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By: Jonathan H. Freiberger Today’s article is about MCLP Asset Co. v. Zaveri , an action that involves numerous areas of the law about which we frequently write -- mortgage foreclosure, FAPA, CPLR 205(a), CPLR 205-A and statutes of limitation. [1] Statute of Limitations in Foreclosure Actions By way of brief background, and as previously written in this BLOG, an action to foreclose a mortgage is governed by a six-year statute of limitations. CPLR 213(4) ; see also   Medina v. Bank of New York Mellon Trust Co., N.A . , 240 A.D.3d 879 (2 nd Dep’t 2025); Fed. Nat. Mort. Assoc. v. Schmitt , 172 A.D.3d 1324, 1325 (2 nd Dep’t 2019). When a mortgage is payable in installments, “separate causes of action accrue for each installment that is not paid and the statute of limitations begins to run on the date each installment becomes due.” HSBC Bank USA, N.A. v. Gold , 171 A.D.3d 1029, 1030 (2 nd  Dep’t 2019). Most mortgages, however, provide that a mortgagee may accelerate the entire debt in the event of, inter alia , a payment default by a mortgagor. Once the mortgagee’s election to accelerate is properly made, “the borrower’s right and obligation to make monthly installments ceased and all sums become immediately due and payable, and the six-year Statute of Limitations begins to run on the entire mortgage debt.” EMC Mortgage Corp. v. Patella , 279 A.D.2d 604, 605 (2 nd  Dep’t 2001) citations and internal quotation marks and brackets omitted); see also   Medina , 240 A.D.3d at 881; HSBC , 171 A.D.3d at 1030. FAPA The Foreclosure Abuse Prevention Act  (“FAPA”), which went into effect in December of 2022, “represents the Legislature’s response to litigation strategies and certain legal principles that distorted the operation of the statute of limitations in foreclosure actions.” Genovese v. Nationstar Mortgage LLC , 223 A.D.3d 37, 41 (1 st Dep’t 2023) (citation omitted). Thus, inter alia , FAPA’s provisions were designed to prevent lenders from circumventing statute of limitations problems in residential mortgage foreclosure actions by the simple expedient of accelerating and deaccelerating loans to restart the running of statutes of limitations. The First, Second and Third Departments have all held that FAPA is to be applied retroactively. See, e.g., Genovese v. Nationstar Mortgage LLC , 223 A.D.3d 37 (1 st  Dep’t 2023), [2]   97 Lyman Avenue, LLC v. MTGLQ Investors, L.P. , 233 A.D.3d 1038 (2 nd  Dep’t 2024); U.S. Bank N.A. v. Lynch , 233 A.D.3d 113 (3 rd  Dep’t 2024) [3] CPLR 205(a) and 205-A [4] Sometimes the applicable statute of limitations expires after the dismissal of a timely commenced action. Such an occurrence is not be a problem if a new action can be commenced before the limitations period expires. However, issues may arise when an otherwise timely action is dismissed subsequent to the expiration of the limitations period. Depending on the nature of the dismissal, even in the latter scenario, a plaintiff may be permitted to commence a new action notwithstanding the expiration of the applicable statute of limitations by virtue of the savings provisions of CPLR 205(a) . CPLR 205(a) is a “remedial” statute that “has existed in New York law since at least 1788” and can [t]race[] its roots to seventeenth century England.” Wells Fargo Bank, N.A. v. Eitani , 148 A.D.3d 193, 199 (2 nd Dep’t 2017), appeal dismissed , 29 N.Y.3d 1023 (2017). The purpose of CPLR 205(a) is to “ameliorate the potentially harsh effect of the Statute of Limitations in certain cases in which at least one of the fundamental purposes of the Statute of Limitations has in fact been served, and the defendant has been given timely notice of the claim being asserted by or on behalf of the injured party.” George v. Mt. Sinai Hospital , 47 N.Y.2d 170, 177 (1979). Thus, the statute provides “a second opportunity to the claimant who has failed the first time around because of some error pertaining neither to the claimant’s willingness to prosecute in a timely fashion nor to the merits of the underlying claim.” George , 47 N.Y.2d at 178-79. To address the previously discussed gamesmanship employed by lenders to artificially extend applicable statutes of limitation, FAPA added CPLR 205-A, which limits the ability of lenders to manipulate the statute of limitations in mortgage foreclosure actions. MCLP Asset Co., Inc. v. Zaveri All the previously discussed principles are addressed in MCLP . In MCLP, the plaintiff lender’s predecessor in interest commenced an action in 2012 to foreclose a mortgage that was “deemed abandoned” and dismissed in 2017 pursuant to CPLR 3404 . A subsequent appeal from the denial of the predecessor lender’s motion to restore was dismissed as abandoned. Another of plaintiff’s predecessors in interest commenced the subject foreclosure action in 2019. The motion court granted the defendant’s motion to dismiss the complaint on statute of limitations grounds. On the lender’s appeal, the Fourth Department reversed “concluding that the 2019 action was not time-barred inasmuch as CPLR 205 (a) applied to extend the statute of limitations.” Shortly after the appeal was decided, however, FAPA was enacted and, inter alia , amended CPLR 205 to provide that "[t]his section shall not apply to any proceeding governed by CPLR 205-a. (Ellipses and brackets omitted.) After the complaint was reinstated, the predecessor assigned the mortgage to the plaintiff lender, who moved for summary judgment. The borrower cross-moved for leave to amend the answer to include a statute of limitations defense based on FAPA’s amendment of CPLR 205 and its enactment of CPLR 205-a. The motion court granted the borrower’s cross-motion. Thereafter, relying on decisions from the First and Second Departments, the motion court concluded that “FAPA was intended to be applied retroactively and, pursuant to CPLR 3212(b) , searched the record and granted summary judgment to the borrower . On appeal, the lender argued that “FAPA, particularly CPLR 205-a, [should not be] applie[d] retroactively.” As to retroactivity, the Court stated: Retroactive operation is not favored by the courts and statutes will not be given such construction unless the language expressly or by necessary implication requires it. However, remedial legislation should be given retroactive effect in order to effectuate its beneficial purpose. Factors to consider in determining whether a statute should be applied retroactively include, whether the legislature has made a specific pronouncement about retroactive effect or conveyed a sense of urgency; whether the statute was designed to rewrite an unintended judicial interpretation; and whether the enactment itself reaffirms a legislative judgment about what the law in question should be. [Citations, ellipses and brackets omitted.] Based on the legislative history, the Fourth Department determined that FAPA was intended to apply retroactively. Specifically with respect to CPLR 205-a, the Court stated: we note that, in drafting that provision, which was modeled on CPLR 205 (a), the legislature did not include the CPLR 205 (a) language "requiring that the court set forth on the record the specific conduct constituting the neglect, which conduct shall demonstrate a general pattern of delay in proceeding with the litigation, which had occasioned erroneous judicial interpretations that the court's recitation of the specific conduct is a condition precedent to the bar against an extension of the statute of limitations for a neglect based dismissal. Indeed the legislative history makes clear that in omitting the aforementioned language, the legislature intended to correct those "erroneous judicial interpretations". In enacting CPLR 205-a, the legislature sought to, inter alia, bring greater clarity in mortgage foreclosure actions concerning what constitutes a neglect to prosecute and thereby promote "the objectives of 'finality, certainty and predictability,' to the benefit of both plaintiffs and defendants". We thus conclude that the legislature intended for CPLR 205-a, like the rest of FAPA, to apply retroactively. [Citations, ellipses and brackets omitted.] In addition, the Court found the new CPLR 205-a did not operate to extend the statute of limitations and, therefore, the motion court properly granted summary judgment to the borrower. Specifically, the Court noted that CPLR 205-a does not apply to successors in interest or assignees unless it is pleaded and proved that they are “acting on behalf of the original plaintiff” or where the first action is dismissed for any form of neglect. The Court also rejected, on the merits, the lender’s argument that the retroactive application of FAPA is violative of its due process rights. [5] Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. [1] This BLOG has written dozens of articles addressing numerous aspects of residential mortgage foreclosure. To find such articles, please see the BLOG  tile on our website  and search for any foreclosure, or other commercial litigation, issue that may be of interest you. In particular, as relates to today’s article, type “FAPA”, “statute of limitations”, “CPLR 205” and/or “CPLR 205-a” into the search box. [2]   Genovese was also discussed in this BLOG’s article: “ The Appellate Division, First Department, Reiterates in Two Cases That The Foreclosure Abuse Prevention Act (“FAPA”) is to Have Retroactive Application and Otherwise Passes Constitutional Muster ”.   [3] Lynch was also discussed in this BLOG’s article: “ The Appellate Division, Third Department, Holds that Retroactive Application of the Foreclosure Abuse Prevention Act (“FAPA”) Does Not Violate Due Process ”.   [4]  In previous BLOG articles, we compared CPLR 205(a) with 205-A. See, e.g.,  [ here ] and [ here ]. [5] On November 25, 2025, the New York Court of Appeals decided two cases: Article 13 LLC v. Ponce De Leon Fed. Bank  and Van Dyke v. U.S. Bank, N. A. , in which the Court determined that certain provisions of FAPA operate retroactively and that such retroactive application violates neither the lender’s substantive nor procedural due process rights as applied to the subject cases. We will address these cases in next week’s BLOG article.

By: Jeffrey M. Haber In Kassirer v. Gotlib , 2026 N.Y. Slip Op. 02154 (1st Dept. Apr. 9, 2026), the Appellate Division, First Department, reaffirmed a bedrock principle of New York contract law: agreements to agree are not enforceable. The case arose from an alleged oral agreement to pursue a Manhattan real estate acquisition through yet‑to‑be‑formed entities, with ownership interests, management rights, and funding obligations left largely undefined. Although the plaintiff contributed $1.6 million toward the venture, the Court held that the purported agreement lacked the definiteness required to form a binding contract. The absence of agreed-upon material terms, combined with the sophistication and complexity of the contemplated transaction, rendered the arrangement nothing more than a preliminary, nonbinding framework. As a result, the Court dismissed the plaintiff’s breach of contract and declaratory judgment claims, underscoring that intent and partial performance cannot cure fundamental contractual vagueness. Kassirer v. Gotlib [Eds. Note: the factual discussion that follows was distilled from the decisions of the courts in this case and the parties’ briefing on appeal.] Plaintiffs, Isaac Kassirer, and his entity, Emerald Equity Group LLC (“Emerald”), alleged that Kassirer and the individual defendants entered into an oral agreement to purchase a piece of Manhattan real estate through defendant 685 Investors LLC, that Kassirer arranged for third-party financing of $25 million toward a $30 million deposit and that the three individual parties agreed to each make up the remaining $5 million by paying $1,660,000. According to plaintiffs, the oral agreement provided that (1) the parties would work together to acquire some or all of the properties; (2) Kassirer would “fund or procure sources of funding” for any downpayment that “may” be required and would fund or procure a third of the funds “required to acquire whatever Properties the defendants decided to acquire; (3) Kassirer would receive one-third of the membership interests in a limited liability company (that was not yet formed) that would act as the manager “of the entity/entities which would own, either directly or through subsidiaries, some or all of the Properties”; and (4) “upon the first closing of the purchase of any of the Properties,” $1,660,000 would be returned to Kassirer. Kassirer’s portion was paid through Emerald. Kassirer claims that defendants thereafter shut him out of the venture, making him only a limited partner. Plaintiffs brought suit, seeking (1) a judgment declaring that he was a one-third partner in defendant 685 Manager LLC and entitled to a share of certain fees and distributions, and (2) the return of his $1.6 million, under theories of breach of contract and unjust enrichment.  Defendants moved to dismiss the complaint. Among other arguments, defendants argued that plaintiffs failed to allege the existence of an enforceable contract. At most, said defendants, plaintiffs alleged only an unenforceable agreement to agree – that is, an agreement to later agree on the terms of an operating agreement for a limited liability company. According to defendants, at most, there was an oral agreement to split membership interests in a yet-to-be-formed entity that would manage another yet-to-be-formed entity that would own Manhattan real estate, and if a down payment was required, Kassirer would contribute a third of the down payment and a third of the purchase price. In other words, defendants argued that plaintiffs failed to plead the existence of an oral agreement with sufficient detail to make it binding. Instead, defendants argued that plaintiffs pleaded an inchoate “agreement,” made on an unspecified date to acquire some unspecified real estate and to split membership interests in a nonexistent entity that was to manage another nonexistent entity that would own unspecified properties. Because plaintiffs failed to plead any of the material terms of the agreement, let alone that there was mutual assent to those terms, defendants argued, plaintiffs failed to plead the existence of a contract at all. The motion court denied the motion to dismiss. The First Department unanimously modified the order to the extent of granting the motion to dismiss plaintiffs’ first and second causes of action for a declaratory judgment and breach of contract and otherwise affirmed. Governing Legal Principles To establish the existence of an enforceable agreement, a plaintiff must establish an offer, acceptance of the offer, consideration, mutual assent, and an intent to be bound.  Mutual assent or the meeting of the minds must include agreement on all essential terms. [1] The threshold inquiry is “whether there is a sufficiently definite offer such that its unequivocal acceptance will give rise to an enforceable contract.” [2]  “Impenetrable vagueness and uncertainty will not do.” [3]   When “there are sufficient material terms absent from the” alleged contract, no enforceable agreement exists. [4]   Additionally, when the subject matter of the alleged agreement is complex and of the type usually put in writing, courts are even more likely to conclude that there is no agreement. [5]   Finally, when a material term of a purported agreement is left for future negotiations, courts hold that, at most, there is only an unenforceable agreement to agree. [6] The First Department’s Decision The Court held that “[t]he [motion] court should have granted defendants’ motion to dismiss the breach of contract claim.” [7]  The Court found that “the parties’ purported oral agreement [was] plainly nothing more than an unenforceable ‘agreement to agree’” “[g]iven the plethora of vague and missing material terms.” [8] Takeaway Kassirer  reaffirms a core principle of New York contract law: courts will not enforce preliminary understandings that lack definite, agreed-upon material terms. Arrangements that leave essential terms open for future negotiation are, at most, an unenforceable agreement to agree. To plead an enforceable contract, a plaintiff must allege mutual assent to all essential terms. That requirement was not met in Kassirer . The alleged oral agreement contemplated the future purchase of unspecified real estate, through entities that had not yet been formed, pursuant to operating agreements that did not yet exist, with funding and repayment obligations that were contingent and ill-defined. In the Court’s opinion, this was not a completed bargain but an framework dependent on future decisions and negotiations, which New York does not recognize as binding. The decision makes clear that plaintiff’s contribution of $1.6 million did not alter the Court’s analysis. While defendants acknowledged receipt of the funds, payment alone cannot supply missing material terms or establish mutual assent. As the Kassirer  Court explained, the exchange of consideration does not transform an indefinite, forward-looking understanding into a binding contract. Without a contract, plaintiff’s claim for breach of contract necessarily failed. Ultimately, Kassirer  underscores a fundamental rule on contract enforcement: where essential terms are left unresolved, there is no enforceable contract. Courts will enforce agreements the parties actually made, not the deals they hoped to complete later. ________________________________ Jeffrey M. Haber  is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes only and is not intended to be, and should not be, taken as legal advice. Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions and not on matters handled by the firm. ___________________________________ [1] Kowalchuk v. Stroup , 61 A.D.3d 118, 121 (1st Dept. 2009).  [2] Express Indus. & Terminal Corp. v. N.Y. State Dept. of Transp. , 93 N.Y.2d 584, 589-90 (1999) (citation omitted). [3] Id.  (citation omitted). [4] Argent Acquisitions, LLC v. First Church of Religious Science , 118 A.D.3d 441, 445 (1st Dept. 2014); see also Caniglia v. Chicago Tribune-New York News Syndicate , 204 A.D.2d 233, 234 (1st Dept. 1994) (“The IAS Court properly dismissed, without leave to replead, the plaintiffs’ first cause of action, purporting to set forth a cause of action for breach of contract, as too indefinite, and therefore, unenforceable, for plaintiffs’ failure to allege, in nonconclusory language, as required, the essential terms of the parties’ purported . . . contract[.]”). [5] See Manufacturers Hanover Trust Co. v. Margolis , 115 A.D.2d 406, 407 (1st Dept. 1985); Emigrant Bank v. UBS Real Estate Secs., Inc. , 2007 WL 5650108 (Sup. Ct., N.Y. County Mar. 14, 2007) (when “a contract of this magnitude and complexity is of a type usually committed to writing,” that weighs against finding a non-written, enforceable agreement); Al-Bawaba.com , Inc. v. Nstein Techs. Corp. , 25 Misc. 3d 1245(A) (Sup. Ct., Kings County 2009) (no oral agreement when it is “clearly the sort of complex, legally-sophisticated contract that necessarily would require a writing”). [6] Argent , 118 A.D.3d 441, 445 (citing J oseph Martin, Jr., Delicatessen v. Schumacher , 52 N.Y.2d 105, 109 (1981)); see also Srivatsa v. Rosetta Holdings LLC , 213 A.D.3d 514, 514 (1st Dept. 2023) (oral agreement to grant shares in an LLC was “at most, an unenforceable agreement to agree”). [7] Slip Op. at *1 [8] Id.  (citing Srivatsa , 213 A.D.3d at 514-515).

