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11 Business Negotiating Tips

Posted: September 9th, 2012

There are many sources to turn to for resources, tips and advice on mastering the art of negotiations. Inc. Magazine and Inc.com are good places where entrepreneurs and business owners can find useful information, insights, and inspiration for running and growing their businesses.

Inc. Magazine has been publishing for more than 30 years. In 1996, they launched Inc.com as a place to access the current online issue of Inc. Magazine, as well as an archive of their back issues. Negotiations are a topic that comes up pretty regularly in the magazine and Web site. You can find tips on a variety of negotiation scenarios, including simple rules for customer negotiations, how to negotiate the buying and selling of your business, rules for venture capital negotiations, and key phrases NEVER to say.

Here are some key lessons learned from Inc. to help ensure that negotiations work to your advantage:

Tip #1: Neutralize the competition. A customer can only threaten to go to a competitor if the competitor represents a viable option. Before negotiating, convince the customer that your offering is the only one that can adequately meet his needs.
Tip #2: Develop realistic expectations. Temper your aspirations with “feasibility” based upon what your counterpart has in mind, and reassess your expectations as the negotiating progresses.
Tip #3: Know your pricing parameters. When it comes to price, know the deal you want and you can justify it as being realistic. Never offer a discount without some other concession to counterbalance it.
Tip #4: Give yourself room to maneuver. Leave yourself some bargaining room, but make sure that you have a plausible rationale for any positions that you take.
Tip #5: Don’t compete with the customer. Negotiations are attempts to reach an agreement, not a contest to see who can win. Make the relationship so important that it’s worth the extra effort, on both sides, to make reasonable concessions.
Tip #6: Know when it’s time to stop. If the negotiation is going well and you’ve got most of what you want, don’t keep negotiating. If you’re 90 percent there, you’re done.
Tip #7: Negotiate until the contract is signed. Don’t relax once there’s a meeting of the minds because until the contract is actually signed by both parties, it’s just so much moonshine.
Tip #8: Know the point past which you will not budge. Then you can make trade-offs and fight for the really important points.
Tip #9: The most important thing in negotiation is the ability to say “no.” In negotiation theory it’s called BATNA, or best alternative to a negotiated agreement.
Tip #10: Avoid the word “between.” It often feels reasonable-and therefore like progress-to throw out a range. But that word between tends to be tantamount to a concession, and you will find that by saying the word between you will automatically have conceded ground without extracting anything in return.
Tip #11: Never say “I think we’re close.” We’ve all experienced deal fatigue: The moment when you want so badly to complete a deal that you signal to the other side that you are ready to settle on the details and move forward. The problem with arriving at this crossroads, and announcing you’re there, is that you have just indicated that you value simply reaching an agreement over getting what you actually want.

For more information, click:
The Most Important Rule in VC Negotiations
15 Simple Rules for Customer Negotiations
5 Things You Should Never Say While Negotiating

What the New gTLDs mean for Trademark Owners

Posted: August 29th, 2012

Tags: intellectual property, technology

What is a gTLD? gTLDs are generic top-level domains similar to .com, .net or .org. The current system has 24 gTLDs. Soon, we will be seeing new gTLDs, such as .ART, .NEWS, .STORE, in the largest-ever expansion of the Internet’s naming system.

The Internet Corporation for Assigned Names and Numbers (ICANN), the nonprofit organization that manages this piece of the Internet’s infrastructure, has been preparing for this domain name expansion for nearly a decade. In June of 2011, it formally approved the expansion and started planning the application process for new gTLDs.

On June 13, 2012, ICANN held a “Reveal Day” event during which the new gTLD applications were unveiled — all 1,930 of them. The applications greatly exceed the 500 applications originally anticipated, demonstrating the impact of the new gTLD program on the Internet space in the coming months and years. The applicant list included several automakers like Fiat, Chrysler and Volkswagen — as well as a few banks including JPMorgan Chase and Barclays. Several tech companies, including Apple, Google, Netflix and AOL, also submitted applications to turn their brand name into a domain. Amazon submitted applications for 76 gTLDs, including .read, .store, .music, .fire, .cloud, .news and .pay. Google also played big, applying for 101 new domains.

