In re: Thelen LLP

The Court of Appeals answers two certified questions that arose in two separate law firm bankruptcy cases, where the firms dissolved their partnerships. In Thelen, the partners included an “Unfinished Business Waiver” or “Jewel Waiver” in their partnership agreement. This waiver arose from Jewel v. Boxer, 156 Cal. App. 3d 171 (Cal. Ct. App. 1984) which held that absent an agreement to the contrary, profits derived from a law firm’s unfinished business are owed to the former partners in proportion to their partnership interests. Thelen’s bankruptcy estate attempted to recover the value of Thelen’s unfinished business for the benefit of the firm’s creditors. The estate argued that pending hourly matters were among a law firm’s assets.

In Coudert, the firm’s bankruptcy estate argued that the partners’ new firms were liable to Coudert for any profits derived from completing the client matters that they brought from Coudert to their new firms.

The court was asked by the District Court to answer two unresolved questions of New York law regarding the applicability and scope of the “unfinished business doctrine.”  First, is a client matter that is billed on an hourly basis the property of a law firm, such that, upon dissolution and in related bankruptcy proceedings, the law firm is entitled to the profit earned on such matters as the “unfinished business” of the firm? Second, if the first question is answered affirmatively, how does New York law define a “client matter” for purposes of the unfinished business doctrine and what proportion of the profit derived from an ongoing hourly matter may the new law firm retain?

The Court answered the first certified question in the negative and found it unnecessary to answer the second certified question.

The Court of Appeals held that law firms cannot have a property interest in future hourly legal fees because they are ‘too contingent’ in nature and too speculative to create a present or future property interest given the client’s right to hire and fire counsel. The dissolved law firm would only be entitled to the value of the case at the date of dissolution, with interest.

The Court discusses several public policy considerations for the ruling including encouraging client choice and attorney mobility. First, treating a dissolved firm’s pending hourly fee matters as partnership property would allow former partners of dissolved firms to profit from work they do not perform, at the expense of a former partner and his new firm. This creates an “unjust windfall” for the dissolved law firm. Additionally, it would encourage partners to leave their firms before dissolution, so they can keep the fees earned from client matters. Moreover, it would make it difficult for former partners to find new jobs if they must remit the profits from their work for existing clients to their old firms. Clients might also worry that their hourly fee matters are not getting enough attention if the law firm is prohibited from profiting from its work on them.  For those reasons the court held that no law firm has a property interest in future legal fees, and therefore those fees are not property under the unfinished business doctrine.

20 N.E.3d 264 (N.Y. 2014)

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Spoleta Construction, LLC v. Aspen Ins. UK Ltd.

This case on appeal concerns the notice provision of an insurance policy covering a third party contracted employee. The plaintiff in this case, Spoleta Construction, LLC, contracted defendant Hub-Langie Paving, Inc., to complete paving work on a construction job. Plaintiff was named as an additional insured of defendant’s policy. Defendant’s employee Shane VanDerwall (“VanDerwall”) was injured while working on the contracted job for plaintiff in October of 2008. VanDerwall commenced a negligence action against plaintiff and others following the incident. Plaintiff did not receive notice of the accident until December 2009, in a letter from VanDerwall’s attorney. In January 2010, plaintiff’s liability carrier sent a letter to defendant notifying it of VanDerwall’s claim, requesting that defendant put its own insurance carrier on notice. Plaintiff’s counsel then demanded that defendant defend and indemnify it in the underlying action. Defendant disclaimed coverage based on untimely notice.

Thereafter, plaintiff commenced a declaratory judgment action seeking a declaration that defendant provide insurance coverage to plaintiff in VanDerwall’s claim. Defendant moved to dismiss the complaint and the Supreme Court, Monroe County granted the motion. The Supreme Court Appellate Division, Fourth Department reversed the judgment and reinstated the complaint against defendant.

The court looked to the language of the insurance policy and noted that unambiguous provisions must be given their plain and ordinary meaning. Furthermore, in the face of ambiguity, the court noted that it must be construed in favor of the insured and against the insurer. In terms of notice, the court stated that notice requirements will be construed in favor of the insured with substantial compliance being sufficient.

The notice provision of defendant’s insurance policy detailed that the insurer has to be notified “as soon as practicable.” The court noted notice should include: how, when and where the accident happened; names and addresses of the injured and witnesses; and the nature and location of injury or damage that occurred. The court held that the December 2009 letter was a notice of an occurrence that could give rise to a claim, but not a claim under the policy. The court rationalized that the December 2009 letter was not a claim because it did not make any demand for payment nor advise that legal action was forthcoming. The court further held that the January 2010 letter constituted notice as soon as practicable to defendant, and that plaintiff was not required to provide notice so long as notice was given. Therefore, the court determined that the Supreme Court erred in dismissing plaintiff’s claim as a matter of law.

