A Very Expensive Typo?
We realize that Elie makes we make our fair share of typographical errors here at ATL. But this is just a blog, not a document being sent to a client or filed with a court, and we’re more focused on substance than style, due to the speed of the news cycle and our desire to be… FIRST! So please cut us some slack.
(But do continue to point out typos to us, either in the comments or by email. Readers are our unofficial copy editors, and we frequently fix typos after they’ve been brought to our attention.)
In any event, at least our typos don’t cost anyone millions. From the New York Times:
The Rushmore, a new 41-story glass and stone condominium tower on Riverside Boulevard at the Hudson River, seemed serene on a recent visit. The flowers in the interior courtyard were in full bloom; the ground-level pool had been filled. Sixteen buyers had already moved in.And yet an error of a single digit in an arcane document — the densely worded 732-page offering plan — could upset that happy picture, and cost the sponsors, the Extell Development Company and the Carlyle Group, tens of millions of dollars in lost revenue, lawyers say.
Of course, this isn’t the first example of an expensive typo (assuming it’s a typo; this is open to debate). Remember the $900,000 comma, or the $40,000 missing “L”?
But, if given effect, the glitch in the Rushmore offering plan will certainly be one of the more expensive ones. Find out the nature of the mistake — and the law firm responsible — after the jump.
Due to the declining real estate market, several buyers at The Rushmore are trying to get out of their contracts (without sacrificing their 15 percent deposits). As it turns out, they may be in luck:
Both the buyers and the sponsors agree that there was an error in a date in the offering plan, a document painstakingly prepared by a major New York law firm. Now they are debating whether the mistake was a trivial clerical error that should simply be ignored, or a one-time opportunity for Rushmore buyers to back out and recover their deposits or negotiate a better deal….Under state regulations, a sponsor is required to provide an operating budget for the first year of a new condominium, so buyers know what to expect when they move in. If the first closing does not occur by the end of the budget year, the sponsor is required to submit a new budget, and give the buyers a right to rescind their contracts.
At the Rushmore, somebody goofed. The offering plan promised to give buyers a right to back out of the plan if the first closing did not occur before the first day of the budget year, Sept. 1, 2008, rather than Sept. 1, 2009, after the last day. The first closing occurred in February 2009.
And who was responsible for this error?
The plan for the Rushmore was prepared by Stroock & Stroock & Lavan, a firm with 750 lawyers [FN1], and reviewed by the development team at Extell, but no one caught the mistake.
We wonder if the associates who worked on that deal still have their jobs. Whether it’s a typo or a substantive error, it’s a big boo-boo.
You may be asking yourself: What the Stroock happened here? Alas, we’ll probably never know (unless there’s a malpractice suit). Michel Evanusa, a somewhat Goth-looking real estate partner at Stroock, did not get back to the Times.
To find out the arguments for and against giving effect to the error — experts disagree on this — click on the link to the NYT article below.
[FN1] The NYT seems to be wrong on the number of attorneys at Stroock. According to the firm website, as well as the firm’s Career Center profile, the firm has around 350 lawyers.
Attack of the Fine Print [New York Times]
Earlier: What the Stroock Is Going On?
Comma Comma Comma Comma Comma Chameleon
Our Kingdom for an “L”
(64) Comments
Comments
FIRST!
SECOND and SHIT SCARED about the bar exam.
oh my god. I didn't study wills.
First to say they should have used Cravath. Cravath don't make mistakes like this.
Is the supremacy of Natural Law a valid answer for any and all NY Bar Exam questions?
is this really the "practice of law?" slaving over a 732 document. sounds miserable
Wow. Spend years looking over some ridiculous document, and then get fired at the end because you missed one typo. What a shitty, shitty life. Glad that's not me.
24 hours and 46 minutes
Sometimes I fantasize about being Stroocked. Does this make me gay?
dey Stroock er jerbs! an' den dey stroock er kerndos!
BarBri sez ... mutual mistakes in getting an agreement on paper are an exception to the parol evidence rule.
on the way to the airport. To go to albany. and I've already crapped my pants.