It is important for organizations — even those that did not apply for their own new gTLDs — to remain aware of the program, its upcoming deadlines, and potential enforcement options. For brand owners and trademark holders, this means taking steps and developing a strategy to detect and deter possible infringement.

There are protective measures currently in place for trademark owners to oppose a new gTLD application. The challenger can file a public comment by September 26, 2012 (which was extended an additional 45 days from the original August 12, 2012), or file a formal objection by January 13, 2013. The objection filing period was built into the new gTLD program specifically to protect certain rights and interests. Anyone with standing may submit a formal objection on any one of four objection grounds:

String Confusion (confusingly similar to existing gTLD or another sought after gTLD)
Legal Rights (infringes existing legal rights of objector)
Limited Public Interest (contrary to generally accepted legal norms of morality and public order)
Community (significant portion of community to which gTLD string may be explicitly or implicitly targeted)

All objections received will move through the ICANN dispute resolution process, estimated to take approximately five months.

It goes without saying that with the unveiling of 1,930 new gTLD applications for various new domains, it is important for trademark owners to be aware of the program, the upcoming deadlines and how to protect against any potential infringement. Additional information can be found at the ICANN website at: http://newgtlds.icann.org

Planning is Not Just For People

Posted: August 29th, 2012

By: Martin Glass, Esq. email

Tags: estate planning

Owning a pet — any pet — is a substantial investment of time and money.

Whether your pet is a rescue, adopted for nothing, or a purebred with a street value of many thousands, you can’t put a price tag on what it’s worth to you. So, you ought to take steps to provide for this family member after you are gone — just as you would for any other. There are a couple of ways to do this, which can be used alone or in combination with each other.

Set up a trust
If you remember, Leona Helmsley set up a $12 million trust to benefit her dog, Trouble. After Helmsley died in 2007, two of her grandchildren, whom she had disinherited, challenged the trust. They convinced the court to reduce the trust to $2 million and ended up with $3 million apiece. The other $4 million went to a charitable trust that Helmsley and her husband Harry had set up. Trouble has since died.

Such trusts (usually funded with much smaller amounts) have become increasingly popular, and can be done here in New York. Creating and administering pet trusts involves many of the same issues that arise with other types of trusts, including how to fund the trust, whether it should take effect while you are still alive (for example, if you are no longer able to care for your pet) and whom to choose as trustee. You will also want to identify the caregiver (include alternates in case the person you have in mind cannot or doesn’t want to do it). Ideally, it should be someone other than the trustee. You can even include care instructions, and indicate what should happen to the funds after your pet dies.

Choose a pet guardian
A simpler approach is to designate in your Will the person to care for your pet, and leave that individual enough money to carry out the responsibility. This raises two potential pitfalls: One, the amount could be subject to estate tax and Two, there is no legal mechanism for making sure things go as you planned. Nor is there any guarantee that the person will want your pet or be able to care for it when time comes.

In response to this problem, a growing number of for-profit and not-for-profit pet guardian programs have sprung up around the country. Some are shelters or re-homing organizations that are specific to certain types of animals — such as birds, farm animals or dogs. Usually the better ones are those run by university veterinary schools or connected with local humane societies.

Pet guardian programs are terrific for people who don’t have a specific person in mind or need to name an alternate on their pet trust if the caregivers they have listed are unable or unwilling to serve. Or, you can combine the two concepts, and put the animal care organization in charge of your pet’s care, while naming the trustee to oversee it and control the money.

Guardian programs are also great if you have a pet like a bird or a tortoise that has long life expectancy — longer than any human beings whom you trust. These programs might also be well suited to finding a home for exotic pets like pigs and llamas.

In choosing a facility, there are a number of issues to consider. Among those are the cost of the facility, what’s its reputation, what’s its track record for placement, and what happens to those animals that can’t be placed.

