Epstein v Perl

[*1] Epstein v Perl 2018 NY Slip Op 51280(U) Decided on September 6, 2018 Supreme Court, New York County St. George, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 September 6, 2018
Supreme Court, New York County

Nina Epstein, as Guardian of the Property Of Shari Perl, et al., Plaintiffs,

against

Andrea Perl, et al., , Defendant, and B.H.H., a Minor, et al., Nominal Defendants.



602898/2005



The appearances of counsel are as follows:

There are a number of attorneys on this case. The attorneys involved in this motion are:

MOVANTS

Bressler, Amery & Ross, P.C., as attorneys for Shari Perl and then-Guardian Martin Evans

Kenneth Moltner

17 State Street

New York NY 10004

OPPOSING MOTION

Henry & Regan-Henry, as attorney for Andrea Perl

John V. Henry

44 Church Street

White Plains, NY 10601

Defendant Gerald Shallo

By: Annmarie P. Venuti LLC

One Brush Hill Road, Suite 207

New Fairfield, CT 06812

(listed as attorneys for Herbert Rubin and Martin Evans, trustees)

Herzfeld & Rubin, PC

125 Broad Street

New York NY 10004

Defendant Stephen Rosen By : Donald Liberman, Esq

152 Harrison Avenue

Garfield, NJ 07026

Rebecca Perl and Bridget Hannah Herman, nominal defendants

By: McCanliss & Early, LLP

88 Pine Street

New York, NY 10005

Defendant Dean Palin

By: Donovan Wickline, PC

32 West 22nd Street, LLC

45 Pineapple Street

Brooklyn, NY 11201

Other attorney:

Michele Kahn, Esq

Kahn & Goldberg, LLP

708 Third Avenue, 19th Floor

NY, NY 10017
Carmen Victoria St. George, J.

This thirteen-year-old action is one of several cases involving disputes between these parties. As the facts have been set forth in many of the scores of decisions resolving the underlying disputes, the Court shall not reiterate them here. Critical here is the fact that on March 21, 2011, Defendant Andrea Perl (AP) responded to Plaintiff Shari Perl's (SP) fourth amended complaint with an answer which asserted fourteen counterclaims and several cross-claims.

In motion sequence number 074, plaintiff seeks to dismiss the twelve counterclaims which her sister, Andrea Perl (AP), asserts in her answer to SP's fourth amended complaint. These counterclaims, as relevant here, are against SP in her individual capacity and against SP's former guardian in his capacity as guardian, in his capacity as co-trustee of some family trusts, and in his individual capacity.

SP alleges that dismissal is proper under CPLR 3211 (a) (6), which allows motions to dismiss counterclaims that "may not properly be interposed in the action." She relies on a July 8, 2011 decision by Judge Judith J. Gische (sequence number 003) in the related case of Evans v Perl (Sup Ct, NY County, Gische, J., Index No 112210/2010), who at the time presided over the case at hand as well as several related cases. In that decision, Judge Gische considered a counterclaim which AP asserted against Martin Evans, who at the time was SP's guardian.[FN1] The first counterclaim against the guardian and Perlrose Realty Company, LLC (Perlrose), which AP and SP owned in equal portions, sought contractual indemnification for all of AP's litigation [*2]expenses in this and a related action. The second counterclaim sought reimbursement for the time AP spent as managing member of Perlrose and for all the expenses she incurred in that role.

In granting the motion to dismiss as against Martin Evans, Judge Gische concluded that there was no legal basis for asserting the counterclaims against the guardian individually or in his capacity as SP's guardian. The court stated that AP had to seek court approval to bring any claims against the guardian in his capacity as guardian. The decision further stated that "the obligation of indemnification in the operating agreement is on Perlrose and not any of the individual members" (id. at), and that therefore there was no claim for indemnification against the guardian or against SP individually. The decision also concluded that, although SP might be indirectly impacted by Perlrose's financial obligations, she and her guardian also were not liable individually under the second counterclaim. It noted that AP could not assert the claims against Perlrose in the case before the court because technically Perlrose was not a petitioner. The decision noted that AP had the ability to bring a separate proceeding against Perlrose for the requested relief.

