Tuesday, December 22, 2009

Personal Injury Attorney - Construction Accident Liability Clarified By Court of Appeals In Runner v. New York Stock Exchange

The Court of Appeals recently issued key a Labor Law 240(1) decision clarifying the meaning of the statute.  In Runner v. New York Stock Exchange, the plaintiff injured his hands when he was asked to lower a large reel down a staircase using a make-shift hoist.  Rather than loading the reel onto an actual hoist or pulley, a rope was tied around it, which was strung over a wooden rail, and the plaintiff was asked to hold one end of the rope to act as a counterweight.  The matter went to trial in a Federal District Court, went to Second Circuit, and the Second Circuit certified the legal issue to the New York State Court of Appeals.

Defendants argued that, for Labor Law 240(1) to be applicable, "gravity must operate directly upon either the plaintiff or upon an object falling." The Court of Appeals responded, however, that ""the single decisive question is whether plaintiff’s injuries were the direct consequence of a failure to provide adequate protection against a risk arising from a physically significant elevation differential."   Labor Law 240(1) was applicable because "a pulley or hoist should have been used."

The defense bar constantly tries to limit the scope of this stutute.  It is a broad statute, covering gravity-related risks, and requires owners and contractors to provide safety devices to guard against that risk  The Court of Appeals did not express any new law, or new interpretion, but, rather merely once again rejected an attempt to create a bright-line rule where none was necessary.  Although the "de minimus height differential" argument is sometimes used as a manner of expressing that a particular circumstance did not present a gravity-related risk, at no point have New York's Courts expressed any sort of minimum height differential.  In fact, "falling object" cases have been upheld where the fall was, essentially, horizontal.

Over at the New York Civil Law Blog,  Matt Lerner points out that the Court focused on the nature of the object being hoisted or secured. The nature of the object is not a new consideration -- notably, in cases such as Outar v. City of New York, the Court has previously commented on objects being the type of object that requires securing -- but it is an under-appreciated factor that the Court makes plain is very relevant to the Labor Law 240(1) inquiry.

Eric Turkewitz at the New York Personal Injury Law Blog notes that this decision is part of a trend away from defense oriented decisions. A lot of it has to do with which cases the Court of Appeals chooses to hear, but there has been a trend.  Looking at the leading Court of Appeals decisions over the last five years, six of eight -- RunnerQuattrocchi(2008), Sanatass (2008), Broggy (2005), Outar (2005), and Stejskal (2004) -- have been Plaintiff friendly; in the five years prior to that, however, only two of five were found in the plaintiff's favor.    

Sunday, December 20, 2009

Personal Injury - The December 2009 Blizzard

One of the things that makes being a lawyer interesting is that you need to learn a wide variety of things.  If applicable to your case, you need to learn medicine, engineering, and -- meteorology.

We just had our first blizzard of this Winter, so this is my snow-related post.  Cases involving slip and falls on snow and ice require developing a theory as to why a third-party is responsible for the  person who slipped's injuries.  You could end up, a summer or two from now, trying to explain to a mid-July jury that snow starting late-afternoon on Saturday December 19th, fell lightly for a while, then took a break after about an inch, picked up again as it got dark, and by Sunday afternoon there was 26" on the ground in Suffolk out on Long Island, and 11" in the City.

The theory could be that a driver didn't take extra care on an icy road; or that someone failed to shovel or plow a public sidewalk; or shoveled but didn't salt, leaving ice behind; or - if temperatures rise above freezing, as they are supposed to - didn't salt after a partial thaw to prevent black ice from forming from the re-freeze.

So, there's the legal angle, but talking about injuries is depressing.

Snow is fantastic.  It looks cool, it's fun to play with. For a little while, you can pretend you are out on a glacier (glassy-er) with Bear Gryllis; on Hoth or some othe Sci Fi Ice Moon; or foraging with primitive man during the ice age.  You can do something romantic with your wife, make a fire and smores, go sleigh riding, have hot-cocoa, or take your dog out to play.  The blizzard coincided with the US airing of the newest Doctor Who special, "Waters of Mars." And, there's going to be snow on the ground for Christmas!

For a brief video describing my services as a Suffolk County Slip and Fall or Car Accident Attorney, click this link.


* How to Protect Your Legal Rights If You Slip and Fall On Snow and Ice
* Slip and Falls on Snow and Ice
* Should I Hire An Attorney?


* Long Island Legal News, "Slip/Trip and Fall Appellate Division Decisions." 
* Huffington Post, "2009 Blizzard As Seen From Space." 
* Slaw, "The Law of Winter."
* NY Times, "Commuters Still Feeling Effects of Snow."  


