In real estate agency relationships, an agent owes its client, a buyer or seller of property, fiduciary duties, including duties of undivided loyalty, reasonable care, and confidentiality. Due to the increasing number of large brokerage firms, “dual agency” deals have become commonplace. A dual agency occurs when an agent represents the buyer and the seller in the same deal, or, the buyer’s and seller’s agents are employed by the same firm. In New York, dual agency is legal as long as proper disclosure is made. This is the key issue in Goldstein v. Houlihan/Lawrence Inc., Index No. 60767/2018, an important case pending in the Westchester Commercial Division before Justice Linda Jamieson.

In Goldstein, Plaintiffs, which include buyers and sellers, allege that Houlihan Lawrence routinely acts as a dual agent as part of a corporate strategy to grow its market share and, in doing so, fails to disclose its agents’ dual roles.

The Complaint asserted four claims, which Houlihan Lawrence moved to dismiss pursuant to CPLR 3211(a). As discussed below, the Court allowed two of Plaintiffs’ claims to proceed: (i) breach of fiduciary duty based on an alleged failure to disclose the risks of dual agency; and (ii) violation of New York General Business Law § 349, based on alleged deceptive acts and practices. (The Court dismissed Plaintiffs’ claims for violation of Section 443 of the Real Property Law and unjust enrichment.)

Breach of Fiduciary Duty

Houlihan Lawrence sought dismissal of this claim on the grounds that each plaintiff executed the statutory disclosure form demonstrating consent to the firm’s dual agency. In analyzing this claim, Justice Jamieson cited Section 443(4)(a) of the Real Property Law (“Dual Agent”), which states:

“A real estate broker may represent both the buyer and the seller if both the buyer and seller give their informed consent in writing. In such a dual agency situation, the agent will not be able to provide the full range of fiduciary duties to the buyer and seller. The obligations of an agent are also subject to any specific provisions set forth in an agreement between the agent, and the buyer and seller. An agent acting as a dual agent must explain carefully to both the buyer and seller that the agent is acting for the other party as well. The agent should also explain the possible effects of dual representation, including that by consenting to the dual agency relationship the buyer and seller are giving up their right to undivided loyalty. A buyer or seller should carefully consider the possible consequences of a dual agency relationship before agreeing to such representation. A seller or buyer may provide advance informed consent to dual agency by indicating the same on this form.” Id. (emphasis added).

In denying the motion, Justice Jamieson concluded that establishing consent for dual agency requires more than a client’s signature on a form:

“By these very words … it appears that the mere signing of the [statutory disclosure] form is insufficient, and the legislature required more. If the form was all that was necessary, there would be no need for this language, and it would be rendered superfluous.” Id. (emphasis added).

General Business Law § 349

Plaintiffs also asserted a claim under GBL § 349, which is directed at deceptive acts and practices against the consuming public. As the Court noted: “[P]laintiffs … must charge conduct of the defendant that is consumer-oriented, by having a broader impact on consumers at large. Private contract disputes, unique to the parties, for example, would not fall within the ambit of the statute” (quoting Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20, 24-25 (1995)).

Here, the alleged wrongs are that Plaintiffs were not properly informed of the risks associated with dual agency and the firm’s compensation. In that regard, the Court stated:

“To analyze the ultimate efficacy of each claim, this Court will be called upon to determine what was said and what disclosure[s], if any, were made to each plaintiff during the relationship … with Houlihan Lawrence. Each of these transactions are separate, different people were involved, and undoubtedly different things were said and communicated. While the alleged commonality between these plaintiffs may be alleged non-disclosure, the ultimate resolution of the claims can only be determined by individual analysis of each transaction, and to a certain extent each transaction can be considered unique.” Id.

But above and beyond alleged deceptive conduct itself, the Court ultimately must consider whether conduct has “a broad impact on consumers at large.” And on that point, Justice Jamieson allowed the claim to proceed based on Plaintiffs’ allegations (which, at this early stage, the Court must accept as true) that “the practices of Houlihan Lawrence are pervasive, have and will affect many others, and Houlihan Lawrence has promoted its practices.” The Court qualified this ruling by stating that “if discovery in this matter proves otherwise, [it] will certainly revisit this issue upon the proper application.”

