Matters

Commercial Real Estate Firm – Partial Summary Judgement Granted in Complex Dispute

Awarded partial summary judgement on behalf of commercial real estate client in a dispute with a former officer and member of the parties’ investment vehicle. The New York Federal Court held that that the plaintiff former officer breached contractual obligations and fiduciary duties by misappropriating resources and soliciting investors during his employment. The Court granted Herrick’s clients’ requested declaratory relief by holding that they properly ascribed “Cause” to the officer’s termination upon discovering the misconduct and validly effectuated the termination and redemption of his profits interest in the parties’ investment vehicle for a penny. The Court also ordered the disgorgement of the former officer’s salary and value of company paid benefits during his period of disloyalty together with injunctive relief requiring him to return all confidential and proprietary information. Notably, the Court also held that the officer’s new business and business partner were jointly and severally liable for aiding and abetting the breaches of fiduciary duty. The remaining claims asserted between the parties were resolved shortly thereafter on confidential terms.

Lender – Denial of Intervention Motion Filed By Borrower’s Co-Manager Upheld on Appeal

The Appellate Division, First Department, unanimously affirmed the denial of a motion filed by a borrower’s co-manager seeking leave to intervene in a lender’s debt enforcement action under a demand note in order to assert direct and derivative claims and defenses on the borrower’s behalf. The motion was filed after the proposed intervenor’s husband and co-manager, shipping magnate Spiros Milonas, settled the action on behalf of the borrower by confessing judgment for the principal amount of a substantial loan.

Phoenix Capital Finance Ltd. v. Axia Realty LLC, 2019 WL 3069368 (Sup. Ct. N.Y. Co. 2019), affirmed 2020 NY Slip Op. 3610, 2020 WL 3454610 (1st Dep't 2020).

Chelsea Building Owner – Successful Enforcement of Surrender Agreement

Achieved a $1 million victory on behalf of a Chelsea building in an action to enforce the strict terms of a surrender agreement for prime retail space in Manhattan’s Chelsea neighborhood. On summary judgment, the Supreme Court, New York County, determined that a commercial tenant breached its contractual obligation to vacate our client’s prime, street level space, ordered the return of an unearned termination fee (including an $800,000 deposit in escrow and $200,000 cash advance), and awarded interest and attorneys’ fees.

Israeli Defense, Aerospace and Aviation Company – Action Dismissed for Lack of Jurisdiction

Obtained dismissal of all claims asserted by a former employee against the largest Israeli defense, aerospace and aviation company. The plaintiff attempted to establish personal jurisdiction over the Israeli company in New York based on a theory that its wholly owned subsidiary operates as its domestic branch or “mere department” in the United States. While the trial court allowed the plaintiff to begin jurisdictional discovery, the Appellate Court reversed the trial court and dismissed our client from the litigation for lack of jurisdiction.

Brokerage Firm – Dismissal of Discrimination Claims Upheld on Appeal

Successful defense of a luxury real estate brokerage firm in an action alleging discrimination based on sexual orientation and marital status in violation of New York State and City Human Rights Laws. Herrick secured the complete dismissal of the complaint in the trial court, and then successfully defended the ruling on plaintiffs’ appeal to the Appellate Division, First Department which upheld the dismissal, finding the plaintiffs had no cognizable claims against our clients who had sought to facilitate, not prevent, plaintiffs’ purchase of a cooperative apartment.

Rent Stabilization Association – NYC Water Board Bill Credit Lawsuit

Represented the Rent Stabilization Association and individual building owners in high profile litigation challenging a proposal by New York City Water Board, and the New York City Department of Environmental Protection to subject landlords of large residential properties to a water bill rate hike in order to fund a one-time credit for the owners of smaller, one-to-three-family homes. In both the trial court, and before the Appellate Division, First Department, Herrick secured rulings blocking the levying of an estimated $76 million in rate hike charges which, we argued, would set a dangerous precedent of instituting arbitrary bill credits and rate hikes, made regardless of economic need and without any rational water-related purpose. Notwithstanding that we convinced two separate courts and a majority of the total judges that heard the case (6 out of 11, including the Chief Judge of the State’s highest court) of the merits of our position, a divided New York Court of Appeals overturned the lower court decisions and declared that the appellants may implement the bill credits and rate increase. Shortly after the decision was delivered, however, the appellants issued a public notice proposing to implement the bill credits, while repealing the planned rate increase. Accordingly, this case demonstrates that although it’s difficult to challenge the rationality of determinations by public agencies, even an ultimately unsuccessful legal challenge can cause public agencies to reexamine their conduct.

Resources

New York Times: Court Halts de Blasio’s Plan to Give Some Homeowners a $183 Credit

Dispute with Former Property Manager – Allegations of Fraud and Self-Dealing

Represented the property owner of four valuable Manhattan buildings in an action filed in New York state court against our client's former property manager with damage claims in excess of $5 million. The dispute, which involved allegations of fraudulent and bad-faith conduct that included self-dealing, comingling of funds, and the misrepresentation of material information, was resolved favorably for the client following Herrick's successful opposition to motions to dismiss, strike allegations in the complaint, and for summary judgment.

