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In its recent decision in Dombrowski v. Bulson, 19 N.Y.3d 347 (2012), the New York Court of Appeals recently reiterated the long-established New York court-made rule barring the recovery of damages for emotional distress injuries and other “non-pecuniary” (i.e., non-monetary) losses in legal malpractice cases.

DSC00026Bucking the position of the majority of states which treat legal malpractice damage claims no differently than other types of negligence claims,[1] the New York Court of Appeals in Dombrowski, in reversing the holding of the Fourth Department, held that non-pecuniary damages are not recoverable in a legal malpractice action arising from a criminal attorney’s “ineffective” defense of the plaintiff. In Dombrowski, the plaintiff’s disallowed non-pecuniary damages arose from his wrongful conviction and 5-1/2 years of incarceration resulting from his defense lawyer’s alleged legal malpractice. Continue Reading

The New York Constitution and Statutes governing which New York State courts have authority (i.e., jurisdiction) to grant permission to appeal to the Court of Appeals can be confusing and in many cases seemingly illogical.gavel-3-1409593-m

Like the United States Supreme Court, the New York Court of Appeals is generally a certiorari type court in that, with few exceptions — such as for appeals from Appellate Division decisions finally deciding the action and in which there were either two dissents or a constitutional question; New York Constitution, Article VI, §3(b)(7) and CPLR §5601(a) & (b) — the great majority of decisions can only be appealed to the Court of Appeals when permission (often referred to as “leave”) is granted. However, unlike the United States Supreme Court, which generally has the exclusive say over which cases will be granted certiorari, the authority to grant permission to appeal to the Court of Appeals is divided between that Court and the Appellate Division.

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Unlike some jurisdictions, the state courts in New York and New Jersey, as well as the federal courts, do not require a losing party who has a monetary judgment entered against them, to satisfy (pay) the judgment or post an appellate bond to secure the payment of the judgment in order to take an appeal. On the other hand, however, taking an appeal does not automatically prevent the judgment creditor from undertaking enforcement procedures to collect on the judgment.

With the exception of certain parties, such as governmental entities and insurance companies, a judgment debtor (the party who owes the money) can only stay (stop) enforcement proceedings to collect on a monetary judgment against them by posting an appellate bond for the full amount of the judgment. To obtain the appellate bond, sureties (the insurance company issuing the bond) will generally require that the judgment debtor post collateral, such as a totally liquid bank account or letter of credit, for 125-150% of the amount of the judgment. That is because the amount of the appellate bond must be sufficient to secure the judgment as well as accruing interest, which can run as high as 9% per year for New York State court judgments (press here to see our related article on judgment interest). The surety will also charge a premium, typically 1-2% of the bonded amount, as their fee.

If the judgment is affirmed (upheld) on appeal, the surety will be obligated to satisfy the judgment by paying the judgment creditor the total amount due plus interest and fees. The surety will use the collateral to pay that. If the judgment is reversed (overturned) on appeal, a court order will likely be required to terminate the bond and have the collateral returned.

Virtually all judgments awarding a plaintiff (or counter-claiming defendant) a monetary judgment accrues interest until the judgment is satisfied (paid off). Hence, if the judgment debtor takes an appeal and posts an appellate bond guarantying payment if the judgment is upheld, the judgment accrues interest while the appeal is pending.

By far, the interest rate for most judgments granted by a New York state court, typically the New York State Supreme Court (the trial level court), New York City Civil Court or other state, city or county court in New York, accrues at a staggering 9%. That rate is much higher than what is allowed by the federal courts (e.g., United States District Court) or the New Jersey state courts. Those rates, which are set according to current rates and indices, are typically only a fraction of the New York state rate. For this reason, plaintiffs are motivated to sue in a New York state court, while defendants are motivated to “remove” cases filed in state court to federal court when a basis for federal jurisdiction applies.

Lastly, mention should be made that in certain situations, tyically cases where a monetary judgment is entered against a state agency, municipal entity or public benefit corporation, much lower rates are set by specific state statutes.

The recent demise of the famous New York City art gallery, M. Knoedler & Company, amid accusations of selling forged and fake artworks comes as no surprise to us, but for the fact that it is many years in the coming.

In perhaps one of the early landmark art fraud cases, my firm sued M. Knoedler, as well as a major art collector from Boston and the renowned art expert and author on the definitive catalogue resonne of the art works of Winslow Homer in federal court.

In that lawsuit, brought in the United States District Court for the Southern District of New York, located in Downtown Manhattan, our client “Sally” who was a small art collector-dealer in New Jersey, owned a beautiful, but unknown, signed oil painting that was a quintessential Homer. Due to the need to have the painting authenticated so that it would be recognized and fully accepted by art museums, galleries and collectors, she accepted Knoedler’s offer to show the painting to Gordon Hendricks, who was near completing a major art book on Winslow Homer paintings and drawings. After several weeks, Knoedler’s Vice President told Sally that Hendricks could not authenticate her art work, but that while at the gallery, a collector saw the art work and wanted to buy it as a “nice painting” to hang on the wall, offering her $25,000, which she accepted.