Counterclaims

The counterclaims at issue in the current motion state as follows: 1) Against the guardian, SP individually, and nonparty Dr. Jeffrey Burkes, stating that SP and Burkes altered AP's medical records so that it appeared as if Burkes prescribed drugs to AP although he prescribed them to SP;2) The guardian, SP, and Dr. Burkes must reimburse her for the care of SP's daughter and of SP's dogs, for legal fees she spent litigating over the custody of SP's daughter, over SP's guardianship proceeding, and over all expenses relating to the purported conspiracy by SP and Burkes as set forth in the first counterclaim;3) The guardian, in his individual capacity and as guardian, Evans and Herbert Rubin, as co-trustees of a trust, and against SP individually, relating to an accounting;4) Against the same parties in the third counterclaim, for an accounting;5) Against the guardian and SP individually, for their purported misappropriation of assets and related alleged wrongdoing;6) Against the guardian and SP individually, for the repayment of a loan SP purportedly took from Perl Properties (PPI);7) Against the guardian and SP individually, for SP's purported misrepresentations to PPI that it owed money to third parties, to obtain this money for herself;8) Against the guardian and SP individually and as former co-trustee of the SP Family Trust (SP Trust), for reimbursement of legal and accounting fees expended with respect to litigation over the trust;9) Against the guardian, including in his capacity as former co-trustee of the AP Family Trust (AP Trust), against the guardian and Rubin in their capacities as co-trustees of the SP Trust, and against SP individually and as former co-trustee of the SP Trust, for damages relating to the Calvin Perl Revocable Trust (CP Trust) and the property located at 145-147 Mulberry Street in New York;10) Against the guardian, including in his capacity as former co-trustee of the AP Family Trust (AP Trust), against the guardian and Rubin in their capacities as co-trustees of the SP Trust, and against SP individually and as former co-trustee of the SP Trust, for reimbursement of legal and accounting fees connected with three related litigations;11) Against the guardian as co-trustee of the CP Trust, the SP Trust, and the AP Trust, as well as against Rubin as co-trustee of the SP Trust, for breach of fiduciary duty in failing to commence an action against Stephen Rosen for alleged misappropriation of trust funds; and12) Against SP individually, for indemnification for legal and accountant fees with respect to various litigations.

As for the counterclaims as they relate to the guardian, plaintiff contends that dismissal is proper because AP did not seek the Court's permission to assert such claims despite Judge Gische's 2011 order. All alleged misconduct by SP that occurred before the appointment of a guardian to manage SP's affairs cannot be asserted against the guardian, plaintiff states, and thus the first, second, third, fourth, fifth, sixth, and seventh counterclaims must be dismissed against the guardian. The eighth, ninth, and tenth counterclaims for an accounting do not state a claim against the guardian, plaintiff alleges. Plaintiff states that the twelfth counterclaim, brought solely against SP in her individual capacity, must be dismissed for the same reason.

As this Court noted in deciding motion sequence 068, which Mr. Evans brought to dismiss all claims asserted against him individually and in his capacity as guardian, Mr. Evans is deceased and has been replaced in the caption and complaint by Nina Epstein, in her capacity as guardian. Those claims which AP asserts against Mr. Evans individually or in his capacity as trustee must go forward, if at all, against the executor or administrator of his estate. All claims asserted against him as guardian also cannot go forward because AP did not seek permission to bring these claims. This is in direct violation of the clear directive in Judge Gische's order. Moreover, they must be asserted, if they are proper claims, against his estate rather than against him personally. Thus, all claims relating to Mr. Evans are severed and dismissed. In addition, as plaintiff correctly notes, AP was directed in a prior order not to assert any claims against the guardian without express permission of the court.

AP also argues her failure to seek court approval is an inadequate basis for dismissal. AP previously ignored Judge Gische's order. Judge Gische did not reach the issue because she dismissed the claims on other grounds. As Judge Gische noted, however, the failure to seek court approval may impact the legal capacity to sue. As one court noted, "[o]nce a guardian is appointed for an incapacitated person, litigation against a guardian as representative of the incapacitated person should not proceed without permission of the court which appointed the guardian" (In re Linden-Rath, 188 Misc 2d 537, 439 [Sup Ct NY County 2001] [Linden-Rath]). This rule extends to claims asserted against the incapacitated person (see Wright v Rickards, 94 AD3d 874, 875 [2nd Dept 2012]). The court has the power to grant permission nunc pro tunc (see id.). Where a party does not request and does not receive permission to sue the guardian or the incapacitated person, however, it is a reasonable exercise of the Court's discretion to deny the motion (id.). Here, AP has not even made such an application. Not only did AP fail to do so, but she asserted these counterclaims after being warned not to assert them without this Court's approval. The parties in this action cannot repeatedly flaunt this Court's authority and its orders without consequence.

