Circle Intl. Group, Inc. v Anikeyeva

[*1] Circle Intl. Group, Inc. v Anikeyeva 2005 NY Slip Op 50979(U) Decided on June 28, 2005 Supreme Court, Kings County Schack, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 28, 2005
Supreme Court, Kings County

Circle International Group, Inc. and TIME MEDICAL BILLING & COLLECTION, INC., Plaintiffs,

against

Valentina Anikeyeva, ANDREY ANIKEYEV, DR. IGOR CHAN-MIN, DR. SERGEI KOCHLATYI, NEW WAY MEDICAL, PC, I CHAN MIN MD MEDICAL PC, Defendants.



12350/03

Arthur M. Schack, J.

The issue before the Court is whether the written stipulation of settlement, dated August 20, 2003, signed by all parties and all parties represented by counsel, should be enforced. Plaintiffs move by order to show cause to: restore this action to the calendar; direct defendants Anikeyeva and Anikeyev to comply with the terms of the August 20, 2003 stipulation; and, for a hearing to determine if defendants Anikeyeva and Anikeyev defaulted under the terms of the stipulation, and, if so, to assess monetary damages against these defendants. Defendants Anikeyeva and Anikeyev cross-move for an order to declare the stipulation of settlement null and void or, in the alternative, for an order to place in escrow the percentage of collections plaintiffs would receive from defendant Anikeyeva, if defendant Anikeyeva prevails in a contemplated separate civil RICO action against plaintiffs and the President of plaintiff corporations, Oleg [*2]Atlasman, "seeking the monies that the Petitioners [sic] have stolen from the Respondent [sic] VALENTINA ANIKEYEVA." This contemplated plenary action is allegedly to be filed against plaintiffs, Mr. Atlasman, and approximately 64 other individuals or business organizations for conversion of funds [paragraph 34 of affidavit in support of cross-motion].

The arguments of both opposing counsel with respect to the instant order to show cause and cross-motion are replete with accusations and conclusory statements about whether the opposing parties to this action are engaged in, among other things, organized criminal conspiracies, insurance fraud, burglary, theft, enterprise corruption, RICO violations, money laundering, adultery, and, prostitution. While the numerous allegations and accusations read like a script outline for a future episode of "Law and Order" or "The Sopranos," both attorneys are advised not to hurl venomous barbs at each other and opposing parties. Stick to the issues before the Court.

Background

According to the April 2003 complaint and amended verified complaint [exhibit A of

order to show cause], plaintiffs are domestic corporations in the business of providing medical

management, billing and collection services. Further, defendant Valentina Anikeyeva owns and

operates numerous corporations providing acupuncture services, and her husband is defendant

Andrey Anikeyev (both will be referred to as "the Anikeyevas"). The other defendants are medical doctors and their professional corporations. In their May 2003 answers [exhibit B of order to show cause], all defendants admit that they contracted with plaintiffs for billing services. The complaint alleges that plaintiffs, who received payments from no-fault insurance carriers for defendants, were not properly paid by defendants. Further, plaintiffs allege that defendants, prior to March 30, 2003, conspired to have a burglary executed at plaintiffs' Coney Island Avenue, Brooklyn, office, which resulted in the removal of computer software billing records, and deprived plaintiffs of fees from the collection of no-fault insurance payments due defendants.

All parties, represented by counsel, executed the August 20, 2003 stipulation of settlement [exhibit C of order to show cause]. The stipulation stated that the fees owed to plaintiffs Circle and Time "are in dispute and are presently not determined and would involve substantial time and expense to determine precisely." The stipulation further states:

the within agreement shall constitute a good faith effort to approximate

the value of the services performed.

ALL PARTIES believe it is in their mutual and individual interests to

resolve the above captioned action, without admission of liability, wrongdoing, intentional acts, unlawful conversion, trespass, theft misappropriation,

malfeasance, misfeasance, negligence, or admission.

Solely to avoid the expense, inconvenience, distractions, and

inherent uncertainties associated with any litigation and the additional

legal fees and expenses that inevitably would result from having to prosecute

and defend the case through trial on the merits, the parties to this Settlement [*3]

Agreement desire to settle this lawsuit.

THEREFORE, the PARTIES agree that the above captioned action

is discontinued without prejudice.

