Kramer v Meridian Capital Group LLC

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Kramer v Meridian Capital Group LLC 2018 NY Slip Op 32186(U) August 24, 2018 Supreme Court, Kings County Docket Number: 501793/17 Judge: Leon Ruchelsman Cases posted with a "30000" identifier, i.e., 2013 NY Slip Op 30001(U), are republished from various New York State and local government sources, including the New York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication. [*[FILED: 1] KINGS COUNTY CLERK 09/07/2018 12:14 P~ INDEX NO. 501793/2017 . NYSCEF DOC. NO. 60 RECEIVED NYSCEF: 09/07/2018 ·; SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS : CIVIL TERM: COMMERCIAL PART 8 ------------------------------------------x DAVID KRAMER, Plaintiff, . ~' Decision and order - against - Index No. 501793/17 ('(' s MERIDIAN CAPITAL GROUP LLC, RALPH HERZKA & ELLIOT TREITEL, Defendants, .Jd:=-~ z.j~ August 24, 2018 ------------------------------------------x PRESENT: HON. LEON RUCHELSMAN '• The defendants have moved pursuant to CPLR §3211 seeking to dismiss the the complaint. plaintiff concerning from Van The defendants asserting Cortland any Villages further claims LLC and seek to against for enjoin defendants sanctions. The plaintiff has cross-moved seeking to disqualify the defendant's counsel, Morrison defendants. sanctions. were ··~· Cohen & LLP from representing the The defendants filed a further cross-motion seeking The submitted motions by have the been opposed parties and respectively, arguments held. reviewing all the arguments this court now makes the papers After following determination. On August [hereinafter 3605 Sedgwick 17, 2007 'VCV' ] an acquired Avenue in entity the Bronx Van deed County. Cortland to Villages premises The located plaintiff, LLC at David Kramer was a managing partner of VCV. VCV borrowed $19.6 million secured by a mortgage Bank. in the property from New York Community Defendant Meridian was the mortgage broker in connection 1 of 8 ~- [*[FILED: 2] KINGS COUNTY CLERK 09/07/2018 12:14 INDEX NO. 501793/2017 P~ NYSCEF DOC, NO. 60 RECEIVED NYSCEF: 09/07/2018 \ .. with that loan. the loan During 2010 VCV sought to modify the terms of and again Meridian was hired to assist in that refinancing effort. An agreement was reached and memorialized in a Term Sheet signed on October 10, loan and on proceeding. January VCV 31, filed 2010. 2012 an VCV VCV defaulted on the commenced adversary a proceeding bankruptcy against the defendant's herein alleging the defendant's failed to follow the instructions and that they provided during the defendants authorization. signing VCV on VCV' s bound alleged the VCV the behalf without refinancing to the defendants Term negotiatio_ns Sheet with out committed forgery authorization. On January 11, 2013 the Bankruptcy Court confirmed VCV's bankruptcy liquidation plan. Pursuant defendants f·· I" were to that plan all transferred to claims VCV's secured against lender. the The secured lender has never pursued those claims. During defendants October 2016 VCV commenced asserting the same causes assigned to the secured creditor. withdrawn. On January 27, 2017 member of VCV instituted the within l; causes of action against authorization. in to action action plaintiff lawsuit the defendants, binding A motion of the f acted .fraudulently an against that had the been That action was subsequently r I asserted VCV David Kramer alleging the a same namely the defendants to the Term Sheet without dismiss has been filed by ..~~;, . \" ..r-· ··:...·t·. ,- 2 of 8 the [*[FILED: 3] KINGS COUNTY CLERK 09/07/2018 12:14 NYSCEF DOC. NO. 60 ... defendants alleging the plaintiff, to the Term Sheet, in any '.