New York Court of Appeals Lets Stand Significant Jaspan Schlesinger Victory
Date: November 24th, 2015
Location: Albany, New York

Jaspan Schlesinger LLP partners Steven R. SchlesingerLaurel R. Kretzing and Christopher E. Vatter successfully defended significant trial and appellate victories before the New York State Court of Appeals.  On November 24, 2015 the Court of Appeals denied the adversary’s motion for leave to appeal, ending a dispute between former business partners that began decades ago in Matter of Wilbur F. Breslin v. Superior Steakhouse (Court of Appeals Mo. No. 2015-1124).

This case arose from a long standing business relationship in which plaintiff Wilbur Breslin sued to dissolve entities that he owned with Jaspan Schlesinger client, the late Fred Cohen, a friend and former business partner of Breslin.  Together, Breslin and Cohen owned and operated restaurant franchises on Long Island and acquired the real estate on which the restaurants operated.

As their business enterprise continued, Breslin made additional capital contributions to the entities in excess of the amount made by Cohen.  While the parties agreed that the additional capital contributions would be treated as a shareholder loan, they did not agree on an interest rate.  Breslin claimed that the loans would be repaid with interest at the rate of 2% above prime, compounded annually.

Cohen claimed that the only interest rate ever agreed to was simple interest rate of 1% above the prime rate.  In addition, Cohen asserted counter-claims against Breslin based upon Breslin’s breach of fiduciary duty in withholding distributions from Cohen and in paying unauthorized management fees, real estate commissions and other unauthorized charges.

After a trial, the Nassau County Supreme Court issued a decision which denied Breslin’s monetary against Cohen, finding that Breslin failed to prove his entitlement to the claimed compounded interest rate claim but failed to award Cohen damages on his claims, including his claim that if interest was properly calculated Breslin owned Cohen money.  Both parties appealed.

On appeal the Appellate Division, Second Department, in a memorandum Decision and Order reported at 124 A.D.3d 771, 2 N.Y.S.3d 191 (2d Dep’t 2015), affirmed the Supreme Court in so far as it determined that the Supreme Court properly dismissed Breslin’s claims for an accounting and money damages against Cohen, finding that the evidence adduced “at trial failed to demonstrate the existence of an enforceable agreement requiring the repayment of the … loans at prime plus 2%, compounded annually.”  The Appellate Division found that absent an express agreement or statutory authority, compounded interest is not recoverable.

However, with respect to Cohen’s claim against Breslin, the Appellate Division reversed the trial court, finding that the Supreme Court erred in dismissing  Cohen’s counterclaims for breach of fiduciary duty since the evidence at trial demonstrated that Breslin breached his fiduciary duty “in the payment of unauthorized fees and overcharging of interest on the … loans”.  Accordingly, the Appellate Division found that Cohen was entitled to a judgment of $679,426.99 plus interest.

In its November 24, 2015 Order the Court of Appeals summarily denied Breslin’s motion for leave to appeal, ending this legal battle with a significant recovery for Jaspan Schlesinger’s client.

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Stephanie A. Speirs is sworn in at the Appellate Division, Second Judicial Dept.

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