One final piece of advice: In addition to expressing your wishes in estate planning documents, communicate them to friends, family and financial advisors. Otherwise, by the time they locate the relevant documents, it may already be too late to save Fluffy or Rover.

Improving Business Negotiations

Posted: August 9th, 2012

By: Joe Campolo, Esq. email

Tags: negotiation

Most people simply don’t know how to negotiate. Our parents didn’t teach us and their parents didn’t teach them. And despite the fact that negotiations are a daily occurrence, we’re taught nothing about them. Many believe that since we’re not taught we just assumeit cannot be taught.And because we sometimes fear what we don’t understand; we are afraid to learn. But there is good news; we can all improve our negotiation skills. A quote commonly found in negotiation theory books and articles from G. Richard Shell in his book Bargaining for Advantage: Negotiation Strategies for Reasonable People, reads, ” . . negotiations commonly follow a four-step path: preparation, information exchange, explicit bargaining, and commitment . . Negotiation is, in short, a kind of universal dance with four stages or steps. And it works best when both parties are experienced dancers.”

Phase one of this “dance” is referred to as the Pre-bargaining Phase. This step involves:

Phase I: Pre-Bargaining Phase

Information: Learn as much as you can about the problem. What information do you need from the other side?
Leverage Evaluation: Evaluate your leverage and the other party’s leverage at the outset. This is important because there may be a number of things you can do to improve your leverage or diminish the leverage of the other side. What will you do to enhance your leverage?
Analysis: What are the issues?
Rapport: Establish rapport with your opponent(s). You need to determine early on if your opponents are going to be cooperative; if not, consider employing a mediator as soon as practical.
Goals and expectations: Goals are one thing; expectations are something else.
Type of negotiation: What type of negotiation do you expect? Will this be highly competitive, cooperative, or something unusual? Will you be negotiating face to face, by fax, through a mediator, or in some other manner?
Budget: Every negotiation has its costs. Lawyers will avoid conflicts with their clients by discussing budgets sooner rather than later. Many times there are a number of choices for enhancing leverage. For example, you may enhance your leverage by taking several depositions, by adding parties to a law suit, by serving subpoenas on witnesses, or by hiring experts. Unless your client has unlimited resources, you will have to make some hard choices, which should be designed to give you the “most bang for your buck.”
Plan: What’s your negotiation plan?

Phase II: Bargaining Phase

Logistics: When, where, and how will you negotiate? This can be especially important in multi-party cases.
Opening offers: What is the best offer you can justify? Should you make it, or wait to let another party go first?
Subsequent offers: How should you adjust your negotiating plan when responding to unanticipated moves by your opponent?
Tactics: What sort of tactics will you employ? What sort of tactics is your opponent using on you?
Concessions: What concessions will you make? How will you make them?
Resolution: What is the best way to resolve the problem? Is there an elegant solution? Be on constant lookout for compromise and creative solutions.

Phase III: Closure Phase

Logistics: How and when will you close? At mediation or later on? Who will prepare the final agreement?
Documentation: Prepare a closing checklist.
Emotional closure: It’s one thing to end a legal dispute; it’s another to address the underlying interests and needs of the parties. If you neglect the latter, the agreement will probably not sustain.
Implementation: It’s not over until it is over.

Excerpts and further detail can be found at:
Improving Negotiation Skills: Rules for Master Negotiators by Thomas Noble

Keyword Infringement Litigation Heats Up

Posted: July 24th, 2012

Tags: intellectual property, technology

Google’s AdWords is a powerful advertising platform. But what happens when a competitor bids on your trademark, or slips your mark and brand name into its website’s metatags in order to lure away a potential customer searching for your business?
Not surprisingly, companies who lost the placement wars weren’t too happy and commenced trademark infringement lawsuits against the competitor and the search engine that sold the keyword bids and advertising placement. However, suits against Google and similar search engines died in August 2010, after a District Court’s opinion in Rosetta Stone Ltd. v. Google, Inc., 2010 WL 3063152 (E.D. Va. August 3, 2010). But the flood gates may soon be opened.

