New York Business Lawyer Blog

July 30, 2013

THE USE OF AN EXPERT’S AFFIDAVIT IN OPPOSITION TO MOTIONS FOR SUMMARY JUDGEMENT IN NEW YORK

by The Law Firm of Grasing & Associates

The rules governing the use of expert witness affidavits to oppose, or support, motions for summary judgement in New York, especially in the Appellate Division, Second Department, often are misunderstood. There are cases in which the trial court does not consider an expert’s affidavit because the party that tries to use it did not disclose the expert before the Note of Issue and Certificate of Readiness were filed, which is when fact discovery should be completed. See Constr. by Singletree, Inc. v. Lowe, 55 A.D.3d 861, 866 N.Y.S.2d 702 (2nd Dept. 2008). There are other cases, especially more recent ones, in which the trial court considers an expert’s affidavit despite the fact that the expert was not disclosed before the Note of Issue and Certificate of Readiness were filed. See Rivers v. Birnbaum, 102 A.D.3d 26, 953 N.Y.S.2d 232 (2nd Dept. 2012). There actually is a hard and fast rule as to whether a party will be able to use such an affidavit: It’s firmly within the trial court’s sound discretion.

As we previously discussed, an expert witness is allowed to provide her opinion at trial when it would help to clarify an issue calling for professional or technical knowledge, possessed by the expert and beyond the experience and understanding of the typical juror. See De Long v. Erie Cnty., 60 N.Y.2d 296, 307, 457 N.E.2d 717, 722 (1983). An expert often also is necessary to oppose, or support, a motion for summary judgement, which is the procedural equivalent of trial. See Rivers v. Birnbaum, supra, 102 A.D.3d 26, 953 N.Y.S.2d 232 (2nd Dept. 2012).

Plaintiffs and defendants both must disclose, prior to trial, the experts they intend to testify on their behalf at trial. The statute that governs expert’s disclosure, however, times the disclosure in terms of a trial, not in terms of a motion for summary judgement. CPLR 3101(d)(1) provides, in relevant part:

d) Trial preparation. 1. Experts. (i) Upon request, each party shall identify each person whom the party expects to call as an expert witness at trial and shall disclose in reasonable detail the subject matter on which each expert is expected to testify, the substance of the facts and opinions on which each expert is expected to testify, the qualifications of each expert witness and a summary of the grounds for each expert’s opinion. However, where a party for good cause shown retains an expert an insufficient period of time before the commencement of trial to give appropriate notice thereof, the party shall not thereupon be precluded from introducing the expert’s testimony at the trial solely on grounds of noncompliance with this paragraph. In that instance, upon motion of any party, made before or at trial, or on its own initiative, the court may make whatever order may be just.

[Emphasis supplied].

The problem comes from the fact that parties often wait until close to trial to disclose to their opponents the experts they intend to call at trial. They do this for many reasons, including the expense involved, since most experts command sizable fees and parties often want to be sure that the case will actually go to trial before they incur the expense of retaining an expert to testify at trial. There also is the very human trait of not doing something until it absolutely has to be done; there truly is nothing more productive than the very last minute.

The confusion comes from how the disclosure requirements of CPLR § 3101(d)(1), apply to motions for summary judgement; in particular, when parties need to disclose their experts, and what penalties they face if they fail to meet the deadline.

In Constr. by Singletree, Inc. v. Lowe, 55 A.D.3d 861, 866 N.Y.S.2d 702, (2nd Dept. 2008), the Appellate Division Second Department scared all the procrastinators straight. It upheld the lower court’s decision to bar the use of experts’ affidavits in opposition to a motion for summary judgement because the party that wanted to use them failed to disclose them before the Note of Issue and Certificate of Readiness were filed. Put another way, the parties agreed that all the preliminaries were completed, that the case was ready for trial, and then one of them said, “But wait, there’s more.” The court, however, did not go along.