Houlihan Lawrence also argued that GBL § 349 does not apply to real estate transactions or deals involving the amounts of money at issue, but the Court disagreed and held that “real estate transactions are not excluded from the protections of the statute.” Id. (citing Polonestsky v. Better Homes Depot, Inc., 97 N.Y.2d 46 (2001)). The Court also was not prepared to dismiss this claim based on the amount of the commissions but noted that it “will certainly be a factor in determining, at the proper time, whether the transaction was unique.”

Litigation Status: On May 15, 2019, Justice Jamieson appointed a full-time discovery master to hear and report to the Court on all issues of discovery, including pending discovery motions, pursuant to CPLR § 4311.

We will continue to monitor this case and provide updates on new decisions and developments.

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There’s a clever saying of murky origin that goes, “if your only tool is a hammer, then every problem looks like a nail.” It describes the “law of the instrument,” or Maslow’s Hammer, which says that people tend to over-rely on their available and familiar tools, even when they shouldn’t. Well, when you’re looking for a default judgment, service often looks like nail and mail.  And often it shouldn’t look that way.

We’ve previously written about how judges in the Westchester Commercial Division will deny even an unopposed motion for default judgment when the plaintiff fails to submit proof of the claim or of damages. On July 31, 2019, Justice Linda Jamieson issued another decision doing just that. The decision in Lliguicota v. Perez, Index No. 50059/2018, though, also shows that, on a motion for default judgment, the Court will independently determine if service was proper and deny a motion for default judgment if it was not.

In Lliguicota, the proof of service stated that the plaintiff served the summons under CPLR 308(4), customarily referred to as “nail and mail,” which permits service by a combination of “affixing the summons to the door” of the defendant’s home or business, and by mail, when personal service “cannot be made with due diligence.” Examining the affidavit of service, Justice Jamieson found that “it does not appear to the Court that plaintiff exercised due diligence before resorting to ‘nail and mail’ service under CPLR § 308(4).” Instead, “a review of the process server’s affidavit shows that although four attempts at service were made, all of them were ‘made on weekdays during hours when it reasonably could have been expected that [defendant] was either working or in transit to work’” (quoting County of Nassau v. Letosky, 34 A.D.3d 414, 824 N.Y.S.2d 153 (2d Dep’t 2006)). Justice Jamieson, therefore, directed the plaintiff to properly serve the summons within 20 days, and denied the motion.

Takeaway: Motions for default judgments will not be rubber-stamped by the justices of the Westchester Commercial Division. Be sure to submit proof of the underlying claim, damages, and proper service.

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New York’s Commercial Division is an attractive forum for parties to litigate disputes over financial transactions. And, because so many transactions flow through New York institutions, aggrieved plaintiffs often believe that the flow of money through the state gives them a hook to sue defendants in New York courts. Often, that is true. But there are limits.

Justice Jamieson discussed those limits in de Arata v. Mathison, Index No. 55723/16. In that case, the plaintiff alleged that her former son-in-law, Mathison, who managed her investments, stole money from her in three transactions. Mathison gave that money to defendant Central Andean Investment Corp. to invest, but Central lost the money. The plaintiff sued Mathison, who defaulted, and the Court entered summary judgment against him.

This decision, however, concerns the plaintiff’s claims against Columbia-based Central and its principal, Jorge Fernando Ricardo Varela. Central and Varela moved for summary judgment dismissing them from the case on the ground that the New York court could not exercise personal jurisdiction over them.

Significantly, there was no evidence that Central or Varela knew that the money they received from Mathison belonged to the plaintiff. There was also no evidence that they stole or misappropriated the money. Instead, it appeared that they simply made bad investments. Central cleared its transactions through a company in Panama, which in turn cleared through Pershing, LLC, which maintained an account with Bank of New York–Mellon. Justice Jamieson found that this connection to New York was too tenuous to support personal jurisdiction over Central and Varela under New York’s longarm statute.

