Matters

New York Residential Brokerage Company – Successful Mediation

Representation of a prominent New York residential brokerage company in a successful mediation against a civil rights suit alleging conspiracy with building owners to steer families with children away from apartments.

Title Insurance Company – Agent’s Fraud Imputed to Lender

Representation of a title insurance company against a lender whose agent committed a fraud that caused the loss of the insured mortgage. Our client successfully argued that since the agent acted on behalf of the bank, the fraud could be attributed to the bank and therefore fell under the policy’s exclusion for “acts of the insured.” The court’s ruling will have ramifications in the title insurance and mortgage lending industry since many sub-prime lenders relied upon unscrupulous agents to close their loans, and to the extent any frauds committed by those agents lead to a title loss, the lenders cannot look to the title insurers for indemnification.

Joseph Kahan – Arbitration Award Vacated

Representation of Joseph Kahan in successfully petitioning the Kings County Supreme Court to vacate a rabbinical court's arbitration award regarding competing claims to real properties in Brooklyn and other assets. The arbitration agreement provided that the parties could proceed only with counsel acceptable to the arbitrators. Kahan participated in the arbitration even after the arbitrators rejected his proposed counsel and insisted that he could proceed only with counsel they would select for him. Initially, Kahan proceeded without counsel at all, but as the matter progressed, he realized that the arbitrators' procedures were unfair and he withdrew from the arbitration before the panel ruled. Describing its ruling as one of first impression under New York law, the court agreed that the arbitrators had denied Kahan the right to counsel of his choice, and overturned the award. This case was featured in the November 24th 2009 edition of the New York Law Journal. (26 Misc.3d 615, 889 N.Y.S.2d 839 (2009))

Real Estate Investment Management Companies – Construction Litigation

Defended a large industrial real estate investing entity and its investment management firm in a $90 million construction defect litigation with an industrial tenant in New Jersey. We succeeded in getting most of the plaintiff’s case dismissed on summary judgment, and then settled the rest of the dispute case before trial. The settlement included the plaintiff turning over escrowed back rent to our client and entering into a favorable lease extension.

Real Estate Company – Management Agreement Litigation

Represented a real estate services company in a $20 million lawsuit brought by former customers. The former customers, owners of two large New York City office buildings, claimed that our client, which managed the buildings, had committed numerous acts of wrongdoing over several years, including breaching contracts, fraud, and breaching fiduciary duties. The customers sought to recover all the fees they’d paid our client over the years under New York’s “faithless servant” doctrine. The District Court granted our summary judgment motion, dismissing all of the higher-damage tort and equity claims, and we then settled the remaining breach of contract claim. The former customers lost their appeal to the Second Circuit Court of Appeals, bringing the case to a successful conclusion for our client.

Red Rock Services Trustee – Appellate Victory in Bankruptcy Litigation

Herrick secured an appellate victory for the chapter 7 trustee of bankrupt demolition subcontractor Red Rock Services, affirming a judgment of almost $1 million won in a bankruptcy adversary proceeding in the Eastern District of Pennsylvania. On behalf of the trustee, Herrick sued a general contractor for breach of its obligations under subcontracts with Red Rock in a pair of multimillion dollar construction projects in Baltimore and Boston. After eight days of trial, the trustee was awarded a judgment of almost $1 million, including attorneys' fees. Herrick defended the judgment on appeal to the district court, where it was affirmed, and went on to successfully defend the ruling on the defendant’s second appeal to the Third Circuit, which affirmed the judgments of the bankruptcy court and district court in their entirety.

NYSE Company – Internal Investigation

Representation of the Audit Committee of a New York Stock Exchange listed company to conduct an internal investigation of whistleblower claims brought by a former officer alleging that certain officers and directors had committed accounting fraud and violated the Sarbanes-Oxley Act.

Former Corporate Officer – Successful Defense of Fraud and Unjust Enrichment Claims

Successful defense of a former corporate officer in suits filed in New York and Wisconsin state courts arising from an investor’s claims of fraud and unjust enrichment in connection with alleged misrepresentations about the sales, revenues and future prospects of a business in which the plaintiff had invested.