If you look at the decision in Constr. by Singletree, Inc. v. Lowe, supra, you can see why the trial court issued such a harsh decision. The case involved a house which one of the defendants, J.C. Construction Management Corp, built for the other defendant, Lowe. The plaintiff, Construction by Singletree, Inc., was a subcontractor on the same job which sued the defendants to recover the money it claimed it was owed for its work. The issue on appeal was Lowe’s cross-claims against JC to recover money for what he said was JC’s breach of warranty and to collect the liquidated damages called for in the contract between them; i.e., Lowe alleged JC improperly installed the flooring and insulation systems and should pay him as a result. The only problem was, Lowe evidently waited too long to offer any substantial evidence to back up his claims, and then he tried to save the day by labeling that evidence as expert’s disclosure.
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July 16, 2013

In Negotiations, Can Silence Be Golden?

by The Law Firm of Grasing & Associates

When it comes to negotiating the best deal possible most people consider words to be king. If you make an offer there has to be a justification. If you refuse the offer, you immediately have to make a counter-proposal, and justify it. You tout the benefits of your product, justify your asking price, and critique the other side’s position; a few well-placed matter-of-fact observations, should do the trick. What most people do not realize, though, is that sometimes certain things, at certain times, are best left unsaid. Sometimes, silence is golden.

Standard negotiating advice to someone making an opening offer is to justify it. If there is something special about the item you are trying to sell, then say it. If there is something below-par about the product or service that you are trying to buy, then mention it. After all, you will be taken more seriously, and your position given more credence, because you have a reason for your offer. This advice is based, in large part, on the 1978 “Copier Machine Study,” by Ellen Langer, Arthur Blank, and Benzion Chanowith. In that study, a person waiting to make copies was more likely to let someone cut in front of him to make a small number of copies if the person offered some justification.

Katherine Shonk, Editor of Negotiation, the monthly newsletter of Harvard Law Schools’ Program on Negotiation, in an article that first appeared in October, 2011, points out that sometimes it may be wise to not justify an offer, at least not at first. She points out that the “Copy Machine Study” may have more to do with the trivial nature of the request, “Can I make 5 copies?” than with the justification offered for it.

July 12, 2013

When Is An Insurance Broker Liable For A Coverage Mistake In New York?

by The Law Firm of Grasing & Associates

Everyone knows the devastation caused by Hurricane Sandy: property destroyed; power lost; lives disrupted. No one expected it, but everyone has to live with it. Insurance is supposed to help put the pieces back together. But who’s responsible when the insurance you have isn’t the insurance you need? Nothing good happens when businesses close and homeowners can’t rebuild because they don’t have the right kind, or the correct amount, of insurance. When that occurs, who’s liable for such a big mistake? You might think it’s the insurance broker or agent but, more often than not, it’s the insured.

Recently, a Glen Cove, New York restaurant, The Water’s Edge, sued its insurance broker, B&G Group, Inc. for allegedly getting it the wrong coverage, from the wrong company, in the wrong amounts. According to an article in Newsday, the restaurant closed down on the day of the Storm, October 29, 2012. It didn’t have power for 14 days, couldn’t maintain its refrigeration system, had to dispose of the spoiled food, and only reopened in late May of this year. It claims that it lost $115,000 in spoiled food and suffered $250,000 in lost business income. The problem, evidently, is that it received only $5,000 for covered losses under its insurance policy, when it thought it would receive, and obviously needed, much, much more.

The Water’s Edge, which opened only last summer, according to news reports, obtained an insurance policy from Lloyd’s of London and used an insurance broker, B&G Group Inc., to get it. The Water’s Edge allegedly paid the policy premiums to B&G but B&G failed to pay the premiums to Lloyd’s of London and, as a result, the policy was canceled. B&G allegedly replaced the canceled Lloyd’s policy with another, presumably with different terms and coverage limits, but never informed the restaurant of the changes. The Lloyd’s policy allegedly had coverage limits of $500,000 for both the loss of the food and for business interruption, but the most the restaurant could recover under the replacement policy evidently was much less. When the loss was adjusted, and the payment turned out to be so small, the restaurant sued the broker to make up the difference.

Importantly, the Water’s Edge, based on the news reports, did not sue its insurer. This probably means it received everything it was entitled to under the replacement policy. There also is no allegation that Lloyd’s wrongfully terminated the original policy. With these two avenues closed, there was only one other place to turn: its insurance broker.