The key provision in the analysis is CPLR 302(a)(1), which allows a New York court to exercise jurisdiction over a “nondomiciliary” if it “transacts any business within the state or contracts anywhere to supply goods or services in the state” and there is “a substantial relationship between the transaction and the claim asserted.” Wilson v. Dantas, 128 A.D.3d 176 (1st Dep’t 2015), aff’d 29 N.Y.3d 1051 (2017). The plaintiff argued that: (i) Central and Varela purposefully used the correspondent bank on three occasions in connection with the plaintiff’s investments; and (ii) their use of those accounts came to an end “only because Defendants’ clandestine conversion was discovered by Plaintiffs and thereby stopped.”

Justice Jamieson, however, found that Central and Varela’s connections with New York were “essential adventitious” (quoting Licci v. Lebanese Canadian Bank, 20 N.Y.3d 327 (2012)). They were, in other words, not even defendants’ doing. “Central used a Panamanian bank for its transactions with plaintiffs’ money,” the Court explained. “The Panamanian bank is the entity that used the New York bank.” This, Justice Jamieson held, is not enough to support long arm jurisdiction over the defendants. The Court concluded: “There is nothing in the complaint, nor in the papers on this motion, that demonstrates that movants purposefully and knowingly availed themselves of a New York forum; the only contacts in New York are passive and coincidental. These transactions all occurred in Colombia, among Colombian actors, involving Colombian funds. Put differently, if any wrongdoing occurred, it occurred in Colombia, not New York.” Justice Jamieson granted summary judgment dismissing the claims against Central and Varela.

Takeaway: It is tempting to assert claims involving financial fraud in New York courts and, especially, in the Commercial Division, when funds are misappropriated using New York-based clearing banks. But plaintiff’s counsel must make sure that the connections to New York are strong enough to support personal jurisdiction. Justice Jamieson’s decision again demonstrates that the mere clearing of funds through New York, at some stage of the transaction, is not enough.

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In an earlier post, we explained that the Westchester Commercial Division will not grant a motion for a default judgment without reviewing the papers. The Court will first determine whether the plaintiff has made a prima facie showing of its entitlement to a judgment. It is not unusual for the Westchester Commercial Division justices to deny even an unopposed motion for a default on the ground that it is not supported by admissible evidence. Defaulting defendants, however, should not take comfort from this because they will not be relieved of their default without a good explanation.

Energy Reduction Assets, LLC v. Proactive Lighting Solutions, LLC, Index No. 68477/2017, started like the cases discussed in our earlier post: the plaintiffs moved for a default judgment, but Justice Gretchen Walsh denied the unopposed motion. The Court found that the plaintiffs failed to submit sufficient proof of their entitlement to judgment under CPLR 3215(c). “Default judgments are not to be rubber-stamped once jurisdiction and failure to appear are shown,” the Court explained. “Proof must still be submitted to satisfy the Court, at least prima facie, as to the viability of the uncontested cause of action.” Justice Walsh therefore denied the motion without prejudice.

When the plaintiffs made a renewed motion, supported with additional proof, the defaulting defendants appeared and cross-moved to vacate the default. On the plaintiffs’ second attempt, Justice Walsh found that the plaintiffs had met their prima facie burden. But what about the cross-motion to vacate?

This time, it was the defendants who failed to satisfy their burden – or Justice Walsh. A defendant asking a court to vacate a default must offer a reasonable excuse for not answering the complaint. In this case, however, the only excuse offered was that the individual defendant and president of one of the corporate defendants “is not sophisticated with respect to the legal process and did not understand that he had to respond to the Complaint until speaking with…counsel.” In other words, he just didn’t know that he was required to do something when the defendants were served with the pleadings. This, Justice Walsh found, was not sufficient. “Courts have repeatedly held that a party’s ignorance of the law or assertions that the party was unaware as to whether or how to respond to a complaint are not reasonable excuses for purposes of vacating default judgements,” Justice Walsh explained.