Saturday, December 19, 2009

Personal Injury - The Workers Compensation Lien, In A Deficiency Scenario, Unfairly Usurps Personal Injury Recoveries

Worker's compensation is a great idea.  In it's modern form, it is a mandated insurance program whereby people who are injured at work, regardless of fault, can have their medical bills paid and recover for lost wages. In exchange for this protection, workers cannot sue their employers.  In the U.S., these laws originated in the early twentieth century, and by 1948 every state had a worker's compensation scheme.

In cases where there is a third-party at fault for the worker's injury, and the injured worker brings a personal injury suit, New York law gives the worker's compensation insurance carrier a right to recover from the personal injury proceeds the amount it paid or is obligated to pay.  When this happens, the worker's compensation lien is reduced by a proportionate share of the litigation cost (i.e., attorneys fees and expenses).  This issue regularly arises in construction accident cases, and frequently occurs in other types of cases as well.

In some cases, where the worker receives full compensation, and is not permanently disabled from work, the lien is fair and prevents double-recovery for lost wages and medical expenses. The same fairness, however, would be accomplished by allowing a collateral source set-off for worker's compensation payments.

The more problematic case arises where issues of comparative fault, questionable liability, or limited insurance prevent full recovery, or where the injured person has a permanent disability and will be receiving permanent worker's compensation benefits.  In those cases, the worker's compensation lien can create a terrible inequity.  When the worker recovers less than the lien amount (after reduction for the full litigation cost), the compensation carrier has a right to take the worker's entire share of the recovery.  Where the worker's compensation carrier is paying continuing benefits, the compensation carrier has a right to its full lien (minus a proportionate share of litigation costs), and can also take a credit against future benefits (i.e. go on a "holiday") in the amount of the worker's recovery from the at-fault party. (See Burns v. Varialle; Sheer v. State Ins. Fund). Essentially, it is possible for the worker to go through an entire lawsuit, perhaps appearing for depositions or even trial, and then receive nothing other than a lump-sum advance on worker's compensation benefits they would have received anyway.

Medical insurers used to be able to do something similar, asserting a subrogation lien against personal injury recoveries for benefits they had paid, but New York recently passed a law rendering such liens void. (Coverage Counsel; NYPILBCent. NY Injury Blog). 

The reasoning behind this new law, that the insurer received premiums in exchange for its payout obligation and it is unfair for the insurance company to benefit at the expense of the injured party, is equally applicable to worker's compensation insurers.  Indeed, in a medical insurance context, the collateral source rule (desribed above) applies to prevent double recovery.  The new law, however, does not apply to worker's compensation insurers (whose lien is protected by a seperate statute).

Accordingly, I submit that the State Legislature should consider an amendment to the Worker's Comp Law similar to the recent law affecting medical insurers.  The collateral source set-off approach still avoids double recovery, but is preferable for plaintiffs because it accomodates pain and suffering compensation in a disputed case notwithstanding a large reimbursed for economic losses.

Tuesday, December 1, 2009

Harlan Ellison Star Trek Lawsuit

Many Sci Fi blogs have reported that acclaimed Sci Fi author Harlan Ellison recently stated that he would like to write the sequel to J.J. Abrams' Star Trek reboot.  (See ScreenRant).  The comment may have been half-sincere, half tongue-in-cheek, but who knows.

Ellison has an interesting history with Star Trek.  In March, 2009, Ellison sued Paramount for failing to pay him royalties for an episode of the original series that he wrote.  The case settled on November 17, 2009.  Now, less than two weeks later, he is saying that he'd like to write the next movie (apparently indicating that Roddenberry had approached him a long time ago with the idea of writing a movie, and he already has some ideas).

(Read More at Sci Fi Scholar).

Thursday, November 12, 2009

Another Big Victory In The Fight Against Illegal Overdraft Fees

Hat-tip to the CL&P blog, the Federal Reserve has finally approved a rule curbing abusive overdraft fees.  Starting July 1, 2010, banks will no longer be allowed to charge overdraft fees for ATM or one-time debit/credit transactions.  You can read the whole rule, with commentary, here, or the cliff-notes version here.


* US Supreme Court Signals Shift In Federal Pre-Emption

* Bank of America Settles NSF Fee Class-Action

* June 27, 2008, "Week In Review," (the Federal Reserve is now considering a rule to curb abusive overdraft fees by banks). 

* May 7, 2008, "Debit Cards and Overdraft Protection: The US Allows Banks To Steal 10 Billion Dollars Per Year From The Poor."

* August 31, 2007, "The UK Takes Steps to Curb Illegal Overdraft Fees, But US Efforts Have Not Been So Well Received." 

Monday, November 9, 2009

Construction Injury Trial On The One- Or Two- Family Dwelling Issue

I just finished a trial in Queens. It was a construction accident case, and the issue was whether a property consisted of a one- or two-family dwelling.

