A former executive filing a lawsuit against a company for a breach of a severance agreement is not necessarily out of the ordinary. What is more shocking, however, is when that executive was previously convicted of stealing millions of dollars from that same entity.

This scenario is currently taking place with regard to former Tyco International Ltd. Chief Financial Officer Mark Swartz. He was convicted in 2005 on charges of grand larceny and securities fraud. While he is currently still serving an 8 to 25 year prison term, Mr. Swartz filed a breach of contract claim against his former employer on May 4.

Perhaps surprisingly, there is not necessarily any reason why a party convicted of a crime against another party cannot later bring a New York breach of contract claim against that same individual or entity. The party alleging the breach of New York contract will have to prove the same elements as any other claimant, namely:
  • That an enforceable agreement existed between the parties.
  • That the plaintiff fulfilled his obligations.
  • That the defendant breached the agreement.
  • That the plaintiff sustained damages as a direct result.

In order to prevail in his claim against Tyco, Mr. Swartz will have to demonstrate each of the above points with regard to the severance agreement that he alleges validly existed between the parties. To support his claim, Mr. Swartz asserts that the Board of Directors had full knowledge that charges against him for grand larceny and securities fraud were pending at the time that it approved the severance agreement. However, several of the members of the board who were serving at the time the agreement was approved were later replaced in connection with the investigation. This may ultimately work against Mr. Swartz in his action.

For more information about breach of contract and other New York business litigation matters, contact a New York breach of contract attorney today at (888) 497-3410.
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