& •. P~ INDEX NO. 501793/2017 RECEIVED NYSCEF: 09/07/2018 If··· who was not even a signatory event, cannot assert these claims since they have been transferred to the secured creditor. The plaintiff has filed a cross-motion seeking to disqualify defendants' counsel on the grounds he counsel in this very matter. factors. First, represented him ; a to hire the same This motion is based upon three plaintiff in sought argues matter that Morrison that involved the & New York Cohen State ' Attorney General. David Scharf, Second, the plaintiff asserts he met with a member of Morrison & Cohen and disclosed to him the claims he believed he maintained against the defendants and "after could about not 20 represent represented the existed (see, argues Morrison plaintiff minutes" the defendants was informed plaintiff in this sought Cohen Morrison admitted & Mr. Scharf that Morrison & Cohen matter, thus, conflict a Cohen's ~ 9). a Third, plaintiff conflict existed help yet in a when third matter. Conclusions of Law r 1 ... ,.. It is well settled that a party seeking to disqualify its adversary's counsel based upon counsel's alleged prior representation of the moving party must establish the ·i'- •. ';:- 't ,_· 'j. ·,-:.': 3 \:-~. ,~f... ~; . 3 of 8 he because Affidavit of David Kramer, & by ~-· [*[FILED: 4] KINGS COUNTY CLERK 09/07/2018 12:14 NYSCEF DOC~ P~ INDEX NO. 501793/2017 NO. 60 RECEIVED NYSCEF: 09/07/2018 existence of a prior attorney-client relationship between the moving party and opposing counsel, that the matters involved in both representations were substantially related, and that the interests of the present client and former client are materially adverse (see, Gjoni v. The Swan Club Inc., 134 AD3d 896, 21 NYS3d 341 [2d Dept., 2016]). Concerning the fact Morrison & Cohen represented the plaintiff in a prior matter, it is undisputed such representation took place. That matter involved an unrelated entity owned by the plaintiff, Colonial Management Group LLC that was subject to an investigation by the Office of the Attorney General of the State of New York. It did not involve r-:.. ~ .· any of the parties in connection with VCV and terminated in July 2016. The plaintiff does not assert the Attorney General matter was substantially related to this matter. Thus, that representation cannot form the basis for disqualification. Equally irrelevant is an alleged admission by Morrison & Cohen that a conflict existed. In June 2017 the plaintiff sought ,.-._· refinancing in another property and disclosed the Attorney General matter trying to forestall any potential issues it might raise. The lender sought a letter from plaintiff's counsel insuring the Attorney General matter had been satisfactorily resolved. The lender providing the refinancing 4 ,, " 4 of 8 i .;:, .....}l:,~·~-•;:- [*[FILED: 5] KINGS COUNTY CLERK 09/07/2018 12:14 - -·~ • INDEX NO. 501793/2017 P~ RECEIVED NYSCEF: 09/07/2018 NYSCEF DOG. NO. 60 .:i ·:>. .:·,.:· was also represented by Morrison & Cohen and reached out to the law firm seeking the letter. Morrison & Cohen responded they first had to resolve "the Meridian issue" (see, Email sent by Morrison & Cohen, dated June 8, 2017). In a subsequent email Morrison & Cohen explained that the plaintiff was seeking the letter from them which essentially consisted of new legal work. Since the plaintiff sued Meridian, a client of Morrison & Cohen, such legal representation could not be undertaken without a waiver of any conflict of interest. That does not mean a conflict existed when the representation for the Colonial matter was first undertaken. Morrison & Cohen's request for a waiver was a reasonable precaution considering it would be representing opposing parties in the same litigation, albeit in another matter. Therefore, no such conflict is raised thereby and that cannot serve as a basis for disqualification. The real conflict alleged is the assertion the plaintiff revealed litigation strategy and confidences to Morrison & Cohen for twenty minutes and was only then told they could not represent the plaintiff since they already represented the defendants. First, Morrison & Cohen deny any such meeting took place. Indeed, there is no independent evidence corroborating the existence of any meeting. Further, Mr. 5 .::-·_ -_,',.- 5 of 8 ,, -~-- ~ . - -~-""' ·-- ,., ., __ -·. --- _.;. _.Jlf'_": ..:;....,.....'