Takeaway: The justices of the Westchester Commercial Division will scrutinize default judgment motion papers to ensure compliance on both sides. Plaintiffs won’t get an easy default judgment, and defendants will not be lightly relieved of their defaults.

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A recent decision from Westchester Commercial Division Justice Linda Jamieson presents an interesting contrast to a case we discussed in an earlier post. In Prisco v. L’Aquila Realty LLC, Index No. 58654/2018, Petitioner moved to disqualify opposing counsel, who was deposed in the case and certain to be called as a witness at trial. Petitioner argued that, pursuant to Rule 3.7 of the Rules of Professional Conduct, a lawyer cannot be both an advocate and a witness, except in limited circumstances.

Justice Jamieson explained that “the court is guided, but not bound by, the standards set forth in Rule 3.7, and whether to disqualify an attorney rests in the sound discretion of the Court” (quoting Harris v. Sculco, 86 A.D.3d 481, 926 N.Y.S.2d 897 (1st Dep’t 2011). Then, because summary judgment motions had not yet been filed in the case, the Court denied the motion as “premature.” “If the parties do not make motions for summary judgment, or if the motions are unsuccessful such that a trial is necessary,” Justice Jamieson said, “petitioner may make a second motion.”

In an earlier decision in HH Marina Development LLC v. Tarrytown Boat Club, Inc., however, Justice Jamieson held that a general counsel who was deposed in the case and would be a key witness at trial “cannot be allowed to take the deposition of other key witnesses.”

The different outcomes in the two cases likely is attributable to the fact that in HH Marina, the general counsel who sought to depose other witnesses was not counsel of record. Thus, plaintiff HH Marina was not deprived of its choice of counsel and the motion was not really a motion to disqualify.

Takeaway: HH Marina was a highly unusual situation, and Justice Jamieson’s decision in Prisco likely better reflects the Court’s reluctance to interfere with the parties’ choice of counsel.

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On June 14, 2019, the New York State Bar Association hosted a breakfast at the Westchester County Courthouse with Justices Linda Jamieson and Gretchen Walsh. This was a great opportunity to hear from Westchester’s Commercial Division judges on various topics, including their expectations of attorneys who appear before them. Here are a handful of important takeaways:

Discovery Disputes:

The justices expect counsel to abide by Commercial Division Rule 14, which requires good faith negotiations to resolve discovery disputes before seeking judicial intervention.

If assistance is necessary, the judges’ approaches are a bit different. Justice Walsh does not want letters; counsel should contact chambers to schedule a call. Justice Jamieson prefers that counsel first send a letter to identify the issues; the Court will then arrange a conference call, except if the issues are complex, in which case counsel must appear in person.

The justices also advised that if a dispute arises during a deposition, the parties should contact chambers to obtain an immediate ruling while the deposition is still in progress, in order to avoid the need to reopen or continue a deposition at a later date.

Briefs:

Justice Jamieson and Justice Walsh encouraged lawyers to keep briefs “short and concise.” Both justices agreed that there is no need to recite legal standards on dispositive motions and that lawyers should avoid being repetitive. In addition, Justice Jamieson encouraged lawyers to follow her rule requiring the use of tabs to separate exhibits.

Regarding page limits, under Rule 17, opening and opposition briefs must be limited to 7,000 words (approximately 22-23 pages) and reply briefs must be limited to 4,200.

Notably, Justice Walsh will allow multiple defendants to exceed the limit if they join together in a brief.

Rule 19-a Statements of Material Facts:

As discussed in a previous post, when filing and opposing motions for summary judgment in the Westchester Commercial Division, be sure to submit Rule 19-a Statements, as they are very important to both Justice Jamieson and Justice Walsh.