The parties agreed that the Law Firm of Belisi & Donovan would receive the settlement proceeds. Defendants agreed to cooperate with Belisi & Donovan and were to pay 20.5% of the gross proceeds recovered for billing and management services for which payments prior to March 30, 2003 had not been previously paid to plaintiff corporations. Further, defendants agreed to give to Belisi & Donovan any uncashed checks from August 20, 2003 forward relative to the applicable billing period for encashment, distribution, payment and/or collection, as well as no-fault denials or requests for additional information,

Oleg Atlasman, in his affidavit in support of the order to show cause, claims that the Anikeyevas complied with the stipulation for approximately six months. They delivered checks worth about $200,000, which represented about $1,000,000 recovered by the Anikeyevas for services rendered by plaintiffs to the Anikeyevas prior to March 30, 2003. Mr. Atlasman alleges that the Anikeyevas, since January 2004, disregarded the stipulation, refused to pay additional funds to plaintiffs, and failed to provide copies of no-fault denials and patient records to plaintiffs. Defense counsel makes numerous accusations of criminal conduct by plaintiff corporations and many other entities. Attached to his cross-motion is a lengthy affidavit of James Hand [exhibit B of cross-motion], who alleges to be a principal of a private investigation firm, Secure and Recover LLC, and a retired New York City Police Department Lieutenant, who commanded the "Fraudulent Accident Investigation Squad" in 2002 and 2003. Mr. Hand recites voluminous charges of wrongdoing and criminal conduct by many individuals and businesses, and states in paragraph 7 of his affidavit that:

This is an ongoing investigation that has thus far uncovered a

wide scale and pervasive scheme to defraud Valentina Anikeyeva and

Ms. Anikeyeva's Licensed Professional Accupuncture Corporations

(the 'P.C.s') out of at least 550,000 [sic] dollars, perhaps in excess if

$1,000,000, the exact sum still to be determined.

He concludes in paragraph 112 of his affidavit that:

Based upon my training and experience Oleg Atlasman has engaged

in nefarious schemes involving on the state level, insurance fraud, money

laundering, tax evasion, forgery, enterprise corruption and grand larceny

to name just a few.

Defense counsel admits in paragraph 7 of his reply affirmation to a business relationship with Mr. Hand. He asserts in paragraph 14 of his reply affirmation that he served as a Suffolk County Assistant District Attorney, and then in 2003 and 2004 as a Kings County Assistant District Attorney in the Rackets Bureau, specializing in insurance fraud. Further, in paragraph 20 of his reply affirmation, he claims that he led investigations that utilized wiretaps, massive undercover operations, search warrants and confidential informants to secure "hundreds of arrests." Curiously, he never reveals how many of these arrests resulted in convictions.

Defense Counsel, in exhibit C of his cross-motion, attaches an affidavit of his client, Valentina Anikeyeva, which makes numerous accusations about plaintiffs and Mr. Atlasman. Ms. Anikeyeva admits owning eight acupuncture professional corporations in paragraph 1. The [*4]Court is troubled by the extreme sloppiness of this inadmissible affidavit. The first page states that the affidavit was executed in the State of New York, County of Nassau, while on the sixth and last page, it is sworn to and subscribed before a Notary Public in the State of Florida, on January 17, 2004. Yet, in paragraphs 16 and 17, Ms. Anikeyeva makes allegations about events in April 2004, three months after she allegedly signed the defective affidavit.

Plaintiff corporations, in their papers in support of their order to show cause and in opposition to defendants' cross-motion, accuse all of the various defendants of illegal criminal activities. For instance, in paragraph 12 of Oleg Atlasman's reply affidavit, he states that:

the Anikeyevas have created a ring of 24 Acupuncture P.C.'s, each of

which is "used" or "rented" by them for purpose of billing for between

$30,000 to $50,000.00 [sic] per month, per P.C., for alleged acupuncture

services. Clearly, the average acupuncturist does not have 24 professional

New York corporations with income of millions of dollars, while residing

in a lavish lifestyle in Florida.

This sideshow, used by both sides, to accuse the opposing parties of criminal activities, attaching numerous irrelevant documents, and pursuing self-serving, speculative and unsubstantiated allegations, diverts attention from the issue at hand, the sufficiency of the August 20, 2003 stipulation of settlement and if its terms have been breached by the Anikeyevas.

Further, defense counsel continually refers in his papers to plaintiffs as "petitioners" and defendants as "respondents." This is not only annoying to the Court, but it is incorrect.

For the reasons to follow, the Court will uphold the August 20, 2003 stipulation of settlement of the parties.

