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Lawsuit Alleging Lehman Brothers’ Substitution of Toxic Securities for High Value Securities Can Go Forward

In a full-fledged opinion by Justice Saxe, the First Department determined plaintiff Aetna Life Insurance Company had sufficiently alleged causes of action stemming from Lehman Brothers’ alleged removal of high-grade securities from a trust account and replacement of those securities with toxic subprime-mortgage-backed securities. The First Department summarized the facts and its rulings as follows:

Aetna asserts that defendants [replaced the high value securities with toxic securities] as part of an effort to prop up Lehman Brothers’ financial position in the final days prior to its 2008 collapse. The complaint alleges causes of action for breach of the Connecticut Unfair Trade Practices Act (CUTPA) (Conn Gen Stat § 42-110b[a] et seq.); breach of fiduciary duty; negligence; and recklessness. We affirm the determination of the motion court holding that the allegations are sufficient to support each of the causes of action, and modify only to the extent of denying dismissal of the negligence claims against the individual defendants.  Aetna Life Ins Co v Appalachian Asset Mgt Corp, 2013 NY Slip Op 05506, 1st Dept 7-30-13

 

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DEFENDANTS DEMONSTRATED THEY DID NOT HAVE CONSTRUCTIVE NOTICE OF WET CONDITION WHERE PLAINTIFF FELL, CAUSE OF ACTION BASED ON ABSENCE OF A HANDRAIL SHOULD NOT HAVE BEEN DISMISSED.
PLAINTIFF WAS STRUCK BY A PIECE OF SHEETROCK, THE LADDER HE WAS STANDING ON SHOOK, AND PLAINTIFF FELL TO THE GROUND; THERE WAS NO NEED TO PROVE THE LADDER WAS DEFECTIVE; PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT ON HIS LABOR LAW 240 (1) CAUSE OF ACTION SHOULD HAVE BEEN GRANTED (FIRST DEPT).
EVEN THOUGH THE RECONSTRUCTION OF THE EAST RIVER PARK WILL BENEFIT THE SURROUNDING COMMUNITY (FLOOD PROTECTION) AS WELL AS THE PARK, THE RECONSTRUCTION SERVES A PARK PURPOSE AND THE APPROVAL OF THE STATE LEGISLATURE IS THERFORE NOT REQUIRED UNDER THE PUBLIC TRUST DOCTRINE (FIRST DEPT).
POLICE OFFICER DID NOT DEMONSTRATE HIS PULMONARY HYPERTENSION WAS RELATED TO HIS SERVICE AT THE WORLD TRADE CENTER ON 9-11.
DEFENDANT DOCTOR’S FAILURE TO APPEAR FOR THE NO-FAULT EXAMINATION UNDER OATH (EUO) REQUESTED BY THE INSURER JUSTIFIED THE DENIAL OF DEFENDANT’S CLAIMS FOR BENEFITS (FIRST DEPT).
DEFENDANT MADE GOOD FAITH EFFORTS TO COMPLY WITH THE TERMS OF HER PLEA AGREEMENT; SENTENCE REDUCED AND CONVICTION MODIFIED IN THE INTEREST OF JUSTICE (FIRST DEPT).
BECAUSE PLAINTIFF HAD TO STAND ON THE GUARDRAILS OF THE MANLIFT TO REACH WHAT HE WAS WORKING ON, THE MANLIFT WAS NOT APPROPRIATE EQUIPMENT; PLAINTIFFS WERE ENTITLED TO SUMMARY JUDGMENT ON THE LABOR LAW 240(1) CAUSE OF ACTION (FIRST DEPT).
VERTICAL LADDER FIRE ESCAPE, THROUGH WHICH PLAINTIFF FELL AND WAS RENDERED PARAPLEGIC, VIOLATED MULTIPLE DWELLINGS LAW 53.

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