Frydman LLC is pleased to announce that David Frydman has been selected to the 2021 New York Super Lawyers list, an honor reserved for no more than 5% of New York lawyers.  David’s selection recognizes his tremendous work and success representing companies, individuals, funds, investors and real estate professionals in various forms of business litigation.  David’s selection is the result of Super Lawyers’ independent research evaluation along with peer reviews by fellow attorneys against whom David litigates against on a daily basis. Being named to the Super Lawyers list cements David’s position as a top New York litigation counsel and advisor.

Please do not hesitate to contact us to learn more about David’s practice and how Frydman LLC can help you avoid a potential business conflict before it gets to litigation or resolve an already developed dispute.

Frydman LLC Hires Experienced Complex Commercial Litigation Attorney

Frydman LLC is pleased to announce the addition of seasoned New York litigation attorney Alex P. McBride to the firm. Mr. McBride focuses his practice on complex commercial and securities matters. Prior to joining Frydman LLC, he served as an attorney at Jones Day for nearly a decade, defending and prosecuting numerous high-profile financial products cases.

In addition to his substantial trial court experience, Mr. McBride has a wealth of experience in state and federal appeals, SEC & DOJ investigations, congressional inquiries, bankruptcy litigation, and complex trust disputes. He has previously served as national counsel for a major corporate trustee, advising on business risk and strategy, giving him a unique perspective on the legal decisions that impact how a business functions.

Mr. McBride is also an author and a scholar. He teaches an annual class on securitization litigation at Fordham Law School and provided the case profiles for the online companion site to the PBS series “The Supreme Court.”

Mr. McBride received a dual bachelor’s degree in History and Political Science, magna cum laude, from Macalester College in Minnesota. He earned his law degree, magna cum laude, from Tulane University Law School. At Tulane, he served as articles editor for the Tulane Law Review and was elected to the Order of the Coif. Mr. McBride is admitted to practice in New York state and federal courts.

Please join us in welcoming Mr. McBride to the firm.

Alex P. McBride
Frydman LLC
501 Fifth Avenue, 15th Floor
New York, New York 10017
Tel: (212) 355-9100
Fax: (212) 997-0371


Does someone defrauded into not selling (“holding”) an asset have a claim against the fraudster?  Intuitively, one might think “of course!” if not for the fraud, the holder would have sold the asset and made a profit.  Why should someone else’s bad acts prevent the asset owner from recovering her would-be profits?  Recent New York state court decisions, however, confirmed the answer in New York is a flat “no,” at least where the asset holder is seeking to recover lost profits.  What happens if a holder is not seeking lost profits, but instead to recover for a complete loss of investment?  The question remains unsettled in New York.

Defrauded holders are in a tough spot.  The securities fraud section of the Securities and Exchange Act of 1934 and Rule 10b-5 promulgated by the U.S. Securities and Exchange Commission require a purchase or sale for a fraud claim and do not provide relief for an owner defrauded into holding.  Aggrieved holders are left with potential common law (i.e. court created rather than statutory) fraud claims.  Common law fraudulent inducement claims in New York are generally limited to “out of pocket” losses and require damages that are not speculative.  In Starr Found. v. Am. Int’l Grp., Inc., 76 A.D.3d 25, 901 N.Y.S.2d 246 (1st Dep’t 2010), the First Department, the appellate court covering Manhattan and the Bronx, confirmed that a defrauded holder may not recover for potential lost profits.  In Starr, plaintiff-charity alleged defendant AIG fraudulently misrepresented the degree of risk attached to AIG’s credit default swap portfolio, which induced plaintiff to hold and not sell its publicly traded AIG shares.  Months later, AIG publicly reported billions of dollars of losses caused by its credit default swap portfolio and its share price plummeted.  Plaintiff sought to recover the loss in value of its shares from Summer 2007 – when it claims it would have sold the shares – to early 2008 after AIG reported its losses.  The First Department dismissed the claim as violative of New York’s “out-of-pocket” rule – a plaintiff is only entitled to recover what it actually lost because of the fraud, not what it might have gained.  The court held holder claims seeking lost profits are impermissible because they require an untenable degree of speculation, including (1) whether the holder would have sold absent the fraud; (2) when the sale would have occurred; (3) the amount of shares the holder would have sold; and (4) the effect truthful disclosure would have had on the market price.

Recently, the New York County Commercial Division, perhaps the most sophisticated commercial state trial court in the country, applied the bar against lost profit holder claims.  In Q China Holdings, LTD. v. TZG Capital Limited, 2018 NY Slip Op 30779(U) (Sup. Ct. N.Y. Co. Apr. 23, 2018), Plaintiff claimed it abandoned a sale of shares to defendant when plaintiff learned defendant lied about the company’s earlier sale of a subsidiary.  Plaintiff sought to recover the profits it would have received had defendant been honest and plaintiff sold to defendant.  Citing Starr, the court dismissed the claim as a prohibited speculative holder claim seeking lost profits.

It is clear that New York courts reject claims seeking lost profits due to a fraud that causes an investor to hold and not sell.  What is not clear is the viability of a holder claim where the investment becomes worthless once the fraud is revealed.  In a decision nearly one century old, Continental Ins. Co. v. Mercadante, 22 A.D. 181, 225 N.Y.S. 488 (1st Dep’t 1927), defendants fraudulently induced the plaintiffs to not sell bonds by conveying false information as to the earnings and solvency of the bond issuer.  Shortly thereafter, the bonds plaintiff did not sell became “substantially worthless.”  The court held plaintiffs stated a claim for recovery against defendants for plaintiffs’ loss.  Eighty years later, the same court in Starr questioned whether Mercadante still represented good law, but assuming it did, distinguished it because the Starr plaintiff was seeking lost profits, not to recover the loss of investment, i.e. an out-of-pocket loss – perhaps a dubious distinction.  More recently, in AHW Inv. P’ship, MFS, Inc. v. Citigroup Inc., 661 F. App’x 2 (2d Cir. 2016), the Second Circuit Court of Appeals, the appellate Federal court covering New York State, noted the contrary decisions by New York courts and acknowledged that whether a holder can recover damages for loss of investment remains an unsettled question in New York.

