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The “Equitable Accounting” Remedy

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The right to an accounting has its basis both in common law and in statute. 

The law related to common law “equitable accountings” has evolved and changed over the years, and this evolution affords courts much flexibility to achieve just results.  But, the law is still subject to conflicting opinions and inconsistent rules of law.  As New York Supreme Court Justice Judith J. Gische stated after analyzing the law relating to equitable accountings:

“The body of law on equitable accountings is conflicting and muddled.” - Evans v. Perl, 2009 N.Y. Slip. Op. 31413, 2009 WL 1905169 (N.Y. Sup. Ct. June 23, 2009).

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Fraud Claims in the Context of Contract Representations: The Question of Reasonable Reliance

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A recent New York Court of Appeals decision provides some guidance of relevance to all transactional lawyers and clients relating to potential causes of action for contractual representations and warrantees, which prove to be untrue.

In DDJ Management, LLC, et al., v. Rhone Group L.L.C., et al., 15 N.Y.3d 147___N.Y.S.2d___ (June 24, 2010), the New York Court of Appeals addressed the following questions in its decision to allow Plaintiff DDJ Management’s $40 million fraud claim to proceed to a jury:

  • When can a recipient of written representations from a company, which prove to be untrue, sue third parties, such as shareholders and officers of the company making the representations?
  • In what circumstances does neglecting to conduct a due diligence investigation impede the  recipient of contract representations from bringing a fraud claim?

The basic facts, in a nutshell, are as follows:

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Protecting Trade Secrets – Basic Practical Considerations

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The protection of trade secrets involves a combination of business and legal acumen.

The best way to protect a trade secret is not to disclose it to anybody.  This should be the default position – keep it secret!  But, in the real world, that is rarely possible or practical.  Often, trade secrets must be disclosed to be able to benefit from them.

Trade secret disclosures can generally be broken down into three categories: (1) Disclosure to employees; (2) Disclosure to potential strategic partners and (3) Disclosure to potential sources of financing.