The dissent objected on the grounds that plaintiff failed to provide timely notice of an occurrence to defendant. The dissent sought to modify the judgment by denying part of defendant’s motion seeking to dismiss the declaratory judgment cause, reinstating that cause of action.  Further, the dissent would grant judgment to defendant by declaring that defendant had no duty to plaintiff. The dissent disagreed that plaintiff’s January 2010 letter to defendant constituted notice of an occurrence under the terms of the policy, reasoning the letter did not indicate that plaintiff was seeking coverage directly from defendant as an additional insured on the policy.

991 N.Y.S.2d 183 (N.Y. App. Div. 2014)

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Bish v. Odell Farms P’ship

This appeal addresses the interpretation of NY Labor Law § 240(1) and NY Labor Law § 241(6). The plaintiff, Robert Bish, was a cement truck driver who was injured following a slip and fall off of an affixed ladder to the cement truck he was operating while on the defendant, Odell Farms’ property. Plaintiff commenced a personal injury action against defendant in the Supreme Court of Chautauqua County. Defendant moved for summary judgment, which was granted in part, but denied with respect to NY Labor Law § 240(1) and NY Labor Law § 241(6). Defendant appealed the denial of its summary judgment motion, and this court reversed the lower court’s decision, concluding that the summary judgment motion should have been granted in its entirety.

Plaintiff’s employer contracted with defendant to deliver cement to its property for purposes of constructing a bunk silo. After the cement truck was unloaded, plaintiff drove the truck to a nearby ditch on Defendant’s property in order to wash out the truck, which is a routine procedure. While washing the truck, Plaintiff was standing on a ladder affixed to the truck, and stepped on a wet rung of the ladder, falling off and injuring himself.

The language of NY Labor Law § 240(1) is to be construed liberally in order to protect workers (Wicks v. Trigen-Syracuse Energy Corp., 877 N.Y.S.2d. 791 (4th Dep’t. 2009), but it “must not be strained to accomplish what the Legislature did not intend” (Blake v. Neighborhood Hous. Servs. Of N.Y. City, 1 N.Y. 3d 280, 292 (2003)). Here, the court the court held that plaintiff was not engaged in a type of activity that the legislature intended to impose liability for under NY Labor Law § 240(1). The routine washing of a cement truck is not an “erection, demolition, repairing, altering, painting, cleaning, or pointing” of a “building or structure” within the meaning of NY Labor Law § 240(1). Furthermore, the court rejected the argument that because Plaintiff operated the machinery of the cement truck to assist the pouring of the cement as part of construction of the bunk silo, that he was engaged in the “construction” of a “structure or building” within the meaning of NY Labor Law § 240(1).

With regard to NY Labor Law § 241(6), the court held that it was inapplicable because plaintiff was not engaged in “construction work” within the meaning of the statute when he fell off the ladder. Plaintiff was merely washing his truck as a routine procedure.  For those reasons the court held that Defendant’s summary judgment motion should have been granted in its entirety.

989 N.Y.S.2d. 719 (4th Dep’t. 2014)

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People v. Dallas

In a non-jury trial, the defendant was convicted of predatory sexual assault against a child, two counts of assault in the first degree, two counts of assault in the first degree as a sexually motivated felony, and endangering the welfare of a child. The underlying facts involved defendant forcibly anally sodomizing a nine-month-old infant. Thereafter, in the presence of a witness, he expressed indifference over the infant’s obvious medical needs by failing to seek medical attention. An appeal of the judgment followed with a series of legal contentions from defendant.

The Fourth Department held that repeated statements, indicating that defendant wanted to leave a custodial interrogation with police, were not the functional equivalent of a request for an attorney. Only those statements made after an unequivocal request for counsel can be suppressed. Despite his limited intellect, defendant did unequivocally ask for an attorney later in the interrogation, negating his contention that he did not understand his rights. The police terminated the interrogation thereafter. He also met the constitutional requirements for waiving a jury trial in court and in writing, establishing that he did so knowingly, voluntarily, and intelligently. The trial court did not err in admitting defendant’s statements or accepting the waiver of his rights.

Defendant also averred that he was denied effective assistance of counsel. Viewing the defense counsel’s representation in totality, the court held that defendant failed to show a required lack of an explanation for his counsel’s actions and omissions. His contention ultimately had no merit.

