Client Q & A

Answers to common client questions.
Posted: April 22, 2019

Client Q & A: Three Questions To Ask If Your Business Is Sued For Being Allegedly Inaccessible To Wheelchair Users

Three Questions To Ask If Your Business Is Sued For Being Allegedly Inaccessible To Wheelchair Users

By Elizabeth Wolstein

The explosion of website accessibility lawsuits under the Americans with Disabilities Act (“ADA”) has been getting a lot of attention. These cases raise interesting legal, practical, and philosophical issues that we hope to address in future posts. For now, though, let’s spend a little time on the good old-fashioned brick and mortar ADA lawsuit. Stores and restaurants in New York City continue to be hit with these lawsuits on virtually a daily basis, from wheelchair-bound plaintiffs claiming they are being denied access to establishments due to entrances containing steps. If your business finds itself on the receiving end of such a lawsuit, here are three questions you can ask at the outset to help guide strategy.

Congress enacted the ADA in 1990 to “provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities.” 42 U.S.C. § 12101(b)(1). The statute prohibits discrimination on the basis of disability in employment (Title I), in state and local government programs and services (Title II), and in the operation of places of “public accommodation” (Title III)—private businesses that serve the public. Anyone who owns, leases, or operates a “place of public accommodation” may not discriminate on the basis of disability in the provision of “the goods, services, facilities, privilege, advantages, or accommodations” made available by the establishment. 42 U.S.C. 12182(a). The statute identifies 12 categories of private entities that are public accommodations for purposes of the ADA, including restaurants, stores, theatres, hotels, gyms, schools, and all manner of service establishments. See 42 U.S.C. § 12181(7). If your business falls within one of these 12 categories, it is subject to the ADA’s non-discrimination madate.

That is the starting point. To know your business’s remediation obligations, however, you have to know two things. That brings us to the first two questions a business sued by a wheelchair user should ask.

Question 1: When was the facility built that I own/lease/operate?

The ADA sets different remediation standards depending on the age of the facility. If your facility opened for occupancy after January 26, 1993 (30 months after enactment of the ADA), it must be “readily accessible to and usable by” disabled individuals—the most demanding remediation standard. 42 U.S.C. § 12183(a)(1). As a practical matter, this means the business has to be accessible virtually without regard to the cost of making it so. Since the ADA has been on the books for almost 30 years, builders are by now used to constructing to ADA standards, and new buildings are less likely to be in the sights of the plaintiff ADA bar.

Not so for older buildings, of which New York has so many. If your facility was built for occupancy before January 1993, it is subject to a less onerous remediation standard, but with a big caveat discussed via Question 2 below. Facilities built before 1993 that have not undergone an “alteration”—this is the caveat—must remove architectural barriers to wheelchair access only where such barrier removal is “readily achievable,” that is, “easily accomplishable and able to be carried out without much difficulty or expense,” a determination to be made based on factors listed in the statute. 42 U.S.C. §§ 12181(9), 12182(b)(2)(A)(iv).

The caveat is critical to the business’s remediation obligations so let’s move on to question 2.

Question 2: If my facility was built for occupancy before January 1993, has it undergone an “alteration” after January 1993?

If you’ve been sued and your facility was built before 1993, this is the critical question to determining your remediation obligations, and knowing your obligations is central to developing a defensive strategy. Under the ADA, an older building that has undergone an “alteration” is subject to the same unforgiving accessibility standard applicable to new construction. “Alteration” being the critical question, Congress of course chose not to define the term. The statute provides some general guidance, stating that if an alteration “affects or could affect the usability of the facility or part thereof,” 42 U.S.C. § 12183(a)(2), it must be done in such a way that the altered portion of the facility is accessible to disabled individuals—the same standard that applies to new construction. Ask yourself whether your facility has undergone something like the following specified in the ADA regulations: “remodeling, renovation, rehabilitation, reconstruction, historic restoration, changes or rearrangement in structural parts or elements, and changes or rearrangement in the plan configuration of walls and full-height partitions.” 28 C.F.R. § 36.402(b). If the answer is yes, you will be subject to the remediation standard applicable to new construction, under which the potentially burdensome cost of compliance will generally not be a defense.

Question 3: Is my facility really a place of public accommodation as plaintiff claims?

Finally, don’t assume the plaintiff is correct in claiming your establishment is a place of public accommodation. Although the statute casts a wide net, a place of public accommodation is not anything with an entrance. A private club would seem not to fall within the definition, for example. But how about a private apartment building? Or a restaurant closed for renovations? There may be some grey areas that leave room for challenging the claim that your business is a place of public accommodation, proof of which is essential to establishing liability.

Posted: February 12, 2019

Client Q&A: I’m Getting Sued for Breach of Contract. The Defense Costs Are Almost as Bad as the Suit Itself. Can I Force the Plaintiff to Pay My Attorneys’ Fees if I Win?

