Litigation

You are sitting in your office on the busiest day of the year, and just when you think nothing else could go wrong, a person walks in and utters the fateful words “You’ve been served”, while handing you a stack of papers.   Your business is a party to a New York civil litigation lawsuit. Your business has  just been sued.  What is the best course of action you can take, and how can you protect yourself as well as your business?

Who?

Read the papers that are given to you to find out the party that is suing you and the type of civil litigation you are involved in.  Is it a corporation, a partnership, or an individual?  Are they a customer or a supplier of your business? Who is the lawyer representing the party that is suing you?  This information will help your attorney obtain a more favorable result for you by researching the other party and its counsel. (Do they settle often?  Are they a big company?  What are their financial resources?  Do they have a reputation to maintain and therefore may want to settle quickly?).

What?

What exactly are you being sued about?  Is it a breach of contract claim? Is it a non-payment claim, or a non-performance claim?  Those are many reasons why a business may be sued.

When?

In Civil Litigation, timing is critical in a lawsuit.  Responses must be filed within a set period, which in New York is  usually within 30 days.  While an extension can be granted, don’t wait until the last minute to contact your attorney.  It takes time to prepare an appropriate answer to the papers.  If you do not respond in a timely fashion, you will be considered in default, and a judgment may be taken against you.  This means you may lose the case without the opportunity to provide a defense.

Also, don’t assume you are judgment proof, because judgments can be collected from future earnings as well as assets.  In addition, do not assume that your insurance covers everything, although it may be wise to notify your insurance carrier as well as your attorney.

Where?

What court are you being sued in?   What county?  State or Federal Court? You may be sued in a state far away if, for instance, you have done business in that state.  In that case, your New York attorney will have to obtain local counsel for your small business in the other state, and this takes time.

Why?

Why did the party resort to a lawsuit?  Is it something you can fix by having your attorney talk to the other side and negotiate a settlement?  Is there a running animosity between your company and the other party, in which case settlement will be difficult?  Do you need to file a counterclaim against the other party?

How?

Immediately notify and supply the civil litigation  lawsuit papers to your attorney.  Make sure you retain a photocopy for yourself.  Inform your attorney of all the facts relevant to the case.  Your attorney will decide what is important and what is not.
Organize your documents pertaining to the case so that you can minimize the time the attorney must spend going through them.  This will save your attorney ’s time, and therefore save you legal fees.  Do not talk to the other party’s attorney.  He works for the other party, just as your attorney works for you.  Let your attorney do this for you.  In addition, remember that in law, just as in any profession or business, there are rules and procedures  your attorney knows and you may not.  To stay out of trouble, leave the legal work to your attorney.

A trial can take several weeks in New York, including preparation time.  Therefore, it may be in your best interest in certain cases to settle.  However, be realistic in your settlement expectations.

Conclusion

Having an ongoing attorney-client relationship will help protect you in the event of a civil litigation lawsuit.  The more your attorney knows about your business, the better the attorney will be able to help you.  In addition, discussing business options and problems with your attorney ahead of time could help prevent a lawsuit from ever starting.  Either way, it will save you money in the long run.

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It is not unusual where you may be purchasing goods that a third party has possession of, such as a warehouse or a bailee.  In such an instance, you should be clear in the contract where the delivery should be made.

Under the UCC, which covers the sale of goods, if the contract is one for goods that are identifiable and are known by both parties to be in a location that is not in possession of either party, then delivery is where the goods are located.   If you agree to purchase a car, and the car is located in warehouse owned by someone else, then the buyer has to pick up the car at the warehouse.

The attachment of property is a strong weapon when used properly in New York. A businessman who is having financial problems decides not to pay for goods that he purchased.  If your company is the creditor, it could take years before he will have to pay. At that time, the funds could be depleted.  One key provisional remedy that a creditor can seek is to obtain an attachment.  Here, the creditor can obtain an attachment on the bank account and the businessman would not be able to use the money. Even though the plaintiff is not able to use or obtain the funds, the businessman will not have the luxury of time and would be more motivated to settle.

Attachment of property can have devastating effects on the businessman.  Attachments can be ordered by the court ex parte, meaning that the businessman will have no notice.  This could cause checks to bounce and drastically alter the ability for a small company to conduct business.

In order to obtain an order of attachment, the creditor would have to show, as per CPLR 6201(a): 1. that \”there is a cause of action\” and that the plaintiff will probably succeed on the merits; 2. that at least one of the grounds of attachment found in the law exists;  and 3. that the amont asked for in the lawsuit exceeds any counterclaims that the creditor has knowledge of.

If an order is granted, it is directed to the sherriff, not the defendant. Some orders are granted without notice to the businessman.

If you have a question about provisional remedies such as attachment of property in New York, act now and contact the Law Office of Frederic R. Abramson at 212-233-0666. Feel free to keep up to date on all New York Business Law issues by visiting my blog.

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Centuries ago, there was no fixed time start a lawsuit.  The Statute of Limitations was enacted to protect defendants against defending old lawsuits after a reasonable time has passed.  The law has specific provisions that prescribe how long a plaintiff has before starting a lawsuit. If you fail to commence your lawsuit within the statute of limitations, your case is generally dismissed.

As a general rule, it is wise to begin a lawsuit within at least six to eight months before the statute of limitations expires. The reason for this is because the law is often quirky.  For example the law requires the plaintiff to serve the defendant.  By allotting a six-eight month window  before the statute of limitations expires, it would be possible to re-serve the defendant.

The specific time periods regarding the statue of limitations can be found in the New York Civil Practice Law and Procedure Article 2.

If you have a question of how the statute of limitations impacts your case, contact my law office by phone at 212-233-0666 or via email at fabramson@abramsonlegal.com

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The New York Attorney General announced today that they are suing 35 law firms for improper service of default judgments. A party obtains a default judgment when the defendant does not appear in a lawsuit. American Legal Service, a process server located in Long Island has been named by the Attorney General as providing improper \”sewer\”  service.  The 35 law firms have not been accused of any wrongdoing.

If you wish to re-open a default judgment against you due to improper service based on the Attorney General\’s action today you should:

1.  Go to the county clerk in the county where the default was filed and obtain the court file.  Check the affidavit of service to see if American Legal Service was the process server.

2.  If you are unable to ascertain the name of the process server, check the law firm who started the lawsuit.  If it is one of the 35 law firms listed in the Attorney General\’s complaint then:

3.  File a motion to vacate the default for improper service of process.

At this point, it is unclear what the remedies would be for instituting an action, especially in cases where the statute of limitations has run for vacating a default.  In New York, the statute of limitations is one year.  However, the court or some other governmental body may fashion new law based on this mass fraud.

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