Rogers & Tartaro Business Litigation Blog : New York and Connecticut Business Litigation Lawyer & Attorney : Rogers & Tartaro Law Firm : Commercial Litigation : Westchester County NY, Fairfield County CT

We often tell clients that going through litigation is like the movie Rocky: the parties will batter each other emotionally and financially until the last one standing wins. This analogy draws on popular culture and helps to manage clients’ expectations, while promoting the advantages of reasonable negotiated settlements. It also makes a serious point with a touch of humor.

Little did I know that even more nuanced life lessons are to be found in one of the sequels, Rocky III.

In this installment, Rocky has lost the championship and is trained by his former arch-opponent for a comeback.

But, there’s more to it. Rocky, in fact, has to learn new skills. Specifically, he has to be quicker, more agile, and learn to move rhythmically. He also has to package his new skills into a whole new fight strategy. But first, he has to pick himself up emotionally.

I think this is a good metaphor for surviving the recession. Businesses that may have lost their “championship” standing may need to pick themselves up, learn new skills and package them into a whole new business strategy.

Actually, learning new skills should be part of a continuous process, and business strategies should be continually reevaluated and refreshed. Then, the business would be well-positioned to survive adversity -- even a really bad recession. Personally, we have always been prepared to shift the focus of our practice within appropriate areas of our expertise and to selectively implement new technologies to deliver services more effectively.

So, I learned about litigation from Rocky and about management from Rocky III.

To think that I could have saved all that time going to business school and law school if I had only paid more attention to Rocky.

image courtesy allposters.com

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The Real Property Law Section Blog, a private blog of the New York State Bar Association, recently alerted us to an article summarizing new legislation in New York designed to protect homeowners in foreclosure and subprime borrowers. The article is by Kirsten Keefe and Elizabeth Hasper or the Empire Justice Center and is entitled “New State Law Addresses Mortgage Foreclosure Crisis and Subprime Lending Abuses.”

A summary of a summary may inevitably leave out important information so we recommend reading the entire article. However, among the highlights that we noted:

• Criminalization of “Residential Mortgage Fraud;”
• Ninety-Day Pre-Foreclosure Notice;
• Mandatory Settlement Conferences;
• Restrictions on Mortgage Brokers;
• Regulation of Mortgage Servicers.

And, we noticed that in various places the remedies can include reimbursement of attorneys’ fees and even treble damages.

In short, the new Foreclosure Prevention and Responsible Lending Act appears to be tough. It creates new requirements for lenders and brokers, created new defenses for borrowers and, in addition to criminalization of outright fraud, created new remedies for borrowers who have been abused. We’ll have to wait to see how it works in practice.

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Law.com carried an interesting and useful post by Stewart Weltman of The Corporate Counselor on best practices to control litigation costs and optimize results (“Rules of Thumb To Rein in Litigation Costs and Optimize Results”).

Before commenting on the substance of the article, I need to make clear an important distinction (from our point of view) and a useful quibble.

First, the distinction: the article is written as advice to in-house corporate counsel. Our experience is mostly with clients who are far from the size where they would employ full time in-house counsel. Thus, the strategies to reduce costs would be selected and applied by non-lawyer business people. 

The quibble is that if the author’s advice is taken just a bit too far, in-house counsel will end up micro-managing the litigation and relieving outside counsel of accountability for results. All the major strategic and tactical decisions would be taken by in-house counsel. In our case, the decisions would be made by non-lawyer managers and proprietors.

All of the above having been said and noted, the substance of the article can be turned around and re-characterized as a more general identification of options to be presented to the client (with or without the mediation of in-house counsel) along with an identification of the associated risks. There are risks. When you choose to dispense with a “needless” deposition, you better be right about the “needless” part.

I strongly recommend reading the full article to fully appreciate the “rules of thumb” to control costs and optimize results presented by the author. But, here is how I would boil them down:

• In motion practice, choose your battles carefully, don’t make every motion possible;
• Don’t make every argument, urging a losing position loses credibility;
• Don’t get into discovery disputes: produce more, rather than less; limit your document requests and don’t use interrogatories;
• Dispense with needless depositions and presume they are not needed until demonstrated otherwise;
• Don’t train your adverse witnesses with your best cross-examination at depositions;
• Don’t employ an ediscovery team;
• Do employ a “devil’s advocate” lawyer to test your counsel’s strategy and tactics.

A consistent thread running through the article is the use of a “best-case story” to keep your case simple, short and effective.

Ultimately, we can’t disagree with the author’s conclusion that there is no quick fix. Controlling litigation costs requires close attention to every aspect of the litigation. 

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Recently,Law.com, reported that New York had established statewide guidelines for the qualifications of court-appointed mediators and neutral evaluators ("N.Y. Court Establishes First Statewide Guidelines for Mediators, Neutral Evaluators"). The story was by Joel Stashenko of the New York Law Journal.