If the allegations are true, and right now we don’t know if they are, the restaurant has a good chance of recovering at least some of its losses. It will have to show that the only reason the Lloyd’s of London policy was not in effect was because of the broker’s mistake. It then could be entitled to recover only the difference between what it received under the replacement policy and what it would have recovered under the Lloyd’s of London policy. The broker will be able to challenge the claimed coverage and damages because it will stand in the insurer’s shoes; i.e., if the insurer would have had to pay, then the broker will have to pay. Soho Generation of New York, Inc. v. Tri-City Ins. Brokers, Inc., 256 A.D.2d 229, 231-32, 683 N.Y.S.2d 31, 34 (1st Dept. 1998).

Normally, though, it is not so easy to recover from an insurance agent or broker when the insurance turns out to be different than the insured thought it was before the loss. To know why, you have to understand what an insurance agent’s duties are.
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July 9, 2013

Trademarks and Businesses: Branding Made Better

by The Law Firm of Grasing & Associates

A well thought out business plan should ensure steady, profitable growth by providing goods or services that customers want and can rely upon. One way to achieve this is through brand loyalty, which some would argue is the key to success. If you want to be around in ten years, chances are you will have to convince buyers that your product or service, whatever it might be, is worth having, recommending, and coming back to. Any business owner can tell you the benefits of purchasing what she’s selling; dependable, reliable, high quality, less expensive, value-driven; there are many ways to describe how good her product is. Getting this point across to your potential customers, however, can be difficult. One often overlooked way to convince them of the quality of your product is through a trademark or service mark, which, if done right, will easily identify your product or service. To show you just how important a trademark is, one of this country’s favorite companies, Apple, is back in the news because it is trying to trademark the name of what might become the next must-buy piece of personal electronics.

Apple is seeking to trademark the term “iWatch” in Japan, as well as approximately 6 other countries. Everyone can guess what an “iWatch” will be. Like most good phrases used in advertising it’s a catchy name with more than one meaning. It could describe a watch made by Apple because, it seems, almost everything Apple makes now begins with the lowercase “i” in its name. That, in and of itself, is quite a branding tool; most businesses can only dream of having their customers identify their products by one little letter. At the same time, it implies that the product is something the user will watch/view/look at; with most computers, that’s just what you do. What is important to keep in mind, however, is exactly what Apple, by filing the trademark applications, is trying to do.

Apple reportedly wants to have the sole rights to use the name, the iWatch, for a mobile computing device. The trademark application, by itself, however, does not mean that Apple already has come up with, invented, or even produced a proto-type of, a mobile computing device worn on the wrist; patents are separate from trademarks. In the U.S., you can apply for a trademark even if you haven’t used the mark in commerce. If you get permission to use the trademark from the U.S. Patent and Trademark Office, you are given a certain amount of time, normally six months, to start using it. It should be noted, though, that Apple has filed a series of patents in the U.S. for watch-like mechanisms.

July 5, 2013

Text Mining: A Divining Rod For Insurance Fraud?

by The Law Firm of Grasing & Associates

We’ve previously talked about how technology can be used in fraud investigations; basically, it can help investigators pay attention to the important things. The trick is learning, and keeping up with, what is important. A good tool for doing this is text mining. By taking advantage of a computer’s ability to “read” many more pages of text than a human ever could hope to, in a fraction of the time, and to draw patterns and other relevant information from all of that “reading,” text mining can point an investigator in the right direction by letting her know what warning signs to look for and address. Turning words in free-flowing narratives, emails, statements, and notes into useful facts that can be studied and analyzed, text mining can, and should, help any investigator.

There are four different parts of the text mining process, each of which is as essential as the other:

1. Information Retrieval Systems: These weed out irrelevant documents in order to concentrate on the ones that are more likely to get you the answers you are looking for. Say you’re looking for the best attorney to help you buy a house; chances are you’d be smart to look for ones who have “real estate,” “houses,” or “homes” somewhere in the description of their practice. This won’t necessarily get you the attorney you want, but it will make your search a whole lot easier. This is what information retrieval systems do.

