It is terribly unfortunate and disturbing that some lawyers seem to believe that civility and politeness are inherently at odds with good, aggressive advocacy.

Let me be perfectly clear: I have no problem with an attorney aggressively protecting and pursuing his client’s interests. Everyone’s got a job to do.

And there are certainly times when the other side plays fast and loose with the rules, and therefore needs to be called out for their inappropriate conduct.

But that doesn’t mean your knee-jerk, immediate response is to assume the other side is lying, and to then castigate them in open court – particularly when you have only unsupported assumptions rather than any hard facts to back it up. In other words – and at the risk of stating the obvious – you can disagree without being disagreeable, and picking needless fights with the other side burns the bridges of communication and erodes trust, which is a critical component to the amicable resolution of cases.

Despite these obvious drawbacks, this push-button nastiness seems to be an increasing trend I’m facing, particularly in the business litigation and breach of contract context. I certainly hope the courts start to clamp down on this trend, because it truly is a black mark for the legal profession.

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In an opinion that was handed down yesterday in the defamation case of Tener v. Cremer, New York’s Appellate Division, First Department held that the trial court erred by denying outright – without a hearing – a plaintiff’s motion seeking to hold NYU in contempt for failing to protect or produce electronically stored information (ESI) in response to a subpoena.

In response to the motion, NYU claimed that it could not comply with the subpoena because the identities of people who accessed the Internet through a particular portal were stored in a text file that was automatically overwritten every 30 days, and the school did not “possess the technological capability or software, if such exists, to retrieve a text file created more than a year ago and ‘written over’ at least 12 times.”

The unanimous appellate court was unpersuaded by this argument, however.

As the plaintiff’s expert noted, there are several steps NYU could take to obtain the data, including the utilization of forensic software. Indeed, the appellate court cited to the fact that Nassau County Commercial Division has enacted detailed rules to address specifically the issue of forensic data recovery.

Therefore, the court held, “To exempt inaccessible data presumptively from discovery might encourage quick deletion as a matter of corporate policy, well before the spectre of litigation is on the horizon and the duty to preserve it attaches.”

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International Shoppes, Inc., et al.  v. Spencer is a case from a trial court in Nassau County, NY that is scheduled to appear in tomorrow’s edition of The New York Law Journal that is the poster child – at least in my view – for litigation run amok.  And, lest you think that I meant to say “frivolous lawsuit,”  I assure you that I deliberately chose not to use that phrase.

In this case, the plaintiff sued their former employee for, among other things, allegedly defaming them publicly and fraudulent concealment. And, from the Court’s opinion, there seems to be some merit to the company’s contention that the defendant actually did defame them.

But here’s the problem:

Even assuming that someone took this former employee’s negative, defamatory comments seriously (and I’m not sure that the evidence will bear this out), and further, that the plaintiff’s company suffered damages as a result, how exactly would the defendant be expected to satisfy the judgment?

As the plaintiff is all too well aware, they employed him as a low-level sales clerk, who presumably has no assets with which to satisfy a judgment of any significance.

To me, this is just another example of “Why Defamation Lawsuits Are Often a Waste of Time and Money Under NY Law.”

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As noted elsewhere (see, e.g., “Why It’s So Hard to Recover Legal Fees in a NY Breach of Contract Case“) , the general rule in New York is that you cannot recover the costs you’ve incurred to defend a lawsuit that has been brought against you. Of course, there are some exceptions to that rule,  the most prevalent being where the two sides to the litigation had previously entered into a written agreement that provided for either side to recover their legal fees.

There is another limited exception to that rule: where the court determines that your adversary has engaged in “frivolous conduct.”

So what constitutes “frivolous conduct” under New York law?

Fortunately, it is defined by Uniform Court Rule §130-1.1 (c), which provides, in pertinent part, as follows:

(c) For purposes of this Part, conduct is frivolous if:

(1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law;

(2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or

(3) it asserts material factual statements that are false.

As noted in the title to this article, however, it is extraordinarily rare that New York State’s courts will award costs and/or sanctions against the other side to a litigation. Therefore, you should never assume that a court will make you whole for defending a lawsuit that you personally deem “frivolous.”

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It is indeed rare that cases which hinge completely on jurisdictional or procedural grounds could have any interest at all for non-lawyers. But GS Plasticos Limitada v. Bureau Veritas, which was just decided last week, is one such case.