Law.com rightly reports that this is a “coming of age” for alternative dispute resolution (ADR).

The story brought to mind a court-appointed mediation session I was involved with for an employment matter that occurred on the same day and just before I attended a seminar on mediation. The mediation session seemed an utter failure and that put me in a negative mindset throughout the seminar.

A few months later, the case settled on terms basically similar to those recommended by the mediator.

One of the points emphasized in that seminar is that mediation (and settlements in general) put the parties back in control. They decide what they will concede or agree to. By contrast, in a litigated resolution, the court decides who will win or lose and to what extent the parties will win or lose.

That was a good lesson to learn. Another good lesson was that the positive effects of mediation may not be immediate. It may take some time for the parties, who have a deep emotional commitment to their positions, to absorb the points made in mediation. After time for thought, and reinforcement by the attorneys on each side, the mediation can be very successful.

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Law.com reports that individual borrowers are taking preemptive action against their lenders by suing over deceptive lending practices. The story, “Saying They Were Tricked, Borrowers Fight Back With Lawsuits,“ is by John Pacenti of the Daily Business Review.

We have previously commented on New York cases where the tables were turned on lenders who had started foreclosure proceedings here and here. And, state regulators in various states are suing major lenders over general practices. 

The Law.com report involves cases from around the country that are different from the New York cases because the individual borrowers are not waiting for foreclosure proceedings (and may not be at risk of foreclosure). Nor, are they waiting for state regulators to sue. Instead, the borrowers are starting the lawsuits. 

According to the Law.com report, borrowers complain of practices typical of predatory lending, such as: the lender telling customers interest rates were fixed when they were adjustable, misrepresentations about the length of the loan and teaser rates where rates, in the long-term, are higher. At stake: damages that may include: reimbursement of all mortgage payments, finance charges and interest plus attorneys’ fees and costs.

Some of these suits are apparently supported by organizations formed to help borrowers, such as the Affirmative Defense Group of Margate, Florida mentioned in the Law.com report. 

individual borrowers who are not supported by an organization may have some tough choices to make, drawing on their emotional strength and financial resources, in order to fight back. 

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Acquiring property by adverse possession may be more difficult in the future, at least in New York.

I was alerted to a revision of the New York law of adverse possession, just signed by Governor Paterson, by Sui Generis - - a New York Law Blog in its New York Legal Roundup of July 9, 2008. The Roundup referenced linked to a report in Newsday.com by the Associated Press (Archaic Land Law Revised in New York).   Other news media carried the report.  Norrthcountrygazette.org provided a few background details, indicating this is an example of the legislature trumping the state’s highest court (NY’s Adverse Possession Law Revamped).

We have commented on adverse possession and explained what it is in prior posts here and here.

While Newsday characterizes adverse possession as an “archaic” law, our firm can attest from recent experience that adverse possession is a very live concept in both New York and Connecticut. Research queries turn up many recent cases. 

Media accounts of the new (actually, revised) law are broad-brush. According to the Newsday.com report, the acquisition of a neighbor’s land by adverse possession “will not happen simply because a fence, hedge, shrub, shed or other minimal, nonstructural item is placed across the deeded property line.”

According to the Northcountrygazette.org report, the new law requires that a “claimant have a ‘claim of right’ or ‘reasonable basis for the belief’ that the property is theirs to take by adverse possession.” Northcountrygazette.org also reports that the law is the ultimate product of legislators’ efforts to trump the Court of Appeals and reverse the law created by the case of Walling v. Przybylo,7 N.Y.3d 228, 818 N.Y.S.2d 816 (2006), holding that actual knowledge by the claimant that another person is the owner by deed does not defeat an adverse possession claim.

The news reports do not provide enough details to fully understand the changes. We will comment further when the text of the statutory changes and technical legal commentaries are available. Please “stay tuned.” 

In the meantime, it is still a fact that adverse possession can be “defeated” if property owners walk their property lines, make a note of any encroachments and, with their attorneys, take prompt, appropriate action - - before it’s too late.

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Readers might have noticed that we like commenting on posts in the Wall Street Journal Law Blog. We don’t cover “Big Law” or “Big Business” nor do we usually comment on criminal law, all LB specialties, but some LB posts just stimulate thought and, in this case, memories.

So it is with the recent post by Dan Slater on how Judge Richard Posner, U.S. Court of Appeals, 7^th Circuit, allowed the “Ostrich Instruction” in a criminal jury trial (“Conrad Black’s Sentence Upheld; 7th Circuit OKs Ostrich Instruction”). We’ll pass on commenting on the criminal matter under discussion in the post.