Appellate Win Reverses $9 Million Judgment against Buyers of Upper West Side Landmarked Property

Secured an important First Department win, reversing what was essentially a $9 million judgment against real estate developers in litigation against the seller of a landmarked property located on Manhattan’s Upper West Side. At issue was whether or not a $10 million “approval payment” beyond the $32 million contract purchase price payment was contingent upon the seller actually obtaining certain building approvals rather than merely applying for them. Herrick achieved a series of victories in the trial court, including pressuring the seller into withdrawing a default notice claiming our client had breached the terms of the contract, and securing the withdrawal of the seller’s initial counsel due to a conflict of interest, prior to the issuance of a potentially devastating decision that dismissed our client’s principal claims. We appealed to the Appellate Division, First Department, which unanimously reversed the ruling, finding that “the motion to dismiss should have been denied,” and that a reading of the contractual language determining that the seller was merely required to seek approvals rather than actually obtain them, “would render meaningless or absurd contractual terms regarding reduction of payment in the face of a failure to obtain the approvals.”

Real Estate Partnership Dispute – Pre-trial Dismissal of Claims for Breach of Fiduciary Duty, Corporate Waste and an Accounting

Herrick negotiated a favorable settlement on behalf of a managing agent and its principals, resolving contentious litigation in New York state court between partners in a venture to develop and lease a medical office building. Prior to reaching the settlement, Herrick secured a number of advantageous rulings - including pre-trial dismissal of claims for breach of fiduciary duty, corporate waste and an accounting - which positioned our clients well in the negotiations that ultimately led to the partnership’s sale of its leasehold interest in the property on favorable terms, a transaction on which Herrick also advised.

Motions for Temporary Restraining Order and Preliminary Injunction Denied in Ongoing Shareholder Derivative Action

Successfully opposed a motion for a temporary restraining order and preliminary injunction on behalf of the manager and managing agent of five limited liabilities companies that control multi-unit residential properties in New York City. Herrick continues to defend the client in ongoing shareholder derivative litigation in New York state court, alleging commercial torts and seeking, among other things, a dissolution of the LLCs and the appointment of a temporary receiver.

Life Settlement Investment Firm – Advice and Litigation

Represented a German investment firm with respect to its investment portfolio of U.S. life insurance policies. In addition to providing advice concerning life settlement laws and regulations in various jurisdictions, Herrick also represented the company in litigation on its disputed claims in multiple jurisdictions. Herrick procured a multi-million-dollar settlement for the client, almost 90 percent of the policy value, in New Jersey federal litigation in which the carrier contested the claim as a likely STOLI ("stranger originated life insurance") policy. Herrick also settled a large claim filed in Pennsylvania federal court in which our client received approximately 70 percent of the policy value in a case where the age of the insured, a former Syrian national, was disputed.

Global Manufacturer – Vendor Contract Dispute

Representation of a global manufacturer in resolving breach of contract claims filed in New York state court by a travel services consortium in connection with an agreement to provide global travel management services.

International Real Estate Investment Firm – Real Estate Brokerage Dispute

Negotiated a favorable settlement on behalf of the North American arm of an international real estate investment and finance company to resolve litigation over a brokerage commission in connection with the client’s acquisition of an iconic Los Angeles building.

Real Estate Firm – Motion for Summary Judgment Granted in Commercial Leasing Dispute

Successful defense of a real estate firm in litigation with a restaurant tenant plaintiff attempting to broaden the scope of a narrowly tailored restriction in a commercial lease for space located in a New York shopping center. Claiming our clients had breached the lease agreement by leasing space in the shopping center to a restaurant chain, the plaintiff filed suit to recover damages it allegedly suffered as a result. The court denied the plaintiff’s motion for a preliminary injunction preventing our clients from constructing additional commercial space for use by the new restaurant tenant, and granted our motion for summary judgment, dismissing all of the plaintiff’s claims including those for breach of the commercial lease and tortious interference of contract.

Commercial Bank – Pre-Trial Dismissal of Negligence Claims

Obtained pre-trial dismissal of negligence claims against a commercial bank in connection with a former employee's misappropriation and embezzlement of plaintiff's assets.

Global Manufacturer – Favorable Settlement in Legal Malpractice Litigation

Negotiated a favorable settlement on behalf of a Fortune 500 manufacturer to resolve a legal malpractice action brought against the client’s former counsel, a national law firm, in connection with the firm’s representation of the client in a multi-million dollar product liability litigation. The settlement was reached on the day of jury selection following a ruling granting our client summary judgment on the issue of the defendant’s malpractice.

National Drug Retailers – Litigation to Recover Property Tax Overcharges

Represented national drug retailers in lawsuits alleging that property managers over billed them millions of dollars for their share of property taxes - successfully opposing the property managers’ motions to dismiss in the trial court and on appeal before the New York Supreme Court's Appellate Division.

National Drugstore Chain – Dismissal of Purported Class Action

Successfully argued summary judgment motion obtaining dismissal of all claims against a national drug retailer targeted in a proposed class action lawsuit asserting claims for fraud and violations of the NY General Business Law.

National Retail Chain – Pre-Trial Dismissal of Claims Under 42 U.S.C. § 1983 and The Fair Labor Standards Act

Obtained pre-trial dismissal of claims against a national retailer brought by a former employee under 42 U.S.C. § 1983 and The Fair Labor Standards Act, and attendant state law claims for malicious prosecution, negligence, punitive damages, false arrest and abuse of process.

Significant Settlement for Former Willowbrook Class Member

Secured a $562,000 settlement on behalf of a pro bono client with profound developmental disabilities to resolve actions filed in the Southern District of New York and New York Court of Claims asserting Section 1983, constitutional and negligence claims against government employees who abused the client or allowed her to be abused. Prior to reaching the settlement agreement, Michael successfully opposed motions for summary judgment filed by high-ranking officials named as defendants. (Prior Firm Experience)

Michael Berengarten, Partner