.. »--· [*[FILED: 6] KINGS COUNTY CLERK 09/07/2018 12:14 INDEX NO. 501793/2017 P~ NYSCEF DO(. NO. 60 RECEIVED NYSCEF: 09/07/2018 Kramer submitted an affidavit dated May 30, 2018 wherein he stated he visited the offices of Morrison & Cohen during July 2014 and that after disclosing key litigation information Morrison & Cohen informed Kramer they could not take the case since they represented the defendants. However, on August 1, 2018 Mr. Kramer submitted a new affidavit wherein he asserted the meeting did not take place during July 2014 but rather during December 2013 or January 2014, a full half a year before the stated date in the original affidavit. Further, the new affidavit contains the assertion that another individual, Joel Ciment, was also present at that meeting. Indeed, Mr. Ciment has submitted an affidavit dated August 1, 2018 confirming he was present at the meeting in January 2014. / However, the affidavits of Mr. Ciment and the plaintiff differ in key respects to the point neither can be utilized to establish a basis for disqualification. The first affidavit submitted by Mr. Kramer makes clear the entire purpose of the alleged meeting was to seek to hire Morrison & Cohen in this litigation. According to the affidavit of Mr. Ciment the purpose of the meeting conceined the Attorney General matter. Thus, Mr. Ciment states that "it was in connection to the TRIBORO issues that I attended a meeting with Plaintiff 6 of 8 ,Iii!. < '-· ~._ [*[FILED: 7] KINGS COUNTY CLERK 09/07/2018 12:14 P~ INDEX NO. 501793/2017 NYSCEF . DOC. NO. 60 RECEIVED NYSCEF: 09/07/2018 ' and Mr. Scharf" (see, Affidavit of Joel Ciment, ,,, <JI 7). According to Mr. Ciment, at some point the conversation with Mr. Scharf turned to this litigation. Mr. Kramer's second affidavit asserts the entire meeting was about this litigation. This discrepancy is critical since it raises !·-. serious questions establishing the nature of the meeting and the role of Mr. Ciment. Moreover, as noted, Morrison & Cohen denies the meeting ever even occurred. While it is true that where there is a doubt concerning the specific items discussed then such doubts are resolved in favor of disqualification (Rose Ocko Foundation Inc., v. Liebowitz, 155 AD2d 426, 547 NYS2d 89 [2d Dept., 1989]) there must be evidence of some disclosure. If any party can merely allege, without any substantiation, that a meeting occurred and confidences were discussed then no attorney client relationship is safe from disqualification. Any litigant at any time can assert, without any proof at all, that the litigant contacted the opposing litigant's counsel and therefore the counsel must be disqualified. Surely, the power to allege disqualification cannot be exercised without evidence establishing the need for such disqualification. As the court stated in Colebrook, Bosson and Saunders, Inc. v. Satelozzi, Inc., 31 Misc3d 122l(A), 930 NYS2d 174 [Supreme Court New York County 2011], 7 "'·.·. 7 of 8 -~ "" [*[FILED: 8] KINGS COUNTY CLERK 09/07/2018 12:14 NYSC~F. INDEX NO. 501793/2017 P~ RECEIVED NYSCEF: 09/07/2018 DOC. NO. 60 i?..... "conclusory and unsubstantiated allegations are insufficient to establish an attorney-client relationship" (id). Indeed, without sufficient evidence establishing the existence of communications that might be grounds for disqualification the moving party has failed to establish any communications are substantially related to any representation (Gjoni, supra). Therefore, based on the foregoing, the motion seeking disqualification is denied. Consequently, the motion seeking to dismiss the complaint is granted. Further, the motion seeking an injunction preventing the plaintiff from asserting any further claims in this VCV matter is granted. The plaintiff is enjoined from pursuing any further claims without prior court approval. Lastly, any motions seeking sanctions are denied. So ordered. ENTER: DATED: August 24, 2018 Brooklyn NY Hon. 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