By Joshua Wurtzel

For many businesses, the cost of defending against a lawsuit—even one that has little chance of success—can be harrowing. And defending against a breach of contract claim can be especially expensive—since insurance often doesn’t cover contract claims, contract (unlike fraud) claims don’t require a plaintiff to plead its claim with particularity, and issues of fact may make a quick dismissal impossible. Thus, businesses sued for breach of contract have two, often-unappealing options: defend the claim on the merits and incur significant legal fees, or default and be on the hook for a judgment.

The default rule in New York—absent a fee-shifting clause in a contract or a fee-shifting statute (like some civil-rights statutes)—is that each party to a lawsuit pays its own legal fees, even if it wins its case. But a little-known section of the New York Civil Practice Law and Rules allows a successful defendant in a contract suit to shift some of its legal fees to the other side.

Under C.P.L.R. § 3220, a party against which a contract claim is asserted can “serve upon the claimant a written offer to allow judgment to be taken against him for a sum therein specified, with costs then accrued, if the party against whom the claim is asserted fails in his defense.” This is different from an offer to compromise under C.P.L.R. § 3221 or an offer of judgment under Federal Rule of Civil Procedure 68—under which a party offers to settle both liability and damages for a set amount. Instead, under C.P.L.R. § 3220, a party makes an offer to liquidate damages conditionally—meaning that the offeror agrees to pay a set amount of damages, but only if the claimant first wins on liability.

Under C.P.L.R. § 3220, the claimant has ten days to accept the offer and fix the damages to which it will be entitled if it wins on liability. But if the claimant doesn’t accept the offer, it must then pay the “expenses necessarily incurred” by the party making the offer for “trying the issue of damages from the time of the offer.” So unlike C.P.L.R. § 3219 and Fed. R. Civ. P. 68—under which a party that rejects an offer is liable to the offeror only for its “costs”—C.P.L.R. § 3220 makes the claimant liable for some of the offeror’s “expenses” incurred after the offer, which includes attorneys’ fees. Reinhard v. Connaught Tower Corp., 150 A.D.3d 431, 432 (1st Dep’t 2017) (defendant “entitled to attorneys’ fees pursuant to CPLR 3220”); Abreu v. Barkin & Assocs. Realty, Inc., 115 A.D.3d 624, 624 (1st Dep’t 2014) (claimant liable for offeror’s “costs and fees” under C.P.L.R. § 3220); McMahan v. McMahan, 38 N.Y.S.3d 728, 732 (Sup. Ct. Westchester Cty. 2016) (under C.P.L.R. § 3220, “‘expenses’ to be recovered by the defendant, where plaintiff does not obtain a more favorable judgment, includes attorney’s fees”), aff’d sub nom. Perry v. McMahan, 164 A.D.3d 1488 (2nd Dep’t 2018).

The fees for which the claimant is liable are limited to the offeror’s fees incurred in “trying the issue of damages.” C.P.L.R. § 3220; see Siegel, Practice Commentaries, C3220:1 (“Note that P’s failure to establish liability or to win damages in excess of D’s offer invokes the sanction, but that the sanction consists of reimbursement only for the expenses of trying the damages question. Since liability was not conceded, D is not entitled to reimbursement for the expenses attributable to the liability aspect of the trial.”). In the Second Department, the “commencement of a trial” is a “condition precedent” to “imposing liability upon the claimant for the opposing party’s expenses.” Saul v. Cahan, 153 A.D.3d 951, 953 (2nd Dep’t 2017). So there, defeating a contract claim on a motion to dismiss or for summary judgment doesn’t invoke any fee shifting. But in the First and Third Departments, defeating a contract claim on a motion to dismiss or for summary judgment—or even getting the claimant to withdraw the claim by stipulation—invokes fee shifting for some portion of the offeror’s fees. Abreu, 115 A.D.3d at 624 (claimant liable for offeror’s attorneys’ fees when claimant withdrew claims “in a stipulation on the record at trial”); Morgan v. Kunker, 268 A.D.2d 749, 751 (3rd Dep’t 2000) (plaintiff liable for defendant’s attorneys’ fees when court granted summary judgment for defendant). Indeed, in defeating the contract claim altogether, the offeror would have necessarily incurred fees in showing that the claimant was not entitled to any damages.

Thus, a party against which a contract claim is asserted should always consider serving an offer under C.P.L.R. § 3220 at the beginning of the case for $1. The claimant presumably won’t accept the offer, and if the offeror defeats the contract claim altogether (either at trial in the Second Department, or on a dispositive motion in the First and Third Departments), the claimant will be liable for some of the offeror’s attorneys’ fees and costs. And while this liability extends to only a portion of the offeror’s fees, the party against which a contract claim is asserted loses nothing by making this offer, and creates an upside for itself if it defeats the contract claim.

Thus, a defendant (or plaintiff against which a counterclaim for breach of contract is asserted) that makes offer under C.P.L.R. § 3220 shifts some of its liability for its attorneys’ fees to the plaintiff, and gives a plaintiff with a weak contract claim additional downside. This can serve a valuable purpose in later settlement negotiations, and can also allow a successful defendant to recover a portion of its fees and costs.