Oral Argument:

Both justices generally do not hold oral argument but will make an exception to give junior attorneys an opportunity to gain experience arguing motions. As Justice Jamieson said, “we would like to see everyone given a shot.” Justice Walsh said that she is considering amending her rules to allow oral argument if an attorney with five years of experience or less will handle it. Both justices also advised that they ultimately rely on the briefs in deciding motions so, as Justice Walsh said, “oral argument will not make or break you.”

ADR:

Justice Jamieson and Justice Walsh are both strong proponents of “presumptive” alternative dispute resolution, in which parties will be referred to mediation in the early stages most lawsuits. Justice Jamieson encouraged attorneys to consider mediation before making their first appearance in the case.

Civility and Professionalism:

Gamesmanship will get you nowhere. Both justices expect counsel to be professional and treat each other with civility. In addition, Justice Jamieson does not like when attorneys talk to each other instead of addressing the Court and Justice Walsh will make attorneys appear in person if they cannot agree on adjournments.

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Commercial leases are often complicated, as the stakes are high for each party. A tenant needs the right space to operate its business and a landlord needs reliable tenants to cover its expenses and earn a profit. When tenants cease paying rent and vacate or are evicted, actions by landlords to collect unpaid rent ensue. Sometimes, those actions include claims against a tenant’s principal to enforce a personal guarantee in the lease. That was at issue in TSG Grat #7, LLC v Cortlandt Manor Flooring, LLC/John Posimato, Index No. 57204/16.

In this case before Westchester Commercial Division Justice Linda Jamieson, the tenant-defendant, Cortlandt Manor Flooring, LLC, leased commercial space from the plaintiff-landlord. After the tenant stopped paying rent, it was evicted. The landlord sued the tenant and its principal, John Posimato, to collect rent allegedly due through the end of the lease. The landlord claimed that Posimato personally guaranteed the lease. But Posimato signed the guarantee: “John Posimato, Member, Cortlandt Manor Flooring, LLC.”

In opposition to the landlord’s summary judgment motion, Posimato argued that he only signed in his corporate capacity. In reply, the landlord submitted an unsigned proposal it had sent to Posimato before the lease and guarantee were executed that sought a six-month “good guy guarantee.”

Justice Jamieson ruled that the landlord’s unsigned proposal proved nothing. Further, the lease required the landlord to reduce any damage claim by the amount it received after reletting the premises. But the landlord failed to address this in its motion papers. For these reasons, there were issues of fact concerning the amount of rent owed and whether Posimato signed the guarantee personally or in his corporate capacity. Thus, Justice Jamieson denied the landlord’s motion for summary judgment against Posimato.

In addition, the corporate tenant did not appear in the action. Justice Jamieson denied the landlord’s motion for a default judgment and dismissed the action against the tenant because the landlord only served by regular mail. Under Limited Liability Company Law § 303 and CPLR § 311-a, that “is not an authorized method of serving a limited liability company.”

Takeaway for Landlords: When seeking a personal guarantee under a commercial lease, make sure the language clearly and unambiguously provides that the representative is signing personally rather than in his/her corporate capacity.

Additional Takeaway: Make sure you hire an experienced process server who knows the proper methods of service.

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An easement, or right-of-way, grants someone the right to cross or use another’s property for a specific purpose. But if the holder of the right-of-way exceeds the scope of the easement, he or she may be liable for damages for trespass. That was the case in Julia Properties, LLC v. Levy.

In July 2009, plaintiff Julia Properties, LLC, owned by Thomas Decea, entered into a lease with William Morgan, the landlord, to rent property owned by Morgan. Defendant Norman Levy possessed a right-of-way over a portion of the property to access a dock. Plaintiff sued Levy to recover damages for trespass, claiming that in July 2010, Levy engaged in criminal conduct on the property. Specifically, Plaintiff alleged that Levy intentionally used the wheels of his truck to launch stones at the home occupied by Decea’s family.

Levy moved for summary judgment dismissing the case. He argued that he possessed a right-of-way over the relevant portion of the property and that no damages were sustained. Levy also argued that Plaintiff had no right of possession at the time of the alleged trespass and, in turn, lacked standing. Levy claimed that Plaintiff could not have leased the property before October 2010, when a certificate of occupancy for the property was issued.