The 4th Circuit in Rosetta Stone Ltd. v. Google, Inc., 2012 WL 1155143 (4th Cir. April 9, 2012) gave Rosetta Stone another chance. The bulk of the District Court’s decision was reversed, allowing Rosetta Stone to proceed to trial. Although the Rosetta Stone litigation will not be resolved relatively soon, the 4th Circuit’s decision is significant because (1) it clarifies that trademark infringement analysis in a keyword advertising context will follow the traditional legal standard applicable to likelihood of confusion; and (2) it establishes that a company can bring a trademark infringement action against Google, and similar search engines, on the basis that the sponsored links are confusing to the customers.

At the District Court level, Google argued that it legitimately used trademarks as keyword triggers to help make consumers make more informed choices, and its use of the trademarks are “functional” to its business, thus making it immune to trademark infringement claims. The District Court agreed and concluded that (1) there was no evidence to support a likelihood of confusion of consumers, in part because the search engine provider was not attempting to pass off its goods or services as Rosetta Stone’s; and (2) that the use of marks as search engine advertising keywords was protected by a functionality defense, because the keywords served an indexing function in pulling up sponsored advertising links.

In reversing the decision, the Fourth Circuit held that trademark law protects against likelihood of confusion of consumers as to the source or sponsorship of goods or services, and held that the evidence created disputed questions of fact to be tried on whether there was a likelihood of confusion. The court also held that the functionality defense applied only if the trademark consists of functional features of a plaintiff’s product or packaging, and not based on the manner in which a defendant uses a mark.

Accordingly, traditional trademark standards of likelihood of confusion apply in keyword advertising, rather than specialized standards. These traditional standards are not only applicable to trademark claims filed against search engine providers, but also to the more common situation in which these claims are filed against a competitor who purchases a plaintiff’s trademark as a keyword from the search engine provider and uses them to trigger sponsored advertising links.

The Rosetta Stone lawsuit and its outcome will be closely watched by both search engine providers and the business community. No doubt, Google will be aggressively defending this action given that Google’s Adwords raked in $32 billion last year, or 97% of the company’s total revenue. Knowing this, many large companies have lined-up their support to Rosetta Stone and some have even filed similar suits against Google. No doubt, the Rosetta Stone decision has opened the door wide for companies to not only sue their competitor for trademark infringement, but also the search engine giants that sold the keyword bids and advertising placement.

What is a Trust?

Posted: July 21st, 2012

By: Martin Glass, Esq. email

Tags: estate planning

Attorneys, especially estate planning attorneys, talk about trusts all the time. They talk about them as if everyone already understands exactly what a trust is. There is no doubt that trusts have long served as a valuable estate and financial planning tool, since they can meet a number of important planning needs.
Since people began using trusts centuries ago, they have mistakenly been regarded as tools for the super-wealthy to protect their fortune. That is certainly true to a degree, but a person doesn’t have to be ‘filthy rich’ in order to benefit from the use of a trust.

Well then, what exactly is a trust? A trust may be defined as a “fiduciary relationship in which one person holds a property interest, subject to an equitable obligation to keep or use that interest for the benefit of another.”

A trust, then, is a legal entity, recognized and regulated by the laws of the various states, that is established by the proper execution of a formal, written document (the trust document) in which the legal ownership of certain property (the trust corpus or trust principal) held within the trust is separated from the beneficial ownership of the property itself. The person or institution who is the legal owner of the trust assets and who is responsible to manage and invest those assets is known as the trustee. Those persons who receive the benefits from the trust and/or income generated from trust assets are known as trust beneficiaries. That’s the attorney’s way of defining a trust.

A much simpler way to define or describe a trust is that it’s just a box. You put various types of assets into the box by re-titling the asset. The person who establishes or creates the box is the grantor, creator or trustor. Depending on the type of trust either the grantor or a third party puts the assets into the trust. The person (or people) that can control what happens to those assets, once in the box are the trustees. The trust document itself is what controls everything that was put into the box by defining what the trustees can and cannot do with those trust assets at any particular time.