By: Jeffrey M. Haber In KSFB Mgt., LLC v. Goldman Sachs & Co., LLC , 2026 N.Y. Slip Op. 02064 (1st Dept. Apr. 7, 2026), the Appellate Division, First Department, affirmed dismissal of claims alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and fraud. KSFB Mgt., LLC (“KSFB”) claimed that Goldman Sachs & Co., LLC (“Goldman”) and another defendant deceived it into managing a subsidiary while secretly pursuing a competing sale that excluded KSFB, allegedly misusing confidential information shared under a nondisclosure agreement (“NDA”). The Court held that KSFB failed to identify specific confidential information misused, as required to plead breach of the NDA. It further ruled that the NDA did not obligate Goldman to avoid conflicts or prioritize a joint sale. Finally, the Court held that the fraud claims failed because the alleged oral assurances on which the claims were based were contradicted by explicit conflict disclosures in a later engagement letter, making reliance unreasonable as a matter of law. KSFB Mgt., LLC v. Goldman Sachs & Co., LLC Plaintiff alleged that Goldman and defendant Focus Financial Partners, LLC (“Focus”), who entered a stipulation of discontinuance after the appeal was filed, engaged in a months-long scheme to deceive plaintiff, a business management firm providing services for high-net-worth individuals, into continuing to manage Focus’s non-party subsidiary, NKSFB, LLC (“NKSFB”), while Goldman assisted Focus to pursue a combined sale of NKSFB and KSFB. Plaintiff alleged that unbeknownst to it, Goldman and defendant Patrick Fels (“Fels”) were simultaneously advising Focus in a competing transaction to sell Focus and NKSFB to Clayton Dubilier & Rice LLC (“CD&R”), which excluded plaintiff. According to the complaint, defendants used the expectation of a joint sale of NKSFB and KSFB to induce plaintiff to provide confidential information under the NDA. Under Paragraph 2 of the NDA, Goldman agreed to “keep the Confidential Information confidential,” and therefore, it would not, “without prior written consent of [Focus and KSFB], (i) use, for itself or on behalf of any other person, any portion of the Confidential Information for any purpose other than the Purpose, or (ii) disclose any portion of the Confidential Information to any person, other than . . . in connection with the Purpose.” “Confidential Information,” in turn, was defined in Paragraph 1 of the NDA as “all oral, written or digital information furnished by or on behalf of [Focus or KSFB] to [Goldman]” in connection with the joint NKSFB sale, “whether furnished before or after the date hereof.” Such information included “the identity of [Focus or KSFB] and/or the identity of the [NKSFB] or any other affiliate . . . and/or the fact that [Focus or KSFB] or its affiliates may be considering a possible strategic transaction.” It further encompassed “material provided directly by [NKSFB] or any other affiliate, agent or representative of [Focus or KSFB].” This definition of “Confidential Information,” however, did not include information that “was known by [Goldman]” at the time of disclosure by either Focus or KSFB. In addition to the foregoing, Paragraph 8 of the NDA provided that Focus and KSFB would “be granted access to any electronic dataroom or other file sharing platform used to share Confidential Information” with Goldman. To avoid any doubt, the NDA went on to provide that “any Confidential Information of another party received or accessed by a party, whether provided by [Goldman, Focus, or KSFB], contained in a data room or otherwise, [would] be used by such party only for the purposes of a mutually agreeable strategic transaction assisted by [Goldman] and any such sharing or disclosure by a party [would] not constitute a license to use or any transfer of ownership or other rights with respect to such Confidential Information or any waiver or grant of use of such Confidential Information for any other purpose.” According to plaintiff, defendants allegedly used the confidential information in their negotiations with CD&R. To minimize Goldman’s legal exposure for this alleged scheme, defendants allegedly convinced plaintiff to sign an engagement letter, which included several disclaimers of liability. KSFB commenced the action on February 8, 2024, asserting claims for (i) breach of the NDA against Focus and Goldman (Count I); (ii) breach of the covenant of good faith and fair dealing against Focus and Goldman (Count IV); (iii) fraudulent concealment, misrepresentation, and inducement against all defendants, as well as declaratory judgment regarding the enforceability of the allegedly fraudulently induced engagement letter (Counts VI, VII, & IX — the fraud-based claims); (iv) breach of fiduciary duty against Goldman and aiding and abetting breach of fiduciary duty against Focus, Patrick Fels, and another defendant (Counts II & III); (v) tortious interference with prospective economic advantage (Count V); and (vi) unjust enrichment. Goldman and Fels moved to dismiss the first, fourth, and sixth causes of action pursuant to CPLR 3211(a)(7). The motion court granted the motion. The First Department unanimously affirmed. The Court held that the “motion court properly dismissed the first cause of action alleging that defendants breached (i) paragraph 2 of the NDA and (ii) a section of paragraph 8.” [1]  The Court found that “[p]laintiff made only vague and conclusory statements that defendants disclosed confidential information, as defined in the NDA, and failed to identify what confidential information was allegedly misused.” [2]  The Court explained that “[p]laintiff allege[d] that Goldman shared confidential information with nonparty CD&R to assist them in negotiations to acquire defendant Focus and NKSFB. [However,] Plaintiff was not involved in those negotiations, and its confidential information would not have been material to those discussions. [For this reason,] … plaintiff’s complaint suffers from the absence of any allegations about whether the confidential information that was allegedly disclosed belonged to plaintiff or Focus.” [3]  “We need not accept as true plaintiff’s conclusory allegations, made upon information and belief,” said the Court, “that Goldman disclosed plaintiff’s confidential information to CD&R.” [4]   The Court also held that the motion court “correctly dismissed the contract claim based on allegations that Goldman breached that portion of paragraph 8.” [5]  The Court noted that the “purpose of the NDA was to allow Goldman to receive confidential information from Focus and plaintiff.” [6] “Thus,” explained the Court, “paragraph 8 should be read to refer to the dataroom or platform used to share Focus’ and plaintiff’s confidential information with Goldman, not a separate dataroom or platform set up to share Focus’ confidential information with CD&R.” [7]   Moreover, the Court held that the “motion court providently dismissed the breach of the implied covenant of good faith and fair dealing claim[,]” [8]  “[i]mplicit in all contracts.” [9] Pursuant to the implied covenant, “neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.” [10]  Yet, “the covenant of good faith and fair dealing … cannot be construed so broadly as effectively to nullify other express terms of a contract, or to create independent contractual rights.” [11] Nor can one party invoke the duty of good faith to imply obligations inconsistent with the terms of the contractual relationship. [12]  Ultimately, “‘a party who asserts the existence of an implied-in-fact covenant bears a heavy burden’ to ‘prove not merely that it would have been better or more sensible to include such a covenant, but rather that the particular unexpressed promise sought to be enforced is in fact implicit in the agreement viewed as a whole.’” [13] The Court held that “plaintiff did not meet its ‘heavy burden’ to show that defendants agreed in the NDA to forego, explicitly or implicitly, any action that would create a conflict with the proposed sale of plaintiff and NKSFB.” [14]   The Court noted that the “NDA provide[d] that the parties thereto (Focus, plaintiff, and Goldman) had “an interest in entering into discussions wherein [ea]ch Disclosing Party may share information with Recipient [Goldman] . . . for the purpose of pursuing a possible relationship between Recipient and the Disclosing Parties in which Recipient may advise and assist with respect to a possible strategic transaction involving” NKSFB.” [15]  “The NDA itself was not an agreement in which Goldman committed itself to helping Focus and plaintiff sell KSFB and NKSFB,” said the Court. [16] The Court further held that the “motion court … properly dismissed the sixth cause of action alleging fraud because plaintiff failed to satisfy the element of justifiable reliance.” [17]   To state a claim for fraud, a complaint must allege a representation or omission of a material fact, falsity, scienter, reliance, and damages. [18] Similarly, a claim premised on fraudulent inducement requires “specific statement[s] made by defendants (or by anyone else) that would have fraudulently induced the contract.” [19]  Stated differently, to state a claim for fraudulent inducement, a plaintiff must allege “(1) a misrepresentation or an omission of material fact which was false and known to be false by the defendant, (2) the misrepresentation was made for the purpose of inducing the plaintiff to rely upon it, (3) justifiable reliance of the plaintiff on the misrepresentation or material omission, and (4) injury.” [20]   Plaintiff alleged that on a September 16, 2022 phone call, Fels “repeatedly assured [plaintiff] that there was no, and would be no conflict” in Goldman acting as an investment banker for both Focus and plaintiff. [21] “Any alleged reliance on these oral statements,” said the Court, was “irreconcilable with the engagement letter which the parties signed four months later.” [22]  The Court explained that “[i]n the engagement letter, the parties unambiguously agreed that ‘potential conflicts of interest, or a perception thereof, may arise as a result of [Goldman] rendering services to both [Focus and KSFB] simultaneously,’ that KSFB’s and Focus’ ‘interests may not always be aligned,’ and that the arrangement ‘will not give rise to any claim of conflict of interest against Goldman.’” [23] “On the September call,” said the Court, “Fels also stated that Focus and Goldman were ‘committed to the same goal’ as KSFB.” [24]  The Court concluded that “[t]his allegation fail[ed] to state a claim for fraud for the same reasons.” [25] Moreover, noted the Court, “[t]he engagement letter explicitly stated that the parties only contemplated a ‘possible sale of all or a portion of [NKSFB] . . . and/or [KSFB]’ [and] … disclosed that Goldman ‘may currently be providing and may in the future provide’ other ‘services that could impact the transaction contemplated.’” [26]  “In light of these written disclaimers,” concluded the Court, “it was unreasonable as a matter of law for plaintiff, a sophisticated party, to rely on Goldman’s oral representations made months earlier during the September call.” [27] Finally, the Court rejected “[p]aintiff’s argument that the motion court failed to apply the peculiar knowledge exception to the fraud claims,” stating that the argument “lack[ed] merit.” [28]  The Court found that “[p]laintiff fail[ed] to articulate any undisclosed information that was  uniquely  in defendants’ possession.” [29]   This was especially so, said the Court, because “the engagement letter notified plaintiff concerning potential ‘conflicts of interest’ that may exist between Focus and plaintiff that could ‘impact the [NSKFB/KSFB] transaction.’” [30] Takeaway KSFB  underscores the courts’ insistence on precision, restraint, and contractual fidelity when sophisticated parties litigate deal‑related disputes. The Court’s decision illustrates that allegations of breach and fraud must be grounded in concrete facts, not suspicion or hindsight. Plaintiffs claiming misuse of confidential information under an NDA must identify what information was shared, who owned it, and how it was improperly used; vague assertions that confidential information “must have been disclosed” will not suffice. The decision also reinforces that courts will not rewrite agreements to impose obligations that the parties did not expressly bargain for. An NDA designed to facilitate information sharing does not, without more, restrict a financial advisor from pursuing other transactions. Finally, the ruling reaffirms that sophisticated parties cannot reasonably rely on prior oral assurances when subsequent written agreements explicitly disclose the information allegedly misstated or omitted. As KSFB demonstrated, written disclaimers remain a powerful shield against fraud claims. ____________________________________ Jeffrey M. Haber  is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes only and is not intended to be, and should not be, taken as legal advice. Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions and not on matters handled by the firm. ____________________________________ [1] Slip Op. at *1. [2] Id.  (citing Art Capital Group, LLC v. Carlyle Inv. Mgt. LLC,   151 A.D.3d 604 , 605 (1st Dept. 2017);  see also Parker Waichman LLP v. Squier, Knapp & Dean Communications, Inc.,   138 A.D.3d 570 , 570-571 (1st Dept. 2016)). [3] Id. [4] Id.  (citing Skillgames, LLC v. Brody,   1 A.D.3d 247 , 250 (1st Dept. 2003)). [5] Id.  at *2. [6] Id. [7] Id.  (citing Beal Sav. Bank v. Sommer,   8 N.Y.3d 318 , 324 (2007)). [8] Id. [9] Atlas El. Corp. v. United El. Group, Inc. , 77 A.D.3d 859, 861 (2d Dept. 2010)). [10] Id. [11] Fesseha v. TD Waterhouse Inv. Servs., Inc. , 305 A.D.2d 268, 268 (1st Dept. 2003)). [12] Gottwald v. Sebert , 193 A.D.3d 573, 582 (1st Dept. 2021); Sheth v. NY Life Ins. Co. , 273 A.D.2d 72, 73 (1st Dept. 2000)). [13] Singh v. City of New York , 40 N.Y.3d 138, 146 (2023) (quoting Rowe v. Great Atl. & Pac. Tea Co. , 46 N.Y.2d 62, 69 (1978)). [14] Slip Op. at *2 (citing Cordero v. Transamerica Annuity Serv. Corp.,   39 N.Y.3d 399 , 410 (2023) (internal quotation marks omitted));  see also Singh,  40 N.Y.3d at 146. [15] Id. [16] Id. [17] Id.  at *3. [18] See Albert Apt. Corp. v. Corbo Co. , 182 A.D.2d 500, 500 (1st Dept. 1992). [19] See EVUNP Holdings LLC v. Frydman , 225 A.D.3d 469, 469 (1st Dept. 2024). [20] See CANBE Props., LLC v. Curatola , 227 A.D.3d 654, 656 (2d Dept. 2024). [21] Slip Op. at *3. [22] Id.  (citing HSH Nordbank AG v. UBS AG ,  95 A.D.3d 185 , 204-206 (1st Dept. 2012) (dismissing fraud claim based on “extracontractual representations” concerning “alignment of interests” where contract “expressly disclosed the potential for conflicts of interests . . . and provided that HSH would have no claim against UBS arising from such conduct”);  Societe Nationale D’Exploitation Industrielle des Tabacs et Allumettes v Salomon Bros. Intl. , 249 A.D.2d 232, 233 (1st Dept. 1998),  lv. denied , 95 N.Y.2d 762 (2000) (dismissing fraud claim because alleged oral representations were contradicted by letter confirmation agreements)). [23] Id. [24] Id. [25] Id. [26] Id. [27] Id. [28] Id.  at *4. [29] Id.  (orig’l emphasis) (citing S kyview Cap., LLC v. Conduent Bus. Servs., LLC ,  239 A.D.3d 426 , 428 (1st Dept. 2025) (finding that “plans were not peculiarly within [the defendants’] knowledge” because the plaintiff “could have inquired” about them] ; MBIA Ins. Corp. v. Merrill Lynch ,  81 A.D.3d 419 , 419 (1st Dept. 2011) (declining to apply the peculiar knowledge exception because the plaintiff was a sophisticated business entity that could have obtained the truth about the defendants’ allegedly fraudulent representations through investigation)). [30] Id.