Instead, the concept of an “Ostrich Instruction” reminded me of our firm’s experience with a civil matter, specifically an adverse possession matter that also involved a jury trial. I believe that without being aware at the time, we were confronted with a similar concept which, with apologies to Judge Posner, we will call the “Ostrich Defense.”

An earlier post on this blog generally described the concept of adverse possession ("Losing Your Property Rights Through Inattention". For the sake of brevity, we will now simply say it is a claim that you own part or all of your neighbor’s property after a prescribed period of claimed continuous possession; there is more to it, of course, and for the rest I refer you to the earlier post.

The “Ostrich Instruction,” in a criminal context, is explained by LB in its post with a quote from Judge Posner, who coined the term, as follows:

An “ostrich instruction,” Posner explains, “tells the jury that to suspect that you are committing a crime and then take steps to avoid confirming the suspicion is the equivalent of intending to commit the crime.” Posner also clears up a fallacy: The legend that ostriches bury their head in the sand when frightened, he says, is “pure legend and a canard on a very distinguished bird.”).

The situation involving our derivative “Ostrich Defense” was as follows: In New York, for adverse possession, it is a settled principle that when claiming ownership of a neighbor’s property, the claimant’s knowledge of the actual boundary lines is not all that relevant. However, acknowledgment of the boundary lines would soundly defeat the claim. 

In our adverse possession case, the claimant maintained he could not possibly have acknowledged the boundary lines because he never had knowledge of the boundary lines. This, despite signing numerous documents submitted to municipal authorities that did acknowledge the boundary lines. He claimed to have signed the documents in blank so he never could have had the requisite knowledge. 

There was, of course, cross-examination (by our firm’s other partner Beverley Rogers) and the jury found for our client, the property owner. On appeal, the claimant dropped the adverse possession claim and tried only for a prescriptive easement, where you have right to use but do not own the property. That failed too, the appellate case is 40 AD3d 577, 834 N.Y.S.2d 330 (2d Dep’t 2007).

Well, how do you cross-examine a witness who is relying on the “Ostrich Defense?” Persistently. In this particular case, it was a matter of allowing the claimant to bring out his own inconsistencies.

On the other hand, could the “Ostrich Defense” actually be effective? I have to concede it could be a legitimate and effective defense in a civil matter under the right circumstances.

But, that would be a different case and a different post.

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The Delaware Business Litigation Report recently reported a case in which the Delaware Court of Chancery upheld the right to refuse to settle “Court of Chancery Upholds Right To Refuse To Settle”). One might wonder why that right was ever in question.

The case was somewhat complex and involved an insurer, a company, the company’s former directors and D&O coverage. The company wanted the former directors to settle so it could use their admission of liability, part of the settlement, as a legal “club” against the insurer. 

The Court did not think much of the company’s argument against its directors and upheld the directors’ right to refuse to settle. But,  the company’s position was at least based on a thought-out, rational legal strategy. I won’t actually comment further about that particular case, the text of which is available on the DBLR post.

I will comment on situations, encountered often, in which clients refuse to settle not because of any legal strategy, good or bad, but because of strictly emotional reasons. These situations are unfortunate.

Settlement puts the parties in charge. They can decide the terms by which their dispute be resolved. In a fully litigated case, the court decides for the parties. Often, unlike the Delaware case, there is no insurance involved and the parties exhaust themselves financially.

In our firm, we make it a practice to counsel litigation clients to start thinking about the acceptable terms of a settlement at the outset of a case. Of course, not every case can settle or, even when it can, not necessarily early on. Sometimes the parties need to go through discovery and pre-trial procedures to fully understand their positions. Sometimes, as was once pointed out to me by a judge’s clerk, the parties need to start spend money to fully realize the wisdom of a settlement. 

Most cases do settle. One of the challenges of litigation, however, is to bring around that client who for purely emotional, sometimes seemi

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Many people remember the long-running Broadway (and national) show, Les Miserables, or, at least, its music. Some may also remember that it was based on Victor Hugo’s 19^th century novel Les Miserables and that both the old TV program and the movie, The Fugitive, loosely reflect the same novel in story and concept. The character, Inspector Javert, the detective who doggedly pursues the main character, Jean Valjean, for years, may be less-well remembered.

I was reminded by a recent court decision that many prospective plaintiffs need to contemplate whether they will have to become Javerts themselves in order to gain any benefits from their litigation. 

Thus was I thinking when I read the decision reported recently in the private blog of the Real Property Law Section of the New York State Bar Association. A New York County Appellate Division decision (for out-of-staters: first level of appeal after a trial in the court of general jurisdiction, the Supreme Court), held that a renewal judgment is entered as of the date it was granted, and the liens of mortgages (recorded prior to that date) receive priority over that judgment. Gletzer v. Harris, 2008 WL 678589 (Sup.Ct., N.Y. Co.). The controversy arose when a judgment creditor applied for renewal of a judgment lien for a second ten-year run and was ultimately granted the renewal but nunc pro tunc (retroactively) to a date four years earlier.

