Krupnick v Drossman

[*1] Krupnick v Drossman 2010 NY Slip Op 52182(U) [29 Misc 3d 1237(A)] Decided on December 7, 2010 District Court Of Nassau County, Fourth District Knobel, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 December 7, 2010
District Court of Nassau County, Fourth District

Sheldon M. Krupnick, Plaintiff(s),

against

Jennifer Drossman, ESQ., d/b/a DROSSMAN AND ASSOCIATES, Defendant(s).



SC 02938/09



Sheldon M. Krupnick, plaintiff pro se, Kevin P. Krupnick, Esq., Attorney for Defendant, 23 Village Square, Glen Cove, New York 11542.

Gary F. Knobel, J.

The unfortunate circumstances surrounding the "small claims" in this action are, at its bitter core, a Greek tragedy pitting a father against his son (who was a former associate in the father's law firm and is now representing another former associate as a defendant in this proceeding), a former husband against his former wife, a stepson against his step mother, and a former client against her former attorney.[FN1] Though the amounts sought in damages are small, the claims asserted in this action are by no means "small" in terms of the seriousness of the legal and ethical allegations, and the amount of consideration given by the Court.[FN2] [*2]

The plaintiff's claim and the defendant's counterclaims arise from a series of incidents pertaining to a law office, Suite 544 (the "Suite"), within 114 Old Country Road in Mineola.

Plaintiff Sheldon M. Krupnick, an attorney suspended from the practice of law in New York (In re Krupnick, 65 AD3d 291, 295 [2d Dept 2009]) for a period of five years from July 30, 2009, seeks to recover $2,600.00, for unpaid rent monies allegedly owed for the months of August and September 2009 by defendant Jennifer Drossman, Esq., d/b/a Drossman and Associates, based upon a month-to-month oral agreement to sublease part of the Suite. The tenant of the Suite was The Law Offices of Sheldon Martin Krupnick, P.C., pursuant to a written lease with the landlord, 114 Old Country Road, LLC, which was entered into in 2006.[FN3] The defendant subsequently vacated the Suite on September 17, 2009, and claims that she was forced to do so because of plaintiff's suspension from the practice of law and his conduct and behavior toward her and her employees.

In her answer, the defendant, through her attorney, asserted the following affirmative defenses: (1) the plaintiff lacks the legal capacity to sue on the grounds that (a) the plaintiff, as an individual, is not a party to the underlying leasing agreement of the premises, and (b) the plaintiff's suspension from the practice of law prevents him from suing on behalf of the Law Offices of Sheldon Martin Krupnick, P.C., the lessee; (2) the plaintiff lacks standing to sue, for the same arguments set forth in the first affirmative defense; (3) there was an accord and satisfaction, i.e., that the amount allegedly owed by the defendant was paid in full pursuant to a set-off of monies allegedly owed by the plaintiff to his son, defendant's attorney; (4) the plaintiff failed to provide an account stated; and (5) the Statute of Frauds bars the plaintiff's claim. The defendant further asserted counterclaims against Sheldon M. Krupnick for (1) monies owed for the use of the defendant's equipment, (2) monies owed for unpaid utilities and (3) the constructive eviction of the defendant's law firm by the plaintiff.

The defendant, a former associate employed by the Law Offices of Sheldon Martin Krupnick, P.C., was represented at trial by Kevin P. Krupnick, Esq., the plaintiff's son and an associate as well in plaintiff's former law firm. The defendant was called by the plaintiff to be his first witness, and testified at trial that she had been sharing the Suite with the Law Offices of Sheldon Martin Krupnick, P.C., since June 2006, and that she was obligated to pay the sum of $1,300.00 per month, including the months of August and September 2009. She further testified that the plaintiff was paid for August and September in the form of a credit for legal services rendered by Kevin P. Krupnick, Esq. pursuant to an oral agreement with plaintiff that was reached at a meeting held in the middle of August 2009, and attended by the plaintiff, the [*3]defendant, Kevin P. Krupnick, Esq., and Doreen Krupnick, the plaintiff's ex-wife and the mother of Kevin P. Krupnick, Esq. Defendant declared that she vacated the Suite in September 2009, when, in her judgment, ethical restrictions resulting from plaintiff's suspension made it impossible for her and her office staff to remain in the Suite. The defendant maintained that the plaintiff was engaged in the unauthorized practice of law and attempted to repossess client files, which resulted in police intervention. The files however, ultimately remained in the possession of the defendant.