The trial court properly admitted the physical DNA evidence used against defendant at trial. Although the police did not advise him that he could refuse a swab, that fact alone did not automatically refute consent otherwise voluntarily given. Moreover, the DNA in the rape kit that matched defendant’s sample had sufficient reassurances from the police of a proper chain of custody. It was admissible based solely on that reassurance because any allegations of gaps in the chain only went to the rape kit’s probative value at trial.

Defendant successfully argued that the two counts of assault in the first degree were “inclusory” according to CPL 300.30(4). The two counts were lesser offenses that were already included in the two counts of assault in the first degree as a sexually motivated felony. Defendant could not have committed the greater offense of a sexually motivated assault without concurrently committing assault. The Fourth Department reversed the two underlying assault charges because defendant had also been found guilty of the greater offense.

The greater offense of a sexually motivated assault requires a showing that the defendant had a depraved indifference to human life. Defendant argued that this element was not supported by legally sufficient evidence.  However, the brutal facts of the case, combined with Dallas’ impassive response to the injuries he inflicted on the victim after the commission of the crime, constituted depravity in the court’s eyes. The prosecution also satisfied the recklessness element because defendant knew the extent of the injuries to the victim and failed to seek medical attention or consult with the people in his vicinity. The court finally concluded that his sentence was not unduly harsh or severe.

989 N.Y.S.2d 206 (4th Dept. 2014)

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People v. Mulligan

This appeal addresses several matters following the criminal conviction upon a jury verdict of Defendant, Edwin L. Mulligan. Defendant was convicted of attempted second degree murder, first degree assault, two counts of criminal possession of a weapon in the second degree, criminal possession of a weapon in the third degree and endangering the welfare of a child. During the trial, the court admitted into evidence a 911 call that took place only minutes after the shooting. On the call, the 911 operator asked the witness who shot the victim and the witness responded, “I guess her boyfriend.” The witness then asked the victim to identify the shooter and the victim identified defendant. The witness repeated what the victim said to the 911 operator. Defendant argued that the trial court erred in admitting this evidence because the victim’s statement was not an excited utterance and because the witness’ identification was not a present sense impression.

The court held that the statement made by the victim was an excited utterance, even though it was a response to an inquiry. After looking at the circumstances in the case (the victim made the statement after being shot four times in front of her young child, within minutes of the incident and she indicated to paramedics that she did not want to die), the appellate court agreed with the trial court that the victim spoke while under the stress of the event and thus it qualified as an excited utterance. However, the court agreed with defendant that the witness’ statement identifying defendant as the shooter should not have been considered a present sense impression because the witness did not see the shooting and only confirmed the shooter’s identity after asking the victim. The court held that this witness’ statement bolstered the victim’s identification, but that it was harmless error in light of the overwhelming evidence of defendant’s guilt and the probability that the jury would have convicted him regardless of the error.

Defendant contended that testimony of a police officer during trial also bolstered the victim’s identification. However, the appellate court held this to be without merit because the officer’s testimony provided a narrative of the events leading up to defendant’s arrest and even if it was error, it was harmless in light of the strength of the victim’s identification. Defendant alleged prosecutorial misconduct, which the appellate court also held to be without merit. Defendant contended that during cross examination of defendant, the prosecutor denied him the right to remain silent by asking him about his failure to call the police. The Court held that the cross-examination focused on defendant’s conduct and showed inconsistency in his defense and therefore defendant’s claim was without merit.  The court rejected defendant’s claim of ineffective assistance of counsel for failing to completely preserve a prosecutorial misconduct issue, noting that counsel need not make a motion or argument that has little chance of success. The appellate court rejected defendant’s arguments on legal sufficiency and weight of the evidence.

Lastly, the appellate court rejected defendant’s argument that the trial court failed to make rulings on his omnibus motion seeking suppression of evidence found pursuant to a search warrant.  The appellate court held that defendant never sought a ruling on these issues or raised them during the trial and therefore, his argument was without merit.

988 N.Y.S.2d 354 (4th Dept. 2014)

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Federal Rule of Criminal Procedure 12(b)(3)

Effective December 1, 2014

The former Federal Rule of Criminal Procedure 12(b)(3) stated that a party must make the following motions before trial: a motion alleging defect in instituting the prosecution, a motion alleging defect in the indictment or information, a motion to suppress, a Rule 14 motion to sever charges or defendants, and a Rule 16 motion for discovery. Fed. R. Crim. P. 12(b)(3) (amended December 1, 2014). Motions alleging defect in the indictment or information could be made at any time while the case was pending in order to invoke the court’s jurisdiction or state an offense. Id. 