By: Jeffrey M. Haber Financial abuse of seniors and other vulnerable adults is among the most damaging and the least visible forms of investor harm. It arises when age, illness, cognitive decline, or dependence on trusted professionals erodes an individual’s ability to evaluate advice or resist coercion, even while legal capacity nominally remains intact. In the securities context, this vulnerability intersects directly with federal and state regulation, in which advisory relationships are built on trust, discretion, and an informational imbalance. When those features are exploited, the resulting harm implicates not only private loss but the integrity of the regulatory system itself. The SEC’s enforcement action against the Estate of John R. Brodacki, III and Castle Hill Financial Group, LLC, illustrates how financial exploitation and abuse can run afoul of professional and/or regulatory compliance. According to the SEC, from at least June 2018 through September 2025, defendants fraudulently induced their clients – many of whom were elderly, retired, or seriously ill – to transfer money to Castle Hill. The SEC alleged that Brodacki told the clients that their funds would be used to invest for their benefit and/or that of their relatives. The clients understood that defendants would manage these investments as their investment advisers, and they never told them otherwise, said the SEC.  As examples, defendants told some clients that they would invest in high-yield bank accounts, stocks, bonds, certificates of deposit, notes, or securities of private companies. The SEC alleged that instead of making such investments, defendants used clients’ funds largely to pay Brodacki’s own personal and business expenses, including lavish meals, membership fees to exclusive social clubs, tuition, and travel; to make payments to other advisory clients; and to make payments to Brodacki’s family members. According to the SEC, defendants returned only $162,750 to 18 investors, and most of those repayments were made from other advisory clients’ funds entrusted to defendants to invest on their own behalf, which, the SEC said, was behavior typical of a Ponzi scheme. The SEC further alleged that defendants continued to solicit and accept client funds for purported investment advisory services even after the registered investment adviser with which they were associated terminated the relationship in July 2025. The SEC charged each defendant with breaching their fiduciary duties to at least 18 of their advisory clients and misappropriating approximately $1.68 million in client funds in violation of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC seeks disgorgement with prejudgment interest from each defendant, a civil money penalty and a permanent injunction against Castle Hill. Takeaway The alleged misconduct is instructive not simply because of the magnitude of the losses —approximately $1.68 million — but because it demonstrates how exploitation may occur in the absence of overt incapacity, coercion, or recognizable fraud. According to the SEC, clients relied on longstanding personal relationships with the adviser and received documentation purporting to reflect legitimate, appreciating investments. Others sought conservative income‑generation or estate‑planning solutions and were instead directed into off‑platform transactions that circumvented custodial protections and supervisory controls. As alleged, the misconduct operated through consent that was valid and procedurally documented, yet substantively undermined by trust, dependency, and informational asymmetry. The SEC’s enforcement action reflects a regulatory view that exploitation of senior and vulnerable investors is not a peripheral concern, but an important component of adviser fraud. By grounding its claims in breaches of fiduciary duty under Sections 206(1) and 206(2) of the Investment Advisers Act, the SEC treated the misuse of trust, authority, and client dependency as integral to the violation itself. Apparent authorization, personal familiarity, or documentation does not insulate conduct from regulatory scrutiny when those features are used to disguise breaches of fiduciary duty, fraud, and misappropriation. More broadly, the action highlights the risk of financial abuse in regulated environments. Written custodial requirements, supervisory policies, and disclosure alone are insufficient, where advisers induce clients to operate outside established safeguards — particularly where age, illness, or isolation heightens susceptibility. The enforcement action underscores the SEC’s mission that protecting vulnerable investors is inseparable from maintaining market confidence, and that enforcement must address the subtle ways in which alleged financial exploitation and abuse adapts to compliant‑looking structures. The litigation release announcing the enforcement action can be found here . The complaint, filed in Securities and Exchange Commission v. Personal Representative of the Estate of John R. Brodacki, III and Castle Hill Financial Group, LLC , No. 3:26-cv-30055 (D. Mass. filed Apr. 2, 2026), can be found here . ________________________________ Jeffrey M. Haber  is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes only and is not intended to be, and should not be, taken as legal advice. Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions and not on matters handled by the firm.

By:  Jeffrey M. Haber In Kober v. Nestampower , 2025 N.Y. Slip Op. 06609 (2d Dept. Nov. 26, 2025), the Appellate Division, Second Department, decided an appeal involving disputes over membership interests in a limited liability company. After a member’s death, her daughter attempted to assign the trust’s LLC interest to herself and siblings without obtaining consent from other members. Plaintiffs sued for declaratory relief and damages. The Court held that under New York’s Limited Liability Company Law and the LLC’s operating agreement, an assignment of interest does not confer management rights or membership unless expressly permitted and consented to by existing members. Since plaintiffs lacked such consent, they were not members of the LLC and had no standing to assert the derivative claims alleged in the complaint. Defendants Rita Nestampower and Martha Gendel and their sister Bernice Klein (the “decedent”) were members of KGN Associates, LLC (hereinafter, “KGN” or the “LLC”). The sisters formed KGN on February 26, 2003, for the purpose of owning and managing commercial property in Farmingdale, New York. KGN also owned two parcels of vacant land in Yaphank, New York. All properties were inherited from the sisters’ father. In October 2004, the decedent assigned her interest in the LLC “to the extent of thirty three and one third Percent (33 1/3%) of the Net Profits in the [LLC] as defined by the [LLC]” to a living trust in her name (hereinafter, the “trust”), of which she was the trustee. In June 2010, the decedent died, and plaintiff, Linda Robin Kober (“Kober”), the decedent’s daughter, became the trustee of the trust. In February 2011, Kober executed an assignment on behalf of the trust (the “assignment”), intending to assign the trust’s interest in the LLC to herself and the decedent’s other children, plaintiff Bettina Iris Rabinowitz (“Rabinowitz”) and defendant Jules Mark Klein (“Klein”), each as an 11.11% member. In February 2018, Kober and Rabinowitz (collectively, the “plaintiffs”), individually and derivatively on behalf of the LLC, commenced the action against, among others, defendants, inter alia , to recover damages for breach of fiduciary duty and for declaratory relief. In particular, plaintiffs asserted the following four causes of action: First – declaratory judgment that plaintiffs and Klein were members of the LLC, each owning an 11.11% interest, and permanently enjoining defendants from excluding them from the management of the LLC; Second – on behalf of the LLC and against defendants in an amount equal to the difference between the fair market value and the sales price of the Yaphank property, with interest from the date of sale, and reasonable attorney’s fees for the prosecution of the claim; Third –  on behalf of the LLC against the attorney and his law firm for the LLC in connection with the sale of the Yaphank property, in an amount equal to the difference between the fair market value and the sales price of the Yaphank property, with interest from the date of sale; and Fourth – on behalf of the LLC against defendants, permanently enjoining them from selling the Farmingdale property without notice to plaintiffs and Klein, and without permitting them to participate equally in the management of the LLC, together with reasonable attorney’s fees in prosecuting the claim. Thereafter, plaintiffs moved for summary judgment on the complaint. Defendants cross-moved for summary judgment dismissing the first, second, and fourth causes of action on the ground, among others, that plaintiffs lacked standing to assert derivative causes of action on behalf of the LLC. In an amended order dated April 30, 2021, the Supreme Court denied plaintiffs’ motion and granted defendants’ cross-motion. Plaintiffs appealed. The Second Department affirmed. “A membership interest in a limited liability company is assignable in whole or in part.” [1]  However, the assignment of a membership interest “does not . . . entitle the assignee to participate in the management and affairs of the limited liability company or to become or to exercise any rights or powers of a member.” [2]  Rather, “the only effect of an assignment of a membership interest is to entitle the assignee to receive, to the extent assigned, the distributions and allocations of profits and losses to which the assignor would be entitled.” [3]  “A person can become a member of a limited liability company by assignment, but only where the operating agreement grants the assignor such power, and, then, where the conditions of such authority have been complied with.” [4]   Looking at the LLC’s operating agreement, the Court noted that the agreement “allow[ed] for the transfer of a membership interest, but provide[d] that new members [could] only be admitted with the consent of the LLC’s other members”. [5]  The assignment at issue provided that the transfer of the membership interest was “[s]ubject to the acceptance of [the] assignment and assumption by the LLC.” [6]  The Court found that, as demonstrated by defendants in their cross-motion, “there had not been any prior consent allowing for the transfer of any membership interest to the plaintiffs”. [7]  As a result, the Court held that “defendants established their prima facie entitlement to judgment as a matter of law dismissing the first, second, and fourth causes of action”. [8]  “In opposition,” said the Court, “plaintiffs failed to raise a triable issue of fact, as they [did] not dispute that they failed to obtain the consent of the LLC’s other members to be admitted as members of the LLC when they acquired their membership interest.” [9]  “Therefore,” concluded the Court, “plaintiffs, as nonmembers who had not been admitted as members of the LLC, lacked standing to pursue derivative causes of action on behalf of the LLC.” [10]   For the reasons stated with respect to defendants’ cross-motion, the Court held that “plaintiffs failed to demonstrate their prima facie entitlement to judgment as a matter of law on the complaint.” [11] Takeaway Under the LLC Law, assigning a membership interest only transfers economic rights (profits and losses), not management rights or membership status. As explained in Kober , becoming a member requires compliance with the operating agreement and consent from existing members. Kober  also underscores the importance of an operating agreement. An operating agreement typically includes a number of provisions that give clarity to the conduct of the LLC and its members. For example, an operating agreement specifies: (a) each member’s ownership percentage, voting rights, and responsibilities; (b) whether the LLC is member-managed or manager-managed, detailing decision-making authority and operational procedures, provisions that are important in determining the fiduciary duties each member has, or may have, vis-à-vis the other and/or the LLC; and (c) the rules for admitting new members and transferring interests, ensuring that ownership changes occur only with proper consent—avoiding issues like those in Kober . Moreover, an operating agreement typically addresses profit distribution, dispute resolution, and dissolution procedures, thereby reducing risk and uncertainty. Without an operating agreement, the LLC Law applies by default, which may not align with members’ intentions. A tailored agreement, therefore, gives members flexibility and control. In Kober , the LLC had an operating agreement that governed the admission of new members. Under that agreement, even if an assignment occurs, without explicit consent from other members, the assignee cannot participate in management or assert member rights. The failure to obtain the consent of the other members was the death knell of plaintiff’s derivative claims. Only members of an LLC have standing to bring derivative actions on behalf of an LLC. As made clear in Kober , nonmembers, even with assigned economic interests, cannot pursue such claims. _______________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. [1] Behrend v. New Windsor Group, LLC , 180 A.D.3d 636, 639 (2d Dept. 2020); see Limited Liability Company Law (“LLC Law”) § 603(a)(1). [2] LLC Law § 603(a)(2); see Behrend , 180 A.D.3d at 639. It is important to note that Section 603(a) of the LLC Law makes clear that an assignment of a membership interest is governed by the statute, “[e]xcept as provided in the operating agreement.” [3] LLC Law § 603(a)(3); see Behrend , 180 A.D.3d at 639. [4] Behrend , 180 A.D.3d at 639; see  LLC Law § 602(b)(2). [5] Addressing the terms of the operating agreement, the motion court found that there was “no provision in the Operating Agreement which contradicts the language of [LLCL] § 603(a)(3).” [6] Slip Op. at *2. [7] Id.  (citing Behrend , 180 A.D.3d at 640; Kaminski , 169 A.D.3d at 786). The Supreme Court found “There is no provision in the Operating Agreement that a member’s interest may be evidenced by a certificate issued by the company, and plaintiffs do not claim that such a certificate reflecting transfer of membership was ever issued. The Operating Agreement at ¶ 13 sets forth the process whereby members may admit new members. Plaintiffs do not allege that the defendant members ever caused the Company to admit plaintiffs as members.” [8] Id. [9] Id.  (citing Kaminski v. Sirera , 169 A.D.3d 785, 786 (2d Dept. 2019)). [10] Id.  (citing   Tzolis v. Wolff , 10 N.Y.3d 100, 102 (2008); Harounian v. Harounian , 198 A.D.3d 734, 736 (2d Dept. 2021); Kaminski , 169 A.D.3d at 786). [11] Id.  (citing Behrend , 180 A.D.3d at 640).