If you have any questions about potential fraudulent conduct that affected an investment you have made, please do not hesitate to contact us.


Frydman LLC recently secured a favorable recovery for our client in a lawsuit seeking unpaid distributions and our client’s share of the proceeds from a limited partnership’s sale of a New York City rental building.  One of FLLC’s practice areas is corporate litigation involving disputes between investors, shareholders, lenders, management and companies for breaches of operating agreements, breaches of fiduciary duty and related claims.  In 1984, our client, a resident of Italy, invested as a limited partner in a New York limited partnership managed by her brother, a resident of France, acting as general partner.  The general partner brother was also a limited partner, the husband of a limited partner and the beneficiary of a trust with a limited partner interest.

On behalf of our client, we filed suit against the general partner brother and the partnership in New York County Supreme Court alleging causes of action including breach of fiduciary duty and breach of the limited partnership agreement.  We claimed that over the years the general partner and the partnership made distributions to our client’s brother and his related limited partners, but deliberately failed to pay our client accrued distributions.  We further claimed that, in 2011, without notice to our client and in breach of the partnership agreement, the general partner caused the partnership to sell the rental building for over $5 million through a “Section 1031 Exchange” and purchased an interest in a triple-net lease for a CVS pharmacy located in Texas.  After the sale, the general partner brother secretly dissolved the limited partnership, leaving the triple-net lease in a newly formed entity.

Discovery in the action was hard fought.  We made an extensive motion claiming that the manager-brother withheld from production in discovery critical email uncovering the misconduct.  The court granted our motion to compel the defendants’ attorneys to search thirteen years of the brother’s email employing specific search terms.  We subpoenaed the brother’s accountant and others and received productions totaling tens of thousands of emails and other documents.  With the help of a consulting expert to forensically examine the partnership’s books and records, we were able to determine how much money the partnership failed to distribute to our client and the amount of our client’s share of the proceeds from the building sale.

We performed detailed analysis of the parties’ records and a reconstruction of the limited partners’ accrued distributions and capital accounts.  Armed with these analyses, we engaged in intensive settlement discussions that included multiple conferences with our forensic accounting team.  We were able to obtain a novel, tax advantaged settlement package for our client involving a significant cash payment and exit from the investment relationship.  We are gratified that our client justly received significant compensation and can now move on from this long-term family investment that had been a source of upset and consternation.


You might know there are deadlines to file any type of civil litigation claim known as statutes of limitation.  For example, in New York, a breach of contract claim must be filed within six years after the date of breach (e.g. if a breach occurred on January 1, 2013, plaintiff must commence an action by January 1, 2019).  Typically, if a plaintiff does not start a lawsuit before the statute of limitations expires, the claim is barred.  In other words, coast clear for the would-be defendant … or is it?  Businesspeople should be careful in their communications with their counterparts because there are several ways in which an otherwise time-barred claim can be revived.  This post will focus on a New York statute that allows an otherwise time-barred claim to be revived if a person (or her agent) admits the outstanding obligation in a signed writing.

New York General Obligation Law § 17-101 allows the statute of limitations to start over where the party to be charged (i.e. the would-be defendant) acknowledges in a signed writing the existence of a debt or other unperformed contract obligation.  For the statute to revive a claim, the writing may not contain anything inconsistent with the party’s intention to pay or perform, such as a reservation of rights or conditioning repayment on a future event occurring.  The writing need not be a formal letter – New York courts have enforced this statute to revive expired claims against unwary defendants who sent financial statements carrying a debt to the lenderlisted the debt in a bankruptcy petition and entered into a stipulation partially settling a claim.

The First Department Appellate Division, covering appeals from Manhattan and the Bronx, recently held that sufficient correspondence from a borrower’s attorney can satisfy the statute.  In Nelux Holdings Int’l, N.V. v. Dweck, 2018 N.Y. Slip Op. 02569 (1st Dep’t Apr. 17, 2018), a borrower in 1999 and 2000 borrowed $1,499,900 from the lender, giving back promissory notes requiring repayment by May 10, 2004.  Defendant repaid $179,885, leaving a balance due of $1,320,015.  In the normal course, plaintiff would have to sue by May 10, 2010 (six years after the repayment date).  The lender did not file suit until July 22, 2015 and the borrower made a motion for summary judgment to dismiss the case as time-barred.  The lender relied on emails and letters sent by the borrower’s attorney in 2009 and 2012, claiming they satisfy the revival statute and restarted the statute of limitations.  The correspondence described the promissory notes, the collateral and the interest rate, and stated that defendant “wishes to pay off and retire the secured loan” and “will be trying to retire the loan by the end of the year,” while also asking plaintiff to confirm the amounts outstanding.  Defendant argued the writings were not signed by him and, thus, could not satisfy the statute and, in any event, the attorney did not represent defendant.  The court denied the motion, holding (i) an acknowledgment of a debt signed by the party’s agent (an attorney in this case) can revive a time-barred claim; (ii) the writings acknowledged the debt and (iii) whether the attorney represented defendant is an issue for a jury to decide at trial.

If you have any questions about the timeliness of a potential claim, please do not hesitate to contact us.