Opinion
35178/04.
Decided July 2, 2008.
Regina Felton, PC Brooklyn NY, Plaintiff.
Daniel Singer, Esq. Goldberg Weprin Ustin LLP New York NY, Defendant.
In my prior decision and order in this action, reported at 16 Misc 3d 1132 (A), 2007 NY Slip Op 51671(U), I restored this matter to the Court calendar, and granted summary judgment and dismissal to defendant United Equities, Inc. (UEI), pursuant to CPLR Rule 3212. Further, I ordered a hearing on November 16, 2007, pursuant to 22 NYCRR § 130-1.1 (d), to give plaintiff Robert Robertson and his counsel, Regina Felton, Esq., a "reasonable opportunity to be heard" to determine if they had engaged in "frivolous conduct," as defined in 22 NYCRR § 130-1.1 (c), for continuing the instant action against UEI, a corporation that should never have been a named defendant.
My prior cited decision and order recited the history of this case, including Ms. Felton's insistence in continuing the action against defendant UEI, not the proper party, which should have been United Equities Corporation (UEC).
Background
UEI's counsel, Goldberg Weprin Ustin, LLP (GW U), at the November 16, 2007 hearing, presented time sheets totaling $25,086.25 for legal services rendered to UEI in the instant matter. The Court gave Mr. Robertson and Ms. Felton an opportunity to be heard.
The instant action was commenced by plaintiffs in October 2004. Mr. Behzad Nehmadi, UEI's President, stated in ¶'s 20 — 25 of his affidavit in support of the motion for summary judgment and the award of costs and/or sanctions:
20. Amazingly, when presented with the . . . overwhelming evidence that United Equities, Inc., the entity sued herein, is a different
entity than the entity sued in the Initial Proceeding ( i.e., United Equities Corporation improperly sued as United Equities Inc.), Plaintiffs' attorneys summarily dismissed the documentary evidence and refused to acknowledge that a serious mistake was made by Plaintiffs inasmuch as they were seeking to enforce the Judgment [sic] against the wrong party.
21. At my December 28, 2005 deposition, I clearly and repeatedly stated to Plaintiff's attorney, Regina Felton, Esq., that United Equities, Inc. had never any connection whatsoever with the subject matter of this litigation. Plaintiff's counsel admitted to me, after the deposition's conclusion, that she believed that United Equities Inc. was not a proper defendant in this case.
22. I also understand that, nonetheless, Plaintiff's counsel again inexplicably refused to discontinue this matter as against United Equities Inc. at the compliance conference held on January 18, 2006.
23. Plaintiff's counsel subsequently failed to furnish United Equities Inc.'s attorneys with a copy of [the] December 28, 2005 deposition transcript, despite defense counsel's repeated requests for a copy of said transcript.
24. Furthermore, as indicated in the accompanying affirmation of Eli D. Golob, Esq., Plaintiff's counsel continued to refuse to discontinue this action as against United Equities Inc. despite the fact that United Equities Inc. had nothing to do with the transactions at issue herein.
25. The foregoing facts inescapably lead to the conclusion that Plaintiffs wrongfully commenced this action against United Equities Inc.
Eli Golub, Esq., of GW U, stated in ¶ 13 of his affirmation in support of the motion for summary judgment and the award of costs and/or sanctions, that:
this office prepared the Certificate of Incorporation for United Equities, Inc. and acted as incorporator for it, which included handling all aspects of the incorporation. Thus, this firm is intimately familiar with the existence and status of United Equities, Inc. and can affirmatively state that the entity sued herein, United Equities Inc., is not the entity sued in the Initial Proceeding and never owned or claimed to own any property in Kings County.
Mr. Golob claimed, that after he received the complaint in the instant matter from UEI, he called Ms. Felton to explain that the wrong party had been sued, but Ms. Felton demanded that UEI answer the complaint. Mr. Golob attached copies of various letters and faxes from his colleague, Aubrey E. Riccardi, Esq., to Ms. Felton, in January and February 2005, which provided numerous documents demonstrating that the wrong party had been sued. The only response from Ms. Felton was a letter, dated February 15, 2005, which stated "if you wish to make your Motion to Dismiss, I would suggest that you do so, otherwise, I expect your client to appear for any conferences that are held in connection with this case. Otherwise, your client will be deemed to be in default." Mr. Golob also pointed out in his affirmation in support that Mr. Nehmadi was deposed on December 28, 2005 [¶ 35], but that Ms. Felton failed to provide a copy of the deposition, despite repeated requests [¶ 37]. Similar to Mr. Nehmadi, Mr. Golob stated, in ¶ 35, that after the deposition ended, "Ms. Felton finally concluded that she believed that United Equities Inc. was not a proper defendant in this case." He then noted, in ¶ 36, that Ms. Felton refused to discontinue the action against UEI at the January 16, 2006-compliance conference. Mr. Golob, in ¶ 38, stated that in spite of the evidence that the wrong party, UEI, was sued, "Plaintiffs knowingly, intentionally and in bad faith continued to prosecute this action against United Equities Inc." Then, in ¶ 39, Mr. Golob claims that this "is the precise type of conduct that Rule 130-1.1 (a) seeks to discourage."