By:  Jeffrey M. Haber In Brearly v. Weis Mkts., Inc. , 2025 N.Y. Slip Op. 34485(U) (Sup. Ct., Broome County Oct. 31, 2025), the motion court was asked to consider the viability of claims for violations of General Business Law (“GBL”) §§ 349 and 350, which prohibit false advertising and deceptive acts or practices in the conduct of any business, trade, or commerce. [1] As discussed below, the motion court held that plaintiff failed to satisfy the elements of the claims asserted. In particular, plaintiff alleged that “Salt & Vinegar Flavored Potato Chips” packaging was misleading under GBL §§ 349 and 350 because it implied natural ingredients, though the chips contained artificial flavorings like malic acid. The motion court held the claims failed. While the packaging was consumer-oriented, an element of a GBL claim, it was not materially misleading: the label stated “flavored,” signaling artificial ingredients, and omitted terms like “all natural.” Additionally, the motion court rejected plaintiff’s “price premium” theory of damages because the chips were a lower-cost store brand, not marketed at a premium. Without material deception or injury, the motion court concluded that the complaint did not meet statutory requirements necessary to withstand the motion to dismiss. Summary of the Action Plaintiff alleged that she purchased defendant’s “Salt & Vinegar Flavored Potato Chips” from January 2022 through January 2025. She asserted that many consumers, including herself, seek foods made with natural flavors and ingredients and try to avoid products containing artificial flavoring, which they view as potentially less healthy. Plaintiff claimed that the product’s packaging misled consumers because the chips did not contain real vinegar; instead, the vinegar taste was derived from artificial ingredients. Plaintiff emphasized that the words “salt & vinegar” appeared in a large, white font at the top of the front label, while the phrase “flavored potato chips” appeared below it in a smaller, darker font, allegedly suggesting the presence of natural ingredients. Plaintiff also pointed to the imagery on the packaging: a glass bowl that appeared to hold salt and a wooden spoon next to a cruet filled with vinegar. Despite these representations, the ingredient panel on the back listed sodium diacetate and malic acid—both artificial flavorings—rather than vinegar. Plaintiff further asserted that she paid more for the product than she otherwise would have had she known it contained artificial flavoring, even though the chips were sold as a more economical store-brand alternative to national brands. She alleged that these labeling and pricing practices amounted to deceptive conduct in violation of the GBL. The GBL To state a claim under GBL §§ 349 and 350, “a plaintiff must allege that a defendant has engaged in (1) consumer-oriented conduct, that is (2) materially misleading, and that (3) the plaintiff suffered injury as a result of the allegedly deceptive act or practice. [2]  A claim under these statutes does not lie when the plaintiff alleges only “a private contract dispute over policy coverage and the processing of a claim which is unique to the[] parties, not conduct which affects the consuming public at large.” [3]  Thus, a plaintiff claiming the benefit of either Section 349 or Section 350 “must charge conduct of the defendant that is consumer-oriented” or, stated differently, “demonstrate that the acts or practices have a broader impact on consumers at large.” [4]   Notably, the deceptive practice does not have to rise to “the level of common-law fraud to be actionable under section 349.” [5]  In fact, “[a]lthough General Business Law § 349 claims have been aptly characterized as similar to fraud claims, they are critically different.” [6]  For example, while reliance is an element of a fraud claim, it is not an element of a GBL § 349 claim. [7]   Nevertheless, a plaintiff must allege the existence of a materially misleading act or advertisement to state a cause of action under GBL §§ 349 and 350. [8]  The test for both a deceptive act or deceptive advertisement is whether the act or advertisement is “likely to mislead a reasonable consumer acting reasonably under the circumstances.” [9] Whether a particular act or advertisement is materially misleading may be made by a reviewing court as a matter of law. [10] The Motion Court’s Decision As to the first element, the motion court found there was “no question … the packaging at issue is consumer oriented.” [11]  Though plaintiff satisfied the first element of the claims, the motion court held that plaintiff failed to satisfy the second and third elements of the claims. With regard to the second element ( i.e. , consumer-oriented conduct that is materially misleading), the motion court held that plaintiff failed to state a claim. [12]  The motion court found that the “label at issue expressly state[d] the chips [were] ‘flavored’, thereby indicating the presence or possibility of artificial ingredients.” [13] Plaintiff alleged that the packaging was deceptive because a reasonable consumer would expect the chips to contain only “natural” ingredients based on the label “Salt & Vinegar Flavored Potato Chips” juxtaposed with the image of a cruet containing vinegar adjacent to a bowl containing salt. Defendant argued, among other things, that no reasonable consumer would be misled into believing that its salt and vinegar potato chips did not contain artificial ingredients. Defendant further argued that the packaging at issue did not contain overt statements, such as “all natural,” and that the presence of a cruet filled with amber liquid, ostensibly vinegar, did not create the false impression about the ingredients of the chips. The representations about flavoring, as opposed to ingredients, said defendant, were standard marketing techniques that had been widely held to be permissible in other litigations. The motion court also held that “[p]laintiff’s position [was] further undercut by the omission of any terms that den[ied] the presence of artificial ingredients to a reasonable consumer, such as ‘all natural’”. [14]  “Although the front label refer[red] to a flavor (i.e., vinegar),” said the motion court, “it makes no claims about ingredients or the source of the vinegar flavoring, nor [was] it reasonable to presume the product contain[ed] a specific ingredient”. [15]  “Case law repeatedly dismisses claims alleging deception by flavoring coming from a particular ingredient,” noted the motion court. [16]  Therefore, the motion court found that the “complaint conflate[d] the packaging’s representations about the product’s flavoring with its ingredients and, therefore, fail[ed] to state a viable cause of action because the packaging [was] unlikely to mislead a reasonable consumer”. [17]   The motion court further held that plaintiff failed to satisfy the third element of the claim, “namely … that plaintiff suffered an injury from the supposedly false or misleading packaging”. [18]  In the complaint, plaintiff advanced a “price premium theory”, under which “[a] company market[s] a product as having a unique quality, that the marketing allowed the company to charge a price premium for the product, and that the plaintiff paid the premium and later learned that the product did not, in fact, have the marketed quality”. [19]  The motion court found that the allegations in the complaint actually undermined plaintiff’s position: “A review of the complaint, however, reveals plaintiff’s acknowledgment that defendant’s potato chips were not marketed as a national brand at a premium price, but rather as a ‘private label product’ sold at a lower cost compared to national brands.” [20]   The motion court concluded that “[w]ithout the allegation that plaintiff paid a premium for defendant’s product because of its labeling, but rather an admission that she did not, plaintiff … failed to satisfy the third prong of a claim for deceptive practice and/or false advertising by failing to allege damages arising from the allegedly deceptive labeling of defendant's product”. [21]   Takeaway For GBL §§ 349 and 350 claims, plaintiffs must demonstrate that the subject marketing is materially misleading and caused actual harm. As explained by the motion court in Brearly , flavor descriptions and imagery alone, without explicit ingredient claims, generally do not suffice. Additionally, price-premium arguments require evidence that the product was sold at a higher price due to the alleged misrepresentation. In Brearly , plaintiff failed to allege harm due to a price premium, especially since plaintiff acknowledged that defendant’s potato chips were not marketed as a national brand at a premium price. _______________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. [1] This Blog has written numerous articles examining GBL §§ 349 and 350, including: New York Court of Appeals Reaffirms that Claims Under GBL 349 and 350 Must Have a Broader Impact On Consumers at Large; GBL 349 and 350, Contractual Privity and The Warranty of Merchantability; and Licorice Sticks and New York’s General Business Law. In addition to the foregoing articles, readers can find additional articles examining GBL § 349 by clicking on the  BLOG  tile on our  website  and searching for any GBL topics that may be of interest to you. [2] Koch v. Acker, Merrall & Condit Co. , 18 N.Y.3d 940, 941 (2012); Goshen v. Mutual Life Ins. Co. of N.Y. , 98 N.Y.2d 314, 324 n.1 (2002). GBL § 349(a) provides that “[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful[,]” while GBL § 350 states that “[f]alse advertising in the conduct of any business, trade or commerce or in the furnishing of any service in this state is hereby declared unlawful.” [3] New York Univ. v. Continental Ins. Co. , 87 N.Y.2d 308, 321 (1995) (internal quotation marks omitted). [4] Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank , 85 N.Y.2d 20, 25 (1995). [5] Boule v. Hutton , 328 F.3d 84, 94 (2d Cir. 2003) (citing Gaidon v. Guardian Life Ins. Co. , 94 N.Y.2d 330, 343 (1999)). [6] Gaidon , 94 N.Y.2d at 343. [7] Stutman v. Chemical Bank , 95 N.Y.2d 24, 29 (2000); Small v. Lorillard Tobacco Co. , 94 N.Y.2d 43, 55-56 (1999). [8] See Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP v. Matthew Bender & Co., Inc. , 37 N.Y.3d 169, 176 (2021); Andre Strishak & Assocs., P.C. v. Hewlett Packard Co. , 300 A.D.2d 608, 609 (2d Dept. 2002). [9]   Oswego , 85 N.Y.2d at 26. See also   Andre Strishak , 300 A.D.2d at 609;  Himmelstein , 37 N.Y.3d at 178. [10] Id. [11] Slip Op. at *4 (citation omitted). [12] Id.  at *5. [13]   Id.  (citing Angeles v. Nestlé USA, Inc. , 632 F. Supp. 3d 309, 315 (S.D.N.Y. 2022)). [14] Id.  at 6 (citing Marotto v. Kellogg Co., 2018 WL 10667923, at 8 (S.D.N.Y. 2018)). [15] Id.  (citing Wynn v. Topco Assocs., LLC , 2021 WL 168541, at *4 (S.D.N.Y. 2021)). [16] Id.  (citing Oldrey v. Nestlé Waters North America, Inc. , 2022 WL 2971991 (S.D.N.Y. 2022); see also Myers v. Wakerfern Food Corp. , 2022 WL 603000 (S.D.N.Y. 2022) (“flavor designation does not convey an explicit ingredient claim”)). [17] Id.  (citing Angeles , 632 F. Supp. 3d at 315-316). [18] Id. [19] Colpitts v. Blue Diamond Growers , 527 F. Supp. 3d 562, 577 (S.D.N.Y. 2021) (internal citations omitted); Hawkins v. Coca-Cola Co. , 654 F. Supp. 3d 290, 301 (S.D.N.Y. 2023). [20] Slip Op. at *7. [21] Id.

By:  Jeffrey M. Haber In today’s Fraud Notes, we examine two cases involving different issues impacting a fraud claim. In RSD857, LLC v. Wright , 2025 N.Y. Slip Op. 06833 (1st Dept. Dec. 09, 2025), we examine the actionability of appraisals. In Olshan Frome Wolosky, LLP v. Kestenbaum , 2025 N.Y. Slip Op. 06816 (Dec. 09, 2025), we examine the duplication doctrine. [1] RSD857  involved allegations that one of the defendants orchestrated a foreclosure rescue scheme to acquire another defendant’s property through deceptive short sale tactics. Defendant claimed that the other defendant promised to preserve his equity and allow him to remain in his home but induced him to transfer title under false pretenses. A key element of the alleged scheme was an appraisal that allegedly undervalued the property using flawed methodologies that caused defendant and the lender to approve the short sale. On appeal, the First Department held that defendant stated a fraud claim against the appraiser notwithstanding the fact that an appraisal is generally not actionable because it is an opinion as to value. In Olshan , plaintiff sought payment of unpaid legal fees for representing certain defendants in three commercial actions. The parties formalized their relationship in July 2022 through an engagement agreement, later modified by a July 2023 revised fee agreement after one of the defendants promised to make payment. When defendants failed to comply, Olshan withdrew and sued for breach of contract, fraudulent inducement, and veil piercing. The motion court dismissed all claims against most of the defendants, finding, inter alia , the fraud claim duplicative of the breach of contract claim and the veil-piercing allegations to be insufficient. On appeal, the First Department reinstated the breach of contract claim against one of the defendants, holding that the emails exchanged with respect to the revised fee agreement evidenced a binding modification, but affirmed dismissal of the fraud and veil-piercing claims. RSD857 v. Wright RSD857  arose from allegations of a predatory mortgage foreclosure rescue scheme involving multiple defendants. At the center of the controversy is defendant Albert Wright (“Wright”), a homeowner who claimed he was fraudulently induced to transfer title to his property (the “Property”) under the guise of a short sale arrangement designed to save his home from foreclosure. Wright and his wife, Doreen Green (“Green”), purchased the Property in 1998 for $95,000. Over the years, they refinanced multiple times to fund repairs. In 2006, they obtained a $1.151 million mortgage loan secured by the Property. The loan eventually went into default in April 2011, and by 2017, the mortgagee initiated a foreclosure action against Wright, Green, and others. In September 2017, defendant Michael Petrokansky (“Petrokansky”) approached Wright on behalf of YKSNAK Holdings LLC (“YKSNAK”), acknowledging the foreclosure and initially offering to purchase the Property outright. Petrokansky later proposed an alternative to the purchase: he would assist Wright in keeping his home through a short sale arrangement. Thereafter, Petrokansky allegedly assured Wright that he could prevent foreclosure, preserve Wright’s equity, and allow him to remain in the Property. In February 2018, Wright and Green executed a memorandum of contract to sell the Property to RSD857. Allegedly acting on Petrokansky’s advice, Wright filed for Chapter 13 bankruptcy on March 5, 2018, to halt foreclosure proceedings. On April 4, 2018, Wright and Green signed a short sale contract to sell the Property to defendant Joby Hcock1131 LLC for $520,000, and on April 9, 2018, they executed a memorandum of option contract with YKSNAK. In January 2019, Petrokansky arranged for two appraisals of the Property; defendant John Viscusi (“Viscusi”) performed the second. Wright alleged that Viscusi grossly undervalued the Property at $825,000, ignoring its development potential. The appraisal, dated January 18, 2019, was allegedly instrumental in convincing Wright and the mortgagee to approve the short sale. Wright alleged that Viscusi’s appraisal employed unreliable standards and methodologies, misrepresented zoning restrictions, omitted prior sale contracts, and failed to include comparable rentals or land sales. According to Wright’s counterclaims/crossclaims, a forensic review later identified these deficiencies and concluded that the appraisal did not comply with professional standards. In particular, the review showed that Viscusi’s appraisal egregiously undervalued the property by millions of dollars, contained numerous errors, was misleading, and was not credible. Although Viscusi invoiced Petrokansky, the appraisal stated it was prepared for Wright, indicating that Viscusi knew Wright would rely on it. Wright alleged that this awareness, combined with the appraisal’s flaws, supported his fraud claim against Viscusi. On October 17, 2019, Wright and Green executed a short sale approval application. Eleven days later, on October 28, 2019, they signed approximately 20 documents intended to resolve the foreclosure and finalize the short sale. Among these documents were a residential contract of sale transferring the property to RSD857 for $850,000 and a deed recorded on November 18, 2019. A property transfer report listed the sale price as $975,000. Wright alleged that RSD857 paid $975,000 to the mortgagee, despite an outstanding balance exceeding $1.7 million. Following this transaction, the court discontinued the foreclosure action and canceled the notice of pendency. In August 2020, defendant, Spencer Developers Inc. (“Spencer”), applied to demolish the Property and construct a luxury condominium tower. Wright claimed that Petrokansky reneged on promises to allow him to remain in the home and instead sought to eject him. In his amended answer, Wright asserted eight affirmative defenses and nine counterclaims, including, as relevant to the appeal and this article, fraud against RSD857, Petrokansky, Viscusi, and Cohen. Wright alleged that Petrokansky and his affiliates orchestrated a scheme to strip him of his property under false pretenses, aided by, among other things, Viscusi’s false and misleading appraisal. Viscusi, among others, moved to dismiss the counterclaims/crossclaims. Regarding the fraud claim asserted against Viscusi, the motion court denied the motion. Viscusi argued that the fraud claim should be dismissed because an appraisal is a matter of opinion upon which there can be no basis for detrimental reliance. Wright maintained that an appraisal is actionable when it is supported by flimsy and unreliable information. It is well settled that appraisals are generally not actionable under a theory of fraud or fraudulent inducement because such representations of value are matters of opinion upon which there can be no basis for detrimental reliance. [2]   However, “an opinion, especially an opinion by an expert, may be found to be fraudulent if the grounds supporting it are so flimsy as to lead to the conclusion that there was no genuine belief back of it.” [3]   Furthermore, “an assessment of market value that is based upon misrepresentations concerning existing facts may support a cause of action for fraud”. [4]  In such a case, the appraisal is actionable because it is a factual representation—not an opinion. [5]   Based upon the foregoing principles, the motion held that Wright stated a claim for fraud against Viscusi. The motion court explained that Petrokansky allegedly arranged for Viscusi to prepare an appraisal in which Viscusi significantly undervalued the Property by “using unreliable standards and methodologies, to make the short sale more appealing to the lender and to mislead Mr. Wright”. The motion court pointed to the forensic review appraisal and analysis that was performed, which identified numerous misrepresentations and deficiencies in Viscusi’s appraisal. The motion court explained that according to the forensic review, Viscusi failed to prepare a report in conformity with the Uniform Standards of Professional Appraisal Practice; failed to accurately report publicly available information that Wright and Green had twice contracted to sell the Property before the short sale transaction; accurately report current zoning restrictions; failed to identify the development potential for the site; included a misleading statement with respect to the highest and best use for the Property; and failed to cite any comparable rentals or comparable properties for sale in the appraisal. Additionally, the forensic review found fault with Viscusi’s cost approach because Viscusi failed to include or cite information on comparable land sales in the area. The motion court also found that Viscusi may have been aware that Wright would rely on the appraisal. [6]  The motion court explained that although Viscusi sent the invoice for the appraisal to Petrokansky, the first page of the appraisal stated that it was prepared for Wright. Given the number of alleged misstatements and deficiencies in the appraisal, together with Viscusi’s acknowledgement that the appraisal had been prepared for Wright, the motion court held that Wright pleaded facts sufficient to state a claim of fraud. [7] On appeal, the First Department affirmed. The Court held that the motion court “properly denied Viscusi’s motion to dismiss the counterclaims against him because Wright adequately pleaded a claim for fraud.” [8] The Court found that “Wright's allegations that Viscusi’s valuation of the [P]roperty at $825,000, and that ‘statements used to support this valuation’ were ‘false and misleading and misrepresented material facts,’ were supported by the forensic analysis performed by [the forensic] appraiser … annexed to Wright’s pleading”. [9]  That analysis, said the Court, showed “that Viscusi’s appraisal egregiously undervalued the [P]roperty by millions of dollars, contained numerous errors, was misleading, and [was] not credible.” [10] “Moreover”, said the Court, “Wright adequately pleaded that Viscusi was aware that his misrepresentations would reasonably be relied upon by Wright”. [11]   The motion explained that “Viscusi’s appraisal explicitly stated that its intended recipient was Wright, and that its intended use was for Wright, as ‘lender/client,’ to evaluate the [P]roperty as to its fair market value.” [12]  Under those circumstances, the Court concluded that “Wright sufficiently pleaded that he reasonably relied on Viscusi’s appraisal for this purpose.” [13]   Olshan Frome Wolosky, LLP v. Kestenbaum Olshan arose from a non-payment of legal fees, in which plaintiff, Olshan Frome Wolosky LLP (“Olshan”), asserted five causes of action against defendants, Fortis Property Group, LLC (“Fortis”), FPG Maiden Lane, LLC (“FPG Maiden Lane”), FPG Maiden Holdings, LLC (“FPG Maiden Holdings”), Joel Kestenbaum, and Louis Kestenbaum (collectively, the “Defendants”): (1) breach of contract; (2) unjust enrichment; (3) quantum merit; (4) fraudulent misrepresentation; and (5) charging lien. Defendants moved to dismiss the complaint in its entirety. The motion court granted in part, and denied in part the motion. Olshan alleged that the fees owed by defendants stemmed from its representation of defendants in three different ongoing commercial actions in New York County Supreme Court (collectively, the “Actions”).  