A Manhattan intellectual property law firm's piercing the corporate veil and fraud claims against a former client for more than $1.2 million in allegedly unpaid fees have been thrown out by a state appeals court.

But IP boutique Springut Law's remaining claims against a telecommunications patent holding company and its late president, Gerald Weinberger—including claims for breach of contract—continue to be contested in the heated, three-and-a-half-year-old legal battle that now also involves Weinberger's widow, Irene Weinberger.

An Appellate Division, First Department, panel on Tuesday tossed out several of Springut Law's claims against Gerald Weinberger, who died in 2015. In a terse opinion, the unanimous panel called the law firm's veil-piercing claim against Weinberger “wholly conclusory.” And it deemed the law firm's “fraud and fraud-related claims” against various defendants to be insufficient because the claims were “duplicative of its breach of contract claim.”

The dismissal of the veil-piercing and fraud-based claims affirmed the May 2017 decision of Manhattan Supreme Court Justice Debra James.

Springut Law “contends that defendant Gerald Weinberger … intentionally kept one of his entities judgment proof in a fraudulent effort to obtain legal representation without paying for it,” wrote Justices David Friedman, Judith Gische, Angela Mazzarelli, Cynthia Kern and Anil Singh. “The nonspecific allegations that Weinberger ignored corporate formalities, 'completely dominated and controlled' the corporate defendants, and made the business decisions for the entities were not sufficient to pierce the corporate veil.”

The justices also wrote, “A cause of action for fraud is not sufficiently stated where, as here, the only fraud charged relates to a breach of contract. … Nor has plaintiff alleged any specific misrepresentations of 'present fact' that were collateral to the contract.”

Midtown-based Springut Law, which bills itself on its website as “experts in fashion, life sciences, tech and media IP,” and which lists clients ranging from Cartier and Gucci to Quest Diagnostics and McAfee, lodged its action in 2014 against Weinberger and his Smithtown, New York-based company, Rates Technology Inc. In a 19-page amended complaint filed in June 2015, the law firm added Irene Weinberger to the case.

The complaint details years of Springut Law's representation of RTI in mostly patent-based civil actions, and it notes, by patent number, two patents that RTI allegedly holds. The complaint also calls RTI's patent success a “lucrative business indeed,” while alleging that since 2003, RTI has licensed its patents to upward of 100 companies in the telecommunications field.

But then the law firm alleges significant fraud, while calling RTI merely a shell company.

“Rather than holding [the] lucrative revenue stream in the possession of RTI so that it could pay its law firm creditors, defendants contrived a scheme to keep RTI insolvent and divert these funds through another company, defendant LCR [LCR Technologies Inc.], to defendants Gerald and Irene Weinberger's personal bank accounts, thereby making it impossible for any law firm or other creditor to enforce any judgment against RTI,” Springut Law alleges. It adds that “Gerald Weinberger … completely dominated every aspect of the operations of, both RTI and LCR.”

The firm claimed RTI and LCR maintained bank accounts controlled by the Weinbergers, where funds were diverted for personal use: ”a large amount of funds—in excess of $1 million—were withdrawn by checks made out to Gerald Weinberger, who in turn endorsed them to his wife, Irene Weinberger, who in turn, deposited them in her personal bank account or accounts.”

In court papers, the defendants, which at this juncture include RTI, LCI, Irene Weinberger and the estate of Gerald Weinberger, have denied that the outstanding fees are owed to Springut Law and have called the claimed fee amounts both unreasonable and unauthorized. The defendants, represented by Isaac Zaur, a Clarick Gueron Reisbaum partner in Manhattan, have also said that Springut's representation of RTI in at least one matter led to an important RTI telecommunications-related patent suffering damage and losing some value.

Zaur added in an email to the Law Journal on Wednesday, “The Springut firm ran up a bill over well over a million dollars, much of it while their client's principal was in his final illness. Their work on behalf of RTI ended in a disastrous adverse claim construction determination, destroying the value of the very patent they were retained to assert. It is most unfortunate that the firm now seems intent on pursuing the widow of RTI's principal, who was left almost entirely without liquid assets upon Mr. Weinberger' death.”

He continued, “Springut signed an engagement letter with RTI, not Mr. Weinberger, and certainly not Mrs. Weinberger. Any claim should be pursued against that entity alone.”

Tal Benschar, a partner at Springut Law representing the firm, said Wednesday that the defendants “ran up a large bill, the firm is looking to recover.” He also said that the dismissal of certain claims by the First Department did not amount to a setback for Springnut because “we have other claims in the case that can still be pressed,” including a claim for fraudulent conveyance against the Weinbergers.

The case is Springut Law v. Rates Technology, 156233/14.