The decision is somewhat technical and its impact may not be appreciated without a great deal of background. However, the decision affords the opportunity to fill-in some of that background by reviewing fundamentals that should be reviewed with a client before commencing a lawsuit. One can start with a very fundamental question: what do you win when you win at trial?

In most cases, you win a judgment. If it is a money judgment, you hope that the defendant will simply pay it. And, many do pay, which in that case ends the discussion. If the defendant doesn’t pay it, what have you won? 

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Only a few days ago we thought we were being lawyerly and careful in observing that it’s not often that the tables will be turned on a foreclosing lender as they were in the LaSalle case on which we were commenting at the time. The Law Blog of the Wall Street Journal recently reported another lender had been “dinged” (LB’s term) in court. The LB post provides a link to the Wall Street Journal news story.

The situation, in this case, involved some letters that were possibly forged and used as a basis to threaten foreclosure. The lender’s explanation, as reported in the WSJ news story was that the letters were re-created electronically by an employee.

The WSJ also reports that an executive of Countrywide Financial, the lender, testifying before Congress, admitted that sometimes employees made mistakes but denied that the lender intentionally abused its homeowners. 

I would give Countrywide the benefit of the doubt. Mistakes are probably more common than outright, systematic abuse. But, in our post we were making a limited point: that the borrower/homeowner, threatened or in the midst of foreclosure, should consult an attorney and explore all options. That is just as true when dealing with “employees’ mistakes” as it is in the case of intentional wrong-doing.  

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Partner Beverley Rogers led a lively discussion of Employment Law, primarily hiring practices, at the “Brown Bag Lunch” sponsored by the Ridgefield, CT Chamber of Commerce on Thursday, February 21. Our other partner, Angelo Tartaro, also attended and provided light assistance. The questions raised by attendees highlight issues of concern to the Ridgefield business organizations.

Our goal is to keep our clients and readers out of litigation, if possible. With that in mind, in leading the discussion Beverley did not dwell on technical distinctions and defenses such as the varying definitions of “employer” and “employee” under federal and state statutes and caselaw. Rather, the focus, as in this Blog, was on “best or at least better” practices of good management to avoid tangles of a legal dispute over hiring and other employment practices.

With that in mind, Beverley presented and discussed a series of questions that may and may not be asked at an employment interview. For example, an interviewer is asking for trouble when questions involve childcare arrangements but not whether a frequent travel schedule will be acceptable to the applicant. An interviewer should never ask whether an applicant has ever been arrested but it is perfectly acceptable to ask whether the applicant was ever convicted of a crime. Questions relating to sexual preference, religious practices, national origin (such as the derivation of your last name) have not place. Questions relating to whether the applicant can perform the essential functions of the position, with or without a reasonable accommodation, are acceptable. Of course, the interviewer should not suggest that a reasonable accommodation might be necessary; the applicant must request it. The examples discussed are too numerous to review here in detail; to download her handout, click here.

The attendees were very interested in how to handle a situation where the applicant volunteers information about a “forbidden subject.” The interviewer should state that the information is not appropriate to discuss any further and return the discussion to the essential functions of the position. And, the interviewer’s notes should not reflect any information about the inappropriate subject matter.

Beverley advised that notes of the interview should be kept separate from the job application. An attendee volunteered a humorous anecdote that reinforced the point. It seems the organization’s Human Resources auditors wanted to know why a notation of “W” was made an a job application. The implication was that the notation meant “White” or “Woman.” In fact, it denoted the “Western” division of the hiring organization. The better practice is not to have any notations that could be misinterpreted for a discriminatory purpose. Beverley presented and discussed a sample employment application from ____________________, which can be downloaded by clicking here.

Moving on from employment to other practices, Beverley explained that Connecticut and New York are still “employment at will” states in which an employee can be terminated for any reason but that protected classes of employees cannot be terminated for a discriminatory reason or under other circumstances covered by specific statutes or for specific conduct that is actionable under federal or state common law. An example of the latter was illustrated by one of our firm’s recent cases in which a client received a favorable settlement after suing an employer for defamation because he was wrongfully accused of stealing without an investigation.

In that case, an investigation was promised by the Employee Manual but the management largely ignored its manual. Attendees were very interested in Employee Manuals and the nuances of what they should or should not include as policies. That discussion was too extensive for this article but two general points stand out: (1) the better practice is to issue a manual and obtained a signed receipt when first issued and when updated; and (2) the manual does not do much good if actual practices deviate from those promised in the manual.

We may not be the most objective observers but we came away with the impression that the attendees found the event to be enjoyable, informative and topical.

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