Successful Defense in Multi-Plaintiff Litigation Alleging Fraud, FLSA and Civil RICO Violations

Defended individuals and related corporations affiliated with a global network of yoga studios in a highly publicized lawsuit in Arizona federal court in which more than two dozen plaintiffs asserted claims including fraud, undue influence, unfair and deceptive business practices, emotional distress, FLSA violations and civil RICO violations. Following a ruling dismissing the majority of claims, this litigation was ultimately terminated when all remaining causes of action asserted in an amended complaint were either dismissed by the court or withdrawn by the plaintiffs.

Robert W. Seavey – Victory in $500 Million RICO Case

Representation of Robert W. Seavey, real estate developer and owner, in obtaining a U.S. District Court summary judgment dismissing a $500 million RICO case. The suit also named members of his family, the management company and accounting firm. The court found that the plaintiffs and their forensic accounting firm had failed to find any evidence supporting their claims. The decision appears to be the first New York decision that found that the federal bank fraud statute cannot serve as a predicate act in a RICO case when the plaintiff is not a financial institution. All state court claims were dismissed.

Appellate Victory for Special Servicer

Represented the special servicer for a lender in a suit against a borrower and three individual guarantors after the borrower procured subordinate financing in violation of a non-recourse carve-out provision. In a case of first impression, the Superior Court of New Jersey, Appellate Division enforced the non-recourse carve-out provision and imputed personal liability to the borrower and guarantors. It concluded that the disputed clause fixes liability rather than damages and, therefore, does not constitute an unenforceable penalty as the borrower had argued. The Appellate Division also held that the borrower's efforts to “cure” the triggering event did not vitiate personal liability. As a result, the lender properly obtained a $5 million+ deficiency judgment against the borrower and guarantors.

Senior Executive – U.S. Attorney/SEC Investigation

Representation of a senior executive of a national retail brokerage firm in a joint U.S. Attorney/SEC investigation relating to market timing activities. No charges were instituted against the executive.

Madoff Litigation – Filings Against the SEC

We represent a number of victims of Bernard Madoff's Ponzi scheme. In January of 2009, we filed notices of claim with the Securities & Exchange Commission alleging negligence under the Federal Tort Claims Act. The SEC rejected our claims six months later, and on Wednesday, October 14, 2009, we filed the historic and first known lawsuit against the SEC seeking monetary damages under the FTCA, Molchatsky and Schneider v. United States. We were lead counsel on the Molchatsky case and filed two additional cases against the United States on behalf of other Madoff victims. While the Second Circuit ultimately dismissed the action, essentially saying that the SEC had absolute immunity, the case sent a message that Herrick will leave no stone unturned on behalf of its clients. This work led to favorable tax relief legislation for Ponzi scheme victims as well as a complete overhaul of SEC staff policies and procedures.

Foreign Insurance Companies – Wrongful Discharge Claims

Representation of foreign insurance companies in connection with the wrongful discharge claims from the managing directors of U.S. subsidiaries.

Employees – SEC Investigation

Representation of multiple employees from a public company in an SEC investigation alleging misstatements in the company’s public filings. No charges were instituted.

Hedge Fund Managers – SEC Investigation

Representation of two hedge fund managers in an SEC investigation relating to market timing activities. No charges were instituted.

National Retail Brokerage Firm – Civil Litigation

Representation of a national retail brokerage firm in a state court action alleging sales practice violations.

Executive – SEC Investigation

Representation of an executive of a national retail brokerage firm in a joint U.S. Attorney and SEC action alleging fraud in connection with securities lending.

Stock Brokers – FINRA Investigation

Representation of multiple stock brokers of a national retail brokerage firm in a FINRA investigation into various sales practice violations.

Investor Group – Fraud and Misrepresentation Claims

Represented an investor group in connection with fraud and misrepresentation claims against an investment manager in various private investments.