On the other hand, under the lease, the “commencement date” was the date that either: (i) Landlord obtained a certificate of occupancy; or (ii) the property was deemed habitable. Decea testified that the property was ready for occupancy in 2009 and habitable by July 2010. Thus, Plaintiff argued, it had the right to possession at the time of the alleged trespass.

The Second Department held that Westchester Supreme Court Justice Linda Jamieson properly denied Levy’s motion for summary judgment dismissing Plaintiff’s claim. The elements of a trespass claim are: “the intentional entry onto the land of another without justification or permission.” Korsinsky v. Rose, 120 A.D.3d 1307, 1309-1310, 993 N.Y.S.2d 92 (2d Dep’t 2014). Based on Decea’s testimony, Levy could not establish that Plaintiff did not have a right to possession at the time of the alleged trespass.

Levy also failed to establish entitlement to dismissal of Plaintiff’s claim based on his right-of-way to enter the property. Although “[a]n action for trespass may not be maintained where the alleged trespasser has an easement over the land in question,” Mangusi v. Town of Mount Pleasant, 19 A.D.3d 656, 657, 799 N.Y.S.2d 67 (2d Dep’t 2005), this “is true only when the scope of the easement has not been exceeded.” Gates v. AT&T Corp., 100 A.D.3d 1216, 1220, 956 N.Y.S.2d 589 (3d Dep’t 2012). The Second Department affirmed Justice Jamieson’s ruling that Levy failed to eliminate all triable issues of fact as to whether his alleged criminal conduct exceeded the scope of his easement of a portion of the property to access the dock.

The Second Department also affirmed Justice Jamieson’s ruling that Levy failed to establish that Plaintiff sustained no damages. “The essence of trespass to real property is injury to the right of possession.” Id. (quotation omitted). Thus, that Plaintiff did not own the property or spend money to repair the damage to it was irrelevant. Plaintiff may recover “consequential damages such as … damages caused by discomfort and inconvenience.” Volunteer Fire Assn. of Tappan, Inc. v. County of Rockland, 101 A.D.3d 853, 856, 956 N.Y.S.2d 102 (2d Dep’t 2012).

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Sometimes in-house counsel believe they can handle a case better, or more cost-effectively, than outside counsel. And sometimes, they just miss practicing law. Still, it’s better to let outside counsel do the talking…and the questioning. It’s impossible to know what motivated in-house counsel in HH Marina Development LLC v. Tarrytown Boat Club, Inc., Index No. 63137/17, to take a deposition. But it didn’t work out well. The facts are straightforward, but unusual.

Under CPLR 3106(d), the party seeking a deposition may designate “a particular officer, director, member or employee” in the notice. Defendants noticed “HH Marina Development LLC by Joseph Cotter” – HH’s President. CPLR 3106(d), however, gives the other side an opportunity to produce someone other than the designee. All that is required is to notify the other side at least ten days before and give the identity, description or title of the witness. Instead of producing Mr. Cotter, Plaintiff designated its General Counsel, Daniel Pennessi.

Plaintiff then sought to depose one of the Defendants. When the parties and counsel showed up, Defendants learned that Pennessi himself planned to ask the questions. Not surprisingly, Defendants objected, and the parties called the Court. When Pennessi could not cite caselaw supporting his position that he was entitled to take the deposition, it was postponed.

Plaintiff then moved to enjoin Defendants from refusing to proceed with depositions conducted by Pennessi. Plaintiff argued that Pennessi should be permitted to take depositions because he had no “threshold or significant testimony to provide upon which this case will be decided.” Justice Jamieson found this “puzzling” as Plaintiff had designated Pennessi as a witness. “By selecting Mr. Pennissi over Mr. Cotter,” the Court wrote, “plaintiff has demonstrated that Mr. Pennessi does, in fact, have ‘threshold or significant testimony to provide.’”