The trustee must fulfill his duties as defined in the trust document in a fiduciary manner. A fiduciary standard of care is the highest level that is recognized by law. In essence, the trustee must put the interests of the trust and its various parties above his own interests. For example, the trustee may be obligated to use the trust principal for a primary beneficiary even though the trustee, as a secondary beneficiary, may end up with nothing left.

The provisions, purposes, duration, trustee powers and all other matters pertaining to the trust are contained in the trust document. The grantor must make a number of decisions prior to the establishment of the trust, such as:

– What assets will be placed into the trust?
– Who will receive the benefits from the trust?
– Who will serve as the trustee?
– How will the trust be operated and managed?

One of the great advantages of a trust is that it is a private agreement between the grantor and the trustee on how to handle the assets that were put into the trust. The agreement continues even after the death of the grantor. Therefore, if all the assets are in the trust, there is typically no need to go to court to probate a Will. This can be a major savings in cost and time. This also keeps the transfer of assets private and minimizes the risk of other parties attempting to contest the transfer of the assets.

The other purposes that may be served by the creation and proper administration of a trust include: reducing income and estate taxes, as well as managing wealth more effectively; ensuring that the trust assets will be professionally managed; protecting the assets against long term care costs or the inability to receive government benefits for disabled beneficiaries; the ability to “stand in” for children and grandchildren until they can become old enough or mature enough to handle their own affairs; ensuring that, at the death of the grantor, benefits will pass to the proper individuals, at the proper time, and in the proper amount.

The one caveat with trusts is that people forget that there are two parts to using a trust for any of the above purposes. The trust must be created and the trust must be funded. Many people forget to do the second part. Without that you just have an empty box. Assets must be re-titled into the name of the trust for the trust document to have any control over those assets. A qualified estate planning attorney can guide you through this process.

Your Estate Plan Needs to Be Updated After a Divorce

Posted: June 12th, 2012

By: Martin Glass, Esq. email

Tags: estate planning

Divorce is never simple and is actually usually quite messy. That includes annulments and legal separations. Many things are not automatic or included in the official decree. Because of this, every person should have a new estate plan drafted following a divorce.
According to New York law, if you name your spouse in your Will and then divorce, that designation is revoked and it is as if he or she has pre-deceased you.

That’s the good news. The bad news is that the divorce itself may not change the trustees, guardians, agents or others named in an estate plan. These people can still take control of financial accounts or other matters as designated in a Will, trust or other documents. It is not uncommon to name in-laws and family members as responsible parties for a testator’s assets. Depending on the status of the relationship following a divorce, it may not make sense to have an ex-spouse, or ex-in-laws responsible for managing a home, financial accounts or minor children.

Similarly, it is common, and sometimes even required, for a spouse to be listed as the beneficiary of accounts, trusts, or insurance policies. A divorce will not change the beneficiary designation. If an ex-spouse no longer wishes to list the other ex-spouse as beneficiary he must complete required forms provided by the financial institution or insurance company.

This is also true of other estate planning documents. If you had named your former spouse as your agent under a power or attorney or health care proxy, the divorce does not change that or remove that agency. New documents must be created and the financial and medical institutions must be made aware of the change. This usually entails some type of formal revocation of the former power of attorney or health care proxy.

Even before the divorce is finalized, you may want to seek professional assistance of a qualified estate planning attorney. This way you can minimize the impact, should something happen to you before the judge signs the decree. And then afterwards, there are still a number of loose ends to tie up.

President Obama Signs into Law the Jumpstart Our Business Startups Act

Posted: June 10th, 2012

Tags: corporate

On April 5, 2012, President Obama signed into law the Jumpstart Our Business Startups Act (the “JOBS Act”). The JOBS Act is intended to increase American job creation and stimulate economic growth by improving access to the public capital markets for a new category of issuer created by the JOBS Act — the “emerging growth company.” It represents the most comprehensive reform to the laws governing capital raising since the Securities and Exchange Commission (SEC) issued its 2005 Securities Offering Reform.