Discussion

CPLR Rule 2104, entitled "Stipulations" states:

An agreement between parties or their attorneys relating to any

matter in an action, other than one made between counsel in open court,

is not binding upon a party unless it is in a writing subscribed by him or

his attorney or reduced to the form of an order and entered. With respect

to stipulations of settlement and notwithstanding the form of the stipulation

of settlement, the terms of such stipulation shall be filed by the defendant

with the county clerk. [emphasis added]

A stipulation is a contract, binding all parties, and favored by the courts. Hallock v State, 64 NY2d 224, 230 (1984). The Hallock Court held, at 230, that "[o]nly where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation (Matter of Frutiger, 29 NY2d 143, 149-150)." See Matter of Galasso, 35 NY2d 319 (1974). The Court of Appeals, in McCoy v Feinman, 99NY2d 295 (2002), revisited the requirements of a valid stipulation, holding, at 302:

Stipulations not only provide litigants with predictability and assurance

that courts will honor their prior agreements (see Kaplan v Kaplan, 82 [*5]

NY2d 300, 307 [1993]), but also promote judicial economy by narrowing

the scope of issues for trial (see Hallock v State of New York . . .) To

achieve these policy objectives, a stipulation is generally binding on

parties that have legal capacity to negotiate, do in fact freely negotiate

their agreement and either reduce their stipulation to a properly subscribed

writing or enter the stipulation orally on the record in open court (see

CPLR 2104; Siegel, NY Prac § 204, at 323; see also Hallock at 230;

Covert v Covert, 50 AD2d 622, 623 [1975]).

When a stipulation meets these requirements, as it does here,

courts should construe it as an independent contract subject to settled

principles of contractual interpretation (see Keith v Keith, 241 AD2d 820,

822 [3d Dept 1997]; De Gaust v De Gaust, 237 AD2d 862, 862 [3d Dept

1997]). As with a contract, courts should not disturb a valid stipulation

absent a showing of good cause such as fraud, collusion, mistake or duress

(see e.g. Hallock, 64 NY2d at 230, Matter of Frutiger, 29 NY2d 143, 150

[1971]); or unless the agreement is unconscionable (see Christian v Christian,

42 NY2d 63, 73 [1977]); Mosler Safe Co. v Maiden Lane Safe Deposit Co.,

199 NY 479, 485 [1910]) or contrary to public policy (see e.g. Eschbach v

Eschbach, 56 NY2d 167, 171 [1982]; or unless it suggests an ambiguity

indicating that the words did not fully and accurately represent the parties'

agreement (see e.g. Keith, 241 AD2d at 822).

The Appellate Division, Second Department, in Lucadamo v Bridge to Life, Inc., 12

AD3d 422, 423 (2004), added "or other cause sufficient to invalidate a contract," to the Hallock standard of "fraud, collusion, mistake or accident" as grounds to vacate a stipulation. In Town of Clarkstown v M. R. O. Pump & Tank, Inc., 287 AD2d 497, 498 (2d Dept 2001), the Court noted that "overreaching" can be a "showing of good cause" to be relieved from a stipulation. In

Borghoff v Borghoff, 8AD3d 519 (2d Dept 2004), the Court noted that "[a]bsent such proof, a

stipulation that is fair on its face will be enforced (see Linder v. Linder, 297 AD2d 710)." See Lukaszuk v Lukaszuk, 304 AD2d 625 (2d Dept 2003); De Gregorio v Bender, 4 AD3d 385 (2d Dept 2004).

All parties, in the instant case, including the Anikeyevas, are experienced businesspeople and professionals, and all were represented by counsel in negotiating and executing the stipulation of settlement. Thus, the default of the Anikeyevas is not slight or trivial. In a similar case, in which defendants defaulted in complying with the terms of a stipulation, McKenzie v Vintage Hallmark, PLC., 302 AD2d 503 (2d Dept 2003), the parties entered into a stipulation of [*6]settlement for defendants to pay plaintiff $750,000 and storage fees for cognac in France. Pursuant to the stipulation, defendants executed a confession of judgment for almost $1.8 million, if defendants defaulted and failed to cure their default within seven days of receipt of written notice of their default. Defendants subsequently defaulted in paying the storage fees. Defendants received their notice to cure, and failed to cure within seven days. After plaintiff entered judgment by confession on the same day that defendants paid the storage fees, defendants asked to have equitable relief to relieve them from the harsh consequences of their violation of the stipulation. The Court, held, at 504, that "literal enforcement of the terms of the stipulation of settlement is not unjust in this case, where the agreement was negotiated by sophisticated parties, all of whom were represented by counsel, and the default was neither inadvertent nor trivial [citations omitted]."