In this tortious interference with contract case, the plaintiff, a Brazilian company, claimed that it lost a contract with another Brazilian company after the defendant testing company falsely reported that its products contained excessive amounts of arsenic. In response, the plaintiff sued not only the testing company, but also sued the testing company’s French parent corporation.

Since the testing was done in New York, plaintiff brought the case in New York County. But there was one (seeming) problem:  the French parent company had filed a certificate of surrender to do business in New York before the action was commenced, in accordance with BCL §1314(b)].

In reversing the trial court’s Order, and dismissing the action against both of the defendants, the appellate court stated as follows:

“BV’s surrender of its authority to do business in New York does not insulate it from the court’s assertion of personal jurisdiction over it, because the liability in this case was “incurred by [BV] within this state before the filing of the certificate of surrender” (Business Corporation Law [BCL] § 1310[a][5].; see Antonana v Ore S.S. Corp., 144 F Supp 486, 491 [SD NY 1956]; Munn v Security Controls, 23 AD2d 813 [1965]).

“However, the court erred in finding that it had jurisdiction pursuant to BCL § 1314(b)(3), based on the tortious conduct’s having arisen out of the testing services performed in New York. For purposes of BCL § 1314(b)(3), the inquiry is not where the tortious conduct occurred but ‘[w]here the cause of action arose’ (see id.; see also Gonzalez v Industrial Bank [of Cuba], 12 NY2d 33 [1962]; Hibernia Natl. Bank v Lacombe, 84 NY 367, 384 [1881]).

“Plaintiff’s claim is one for interference with contractual relations. Although the faulty testing that led to the loss of the contract occurred in New York, plaintiff had no cause of action until the contract was actually lost, i.e., until it was cancelled, and that cancellation occurred in Brazil.”

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Back in August, I wrote about the Most Formidable Defense to a Tortious Interference Claim in New York: justification. In other words, as long as a defendant can show that they induced Company A to break their agreement with Company B for legitimate economic reasons, the tortious interference claim will likely fail.

But, as pointed out in Omni Consulting Group, Inc. v. Marina Consulting Group, a New York Federal Court decision from tomorrow’s New York Law Journal, there is another defense to a tortious interference claim that is perhaps equally lethal: the plaintiff’s inability to prove that the defendant intentionally procured the breach of contract, and that if not for the defendant’s actions, the contract would not have been breached.

In dismissing the tortious interference claim, the Omni Court stated as follows:

“[The third party with whom plaintiff had the contract] came up with the idea of breaking the Master Agreement on his own. He told [defendant], without any prompting, that he would “work things out” with plaintiff to allow for a direct relationship with [defendant]. The very fact that [the third party] had to tell [defendant] that he would “work things out” implies that [the third party] hesitated to hire [plaintiff]. [Defendant] thus never suggested or encouraged any contractual breaches; it merely took advantage of an idea that [the third party] carried forward on his own.”

Somewhat ironically, as suggested in the title of this post, this claim was dismissed despite the fact that the defendant had defaulted, and not opposed the claim at trial. That result should underscore some of the difficulty inherent in proving all of the necessary elements of a tortious interference claim under New York law.

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Much to my clients’ chagrin (and yes, I get asked this question a lot), the instances where you can actually recover your legal fees expended on a case in New York are very rare.

But that doesn’t mean that there aren’t some circumstances where you can get them.

As noted in “How You Can Recover Your Legal Fees in a NY Breach of Contract Case,” one way you can recover legal expenses is if you have a written agreement that allows for the recovery of legal fees. (A verbal, or unwritten agreement on this issue will not suffice).

But what if (like most cases) you don’t have any such agreement?

Then you are left with two (2) other possibilities:

(1) if legal fees are provided for by statute or court rule (see, e.g., Matter of A.G. Ship Maintenance Corp. v Lezak, 69 NY2d 1, 5; see Baker v Health Mgt. Sys., 98 NY2d 80, 88, rearg denied 98 NY2d 728); or,

(2)  if the parties have “acted with disinterested malevolence’ [and have] . . . intentionally [sought] to inflict economic injury on [another party] by forcing [him or her] to engage legal counsel’ ” (Anniszkiewicz v Harrison, 291 AD2d 829, 830, lv denied 98 NY2d 611; see Rinaudo v City of Rochester, 148 AD2d 984).

