Litigation: the Boxing Match That Never Ends

Litigation can often be a boxing match that never ends. Imagine a scenario where you are a professional boxer in a boxing match. You start the match feeling very confident. You throw a straight punch followed by a hook, and then you pull a haymaker and a mixture of other punches that have other names of an unknown origin. To your surprise, however, your opponent pulls a Bolo punch, and you find yourself on the floor. Ready to throw in the towel, you do so, and the referee ends the match.

That’s the end of it, right? Well, no. Your opponent continues to hammer you, relentlessly. Refusing to acknowledge your surrender.  What would you say about such a scenario? What if you were to be told that such scenarios often occur in the world of litigation?

In the event you get sued, you have two options: litigate the case or settle it. You may decide to litigate, but in this scenario you settle, at which point, you enter into a settlement agreement.

You do your part and abide by the terms of the settlement. To your astonishment, however, your opponent does not discontinue the case, despite your compliance and the settlement agreement. How would that make you feel? That is exactly what transpired in the case of Martin v Harrington, 2016 NY Slip Op 04027 [2d Dept May 25, 2016].

In the Martin case, neighbors had a property line dispute. Martin claimed that due to improvements made by Harrington on his property, which included an asphalt driveway, Harrington encroached and trespassed on her property.

The neighbors fought it out in court for about six months. The parties finally agreed to settle the case. The proposition to settle was initiated by Martin’s counsel. The attorney for Martin sent a letter to Harrington proposing to settle the matter; Martin would discontinue the case if Harrington were to satisfy certain conditions. Harrington agreed and satisfied the conditions including removal of the encroachment, which cost him over $5,500.00.

About three years later, Martin complained to Harrington that he is still encroaching upon her property. Harrington’s position was that he satisfied the conditions as agreed upon. To Harrington’s surprise, Martin did not discontinue the case despite complying with the conditions.

It is parallel to our analogy with the boxer; you tap out, but your opponent is still throwing punches at you. Harrington moved the court to enforce the settlement agreement and dismiss the case as settled. Martin (who wants to have her cake and eat it too) claimed that the settlement agreement is not binding.

New York Civil Practice Law and Rules defines what constitutes a binding settlement agreement. An agreement is binding upon a party if it is in writing and signed by the party or the party’s attorney. Furthermore, the settlement agreement must contain all the material terms and must be clear that there is a mutual accord between the parties.

In the Martin case, the material terms were contained in the letter that was sent from Martin’s attorney to Harrington’s attorney. Based upon the correspondence between the attorneys, Harrington performed the tasks set forth within the settlement. Martin never objected to the settlement or to Harrington’s compliance with the conditions. The court in the Martin case therefore concluded that the settlement agreement is indeed enforceable and confirmed the dismissal of the action.

The lesson to be learned here is to make sure that your attorney is careful to ensure that the settlement agreement is absolutely binding, and then to follow-up and verify that the case is discontinued upon satisfaction of the settlement terms. You do not want to be in the position of the boxer that is being pummeled while down.

Justice Delayed is Justice Denied

Justice is too often delayed. The legal system in the United States is just that . . . a legal system. It is not a system intended to “do justice”. Don’t get me wrong, justice does occur in our system, but not by design.

The system is geared for delay. Contrary to how it appears on the TV shows the “Good Wife”, “Law and Order”, or any other legal show, there are few, if any, cases that are over in 45 days, let alone 45 minutes. The pace of most litigation in the United States takes years, not months.

There is an old axiom: “Justice Delayed is Justice Denied.” If that is true, justice is almost always DENIED.

It does not matter what area of the law we speak about today. In New York State, civil litigation takes YEARS to finally come to an end if a jury trial is needed. It takes years, not months or days. It can be upwards of 3-5 years before a plaintiff, looking to recover for damages he/she may have sustained, to finally get “their day in court”. Is that Justice? When I say plaintiff, this refers not just to individuals, but businesses also.

Let’s say you are a small business vendor who has a contract with another business to deliver to them goods and/or services. You deliver the goods and/or services in a timely manner, so you expect to be paid accordingly. Well, many times that bill is not paid timely. Now what do you do?