Defendants' counsel cites Weitz v Murphy, 241 AD2d 547 (2d Dept 1997) and Bank of New York v Forlini, 220 AD2d 377 (2d Dept 1995) to argue that the August 20, 2003 stipulation's enforcement is not only unjust and inequitable, but it would give plaintiffs an unconscionable advantage. However, neither case is applicable. In Weitz, a judgment creditor deliberately failed to inform defendant that a check was dishonored. The judgment creditor then entered the judgment by confession. In the instant case, defendants failed to comply with the stipulation, after making payments for a period to months to plaintiffs. In Bank of New York, debtors received a vacatur of judgment for violation of a stipulation because plaintiff Bank did not give timely notice to defendants that a payment check had been dishonored. Just as in McKenzie, defendants in the instant case were not "babes in the woods" and were represented by counsel. Thus, the August 30, 2003 stipulation "was negotiated by sophisticated parties, all of whom were represented by counsel, and the default was neither inadvertent nor trivial."

Further, defendants' counsel, the former Suffolk and Kings prosecutor, demonstrates a woeful disregard of the confrontation clause in the Sixth Amendment of the United States Constitution and Article I, § 6 of the New York State Constitution. His accusations and conclusory statements, in paragraph 46 of his reply affirmation, that the affidavits of Mr. Hand [exhibit B of cross-motion], Ms. Anikeyeva [exhibit C of cross-motion] and Regina Tsatsky [exhibit D of cross-motion] are proof that Oleg Atlasman "stole a massive amount of checks from Respondent Valentina Anikeyeva. The Affirmation in Support of the Cross Motion relied upon this evidence." Defendants' counsel then states that the affidavit of Mr. Hand contains information "garnered primarily from surveillance, interviews, review of Court filings and SEC filing and cooperation with law enforcement." Based upon this, in paragraph 47 of his reply affirmation, without any indictment and trial, defendants' counsel cross-moves to have the August 20, 2003 stipulation "deemed null and void and not enforced according to the laws of equity" or in the alternative to have monies owed to plaintiffs pursuant to the stipulation "held in escrow pending the outcome of the Respondent's civil action as it is unlikely that such monies could be later recovered from Atlasman."

Putting aside basic civil rights, such as the presumption of innocence and the right to a trial by jury, with criminal guilt proved beyond a reasonable doubt, this Court is amazed that the former prosecutor would deny Mr. Atlasman a chance to confront his accusers. In Pointer v Texas, 380 US 400 (1965), the US Supreme Court explicitly applied the Sixth Amendment right [*7]of a defendant to confront his accuser obligatory to the states under the 14th Amendment. Justice Hugo Black declared in Pointer, at 404, that "[t]he fact that this right appears in the Sixth Amendment of our Bill of Rights reflects the belief of the Framers of those liberties and safeguards that confrontation was a fundamental right essential to a fair trial in a criminal prosecution." Further, at 405, Justice Black states, "There are few subjects, perhaps, upon which this Court and other Courts have been more unanimous than in their expressions of belief that the right of confrontation and cross-examination is an essential and fundamental requirement for the kind of fair trial which is this country's constitutional goal."

In the instant case, the stipulation was ultimately filed with the Kings County Clerk on October 22, 2004. While the parties agreed in the stipulation that "the above captioned action is discontinued without prejudice," a distinct and separate stipulation of discontinuance was never filed with the County Clerk. As no express and unconditional stipulation of discontinuance has been filed, plaintiffs are within their rights to move for judicial enforcement of a valid stipulation of settlement. In Teitelbaum Holdings, Ltd. v Gold, 48 NY2d 51, 53 (1979), the Court held:

A settlement agreement entered into by parties to a lawsuit does not

terminate the action unless there has been an express stipulation of

discontinuance or actual entry of judgment in accordance with the terms

of the settlement. Absent such termination, the court retains its supervisory

power over the action and may lend aid to a party who had moved for

enforcement of the settlement.

See M & B Equities, LLC. v Parkway Gardens Owners, Inc., 286 AD2d 755 (2d Dept 2001); Greyston Foundation, Inc. v Nationwide Insurance Co., 288 AD2d 438 (2d Dept 2001); Markovits v Mitrany, 12 AD3d 574 (2d Dept 2004).