June 25, 2013

Business Negotiations 101: Know Your Fallback Position

by The Law Firm of Grasing & Associates

As we have talked about, negotiations are important, to businesses, their employees, and customers. Everyone wants to get the best deal possible. Being able to achieve it, however, is no easy task. How you conduct negotiations, the negotiation strategies that you should follow in order to get what you need out of the negotiations, might sound like academic gobbledygook, but they really are common sense ideas that have real life consequences for real life people. Businesses fail, employees lose their jobs, and products we all know and love go away, when emotion gets in the way of reason; these negotiation strategies are a way to avoid that.

We previously wrote about the need to know what you want before you begin to negotiate and the dangers of playing hardball once you start. This time we’ll talk about determining what your best alternative to a negotiated agreement, or BATNA, is. Put another way, your BATNA is your best fallback position if negotiations fail. It’s a common sense concept that gives you an idea of when you should accept an offer, when you should fight, and when you should walk away. Knowing your realistic bottom line, and that of your opponent, is essential to getting what you want, and preventing you from giving away more than you have to, in negotiations.

In order to determine what your BATNA is, you first need to actually know what all of your alternatives are. The most important, and overlooked, step is to make sure that you compare them as apples to apples because none will be exactly the same. As Harvard Business School and Law School Professor Guhan Subramanian pointed out in an article entitled, “Taking BATNA To The Next Level,” which first appeared in the January 2007 edition of the monthly newsletter Negotiation, your alternatives are not going to be directly comparable to what you can achieve in a negotiated agreement. His example, of a customer deciding whether to renew his current homeowner’s policy, proves the point. You can’t just compare premiums; you have to go through the coverages, to see what losses are covered and what you’ll receive if a loss actually occurs, before you know which policy gives you the best value. Saving a few hundred dollars a year in premiums may not mean much if you lose a few thousand dollars because the cheaper policy does not cover your loss.

June 21, 2013

How To Investigate Insurance Fraud: LISTEN

by The Law Firm of Grasing & Associates

When you are investigating insurance fraud, what is technology really good for? The answer may surprise you: Listening.

Listening: Everyone knows what it is. Everyone knows how to do it. And everyone believes they do it well. Whether it’s investigating insurance fraud, negotiating a business deal, or trying a case, it’s perhaps the single most important skill you need in order to succeed. Whether it’s the company rep you’re negotiating with or the witness you’re interviewing, you will always have a better chance to succeed if you actually listen to them.

Listening is really just paying attention; to the person you are talking to; to what she’s saying; doing; to what she really means. Often, like the pages of a good book, you have to dig beneath the surface to get the true meaning. Standing alone, her words may say one thing; when they are put with everything she’s said before, they may mean something else; and when combined with her actions, her words will often mean something completely different. If you only hear her words, you’ll never know what she is trying to say. If you listen to her and pay attention to all the important details, then you’ll understand.

June 14, 2013

How To Get What You Want In Business Negotiations: Is Hardball Always Necessary?

by The Law Firm of Grasing & Associates

How to succeed in negotiations is open to debate. It depends in large part on what you mean by success. Business owners, in New York and elsewhere, often think it means they have to win, and their negotiating partner, who they often view as their opponent, has to lose. Hardball, to them, is the key; power is what counts. Most business owners want to gain the upper-hand, and, once they have it, use it for all it’s worth. Lawyers often act in this same way, especially once litigation begins. The take-no-prisoners approach may be tempting, and it certainly does look good in the movies, but it often doesn’t get you what you bargained for.

The word “tense” always seems to come first whenever negotiations make the news. Normally up against a deadline, each party strongly believes that its cause is just and that the other side is pig-headed, if not downright evil, in opposing it. If the negotiations fail, each side is ready and willing to heap scorn upon the other.

