Court Dismisses Counterclaim For Breach Of Contract After Trial For Lack Of Damages

Posted: October 10, 2025 / Written by: Samuel L. Butt, Thomas A. Kissane, Channing J. Turner, Joshua Wurtzel, Jeffrey M. Eilender / Categories Commercial, Breach of Contract

Court Dismisses Counterclaim For Breach Of Contract After Trial For Lack Of Damages

On September 4, 2025, Justice Melissa A. Crane dismissed defendant’s counterclaim for breach of contract in Denenberg v. SDK Heiberger LLP, Index No. 655118/2021. The Court explained:

Simply, defendants have not carried their burden to prove damages. Defendants assert several areas of breach. They accuse plaintiff of: (1) failing to provide truthful and accurate information; (2) diverting firm assets; (3) breaching the confidentiality provisions of the Partner Agreement (PA); and (4) by providing legal advice while suspended.

As discussed, the diversion of clients, if this happened at all, resulted in no provable damage to defendants. First, defendants failed to specifically identify a single diverted client. Plaintiff testified that clients followed him to his new firm, which they were perfectly entitled to do. Under the seminal case of In re Thelen LLP (24 N.Y.3d 16, 29 [2014]), the Court of Appeals held that pending matters are not partnership "property" within the meaning of the Partnership Law, but rather belong to the client.

Nor have defendants identified what confidentiality provision of the PA plaintiff breached; or what confidential information plaintiff appropriated. The counterclaim that plaintiff breached the PA by providing legal advice while he was suspended is not a proper counterclaim. It is more in the nature of an affirmative defense that defendant's termination of plaintiff, for which plaintiff is suing, was appropriate. Defendants have presented no affirmative damages from plaintiff's conduct. Accordingly, the court dismisses all remaining counterclaims for failure of proof.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning breach of contract.