Plaintiff asserts that the Judge Gische order additionally precludes all claims against SP in her individual capacity, absent permission from the Court. AP states that because SP retained an attorney to represent her individually in her capacity as counterclaim defendant, SP has [*3]waived this argument.[FN2] SP retained counsel to represent her because only because AP sued SP in her individual capacity, however. SP's counsel appears, at this juncture, to obtain dismissal of the counterclaims. Rather than waiving the argument that she cannot be sued without the Court's permission, SP hired counsel so that she could assert it. The twelfth counterclaim should be dismissed on this basis (Linden-Rath, 188 Misc 2d at 439).

Even if the Court did not dismiss these claims on this basis, it would dismiss several of the counterclaims for other reasons. The first counterclaim alleges that SP and Burkes conspired against AP beginning in 2004. AP interposed the counterclaim on March 4, 2011. Plaintiff cites AP's complaint against Burkes (Perl v Burkes, Sup Ct, NY County, Sklar, J., Index No 113623/2006), which states that AP learned of the scheme in mid-2004. The most generous limitations period is six years, under CPLR § 213, plaintiff states. For the same reasons the Court sets forth in its decision in motion sequence 071, the counterclaim against SP is untimely. Furthermore, as plaintiff contends, the first counterclaim does not state a clear cause of action (CPLR § 3013). If AP is trying to contend there was a civil conspiracy, such claim is not viable as an independent cause of action in New York (see Mamoon v Dot Net Inc., 135 AD3d 656, 658 [1st Dept 2016]).

The second counterclaim is untimely because it demands reimbursement for costs AP incurred on behalf of SP's daughter. This claim is governed by the six-year statute of limitations set forth in CPLR § 213 (1). Under the six-year statute of limitations, any costs AP incurred prior to March 4, 2005 are barred. Plaintiff notes that AP stated in her affidavit in yet another related case that SP and AP became estranged around July 2004; plaintiff annexes a copy of this affidavit. Moreover, AP does not allege that she made any payments relating to this counterclaim after March 4, 2005. The Court rejects AP's arguments to the contrary. In addition, there is no merit to the portion of the counterclaim which seeks reimbursement for the legal expenses AP incurred in litigating her lawsuit over SP and Burkes' fraud. As this Court already stated, legal fees are not awardable absent a contract providing for attorney's fees or the right to fees under a statute (Mount Vernon City School Dist. v Nova Casualty Co., 19 NY3d 28, 39 [2012]).

The third counterclaim is ambiguous in its wording. It apparently alleges that SP, her guardian, and the co-trustees of the SP Trust, seek an accounting against AP in the fourth amended complaint, and that this accounting shall reveal that SP owes money for misappropriating funds due under the trust. Accordingly, the counterclaim, which AP asserts on behalf of certain real estate properties owned by Perlrose and on behalf of Perlrose, seeks reimbursement from SP. Plaintiff claims that Justice Gische granted plaintiff's motion for an accounting in a decision which plaintiff has annexed; the decision directed an accounting for Perl Properties, Inc., 145-47 Mulberry Realty Co., LLC; 494 Broadway Realty Co. LLC; 256 W. 36th Street, LLC, and Perlrose Realty Co., LLC. Plaintiff claims that the counterclaim does not [*4]make sense on its face and that, logically, it serves no purpose because the accounting relates to AP's actions rather than SP's conduct. The Court agrees. Moreover, the claim is superfluous. If the accounting SP seeks reveals that SP owes money to AP or to the trust, AP can move for relief under the accounting.

In the fourth counterclaim, AP, on behalf of the Perl Family properties, real estate companies, and Perl Properties, Inc., also seeks an accounting — which, as plaintiff points out, is subject to a six-year statute of limitations (CPLR 213 [1]; see Demian v Calmenson, 156 AD3d 422, 423 [1st Dept 2017], lv denied, 31 NY3d 902 [2018]). The counterclaim primarily refers to SP's activities between 1996 and 1998. In addition, it refers to SP's status as signatory on all accounts relating to the real estate companies. Finally, the counterclaim relates to SP's status as a signatory on all accounts relating to Perl Properties, Inc. from April 1996 to the present. Plaintiff alleges that all these actions took place prior to April 1998, as at that point SP resigned as managing member of all the LLCs. Accordingly, as plaintiff states, the fourth counterclaim, asserted over twelve years after this date, is untimely.