As you might well imagine, the latter standard is extremely difficult to prove.

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It should come as no surprise that as the economy continues to sputter, falter, or whatever your term of choice may be, that many real estate  brokers have taken an increasingly aggressive stance in protecting their commissions. The flip side of that same coin is that the other parties to the deal have likewise hardened their positions of refusing to compensate brokers whom they believe did little or nothing to bring the deal to fruition.

And that is precisely what happened in the breach of contract and co-brokerage agreement case of Susan D. Fine Enterprises LLC v. Steele.

Setting forth the law underlying brokerage commission agreements in New York, the Court stated as follows:

“It is well settled that a broker seeking a commission must establish that: 1) she is duly licensed; 2) she had a contract, express or implied, with the party to be charged with paying the commission; and, 3) she was the procuring cause of the sale. Greene v. Helha. P, 51 NY2d 197,206 (1980) … To qualify for a commission, however, a broker need not have been involved in the ensuing negotiations or the completion of the sale … Rather, where as here, the broker was not involved in the negotiations leading up to completion of the deal, the broker is still entitled to a commission
if she can demonstrate that she “created an amicable atmosphere in which negotiations proceeded or that [she] generated a chain of circumstances that proximately led to the sale.”

But here’s the sticky part:

“As to whether plaintiff was the procuring cause of the sale, courts are in agreement that the issue of procuring cause is a generally a question of fact to be determined at trial.”

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If there were such a contest, I think this case wins the “most absurd lawsuit of the day.”

In Kassis Management, Inc. v. Verizon New York, Inc., the plaintiff claimed damages in breach of contract and consumer fraud as a result of Verizon’s “promise” to move its phone service from one location to their new business location at no cost, and then later told plaintiff that it would only do so for an “excessive” fee.

Not surprisingly, when questioned under oath at a deposition, the plaintiff’s chief executive was “unable to quantify the incoming calls directed to plaintiff during non-business hours during [the relevant time period] nor was he able to identify any business opportunities that plaintiff lost due to missed phone calls.” (How did the plaintiff’s attorneys not know this before they actually went ahead and brought the lawsuit?)

The result of the lawsuit was equally unsurprising: the case was dismissed because, in the words of the court,

“Lost profits must be measured by reliable factors which go beyond mere speculation; While such profits need not be proven with mathematical precision, there needs to be more proof than what has been offered by plaintiff. See Locke v. Aston, 1AD3d 160, 161-2 [1st Dept 2003]. Much of the documentary evidence is not actually verifiable. Therefore, the court must dismiss this action based on the lack of reasonable certainty in calculating the injury to plaintiff.”

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Let’s start with the general rule: New York courts disfavor allowing parties to recoup their legal fees that are incurred in litigation. As New York’s courts have put it: “It is well settled that  legal fees are not recoverable unless provided under the terms of a contract or authorized by statute.” See, U.S. Underwriters Ins. Co. v. City Club Hotel, LLC, 3 N.Y.3d 592, 597, 789 N.Y.S.2d 470, 822 N.E.2d 777 [2004] )).

So, you may be wondering, how specific do you need to be, or what language do you need in your contract, in order to recover legal fees?

Fortunately, New York’s Appellate Division, First Department recently provided us with some guidance on this issue. In Nigri v. Liberty Apparel Co., Inc., the plaintiff sued to recover in breach of contract, and the defendants counter-claimed to recover the legal fees they incurred in defending the action, as well as in prosecuting their own counterclaims under the agreement.

In affirming the trial court’s award of a judgment allowing the defendants to recover their legal fees, the Appellate court cited the language in the underlying agreement that formed the basis for this ruling:

“The parties’ contract provided, in pertinent part, that the plaintiff would pay certain “Guaranteed Obligations,” which were defined as “one-half of all claims, actions, litigation, and other liabilities, costs and expenses (a) in [certain pending legal actions, including a customs matter]…,” and “all out-of-pocket expenses (including reasonable attorneys’ fees and disbursements) … incurred by [defendants] … in enforcing or collecting upon [the] Guaranty.”

The court went on to state that “[T]he clause ‘all claims, actions, litigation, and other liabilities, costs and expenses’ constitutes broad language that is generally interpreted to include attorneys’ fees.”

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