Defendants’ retention of Olshan was memorialized in July 2022 through Olshan’s Engagement Letter and accompanying Terms of Engagement (collectively, the “Engagement Agreement”). The Engagement Agreement was signed by Fortis’ General Counsel on behalf of FPG Maiden Lane, formally commencing Olshan’s representation of the Defendants. Olshan continuously provided legal services to Defendants until November 2023. Olshan alleged that Defendants defaulted on payments multiple times under the payment procedure clause of the Engagement Agreement, but that Olshan had continued representing Defendants because they had promised to pay. The most notable of these promises asserted in the complaint occurred on July 12, 2023, when Fortis’ General Counsel informed Olshan that “Louis [Kestenbaum] ha[d] approved payment of $425k to fully resolve the open invoices from November through April,” and further set out new guidelines regarding how Defendants’ would handle payments from thereon out. Olshan accepted these new terms, thus forming a supplementary agreement between the parties (“Revised Fee Agreement”). When Defendants allegedly did not comply with the new terms, Olshan indicated that it would not continue representing Defendants without full payment for the services previously rendered. The parties formally severed their relationship by stipulating to a substitution of counsel in one of the Actions. Olshan asserted three causes of action that are relevant to the appeal and this article: (1) breach of contract for failing to pay legal fees (encompassing the alleged Revised Fee Agreement); (2) fraudulent inducement based on the allegation that Louis Kestenbaum never intended to perform the July 2023 payment promises; and (3) an alter ego/veil-piercing claim to hold Louis Kestenbaum personally liable for the debts of the Fortis entities.   By decision and order dated August 21, 2024, the motion court granted the motion in relevant part. The motion court dismissed the breach of contract cause of action as against Fortis, Louis and Joel Kestenbaum, and FPG Maiden Holdings, LLC, on the grounds of lack of privity. The motion court also dismissed the fraudulent misrepresentation claim for failure to state a claim and because the cause of action was duplicative of the breach of contract cause of action, and held that the complaint be dismissed in its entirety as against Louis Kestenbaum. Olshan appealed the dismissal order, but only with respect to: (1) the breach of contract claim; (2) the fraud claim; and (3) the alter ego/veil-piercing theory against Louis Kestenbaum. The First Department unanimously modified the order, on the law, to deny the motion to dismiss the first cause of action as against Fortis, and otherwise affirmed. The Court held that the motion court “should have allowed the cause of action for breach of contract to proceed as against Fortis ….” [14]  The Court noted that “[a]lthough a breach of contract cause of action generally cannot be asserted against a nonsignatory to the agreement and Fortis … did not execute the engagement letter, the complaint sufficiently allege[d] that the engagement letter was modified by the later revised fee agreement, which bound Fortis … to the terms of the engagement letter”. [15]  The Court found that the “emails between the parties [were] sufficient to demonstrate [the parties’] agreement to modify the engagement letter so that Fortis … would pay the outstanding and ongoing legal fees under the terms of the revised fee agreement”. [16]   Turning to the fraud cause of action, the Court held that the motion court “properly dismissed the cause of action … as against Louis Kestenbaum”. [17]  The Court observed that “in effect”, plaintiff claimed that “Louis Kestenbaum made a promise of payment without the intent to perform that promise”. [18]  The Court explained that “[e]ven assuming the truth of this allegation, … Kestenbaum’s alleged statement would not constitute a promise collateral or extraneous to the agreements at issue”. [19]  Notably, the Court found that “[p]laintiff also did not allege that it sustained any damages that would not be recoverable under its breach of contract cause of action. Rather, plaintiff merely seeks to recover its legal fees, which it is entitled to under the terms of the agreements should it prevail in this action”. [20]  Under such circumstances, the claim was duplicative of the breach of contract claim. Finally, the Court held that “plaintiff failed to allege sufficient facts that would warrant piercing the corporate veil to hold Louis Kestenbaum personally liable for the legal fees that the Fortis entities allegedly owe to plaintiff.” [21]  The Court explained that “[a]lthough Louis Kestenbaum may have dominated some of the Fortis entities, plaintiff failed to allege that he abused the corporate form for the purpose of obtaining legal services without intending to pay for them.” [22]   Takeaway RSD857  raises several significant legal implications concerning fraud causes of action. Generally, appraisals are treated as opinions, not actionable statements of fact. However, the RSD857  court reaffirmed that an appraisal may support a fraud claim when its underlying methodology is so deficient that it suggests no genuine belief in its accuracy. As discussed, Wright alleged that Viscusi’s appraisal undervalued the property by ignoring development potential, misreporting zoning restrictions, and omitting comparable sales. These alleged deficiencies, coupled with forensic findings, allowed the Court to infer fraudulent intent and affirm the denial of the motion to dismiss. RSD857 , therefore, underscores that professionals cannot shield themselves behind the “opinion” defense when their work is knowingly misleading or recklessly prepared. RSD857  also highlights a critical principle concerning reliance: when a person knows that a third party will rely on their work, tort liability may attach for fraudulent preparation. In RSD857 , Viscusi’s appraisal explicitly stated it was prepared for Wright, creating a reliance scenario that the Court found actionable. Olshan  raises several significant legal implications concerning breach of contract and fraud causes of action. Olshan  highlights the fact that emails can constitute a binding modification of an agreement. As noted, the First Department held that the July 2023 Revised Fee Agreement—formed through email exchanges—was enforceable against Fortis even though Fortis did not sign the original engagement letter. Olshan  also reaffirms three principles involving fraud claims: fraud claims based on promises without intent to perform are not actionable; promises to perform are not collateral to the contract; and fraud damages that seek the same damages as the contract claim are duplicative. _________________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. [1]  This Blog  has written dozens of articles addressing numerous aspects of fraud claims and fraud claims and breach of contract claims asserted in the same action. To find such articles, please see the  Blog  tile on our  website  and search for any fraud, fraudulent inducement,  breach of contract, or other commercial litigation, topics that may be of interest you. As relates to today’s article, type “fraud”, “justifiable reliance”, “fraudulent inducement”, “matters of opinion”, or “duplication” into the “search” box. [2]   Brang v. Stachnik , 235 App. Div. 591, 592 (1932), aff’d , 261 N.Y. 614 (1933); Ellis v. Andrews , 56 N.Y. 83, 85-87 (1874); Stuart v. Tomasino , 148 A.D.2d 370, 371 (1st Dept. 1989). [3]   Ambassador Factors v. Kandel & Co. , 215 A.D.2d 305, 308 (1st Dept. 1995) (citation omitted); see also   Ultramares Corp. v. Touche , 255 N.Y. 170, 186 (1931). [4]   Flandera v. AFA Am., Inc. , 78 A.D.3d 1639, 1640 (4th Dept. 2010). [5]   See Cristallina v. Christie, Manson & Woods Int’l , 117 A.D.2d 284, 294 (1st Dept. 1986); People v. Peckens , 153 N.Y. 576, 591 (1897) (statement “as to value” amounts to an actionable “affirmation of fact” when “made by a person knowing them to be untrue, with an intent to deceive and mislead”); Polish & Slavic Fed. Credit Union v. Saar , 39 Misc. 3d 850, 855 (Sup. Ct., Kings County 2013) (“[T]o the extent that the EMVs [ i.e. , estimated market values] of the subject properties were extrapolated from misrepresentations of factual data, the appraisal itself may be considered a factual misrepresentation rather than a mere matter of opinion.”).  [6]   See Rodin Props. Shore Mall v. Ullman , 264 A.D.2d 367, 368-369 (1st Dept. 1999) (“[w]hen a professional ... has a specific awareness that a third party will rely on his or her advice or opinion, the furnishing of which is for that very purpose, and there is reliance thereon, tort liability will ensue if the professional report or opinion is negligently or fraudulently prepared”). [7]   Houbigant, Inc. v. Deloitte & Touche , 303 A.D.2d 92, 100 (1st Dept. 2003). [8]  Slip Op. at *1. [9]   Id.  (citations omitted). [10]   Id. [11]   Id.  (citation omitted). [12]   Id. [13]   Id. (citing Remediation Capital Funding LLC v. Noto , 147 A.D.3d 469, 470-471 (1st Dept. 2017)). [14]  Slip Op. at *1. [15]   Id.  (citing Lawrence M. Kamhi, M.D., P.C. v. East Coast Paint Mgt., P.C. , 177 A.D.3d 726, 727 (2d Dept. 2019)). [16]   Id.  (citing Kataman Metals LLC v. Macquarie Futures USA, LLC , 227 A.D.3d 569, 569 (1st Dept. 2024)). [17]   Id. [18]   Id. [19]   Id.  (citing Cronos Group Ltd. v XComIP, LLC , 156 A.D.3d 54, 65 (1st Dept. 2017)). [20]   Id.  (citing MaÑas v. VMS Assoc., LLC , 53 A.D.3d 451, 454 (1st Dept. 2008)). [21]   Id. [22]   Id.  (citations omitted).

By:  Jeffrey M. Haber In any contract dispute, “it is necessary to consider the language in the contract, for that is what controls the parties’ rights and responsibilities.” [1] For this reason, New York courts “are guided by the standard rules of contractual interpretation, which provide that ‘a written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms.’” [2]   In applying these rules of construction, “courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing.” [3]   With the foregoing rules in mind, we examine Stevens v. Audthan, LLC , 2025 N.Y. Slip Op. 06922 (1st Dept. Dec. 11, 2025), and Greenland Asset Mgt. Corp. v. MicroCloud Hologram, Inc. , 2025 N.Y. Slip Op. 06901 (1st Dept. Dec. 11, 2025). Stevens v. Audthan, LLC Stevens  concerned the alleged breach of a temporary relocation agreement (TRA). Plaintiff and his long-time roommate were the rent-regulated tenants of a single room occupancy unit (SRO) in Manhattan. Defendants entered into separate TRAs with plaintiff and his roommate to house them in temporary relocation apartments during the pendency of a construction and renovation project. The TRAs contemplated that each tenant would have the option to return to the building once construction was complete, at which time they would have separate units. However, the construction work was never completed. Pursuant to plaintiff’s TRA, defendants offered him the option of remaining in his temporary relocation apartment or returning to his original SRO. Plaintiff sent a lengthy response, electing to move back into his original SRO together with his long-time roommate. Much litigation ensued, including a plenary action in which plaintiff claimed that defendants had breached their TRA by requiring that he share his original unit with a co-tenant. The motion court granted defendants’ motion for summary judgment dismissing plaintiff’s claim that defendants breached the TRA with him. The Appellate Division, First Department, affirmed the motion court’s order. The Court held that the TRA was clear and unambiguous concerning plaintiff’s options. [4]   Looking at the TRA, the Court found that Paragraph 8(f) “clearly state[d] that if defendant Clinton Housing Development Company Inc. (CHDC) cease[d] to be the managing agent of the construction project, plaintiff ha[d] the option of returning to the original SRO unit he resided in prior to the temporary relocation or remaining in the apartment to which he was relocated.” [5]  “It says nothing about residing in the unit alone,” said the Court. [6]  The Court explained that “when CHDC did cease to be managing agent, plaintiff notified CHDC that he opted to return to the original SRO with his former roommate. Plaintiff provided no credible evidence that he was deceived or coerced into signing the TRA, which contained a merger clause providing that the signed contract comprised the entire agreement between the parties.” [7] The Court also held that “plaintiff [was] judicially estopped from insisting in this action that he [was] entitled to return to the original unit without his roommate.” [8]  The Court noted that the “doctrine of judicial estoppel” precluded plaintiff from taking a contrary position to the one that he took in a related action. [9]  “Plaintiff and his roommate, in an illegal lockout proceeding against the property owner, took the position that they both had the right to possession of the original unit, and the Civil Court agreed. Plaintiff cannot now take the position that it [was] only he who was entitled to take possession as the sole tenant merely because his interests have changed”, said the Court. [10] Greenland Asset Mgt. Corp. v. MicroCloud Hologram, Inc. Greenland  arose out of a merger between a special-purpose acquisition company (SPAC) and a private company. The acquisition of a private company by a SPAC allows the private company to be publicly traded and to access the funds raised by the SPAC’s initial public offering. A SPAC’s sponsor is usually compensated through discounted SPAC shares received before the SPAC’s IPO. Those shares generally have value only if the SPAC transaction is finalized, meaning that the private company is acquired. Additionally, those shares cannot be sold unless and until the SPAC, or its successor in interest following the transaction, either registers the shares with the Securities Exchange Commission (SEC) by successfully filing a registration statement (Registration Route) or removes the restrictive legend on the shares pursuant to 17 C.F.R § 230.44, otherwise known as SEC Rule 144 (Rule 144 Route). Plaintiff sponsored the SPAC Golden Path Acquisition Corporation (Golden Path) to raise funds through an IPO for the purpose of merging with or acquiring the targeted private company. On September 10, 2021, Golden Path entered into a merger agreement with “MC Hologram Inc.” The parties closed on the agreement to merge on September 16, 2022, and Golden Path simultaneously changed its name to its current form, MicroCloud Hologram, Inc. On June 21, 2021, before Golden Path’s IPO occurred, plaintiff and Golden Path entered into two agreements. One was a private-placement purchase agreement through which plaintiff acquired 248,000 private-placement units. The second was a registration-rights agreement (RRA). As a result, plaintiff owns 1,735,050 MicroCloud shares, consisting of 1,437,500 founder shares and 297,500 shares obtained through the private-placement transaction and redeemed private warrants upon consummation of the merger. MicroCloud, however, did not make any of plaintiff’s shares saleable through either the Registration Route or the Rule 144 Route. All of plaintiff’s shares remained restricted securities. In response to MicroCloud’s inaction in registering the shares, plaintiff sued MicroCloud, asserting four claims for relief: breach of contract, breach of implied contract, breach of the implied covenant of good faith and fair dealing, and conversion. MicroCloud moved to dismiss all four claims. The motion court denied the motion with regard to the causes of action for breach of contract (the first cause of action) and breach of the implied covenant of good faith and fair dealing (the third cause of action). The Appellate Division, First Department, unanimously affirmed. The Court held that “[p]laintiff stated a cause of action for breach of contract by alleging that defendant failed, among other things, to file a registration statement with the Securities and Exchange Commission, despite plaintiff’s multiple written demands that it do so under the terms of the parties’ contract.” [11]   The Court held that “the contract sufficiently provided objective criteria by which to measure defendant’s performance of its obligation.” [12] The Court found that the terms of the agreement were clear and unambiguous about defendant’s obligation to prepare and file the registration statement: Under the terms of the contract, once plaintiff submitted a demand for registration, defendant was required to use its “best efforts” [13] to prepare and file a registration statement with the SEC “as expeditiously as possible,” to cause the registration statement to become effective, and to keep it effective until defendant sold its securities. The contract’s definitions, in turn, expressly refer[red] to the filing of registration statements, amendments, and supplements in compliance with the Securities [Exchange] Act [of 1933] and SEC regulations, therefore incorporating the Act and the regulations into the contract’s terms and providing objective standards for judging the adequacy of defendant’s efforts. Similarly, the requirement to file “as expeditiously as possible” is modified by a proviso allowing defendant to “defer any Demand Registration for up to thirty (30) days,” thus providing additional guidance as to the timing of defendant’s obligation to file a registration statement. [14] The Court also held that plaintiff “stated a cause of action for breach of the implied covenant of good faith and fair dealing by alleging that defendant denied its requests because its principal sought to sell his own shares on the open market without having to compete with plaintiff.” [15]  The implied covenant of good faith and fair dealing “embraces a pledge that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.” [16]  The covenant is breached when a party acts in a manner that deprives the other party of the benefits of the contract. Id. The Court noted that even if “defendant had some discretion under the contract to refuse plaintiff’s request as unreasonable, it did not warrant dismissal because “‘even an explicitly discretionary contract right may not be exercised in bad faith so as to frustrate the other party’s right to the benefit under the agreement.’” [17]   The Court “reject[ed] defendant’s contention that it possessed the sole discretion to decide whether to remove a restrictive legend on the securities, as the contract stated that defendant ‘shall’ take action to enable plaintiff to sell its shares under the Securities Act.” [18]  The Court also rejected the notion that “plaintiff’s action [was] foreclosed by the SEC’s comment that ‘the removal of a legend is a matter solely in the discretion of the issuer of the securities’ under Rule 144.” [19]  The Court noted that the “SEC also recognizes that ‘[d]isputes about the removal of legends are governed by state law or contractual agreements’, and the parties’ contract require[d] defendant to remove any obstacles to plaintiff’s selling of its shares on the market, including by removing restrictive legends.” [20] Takeaway In New York, courts enforce contracts based on their written terms. If an agreement is clear and complete, the courts will apply its plain meaning—without adding, removing, or rewriting provisions. This means that the written terms of the parties’ agreement control the rights and obligations of the parties. Both Stevens v. Audthan, LLC  and Greenland Asset Mgt. Corp. v. MicroCloud Hologram, Inc.  stand for this foundation principle of contract interpretation. [21] _________________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. [1] See   Beinstein v. Navani , 131 A.D.3d 401, 405 (1st Dept. 2015).  [2] Greenfield v. Philles Records , 98 N.Y.2d 562, 569 (2002). [3] Vermont Teddy Bear Co. v. 538 Madison Realty Co. , 1 N.Y.3d 470, 475 (2004) (internal quotation marks omitted). [4] Stevens , Slip Op. at *1. [5] Id. [6] Id. [7] Id. [8] Id. [9] Id.  (citing Baje Realty Corp. v. Cutler , 32 A.D.3d 307, 310 (1st Dept. 2006) (the doctrine of judicial estoppel precludes a party who assumed a certain position in a prior proceeding, and who secured a judgment in his or her favor, from assuming a contrary position in another action simply because his or her interests have changed) (citations omitted)). [10] Id. [11] Greenland , Slip Op. at *1. [12] Id. [13] “[U]nder New York law, a best efforts’ clause imposes an obligation to act with good faith in light of one’s own capabilities,” and apply “such efforts as are reasonable in the light of that party’s ability and the means at its disposal and of the other party’s justifiable expectations.” Ashokan Water Servs., Inc. v. New Start, LLC , 11 Misc. 3d 686, 692(Civ. Ct., Kings County 2006) (internal quotation marks omitted). “[A] best efforts clause permits parties a degree of discretion in the selection of a plan of action and allows them to rely on their good faith business judgment as to the ‘best way’ to achieve the desired result.” In re CHATEAUGAY Corp. , 186 B.R. 561 (Bankr. S.D.N.Y. 1995) (citing Western Geophysical Co. of Am., Inc. v. Bolt Assocs., Inc. , 584 F.2d 1164, 1171 (2d Cir. 1978)). See also Bloor v. Falstaff Brewing Corp. , 601 F.2d at 614-15 (2d Cir. 1979) (party may demonstrate “best efforts” were made by proving “there was nothing significant it could have done” to meet its obligations “that would not have been financially disastrous.”). “Best efforts” require “greater care and diligence” than the “ordinary care and diligence” to which the promisor would otherwise be bound to exercise. See Allen v. Williamsburgh Sav. Bank , 69 N.Y. 314, 322 (1877). In a commercial contract, a commercial reasonable effort clause sets a lower bar than a best efforts clause. So, if a party fails to meet the commercial reasonable effort standards, it will fail to meet the best-efforts clause.   [14] Id.  (citation omitted). [15] Id. [16] 511 W. 232nd Owners Corp. v. Jennifer Realty Co. , 98 N.Y.2d 144, 153 (2002) (citation and internal quotation marks omitted). [17] Id.  (quoting Legend Autorama, Ltd. v. Audi of Am., Inc. , 100 A.D.3d 714, 716 (2d Dept. 2012) (quoting Richbell Info. Servs. v. Jupiter Partners , 309 A.D.2d 288, 302 (1st Dept. 2003)). [18] Id. [19] Id.  (citation omitted). [20] Id.  (citation omitted). [21] This Blog  has written numerous articles in which the courts made clear that the words in a contract are to be enforced so long as they are clear and unambiguous. Some of those articles include: Contracts that Say What They Mean, Mean What They Say ; Contracts That Say What They Mean, Mean What They Say Redux ; Contract Interpretation: Words Have Meaning ; Giving Two Contract Provisions Their Intended Meaning ; and Written Agreements That are Clear and Unambiguous Must Be Enforced According To The Plain Meaning of Their Terms .

By:  Jeffrey M. Haber In today’s article, we examine defamation per se under New York law, which allows recovery for defamation without proving special damages when the alleged statement falls into four categories: accusing someone of a serious crime, harming their trade or profession, imputing a loathsome disease, or alleging unchastity. In Couteller v. Mamakos , 2025 N.Y. Slip Op. 06965 (1st Dept. Dec. 16, 2025), a building superintendent sued a resident for falsely accusing him of sexual assault and harassment, disseminating the false claims to the police, the board of managers, and residents. The Appellate Division, First Department, found the statements defamatory per se, as they charged a serious crime and injured plaintiff’s profession. Since plaintiff proved malice, plaintiff could not find the protection of the qualified privilege that her statements otherwise would have enjoyed. A Brief Primer on The Law of Defamation The elements of a defamation claim are “a false statement, published without privilege or authorization to a third party, constituting fault as judged by, at a minimum, a negligence standard, and it must either cause special harm or constitute defamation per se.” [1] The two forms of defamation are libel and slander. [2] Since only facts can be proven false, statements purporting to assert facts about the plaintiff are the proper subject of a defamation claim. [3] When pleading a claim of defamation, “[t]he complaint … must allege the time, place and manner of the false statement and specify to whom it was made.” [4] The complaint must also set forth “the particular words complained of.” The language at issue cannot amount to “expressions of opinion” or ‘“loose, figurative or hyperbolic statements.’” [5] In deciding whether a statement is defamatory, a court “must consider the content of the communication as a whole, as well as its tone and apparent purpose and in particular should look to the over-all context in which the assertions were made and determine on that basis whether the reasonable reader would have believed that the challenged statements were conveying facts about the [] plaintiff.” [6] Under New York law, a claim alleging defamation is not sustainable if special damages are not pleaded. [7]  Special damages must be “fully and accurately identified ‘with sufficient particularity to identify actual losses.’” [8]   To set forth a cause of action in defamation per se, plaintiff need not plead special damages, but the statement must be “more than a general reflection upon [plaintiff’s] character or qualities.” [9] Rather, the statement must fall within one of four distinct exceptions: the statement (a) charged the plaintiff with a serious crime; (b) tends to injure the plaintiff in his or her trade, business or profession; (c) claims the plaintiff has a loathsome disease; or (d) imputes unchastity to a woman. [10]   The statement claimed to be defamatory cannot be privileged. There are two types of privilege relevant to a defamation claim: absolute and qualified. “Absolute privilege … entirely immunizes an individual from liability in a defamation action [] regardless of the declarant’s motives.” [11] It is “generally reserved for communications made by ‘individuals participating in a public function, such as judicial, legislative, or executive proceedings.’” [12]  “The absolute protection afforded such individuals is designed to ensure that their own personal interests—especially fear of a civil action, whether successful or otherwise—do not have an adverse impact upon the discharge of their public function.” [13]   “On the other hand, a statement is subject to a qualified privilege when it ‘is fairly made by a person in the discharge of some public or private duty, legal or moral, or in the conduct of his own affairs, in a matter where his [or her] interest is concerned.’” [14] Circumstances in which a qualified privilege may apply include statements made in self-defense or to protect the safety of others, statements by an employer to a former employee’s prospective employer, communications made by an individual to a law enforcement officer, [15]  communications made to persons who share a common interest in the subject matter, [16]  and reports of official proceedings. “When subject to this form of conditional privilege, statements are protected if they were not made with ‘spite or ill will’ or ‘reckless disregard of whether [they were] false or not’ … , i.e. , malice.” [17]  The plaintiff bears the burden of proving the speaker acted with malice. [18]   “Whether allegedly defamatory statements are subject to an absolute or a qualified privilege depend[s] on the occasion and the position or status of the speaker …, a complex assessment that must take into account the specific character of the proceeding in which the communication is made.” [19]   “In judicial proceedings[,] the protected participants include the Judge, the jurors, the attorneys, the parties and the witnesses,” who are granted the protection of absolute privilege “for the benefit of the public, to promote the administration of justice, and only incidentally for the protection of the participants.” [20]  “The immunity does not attach solely because the speaker is a Judge, attorney, party or a witness, but because the statements are … spoken in office.” [21] Thus, for example, “statements made by counsel and parties in the course of ‘judicial proceedings’ are [absolutely] privileged as long as such statements ‘are material and pertinent to the questions involved … irrespective of the motive’ with which they are made.” [22] The Court of Appeals has nonetheless “reiterated that [a]s a matter of policy, the courts confine absolute privilege to a very few situations.” [23] With the foregoing primer in mind, we examine Couteller v. Mamakos . [24] Couteller v. Mamakos Plaintiff, a resident superintendent at a building located in New York City (the “Building”), brought an action against defendant, the owner of an apartment in the Building, alleging that defendant defamed him by falsely stating, repeatedly, that he had sexually assaulted her. Specifically, plaintiff claimed that on August 23, 2017, after he reported defendant’s violation of a cease-and-desist order to the New York City Police Department, defendant informed the officers that she wished to file a complaint against plaintiff for sexual harassment and sexual assault. No complaint was filed. On October 24, 2017, during a meeting of the Building’s board of managers, defendant stated that plaintiff had threatened to shut off her water unless she performed “sexual favors.” Thereafter, defendant distributed a flyer to every apartment in the Building, stating that plaintiff sexually attacked and assaulted her. In his complaint, plaintiff sought (1) a declaratory judgment determining that defendant’s conduct was defamatory, (2) an injunction permanently restraining defendant from engaging in such conduct, and (3) an award of compensatory damages accounting for harm to his professional and personal reputation, and emotional distress, as well punitive damages, costs, and reasonable attorney’s fees. Following a failure to appear at a scheduled conference in December 2021, among other defaults, the motion court issued an order striking defendant’s answer and setting the matter down for an inquest. After additional related motion practice, the motion court conducted an inquest on April 25, 2024. At the inquest, the motion court found that plaintiff credibly testified as to the events set forth in the complaint and that defendant’s statements caused him great anxiety about the security of his job and his relationship with the Building’s tenants. Defendant also appeared at the inquest and argued that plaintiff should not receive any damages because plaintiff had, in fact, sexually accosted her in her apartment.   The motion court held that plaintiff established that defendant falsely stated that plaintiff sexually assaulted her and widely disseminated that misstatement, both orally and in writing, to hundreds of individuals, with at least a negligent regard for the truth. Though no special harm was established, said the motion court, defendant’s false claim that plaintiff sexually assaulted her—a serious crime—constituted defamation per se. At the conclusion of the inquest, the motion court awarded plaintiff $230,000, plus statutory interest and $6,080 in attorneys’ fees. On appeal, the Appellate Division, First Department, unanimously affirmed. The Court held that the motion “court properly concluded that plaintiff established a prima facie case of defamation per se at the inquest.” [25]   The Court found that “Defendant’s statements fell within two of the categories of defamation per se” – charging plaintiff with a serious crime, and injuring him in his trade, business, or profession. [26] The Court elaborated, stating that “Defendant’s accusations that plaintiff sexually assaulted her charged him with a serious crime, [27] and her statements that plaintiff sexually harassed her and attempted to coerce sexual favors from her in exchange for his assistance with construction work tend[ed] to injure him in his trade, business, or profession.” [28]  Thus, said the Court, plaintiff was not required to prove special damages. [29]  In that regard, noted the Court, “Plaintiff, as the resident manager and live-in superintendent of the building where defendant owned a condominium unit, explained that accusations of sexual assault and sexual harassment could ‘destroy’ his reputation, and he would ‘never be able to get another job in the field.’” [30] Regarding the application of the qualified privilege, the Court reaffirmed that the privilege attached to statements made to the police reporting a crime, [31] and to the members of the board of managers of the Building. [32] Notwithstanding, the Court held that “plaintiff sufficiently demonstrated that defendant published the statements accusing him of sexual assault and sexual harassment with common-law malice. Plaintiff established defendant’s ‘one and only cause for the publication’ of the defamatory statements was ‘spite or ill will.’” [33]  The Court explained that plaintiff “established that defendant’s statements were part of a pattern of retaliation intended to harm his reputation and cause his termination” and “proved [that] defendant widely disseminated the defamatory statements to the police, plaintiff’s employers, professional colleagues, and every resident of the building, after he called the police to enforce the court order barring her from altering her apartment without permission.” [34] Takeaway Couteller  underscores the principle that under New York law, defamation requires a false, unprivileged statement published to a third party, causing harm or qualifying as defamation per se. Defamation per se applies when statements accuse someone of a serious crime, harm their profession, allege a loathsome disease, or impute unchastity to a woman. Unlike ordinary defamation, special damages need not be proven. Privileges—absolute ( e.g. , judicial proceedings) and qualified ( e.g. , crime reports)—can shield a defendant from liability unless malice is shown. In Couteller , defendant was found to have falsely accused plaintiff of sexual assault and harassment, spreading the claims to the police, the board of managers, and residents. The Court found these statements to constitute defamation per se, as they charged a serious crime and damaged his profession. Malice defeated any privilege. As a result, plaintiff was awarded $230,000, plus interest and fees, and the First Department affirmed. ______________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. [1]   Circulation Assocs., Inc. v. State , 26 A.D.2d 33, 38 (1st Dept. 1966); Salvatore v. Kumar , 45 A.D.3d 560, 563 (2d Dept. 2007). [2]   Ava v. NYP Holdings, Inc. , 64 A.D.3d 407, 411 (1st Dept. 2009). [3]   Davis v. Boeheim , 24 N.Y.3d 262, 268 (2014). [4]   Dillon v. City of New York , 261 A.D.2d 34, 38 (1st Dept. 1999). [5]   Wolberg v. IAI N. Am., Inc. , 161 A.D.3d 468, 470 (1st Dept. 2018) (quoting Dillon , 261 A.D.2d at 38). [6]   Mann v. Abel , 10 N.Y.3d 271, 276 (2008) (internal quotation marks omitted). [7]   See Liberman v. Gelstein , 80 N.Y.2d 429 (1992); L.W.C. Agency, Inc. v. St. Paul Fire & Marine Ins. Co. , 125 A.D.2d 371 (2d Dept. 1986). Special damages are the quantifiable financial losses that a plaintiff has suffered due to the defendant’s actions. [8]   Carter v. Waks , 57 Misc. 3d 1208(A) (Sup. Ct., Queens County 2017) (citing Cammarata v. Cammarata , 61 A.D.3d 912, 915 (2d Dept. 2009)); see also Epifani v. Johnson , 65 A.D.3d 224 (2d Dept. 2009). [9]   Clemente v. Impastato , 274 A.D.2d 771 (3d Dept. 2000) (citation omitted). [10]   Liberman , 80 N.Y.2d at 435. [11]   Stega v. New York Downtown Hosp. , 31 N.Y.3d 661, 669 (2018). [12]   Id.  (quoting, Toker v. Pollak , 44 N.Y.2d 211, 219 (1978)). [13]   Stega , 31 N.Y.3d at 669; Rosenberg v. MetLife, Inc. , 8 N.Y.3d 359, 365 (2007); Toker , 44 N.Y.2d at 219. [14]   Stega , 31 N.Y.3d at 669-670 (quoting, Toker , 44 N.Y.2d at 219). [15]   Toker , 44 N.Y.2d at 219-220. [16]   Liberman , 80 N.Y.2d at 437. [17]   Stega,  at 670 (quoting, Liberman , 80 N.Y.2d at 437-438). [18]   Id. [19]   Id. [20]   Park Knoll Assoc. v. Schmidt , 59 N.Y.2d 205, 209 (1983). [21]   Id.  at 210. [22]   Wiener v. Weintraub , 22 N.Y.2d 330, 331 (1968) (quoting, Marsh v. Ellsworth , 50 N.Y. 309, 311 (1872)); see also Stega , 31 N.Y.3d at 669. [23]   Stega , 31 N.Y.3d at 670. [24]  On numerous occasions, this Blog has examined cases involving defamation, defamation per se, and the absolute or qualified privileges. Among the articles we have written are the following: Court Denies Motion to Dismiss Defamation Claim, Explaining the Difference Between an Expression of Fact and Opinion; Relying on Respondeat Superior Theory, Fourth Department Holds Complaint States A Cause of Action for Defamation Against Employer Based on Employee’s Facebook Posts; There is No Absolute Privilege to Defame Another in Court Papers; Pleading With Particularity: Defamation Causes of Action; and Defamation Per Se and Defamation by Implication: Meeting the Heightened Pleading Standard. [25]  Slip Op. at *1 (citing Taylor v. Brooke Towers LLC , 73 A.D.3d 535, 535 (1st Dept. 2010);  see also Dillon , 261 A.D.2d at 38)). [26]   Id. [27]   Id.  (citing Thomas H. v. Paul B. , 18 N.Y.3d 580, 584-585 (2012)). [28]   Id. (citing Herlihy v. Metropolitan Museum of Art , 214 A.D.2d 250, 261 (1st Dept. 1995)). [29]   Id.  (citing Liberman , 80 N.Y.2d at 435). [30]   Id. [31]   Id.  (citing Sagaille v. Carrega , 194 A.D.3d 92, 96 (1st Dept. 2021),  lv. denied , 37 N.Y.3d 909 (2021)). [32]   Id.  (citing Harpaz v. Dunn , 203 A.D.3d 601, 602 (1st Dept. 2022)). [33]   Id.  (quoting Liberman , 80 N.Y.2d at 439 (internal quotation marks omitted), and citing  Pezhman v. City of New York , 29 A.D.3d 164, 168-169 (1st Dept. 2006)). [34]   Id.