Posted: May 23, 2017

Client Q&A: I jointly own property with a partner and I want to get out.

“I jointly own property with a partner and I want to get out. Is this possible?”

By Erik S. Groothuis.

Partition Actions in New York State

From time to time, people who jointly own property get into disputes, or want to monetize their share of the investment. You may think that if their co-owners do not agree to a division or sale, they are stuck indefinitely. But in fact, New York has a statutory remedy for this problem: an action for partition.

Partition actions enable property owners to end their joint tenancy seeking a court-ordered division of the property. This division can take place in two ways. The preferred method is for courts to divide up the property among the owners, assuming it is feasible to divide it physically. Once divided, the former joint owners now retain individual ownership of their piece of the property. If it is not feasible to divide the property—as the statute defines it, this arises where the partition cannot be made without “great prejudice” to the other owners—courts have another remedy. They can order a judicial sale (most commonly, they will appoint someone to conduct a public auction) of the entire property, with the sale proceeds typically allocated to the owners based on their ownership shares. Examples of situations best served by a judicial sale, as opposed to a partition, are if there is a building on the property that cannot be physically divided (either vertically or laterally), if dividing the property would substantially reduce its value, if the partition would cause the subplots to violate zoning ordinances, or if the parcel of land has only one access point.

Though governed by statute, partition actions are equitable in nature, which means that courts have great flexibility in deciding whether, and how, to divide up property. Courts must balance the equities of all the individual owners before awarding a partition. For example, they may consider disputes among the owners about how the property is being used or managed. That said, it is not necessary to show that the relationship between the owners is acrimonious, that they are in deadlock, or that the property has been mismanaged for a partition claim to succeed. This is in sharp contrast to a dissolution action, which is required where property is jointly owned through a corporation, an LLC, a partnership, or another entity.

Defending a Partition Action

Is there any way to defend against a partition action? First, courts will enforce agreements not to partition; a binding agreement, therefore, is a valid defense to a partition action. But it should be kept in mind that an agreement against partition, like all contracts governing real property, must be in writing (or their enforcement will be barred by the statute of frauds). Second, courts will enforce testamentary restrictions on partition. This often occurs when a parent leaves property to several children in a will, but wants to ensure that none of them try to take a piece of the land for themselves without the agreement of the rest. Testators have the option to prohibit or postpone partitions (in the latter case, either for a reasonable amount of time, or until a specified event occurs) in their wills, and these provisions will be enforced by courts.In the absence of a contractual or testamentary restriction, parties can still argue that they will be greatly prejudiced by the partition based upon their individual circumstances. This may result, however, in a sale instead of a partition. Judicial sales will not be set aside unless a party can show unfair or oppressive conduct.


Partition actions are not widely known or understood, but they can be a powerful tool for someone looking to separate their individual interest in property held with other owners. Schlam Stone & Dolan LLP has extensive experience bringing and defending partition actions. Please reach out if you would like to speak with us on this topic.

Posted: May 10, 2017

Client Q&A: My Company Acquired Another Company And Now I’ve Found Out That The Seller Lied To Us About Its Business And Finances. What Can We Do?

My Company Acquired Another Company And Now I’ve Found Out That The Seller Lied To Us About Its Business And Finances. What Can We Do?

By Niall D. O’Murchadha

When one business buys another business or its assets, the buyer sometimes (often) finds out later that the seller told it things that were not true. And although you might expect the laws dealing with such disputes to be simple and straightforward, they are very much not. Rather than trying to predict the outcome of any particular dispute, this Q&A will lay out some of the issues that make this area of law so complicated.

Breach of Representations and Warranties

Initially, the easiest claim to assert is for breach of contract—if statements made in the “Representations & Warranties” section of the agreement are not true, or the seller fails to comply with some future obligation set forth in the agreement, the buyer can sue for breach of contract.

Fraudulent Inducement

But what if the false statement was not included in the text of the contract, but were made instead during pre-contract negotiations (false statements in the seller’s business records, for example)? Or what if the false statement was made intentionally to deceive the seller? Or what if a merger clause disclaims reliance on any statements that were not written into the agreement? Or what if the limited remedies for breach of contract would not compensate the buyer for its entire losses? What can the buyer do then?

In such cases, a second remedy is available, namely an action for fraudulent inducement, which is in essence a tort claim where the buyer alleges that it was tricked into signing a contract in the first place. Making a claim for fraudulent inducement can be a more attractive option for a buyer: additional remedies for fraudulent inducement include rescission (unwinding the entire contract) and various forms of consequential damages (such as lost opportunities) that are usually not available in a straight breach of contract claim. Under certain circumstances, a fraudulent inducement claim can even result in an award of punitive damages.

The elements of a claim for fraudulent inducement are deceptively simple—1) a false representation of material fact, 2) known by the utterer to be untrue, 3) made with the intention of inducing reliance and forbearance from further inquiry, 4) that is justifiably relied upon, and 5) resulting in damages. But although asserting a fraudulent inducement claims sound like it should be easy, it is anything but—pleading a fraudulent inducement claim that can withstand a motion to dismiss is one of the most complicated undertakings in New York commercial law.

