Wrongful Conduct Does Not Allow for Retaliation

A recent decision by Suffolk County Commercial Division Judge Emily Pines highlights how critical it is for a party in a dispute to keep his hands clean, even in the face of the other side’s wrongful conduct.

The extensive factual and legal discussions raised over the 11 day trial are nicely explained by Peter A. Mahler, Esq. I reference this case for the limited purpose of highlighting the fact that while nasty conduct and table-pounding litigation make for a good movie script, playing by the rules usually carries the day.

This case involved a dispute within a 12 member medical practice. One doctor alleged that the other doctors were not conducting themselves properly while running the practice, engaging in conduct that did not benefit the entire practice. He also complained that they caused the practice to borrow money without proper consent. And finally, that his partners expelled him from the practice without cause. The other doctors claimed that the complaining doctor went behind the others’ collective back and told the prospective lender that the practice did not have proper authorization to borrow the funds. It turned out that the practice did have the authority to borrow money, as the other doctors had properly voted to obtain the loan, but the complaining doctor’s notice to the bank caused it to cancel the practice’s loan, to the detriment of the other doctors.

Judge Pines found that while the other doctors did not completely operate the practice properly, and withheld certain compensation from the complaining doctor, the fact that this doctor wrongfully contacted the bank, causing it to pull the loan application, precluded him from recovering a substantial portion of the amount he was demanding from the practice.

The lesson here is clear: In real life, the claim that your adversary may be robbing you blind does not necessarily give you the right to destroy the business or take unfettered, unilateral steps to defeat what your adversary is trying to accomplish. Not surprisingly, in this setting, an intensive review of the facts is necessary before any action is taken. Don’t undertake that process alone. Team up with experienced counsel before you take action that you might later regret.

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