The defendant's key non-party witness pertaining to the purported removal of client files by the plaintiff, which serves as a basis for defendant's counterclaim of constructive eviction, was Adrienne Flipse Hausch, a member of the Committee on Character and Fitness, Appellate Division, Second Judicial Department. Ms. Hausch testified that the defendant had called her early on September 17, 2009, advising her that a suspended attorney (the plaintiff) was attempting to remove files from the Suite. Ms. Hausch further testified that she advised the defendant that a suspended attorney is not permitted to possess, read or participate in any aspect of their former cases absent a specific order of the Appellate Division. When Ms. Hausch received a second call later in the afternoon from the defendant informing her that the police were called to the Suite, Ms. Hausch went to the scene of the incident and advised the police that the plaintiff should be prevented from moving the files. Ms. Hausch further testified that in her opinion a licensed attorney remaining in shared office space with a suspended attorney might subject such a licensed attorney to disciplinary proceedings.

Ms. Doreen Krupnick, the plaintiff's ex-wife and the mother of Kevin P. Krupnick, Esq., also testified about the September 17th incident involving client files. She further testified that she helped to facilitate a meeting between the plaintiff, the defendant and Kevin P. Krupnick, Esq. on August 12, 2009, to resolve the rent issue. Ms. Doreen Krupnick maintained that an oral agreement was reached, whereby certain fees allegedly owed to the defendant's firm would be withheld in full satisfaction of the rent monies owed for the months of August and September 2009.

Kevin P. Krupnick, Esq., was called by the plaintiff as an adverse witness and testified about the events of September 17, 2009, as well as to the meeting which took place on August 12, 2009.

Mrs. Marilyn Krupnick, the plaintiff's wife, testified on behalf of the plaintiff as to the circumstances and events that she witnessed surrounding the vacature of the Suite by the defendant, as well as the condition of the Suite and the discussions she had with the defendant which were relevant to the issues at bar. She maintained that the defendant was never forced to leave the Suite prior to September 30, 2009.

Ms. Cuat Choo Teo, a former client of the plaintiff, testified on behalf of the defendant and in support of the defendant's counterclaim of constructive eviction. Ms. Teo was also an eyewitness to the events which occurred on September 17, 2009, when the plaintiff allegedly attempted to remove the client files of the defendant from the Suite.

The plaintiff tried to demonstrate at trial, in contrast to the documentary evidence of the underlying written lease for the use of the Suite between the plaintiff's professional corporation and 114 Old Country Road, LLC, that he, Sheldon M. Krupnick individually, was the leasing party. He repeatedly maintained that an oral agreement for the payment of rent was made [*4]between himself and the defendant and not his law firm, The Law Offices of Sheldon Martin Krupnick, P.C. (see transcript of trial conducted on July 19, 2010, at 19, 60 [Q: Mr. Krupnick, how much are you claiming of the defendant today? A: I'm claiming the amount of $1,300 a month, pursuant to an agreement I had with Ms. Drossman . . . ."]; transcript of trial conducted on July 20, 2010, at 60, 63 [Q: Isn't it a fact, Mr. Krupnick that you claim the lease at 114 Old Country Road was under your name? A: No, what I claim is that Jennifer Drossman is a lessee of Sheldon Krupnick. That's what I'm claiming here. That's what I'm saying here;" "Q: Isn't it a fact that the lease was in the name of your professional corporation? A: Whether it was or it wasn't, it makes no difference. The relationship I had was with Jennifer Drossman as my tenant"]).

In support of his breach of contract claim for monetary damages, the plaintiff testified that in August and September 2009 he made demands upon the defendant for rent monies due for the months in question, and was told by the defendant that she would "get around to it" (transcript of trial conducted on July 12, 2010, at 66). According to the plaintiff, the rent, however, was never paid. The plaintiff also denied the existence of an oral agreement for payment in the form of credit for legal services rendered. In response to the defendant's counterclaim that she and her law firm were constructively evicted from the Suite, plaintiff testified that the defendant was free to come into the Suite at anytime prior to September 30, 2009, but instead the defendant voluntarily chose to vacate the premises prior to September 30, 2009.