Issues With Fraudulent Inducement Claims

There are several reasons for this.

First, in an action involving a contract, fraudulent inducement has an additional element: the buyer must allege a misstatement or breach of duty that is “collateral to the contract.” And this element has given rise to a broad and conflicted body of law—New York courts just cannot agree on what “collateral to the contract” actually means. For example, some New York appellate decisions hold that an intentional misstatement in a contractual warranty gives rise to a fraudulent inducement claim—if the seller had not lied about some specific present fact about the business, the buyer might not have bought it. But other courts (sometimes even the same courts) have reached the opposite conclusion—because a warranty is part of the contract, it is not “collateral to the contract.” Similarly, some court state that as a definitive matter of New York law, a present misstatement of intent to perform a contractual promise (for example, that the seller knew perfectly well that it would not pay certain corporate debts in the future, or would not compete with the buyer’s business after the sale) gives rise to a claim for fraudulent inducement, while other courts are equally definitive that a present misstatement of intent to perform does not give rise to a claim for fraudulent inducement.

Second, in addition to the “collateral” question, a fraudulent inducement claim must be pleaded with particularity. In other words, a buyer may not simply allege that a statement was false and that the buyer reasonably relied upon it—it must allege facts sufficient to support that allegation, such as when the statements were made, how the buyer knows or suspects that the seller actually knew the statement was false when it was made, and how the buyer’s reliance was “reasonable.” Each one of these issues gives rise to its own complications—there is a large body of law on whether a complaint properly alleges that reliance was, in fact, “reasonable.” Was the buyer required to perform its own investigation, and if so, how in-depth was that investigation required to be? Should the buyer have demanded specific written promises that the suspect statement was true? Similarly, a “present intent not to perform” cannot simply be alleged—the buyer must say how it knows that the seller did not intend to perform as promised.

Third, because this field of law is so complicated, a potential plaintiff needs to give serious thought to where the action should be filed. Depending on the facts of the case and minor differences in each court’s precedents, bringing the action in one New York State county as opposed to another, or in federal court as opposed to state court, could affect the outcome considerably.
For these reasons, it is very difficult to say definitively what facts can or cannot support a fraudulent inducement claim. But it can be said with perfect confidence that an experienced commercial counsel is essential, both to draft the complaint and also—perhaps even more importantly—to oppose the inevitable motion to dismiss.


Schlam Stone & Dolan has such experience, both in advancing and in dismissing claims for fraudulent inducement of contracts. If you have questions, please contact us and we can discuss the specific facts of your case in detail.

Posted: April 25, 2017

Client Q&A: My company has been sued for replevin, conversion, promissory estoppel, and constructive trust

My company has been sued for replevin, conversion, promissory estoppel, and constructive trust. What do these words even mean?!

By Vitali S. Rosenfeld

Misappropriation of assets takes many forms and invites all kinds of claims seeking various legal remedies. Very often, many alternative claims are asserted for the same alleged wrong. For instance, it is quite common for a complaint to assert a breach of contract but also recite a whole set of quasi-contractual and tort claims based on the same or related factual allegations. But if breach of contract and fraud at least sound like commonly understandable terms, some others often require translation from the legalese.


Replevin is basically a demand to return a specific item of personal property. It is one of the oldest claims known to the common law. For instance, if Peter claims that Paul is improperly withholding Peter’s horse (or car, or laptop), he may seek replevin. It does not matter whether Paul stole the item or just refused to turn it back after the period of his lawful possession expired. The essence of the claim is that Peter wants Paul to return the item. Replevin is not a claim for money damages – only for return of the property.


But what if Paul has already sold or otherwise disposed of the item – or used it in a way that makes it no longer valuable for Peter? Then the only thing Peter could recover is money damages – which he will likely do through a conversion claim. Conversion has been defined as unauthorized assumption and exercise of control over personal property of another, interfering with that person’s right of possession. By selling, using, or otherwise misappropriating Peter’s property, Paul “converts” it to his own benefit. To prove a conversion claim, Peter would have to show his ownership of the property or at least a right of possession superior to Paul’s; he would also have to show that Paul did something wrong in the way he treated the property, causing damages to Peter. Unlike replevin, Peter’s remedy in a successful conversion claim is money damages. But just as replevin, a conversion claim is concerned with a specific and identifiable piece of property.

Money as the Subject of Conversion

Can money itself be the subject of a conversion claim? The answer is yes – but only in certain circumscribed situations. On the one hand, money is likely the most frequently misappropriated kind of asset, and claims for conversion of money are quite common. On the other hand, money is fungible. That is, if Paul borrowed $1,000 from Peter and failed to pay it back on the due date, Peter will have a breach of contract claim against Paul – but not a conversion claim, because the $1,000 that Paul failed to pay back is in any event not the same $1,000 that he borrowed. In other words, the $1,000 that he was supposed to pay back is any $1,000 and not any specific and identifiable $1,000. Accordingly, a payment obligation by Paul does not give rise to a conversion claim by Peter.