Under New York's construction site safety laws, specifically Labor Law 240(1) and 241(6), owners and general contractors are jointly responsible for certain types of construction accidents. This rule does not apply, however, to owners of one- or two-family dwellings who do not direct or control the work.

In this case, my client had fallen through an unprotected floor opening and was severely injured. The general contractor did not have proper insurance, and had gone out of business (leaving no assets to go after). The only viable defendants were the property owners, a retired couple.

The owners had torn down a one-family ranch and were building two two-story houses on the lot. They had not yet received a certificate of occupancy, but the plans and permits listed the structures as two one-family houses. Each house was initially supposed to have five bedrooms, but the plans were later changed (after the complaint was served) so that each house had three bedrooms. One was supposed to have two full and two half baths; the other was supposed to have one full and three half baths.

In those houses, the owners claimed that they would reside in one; their oldest son (42 years old, who paid approximately half of the construction costs) would become the owner of other and live there with his wife and two kids; and the two other adult sons would rent rooms from either their parents or older brother. There was no set "rent," but the brothers (in their 30's, both recently laid off) would pay what they could afford. My client was injured in the house that the owners claimed they intended to occupy.

We suspected that the owners either planned to sell the property for a profit, or have additional tenants, but they flatly denied it during both their depositions and at trial.

As part of the project, the parents established a home owners association creating various easements over the lots after they are formally divided. The home-owners association by-laws contemplated tenants on the property, sale of the property, and possibly building a third house or buying another adjascent house in the future.

This case raised an unsettled issue of New York law: was this purported family compound a one- or two-family dwelling?

There are several cases from the New York Court Of Appeals addressing the one- or two-family dwelling exception. Under these cases, the issue depends on the "site and purpose of the work." Stejskal v SimonsKhela v. Neiger). Where the construction project involves multiple structures with "arguably unifying features," the intended occupancy of the structures can be combined. (Mandelos v. Karavasidis). The one- or two-family dwelling exception is an affirmative defense, and the defendant has the burden of proof.  (Van Amerogen v Donnini).

In addition to intended occupancy, there was also the issue of commercial use. The homeowner's exemption applies where the project is "undertaken solely in connection with... residential use, even if the construction "may have fortuitously affected another area of the property that was used for commercial activities." (Cannon v. Putnam). The exception does not apply, however, if the one- or two-family dwelling is used "solely and exclusively" for a commercial purpose (such as preparation for rental or sale). A property can be consider "solely and exclusively" commercial even if it is also the owner's primary residence. (Lombardi v. Stout; Van Amerogen). The Court of Appeals has not announced a rule for situations where the distinction between commercial and residential use is a matter of degree.

Although it was a thorny issue, the trial seemed to be going in my favor. The property owners were hostile during cross-examination, and were caught making several misrepresentations. For example, the husband had claimed during his deposition that all three of his sons were single and lived at home; at trial we heard that the oldest son had been married for ten years and lived on hid own. The wife authenticated blueprints on direct, laying a well-rehearsed foundation; on cross, however, she admitted that she had only seen them once several years ago and had no idea what she was looking at. She also equivocated about whether the basement was divided into seperate rooms, and where the younger sons were going to live.

As the trial continued, the defendants moved off from their nuisance-value offer. After significant discussion (and my firm's managing partner coming in to close the deal), we agreed to a high-low settlement: agreeing not to go after the defendants' individual property if we won in excess of the insurance policy, and guaranteeing our client a not-insignificant amount if we lost. As part of the high-low, both sides waived their right to appeal.

Prior to closing arguments, both sides moved for a directed verdict. In addition to the Court of Appeals cases above and others, I relied on a recent case from the Third Department, Nudi v. Schmidt, which found that renting to an adult child can be considered a commercial purpose.  Defendants relied largely on Baez v. Cow Bay Construction, a 2003 Second Department case finding that the homeowner's exception applied where a family had torn down their old house, built two one-family homes for the family to live in, and put the properties in a corporate name but insisted that they intended to live there.

Before closing arguments, both sides moved for directed verdicts, and the court dismissed the case as a matter of law. We knew it was a possibility, but it was extremely disappointing. I felt we had a solid argument that: first, the anticipated occupants -- two couples and two grown men -- counted as more than two families; and, second, the occupants, although related, had a business arrangement that made the construction predominantly commercial.

Was the judge right?


- Construction Accident Attorney[Violations Of The Industrial Code]
- Construction Accident Attorney [Falling Workers And Objects]
- One- Or Two- Family Dwelling Exception
- Out Of Possession Landlords Are Still Responsible For Construction Accidents
- Court Of Appeals Clarifies That Construction Safety Laws Apply To "Cleaning" Activities Even When Not Related To Construction

Monday, October 12, 2009

Saturday, September 5, 2009

Should I file a Lawsuit? Should I Contact A Personal Injury Lawyer?

