What do Trinidad, Tobago, Barbados, Peru and Jamaica have in common?  By filing for trademark registration in those venues, Apple, and other large companies, are able to hide up and coming products and their names from the public, for months, while obtaining some level of trademark protection.  Fortune magazine explains how in its article.

In an interesting recent case, the First Department affirmed the viability of a broker’s claim for a commission despite the fact that there were questions as to the broker’s actual role in procuring a buyer.

After Waterbridge Capital, LLC sold a property, it refused to pay its broker, Eastern Consolidated Properties, Inc., claiming that another broker was also seeking a commission payment. Waterbridge asked Eastern to accept a lower amount, which Eastern agreed to do. In the end, Waterbridge refused to pay anything and Eastern sued. Waterbridge argued that Eastern was not entitled to any commission because it was not the broker that sold the property. In viewing the parties’ agreement as a settlement agreement and not a brokerage agreement, the court rejected Waterbridge’s claim finding that once the parties settled, Eastern was entitled to payment regardless of its work as a broker. Specifically, the court held that “[c]ontrary to defendants’ arguments, plaintiff is not required to plead or prove that it was a ‘procuring cause’ of the purchase in order to recover on this agreement, which was in the nature of a settlement agreement. Plaintiff’s relinquishment of its claim for a full commission provides adequate consideration for the agreement, even if its claim was doubtful or would ultimately prove to be unenforceable” (citations omitted).

Plaintiffs own a number of commercial properties in Brooklyn. In connection with that ownership, plaintiffs retained defendant broker to arrange for insurance coverage for the buildings.

At the time of issuance, in 2002, the policies did not cover flood-related damage. In 2007, defendant offered plaintiffs flood coverage. Plaintiffs agreed and believed that the buildings were covered for flood damage. However, plaintiffs were never informed that the policies excluded coverage for properties within specified flood zones. The buildings at issue were in flood zones so that they were in fact not covered for flood. The policies were renewed annually.

In 2011, before Hurricane Sandy hit the New York area, plaintiffs requested that defendant affirm to them in writing that the buildings were covered for flood damage. Defendant did so, writing that the buildings had $1 million of flood coverage. Only after Hurricane Sandy damaged plaintiffs’ buildings did plaintiffs learn that the buildings had no flood coverage. Plaintiffs sued for negligence, breach of fiduciary duty and misrepresentation.

While some businesses believe that all of their business information can be deemed a “trade secret,” the Second Department recently reaffirmed that not to be the case.

In an action by a lighting company seeking to prevent an ex-employee from working for a competitor, the company’s claim that the employee was misappropriating trade secrets was dismissed. In discussing that claim, the Court noted that for a secret to be such, it must be maintained as a secret. This means that where information is “readily ascertainable outside the employer’s business as prospective users or consumers of the employer’s services of products, trade secret protection will not attach and courts will not enjoin the employee from soliciting his employer’s customers.” Because the lighting company’s alleged secrets were “customer lists, prices, and profit margins,” which were described as “distinctive” by the company, the company’s failure to maintain that information as secret within the company defeated its claim.

This is not to say that customer lists, for example, cannot be confidential and enforced as a secret. However, to accomplish that designation, there must be a demonstration of how the information is maintained. Therefore, where a business seeks to keep its information secret, it must take specific steps to treat that information as secret, including by documenting how and for whom the information is available.

In affirming the dismissal of an insurance company’s breach of contract claim which alleged that the insured’s failure to cooperate and obtain consent to settle breached the policy, the First Department held that despite reservation of rights language, an insurance company’s unreasonable delay in dealing with the insured’s claims and trying to disavow coverage amounted to a denial of liability, relieving the insured from its obligation to seek the carrier’s consent before settling.

J.P. Morgan Securities Inc., v. Vigilant Insurance Co.

Some time ago, as part of a discussion about equitable rescission based on fraud, we noted that recovery based on a fraud claim where damages were not specifically alleged and sufficiently supported was the subject of a split between the First and Second Departments.  The Second Department had held that even if just nominal damages are generally alleged, the complaint would survive dismissal. The First Department disagreed and held that a claim of specific damages was required. Recently, the Court of Appeals addressed the split and sided with the First Department.