Think of what happened to Hostess Brands. It closed down in November of 2012 because one of its unions went on strike. Hostess made Twinkies, Ho-Ho’s, and even Wonder Bread. Just about everyone has tried some of their foods at one point or another; my favorite was the Coffee Cakes. Well, the familiar story goes, Hostess ran out of money, declared bankruptcy to try to survive, and attempted to negotiate new contracts with its various unions. Some went along; the Teamsters did. Some refused. The Bakery, Confectionery, Tobacco Workers and Grain Millers, which represented 5000 Hostess employees, went on strike because they opposed the give-backs the bankruptcy judge imposed. When they wouldn’t go back to work, at least not enough of them anyway, Hostess decided to close its doors and sell off its assets. All of its major brands eventually were sold and, hopefully all will re-appear on store shelves. Many of its former employees, however, probably won’t be hired by the new owners.

June 11, 2013

The Art of the Interview: Why Investigators Still Count In Investigating Insurance Fraud

by The Law Firm of Grasing & Associates

Technology is not the only thing you need to investigate insurance fraud. Technology might tell you who to question, but someone still has to do the questioning. Analysis of big data might give you a lot to talk about, but someone, preferably with a little training and experience, is going to have to have that conversation. Technology might be able to sort through a tremendous amount of otherwise indecipherable data in order to identify, or obtain, clues about possible fraud. No matter how good the technology, no matter how vast the meta-data, no matter how many computers parse the data, a skilled investigator still has to connect the dots, and, eventually, a lawyer still has to convince a jury that those dots create a clear, unmistakable picture of fraud.

The interview, where one real person talks to another, is necessary in all fact-finding, whether it be a fraud investigation, a deposition in litigation, or a criminal prosecution. How to obtain information from people, however, is an art, not a science. There might be rules to follow and methods to learn but, by themselves, they are not enough.

An article in the June 1-2, 2013 Weekend Edition of the Wall Street Journal points out the art, and skill, involved in obtaining information from people who may be reluctant to provide it. The author, Jason Matthews, is an ex-CIA agent with more than 30 years of experience, who worked in what now is known as the National Clandestine Service. He talks about what it takes to convince people to spy against their own country. The key, he argues, is to find out what motivates a person. He describes four basic motivational factors, common to all people, that he used. Known by the acronym MICE, they are: money, ideology, conscience, and ego. According to the author:

June 7, 2013

How Should You Negotiate? Know What You Want

by The Law Firm of Grasing & Associates

Negotiations are an important part of everyday existence for all businesses, whether big, medium, or small, whether they are located in New York, around the country, or anywhere in the world. Every time businesses buy and sell goods and services, they negotiate. Business owners want to buy low and sell high. They want to break into a market either by undercutting their competition or by charging a premium for their product to convince buyers of its superior quality. Business negotiations impact the lives of everyday people, too. Everyone knows what a Kindle is, what an iPad is, and what e-books are. Many either have, or know someone who has, at least one of them. In the last few years it’s become common for people to walk around with their nose in their tablet, either reading an e-book or surfing the web. Business negotiations played a big part in making this happen.

A good negotiator is a hard person to find. She’s someone no one else wants to go up against, but everyone wants, and needs, on their side. Whether you can become one is open to debate, but there are a few things every business owner, corporate officer, or attorney, i.e., anyone involved in negotiations on a regular basis, can do to increase their chances of success. Perhaps the most important thing is knowing what you want. Recent news stories point this out.

The United States Department of Justice has sued Apple over its alleged role in price-fixing the retail cost of e-books; the trial started this past Monday, June 3, 2013, in the United States District Court for the Southern District of New York. According to news reports, Apple is charged with conspiring with publishers to raise the price of e-books in 2009 when it sought to enter the e-book market with its iPad. At that time Amazon.com was selling 90% of all e-books, some at a loss, in order to support its e-reader, the Kindle, which it introduced two years earlier. Apple was looking for a way into the market, and the publishers reportedly were looking for a way to increase prices, and presumably profits. Allegedly Apple, at the suggestion of two of the publishers, agreed to a different pricing model than Amazon.com. The agency-model, as it was called, let the publishers set the price for the e-books and set Apple’s compensation as a fixed percentage of the sales price. According to published reports, the Department of Justice alleges that Apple’s entry into the market gave the publishers what they had been looking for: a way to increase the price of e-books. Apple is the sole remaining defendant in the case; the publishers have settled.