Deciding whether to file a lawsuit is a decision that must be based upon each person's individual facts and circumstances.  Making an informed decision, however, is difficult without understanding what is involved in the legal process.  In this post, I have tried to outline some of the factors to be considered in deciding whether to pursue a lawsuit.  

If you are considering filing a lawsuit, and are looking for a personal injury lawyer, particularly a construction accident lawyer, please feel free to contact me.   I personally handle matters throughout lower New York State, especially on Long Island (both Nassau and Suffolk County) and in New York City, and can also help you find a quality lawyer in other regions.  



The main motivation for filing a civil suit is to receive financial compensation.  Even though money cannot replace what you've lost, it can make your life more comfortable.  Money received from a lawsuit can pay for education, medical expenses and devices, food, shelter, and transportation. It cannot make everything better, but it can alleviate financial problems that may make things worse.  It is a not a lottery, or a get-rich quick scheme.  When someone receives money in a lawsuit, it is because they are entitled by law to receive compensation for an injury they suffered that was someone else's fault.  Usually, the compensation is provided by an insurance company, which is in the business of issuing policies to compensate injury victims and makes a profit doing so.

A lawsuit gives you an opportunity to tell your story.  For some people, their case may become precedent, and can become an important part of a little niche of history.  My grandfather, for example, died of asbestos poisoning. Kreppein v. Celotex later became a leading case in products liability litigation, and there is a sense of pride in seeing my family name in case law.

Lawsuits can also promote positive change.  The threat of litigation is a substantial motivating factor in many institutional safety practices.  Contractors, property owners, manufacturers, and pharmaceutical companies, among others, are kept from cutting corners due partly to the threat of liability.


A lawsuit is not a substitute for, or a means towards, closure.  The legal process will not make you feel better.  It is not a vindication of your struggles, there will be no clapping or cheering, it will not put things right in the world, and it will not make people care.

In fact, going through a lawsuit will likely involve an invasion of your privacy.  It will make you re-hash painful memories in a way that will not be comforting.  And, for years, it will keep you from closing a painful chapter in your life.

In the end, you will not say "it was all worth it." The legal process may have been worth the struggle, but whatever amount of money you receive will not make up for the injuries you suffer.  By it's nature, it can't. If you don't really have a serious injury, you can't fake it. And if you wake up in pain, you are missing a limb, or someone you love is dead, your bank account balance will not make up for it.


In the end, no-one but you can decide whether you should pursue a lawsuit.  It is rarely a situation where you contact a lawyer and then, without much further involvement, collect payment for your injuries.  It is also rare, however, that -- when everything is over -- someone with a legitimate claim regrets having filed a suit.  If you are searching for a construction accident attorney or a general personal injury attorney, please feel free to contact me to discuss your claim using either by e-mail or the form below.  I would be happy to provide you with an objective, individualized evaluation.  

Saturday, August 29, 2009

Personal Injury - Construction Accident Attorney [Injuries From Violations Of The NYS Industrial Code]

Labor Law 241(6) reads:

All areas in which construction, excavation or demolition work is being performed shall be so constructed, shored, equipped, guarded, arranged, operated and conducted as to provide reasonable and adequate protection and safety to the persons employed therein or lawfully frequenting such places. The commissioner may make rules to carry into effect the provisions of this subdivision, and the owners and contractors and their agents for such work, except owners of one and two-family dwellings who contract for but do not direct or control the work, shall comply therewith.
This law makes owners and general contractors responsible for ensuring that the New York State Industrial Code is not violated at their work sites, and allows injured construction workers to file a lawsuit to recover damages for pain and suffering if they suffer an injury caused by a violation of the Industrial Code.

Under Labor Law 241(6), the owner and general contractor can be held liable regardless of whether the owner or general contractor directed or controlled the work. Cunha v City of New York, N.Y.3d 504 (2009). Not every provision of the industrial code is specific enough to give rise to liability, however, and the worker's own negligence will be considered. Misicki v Caradonna, 12 N.Y.3d 511 (2009). The owner or general contractor may also argue that the injuries were caused by something other than a violation of the industrial code, and there may be other parties (such as the equipment manufacturer) who are responsible. Pavlou v. City of New York, 8 N.Y.3d 961 (2007).

The Industrial Code contains numerous detailed provisions regarding specific hazards common to construction sites.  Below is a list of some of the more common ones.