By: Jonathan H. Freiberger In a previous BLOG article, “ Real Property Owners and Contractors Should be Aware of the Trust Fund Provisions of New York’s Lien Law ,” we discussed Article 3-A of New York’s Lien Law, much of which is reiterated here. Article 3-A of New York’s Lien Law establishes a system of trusts to ensure that certain individuals or entities that contributed services, labor and/or materials to a construction project for the improvement of real property are paid for their efforts.  See, e.g., Aspro Mech. Contracting, Inc. v. Fleet Bank, N.A. , 1 N.Y.3d 324, 328 (2004); Chase Lincoln First Bank N.A. v. New York State Elec. & Gas Corp. , 182 A.D.2d 906 (3 rd  Dep’t 1992); Park East Const’n Corp. v. Uliano , 233 A.D.3d 888, 889 (2 nd  Dep’t 2024). The Lien Law generally recognizes two types of trusts.  Lien Law § 71 ;  see also Dick’s Concrete Co. Inc. v. K. Hovnanian at Monroe II, Inc. , 20 Misc.3d 1145(A) (Sup. Ct. Orange Co. 2008). The first is the Owner Trust, of which the owner is the trustee.  The assets of the Owner Trust “shall be held and applied to the cost of improvement.”  Lien Law §71(1).   Claimants under an Owner’s Trust include contractors, subcontractors, architects, engineers, surveyors, laborers and materialmen.  Lien Law §71(3)(a).   In general, the assets of an Owner Trust consist of funds received by an owner for the improvement of real property.  Most frequently, trust assets in this category consist of construction loan proceeds.  Lien Law § 70(5 ) . Second is the Contractor/Subcontractor Trust, of which the contractor or subcontractor is the trustee.  The assets of the Contractor/Subcontractor Trust must be used for the payment of certain obligations resulting from the improvement of real property. (Lien Law § 71(2).)  Most frequently, trust assets in this category consist of the payments received by the contractor from the owner (in the case of a contractor trust) or received by a subcontractor from a contractor (in the case of a subcontractor trust) pursuant to the subject construction contract. Lien Law § 70(5). Any funds that are deemed to be trust fund assets under the Lien Law can only be disbursed to appropriate trust fund beneficiaries pursuant to the trust fund provisions of the Lien Law.  DiMarco Constructors, LLC v. Top Capital of New York Brockport, LLC , 193 A.D.3d 1375, 1376 (4 th  Dep’t 2021) (citations omitted). A typical scenario illustrating the need for the protections afforded by the trust fund provisions of the Lien Law is where a contractor receives payment from an owner on a current project, but uses those funds to pay a subcontractor on a prior project.  Although this happens routinely, such payments are prohibited under the Lien Law and could result in the contractor’s failure to pay proper trust fund beneficiaries working on the current project.  The law is clear that the assets of a Lien Law trust fund can only be used for Lien Law purposes–namely the payment of the costs of improvement. Lien Law § 71.  Any other use of trust funds is deemed a “diversion of trust funds” pursuant to Lien Law § 72 .  See, e.g.,   Aspro Mech. , 1 N.Y.3d at 329. “Diversions” may result in civil and/or criminal penalties against a trustee responsible for the diversion. Lien Law § 77 ; Lien Law § 79-a (1) . A contractor that pays itself before paying all trust fund beneficiaries is likely to be deemed to have committed a trust fund diversion.  In this regard, pursuant to the Lien Law “… [e]very such trust shall commence at the time when any asset thereof comes into existence, whether or not there shall be at that time any beneficiary of the trust.”  (Lien Law § 70(3).)  This language makes plain that any money paid by an owner to the contractor must be held in trust for trust fund beneficiaries even if at the time of such payment, the contractor has not yet incurred any liability to any subcontractors on or materials suppliers to the project. However, under some circumstances an owner, as trustee, can use trust funds to reimburse itself to the extent that such reimbursement is for the “cost of improvements.” Fentron Architectural Metals Corp. v. Solow , 101 Misc2d 393, 396 (Sup. Ct. N.Y. Co. 1979); Lien Law § 2(5) . Under the Lien Law, while a trustee is not required to maintain separate bank accounts for each project and is entitled to commingle trust fund assets with its other funds, it must keep detailed books and records setting forth specific items relating to trust funds received and disbursed. Lien Law § 75 ;  Fentron , 101 Misc2d at 396. The failure of a trustee to maintain the detailed records required by § 75 of the Lien Law constitutes presumptive evidence that the trustee “has applied or consented to the application of trust funds actually received by him…for the payment of money for purposes other than a purpose of the trust as specified in [§71 of the Lien Law].” Lien Law § 75(4); see also Medco Plumbing, Inc. v. Sparrow Const. Corp. , 22 A.D.3d 647, 648 (2 nd  Dep’t 2005). L.C. Whitford Co., Inc. v. Babcock & Wilcox Solar Energy, Inc. , a case decided on December 18, 2025, by the Appellate Division, Third Department, found that settlement funds from the resolution of disputes between a general contractor and an owner were lien law trust funds. The defendant in L.C. Whitford  was a general contractor (“GC”) to owner with respect to “the construction of multiple solar photovoltaic electric power facilities” (the “Project”). The plaintiff was a subcontractor on the Project that was not fully paid by GC and, accordingly, filed liens against the Project. The Project resulted in numerous disputes between the GC and owner. The disputes were resolved through a settlement by which the owner agreed to pay the GC a sum of money and the GC agreed to indemnify the owner against subcontractor liens (which included plaintiff’s lien). The GC provided notice that it was going to use the proceeds of the settlement with the owner to “reimburse itself for the payment of the costs of the improvements that it advanced and paid to subcontractors, suppliers and laborers” on the Project. In response, the plaintiff/subcontractor commenced the action (under Lien Law § 77 ) to enforce the lien law trust “contending that [GC]'s proposal to reimburse itself would be an improper diversion of trust assets.” The motion court granted the motion of plaintiff/subcontractor for an injunction prohibiting the GC from disbursing the settlement funds. The Third Department affirmed on the GC’s appeal and stated: Article 3-A of the Lien Law impresses with a trust any funds paid or payable to a contractor under or in connection with a contract for an improvement of real property. Given this statutory definition, we readily conclude that the settlement funds at issue constitute trust funds under Lien Law article 3-A (see Lien Law § 70 [1], [6]). The Court of Appeals has repeatedly recognized that the primary purpose of Lien Law article 3-A is to ensure that those who have directly expended labor and materials to improve real property at the direction of the owner or a general contractor receive payment for the work actually performed. With respect to a contractor's trust, the parties entitled to a beneficial status are expressly enumerated in Lien Law § 71 (2) (a)-(f). Pursuant to Lien Law § 71 (2) (a), "[t]he trust assets of which a contractor is trustee shall be held and applied for enumerated expenditures arising out of the improvement of real property," including "payment of claims of subcontractors, architects, engineers, surveyors, laborers and materialmen" (Lien Law § 71 [2] [a] [emphasis added]). The language is mandatory and does not include the "cost[s] of improvement," which is a term specifically defined to address an owner's costs (Lien Law § 2 [5]; see Lien §§ 70 [5]; 71 [1]. [Some citations, internal quotation marks, brackets and ellipses omitted, emphasis in original.] The Court also noted that while an owner trustee may reimburse itself for certain “costs of improvement,” contractor trustees may not. In this regard, the Court stated: As noted above, [GC] informed plaintiff[] that it intended to reimburse itself for "the costs of the improvements." While a trustee owner may have authority to do so, the Lien Law accords no such authority for a contractor trustee. To the contrary, a contractor-trustee holds the trust assets in a fiduciary capacity akin to that of the trustee of an express trust and thus, does not have a sufficient beneficial interest in the moneys, due or to become due from the owner under the contract, to give him a property right in them, except insofar as there is a balance remaining after all subcontractors and other statutory beneficiaries have been paid. Consistent with these fiduciary obligations, the contractor is statutorily prohibited from applying trust assets to his personal debts to the detriment of valid trust claims. In short, [GC] has no authority to reimburse itself with the settlement funds for moneys advanced on the project and doing so would be a breach of its fiduciary duties as a trustee. As such, Supreme Court duly exercised its discretion by enjoining [GC] from utilizing the funds pending further court approval (see Lien Law § 77 [3] [a]). [Some citations and internal quotation marks omitted.] [1] Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. [1] It should be noted that there was a written dissent in which one Justice concurred.