The threshold critical issue for the Court to determine on the plaintiff's claim is whether the plaintiff, Sheldon Martin Krupnick, as an individual, has the legal capacity to bring as plaintiff the small claim at bar.

The Court of Appeals in Community Bd. 7 of Borough of Manhattan v. Schaffer (84 NY2d 148 [1994]) discussed at length the issue of capacity to sue. The Court of Appeals noted that "the concept of capacity is often confused with the concept of standing, but the two legal doctrines are not interchangeable (id. at 154 [citations omitted]). Standing' is an element of the larger question of justiciability' (id. [citations omitted)... Capacity,' in contrast, concerns a litigant's power to appear and bring its grievance before the Court. Capacity, or the lack thereof, sometimes depends purely upon a litigant's status...A naturalperson's status as an infant [or] an adjudicated incompetent...,for example, could disqualify that individual from seeking relief in court [citations omitted]. [T]he category [of capacity] at issue here arises in the context of suits brought by artificial entities [such as corporations]. Business corporations, for example, are creatures of statute and, as such, require statutory authority to sue and be sued [citations omitted]" (Community Bd. 7 of Borough of Manhattan v. Schaffer, 84 NY2d 148, 154-155).

The Court finds, based upon the credible evidence adduced at trial and after applying the relevant principles of law, that the plaintiff lacks the capacity to sue. The right to enforce the oral sublease belongs to the plaintiff's former law firm, The Law Offices of Sheldon Martin Krupnick, P.C., since that entity entered into a lease with the [*5]landlord for the use of the Suite. The plaintiff acted on behalf of that professional services corporation and could not sublease what he, as an individual, did not lease. In We're Associates Company v. Cohen, Stracher & Bloom, P.C., (65 NY2d 148, 151-152 [1985]), the Court of Appeals held that a shareholder or shareholders of a professional services corporation cannot be held personally liable to a landlord for the breach of a lease obligation by the professional services corporation, i.e., the nonpayment of rent (We're Associates Company v. Cohen, Stracher & Bloom, P.C., 65 NY2d 148, 151-152). The Court reasoned that the public policy of New York is to allow corporations, including professional services corporations, "to be formed for the express purpose of limiting [an individual's personal] liability" (id at 152). Based upon the Court of Appeals' holding, this Court draws an analogy that a shareholder of a professional services corporation, such as the plaintiff at bar, cannot sue as an individual to recover monies which may be owed to that corporation. Moreover, the documentary evidence submitted by the plaintiff to prove that the defendant made past rental payments-deposit slips from Signature Bank in the sum of $1,300.00 each deposited to account holder "Law Office of Sheldon Martin Krupnick" - demonstrate that these payments were not made to the plaintiff individually but were paid instead to the law firm that bears his name.Accordingly, the plaintiff's claim is dismissed. See long form judgment.

THE DEFENDANT'S COUNTERCLAIMS

The defendant alleges four counterclaims: (1) that the plaintiff used equipment leased by The Krupnick Firm, P.C. and failed to contribute $271.57, representing the plaintiff's one-third share of the cost, (2) that the plaintiff failed to pay outstanding bills and invoices totaling $285.90, which were paid by The Krupnick Firm, P.C., (3) that the plaintiff failed to contribute $274.55, representing his one-third share of certain utility bills, which were also paid by The Krupnick Firm, P.C., and (4) that the defendant incurred a loss in the sum of $4,000.00 for lost billing hours resulting from plaintiff's constructive eviction of the defendant.

At trial, the plaintiff, in response to the defendant's three counterclaims involving monies owed for alleged use of equipment and unpaid bills, asserted "a lack of capacity defense," arguing that these claims can only be asserted by The Krupnick Firm, P.C. and not by the defendant. However, the defense of lack of capacity to sue was required to be raised in either a pre-answer motion or in an answer itself. Absent such an offering, the defense is deemed waived (see CPLR 3211 [a] [3]; [e]; Security Pacific National Bank v. Evans, 31 AD3d 278 [1st Dept 2006]). In view of the fact that the action at bar is a small claims action and an answer is not required to be filed and served, and since the parties never sought to have the case transferred to a regular civil part, in the interests of substantial justice the Court will consider this "unpleaded"defense. The Court finds that the defendant failed to establish that she had the legal right to assert a claim that belonged to The Krupnick Firm, P.C. Accordingly, for the same reasons set forth with respect to the dismissal of the plaintiff's claim, the defendant's first three counterclaims are dismissed as these claims can only be [*6]brought by The Krupnick Firm, P.C., and can only be asserted against the professional services corporation, The Law Offices of Sheldon Martin Krupnick, P.C., both of whom are not parties to this small claims action (see, We're Associates Company v. Cohen, Stracher & Bloom, P.C., supra).