Tools and Equipment.
  • Hand tools must be kept in good repair, free from burs or cracks.
  • power-driven machines, such as saws and belts, must have proper guards to protect workers from cutting and tearing injuries to their hands and feet.  A common example of a violation of this rule is circular or bench saws where the safety guard has been broken or removed.  
  • Jacks, forklifts, and other lifting devices must be well maintained and properly rated for the load they are required to carry 
  • Safety goggles must be provided to workers exposed to risk of eye injury, and a hard hat or helmet must be provided to workers exposed to risks from falling or flying objects. 
  • Stairways must be safely constructed and have guard rails that meet particular specifications.
  • Proper lighting must be provided
  • Walls, concrete, and steel work must have shoring or bracing during construction or demolotion
  • Flooring must be stable and secure
Fire, Electricity, and Chemicals:
  • Electricity must be turned off or, it if cannot be turned off, proper protection must be taken.
  • Compressed gas containers, lines, and hoses must be properly stored and kept safe
  • Explosives must be handled with care, and in compliance with particular regulations
  • Proper protective clothing must be provided if workers are exposed to toxic or corrosive chemicals, and respirators must be provided to workers exposed to toxic fumes. 
Protection Against Gravity-Related Risks:
  • Workers exposed to a risk of falling must be provided with safety harnesses, lifelines, nets, scaffolding, roof brackets, and other safety devices where appropriate. 
  • Materials stored at a height must be properly secured to prevent falling;
  • Shafts must have proper guards and warnings.  
If you are looking for a construction accident lawyer, feel free to contact me
Related Posts:

Saturday, August 8, 2009

Nassau County Supreme Court

Nassau County Supreme Court
100 Supreme Court Drive
Mineola, New York 11501


Nassau and Queens were a single county until the turn of the Twentieth Century, but split when New York City consolidated in 1898. Nassau officially became its own County on January 1, 1899, and contains three towns -- Oyster Bay, North Hempstead, and Hempstead -- as well as two cities and numerous incorporated villages.  

The cornerstone of the original Nassau County Courthouse was laid by Theodore Roosevelt, a resident of Oyster Bay, in July 1900.  After extensive renovations, this first courthouse was renamed the Theodore Roosevelt Executive and Legislative Building in 2008, and is now the home of the County legislature.

The Roosevelt Courthouse was the home of the Nassau County Supreme Court from 1900 through 1940. In 1940, a larger building was erected, and held both the Supreme Court and the County Court (which hears cases under $25,000). In 1965, the Supreme Court received a new building, its current home, located at 100 Supreme Court drive.


Saturday, July 18, 2009

Two Years Blogging

My birthday just passed, as did the two year anniversary of my blog. Hence, this post will be a reflection piece. I didn't want to do a post just about my blog, and I didn't want to do just another "top 10" blog list, so I'm going to do a little bit of both.


As far as personal injury, I have done a few posts on areas that I find particularly interesting, such as construction accident or dram shop litigation. I try to make my posts informative, and responsive to both lawyers and lay readers. There are a few great personal injury blogs out there. Eric Turkewitz' New York Personal Injury Law Blog was one of the first blogs I started reading. He comments on a wide range of topics, from war stories to political commentary, and often about legal ethics. Recently, Eric's blog gained some notoriety for his coverage of Supreme Court Nominee Sonya Sotomayer. John Hochfelder's New York Injury Cases Blog provides coverage of settlements and verdicts, and is incredibly well polished (and often well illustrated). His posts are the type of thing you read and think "I may want to look that up again in the future."

Another blog of note, although not strictly discussing personal injury, is Andrew Lavoot Bluestone's NY Legal Malpractice Blog, which is both helpful for practitioners in this area, and as a tool for learning from others' mistakes. I have represented both plaintiffs and defendants in legal malpractice cases, and they can raise some interesting legal issues. Andrew focuses strictly on legal malpractice, and reviews decisions within this niche. His blog drawn a lot of attention on a few occasions due to litigation; one lawyer sued him because he didn't appreciate that his malpractice was publicized, and another sued for statutory damages claiming that faxes of Andrew's newsletter were unsolicited advertisements (the Court of Appeals found that it was not).


One of my major interests is consumer protection. It is an incredibly broad field, which lends itself to focusing on sub-issues rather than global ones. It is important from a social standpoint, and I believe it will become an increasingly important part of the legal profession in the future. The Consumer Law and Policy Blog is a long-running consumer blog, which reports on consumer issues from an academic and political perspective. The Consumerist (which was founded by the writers of pop-culture blog Gawker, and later purchased by Consumer Reports), in contrast, takes a more practical approach, and is geared towards warning everyday consumers about scams and how to deal with them.


One of my strongest talents is writing, and some of my most well received posts have been on appellate litigation and motion practice. There are a few quality blogs that focus on writing. Notably, Wayne Scheiss's Legal Writing Blog and Raymond Ward's The (New) Legal Writer are both excellent reads for people who love to write. I lump writing with procedure (who knows why), and another blog of honorable mention is the CPLR Blog, which provides useful New York procedural tid-bits.


