the country.

The second definition requires that a collapse include an element of suddenness, a falling in, and total or near total destruction; and it excludes sinking, bulging, or cracking. See Graffeo v. U.S. Fid. & Guar. Co., 20 A.D.2d 643, 246 N.Y.S.2d 258 (2nd Dept. 1964), motion for leave to appeal denied, 14 N.Y.2d 685, 198 N.E.2d 911 (1964). A policy of property insurance, however, can specifically exclude coverage for imminent collapse; it depends on the precise policy language. See Rector St. Food Enterprises, Ltd. v. Fire & Cas. Ins. Co. of Connecticut, 35 A.D.3d 177, 827 N.Y.S.2d 18 (1st Dept. 2006).

Continue reading "Collapse Coverage in New York - Does a Building Have to Fall Down to Be Covered?" »

In our last article on the subject, we discussed how a person could come to own land in New York that she never purchased, through adverse possession. It is not an easy task, but it can be done. It takes a long time; ten years. All the while, she has to do it in such a way that the real owner would have a right to evict her. Whether it even should be possible, however, is another question.

The law of adverse possession is open to abuse. It has been used by squatters to try to justify their moving into seemingly vacant homes and claiming them as their own. Recently, a Texas man was convicted of burglary and theft because he moved into a $400,000.00 home that he apparently thought was vacant. The true owners, however, were merely out of town for several months seeking medical treatment. His defense was that he was making a legitimate effort to obtain title to the house through adverse possession. He had, after all, filed an affidavit with the local government making a claim for adverse possession, turned on the utilities, and posted no trespassing signs. The jury did not accept his defense, and he eventually was sentenced to 3 months in jail, ten years' probation, and ordered to pay $10,000.00 in fines.

The problem is more widespread than people might think. According to the same news reports, there had been a spate of approximately 60 adverse possession filings in the same county; and there were at least six additional trials scheduled in which the defendants were asserting adverse possession as a defense to similar charges.

Two of the most often disputed, and most important, elements of establishing an adverse possession claim in New York are hostility and exclusivity. Though we are not going to comment on any possible criminal charges, it is important to note that if the Texas man had tried to do the same thing in New York, he would have established both.

Hostility means that an individual asserts a right to the land, which is hostile to the rights of the legal, or true, owner. In essence, it means that the person making claim to the land must treat it like it is her own and does not belong to the real owner or to anyone else. This provides the key ingredient to obtaining title to land through adverse possession: The real owner must acquiesce in the open and obvious use of the land by another person as if the land actually did belong to that other person. Hostility, however, is negated by seeking permission from the real owner. See Estate of Becker v. Murtagh, 19 N.Y.3d 75, 968 N.E.2d 433 (2012).

Continue reading "ADVERSE POSSESSION IN NEW YORK II: UNWANTED GUESTS INCLUDED" »

Did you ever wonder how a person, or a business, could come to own a piece of land he never bought? Did you even know that it is possible? It can be done in New York, and, as shown by certain high profile cases, in other states as well, through an old legal doctrine known as adverse possession.

Recently, a Florida man tried to obtain title to a $2.5 million mansion in Boca Raton, merely by living there and paying the taxes and utilities on it. The property was foreclosed on in 2012 and remained vacant until he moved in sometime in July, when he filed an adverse possession claim. If he could live there for 7 years, unchallenged, and pay the bills and the real estate taxes, the property would become his under Florida law. Just yesterday afternoon, however, his dream came to an end. The owner, the Bank of America, went to court, sued him for trespassing, and had him evicted. In ending his dream, Bank of America demonstrated the core principal of an adverse possession claim; i.e., the true owner must be able to force the squatter to give up possession but, if he waits too long, the squatter gets to keep the property.

Continue reading "Taking Land in New York: No Money Down" »

Is there really such a thing as a simple sales contract? In New York, at least, the answer is no.

As we previously discussed, a contract does not have to be written in order to be enforced. There can be an implied in fact contract; though it often is easier to prove the existence of a written contract than it is to prove a contract simply by showing that the parties acted like they had entered into a mutually binding agreement.

Most New York business owners place and fill orders for goods all the time. Often they do it just by placing, or receiving, a telephone call, with a purchase order, or at least an invoice, that follows. Most know that if the Buyer, or the Seller, does not keep its end of the bargain, the other could sue it for breach of contract. But what most may not realize is that the Seller also can be responsible for any promises or representations he might make regarding his particular item. Such an unwritten promise, in an unwritten contract, can be a warranty; if the Seller breaks it, he possibly can be liable for breach of warranty and, maybe, even fraud.

There are promises that go along with most sales transactions. For instance, when you buy a car, it often comes with a written warranty; if something breaks in the car within a specified time after you purchase it, the manufacturer often will fix it at little or no cost to you. Sometimes, a car company will voluntarily recall a large number of cars to pre-emptively fix a problem. Recently, for example, according to news reports, Toyota announced a large recall to fix an airbag problem in some of its models..

A warranty does not have to be written to be enforced; sometimes it does not even have to be spoken. A New York business, for instance, that normally sells a particular product, warrants, or promises, even without a writing, that the goods it sells are merchantable. This basically means that if a parts supplier sells widgets, it promises that the widgets it sells are acceptable widgets in the widget trade; that its widgets are of fair average quality as far as widgets go; that its widgets are fit to be used as widgets normally are; that its widgets are basically all of like kind and quality; that its widgets are adequately packaged and labeled as agreed; and that its widgets live up to whatever statements are on the packaging or labeling of the widgets. This is known as the warranty of merchantability. N.Y. U.C.C. Law § 2-314.

Continue reading "Simple New York Sales Contracts - Unspoken Promises Included" »