Whether a financial advisor committed “‘outrageous acts of folly’” could not be determined at the motion to dismiss stage, the New York Appellate Division, First Department has held in S.A. de Obras y Servicios, Copasa v. The Bank of Nova Scotia, et al., --- N.Y.S.3d ----, 2015 WL 1239702 (1st Dep’t Mar. 19, 2015), overturning the motion court’s dismissal of breach of contract claims that the plaintiffs assert against their former advisor in connection with a road project bid.
The motion court had held that the parties’ underlying contract contained a limitation of liability clause barring the claims and that the plaintiffs’ allegations did not “amount to gross negligence,” which voids such clauses under New York law. S.A. de Obras y Servicios, COPASA v. The Bank of Nova Scotia, 2014 WL 2623900 (Sup. Ct., N.Y. Cty. June 12, 2014). The First Department disagreed, however, unanimously holding that the contract-based claims for gross negligence should not have been dismissed “[a]t this stage of the litigation, prior to key depositions… .”
In addition, the First Department affirmed the motion court’s refusal to apply a contractual indemnification provision invoked by the defendant bank, given that the provision “expressly contemplates third-party litigation without clearly implying that the parties intended the provision to apply to intra-party claims.”
Wilk Auslander LLP represents S.A. de Obras y Servicios COPASA, one of the prevailing parties. The case is being handled by: Jay Auslander, Natalie Shkolnik and Julie Cilia.
To read the court’s decision, click here.