The issue presented to the Court was a case of first impression in New York. Specifically, “whether Mr. Pennessi should be allowed to conduct depositions that will be used in the same trial in which he was also a fact witness.” The Court ruled as follows:

First, Justice Jamieson rejected Plaintiff’s argument based on Rule 3.7 of the Rules of Professional Conduct. Rule 3.7 states that “[a] lawyer shall not act as advocate before a tribunal in matter in which the lawyer is likely to be a witness on a significant issue of fact…” A deposition, Plaintiff argued, is not “a tribunal.” But Justice Jamieson concluded that it was “a distinction without a difference.” Because Pennessi would be a key witness at trial, “he cannot be allowed to take the deposition of other key witnesses.”

Second, Justice Jamieson rejected Plaintiff’s suggestion that “if a deposition transcript must be read during trial, the reader can merely omit Mr. Pennessi’s name so that the jury does not know that he was the lawyer taking the deposition.” The Court found that the proposal “does not account for every possible situation, including one in which the deposition itself becomes an issue at trial.” Justice Jamieson was “not willing to risk a mistrial so that Mr. Pennessi … can take the deposition instead of counsel of record doing so.” Thus, the Court denied the motion for a protective order and ordered that Plaintiff, by counsel other than Pennessi, take the two outstanding depositions.

Takeaway: In-house counsel cannot be a witness in the case and take a deposition, too.

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For many, purchasing real estate is a stressful endeavor. It’s further complicated when one attempts to buy distressed property through a short sale, when an owner sells property for less than the mortgage balance. Lenders typically allow short sales to recoup a portion of the loan balance quickly and avoid a lengthy and expensive foreclosure proceeding. Westchester Commercial Division Justice Linda Jamieson granted a short sale buyer a temporary restraining order (“TRO”) and a preliminary injunction when the seller attempted to cancel the contract.

In Singh v. DiBerardino, Index No. 67782/2017, Plaintiff contracted to buy Defendant’s property in Mamaroneck through a short sale. The parties signed five contracts related to it, each of which included statements that Defendant would sell the property to Plaintiff. They also signed agreements with Plaintiff’s fiancé to maintain and secure the Property and clear violations and liens. After Plaintiff undertook all of those efforts and was ready, willing and able to close, the Defendant decided to back out. Plaintiff commenced action and immediately moved for a TRO and a preliminary injunction pursuant to CPLR § 6301. Plaintiff sought to prohibit Defendant from taking actions adverse to Plaintiff’s interest in the Property and force Defendant to close on the sale.

A preliminary injunction is a drastic remedy which should be used sparingly. In exercising its discretion, the Court must determine if the movant has established: “(1) a likelihood of success on the merits, (2) irreparable harm in the absence of an injunction, and (3) a balance of the equities in favor of the injunction.” Trump on the Ocean, LLC v. Ash, 81 A.D.3d 713, 715, 916 N.Y.S.2d 177, 180 (2d Dep’t 2011). Based on the facts, Justice Jamieson found that Plaintiff met its “particularly high burden” and granted the motion in its entirety.

In opposition, Defendant claimed that she signed the contracts under duress and without benefit of counsel and that the work performed by Plaintiff was unauthorized. But Justice Jamieson rejected these arguments. Regarding the claim of duress: “it is well-settled that ‘[a] party is under an obligation to read a document before signing it, and cannot generally avoid the effect of the document on the ground that he or she did not read it or know its contents” (citing Augustine v. BankUnited FSB, 75 A.D. 596, 597, 905 N.Y.S.2d 652, 653 (2d Dep’t 2010)).

Justice Jamieson also rejected Defendant’s claim that she was not represented by counsel. Not only is this not a defense, but the evidence demonstrated that she obtained legal advice concerning the transaction. The Court further noted that Defendant signed several contracts over the course of two years. Accordingly, “it is simply implausible to believe that she did not know what she was doing, or that she was pressured into doing so on so many different occasions.” And finally, various text messages and emails indicated that Defendant did in fact authorize Plaintiff and her fiancé to perform work on the Property.

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