Skadden $35 Million Legal Malpractice Suit Dismissed by Acting Manhattan New York Supreme Court Justice

A Manhattan Acting Supreme Court Justice has granted a motion to dismiss a claim against Skadden, Arps, Slate, Meagher & Flom, after ruling that the claim was time-barred under Oregon’s two-year statute of limitations.

Creditors of a bankrupt conglomerate had sued Skadden, in New York state court, after allegations that Skadden acted unethically in failing to disclose or obtain waivers for multiple conflicts.

The plaintiffs, lenders and private equity funds owners, forced a company, Evergreen International Aviation Inc., to file for Chapter 7 protection in Delaware state court in late 2013. The head of Skadden’s corporate restructuring group, Jay Goffman, Esq., had also been named as a Defendant.

The complaint detailed two “likely fraudulent transfers” in 2013, diverting cash and other assets, which would have been part of the bankrupt estate. First, there was a transfer of two aircrafts, valued at $10.6 million, to Evergreen Vintage Aircraft, a non-profit controlled by Smith, apparently without consideration.

Second, in May, 2013, Evergreen International agreed to sell stock in its helicopter subsidiary to Erickson Air-Crane Inc. for $250 million in cash and other consideration. The complaint alleged that Skadden represented five different companies in the sale, including Evergreen International, its helicopter subsidiary, a separate holding company, and Smith.

In dismissing the case, the Court relied on a New York borrowing statute that applies Oregon’s two year statute of limitations instead of New York’s three year statute of limitations. The Court applied the borrowing statute because all claims and transactions involved in this case occurred in Oregon.

The Court further relied on a recent decision by the Appellate Division, First Department, which emphasized that the purpose of the borrowing statute is to prevent plaintiffs from forum shopping and filing in New York to take advantage of the more favorable statute of limitations. 

Centre Lane v. Skadden

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