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You are here: Home1 / Replevin
Attorneys, Civil Procedure, Corporation Law, Privilege, Replevin

THE ATTORNEY-CLIENT PRIVILEGE DID NOT PASS TO THE FOREIGN (DELAWARE) CORPORATION AFTER A MERGER AND ACQUISITION OF NEW YORK BUSINESS ENTITIES; THEREFORE THE NEW YORK PARTIES, IN THEIR CLAIMS AGAINST THE ATTORNEYS WHO REPRESENTED THEM IN THE TRANSACTION, CAN SEEK ACCESS TO THE ATTORNEYS’ PRIVILEGED COMMUNICATIONS CONCERNING THE TRANSACTION (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Austin, reversing Supreme Court, determined that New York law applied to a party’s assertion of  the attorney-client privilege for documents associated with a corporate acquisition and merger involving New York and Delaware business entities. The opinion is fact-based and far too complex and comprehensive to summarize here. The Second Department, disagreeing with Supreme Court, held that the choice of law was governed by public policy, and the proper theory for access to the privileged documents is New York’s law of replevin. In a nutshell, the Second Department held that the attorney-client privilege did not pass to the foreign corporation after the merger and acquisition, but rather remained with the the New York parties (Sina and Askari) and allowed the New York parties to pursue claims against the attorneys (McDermott)  who represented them in the transaction:

In a situation where documents are sought, New York will apply the law of the forum where the evidence will be introduced at trial or the location of the proceeding seeking discovery of those documents … . Here, the privileged communications being sought by the plaintiffs in this New York replevin action were made in New York between New York-based attorneys at McDermott and Sina, a New York corporation, involving its then-majority shareholder and president, Askari, a New York resident. The sole nexus that Delaware has to this action is that Specialty is a limited liability company formed under the laws of that state. Consequently, New York law applies in this action sounding in replevin seeking the disclosure of McDermott’s files … . …

It would indeed be incongruous to enforce a law which effectively forecloses New York corporations merging with foreign corporations from having the ability to pursue their claims against their counsel or the newly formed, post-merger entities based on the post-merger entities’ control of the documents needed by the former entities to prosecute potential claims. Here, Delaware law gives the new corporation, a putative defendant, sole access to and control of the merger-related documents by the exercise of the attorney-client privilege. This is contrary to New York public policy … . * * *

Here, Business Corporation Law § 1006 specifically provides that a dissolved corporation, like Sina, may commence an action in any court under its corporate name. Sina’s dissolution does not affect Sina’s right or capacity to maintain this replevin action since the claim arose from McDermott’s representation of Sina which began before Sina’s dissolution. … Thus, the plaintiffs demonstrated their prima facie entitlement to judgment as a matter of law in this action for replevin since the plaintiffs submitted evidence, through Askari’s affidavit, that McDermott represented Sina and Askari during the “transactions.” As a result, the plaintiffs demonstrated, prima facie, their superior possessory right to McDermott’s files. Askari v McDermott, Will & Emery, LLP, 2019 NY Slip Op 08547, Second Dept 11-27-19

 

November 27, 2019
https://www.newyorkappellatedigest.com/wp-content/uploads/2018/03/NYAppelateLogo-White-1.png 0 0 Bruce Freeman https://www.newyorkappellatedigest.com/wp-content/uploads/2018/03/NYAppelateLogo-White-1.png Bruce Freeman2019-11-27 11:02:322020-01-27 17:09:45THE ATTORNEY-CLIENT PRIVILEGE DID NOT PASS TO THE FOREIGN (DELAWARE) CORPORATION AFTER A MERGER AND ACQUISITION OF NEW YORK BUSINESS ENTITIES; THEREFORE THE NEW YORK PARTIES, IN THEIR CLAIMS AGAINST THE ATTORNEYS WHO REPRESENTED THEM IN THE TRANSACTION, CAN SEEK ACCESS TO THE ATTORNEYS’ PRIVILEGED COMMUNICATIONS CONCERNING THE TRANSACTION (SECOND DEPT).
Conversion, Replevin

HEIRS OF A JEWISH VIENNESE ART COLLECTOR, FRITZ GRUNDBAUM, KILLED BY THE NAZIS IN 1941, DEMONSTRATED THEY WERE ENTITLED TO POSSESSION OF CERTAIN ARTWORKS IN THE GRUNDBAUM COLLECTION WHICH WERE ALLEGEDLY LOOTED BY THE NAZIS (FIRST DEPT).

The First Department, in a comprehensive opinion by Justice Singh, determined that plaintiffs, heirs of Jewish Viennese art collector, Fritz Grunbaum, who was murdered by the Nazis in 1941, demonstrated they were entitled to certain artworks collected by Grundbaum and alleged to have been looted by the Nazis. The complex history leading to this lawsuit cannot be fairly summarized here:

” A conversion takes place when someone, intentionally and without authority, assumes or exercises control over personal property belonging to someone else, interfering with that person’s right of possession'” … . “Two key elements of conversion are (1) plaintiff’s possessory right or interest in the property; and (2) defendant’s dominion over the property or interference with it, in derogation of plaintiff’s rights” … . Where a party’s interests in property have been sold, there can be no interference with their property rights and a conversion claim may not be maintained … .