Regional Brokerage Firm – Investor Claims

Representation of a regional brokerage firm in multiple investor claims alleging fraud and misrepresentation in connection with a failed private placement.

Securities Trader/Broker-Dealer – Investigations

The principal of a securities trader/broker-dealer in connection with investigations by the New York State Attorney General and the SEC into mutual fund trading practices including market timing and late trading.

Former Government Official – Conflict of Interest Investigation

Represented a former senior official of New York City's Economic Development Corporation before the city's Conflict of Interest Board in connection with publicly reported allegations of improprieties.

Telecommunications Equipment Company – New York City Comptroller Investigation

Represented a major telecommunications company in a high-profile investigation by the Comptroller of the City of New York into the sale of two-way radio equipment. We obtained full payment of multi-million dollar invoices for the company.

Asphalt Contractor – Post 9/11 Reconstruction Bidding Dispute

Representation of an asphalt contractor in challenging the bidding procedure used by New York City and utility companies to award significant street reconstruction work near the World Trade Center site after the September 11th terrorist attacks. We obtained several temporary stays on the grounds that the bidding procedure violated public procurement laws. The city cancelled its invitation to bid and used a different procurement procedure.

Subsidized Housing Project Sponsor – Market Rate Conversion

Represented a sponsor in settling a litigation involving the sponsor's effort to convert one of New York City's largest Mitchell-Lama subsidized housing projects (1,200 units on Manhattan's Upper East Side) to market rate housing. The settlement involved the creation of entirely new subsidy programs by the city and by the sponsor, and an approximately $550 million condominium conversion.

Housing Authority Risk Retention Group – Pollution Exclusion Coverage Litigation

Represented a risk retention group in litigation against a housing authority over whether an insurance policy excluded a judgment against the housing authority for exposure to pollution. In a case of first impression under Illinois law, the 7th Circuit Court of Appeals ruled in favor of our client, holding that the absolute pollution exclusion excluded coverage for an underlying $10 million judgment against the insured based upon exposure to pollutants, even though the insured did not actively cause the pollution, and even though the pollution originated off-site and migrated to the insured's property. (Housing Authority Risk Retention Group, Inc. v. Chicago Housing Authority, 378 F.3d 596 (7th Cir. 2004))

Estate Trustee – Removal Litigation

Representation of the trustee of an estate in litigation with the trust's settlor. The settlor sued to remove the trustee, whom he had appointed, alleging conflict of interest and failure to account. The trial court dismissed the suit, and Herrick represented the trustee in successfully defending the appeal.

Private Company – Political Misuse Investigation

Representation of a private company in connection with a state Attorney General's investigation into whether a former governor improperly used the company to engage in "dirty tricks" against a political rival.

Financial Media Company – Lease Dispute

Represented a multi-billion dollar financial media company in a lease dispute involving approximately 180,000 sq. ft. of office space.

Title Insurer – Frivolous Claim Defense

Defended a title insurer in an action by a property owner seeking title insurance coverage. The court found the owner's damages to be attributable to its own actions, and impressed sanctions against the owner and its counsel, which included attorneys' fees, for prosecuting frivolous litigation.

Consumer Products Manufacturer – Paraguayan Litigation

Represented an international consumer products manufacturer in a legal action brought against it in Paraguay. We are working with the U.S. State Department to deal with the unusual legal rulings involved.

General Contractor – Lien Foreclosure

Representation of a general contractor in a lien foreclosure action against the Metropolitan Transit Authority and the owner of 2 Broadway, New York, the MTA's headquarters. After a trial on the merits, the New York State Supreme Court awarded our client damages in excess of $1 million.

Mezzanine Lender – Term Sheet Breach

Representation of a mezzanine lender in an action in New York State Supreme Court against a borrower for breach of a term sheet. The court granted our motion for summary judgment and awarded damages.

Jury Dismisses Subcontractor’s Discrimination and Breach of Contract Claims

Representation of a real estate developer and general contractor in an action by a minority subcontractor pursuing multi-million dollar discrimination and breach of contract claims. All claims were dismissed after a two week jury trial in the United States District Court for the Southern District of New York.