The instant case was never on a trial calendar. The August 20, 2003 stipulation of settlement was negotiated and executed before a note of issue was filed. The case was marked "disposed" in Justice Barasch's IAS Part. Defendants' counsel asserts that the case was "marked off" the calendar and must be restored pursuant to CPLR Rule 3404, because more than one year has elapsed since the case was "abandoned" on August 20, 2003 [paragraph 41 of his affirmation in support of the cross-motion and opposition to the order to show cause]. This argument demonstrates his misunderstanding of the statute and relevant case law. CPLR Rule 3404 states, in part:

A case in the supreme court or a county court marked "off" or struck

from the calendar or unanswered on a clerk's calendar call, and not restored

within one year thereafter, shall be deemed abandoned and shall be

dismissed without costs for neglect to prosecute.

In an extensive analysis of the legislative history and intent of CPLR Rule 3404, the Appellate Division, Second Department, in Lopez v Imperial Delivery Service, Inc., 292 Ad2d 190 (2001), held that CPLR Rule 3404 referred only to cases on a trial calendar, not a motion calendar, and CPLR Rule 3404 does not apply to pre-note of issue cases. The Court instructed, at 63, that [*8]"CPLR 3404 should not be applied to pre-note of issue cases," and, at 64, "CPLR 3404 should be reserved strictly for cases that have reached the trial calendar." In his McKinney's Practice Commentaries to CPLR Rule 3404, for the year 2001, §3404:7, Professor David Siegel notes that:

CPLR 3404, says the court, governs only cases stricken from a

trial calendar, i.e., a calendar set up after the filing of the note of issue

(see Siegel, New York Practice, 3d Ed. § 376.); it does not apply to cases

in which no note of issue has yet been filed. The court finds corroboration

for this in the very position of 3404 in the CPLR, where it is preceded by

the note of issue procedure (CPLR 3402) that puts the case on the trial

calendar in the first place, and by the provision for seeking a preference

in trial (CPLR 3403), a seeking that occurs concurrently with or shortly

after the filing of the note of issue.

See David v Interfaith Medical Center, 295 AD2d 557 (2d Dept 2002); Golan v Long Island Jewish Medical Center, 7AD3d 489 (2d Dept 2004); Sylvester v New Water Street Corp., 16 AD3d 486 (2d Dept 2005); Burdick v Marcus, 17 AD3d 388 (2d Dept 2005).

Defendants' defenses to plaintiffs' motion are vague, disputed and self-serving accusations against Oleg Atlasman, as an individual, plaintiff corporations and other individuals and business entities, with the threat to commence a new lawsuit against any and up to all of them. The mere threat of a future action cannot invalidate a stipulation of settlement entered into during litigation knowingly and voluntarily, with the assistance and representation of counsel. Beutel v Beutel, 55 NY2d 957 (1982); Anthony v Anthony, 199 AD2d 353 (2d Dept 1993); React Service Inc. v Rindos, 243 AD2d 552 ( 2d Dept 1997); Kourakos v Kourakos, 245 AD2d 242 (2d Dept 1997); M. H. Kane Construction Inc. v Byrd, 284 AD2d 509 (2d Dept 2001).

By making payments from August 2003 to January 2004, the Anikeyevas ratified and accepted the terms of the stipulation. On November 13, 2003, Justice Barasch ordered the remaining defendants to comply with the stipulation [exhibit J of plaintiffs' reply affirmation]. The Anikeyevas failed to complain or challenge the enforcement of the stipulation at that time. Having complied with the stipulation for a period of months, and waiting nearly one and half years to object to the stipulation, the Anikeyevas are deemed to have affirmed the stipulation. Sheindlin v Sheindlin, 88 AD2d 930 (1982); 110 Sand Co. v Nassau Land Improvement Co., Inc., 7 AD3d 497 (2d Dept 2004).

Conclusion

Plaintiffs' motion by order to show cause to direct defendants Anikeyeva and Anikeyev to comply with the terms of the August 20, 2003 stipulation of settlement is granted.

Further, this court orders that a hearing be held on Tuesday, August 9, 2005, at the Supreme Court, Part 27, Room 479, 360 Adams Street at 2:30 P.M. to determine if defendants Anikeyeva and Anikeyev defaulted under the terms of the stipulation, and, if so, to assess [*9]monetary damages against defendants Anikeyeva and Anikeyev.

The cross-motion of defendants Anikeyeva and Anikeyev for an order to declare the August 20, 2003 stipulation of settlement null and void or, in the alternative, for an order to place in escrow the percentage of collections plaintiffs receive from defendant Anikeyeva pending the outcome of a contemplated separate civil action against plaintiffs is denied.

This constitutes the decision and order of the court.

__________________________________

HON. ARTHUR M. SCHACK

J. S. C.