Ms. Felton, in ¶ 21 of her affirmation in opposition to the motion for summary judgment and the award of costs and/or sanctions, stated that she requested that UEI's President execute a statement that he is in no way connected with 1321 Fulton Street Realty Corp. and John Enos Star, and then she would "withdraw the action." In ¶ 22, she stated, "I do not understand why the principal Behzad Nehmadi did not execute the sworn statement requested." Ms. Felton should have noted that Mr. Nehmadi, himself, verified this in UEI's verified answer, filed on January 21, 2005. As such, UEI's verified answer qualifies as an affidavit. CPLR § 105 (u) states, "A verified pleading' may be utilized as an affidavit whenever the latter is required."
It is crystal clear that UEI was the wrong party sued by plaintiffs. While plaintiffs may be properly aggrieved by the actions of John Enos Star and 1321 Fulton Street Realty Corp., the other defendant should have been UEC, not UEI. Thus, I restored this matter to the calendar for the sole purpose of granting summary judgment and dismissal of the action against UEI, and, pursuant to 22 NYCRR § 130-1.1, to conduct a hearing to give plaintiff Robert Robertson and his counsel, Regina Felton, Esq., an opportunity to be heard as to why this Court should not sanction them and/or award defendant UEI costs for the "frivolous conduct" of plaintiff and his counsel in continuing the instant action against UEI, a corporation that should never have been sued.
Discussion
Ms. Felton overlooked that UEI, in its verified answer, verified by its President, Mr. Nehmadi, denied: being the correct entity sued [¶ 21]; and, never owned any real property in Kings County [¶'s 25 and 27]. UEI's verified answer, states, in ¶ 31, that UEI "never transacted business with any individual by the name of John Enos Star or any entity by the name of 1321 Fulton Street Realty Corp. In fact, Until [sic] its receipt of the summons and complaint served herein, United never heard of either John Enos Star or 1321 Fulton Street Realty Corp." As mentioned previously, CPLR § 105 (u) instructs that "[a] verified pleading' may be utilized as an affidavit whenever the latter is required." The Court, in Kempf v Magida ( 37 AD3d 763 [2d Dept 2007]) held that "a verified pleading may be utilized as an affidavit whenever the latter is required ( see CPLR 105 [u])." ( See Travis v Allstate Ins. Co., 280 AD2d 394 [1st Dept 2001]; Hladczuk v Epstein, 98 AD2d 990 [4th Dept 1983]). Ms. Felton set unreasonable conditions to discontinue UEI from the instant action. She should have discontinued UEI from the action after the appropriate documentation was presented to her.
Ms. Felton, for reasons unknown to the Court, persistently continued the action against UEI, the wrong defendant. This forced UEI to continue to litigate this matter and incur wasteful litigation-related expenses. Defendant's counsel, in January and February 2005, provided Ms. Felton with numerous documents demonstrating that the wrong party had been sued. UEI's President was deposed on December 28, 2005. Despite Mr. Nehmadi's clear denials that UEI had no connection whatsoever with the subject of this litigation, Ms. Felton failed to provide defendant's counsel with a copy of the deposition transcript [¶ 37 of Golob affirmation in support of the motion].
The failure of Regina Felton, Esq. to discontinue the instant action against UEI, after being presented with clear evidence that UEI was the wrong corporation sued, is "frivolous." 22 NYCRR § 130-1.1 (a) states that
The court, in its discretion may award to any party or attorney in any civil action or proceeding . . . costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney's fees, resulting from frivolous conduct as defined in this Part, which shall be payable as provided in section 130-1.3 of this Subpart. In addition to or in lieu of awarding costs, the court, in its discretion, may impose financial sanctions upon any party or attorney who appears in a civil action or proceeding who engages in frivolous conduct as defined in this Part, which shall be payable as provided in section 130-1.3 of this Part.