To state a cause of action for replevin, a plaintiff must establish a superior possessory right to property in a defendant’s possession … .

Here, we find that plaintiffs have made a prima facie showing of superior title to the Artworks based on evidence that establishes the following: (1) Grunbaum owned the Artworks prior to World War II; and (2) Grunbaum never voluntarily relinquished the Artworks. Reif v Nagy, 2019 NY Slip Op 05504, First Dept 7-9-19

 

July 9, 2019
https://www.newyorkappellatedigest.com/wp-content/uploads/2018/03/NYAppelateLogo-White-1.png 0 0 Bruce Freeman https://www.newyorkappellatedigest.com/wp-content/uploads/2018/03/NYAppelateLogo-White-1.png Bruce Freeman2019-07-09 12:22:342020-01-24 05:48:29HEIRS OF A JEWISH VIENNESE ART COLLECTOR, FRITZ GRUNDBAUM, KILLED BY THE NAZIS IN 1941, DEMONSTRATED THEY WERE ENTITLED TO POSSESSION OF CERTAIN ARTWORKS IN THE GRUNDBAUM COLLECTION WHICH WERE ALLEGEDLY LOOTED BY THE NAZIS (FIRST DEPT).
Civil Procedure, Conversion, Fraud, Replevin

Complaint Did Not State Causes of Action for Replevin or Conversion Because the Specific Funds Involved Were Not Sufficiently Identified/Fraud Cause of Action Stated—Inference of Fraud Sufficiently Raised from Circumstances Alleged

The Fourth Department determined the complaint did not state causes of action for replevin and conversion, but did state a cause of action for fraud.  The motions to dismiss the replevin and conversion causes of action pursuant to CPLR 3211(a)(7) should therefore have been granted.  The basis of the complaint was the allegation that defendants embezzled as much as $4 million from an incapacitated person (Aida Corey):

Addressing first the replevin cause of action, we note that replevin is a remedy employed to recover a specific, identifiable item of personal property …, and “[o]rdinary currency, as a rule, is not subject to replevin” … . Unless the currency can be specifically identified, i.e., it consists of specific, identifiable bills or coins, replevin does not lie … . Here, the amended complaint alleges that the individual defendants “have used some or all of Aida Corey’s $4 million in cas[h] to purchase real and personal property and other tangible assets” and that they “have taken approximately $4 million of Aida Corey’s cash and/or personal property.” The sole focus of the parties, both in Supreme Court and on appeal, however, has been on the money allegedly taken by the … defendants, and we therefore deem abandoned any allegations by plaintiffs concerning personal property … . We thus conclude that the amended complaint fails to state a cause of action for replevin, because there is no “specifically identified” money that plaintiffs seek to recover … .

With respect to the plaintiff guardians’ cause of action for conversion, the amended complaint likewise alleges that the individual defendants “have taken approximately $4 million of Aida Corey’s cash and/or personal property,” but as with the replevin cause of action we conclude that plaintiffs have abandoned any allegations concerning personal property … . Money may be the subject of a cause of action for conversion only if “it can be identified and segregated as a chattel can be” …, i.e., “where there is a specific, identifiable fund” … . Contrary to the contentions of plaintiff guardians, the sums allegedly converted here do not constitute the type of specific, identifiable fund that would support a conversion cause of action … .

…[T]he court properly refused to dismiss the fraud cause of action against them. A fraud cause of action must allege that the defendant: (1) made a representation to a material fact; (2) the representation was false; (3) the defendant intended to deceive the plaintiff; (4) the plaintiff believed and justifiably relied on the statement and in accordance with the statement engaged in a certain course of conduct; and (5) as a result of the reliance, the plaintiff sustained damages … . The allegations in the complaint must set forth the “basic facts constituting the fraud” …, to “inform a defendant of the complained-of incidents” … . The Court of Appeals has “cautioned that [CPLR] 3016 (b) should not be so strictly interpreted as to prevent an otherwise valid cause of action in situations where it may be impossible to state in detail the circumstances constituting the fraud” (Pludeman v Northern Leasing Sys., Inc., 10 NY3d 486, 491 [internal quotation marks omitted]). Here, much of the detail surrounding the alleged fraud is ” peculiarly within the knowledge’ ” of the … defendants …, and we agree with plaintiffs that an inference of fraud arises from the circumstances alleged in the amended complaint … . Heckl v Walsh, 2014 NY Slip Op 07787, 4th Dept 11-14-14

 

November 14, 2014
https://www.newyorkappellatedigest.com/wp-content/uploads/2018/03/NYAppelateLogo-White-1.png 0 0 CurlyHost https://www.newyorkappellatedigest.com/wp-content/uploads/2018/03/NYAppelateLogo-White-1.png CurlyHost2014-11-14 00:00:002020-01-26 20:04:06Complaint Did Not State Causes of Action for Replevin or Conversion Because the Specific Funds Involved Were Not Sufficiently Identified/Fraud Cause of Action Stated—Inference of Fraud Sufficiently Raised from Circumstances Alleged

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