Baystone Equities, Inc. v Handel-Harbour

[*1] Baystone Equities, Inc. v Handel-Harbour 2005 NY Slip Op 51414(U) [9 Misc 3d 1105(A)] Decided on July 19, 2005 Supreme Court, New York County Tolub, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 July 19, 2005
Supreme Court, New York County

Baystone Equities, Inc., Plaintiff,

against

Jacqueline Handel-Harbour, ESQ., ERIC H. KAHAN, ESQ, and SPERBER, DENENBERG & KAHAN, PC, Defendants.



105732/05

Walter B. Tolub, J.

This is plaintiff's second, and final, attempt before this court whereby plaintiff seeks to recover damages allegedly caused by defendant attorneys and the law firm which employs them. Plaintiff claims he was financially injured by defendants, who were responsible for drafting the papers of plaintiff's adversaries in an action where the adversaries prevailed. Only in this action, only the names of the defendants, and a portion of the relief sought, have been changed.

Defendants Jacqueline Handel-Harbour, Esq. and Eric H. Kahan are attorneys and members of the law firm of Sperber, Denenberg & Kahan, P.C. f/k/a Sperber & Denenberg, P.C. ("Sperber"). In 2001, Sperber represented Gerel Corporation, Ruradan Corporation and Timston Corporation ("the Corporations") in the action captioned, Baystone Equities, Inc. v. Gerel Corporation, Ruradan Corporation, and Timston Corporation, Index No. 601235/2001 (the "Gerel action"). Ms. Handel-Harbour was responsible for drafting, at Mr. Kahan's request, many of the pleadings and papers in that action.

The Gerel action involved a contract to sell three parcels of real estate ("the properties") valued at one hundred million dollars. By decision dated January 2, 2002, Honorable Martin Schoenfeld determined that plaintiff, having failed to make the required payments, breached the contract between Baystone and the Corporation defendants. This decision was affirmed by the Appellate Division, First Department, and the properties at the center of the Gerel action were sold to another entity.

In 2004, plaintiff commenced the action captioned Baystone Equities v. Jacqueline Handel-Harbour (Index No. 602745/2004) ("Baystone I"). The action sought recovery on five causes of action: fraud, conspiracy to commit fraud, aiding and abetting fraud, breach of fiduciary duty and malpractice. Plaintiff's entire argument in that action was premised on the allegation that Ms. Handel-Harbour's inclusion of certain statements in the [*2]Corporations' pleadings in the Gerel action, and her failure to disclose certain facts allegedly known to her, intentionally mislead the Court, improperly influenced the decision of Judge Schoenfeld, and directly caused plaintiff to lose its case in the Gerel action and the properties it sought to purchase.

By decision dated January 24, 2005, this court rejected all of defendants arguments, dismissed the complaint in its entirety, sanctioned the plaintiff for bringing the action and awarded attorneys fees to Ms. Handel Harbour. The decision of this court was largely based on the fact that plaintiff was never a client of Ms. Harbour or her firm. This court rejected plaintiff's remaining arguments because contrary to plaintiff's relentless assertions, Judge Schoenfeld's January 2, 2002 dismissal of the Gerel action, which was affirmed by the Appellate Division, was based "on the policy that when the parties to a contract manifest a desire and understanding that their compliance, or lack thereof, can be objectively and easily verified or belied, courts should not defeat this scheme by allowing lengthy, expensive litigation based merely on uncontemporaneous, undocumented, unlikely (indeed largely uncontradicted) ipse dixit assertions. Both the parol evidence rule and the Statute of Frauds, for all their differences, are meant to prevent law from impeding, or subverting business. If allowed to proceed through liberal disclosure and a full-blown trial, the instant litigation could take years. Meanwhile, a cloud would hover over defendants' titles [FN 18][FN1], perhaps costing defendants millions of dollars.

Had the parties opted, or even allowed for such a possibility, then so be it, and this Court would have denied the instant motion. However, by providing for notices to cure and that any modifications be in writing, and by the general tenor of the agreements, the parties evinced a desire that disputes as to compliance vel non could be resolved in a simple objective manner. (Exhibit C, p. 16).

This court agreed unequivocally with Judge Schoenfeld and the Appellate Division, and dismissed Baystone I, concluding that

[n]one of plaintiff's assertions in this action would have changed this outcome. Plaintiff did not lose its case in the Gerel action because Mr. Elyachar asserted in an affidavit that litigation would cloud title on the properties in issue, or because Mr. Elyachar did not disclose that there was another property transaction pending, or because defendant included language in the Elyachar affidavit, or because defendant did not disclose a purported brokerage [*3]agreement existing between the new purchaser and the Corporation defendants in the Gerel action, or because of alleged ethical violations occurring within the law firm that employs defendant. Plaintiff was not the prevailing party in the Gerel action because it failed to tender payments as required under the contract, thereby breaching, and defaulting under the contract. No amount of arguing will change this finding (Baystone Equities v. Jacqueline Handel-Harbour (Index No. 602745/2004)(emphasis added)).

Notwithstanding this court's decision, plaintiff, unbelievably using the same attorney, commenced the instant action "seeking damages arising from the misconduct including deceit and collusion perpetrated by the Defendants upon the Court and Plaintiff during a prior judicial proceeding" (Defendant's Exhibit O, Verified Complaint). The instant complaint contains allegations virtually identical to those asserted in Baystone I. The only difference, aside from asserting the claims as against Mr. Kahan and the Sperber firm, is that this time, plaintiff's sole cause of action is for damages under §487 of the Judiciary Law. Defendants move for dismissal of the instant complaint pursuant to CPLR 3211(a), legal fees associated with this action and motion, and for sanctions as against both plaintiff and his attorney, Robert B. Goebel, Esq. pursuant to 22 NYCRR 130.1.

