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June 2013 Archives

Prejudgment Interest - Is Justice Delayed Really Justice Denied?

It can take years for a case to proceed from a complaint to a judgment. In Massachusetts, however, the injustice of a delayed judgment is remedied somewhat by an award of pre and post-judgment interest on money damages. This blog focuses on prejudgment interest, which is intended to compensate plaintiffs wrongfully deprived of the use of money to make them whole for that loss. Unless a claim is brought pursuant to a specific statute that provides a different interest rate, prejudgment interest accrues at the high rate of 12% under Massachusetts law. 

The Price of Agreeing to Arbitration

In the recent decision of Oxford Health Plans v. Sutter, the U.S. Supreme Court ruled unanimously that even a "grave error" of an arbitrator is not enough to vacate an award in most cases. Oxford Health Plans had gone to federal court seeking to vacate an arbitrator's decision that John Sutter, MD, could bring a class action on behalf of himself and other New Jersey physicians alleging that Oxford failed to make full and prompt payment for services provided to members of Oxford's network.

275 Washington St. Corp. v. Hudson River Int'l., LLC: Collecting Indemnification Damages in Commercial Leases

In a recent case, 275 Washington St. Corp. v. Hudson River Int'l., LLC, 465 Mass. 16 (2013), the Supreme Judicial Court ruled that a commercial landlord cannot recover post-termination damages under an indemnification clause until the original lease term expires.  In 275 Washington St. Corp., the tenant vacated the premises and ceased paying rent 18 months into a 12-year lease.  The lease included an indemnification clause that provided, "Tenant shall indemnify Landlord against all loss of rent and other payments which Landlord may incur by reason of such termination during the remainder of the term."  After the tenant vacated, the landlord terminated the lease, and, relying on the indemnification clause, demanded that the tenant pay the landlord's lost rent over the entire 12-year lease term, in addition to the unpaid rent that accrued prior to termination of the lease.  The landlord's total potential damages with interest exceeded $1,000,000.

Tax Dependency Exemptions

In a case decided last month, the Court held that a Judge of the Massachusetts Probate and Family Court has the authority to order the allocation of tax dependency exemptions for divorced parents.  When parents divorce, only one parent is permitted to claim the tax dependency exemption for parties' minor child(ren) on his/her tax returns.  For the 2013 tax year, the tax dependency exemption is $3,900 for each dependent (subject to phase out based upon certain income levels).  Disputes between divorcing parties can arise regarding tax dependency exemptions because being able to claim the tax dependency exemption for the minor child(ren) may provide one party with real tax savings. 

Broker Beware

According to the Supreme Judicial Court, a real estate broker must "exercise reasonable care" not only in making representations about a property, but also in determining whether to rely on a seller's information about that property. See DeWolfe v. Hingham Centre, Ltd., 464 Mass. 795, 796 (2013). After roughly four years of looking, the Plaintiff in DeWolfe, a professional hair stylist, found a property he liked, thanks to newspaper and MLS listings by the sellers' broker. Id. at 796-98. The broker advertised the property as zoned with a "Business B" designation, which would permit "hairdresser" as a use on the scale Plaintiff anticipated. Id. Shortly after the conveyance, however, Plaintiff learned the property in fact was zoned "Residential B," a designation permitting perhaps a small, home-based hairdressing business but not the six-station hair salon Plaintiff had planned to establish. Id. at 798.

The Foreign Corrupt Practices Act: An Overview

In many parts of the world, cash payments to government officials are not only routine, but required to do business.  While some foreign governments may turn a blind eye to such practices, the United States does not.  Under the Foreign Corrupt Practices Act (FCPA), both U.S. and non-U.S. persons and entities may incur civil and criminal liability, even for actions that take place outside U.S. territory.  To ensure compliance with the law, anyone doing business overseas should be familiar with the provisions of FCPA.

The Role of Bifurcation in an Arbitral Hearing and its Real World Applications

In a major decision, an arbitral tribunal in the International Chamber of Commerce ("ICC") has issued a ruling on the liability of YPF, the state-controlled energy company of Argentina, for its role in the suspension of natural gas exports to Brazil.  The claim that YPF unlawfully rescinded its contracts was brought forward by AES Uruguaiana and by Transportadora de Gas del Mercosur in 2009. They are reportedly seeking $1.6 billion dollars in compensation. YPF is controlled by the Argentinian government following its nationalization last year - another dispute that is currently also in arbitration.

Foreign Corrupt Practices Act: An Overview

In many parts of the world, cash payments to government officials are not only routine, but required to do business. While some foreign governments may turn a blind eye to such practices, the United States does not. Under the Foreign Corrupt Practices Act (FCPA), both U.S. and non-U.S. persons and entities may incur civil and criminal liability, even for actions that take place outside U.S. territory. To ensure compliance with the law, anyone doing business overseas should be familiar with the provisions of FCPA.

Bank's Duty to Non-Customers Limited to Actual Knowledge of Misappropriation

In a recent case, Bernkopf Goodman LLP v. Herbert, 2013 WL 803521 (March 21, 2013), Massachusetts Federal District Judge Zobel considered the scope of a bank's duty of care to non-customers in cases of alleged misappropriation by an account holder. The plaintiff, Bernkopf Goodman LLP (the "Firm"), alleged that its payroll company, Checkmaster Payroll Service ("Checkmaster"), had misappropriated funds that were supposed to be used to pay the Firm's taxes. In addition to naming Checkmaster as a defendant, the Firm sued the two banks that Checkmaster used to transfer the Firm's funds that were supposed to be paid to the I.R.S.  The Firm claimed that the banks were negligent in failing to prevent the alleged misappropriation.

AFCC Annual Conference Divorce Resources

I recently attended the 50th Anniversary Conference of the Association of Family and Conciliation Courts (AFCC).  AFCC was founded in 1963, and now consists of more than 4,600 members, representing 49 states and 27 countries worldwide.  Members include judges, court employees, private practice lawyers, mental health and dispute resolution professionals, policy advocates, policymakers, researchers, community agencies, academics and students.  The association's work focuses on a wide range of topics of interest to a family law attorney such as mediation, custody evaluation, parent education, and parenting coordination.  For the past 50 years, AFCC has been the leading interdisciplinary organization addressing the challenges of separation and divorce, and, in particular, the impact on children and families.  I returned from this year's annual conference in Los Angeles with a wealth of information.

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