I lol'ed. And I'm scared shitless re the bar exam. So Lat, thanks for at least some news on here that didn't increase the sinking feeling in the pit of my stomach. Please avoid reporting any offer rescissions in the next three days, thanks.
So was Strook the firm? I just skimmed it but Elie never explicitly said.
typos make the baby jesus cry.
If the buyers have already acted as if they have no right to cancel, then the sponsors would have a claim against them if they tried to back out, under a promissory estoppel theory. Section 90 is very clear about this. The damage award would, of course, be limited to the sponsors' reasonable expectations, minus any reliance costs they may have induced on the part of the buyers.
I say the buyers can cancel. Know why? Bexause you pant-shitting (based on above posts) word-bending, technicality finding, pukes are paid to get this stuff right. The date is a CRITICAL aspect of the offering, not some inane misspelled word where a typo is truly trivial.
Face it, the law firm blew it. Sue the bastards!
Hmmm, a 732 page document to review into. That's at least 30 hrs billable, minimum.
Johnny Chimpo.
In the statement issued Sunday by attorney Wendy Murphy, Whalen — who has not spoken publicly — said she only saw the backs of the two men and did not know their race when she made the call. Murphy said Whalen, who works nearby, called because she had been aware of recent break-ins in the area and wanted to correct "misinformation" suggesting that she placed the call because the men on the porch were black.
"Contrary to published reports that a 'white woman' called 911 and reported seeing 'two black men' trying to gain entry into Mr. Gates home, the woman, who has olive colored skin and is of Portuguese descent, told the 911 operator that she observed 'two men' at the home," Murphy's statement read.
"It was very clear that she wasn't sure what the men's race was," Haas said in an interview with The Boston Globe Sunday night.
11, if anything this is unilateral mistake. The buyers are claiming that they knew all along that the contract said 2008 and not 2009. So if the builder uses a mistake theory, it will have to prove that the buyers knew or should have known that it was a mistake.
I think if there's any plausible reason for the K to say 2008, the buyers win. If not, the builder wins. My guess is we'll never know for sure, because the builder will just give the early buyers similar discounts to the later ones and settle the case. And the Strook associate who missed this was undoubtedly laid off months ago.
At $700/hour, you don't get excuses, kiddies! Sorry, you lose, you are fired, your firm is sued, and no one--absolutely no one--gives a shit.
Welcome to law.
Oh, and for those taking the bar--you are going to fail. The bored ones with no concern all around you? Yeah, they are passing it, but not you.
Good luck to everyone on the bar. It had a 90% pass rate for the last july go around, so just don't have a serious brain injury tonight and you'll be fine.
And basically rhe condo is screwed unless its obvious the 2008 date was an error
Probably a typo made by some first year making $160,000 per year. Can't even perform the work of a decent paralegal.
21- absolutely right- i heard in most states the bar examiners are going to fail just about everyone this year to control the amount of attorneys in the job pool
I prefer the work of indecent paralegals.
19 - You're lost. This is not about keeping a non-newsworthy law story alive. Well, at least, that particular non-newsworthy law story.
I want to have babies.
27 - But they don't want you.
This entire blog is one big typo
EvanUSA = Morticia Addams?
EvanUSA = Morticia Addams?
Ah the irony...
TYPO PATROL - Stroock 350 attorneys, not 750. And it's not a law firm, it's a temp agency.
6: I would be gratful to have that kind of job security.
--Samir Nagheenanajar
8 for comment of the year!
SHIT ... I meant 9.
32 - Looks like your comment got picked up. See the FN.
so.. you gonna fire elie soon? sounds like you are
Fire the associate? What happened to partner supervision? Clients do expect such supervision and do pay legal fees based on this expectation. Otherwise, we'd expect legal fees to be dramatically lower.
Former Thelen and current Orrick partner The Glass Cock here, opining that this was not just a typo. Yes, it's true, the Glass Cock has scores of junior associates working away as word processors, and some really capable (though a bit she-nazi like) mid levels supervising, but at the end of the day the Glass Cock reads through the documents to make sure that they make sense. The Glass Cock assumes that his juniors catch the typos, but he doesn't assume that they understand the deal or the basic legal and economic functioning of a transaction. Knowing when the financials went stale and when that triggered a right to cancel was ultimately the partner's responsibility. Thus, this was a failure of supervision, not a typo.
37 / 38 - True. But partners rarely get fired for mistakes; they are owners of the business, after all.
(If they do get fired, it is usually for office politics, or maybe incompatible billing rates / structures.)
Worked with Strook once. Simply the most incompetent group of lawyers ever assembled.
Michel Evanusa is kind of hot for an older woman.
"Readers are our unofficial copy editors, and we frequently fix typos after they're brought to our attention."
Best: ",,, fix typos once they have been brought ...."
Of course it makes no sense in this context that you would fix the typos before they have been brought to your attention.
42 - No, they could fix them "sua sponte" (after noticing them on their own).
42, u r a dufus.
42, u r a dufus.
Probably what happened was that the legal work on the deal occurred over a frenzied two weeks to a month. During that time no lawyer at Stroock had a day off. Most were required to answer client calls/e-mails until 2 AM or so each day. The lack of sleep, caffeine abuse, etc made the lawyers into zombies. They thus did not catch the typo.
Of course, doing the work over a longer period of time and providing reasonable time off would have been seen as not fulfilling the firm's role as serving its clients. Now, I'm not saying the firm should have had the lawyers work 9 to 5 with weekends off. But something in between 9 to 5 and working every day to 2 AM.
Good luck to everyone on the NY bar exam! Remember, just relax and think positive and you will do fine. 90% of people pass, and given all the hard work you have put in, you will almost certainly be among them.
Oh and also, some of you are going to fail and it will ruin your lives. Go get 'em!
Strook & Strook & Lavan = Larry & Darryl & Darryl
20 and 22,
Sure, but just realize that the buyers' CLAIM would be that it is a unilateral mistake. The builders are certainly claiming, by contrast, mutual mistake, namely that both sides agreed to 2009, 2008 was a typo, and now that the buyers saw this typo, they're trying to welch.
My larger point stands, which is that since the builders are claiming mistake, they get to introduce extrinsic evidence, and the parol evidence rule is inapplicable.
Would they get a directed verdict? Of course not. If you take all facts alleged by the buyers as true, it's unilateral mistake, the buyers had no way of knowing the builder was confused, and the buyer wins. But neither would the buyers win on a directed verdict.
This case seems to me one that would have to turn on the factual findings. It would naturally settle well before that point though. Which side gets a better swing at the settlement pinata though all boils down to whoever can muster the most compelling evidence in discovery, methinks.
- 11
I practice law for almost 40 years with a major regional law firm. I never, ever signed my name to any document that I did not read in full. I can't recall a time that I read a final draft that didn't contain at least one, and usually several typos. These had passed through god knows how many associates and junior partners hands, but still the careless errors remained. I never could seem to make young associates understand that clients pay a bundle of money for things to be done correctly, as in correctly all of the time. Yes, some attorneys would get fired from time to time for numerous instances of such errors. I would catch hell for yelling at the attorneys responsible for the mistakes. I retired and left the future errors to current partners and their malpractice carriers.
Interested party here. How could the developer demonstrate it was a mutual mistake? They drafted the document by themselves, it was not negotiated.
Maybe cheap law firms should rethink cutting their word processing departments and especially getting rid of proofreaders. Penny wise and dollar foolish as usual.
Company X hires Stroock. Hilarity ensues.
also, buyers do not agree it is a typo, that is a misquote by the writer.
Way to always let yourself off the hook for your own mistakes while you continue to sear others for theirs, Lat.
51 is right, 11/49 is wrong. You can't claim mutual mistake as to a term written into the final contract. This isn't a case of two ships called the Peerless, it's a case of one party trying to enforce the contract as written and the other one trying to get out if it. IF the 2008 term is so laughable that the buyers should have known it was a typo, then the builder has a case. If there's any explanation for it that passes the laugh test, though, the builder is screwed.