By: Jonathan H. Freiberger Article 3-A of New York’s Lien Law establishes a system of trusts to ensure that certain individuals or entities that contributed services, labor and/or materials to a construction project for the improvement of real property are paid for their efforts.  This post is designed to generally familiarize owners and contractors with some of the trust fund provisions of the lien law. The Lien Law generally recognizes two types of trusts.  ( Lien Law § 71 .)  The first is the Owner Trust, of which the owner is the trustee.  The assets of the Owner Trust “shall be held and applied to the cost of improvement.”  (Lien Law §71(1).)   Claimants under an Owner’s Trust include contractors, subcontractors, architects, engineers, surveyors, laborers and materialmen.  (Lien Law §71(3)(a).)   In general, the assets of an Owner Trust consist of funds received by an owner for the improvement of real property.  Most frequently, trust assets in this category consist of construction loan proceeds.  ( Lien Law § 70(5) .) Second is the Contractor/Subcontractor Trust, of which the contractor or subcontractor is the trustee.  The assets of the Contractor/Subcontractor Trust must be used for the payment of certain obligations resulting from the improvement of real property such as: the claims of subcontractors, architects, engineers, surveyors, laborers and materialmen; payroll taxes; sales taxes; unemployment insurance; benefits and wage supplements; surety bond premiums and insurance premiums related to the project. (Lien Law § 71(2).)  Most frequently, trust assets in this category consist of the payments received by the contractor from the owner (in the case of a contractor trust) or received by a subcontractor from a contractor (in the case of a subcontractor trust) pursuant to the subject construction contract. (Lien Law § 70(5).) Any funds that are deemed to be trust fund assets under the Lien Law can only be disbursed to appropriate trust fund beneficiaries pursuant to the trust fund provisions of the Lien Law.  A typical scenario illustrating the need for the protections afforded by the trust fund provisions of the Lien Law is where a contractor receives payment from an owner on a present project but the contractor uses the funds to pay a subcontractor on a prior project.  Although this happens routinely, such payments are prohibited under the Lien Law and could result in the contractor’s failure to pay proper trust fund beneficiaries working on the current project.  An unpaid subcontractor can use the trust fund diversion as leverage against the diverting contractor.  The contractor likely diverted trust funds on the earlier project or else there would have been sufficient funds available to pay all trust fund beneficiaries on the prior project without resort to diversions on the current project. Under the Lien Law, a contractor that pays itself before paying all trust fund beneficiaries is likely to be deemed to have committed trust fund diversions.  In this regard, pursuant to the Lien Law “… very such trust shall commence at the time when any asset thereof comes into existence, whether or not there shall be at that time any beneficiary of the trust.”  (Lien Law § 70(3).)  This language makes plain that any money paid by an owner to the contractor must be held in trust for trust fund beneficiaries even if at the time of such payment, the contractor has not yet incurred any liability to any subcontractors on or materials suppliers to the project. Under the Lien Law, while a trustee is not required to maintain separate bank accounts for each project and is entitled to commingle trust fund assets with its other funds, it must keep detailed books and records setting forth specific items relating to trust funds received and disbursed. ( Lien Law §75 .) The law is clear that the assets of a Lien Law trust fund can only be used for Lien Law purposes--namely the payment of the costs of improvement. (Lien Law § 71.)  Any other use of trust funds is deemed a “diversion of trust funds” pursuant to Lien Law §72 .  “Diversions” may result in civil and/or criminal penalties against a trustee responsible for the diversion. The failure of a trustee to maintain the detailed records required by § 75 of the Lien Law constitutes presumptive evidence that the trustee “has applied or consented to the application of trust funds actually received by him…for the payment of money for purposes other than a purpose of the trust as specified in §71 of the lien law.” (Lien Law § 75(4).) Pursuant to Lien Law §79-a , trust fund diversions also implicate the penal law and could subject the responsible party to a criminal charge of larceny. Thus, the Lien Law provides, in pertinent part: 79-a Misappropriation of funds of trust 1. Any trustee of a trust arising under this article, and any officer, director or agent of such trustee, who applies or consents to the application of trust funds received by the trustee as money or an instrument for the payment of money for any purpose other than the trust purposes of that trust, as defined in section seventy-one, is guilty of larceny and punishable as provided in the penal law if (a)  such funds were received by the trustee as owner, as the term “owner” is used in article three-a of this chapter, and they were so applied prior to the payment of all trust claims as defined in such article three-a, arising at any time…. There is, however, an exception to the criminal penalties contemplated by the Lien Law in situations in which trust assets are used to repay advances made by, among others, a trustee if those advances were used for trust fund purposes. Thus, § 79-a(2) of the Lien Law provides: 2. Notwithstanding subdivision one of this section, if the application of trust funds for a purpose other than the trust purposes of the trust is a repayment to another person of advances made by such other person to the trustee or on his behalf as trustee and the advances so repaid were actually applied for the purposes of the trust as stated in section seventy-one, or if the trustee has made advances of his personal funds for trust purposes and the amount of trust funds applied for a purpose other than the trust purposes of the trust does not exceed the amount of advances of personal funds of the trustee actually applied for the purposes of the trust, such application or consent thereto shall be deemed justifiable and the trustee, or officer, director or agent of the trustee, shall not be deemed guilty of larceny by reason of such application or by reason of his consent thereto. There is, however, no similar exception to the civil penalties that may be imposed for trust fund diversions.  Thus, even in the absence of any improper motives on the part of a trustee and/or any of its officers, directors, agents and the like, the innocuous act of the repayment of advances used for trust purposes, could give rise to civil penalties under the lien law. Pursuant to Lien Law § 76 , a trust fund beneficiary is entitled to review the books and records required to be maintained by a trustee and/or to demand a verified statement as to the entries on said books and records so that a determination can be made as to whether trust fund “diversions” exist. Thus, §76 (4) of the Lien Law provides, in pertinent part: …after service of a request for a verified statement, the trustee shall serve upon the beneficiary named in the request a statement, subscribed by the trustee or an officer thereof and verified on his own knowledge, setting forth the entries with respect to the trust contained in the books or records kept by the trustee pursuant to [§ 75 of the Lien Law] and the names and addresses of the person or persons who, on behalf of or as officer, director or agent of the trustee, made or consented to the making of the payments shown in such statement. TAKEAWAY Any owner receiving construction loan proceeds and any contractor or subcontractor receiving payments from an owner or contractor, as the case may be, should be aware of the trust fund provisions of New York’s Lien Law.  Trustees should keep appropriate and statutorily compliant records so that allegations of trust fund diversions can easily be refuted.  Moreover, maintaining such records enables the trustee to avoid the presumption of a diversion imposed by Lien Law §75(4) for failing to maintain proper books and records as discussed above. Future articles will address each of these issues in more detail.

By:  Jeffrey M. Haber In today’s article, we examine Epstein v. Cantor , 2025 N.Y. Slip Op. 06989 (2d Dept. Dec. 17, 2025) ( Epstein I ), and Epstein v. Cantor , 2025 N.Y. Slip Op. 06990 (Dec. 17, 2025) ( Epstein II ) (collectively, Epstein ), related cases involving, among other things, New York’s partnership law. Epstein  centered on whether Cantor, Epstein & Mazzola, LLP (CEM) was a partnership and whether Epstein was a partner in the firm. Cantor argued that Epstein lacked partnership status, seeking dismissal of, inter alia, fiduciary-related claims. The Appellate Division, Second Department, held that a 1995 written agreement between Cantor and Epstein expressly formed a partnership and governed their relationship, confirming Epstein’s partner status. Consequently, Epstein’s claims for breach of fiduciary duty, violation of Partnership Law § 20(3), and an accounting against Cantor survived dismissal. In contrast, a 2013 agreement rendered Mazzola a W-2 employee with no equity interest, refuting allegations that he was a partner. Thus, the fiduciary claims against Mazzola and the related Boyd defendants were dismissed. Epstein v. Cantor Epstein  arose from the dissolution of a law firm. In 1995, plaintiff and defendant Robert I. Cantor (“Cantor”) entered into an agreement to form a partnership that would ultimately become Cantor, Epstein & Mazzola, LLP (“CEM”), upon the addition of defendant Bryan J. Mazzola (“Mazzola”). Pursuant to an agreement dated January 1, 2013, entered into by, among others, Epstein, Cantor, and Mazzola, as of that date, Mazzola became a W-2 salaried employee of CEM, with no equity interest in the firm. In 2015, Cantor informed Epstein, Mazzola, and Gary Ehrlich (“Ehrlich”), a senior attorney working at CEM at the time, that he had decided to leave CEM. This led to negotiations between Cantor, Epstein, Mazzola, and Ehrlich about the future of CEM and the terms of a potential buyout of Cantor’s interest. Mazzola and Ehrlich proposed to purchase the equity in the firm in return for a payout to Cantor and Epstein. Epstein allegedly rejected the offer, and thereafter, Mazzola and Ehrlich determined that they would leave CEM. In June 2016, letters purportedly from CEM were sent to certain clients stating that Mazzola, Ehrlich, and two other attorneys were leaving CEM to join a new firm and that CEM had no objection to those attorneys contacting the clients to solicit their continued representation of them. In 2019, Epstein, individually and as a partner of CEM, commenced the action against Cantor and defendant Robert I. Cantor, PLLC (hereinafter, together, the “Cantor defendants”), and Mazzola and defendants W. Todd Boyd, Boyd Richards Parker Colonelli, P.L., and Boyd Richards NY, LLC (collectively, the “Boyd defendants”), alleging, inter alia , that Cantor, without Epstein’s consent, formed his own firm and transferred almost all of CEM’s clients, which were based in large part upon the client base and relationships that Epstein had accumulated over many years, to the law firms of Boyd Richards Parker Colonelli, P.L. and Boyd Richards NY, LLC (hereinafter, together, the “Boyd firms”), with the help of Boyd and Mazzola. Epstein asserted causes of action alleging breach of contract against Cantor (first cause of action), breach of fiduciary duty against Cantor and Mazzola (second cause of action), violation of Partnership Law § 20(3) against Cantor and Mazzola (third cause of action), an accounting against Cantor (fourth cause of action), conversion against Cantor (fifth cause of action), violation of the faithless servant doctrine against Mazzola (sixth cause of action), unjust enrichment against Mazzola (seventh cause of action), corporate raiding against the Boyd defendants (eighth cause of action), aiding and abetting Cantor’s breach of fiduciary duty against the Boyd defendants (ninth cause of action), unfair competition against the Boyd firms (tenth cause of action), and tortious interference with contract against the Boyd defendants (eleventh cause of action). The Cantor defendants moved pursuant to CPLR 3211(a) to dismiss the second, third, and fourth causes of action, arguing, inter alia , that the CEM agreement demonstrated that CEM was not a partnership and Epstein was never a partner in CEM, and thus, there was no fiduciary relationship and Epstein was not owed fiduciary duties. The Boyd defendants moved pursuant to CPLR 3211(a) to dismiss the amended complaint for the same reasons, among others, as argued by the Cantor defendants. In an order dated December 11, 2020, the Supreme Court, among other things, granted the motions of the Cantor defendants and the Boyd defendants. Epstein appealed. Thereafter, plaintiff moved for leave to reargue and renew his opposition to defendants’ separate motions. In an order dated August 19, 2022, Supreme Court, among other things, denied the Cantor defendants’ motion pursuant to CPLR 3211(a) to dismiss the second, third, and fourth causes of action as against them and adhered to the determination granting the Boyd defendants’ motion pursuant to CPLR 3211(a) to dismiss the amended complaint insofar as against them. Supreme Court also denied Epstein’s motion for leave to renew his opposition to the Boyd defendants’ motion. Epstein appealed, and the Cantor defendants cross-appealed. The Appellate Division, Second Department, affirmed. “A partnership is an association of two or more persons to carry on as co-owners a business for profit.” [1] The governing law of partnerships in New York is the Partnership Law of 1919, which enacted into law the original Uniform Partnership Act. [2]  It is well established, however, that “[t]he Partnership Law’s provisions are, for the most part, default requirements that come into play in the absence of an agreement.” [3]  Thus, when there is an agreement “establishing a partnership, the partners can chart their own course.” [4]  Stated differently, “where the agreement clearly sets forth the terms between the partners, it is the agreement that governs.” [5]  “In the absence of prohibitory provisions of the statutes or of rules of the common law relating to partnerships, or considerations of public policy, the partners of either a general or limited partnership, as between themselves, may include in the partnership articles any agreement they wish concerning the sharing of profits and losses, priorities of distribution on winding up of the partnership affairs and other matters. If complete, as between the partners, the agreement so made controls.” [6]  However, “[w]hen there is no written partnership agreement between the parties, the court must determine whether a partnership in fact existed from the conduct, intention, and relationship between the parties.” [7]   Based upon the foregoing principles, the Court held that CEM was a partnership and that Epstein was a partner thereof. [8]  The Court noted that there was no dispute that there was a written agreement between Cantor and Epstein that was executed in 1995, “which provided that the agreement was entered into to ‘form the partnership’ that would become [CEM].” [9]  The Court observed that the “agreement also provided the terms of that partnership and that the agreement was the complete agreement of the parties.” [10]  “Thus,” concluded the Court, “pursuant to the plain language of the agreement between Cantor and Epstein, which ‘govern[ed]’ their relationship, CEM was a partnership and Epstein was a partner thereof.” [11]   “As such,” said the Court, “the agreement did not utterly refute Epstein’s factual allegations [under CPLR 3211(a)(1)] [12]  that he was a partner of CEM or conclusively establish a defense as a matter of law to the second and third causes of action, alleging breach of fiduciary duty and a violation of Partnership Law § 20(3), respectively, insofar as asserted against Cantor, and the fourth cause of action, for an accounting.” [13]  “Accordingly,” concluded the Court, “the Supreme Court, upon reargument, properly, in effect, denied the Cantor defendants’ motion pursuant to CPLR 3211(a) to dismiss the second, third, and fourth causes of action insofar as asserted against them.” [14] The Court also held that “Supreme Court properly granted the Boyd defendants’ motion pursuant to CPLR 3211(a) to dismiss the amended complaint” as against them. [15]  The Court found that the “Boyd defendants established their entitlement to dismissal of the second and third causes of action, alleging breach of fiduciary duty and a violation of Partnership Law § 20(3), respectively,” as against “Mazzola pursuant to CPLR 3211(a)(1).” [16] The Court noted that in support of the motion, “[t[he Boyd defendants submitted, inter alia, the agreement dated January 1, 2013, between, among others, Cantor, Epstein, and Mazzola, which rendered a 2007 partnership agreement between Cantor and Mazzola null and void and provided that Mazzola, as of January 1, 2013, was solely a W-2 salaried employee of CEM, with no equity interest in CEM.” [17]  “Thus,” said the Court, “the January 1, 2013 agreement utterly refuted Epstein’s allegations that Mazzola was a partner of CEM.” [18]  Accordingly, concluded the Court, “the Supreme Court properly granted dismissal of the second and third causes of action” “as asserted against Mazzola.” [19] The Court affirmed the dismissal of the claims asserted against the Boyd defendants for violation of the faithless servant doctrine and unjust enrichment against Mazzola, corporate raiding, aiding and abetting Cantor’s breach of fiduciary duty, and tortious interference with contract against the Boyd defendants, and unfair competition against the Boyd firms because the claims “either failed to plead the requisite elements for such causes of action or were based on bare allegations that were merely conclusory and lacked factual specificity, which rendered them insufficient to survive a motion to dismiss.” [20] Takeaway While New York’s Partnership Law provides certain default provisions where there is no partnership agreement or the agreement is silent, a partnership agreement that clearly sets forth the terms between the partners will govern the partnership and the partners’ relationship. Thus, as in Epstein , courts will enforce the terms of a partnership agreement over default statutory provisions when the agreement is clear and unambiguous. Epstein also highlights the principle that partners owe duties of loyalty and care. Actions like diverting clients or assets without consent can trigger claims for breach of fiduciary duty and violations of Partnership Law § 20(3). Section 20(3) of the Partnership Law outlines specific actions a partner  cannot  take without the other partners’ authorization, preventing them from binding the partnership to major decisions that would stop the ordinary business, such as assigning all property for creditors, selling goodwill, confessing judgments, or submitting claims to arbitration, protecting the partnership from unilateral, business-ending moves.  ___________________________ Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. This article is for informational purposes and is not intended to be and should not be taken as legal advice. [1] Partnership Law § 10(1). [2] Congel v. Malfitano , 31 N.Y.3d 272, 287 (2018). [3] Ederer v. Gursky , 9 N.Y.3d 514, 526 (2007). [4] Congel , 31 N.Y.3d at 287-288. [5] Zohar v. LaRock , 185 A.D.3d 987, 991 (2d Dept. 2020);  see Congel , 31 N.Y.3d at 279. [6] Lanier v. Bowdoin , 282 N.Y. 32, 38 (1939);  see Congel , 31 N.Y.3d at 287-288. [7] Saibou v. Alidu , 187 A.D.3d 810, 811(2d Dept. 2020); see   Delidimitropoulos v. Karantinidis , 186 A.D.3d 1489, 1490 (2d Dept. 2020). [8] Cantor II , at 2- 3. [9] Id.  at *2. [10] Id. [11] Id.  at 2- 3 (citations omitted). [12] Under CPLR § 3211(a)(1), dismissal is warranted where “the documentary evidence utterly refutes plaintiff’s factual allegations, conclusively establishing a defense as a matter of law.” Goshen v. Mut. Life Ins. Co. of New York , 98 N.Y.2d 314, 326 (2002); Leon v. Martinez , 84 N.Y.2d 83, 88 (1994). “To constitute documentary evidence, the evidence must be ‘unambiguous, authentic, and undeniable” ( Phillips v. Taco Bell Corp. , 152 A.D.3d 806, 807 (2d Dept. 2017) (quoting Granada Condo. III Ass’n v. Palomino , 78 A.D.3d 996, 997 (2d Dept. 2010)), “such as judicial records and documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable.” Id. See also Yan Ping Xu v. Van Zwienen , 212 A.D.3d 872, 874 (2d Dept. 2023). [13] Cantor II  at *3 (citations omitted [14] Id. [15] Id. [16] Id. [17] Id. [18] Id. [19] Id.  (citing Cassese v. SVJ Joralemon LLC , 168 A.D.3d 667, 669 (2d Dept. 2019)). [20] Id.  (citation omitted).