Earlier this month, Manhattan Supreme Court Justice Eileen Bransten dismissed a $10 million malpractice suit against Greenberg Traurig. Thomas Cusack, a former executive at American Defense Systems Inc., had brought the malpractice lawsuit. Cusack had accused Greenberg Traurig of malpractice, negligence and breach of fiduciary duty following the IPO of American Defense Systems. The lawsuit had alleged that Greenberg Traurig had prevented him from selling shares by neglecting to remove restrictions from 900,000 shares of American Defense stock held by Cusack.
The court dismissed the suit on the grounds that Greenberg Traurig had an attorney-client relationship only with the company American Defense Systems, and not with Cusack. The lawsuit was also found barred on the grounds of limitations. While the alleged incident happened in 2008, Cusack brought the lawsuit in 2011, beyond the three-year limitation from the time of injury for filing a lawsuit over negligence.
Before going for its initial public offering in 2008, the American Defense Systems notified all its shareholders, including Cusack that they could have restrictive covenants removed from the shares held by them – enabling the stock to be traded publicly. Shareholders were asked to contact Greenberg Traurig, which was acting as the securities’ counsel to the company. Shareholders were asked to seek an opinion letter from the law firm as regards their shares and then submit the same to the transfer agent of ADS, the Bank of New York Mellon.
Greenberg Traurig had duly issued an opinion letter for Cusack to BNY Mellon in June 2008, but Cusack alleges that BNY Mellon told him the letter was not in an acceptable form. However, Greenberg Traurig refused to issue another opinion letter claiming the American Defense Systems had directed it not to issue another opinion letter. Cusack filed a lawsuit, but apparently, too late.
The case is Thomas F. Cusack v. Greenberg Traurig, New York State Supreme Court, New York County, Nos. 651952/2011.