The internet is the best place for legal news. Main stream print publications put much of their best content online through blogs such as Law.com (which owns the National Law Journal and the New York Law Journal) and Wall Street Journal Law Blog, which offer up-to-the-minute breaking news and commentary. Much of the best legal news, however, is from bloggers who are independent from any mainstream print media. Above the Law bills itself as a legal tabloid, offering both news and gossip; The Volokh Conspiracy is filled with original (often opinionated) content; and Nicole Black's Sui Generis focuses specifically on the New York legal community.

There are not many blogs, however, that specifically focus on Long Island. Long Island Business News provides some coverage of legal news, and Newsday covers many of stories of interest, but neither specifically focus on the law. I have been following the Long Island Bankruptcy Blog lately, but the blog is focused on bankruptcy in general rather than specifically Long Island.

For the last few months, I have done a regular post on legal news around Long Island. After tinkering with the format for a while, my posts spawned a new blog: Long Island Legal News. There isn't much content yet, but I plan to update regularly.


Lastly, some of my posts have been more for light-hearted entertainment. I did a post on Harvey Birdman: Attorney-at-Law, and one on Superman. There are a few blogs that take this lighter-side approach, such as Legal Antics (by Nicole Black, who also runs Sui Generis), SayWhat! a humor blog by US District Judge Jerry Buchmeyer, which provides amusing excerpts from trial and deposition testimony. Gerry Spence's Blog is not necessarily meant to be humorous or lighthearted, but it is filled with thought-provokingn musings and commentary.

So, that's my post. A description of my blog, and links to bloggers that comments on similar topics. It is by far not an exhaustive list of blogs, and if anyone has any suggestions of blogs that should be included feel free to leave a comment.

Thursday, July 2, 2009

Cuomo v. Clearinghouse Assoc. May Signal A Shift In The Fight Against Unfair Bank Fees

Recent developments show that there is hope in ongoing fight to protect consumers against unfair bank fees. As I have discussed in prior posts (here and here), the National Bank Act, which was enacted after the Civil War to foster a uniform national banking system, allows national banks to pick a "home state" whose laws it will follow regarding interest rates and fees. As you would expect, banks chose the states with the friendliest laws, which allow them to get away with whatever they want, and State usury laws gradually eroded.

There was a fair amount of litigation in the 1980's and 1990's, as nineteenth century banking laws were ill-equiped to cope with twentieth century technologies such as credit cards and other electronic transactions. In 2003, the Supreme Court excplicitly held that the National Bank Act pre-empts all state usury laws, crushing challenges to unfair credit card and banking fees. Beneficial Nat. Bank v. Anderson, 539 U.S. 1 (2003). (See also Furletti, Debate Over The National Bank Act)

At the turn of the century, with state regulators out of the way and debit card use rising dramatically (particularly with small transactions), banks began earning substantial sums using a fuzzy a accounting method, resequencing daily transactions from highest to lowest in order to charge multiple overdraft fees against small transactions rather than one fee against a larger transaction. but In 2005, banks earned $10 Billion from this practice; in 2007 that number had grown to 17.5 Billion; this year, with bank accounts dwindling due to one of the worst recessions in US History, recent estimates show that banks will earn approximately 38.5 Billion in such fees. (Responsible Lending.org; Consumerist; Washington Post).

Last year, a settlement was reached in a suit against the nation's largest bank, Bank of America, in an action in California State Court under California's consumer protection laws. I recommended the drop-in-the-bucket $35 Million settlement because, the way the law stood at the time, the bank had a very strong argument for having the suit dismissed outright.

Now, there is some hope that the legal landscape may be shifting. On June 29, 2009, the US Supreme Court issued its decision in Cuomo v. Clearinghouse Association, wherein it permitted an investigation of bank lending practices by state attorneys general to determine whether the banks had violated state fair lending laws.

Throughout the sub-prime lending crisis, the states were reluctant to act because, the way the National Bank Act had been interpreted, they were powerless to regulate national banks. (See Law Prof. Blog). After the sub-prime bubble burst, however, many states, including New York, launched investigations into the banks lending practices. As expected, the banks refused to cooperate and argued that the National Bank Act allows them to be regulated 0nly by the Federal Government's Office of the Comptroller of Currency (with whom they have a cushy relationship) and their home state.

Initially, the Courts sided with the banks. The US District Court for the Southern District of New York entered an injunction, halting the States' investigations, and the Second Circuit affirmed. The Supreme Court, however, in a surprise decision, overturned the lower court and found that the States had the power to enforce their fair lending laws against national banks.