The JOBS Act:

Creates a new class of company termed an “Emerging Growth Company” with an easier “on ramp” to going public by reducing existing regulatory requirements;
Relaxes the advertising and solicitation requirements for private offerings of securities;
Permits “crowdfunding” – the raising of capital from a number of investors via the internet and other social media;
Increases from $5 million to $50 million the amount of capital that can be raised in a public offering without triggering registration and periodic reporting obligations; and
Raises the maximum number of shareholders permitted for private companies from 500 to 2,000 (as long as no more than 500 are not accredited).

Emerging Growth Companies
By introducing a new category of publicly-held companies known as an “emerging growth companies,” the bill seeks to exempt businesses with under $1 billion in revenue from certain regulations associated with going public. Notably, companies governed under this category only need to produce two years of audited financial statements when filing for an IPO (rather than three years); they are exempted from Dodd-Frank rules giving shareholders a nonbinding vote on executive compensation; and are freed from the requirement of hiring an outside auditing firm to check internal financial controls.

General Solicitation and Advertising
Prior to the JOBS Act, no issuer could engage in any form of general solicitation or advertising with respect to the securities being offered. The JOBS Act directs the SEC to remove the prohibition against general solicitation and general advertising, provided that all of the purchasers of the securities so offered are accredited investors; to revise Rule 144A under the Securities Act to permit the use of general solicitation or general advertising, provided that the securities are sold only to persons that the seller and any person acting on behalf of the seller reasonably believe to be a qualified institutional buyer. The SEC must adopt these revisions within 90 days.

Crowdfunding
The JOBS Act allows companies to pool money from individuals with common interests and to issue shares in exchange for crowd-funded capital. The new registration exemption under the federal securities laws for crowdfunding will significantly expand funding capabilities for companies and ventures that are too small for traditional venture capital funding or companies that are unable to obtain such capital. The JOBS Act creates a new exemption to allow private companies to raise up to $1 million in equity capital from unaccredited investors within any 12-month period, with each investor being allowed to invest up to a certain amount. The Senate version of the JOBS Act creates a number of restrictions, aimed at protecting investors. Among those restrictions are limiting individual investments to $10,000 or 10 percent of the investor’s annual income (whichever is less) and registration by intermediary platforms and issuers with the SEC. Federal law would preempt state regulations, meaning that issuers could raise funds from across the United States. The SEC has 180 days after the bill’s enactment to publish rules for crowdfunding.

Small Issue Securities
Companies will be able to increase their public offerings of securities from $5 million to $50 million without triggering the full disclosure and reporting obligations that normally accompany a public offering of securities. The JOBS Act amends the offering threshold for companies that are exempt from SEC registration under Regulation A under the Securities Act by creating a new exemption from registration and reporting for small issue securities. These offerings will be subject to state blue sky laws unless they are offered or sold only to qualified purchasers (as determined by the SEC) or sold on a national securities exchange. Such issuers will be required to file annual audited financial statements with the SEC. In addition, the SEC will have the authority to require these issuers to make certain periodic non-financial disclosures available to investors. An issuer of these securities will be able to solicit interest in the offering before it files an offering statement, as determined under SEC rules, and securities issued in these offerings are freely transferable.

Amendment to Conform to Proof; Sufficiency of Rent Demand and Proof of Damage

Posted: June 10th, 2012

By Patrick McCormick

As summer winds down, I thought the best way to ease into autumn would be to examine certain jurisdictional and proof issues that pop up over and over again in summary proceedings. Thankfully, the Courts have provided relevant decisions worthy of discussion. The first is from Nassau County District Court Judge Scott Fairgrieve which discusses whether a commercial landlord waived the right to commence a summary proceeding seeking to collect significant additional rent when the landlord accepted base rent payments 1. The second case is from the New York City Civil Court and involves an amendment of a petition to conform to trial proof and whether additional rent demands are needed before the motion will be granted 2. The last case is a brief decision from the Appellate Division, Second Department, which discusses the adequacy of proof adduced at the trial of an unlawful eviction claim 3.