Further, 22 NYCRR § 130-1.1 (c) states that:
For purposes of this part, conduct is frivolous if:
(1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law;
(2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or
(3) it asserts material factual statements that are false.
It is clear that Ms. Felton, since February 2005, ignored UEI's good faith attempts to resolve this matter without resort to lengthy and costly proceeding. Ms. Felton's continuance of the action against the wrong defendant UEI, "is completely without merit in law" and "asserts material factual statements [about UEI] that are false." Ms. Felton admitted to Mr. Nehmadi, at the conclusion of his December 28, 2005 deposition, and to his counsel, Mr. Golub, that UEI was the wrong entity sued. Ms. Felton should have discontinued the instant action after that date. Therefore, this Court will award to UEI "costs in the form of reimbursement for . . . reasonable attorney's fees, resulting from frivolous conducted as defined in this Part [ 22 NYCRR § 130-1.1 (a)]," subsequent to Mr. Nehmadi's deposition.
The Court finds that the reasonable attorney's fees incurred by UEI subsequent to the December 28, 2005 deposition was $13,287.50. This amount was determined by my analysis of the time sheets submitted by GW U at the November 16, 2007 hearing, and adding $675.00 for three hours at the hearing, for one GW U attorney billing at the rate of $225.00 per hour. The mathematical determination of $13,287.50 in costs, subsequent to December 28, 2005, is as follows:
Eli Golub, Esq.36.25 hours x $225.00/hour=.$ 7,250.00
Matthew Hearle, Esq.3.40 hours x $275.00/hour=1,455.00
Matthew Hearle, Esq.6.00 hours x $325.00/hour=1,950.00
Daniel Singer, Esq.8.70 hours x $225.00/hour= 1,957.50
$12,612.50Daniel Singer, Esq.3 hours at 11/16/07 hearing= 675.00
TOTAL=$13,287.50
In Guttridge v Schwenke ( 155 Misc 2d 317 [Sup Ct, Westchester County1992]), plaintiffs claimed a balance due under a contract. Defendants presented plaintiffs with clear documentary evidence that the outstanding balance had been paid. Just as in the instant case, plaintiffs continued to refuse to discontinue the action. The Court, at 320, instructed that:
Viewed against an objective standard, the failure of plaintiffs to perform any reasonable inquiry into the facts before asserting the second cause of action and the failure to admit incontrovertible facts constituted frivolous conduct. Such conduct was completely without merit and could not be supported by a reasonable argument for an extension, modification or reversal of existing law ( 22 NYCRR § 130-1.1) . . . Plaintiffs' counsel must share the blame for such frivolous conduct as it was also his responsibility in preparing and verifying the complaint, and in conducting this litigation, to make diligent inquiry into the facts and to discontinue litigation when it became apparent it lacked any merit. The frivolous conduct by plaintiffs and their attorney has not only burdened defendant by forcing him to incur legal expenses in defense of needless litigation, it has burdened the court by having to intervene on defendant's behalf. An award of costs and sanctions is needed here not only to compensate defendant, but to deter abuse of the judicial system and to ensure the orderly administration of justice.
In both Moran v Regency Savings Bank, F.S.B. ( 20 AD3d 305 [1st Dept 2005]) and Timoney v Newmark Co. Real Estate, Inc. ( 299 AD2d 201 [1st Dept 2002]), the Appellate Division, First Department, affirmed sanctions and costs against plaintiffs' counsel for continuing actions in the face of unrebutted documentary evidence that plaintiffs' claims lacked merit. The Moran Court, at 306, held:
The motion court's award of costs and sanction was a proper exercise of discretion in light of plaintiff's counsel unjustifiable and consistent refusal to discontinue the action against the Rosenfeld firm in the face of unrebutted documentary evidence showing that another party was the owner of the premises, coupled with counsel's unreasonable insistence on tying such discontinuance to the obtaining of an admission of ownership and control from an unrelated defendant.
In Janitschek v Trustees of Friends World College ( 249 AD2d 368 [2d Dept 1998]), plaintiffs Nickin and Raphael, and their attorney, were sanctioned because for a number of years preceding the commencement of the litigation there was no legal or factual basis to sue defendant college. ( See Laing v Laing, 261 AD2d 622 [2d Dept 1999]).