It may be a different story if Peter gave Paul $1,000 in a sealed envelope with a specific instruction to hand it over to Tom. In this situation, the money may be treated as specifically identified and segregated with an obligation to treat it in a particular manner – which, in the event of Paul’s misappropriation, may give rise to a conversion claim. Of course, the role of a sealed envelope may be played by a bank account, as long as the funds in question remain specific, segregated and identifiable. But Paul may not avoid a conversion claim by wrongfully merging the funds entrusted to him under specific instructions with his other funds; that would be like opening an envelope that he was instructed to keep sealed.

Promissory Estoppel

Promissory estoppel is an equitable doctrine that protects one party’s reasonable reliance on another party’s clear and unambiguous promise in situations that a traditional breach of contract claim may not cover. It becomes particularly applicable, for instance, where the contractual terms were initially not clear or purportedly changed over time by some supplemental promises. If the party on the receiving side of such a promise took some steps to change its position in reasonable reliance on the promise, it may have a basis for a promissory estoppel claim. In other words, the promissor may be “estopped” from revoking the promise even if it does not directly translate into a contractual obligation.

Constructive Trust

Constructive trust is another equitable doctrine that is often regarded as a remedial device rather than an independent cause of action – but is still commonly asserted in complaints as a separate claim. The essence of constructive trust is that the defendant is deemed to hold misappropriated assets in trust for others – and is thus compelled to account for them to the rightful owners. As courts have held, the main purpose of constructive trust is prevention of unjust enrichment. The range of situations where constructive trust may be imposed is quite broad – but there must be some underlying misappropriation or other substantive wrong giving rise to the claim.

Duplicative Claims

While many claims discussed here, and many others, are often asserted alongside a traditional breach of contract claim, such alternative pleading may or may not be proper depending on the specific factual allegations in the complaint. Even though pleading different legal theories in the alternative is generally permitted, certain claims may be impermissibly duplicative of others or simply inconsistent with others asserted in the same complaint. For instance, where the parties’ business relationship is clearly governed by a valid and enforceable written contract, such tort claims as conversion and such equitable claims as constructive trust concerning the same subject matter are likely to be precluded.


A timely and well-crafted motion to dismiss may make cut off redundant and inappropriate claims and make the case much simpler, streamlining its resolution. So the basic advice always remains the same: if you get sued, consult with competent counsel as early as possible. Schlam Stone attorneys have extensive experience in litigating all kinds of business-related claims.

Posted: March 27, 2017

Client Q&A: I think I have an insurance claim, but I can’t make heads or tails of the policy. Help!

I think I have an insurance claim, but I can’t make heads or tails of the policy. I don’t know what is and is not covered. Help!

By Bradley J. Nash

A Guide to Reading an Insurance Policy

If you suffer a loss or destruction of your property, or if someone threatens to bring a legal claim against you, among your first questions may be whether you have insurance coverage to compensate you or to pay for your defense. Like any legal document, an insurance policy can be baffling to the uninitiated reader. If the insurance carrier tells you that coverage is limited in some way, or perhaps not available at all, how do you know if they are treating you fairly? Having a basic understanding of the structure of an insurance policy can help you to protect your rights. (It is also usually a good idea to consult with a qualified attorney in any contested insurance coverage matter.)

Broadly-speaking, insurance policies fall into two categories: “first-party” policies (which cover against damage to or loss of the insured’s property), and “third-party” policies (which cover the insured for liability to others). Some insurance policies, such as a typical homeowners policy, may provide both first-party and third-party coverage. Future posts will explore the types of insurance in more detail, but the basic structure of most insurance policies is the same.

Reading an insurance policy is a bit like assembling a jig-saw puzzle. This is because policies are typically cobbled together from standard forms that are customized by “endorsements” appended at the end. Thus, to figure out precisely who and what is—and is not—covered requires carefully reading and cross-referencing the different parts of the policy. The three principal sections of a typical policy—the Declarations, Policy Forms, and Endorsements—are discussed below.


The first part of an insurance policy—and usually the only part that is customized for a specific policyholder—is the “Declarations.” The Declarations provide a summary of the essential terms of the policy, including the identity of the insureds, the time period covered by the policy, the amount of insurance provided and of any deductibles that must be satisfied before coverage kicks in. The Policy Forms (discussed below) will frequently reference the Declarations. For example, a provision of a liability policy might say:

We will pay on behalf of the Named Insured, Loss from Claims made against the Named Insured during the Policy Period.

To identify the “Named Insured” and the “Policy Period,” you would have to look back to the Declarations.

The Declarations provide a high-level overview of the coverage, but the devil is in the details—and those are spelled out in the Policy Forms, as modified by any Endorsements.

Policy Forms

The heart of an insurance policy is the Policy Forms. These are standard industry or company documents that set forth in detail the rights and obligations of the insurance company and the insured. The three principal components are (1) the Insuring Agreement and related Definitions; (2) the Exclusions; and (3) the Conditions.

