Comments on Recent Cases: June 2023

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Part of my work involves reading court decisions to keep abreast of how judges decide the types of cases I handle. Below, I share some thoughts on recent decisions.

Fox Makes Late Decision to Settle Dominion Voting Lawsuit

Most cases settle, but lawyers generally read about cases that proceeded far enough through litigation that a judge wrote a decision. And the decisions that form binding legal precedent usually reflect cases that were not only litigated, but also appealed. Still, there is a lot to learn from the stories of cases that settle.

This is why I was very interested by a recent New York Times article about the internal decision making process at Fox News about whether to settle the defamation claim brought by Dominion Voting Systems. The company was confident that it would prevail on appeal, citing a legal doctrine that had some support, but some weakness. Accordingly it did not make strong settlement offers. This strategy has some appeal, especially if a defendant can afford years of legal fees. But it clearly carries risk, especially that documents from discovery could come to light that generate negative publicity. 

Cases like this illustrate that any settlement strategy needs to consider not just the likelihood of ultimate success or legal fees, but also the other consequences of protracted litigation.

Court Sets Aside Fraudulent Conveyance

When a debtor realizes that a creditor may take his property, a natural instinct is to transfer the property to a friend or family member so the creditor cannot take it.  While this may make it harder for the creditor to collect, a court may still void the transfer as fraudulent.

For example, in a recent case before the state appellate court in Manhattan, two parents transferred a property to their sons.  A creditor sued the family, claiming the transfer was fraudulent because it was not for an adequate sale price.  The family claimed it was to repay a debt, but they could not produce a writing that reflected the debt.  The court ruled for the creditor without a trial because of the lack of writing, the intrafamily nature of the transfer, and the fact that the parents continued to use the house, which suggested it wasn’t a real sale.

Cases like this illustrate how creditors can take debtor property despite evasive transfers.

Court Refuses to Disturb Arbitration Decision

Courts generally decline to interfere with the decision in an arbitration. Still, parties frequently attempt to re-litigate claims in court after an arbitration and, until the court issues its decision, the parties do end up re-litigating those claims.

For example, in a recent case before the state appellate court in Manhattan, the Republic of Kazakhstan sought to challenge a decision against it rendered by a Swedish arbitrator. It relied upon evidence and arguments that had already been considered by a Washington, D.C. court and by the arbitrator. The court declined to disturb the decisions, citing a need for finality in the case. But it also explained why it would have rejected those arguments anyway, which shows that the parties still litigated the issues in New York.

Cases like this illustrate the deference courts give to arbitration decisions.

Court Strictly Applies Indemnification Clause

Businesses pass along or assume risks in contracts through indemnification clauses.  These provisions require one party to pay all of the expenses arising from issues that may arise for another.  But courts examine the language of the provisions carefully before deciding how to apply them.

For example, in a recent case a landlord sued a maintenance company to compel it to assume the costs associated with an injured maintenance worker.  The trial court held that the landlord had agreed to indemnify the maintenance company.  But the state appellate court in Manhattan reversed the decision, since the specific language in the agreement with the maintenance company said that the landlord agreed to indemnify claims brought by “others,” which could not have meant the maintenance company since it was not an “other.”

Decisions like this illustrate how important the specific language of an indemnification clause can be.