Likewise, the guy in the article talking about "scrivener's error" is wrong. If the contract said, "Residents shell not permit visiting Bostonians to shart in the Common Areas," the courts will read "shell" as "shall" because otherwise the provision is incoherent. But as long as it is at all reasonable to read "2008" as "2008," the court will construe the contract against the drafter/builder.
--20
My apologies,
Used the wrong terminology. Had thought a "scrivener's error" could also be called a mutual mistake. And yes, I was aware that contracts are construed against the drafter as a rule of construction.
I'm still not convinced that the buyers would win as a matter of law though, which is all that really matters.
- 11
What do you mean by your last statement 11/57? There seems to be a litany of case law in favor enforcing as written.
That is nothing Bert Fields the
Bev Hils lawyer--probably ucla-
cost Michael Jackson 8 figures
because a semicolon was erroneous
used for a comma.
I think it was based on royalties
I dunno about NY specifically, 11, but contract construction is a question of law in most jurisdictions. So unless the builder comes up with facts supporting the inference that the buyers knew or should have known there was a mistake (or that some particular buyer waived his rights, but that would only be good against that buyer), the builder DOES lose as a matter of law.
-- 20
54 - That's why (1) there is a question mark in the title and (2) Lat writes "assuming it's a typo; this is open to debate."
It seems pretty easy to demonstrate it's a unilateral mistake, as it's an offering plan drafter solely by the developer. So therefore you cannot consider extrinsic evidence, and therefore cannot demonstrate buyers "knew" it was a mistake?
What evidence can you offer? It can't be any statement by the builder's people -- the contract almost certainly has some clause to the effect that the contract language controls and any contrary oral statement is not binding. I know every 5-page boilerplate apartment lease I've ever signed has had something to that effect, this 730-page monstrosity must as well. Once you have K language saying, in essence, "our salespeople are full of crap and nothing they say is binding," you can't use their statements as notice of a mistake. Unless the buyers were in the room at Stttrook, how else would they know? All you have is constructive notice, which would be that the 2008 term is so crazy that no reasonable buyer would believe the seller was really offering it. Look at the actual facts in cases where unilateral mistake got someone off the hook: it's usually something like 5 bids within 10% of each other, and a 6th 40% lower than all the others. Courts are very, very reluctant to relieve contracting parties of their mistakes. The good news for the builder is that Strook is probably well-insured.
A case like this happened at Haight Gardner Poor & Havens, since swallowed up by Holland & Knight, probably due in part to this snafu.
The firm put together a ship mortgage for US Lines that was supposed to be for $10 million. However, due to a drafting error the amount specified in the mortgage was only $10,000. Imagine GE's (the secured creditor's) surprise when they went to enforce the mortgage after US Lines declared bankruptcy.
If you deal in mortgages regularly (for ships or otherwise) you would normally, in addition to specifying the amount of the mortgage in numbers, also spell out the exact amount in words, just as you do when you write a check. In case of a discrepancy the amount in words controls. Simple, no? Still, it wasn't done here.
The case was litigated over several years and the court help for the debtor's estate limiting the amount of the security to the stated amount of $10,000. I think they were able to get some larger amount from the bankruptcy estate and malpractice insurance covered some more, but what a black eye for the firm.
In a memo released by the firm it was stated that the secretary involved was fired and the associate was very sorry - and later left the firm shortly thereafter. No word was given about the partner, and none of the three was publicly identified (but of course we in the firm knew). But as mentioned above, the partner is NEVER fired for these mistakes, even though he/she ultimately is responsible for them.
In this case the partner in question was doubly wrong for allowing the wrong number to appear and also not protecting his client by inserting the amount of the mortgage in words as well. But he did not pay at all. He continued as a partner even for a while after the H&K takeover. He eventually left and went to a Wall Street firm and is now I believe retired.
Perhaps this partner's professional life should not have been ruined even for as big as mistake as this. But at least he should have had a little more humility, and let me tell you he was just as arrogant as before.
But what can you say other than - "That's just BigLaw!"