  • Insuring Agreement and Definitions
  • The Insuring Agreement spells out the type of risk that the policy covers. For example, a first-party policy will cover a loss of property resulting from a particular risk or risks. A third-party policy will cover the insured’s liability to others, and may also obligate the insurance carrier to hire a lawyer to defend the insured in a lawsuit, or to reimburse the insured for legal fees and costs.

    The Insuring Agreement must be read in conjunction with the Definitions section, which defines the key terms (sometimes by cross-referencing the Declarations). For example, a property policy might state:

    We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.

    This provision can only be understood by looking at the Definitions to see what constitutes a Covered Cause of Loss. It could be defined broadly to cover “all risks,” or more narrowly to cover only a specific risk, such as fire or flooding.

  • Exclusions
  • Although the scope of coverage under the Insuring Agreement may appear broad, it will be narrowed by the Exclusions section. Thus, once you determine what coverage the Insuring Agreement and its associated Definitions provide, you need to assess what the Exclusions take away. In a general liability policy, for example, there may be an exclusion for harms that are “expected or intended” by the Policyholder, or claims arising from a breach of contract. Other types of insurance that provide defense coverage may exclude claims arising from fraudulent conduct, but typically only where there is a “final adjudication” that the insured committed the alleged fraud. These are only a few examples. It is important to read the policy Exclusions carefully to understand what is not covered.

  • Conditions
  • In addition to defining the obligations of the insurer, the policy also places certain obligations on the insured, which are spelled out in the Conditions section of the policy. Often the most important Condition is the requirement to give the insurance company prompt notice of a claim. You can’t get coverage if you don’t ask for it, and in some circumstances, the insurance company can seize on a delay in notice as a ground to disclaim coverage. Policies also typically condition coverage on the insured providing reasonable cooperation to the insurance carrier in its investigation of the claim, and in the case of a policy with a duty to defend, cooperating in the defense.


Just when you thought you were done, there is another critical component of any insurance policy that you must consult: the Endorsements. Rather than tailoring its standard forms to the policyholder, insurance companies modify the forms—often in very significant ways—by appending Endorsements to the policy. The Endorsements may expand or reduce the scope of coverage by changing policy Definitions, modifying the terms of Insuring Agreement, or adding, eliminating or changing the Exclusions.


Interpreting an insurance policy can be a daunting task. Knowing what to look for is the first step in protecting your rights. An experienced attorney can also be helpful in guiding you through the process. We have a great deal of experience advising policyholders in negotiating with, and when necessary, pursuing coverage lawsuits against, insurance carriers. If you have a question about your insurance policy, we would be happy to assist you.

Posted: March 7, 2017

Client Q&A: My Opponent Gets Evidence From My E-Mail? It Would Take Me Weeks to Read Through My E-mail!

My Opponent Gets Evidence From My E-mail? It Would Take Me Weeks to Read Through My E-mail!

By John M. Lundin

As we have discussed in a prior post, in modern complex commercial litigation, one of the biggest costs relates to discovery–the exchange of evidence between the parties. And electronic discovery is one of the biggest components of discovery–collecting e-mail and documents from computer systems, reviewing it to see if it is relevant to the case, providing it to your opponent, and then dealing with all the electronic documents you receive from your opponent. Even in a modestly-sized dispute, parties can end up exchanging tens of thousands of electronic documents. In large, complex cases, we routinely produce and/or receive millions of documents.

How can you deal with all these documents; both collecting your own and reviewing your opponent’s documents to see if they are important to your case? The short answer is that you mostly do not have to do anything. We will do it for you. And we have tools and techniques, some of which I discuss below, to stop the cost from becoming overwhelming.

Preserving Electronic Evidence

There is one critical thing you have to do: once you became aware of a dispute that might turn into a lawsuit, you need to preserve all of the evidence relating to it. This is key. Litigants have had their lawsuits thrown out (or worse, have had their defenses stricken) for failing to preserve and produce relevant evidence. When in doubt, preserve all evidence relating to a dispute, including electronic documents. This means making sure that you and your employees do not delete e-mails or other electronic documents on your computer systems. In particular (and something that sometimes trips people up), remember that some e-mail systems are set up to delete some or all old e-mails automatically. If you leave the relevant e-mails on your server, make sure you disable automatic deletion features for people likely to have relevant evidence.

The good news is that we can advise you on how make sure that your electronic evidence is preserved.

Collecting Electronic Documents

For a host of reasons, the easiest and least expensive way to search for and produce electronic evidence in all but the smallest of cases is to let your lawyers handle it. We have tools and techniques that will make sure things are done right (the only thing worse than doing something unpleasant is doing it twice because it was done wrong the first time). For example, in producing electronic documents, it is important to preserve the original file. If you forward, print or save electronic documents as new files, you lose the information (the metadata) that identified when the original file was created, modified, printed, sent or received. This might cause us to have to collect all your documents again to get the right information.