You hire a lawyer to help collect what is due you. The attorney sends out letters, starts a lawsuit. What do you do in the meantime????? You wait and wait and wait. Unfortunately, your suppliers who originally sold you the goods, or your employees who performed the services needed do get paid. They are not interested when, or even if, you get paid. Employees want their paychecks and your vendors want to be paid or they will not do business with you any longer.

You are now “carrying” an account receivable that is worthless until you get paid. You cannot “deposit” an account receivable; you cannot give it to your employees in lieu of salary; nor can you give it to your supplier as payment. You have to “fund” all of the above until you are paid or risk damage to your own financial history and reputation. If you are a small business, you may have to obtain a business line of credit from your bank to “fund” your sale, which costs you additional money because of interest and bank fees, not to mention your time lost.

But now let’s go back to the hiring of the attorney to get your money. In most cases, the attorney will take a percentage of any recovery (the percentage varies) as well as disbursements. The litigation commences and in the end, 3 years later, you agree to accept 80% of the amount you are owed.

So, as for illustration purposes, lets say you bill a customer $10,000.00 for goods and services, and the attorney takes a 1/3 contingency fee and has $1,000.00 in disbursements. Of the $10,000.00 you are owed, you receive as a gross settlement $8,000.00, less the disbursements of $1,000.00 ($7,000.00 net) less 1/3 for the attorney ($2,333.00). Therefore of the 10,000.00 you are owed, you receive only $4,667.00, which is LESS THAN ½ OF WHAT YOU WERE ORIGINALLY OWED!! Most businesses work on a very tight profit margin. Under this example, most businesses will have lost money on the transaction!!!! But to add insult to injury, the deadbeat who owed you the money, had the benefit of the use of YOUR MONEY for the three years it took to resolve the matter. This is “JUSTICE DELAYED, JUSTICE DENIED”.

This seems to be fundamentally unfair. Well, it is! The business that delivered timely and performed all its responsibilities under the contract actually LOST money because it adhered to the contract. Enough transactions like this can put small businesses out of business very quickly.

“Justice delayed, justice denied” does not apply only in the business world, but also in the arena of personal litigation.

Let’s say you are in a car accident and the insurance company does not want to settle. Five years later you go to trial and receive a large verdict in your favor, money that you need and can use. You can not wait to get the money. You don’t even mind paying your attorney their fee. You wait for your attorney to call and say come get your check. Unfortunately, the call you get is that the defendant is filing an appeal. An appeal you ask, what is an appeal and who pays for it?

Any person who loses their case at trial, whether a plaintiff or defendant, has the right to appeal to the New York State Appellate Division within 30 days after the judgment is entered. That doesn’t sound so bad until you learn that this only STARTS another clock, which also can run for years. As for who pays for it, unless you have a special arrangement with your attorney, you do. The attorney should require you to sign a new Appellate retainer, which is above and beyond the original retainer you signed.

As a general rule, in the Second Department which consist of Suffolk, Nassau, Queens, Brooklyn and a couple of up-state counties, the appealing party then has six months to file their brief as to why the lower court decision should be changed (reversed). The winning party below then has 30 days to file their response and the losing party then gets an additional 10 days to respond. You are looking at over seven months.

But what happens if the losing party who is appealing does not file their brief within the 6 months allotted. They can, and will often be given, multiple extensions to file their brief. This could add months to the timeline above. Let’s assume that the extensions total 3 months (this is not an unreasonable assumption). It will now take 10 months before the appeal can be allowed to be calendared to be heard before the Appellate Division (Justice Delayed is Justice Denied).

So you ask, how long before an appeal is calendared to be heard before the Appellate Division in the Second Department of New York. IT CAN TAKE UPWARDS OF ONE YEAR! You are now over 18 months since you were awarded a judgment and still have not seen a dime.

You wait is still not over. It can take the Appellate Division 2 to 3 months to make a decision. If you win on appeal, you have now probably waited 2 years to receive the proceeds from the jury verdict in your favor (the positive side is that you would be entitled to interest on your judgment at the statutory rate of 9%).

You have waited 2 years to be paid on a case that you won, with all of the added anxiety and cost of any appeal. The system of delay in the courts dictates this. Justice delayed is truly Justice denied.

 

“Justice Delayed is Justice Denied” Was Written by Michael B. Schulman