The reason this is great for consumers is that, by overturning the injunction, the Supreme Court limited the pre-emptive effect of the National Banking Act. By allowing state attorney generals to pursue a fair lending law investigation against the banks, it opens the door (slightly) for state suits based upon unfair and deceptive practices and similar consumer protection statutes.

Unfair overdraft fees are also one of the issues that will be addressed by the Obama administration's new Consumer Protection Agency. Some economists have suggested that "micromanagement" and increased federal involvement is not the answer, and I tend to agree. (Becker-Posner Blog). Indeed, the problem was already made substantially worse by the Federal Government's prior attempts at nationalization through the National Banking Act. Changing the name of the Office of the Comptroller of Currency will not fix the fact that it has not done its job for decades; and even if there is improvement, a new administration could easily wipe out that improvement.

In my opinion, one of the lessons to be learned from the mortgage crisis is that all-encompasing Federal control can lead to all-encompasing failures. The Obama Administration's consumer protection agency is a great idea, but it can only achieve sustainable change if pre-emption is reduced in these areas. State law usury and deceptive practice claims should be permitted to co-exist with federal regulation.

Sunday, June 14, 2009

Long Island Legal News -- May 2009

In this issue:

Long Island Legal News is a monthly newsletter chronicling legal and law-related happenings in Nassau and Suffolk County.

Appellate Division

Krulik v County of Suffolk, 2009 NY Slip Op 03700 (2d Dept. 2009)(summary judgment denied where third-parties were injured in motor vehicle accident with police officer because there was a question of fact as to whether the officer had lights and sirens on at the time and "The manner in which a police officer operates his or her vehicle in responding to an emergency may form the basis of civil liability to an injured third party if the officer acts in reckless disregard for the safety of others. The "reckless disregard" standard requires proof that the officer intentionally committed an act of an unreasonable character in disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow").

Tutrani v County of Suffolk, 2009 NY Slip Op 03716 (2d Dept. 2009)(jury verdict against police officer assigning 50% liability upheld where officer abruptly stopped on the LIE, without lights and sirens, causing the car behind him to abruptly stop, avoiding the police vehicle but causing it to be struck from behind by another car)

Appellate Term

Jeudy v. High Point Furniture Corp., 23 Misc.3d 142(A) (App. Term., 2d Dept., 2009)(small claims judgment in favor of retailer upheld where woman sought refund for broken furnature and the court accepted the retailer's explanation that they had repaired the items but the plaintiff refused to return their phone calls to arrange delivery of the repaired funiture).

Teachers Federal Credit Union v. Jones, 23 Misc.3d 139(A) (App. Term. 2d Dept)(Reversing an Order Suffolk County's 4th District Court that denied a debtor's motion to vacate default; holding that the debtor had stated a reasonable excuse for failing to appear at a court conference because he claimed he never received notice of the adjourn date, and that he had a meritorious defense in that he claimed to qualify for the Credit Disability Insurance offered by the defaulted credit card)

Other Courts

Casale v. Metropolitan Transp. Authority (MTA), 23 Misc.3d 1121(A) (New York County Sup. Ct., 2009)(Upholding special master's finding that the termination of an MTA employee was proper on the grounds of dishonesty, where employee was a high-level internal investigator who received a tip from a co-worker that the head of the LIRR was receiving improper gifts from a contractor in exchange for sweetheart deals (the gifts later proved to be true, the sweatheart deals didn't), but refused to identify the co-worker, calling him a confidential informant).

People v. Giffin, 23 Misc.3d 1124(A), 2009 WL 1313341 (Nassau County Dist. Ct. 2009)(charges for public lewdness upheld where male patron of Effin Grovin Bar in Bellmore, New York, harrassed and then urinated on a female patron)

Donovan v. Rocklyn Fuel Oil Corp., 23 Misc.3d 1130(A)(Nassau County Sup. Ct., 2009)(where, in preparation for closing a home sale, the oil refilling company spilled oil and caused severe damage to the property, summary judgment was granted to plaintiff on strict liability for the cleanup costs and diminuation of value (including the stigma of having been declared an environmental hazard); the court further held that loss of rental income was not recoverable because the home was supposed to have been sold, not rented; and loss of "investment potential" for the profit of the sale could not be recovered under under either strict liability or negligence, but may be recover under breach of contract to the extent the oil company knew that the refill was being conducted in anticipated of a closing.)

Savino v. The Hartford, 2009 N.Y. Slip. Op. 30823 (Sup. Ct. Suffolk Co. Mar. 25, 2009)(The Suffolk County Supreme Court allowed an action for pain and suffering to proceed against an insurance company based upon violation of the duty of good faith and fair dealing in denying benefits to an insured. (Coverage by: No Fault Paradise; Edwards Angle Palmer & Dodge).