So, what should you do? We will work with you to determine what is best in your particular circumstances, but in general, it is fastest and best if we just create an archive of your e-mail account and any other collections of responsive documents and then winnow that collection down to what is relevant to the case using litigation support software made for the task.

Figuring Out What You Have to Give Your Opponent

If we have collected your electronic documents, there are different types of software systems that we use, depending on your needs and the size of the case, that allow us to search your documents in a variety of ways to figure out what we are obligated to produce to your opponent. There are search and analysis techniques we can use to winnow down the electronic documents we collect from you to limit the amount of time we spend looking at individual documents.

One concern in many cases is that you have communicated with us or some other lawyer about the dispute. You do not have to provide your opponent confidential communications with counsel reflecting legal advice. The good news is that we can do most of the work in locating such documents and making sure they are not produced to your opponent electronically.

Dealing With Your Opponent’s Electronic Documents

Not only will you likely have to worry about giving electronic discovery to your opponent, you likely will have to deal with your opponent’s production. Here, it is a good news, bad news situation. The good news is that a lot of evidence usually means that the chances of finding evidence good for your case has increased. The bad news is that it takes time to go through all that evidence. Whether we go through each page of your opponent’s production or use the electronic tools and techniques available to us to identify the documents most likely to be useful to you depends on a variety of factors, such as the evidence we are looking for, how many documents we have to review and how much is at stake in your lawsuit. We can work with you to find a solution that is best for you.


Electronic discovery presents the danger of increased costs and disruption of your business. Handled properly, however, the dangers are more than offset by the opportunities to reduce cost and increase the quality of the proof available at trial. If you are facing a lawsuit and have concerns regarding how electronic discovery will affect you, give us a call.

Posted: February 14, 2017

Client Q&A: A Customer That Went Bankrupt Is Suing to Recover Payments It Made to Me; What Can I Do?

A customer that went bankrupt is suing to recover payments it made to me. What can I do?

By John M. Lundin

When a business goes bankrupt, it very often happens that everyone to which the company paid money in the 90 days before the bankruptcy petition was filed gets sued to recover those payments in what is called a “preference” action. It does not matter whether the payments were for goods actually received or services actually rendered. It does not matter that you did nothing wrong. If you got the payments just before the bankruptcy, the bankruptcy estate can sue to get them back.

What is a Preference Action?

This sounds crazy, until it happens to you (and maybe even after it happens to you).

Before I discuss what can be done, here’s what is happening. The logic of a preference action is that it is unfair that some creditors get paid for goods or services they provide just before a bankruptcy and others do not. So, the answer is to claw back the money every creditor got from the debtor for the 90 days before the bankruptcy filing, so the money can be shared on an equal basis among all affected creditors. For example, if the bankruptcy estate succeeds in recovering $500,000 from you in a preference action, you now have a $500,000 claim against the estate and the $500,000 you paid gets thrown into the pot of money used to pay all creditors. Of course, if the bankruptcy estate ends up paying only 10 percent on claims, the $500,000 that was taken from you gets paid back as only $50,000. Maybe it is fair in general, but it can represent a serious loss to you.

Even worse, if you are a corporate insider, the preference period is one year, not 90 days.

What Can You Do?

Generally speaking, all the bankruptcy estate has to show is that you received the payments in the 90-day preference period. However, there may be defenses that, if you can prove them, will stop the bankruptcy estate from clawing-back the money.

The bankruptcy code contains a number of defenses. Here are the ones we encounter the most:

You can avoid having to return the payments during the preference period if you can show that the payment was for a debt incurred in the ordinary course of business and that the payment was made in the ordinary course of business or according to ordinary terms.

A typical situation where this defense applies is where the debtor was a regular customer of yours, you were providing it goods or services before the bankruptcy and in the 90 days before the bankruptcy, it paid you on the same terms it always did.

What does this mean? Imagine that you bill your clients with payment due 30 days after invoicing and the debtor routinely paid its bills on day 30. If, during the preference period, it kept paying on day 30, you may have a ordinary course of business defense. Of course, life is often messy and it would be unusual for a customer always to pay exactly on time. So, litigating an ordinary course of business defense usually involves statistical analysis of the billing and payment history to determine whether the payments during the preference period were similar to the ones before the preference period.

One issue that comes up in proving whether the payments were in the ordinary course is whether you pressured the debtor to pay during the preference period in a way you would not otherwise have done.

Another common defense is the subsequent new value defense. There, you have to show that you gave “new value”–typically, goods or services–to the debtor after the date of the challenged payment, and that you were not paid for that value or if you were, the payment was not avoidable. An example of this would be that you provided goods or services during the preference period for which you were not paid. If those payments came after the preference payments, they qualify as new value and will offset the preference payments.

There is a related defense called the contemporaneous new value defense. This defense applies when the payment is received at the same time you provide the good or services. For example, if a transaction was COD.


There are other defenses, and the application of the three common defenses I discuss above is more complicated than the short examples I have given show. So, if you are sued in a preference action, you should get experienced counsel to advise you.