In Ambrogio & Caterina Giannone Family Ltd. Partnership, petitioner commenced a commercial non-payment proceeding seeking $1,205.10, in base rent and $79,396.72, in additional rent for construction costs. Respondent moved to dismiss alleging that petitioner accepted thirteen base rent payments since the construction was completed, seven base rent payments since the additional rent was billed and three base rent payments since the rent demand was served. Petitioner alleged “[f]rom the time the construction work began through to when the costs were billed to the tenants in August 2011, when a formal rent demand was served in December 2011, and when a nonpayment proceeding commenced in March 2012, I have actively and continuous (sic) discussed, with respondent, its obligation to pay for these costs under the lease.”

After initially confirming that laches is not a viable defense in commercial cases, the Court framed the issue presented as whether “petitioner waived its right to commence this summary proceeding” by accepting base rent payments. The Court noted that respondent did not dispute that petitioner “continuously attempted to collect the additional rent owed . . . ” The Court noted that the lease at issue contained a “no waiver clause” providing that “no waiver of any provision of this lease shall be effective unless in writing, signed by the waiving party.” The Court denied the motion to dismiss holding that these facts combined with the “no waiver provision clause” led to the conclusion that “[t]here is no basis to find that petitioner waived its right to recover additional rent in a summary proceeding by its acceptance of basic rent. To hold otherwise would frustrate the reasonable expectations of the parties embodied in their lease.”

In JDM Washington Street, LLC, after the conclusion of petitioner’s case, petitioner moved to conform its pleading to the proof presented at trial and rested its case. Respondent opposed the motion arguing that “petitioner must make an updated demand for any rent and additional rent that has accrued since the predicate notice before it can seek to amend the petition at trial.” Respondent argued that “petitioner is limited to a claim for the rent sought in the predicate notice because petitioner never demanded any additional rent while this proceeding was pending.”

In granting the motion to amend the petition to conform to the proof adduced at trial, the Court relied on the specific language of RPAPL §711(2) and CPLR §103(b). The Court noted that “RPAPL §711(2) provides for ‘a demand of rent’ — not plural demands for rent. . . The RPAPL makes no provision for an updated demand for rent in a nonpayment proceeding.” In discussing the CPLR, the Court reminds us that “[u]nder the CPLR a motion to amend a pleading at trial must be freely granted absent surprise or prejudice resulting from the delay.” The Court thus found that a tenant could not be surprised that a landlord in a nonpayment proceeding would seek all rent owed up to trial. The Court refused to read into the RPAPL “a requirement that rent demands must be updated before a petitioner may seek to amend its petition to reflect rent allegedly accrued at the time of trial. Such a requirement would graft another element onto a petitioner’s prima facie case.”

Finally, in a case brought by a commercial tenant against its landlord for damages resulting from an unlawful eviction, the Appellate Division, Second Department, reversed a judgment after a nonjury trial in favor of the tenant. The Appellate Division found that the hearsay testimony offered by tenant to establish its damages was insufficient. In awarding judgment in favor of the tenant for $120,000 ($30,000 loss plus treble damages of $90,000) as compensation for equipment lost as the result of a wrongful eviction, the lower court relied on “the hearsay testimony of the plaintiff, as well as the hearsay testimony of another witness that a third party in Georgia offered to purchase the equipment for the sum of $30,000 after the witness described the equipment to that third party during a telephone conversation.” The Appellate Division noted that “Neither the plaintiff nor his witness testified from his own knowledge as to the actual value of the equipment.” In reversing the judgment of the lower court and dismissing the complaint, the Appellate Division found that the testimony regarding damages was “based completely on hearsay, and unsupported by competent proof . . .” This ruling is harsh, but it serves to remind us that care must be taken when preparing all aspects of our cases and that damages will not be awarded unless competent proof is presented, regardless of the culpable conduct of the opposition.