Joint Venture Partner – $40 Million Construction Agreement Dispute

Represented a joint venture in connection with disputes arising out of DEP construction agreements worth in excess of $40 million.

Law Firm Partner – Profits Dispute

Representation of a partner in a law firm against the firm in an arbitration concerning unpaid profits. A 15-day trial resulted in an award to our client of nearly $500,000.

Investor – SEC Investigation

Representation of an investor in multiple inquiries by governmental authorities in connection with alleged insider trading.

Investment Banker – FINRA Proceeding

Representation of a former employee of a major investment bank in a FINRA regulatory proceeding on charges that he misappropriated funds from his employer by improperly submitting personal expenses as business-related expenses.

Inter-Dealer Brokerage Firm – $500 Million Raiding Case

Represented the U.S. affiliate of a billion-dollar inter-dealer French brokerage firm in a large "key employee raiding case" brought by a competitor whose stock market valuation declined 24% (approximately $450 million) on the day following our client’s hire of approximately 20 of its credit derivatives brokers and employees. Following an intense oral argument by Herrick and other firms aligned with our client, a New York Supreme Court denied the plaintiff’s motion for a temporary restraining order and later denied a motion for preliminary injunction in rulings which allowed the subject employees to work for our client. The dispute then moved to a FINRA arbitration where we defended hundreds of millions of dollars in claims. After more than 240 hearing sessions, the matter was fully settled and all claims withdrawn.

Asset Management Company – Employment Issues

Represented one of the leading independent asset management companies in its defense of a wrongful termination action claiming religious discrimination, and in a separate action claiming discrimination based on disability. We continue to represent the company in all aspects of its employment disputes, and in risk management issues.

Real Estate Board of New York – Mitchell-Lama Litigation

Represented the Real Estate board of New York in its successful lawsuit against the New York City Council to overturn Local Law 79. The law required owners of Mitchell-Lama housing and housing subsidized by certain federal programs to give a right of first refusal to purchase their projects to tenants, pursuant to an ambiguous and burdensome process. The Court found that the law was preempted by federal and state housing laws, and enjoined the City from enforcing it.

Trader – FINRA Investigation

Representation of a former trader at a national retail brokerage firm in a FINRA regulatory investigation into charges of front-running one of the firm's customers.

Securities Broker – Forgery Investigation

Representation of a broker in an NYSE regulatory investigation alleging that the broker forged managerial signatures on new accounts forms and disposed of original employer documents. The broker received an admonition letter in lieu of an enforcement proceeding being brought against him.

National Exchange Department Head – SEC Investigation

Representation of a department head of a national exchange's regulatory division in an SEC investigation into the exchange's failure to enforce its member surveillance program and filing false records with the SEC. The former department head received a cease-and-desist order with no monetary penalties assessed against him.

Brokerage Branch Manager – NASD Investigation

Representation of the branch manager of a regional brokerage firm in an NASD regulatory investigation into improper market timing activities that allegedly occurred in the branch office. No charges were brought against the branch manager.

Private Company Officers – SEC Investigation

Representation of officers of a non-public company in an SEC investigation of the company's unregistered offerings. The SEC alleged that the offerings violated various securities laws, but we convinced the SEC's New York Regional Staff to recommend that charges not be brought against these individuals.

Independent Broker-Dealer – State and NASD Litigation

Representation of a national independent broker-dealer in a New York State civil litigation and in a related NASD arbitration against former employees to recover fees and restitution payments made by the firm as a result of the misconduct of its former employees.

Tire Manufacturer – Antitrust Litigation

Represented a tire manufacturer in successfully defending an antitrust suit brought by an authorized dealer claiming that the manufacturer failed to make a tire available to the dealer that it made available to other authorized dealers.

Title Insurer – Fraud and Defalcation

Representation of a title insurance company in recovering $8 million in losses incurred by defalcation and fraud of a title agent.