There is one piece of good news, though. It would cost a bankruptcy trustee a lot of money to litigate a preference action against every vendor. And, the amounts involved can often be small. So, it is generally–although by no means always–the case that the trustee is willing to negotiate. The bad news is that since people usually settle, a trustee will not just go away unless you can present a strong defense. On the other hand, this means that a typical preference action does not involve the same costs as a full-blown litigation. Rather, there is initial fact gathering and then, hopefully, negotiation and settlement.

If you are a defendant in a preference action, we likely can help you. Give us a call.

Posted: January 31, 2017

Client Q&A: A Vendor Keeps Sending Me Invoices I Don’t Owe; Can Just Ignore Them?

A vendor keeps sending me invoices; I’ve been ignoring them because I think they are wrong. Is this OK?

By John M. Lundin

It seems logical that if you do not owe someone money, you should be able to ignore any bills they send you. Not so.

Under certain circumstances, a New York court can find that you are liable for a bill that you ignored, without even considering the question of whether you got what you were charged for. This is known as the “account stated” doctrine.

A court can find that an account stated exists when circumstances show that two parties have agreed to an amount owed, based upon prior transactions between them. What does this mean? Imagine that you have a business relationship with a vendor, and every month they provide you services and send you a bill. And every month, you either pay the bill promptly or you dispute the amount owed. Under these circumstances, if you get another bill and don’t contest it, a court can infer from your silence that you have agreed to pay the full amount.

If an account stated is found, you will be liable for the entire bill–you are deemed to have waived your right to contest the specific charges. Luckily, there are exceptions to this rule, such as if you can show that the bill was an attempt to defraud you.

How much time can you take to dispute a bill? Often this is covered by the contract, invoice, or purchase order. If it is not, the answer, unsatisfyingly, is that your delay in disputing the bill should not be unreasonable. Whether a delay is reasonable is based on the context. For example, is there a common practice in your industry? Or, in the past, how long did you take either to pay or dispute a bill?

Even though there are defenses, the key point here is that if you receive an invoice that you think is incorrect, say something promptly.

If someone has made a claim against you for an account stated, or if you have a customer that has not complained about its bills, but has not paid them either, give us a call. We are experienced in both prosecuting and defending actions for account stated.

Posted: October 3, 2016

Client Q&A: Someone made a posting on a website that is not just untrue, it also is hurting my business. Is there anything I can do?

Someone made a posting on a website that is not just untrue, it also is hurting my business. Is there anything I can do?

By John M. Lundin

As the internet has grown, so, too, has the problem of people writing things that are false about businesses or other people. Most of us know to take some of the things we read on the internet with a grain of salt, but even so, the basic rules of defamation law apply to the internet. If someone writes something defamatory about you on the internet, they can be held liable.

Very generally, for a claim to be defamatory, it has to be false, be made to a third party (that is, it cannot be just between you and the person who writes or says it) and it has to damage you. And if you sue someone for it, you have to plead specifically what was said and when it was said. If it is written on the internet, most of these elements are easy to satisfy. So, if the poster gives his or her identity, and you can show how you were damaged, you can sue them for defamation.

With the internet, there can be big challenges associated with determining who made the defamatory statement, and thus who to sue.

Who Made the Statement?

One of the biggest challenges in doing something about on-line defamation is that it can be difficult to figure out who made the statement. On the internet, posts, comments and similar statements often are anonymous or made under pseudonyms. So, you may know exactly what was said and when it was said, but not who said it. And if you do not know who made the statement, it is hard to do anything about it.

You may have to subpoena the website or internet service provider to discover the poster’s identity. This can take some time, but if the website or internet service provider from which you are seeking information is in the United States, and if you can show that you have a valid claim, a court usually will order the disclosure of the poster’s identity.

If the website is hosted outside the United States, it probably will not be possible to get any information from it. As a last resort, there are private investigators who sometimes are successful in discovering a poster’s identity.

Even if you learn the poster’s identity, if they are outside the United States, it may be hard to sue them here. That is, even if you have a claim against them in, for example, New York, it may be difficult to have them served with court papers outside the United States. And if you obtain a judgment against them, it may also be difficult to enforce it.

Suing the Website

If the internet service provider gives you the information it has about the poster, it may be that the poster has disguised his or her identity and location, so that even the internet service provider cannot find them.

If you cannot find the poster, why not just sue the internet service provider that hosts the defamatory comment? As discussed above, with a little work, you can learn who the internet service provider is. While there are exceptions, the general rule is that federal law protects internet service providers from being sued for things other people post on websites that the providers provide.


After reading this, you might think that there is nothing to be done if someone defames you on the internet. Not so! Sometimes, it is no different than–indeed easier than–defamation has always been. It is just that the anonymity and ubiquity of the internet can sometimes make it challenging to bring a claim. If you have been defamed by someone on the internet, you need to know that these complications exist. They often can be overcome. We have experience in this area and perhaps we can help you, too.