In Connaughton v. Chipotle Mexican Grill, Inc., Connaughton, a chef hired by Chipotle, alleged that he was fraudulently induced into selling his business idea to Chipotle. Specifically, Connaughton claimed that he was hired by Chipotle to develop an idea for a ramen noodle restaurant chain. He was promised a salary plus future equity. After investing substantial efforts over 18 months in publicly building the concept, Connaughton learned that Chipotle had a relationship with another chef who previously worked on the same concept and with whom Chipotle had signed a non-disclosure agreement. The relationship with the other chef had terminated before Connaughton joined Chipotle. It seemed that all of management except Connaughton were aware of this and that once the new chain opened, that chef would sue Connaughton and Chipotle. Chipotle ignored Connaughton’s concerns and demanded that he continue his work. When he refused he was fired.

Connaughton’s theory for recovery, as succinctly explained by the Court of Appeals, is critical to the case’s outcome in the First Department and in the Court of Appeals. Connaughton alleged that:

Leisure Time Travel, Inc., specializes in “producing holiday tours and vacations that comport with Jewish law and tradition.” Villa Roma claims to be the last resort in the Catskills region.

In 2001, the parties entered into a contract whereby Villa Roma would be rented for five Passover holidays, from 2002 through 2006. In 2005, the parties extended the contract for five years, through 2011.

The agreement called for Leisure Time to take over the hotel approximately one week before Passover. The day before Passover in 2006, a fire destroyed the hotel. The hotel refused to return Leisure Time’s $220,000 down payment. When Villa Roma reopened in late 2008, Leisure Time contacted Villa Roma to book the hotel for the 2009-2011 Passover holidays. Villa Roma refused to allow Leisure Time to book the hotel claiming that the fire rendered the parties’ contract impossible to perform thus terminating it. Leisure Time sued claiming that it was entitled to the return of its deposit paid in 2006 and to use the hotel under the terms of the parties’ agreement.

Land O’ Lakes Outdoors, Inc. and Land O’ Lakes Tackle Co., Inc., began their business selling fishing tackle in a Wisconsin town called Land O’ Lakes, a region “dotted” with lakes attractive to fishermen. Since 1997, these businesses sold fishing tackle to retailers in a number of states.  In 2000, they received federal trademark registration for the mark LAND O LAKES in connection with fishing tackle.

Land O’ Lakes, Inc., based in the adjoining state of Minnesota, sells dairy products (“Land O’ Lake Dairy”) under its registered trademark LAND O LAKES.

In 1997, Land O’ Lakes Dairy became a sponsor for a sport-fishing tournament called the Wal-Mart FLW Tour and advertised its dairy products in fishing magazines. Three years later, after learning that the tackle companies had registered the mark for their tackle, Land O’ Lakes Dairy sent a cease and desist letter to the tackle companies, claiming that its mark was “famous” as it was in use since the 1920s, well before the tackle companies were formed or began selling their products. The tackle companies refused to cooperate with Land O’ Lakes Dairy, and a lawsuit, commenced by the tackle companies, ensued.

In July 2000, Citibank extended a $54,000 loan to a condominium owner, with an additional $38,000 loan extended the next year. These two loans were consolidated into one loan for a total of $92,000. Some seven years later, the condominium board filed a common charges lien against the unit.

In 2010, the plaintiff bought the unit for $15,100 at a foreclosure auction, subject to the “first mortgage of record against the premises.” The new owner sued Citibank seeking to have the second loan of $38,000 declared subordinate to the common charges lien and thus discharged when the unit was bought at auction. The trial court found that the entire consolidated loan was valid and the purchaser at auction had purchased the unit subject to the consolidated loan. After the Second Department affirmed, the purchaser appealed to the Court of Appeals.

In affirming, the Court of Appeals noted that lien priority was normally determined by the “chronology of recording.” However, in a case that deals with a condominium board’s common charges lien, the law excludes the “‘first mortgage of record.’” While acknowledging that case law existed that could be read to take the exception of the first mortgage literally, it refused to accept the buyer’s argument.

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