Bergrin v Kelner

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[*1] Bergrin v Kelner 2018 NY Slip Op 51721(U) Decided on November 27, 2018 Supreme Court, New York County Reed, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 November 27, 2018
Supreme Court, New York County

Ronald Bergrin, Plaintiff,


Kenneth A. Kelner and Robert S. Kelner, Defendants.


Attorneys for the Plaintiff


14 Wall Street, 20th Floor

New York, New York 10005


Attorneys for the Defendants


605 Third Avenue

New York, New York 10158

Robert R. Reed, J.

In this action for breach of contract, plaintiff, Ronald Bergrin, opposing defendant's initial motion to dismiss, which has since been withdrawn,[FN1] moves for an order: (1) pursuant to CPLR 3025 (a), to amend the complaint; and (2) pursuant to 22 NYCRR 130-1.1, for sanctions (plaintiff's cross-motion).

Defendant Kenneth A. Kelner (defendant) cross-moves for an order: (1) pursuant to CPLR 3211 (a) (1), (3) and (7), dismissing the verified amended complaint as against him in its entirety; (2) permitting defendant to enter judgment dismissing the complaint and directing the [*2]Clerk of the Court accordingly; (3) alternatively, to the extent that any part of the motion is not dismissed pursuant to CPLR 3211 (a), for treatment of the remaining motion as one for summary judgment pursuant to CPLR 3211 (c), and, (4) pursuant to 22 NYCRR 130-1.1 and/or section 487 of the New York Judiciary Law, for sanctions against plaintiff's counsel, David Bowles, for commencing a frivolous action and filing with the court as authentic a fraudulent document despite actual and/or constructive knowledge of the document's inauthenticity.


This action involves a son's interest in the inheritance of the multi-million-dollar estate of his father, Joseph Kelner. Plaintiff alleges that, prior to December 2001, defendant learned that his father had disinherited him. According to plaintiff, defendant hired plaintiff to assist him in persuading defendant's father to either give him gifts during his lifetime or to consider writing defendant back into his father's will (complaint,¶ 16).

2001 Oral Agreement

According to plaintiff, the parties orally agreed in late 2001 that defendant would pay plaintiff half the value defendant received from his father (id.). Plaintiff thereafter had frequent meetings with Joseph Kelner. In August 2005, purportedly due to plaintiff's efforts, Joseph Kelner gave defendant a condominium, located at 160 West 86th Street, PH5, New York, New York (the Condominium), believed to be worth at least $10 million (complaint, ¶¶ 17-18). After acquiring the Condominium, however, defendant, according to plaintiff, told plaintiff that he was not able to pay the fee he owed, and requested a new, written agreement.

The Bergrin/Kelner Agreement dated November 16, 2005

On November 16, 2005, the parties entered into an agreement (Bergrin/Kelner Agreement), wherein they acknowledged that plaintiff had already performed services for defendant in obtaining the transfer of the condominium (Bergrin/Kelner Agreement at ¶¶ 3-4, Bowles aff exhibit B). