Monday, May 14, 2007

Answer to Certified Question. In Highland Capital Management L.P. v. Schneider, the Second Circuit had certified the question of whether certain promissory notes issued by McNaughton Apparel Group Inc. to the Schneiders fall within the definition of a "security" as contemplated by UCC 8-102(15) to the New York Court of Appeals. The New York Court of Appeals held the promissory notes were securities under the UCC. In light of this ruling, the Court remanded the case to the District Court, which had held that the notes were not securities, for reconsideration of certain claims. In addition, the Court reversed the dismissal of one claim on which the District Court had held that the Statute of Frauds limited the damages, rendering the claim below the jurisdictional requirement of the Court. In light of the fact that the notes were securities, the Statute of Frauds limitation did not apply and the count was reinstated.

The decision in this case can be found here.

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