The Advisory Committee’s amendment to Rule 12(b)(3), now clarifies that the five categories of motions set out in the former rule 12(b)(3), must be raised before trial if the issue can be decided without a trial “on the merits” and if the basis for the motion is readily available. The new language also provides specific examples of motions for a defect in instituting the prosecution and a defect in the indictment or information. Motions claiming a defect in instituting the prosecution, include improper venue, preindictment delay, a violation of the constitutional right to a speedy trial, selective or vindictive prosecution, and an error in the grand-jury proceeding or preliminary hearing. Defects in the indictment or information includes joining two or more offenses in the same count, charging the same offense in more than one count, lack of specificity, improper joinder, and failure to state an offense. The Committee only made stylistic changes to the other three categories of suppression of evidence, Rule 14 severance of charges or defendants, and Rule 16 discovery motions.

The Committee indicated the “then reasonably available” language in the amendment was intended to ensure a claim that could not have been raised on time by a party would not be subject to the strict limitation on review in 12(c)(3). The old “trial on the general issue” language was deemed too archaic, but the meaning remains the same with “on the merits.” Additionally, the lists of motions under “a defect in instituting the prosecution” and “errors in indictment or information” are not meant to be exclusive; neither are they meant to supersede statutes that implement a time to make specific motions.  Rule 12(b)(3)(B) has also been amended to prohibit a court from hearing claims about errors in the indictment or information at any time while the case is pending, unless the claim is that the defect fails to invoke the court’s jurisdiction or state an offense. Prior to the Committee’s amendment, this particular charging error was considered fatal when raised. Further, the error was excluded from the general requirement that charging deficiencies be raised prior to trial. In United States v. Cotton, the Court determined that jurisdiction did not have the same meaning as it did in 1887, and concluded that the Court’s constitutional and statutory power to hear a case can never be waived or forfeited.  535 U.S. 625 (2002). Therefore, defects in an indictment could not deprive a Court of its power to hear a particular case.


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Puchalski v. Depew Union Free School Dist.

The petitioner, Robert Puchalski, was an administrator for the respondent, Depew Union Free School District (“District”) and the Board of Education of Depew Union Free School District, for over seventeen years, and served as an elementary school principal since 2003. On February 28, 2012, Petitioner was served by Respondent with twenty-one charges of “misconduct, immoral character and/or conduct unbecoming a principal.”

Petitioner requested a hearing pursuant to Education Law section 3020-a, that was held and concluded on October 23, 2012. The Hearing Officer (HO) issued a decision on January 15, 2013 imposing a penalty of termination, and emailed the decision to the attorneys of the parties and the State Education Department (SED). On January 22, 2013 the SED mailed the decision to the parties, and Petitioner received it the following day.

On February 1, 2013, Petitioner filed a petition seeking an order vacating the decision of the HO pursuant to CPLR 7511. On February 5, 2013, Petitioner’s process server delivered the papers to a payroll clerk employed by the District despite being told that she was only responsible for payroll services, and that the District’s administrative offices were at a different location. In response, Respondents filed a pre-trial motion to dismiss the petition asserting that it was untimely and that there was improper service of process. The Supreme Court, Erie County, entered judgment against Petitioner, upholding Respondents’ motion to dismiss the petition holding that it was time-barred. Petitioner appealed and the Appellate Division, Fourth Department, held that the petition was timely, but affirmed the Supreme Court ruling on the alternative ground that Petitioner did not properly serve Respondents.

Respondents argued that the 10 day appeal deadline from a HO decision in Education Law section 3020-a, began to run when the HO e-mailed his final decision to Petitioner. However the Appellate determined that such a ruling would render the statute requirement that a HO notify the Commissioner of Education who in turn notifies the affected employee superfluous. Therefore the court held that the time to appeal began to run when Petitioner received the decision by mail from the SED.

Additionally, according to CPLR 311(a)(7), personal service upon a school district must be made to a school officer as defined in the education law. Education Law section 2(13) states that a school officer includes a clerk of any school district. Here, the court did not recognize the payroll clerk as a “clerk” within the definition of section 2(13), because Education Law section 2130, which was enacted at the same time. defined a clerk as a “treasurer and collector in union free school district” and further stipulates that an individual is to be appointed as clerk of the board of education of a district. Accordingly, the court held that the payroll clerk was not authorized to accept service of process, and affirmed the Supreme Court’s judgment to grant the respondents’ motion to dismiss.

989 N.Y.S.2d 739 (4th Dep’t. 2014)

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