Discussion

As this is a motion to dismiss, the only inquiry presently before this court is whether plaintiff's facts, as alleged, "fit within any cognizable legal theory" upon which plaintiff may succeed (Leon v. Martinez, 84 NY2d 83, 87-88 [1994];(Campaign for Fiscal Equity, Inc. v. State of New York, 86 NY2d 307 at 318 [1995]. See generally, Barr, Altman, Lipshie and Gerstman; New York Civil Practice Before Trial [James Publishing 2004] §36.01 et seq.). Accepting all of plaintiff's allegations contained within the complaint as true, and affording all reasonable instances to be drawn from them (People v. New York City Transit Authority, 59 NY2d 343 at 348 [1983]), the instant motion is dismissed in its entirety.

Despite plaintiff's arguments, this action requires the court to revisit issues that were previously raised in Baystone I, namely, whether plaintiff's alleged damages are a result of defendants' alleged ethical misconduct during the representation of their client, plaintiff's adversary, in the Gerel action.

The doctrine of collateral estoppel or issue preclusion precludes a party from relitigating in a subsequent action any issues that were clearly raised in a prior action or proceeding and decided against that party (Parker v. Blauvelt Volunteer Fire Company Inc., 93 N.Y. 2.d 343, 349 [1999]; Pinnacle Consultants LTD v. Leucadia National Corporation, 94 NY2d 426, 432 [2000]). The doctrine is applicable where the issue raised in the second action [*4]is identical to an issue which was "raised, necessarily decided and material in the first action, and the [parties] had a full and fair opportunity to litigate the issue in the earlier action" (Parker, at 349; Academic Health Professionals Insurance Association v. Kaleida Health, 759 NYS2d 409 [4th Dept. 2003]; Liddle, Robinson & Shoemaker v. Shoemaker, 758 NYS2d 628 [1st Dept. 2003]).

In Baystone I, plaintiff alleged damages sustained as a result of malpractice, breach of fiduciary duty, and fraud. These claims, all of which were dismissed in January 2005, were all predicated on the alleged ethical and professional violations of defendant Handel-Harbour and, though not specifically named in Baystone I, Ms. Handel-Harbour's law firm. Although the instant action seeks recovery of damages based on alleged violations of Judiciary Law § 487, the facts on which this motion is made are identical, and there is no reason why the instant claim could not have been made in Baystone I as against Ms. Handel Harbour as well as the remaining members of the law firm, and the firm itself. As such, there is no reason for this court to entertain the same arguments here. The claim is barred by collateral estoppel.

However, even if the claim were not barred by collateral estoppel, plaintiff's complaint must fail because plaintiff must establish as an element of the claim, that defendants' actions caused plaintiff's damages (Cresswell v Sullivan and Cromwell, 771 F. Supp. 580, 587, 588), a point which plaintiff cannot prove. Judge Schoenfeld's 2002 decision makes it abundantly clear that any of plaintiff's allegedly sustained damages were caused by its own failure to tender the contractually required $900,000 payment necessary to complete the property transaction. If plaintiff sought to challenge the Gerel judgment on the grounds that one or more of the attorneys had committed deceit or fraud, the remedy lay exclusively in that lawsuit, and plaintiff should have moved to vacate the judgment pursuant to CPLR 5015, and not by attempting to bring plenary actions collaterally attacking the court's judgment (Yalkowsky v Century Apartment Associates, 215 AD2d 214 [1st Dept. 1995]; Melnitzky v Owen, 2005 WL 1389348 [1st Dept. 2005]). Accordingly, the instant action is dismissed.

Lastly, this court, looking to 22 NYCRR 130-1.1, holds that sanctions as against both the plaintiff, and his attorney Mr. Goebel are appropriate in this matter. Given the facts and circumstances of this case, it is obvious to this court that this action, as was the action before it, was frivolous and most likely commenced as a way of harassing the defendants. That pattern stops with this action. Accordingly, it is

ORDERED that defendant's motion to dismiss the instant complaint is granted; and it is further

ORDERED that any further litigation commenced in this matter, or any litigation in any matter involving these parties as plaintiff and defendants in any combination, be pre-approved by the [*5]Administrative Judge for New York County prior to the submission of any motions, or the purchase of any index numbers for any new litigation plaintiff may seek to commence; and it is further

ORDERED that plaintiff is sanctioned in the amount of $1,000.00 (One Thousand Dollars), payable to the Lawyer's Fund for Client Protection, said amount to be paid within 14 days of service of a copy of this order with notice of entry; and it is further

ORDERED that plaintiff's attorney, Robert B. Goebel, Esq. is sanctioned in the amount of $1,000.00 (One Thousand Dollars), payable to the Lawyer's Fund for Client Protection, said amount to be paid within 14 days of service of a copy of this order with notice of entry; and it is further

ORDERED that plaintiff and his attorney are further directed to pay defendant costs for necessitating this motion pursuant to CPLR 8201.

This memorandum opinion constitutes the decision and order of the Court.

Dated:

____________________________

HON. WALTER B. TOLUB, J.S.C. Footnotes

Footnote 1: Footnote 18 of the decision continues, "This notwithstanding the fact that plaintiff apparently has not filed any notices of pendency against the properties" (Id.).