The Court next turns to the defendant's counterclaim of constructive eviction. The defendant testified that the plaintiff's conduct in continuing to hold himself out as a properly licensed attorney in contravention of his suspension from the practice of law and his removal of client files resulting in police intervention, as well as certain actions on the part of plaintiff's wife, Marilyn Krupnick, constituted an eviction of the defendant from the Suite. As described and set forth earlier in this decision, Ms. Hausch testified to the conduct of the plaintiff and whether such activity would subject an attorney to disciplinary action. Furthermore, Ms. Hausch also testified that in her opinion a licensed attorney remaining in shared office space with a suspended attorney might subject the licensed attorney to disciplinary proceedings.

A "constructive eviction exists where, although there has been no physical expulsion or exclusion of the tenant, the landlord's wrongful acts substantially and materially deprive the tenant of the beneficial use and enjoyment of the premises" (Barash v. Pennsylvania Term. Real Estate Corp., 26 NY2d 77, 83 [1970]). The defendant's counterclaim to recover damages from the plaintiff under this theory has been incorrectly asserted against the plaintiff instead of the entity which leased the premises to her, The Law Offices of Sheldon Martin Krupnick, P.C. In any event, the Court finds, based upon the preponderance of the credible testimony at trial, and in view of the ramifications of plaintiff's suspension from the practice of law, that the defendant failed to prove that the plaintiff "constructively evicted" her and deprived her of beneficial use and enjoyment of the Suite. This finding is not to be interpreted as excusing the plaintiff's conduct, or anyone's conduct, with respect to the serious ethical violations raised at trial concerning inter alia the September 17, 2009, incident.

Accordingly, the defendant's counterclaim for constructive eviction is dismissed.

See long form judgment.

The Court notes that as a result of the alleged violations of the provisions applicable to the conduct of suspended attorneys (see 22 NYCRR 691.10), compliance with which was ordered by the Appellate Division, Second Department (In re Krupnick, 65 AD3d at 295), I am compelled to refer this matter, along with a copy of this order, the trial transcript and the evidence, to the Grievance Committee (see 22 NYCRR 100.3 [D] [2]).

SO ORDERED:

Hon. Gary F. Knobel

District Court Judge [*7]

Dated: December 7, 2010

cc:Sheldon M. Krupnick

Kevin P. Krupnick, Esq. Footnotes

Footnote 1:¹In support of his case, the plaintiff called as a fact witness, his wife of twenty-one years, Marilyn Krupnick, and as adverse witnesses the defendant and son Kevin P. Krupnick, Esq., both of whom were former associates of the plaintiff when his law firm existed. The defendant called as witnesses Ms. Cuat Choo Teo, a former client of the plaintiff, Ms. Adrienne Flipse Hausch, a member of the Committee on Character and Fitness, Appellate Division, Second Department and the plaintiff's ex-wife Doreen Krupnick, the mother of Kevin P. Krupnick Esq., counsel for the defendant.

Footnote 2:In hindsight, in view of the contentiousness between the parties and the myriad of legal issues presented by the parties, the undersigned, as well as other colleagues who presided in the day small claims part when this case was previously scheduled for trial, should have transferred this case to a regular civil part in the court pursuant to the Uniform Civil Rules for the District Courts since the parties were "represented" by attorneys (22 NYCRR 212.41 [f-1]. Instead, the trial spanned all or parts of five days in a small claims part.

Footnote 3:Article X of the underlying written lease between the Law Offices of Sheldon Martin Krupnick, P.C., and 114 Old Country Road, LLC, which commenced on June 1, 2006, for a period of five years and two months, prohibits the Suite from being sublet without the prior written consent of the landlord, except that Section 10.08 states "[n]ot withstanding anything to the contrary contained [therein], [the Law Offices of Sheldon Martin Krupnick, P.C.,] may sublet up to fifty percent (50%) to another professional without [114 Old Country Road LLC's consent but only with notice."