In Levy v Carol Management Corporation ( 260 AD2d 27, 33 [1st Dept 1999]), the Court stated that, in determining if sanctions are appropriate, the Court must look at the broad pattern of conduct by the offending attorneys or parties. Further, "22 NYCRR 130-1.1 allows us to exercise our discretion to impose costs and sanctions on an errant party. . ." The Levy Court held, at 34, that "[s]anctions are retributive, in that they punish past conduct. They also are goal oriented, in that they are useful in deterring future frivolous conduct not only by the particular parties, but also by the Bar at large." This Court's order that plaintiff's counsel is to pay UEI costs of $13,287.50 for reimbursement for reasonable attorney's fees is necessary to punish Ms. Felton for continuing the instant action after December 28, 2005.
The Court, in Kernisan, M.D. v Taylor ( 171 AD2d 869 [2d Dept 1991]), noted that the intent of the Part 130 Rules "is to prevent the waste of judicial resources and to deter vexatious litigation and dilatory or malicious litigation tactics ( cf. Minister, Elders Deacons of Refm. Prot. Church of City of New York v 198 Broadway, 76 NY2d 411; see Steiner v Bonhamer, 146 Misc 2d 10) [ Emphasis added ]." Clearly, since December 28, 2005, Ms. Felton's continuance of the instant action is "a waste of judicial resources." Her conduct, as noted in Levy, must be deterred. In Weinstock v Weinstock, ( 253 AD2d 873 [2d Dept 1998]), the Court ordered the maximum sanction of $10,000.00 for an attorney who pursued an appeal "completely without merit," and holding at 874, that "[w]e therefore award the maximum authorized amount as a sanction for this conduct ( see, 22 NYCRR 130-1.1) calling to mind that frivolous litigation causes a substantial waste of judicial resources to the detriment of those litigants who come to the Court with real grievances [ Emphasis added ]." Citing Weinstock, the Appellate Division, Second Department, in Bernadette Panzella, P.C. v De Santis ( 36 AD3d 734 [2d Dept 2007]), affirmed a Supreme Court, Richmond County $2,500.00 sanction, at 736, as "appropriate in view of the plaintiff's waste of judicial resources [ Emphasis added ]."
In Navin v Mosquera ( 30 AD3d 883 [3d Dept 2006], the Court instructed that when considering if specific conduct is sanctionable as frivolous, "courts are required to examine whether or not the conduct was continued when its lack of legal or factual basis was apparent [or] should have been apparent' ( 22 NYCRR 130-1.1 [c])." In Sakow ex rel. Columbia Bagel, Inc. v Columbia Bagel, Inc. ( 6 Misc 3d 939, 943 [Sup Ct, New York County 2004]), the Court held that "[i]n assessing whether to award sanctions, the Court must consider whether the attorney adhered to the standards of a reasonable attorney ( Principe v Assay Partners, 154 Misc 2d 702 [Sup Ct, NY County 1992])."
In the instant action, a reasonable attorney would have discontinued the action against defendant UEI when presented with documentation demonstrating that UEI was the wrong party sued, or if still not convinced, then at the conclusion of Mr. Nehmadi's December 28, 2005 deposition. The Court, in its discretion, is only awarding costs to UEI, and not sanctioning Ms. Felton, because the $13,287.50 award of costs is a sufficient penalty.
Conclusion
Accordingly, it is
ORDERED that, after conducting a hearing on November 16, 2007, to determine if plaintiff Robert Robertson and his counsel, Regina Felton, Esq., engaged in "frivolous conduct," as defined in the Rules of the Chief Administrator, 22 NYCRR § 130-1.1 (c), and that plaintiff Robert Robertson and his counsel, Regina Felton, Esq. were granted "a reasonable opportunity to be heard," pursuant to the Rules of the Chief Administrator, 22 NYCRR § 130-1.1 (d), the Court finds that Regina Felton, Esq. engaged in "frivolous conduct" in the instant matter, by not discontinuing with prejudice the instant matter against defendant United Equities, Inc., after December 28, 2005; and it is further
ORDERED that Regina Felton, Esq., pursuant to the Rules of the Chief Administrator, 22 NYCRR § 130-1.2, shall reimburse defendant United Equities, Inc., $13,287.50 in costs for reasonable attorney's fees, c/o Goldberg, Weprin Ustin, LLP, 1501 Broadway, New York, NY 10036, within thirty (30) days of after service of the notice of entry of this decision and order.
This constitutes the Decision and Order of the Court.