The fifth counterclaim states that the former guardian and SP have engaged in wrongful conduct, breached their fiduciary duties to the real estate and other Perl properties, and otherwise misappropriated the properties' funds and engaged in self-dealing. As plaintiff states, when SP resigned as managing member of the LLCs her fiduciary duty ended. Therefore, the claims are untimely.

As the sixth counterclaim only refers to loans SP allegedly made to herself but did not repay to Perl Properties between 2001 and 2004, it too is untimely (citing Congregation Yetev Lev D'Satmar v 26 Adar N.B. Corp., 192 AD2d 501, 503 [2nd Dept 1993] [statute of limitations for unjust enrichment is six years]; see Demian v Calmenson, 156 AD3d 422, 423 [1st Dept 2017], lv denied, 31 NY3d 902 [2018]). The seventh counterclaim is untimely for the same reason, as it relates to improper expenses and reimbursements SP allegedly submitted to Perl Properties.

Plaintiff argues that the eighth, ninth and tenth counterclaims for attorney's fees and accounting fees (ninth and tenth counterclaims) should be dismissed. The Court agrees. "[I]t has now long been the rule in this country not to allow a litigant to recover damages for the amounts expended in the successful prosecution or defense of its rights" (Congel, 31 NY3d at 291 [citations and internal quotation marks omitted]). Only if an agreement to the contrary exists "between the parties or by statute or court rule" are legal fees awardable (Mount Vernon, 19 NY3d at 39).

Furthermore, in the twelfth counterclaim, AP seeks the reimbursement of all litigation costs in all lawsuits, including copying fees, accounting fees, disbursements, and attorney's fees. Plaintiff states that this counterclaim is barred by Justice Gische's July 2011 order, which found that only Perlrose has the obligation to indemnify, and therefore there is no claim against SP (citing Hooper Assoc., Ltd. v AGS Computers, Inc., 74 NY2d 487, 492 [1989]; see Gotham Partners, L.P. v High Riv. Ltd. Partnership, 76 AD3d 203, 207 [1st Dept 2010], lv denied, 17 NY3d 713 [2011]). The Court agrees. AP's position is that because she seeks reimbursement for her litigation costs, the July 2011 order is inapplicable. This argument is unpersuasive. AP cannot obtain the same relief previously denied by changing the wording of the claim. By seeking reimbursement for all litigation costs, AP still essentially seeks indemnification. Moreover, as previously stated, that AP cannot proceed directly against the guardian. The Court dismisses the twelfth counterclaim for the reasons addressed above.

This motion would not have been necessary in the first place if plaintiff had not filed a fourth amended complaint — which, in turn, resulted in the fourth amended answer of AP. In addition, the Court notes, these issues would have been resolved by this juncture if, instead of burying each other, and the Court, in motions, AP and SP moved forward with this lawsuit and/or attempted to resolve their disputes by, for example, having a neutral party conduct an accounting of all related businesses and determine which, if any, party, is obligated to reimburse the trusts. The Court therefore instructs the parties that they must seek its approval before amending any pleadings or bringing any additional motions. Accordingly, it is

ORDERED that the motion is granted, and the counterclaims are dismissed as against SP and against the guardian; and it is further

ORDERED that the parties must seek leave of this Court before it amends the pleadings or submits any further motions.

Dated:

ENTER:

____________________________________

CARMEN VICTORIA ST. GEORGE, J.S.C. Footnotes

Footnote 1: After Martin Evans' death, this action was stayed until Nina Epstein was substituted as guardian for SP.

Footnote 2: AP's arguments relating to prior court orders lacks merit. As this Court reads the orders, the guardian was not limited in his representation of SP. Instead, the orders allowed the guardian to appoint Herzfeld & Rubin, P.C. and other firms as his attorneys for the sole purposes of preparing papers relating to his appearance in the cases as SP's guardian. Moreover, the order appointing the first guardian, Carolyn Reinach-Wolf, conferred the right to defend and commence legal actions involving SP. AP does not contend that the order of substitution limited these rights, and language stating that the guardian represented SP in "this" lawsuit does not mean he had no other powers.