Red Zone v. Cadwalader, Wickersham & Taft
NEW YORK COUNTY
Justice Melvin Schweitzer
Law firm Cadwalader, Wickersham & Taft (CWT) moved for leave to amend its answer seeking to assert a defense of assumption of the risk. CWT represented Red Zone regarding a potential transaction with Six Flags. Red Zone sued CWT asserting it failed to properly carry out Red Zone's instructions to ensure that a letter agreement memorialized Red Zone's and UBS Securities' oral agreement limiting Red Zone's liability for fees to UBS for the transaction to $2 million for any outcome not resulting in Red Zone actually owning a majority of Six Flags' voting stock. The agreement was later held not to so cap UBS's fees, and Red Zone argued CWT committed malpractice. CWT submitted attorney Block's affidavit and Red Zone argued CWT was bound by Block's admission that CWT believed, before the agreement was signed, that it did not clearly record the oral agreement. Red Zone claimed CWT admitted malpractice, thus waived the assumption of the risk defense. The court noted it was too late to now add a new unpleaded defense, especially one "tethered to an affidavit which starkly contradicts the affiant's prior deposition testimony." It stated granting the motion would gravely prejudice New York's rules-based court system, denying CWT's motion to amend its answer.