Trentacoste v Riverhead Central School District, 2009 NY Slip Op 31112(U) (Sup. Ct. Suffolk County, 2009)(summary judgment granted to defendant on primary assumption of risk grounds where plaitniff was injured when tackled during football practice).

That's not funny. A happauge woman has been criminally charged with aggrevated harassment for posting an ad on craigslist sending callers seeking causal sex to a neighbor's house because the neighbor's 9 year old daughter and her daughter were in a fight. (1010 Wins); (Newsday).

Pollution is bad. The owner of a titanium factory in Port Jeff Station has been sentenced to a year in prison for improper storage of toxic waste. (Newsday).

The Wal-Mart Trampling is still making news. Wal-Mart reaches deal with DA over trampling, paying $1.5 Million to Nassau County Social Services and agreeing to crowd control measures; victim's dad is angry, says the measures did not go far enough, and is continuing with suit. (Daily News); (WSJ).

Where are the honest politicians? The Hamptons' town supervisor and budget officer have been accused of corruption. (Hamptons Independent); (East Hampton Star). On the other end of the island, Nassau County Legislator Roger Corbin's lawsuit againt Newsday and News 12 to restrain them from continuing to publish photos of him in handcuffs while being arrested for tax fraud has been thrown out. (Newsday).

Lawsuits can do some good. Pedestrian trip and fall lawsuit leads to renovation of hazardous sidewalk in Sunnyside, Queens. (Daily News).

Drunk driving. Fatal DWI case goes to trial in Riverhead. (7 Online). Nassau County's Wall of Shame for DWI convictions had its one year anniversary. (Newsday)

Hope in the construction industry: build it and they will come. New York construction industry still in steep decline, but may be turning around. Nationwide, the construction industry unemployment rate hit 21% last quarter; New York has faired slightly better, and has several large projects on the horizon. (GlobeSt.com). The courts have approved the use of eminent domain to sieze land near the Brooklyn Navy Yards, and a new stadium for the Nets will be built in Brooklyn. (Sportsnet); (NY Times). With construction projects, however, come construction accidents. (Telegraph UK).

Commuters Unite! East Enders are angry about the MTA tax, calling it taxation without representation. (Sag Harbor Express). I looked up some info about the MTA, and found a 2007 Independent Accountant's Review (here) and 2008 Audit Report (here), page 16 shows the operating expenses but, surprisingly, there is no mention of the giant pit where all the money goes. A tarrif applied by the Port Authority (which is not the MTA) to the Bridgeport / Port Jefferson Ferry has been ruled constitutional only so long as the proceeds to directly to benefit the passengers of the ferry. (Conn. Post).

Entertainment. Lindsay Lohan's father, Michael Lohan, of Suffolk County, has been arrested again. (Miami Herald). Billy Joel has been sued by his former drummer for allegedly withholding royalties. (Insider). Former boxer Floyd Mayweather has been sued by an entertainment management company, he is accused of stealing artists from them for his rap label. (Contact Music).

Medical malpractice. The chair of neurosurgury at North Shore University Hospital has stepped down amid a series of malpractice lawsuits, the hospital's other top neurosurgeon has been called back from suspension (for having a patient prepped for brain surgury and never showing up to perform the surgery) to pick up the slack. (Daily News).In probably-unrelated news, Long Island based Physician's Reciprocal Insurer, which specializes in medical malpractice policies, is insolvent. (Insurance Journal).

An apple for the judge? A Long Island teacher was awarded $5 million in a discrimination suit. (ABC). Two Huntington teachers have sued their school district, claiming disciplinary charges have been filed against them in retaliation for having told students about cutbacks in the gifted program. (Newsday).

Not in my backyard! Amid news that the sex offender shelters are full beyond capacity, and are now occupying space in Riverhead hotels, locals have begun protestingt Suffolk County's policy of housing all of its homeless sex offenders in the Riverhead area. (Riverhead News Review).

The "invisible hand" continues to give us the finger. An Oyster Bay strip mall has sued several banks, including Wells Fargo and LaSalle Bank, accusing them of predatory lending, claiming that representatives talked them into a terrible refinancing package that has made their previously stable debt unmanageable. (Business Insider). Entrepeneur magazine sued in connection with Agape Scandal; the suit claims that the magazine did not conduct due diligence in publishing information about Agape. (Folio Magazine). With the big banks in turmoil, however, The "Hard Money," i.e. small sub-prime, lending business is booming. (Long Island Business News).

Blawg Review # 213 at Cyberlaw Central is a tribute to the Science Fiction classic "A Hitchhiker's Guide to the Galaxy."

At the NY Personal Injury Law Blog, Eric Turkewitz ponders, and waxes poetic, about dead animals in food (here).

From the Long Island Bankruptcy Blog, AG Andrew Cuomo will be investigating debt settlement companies.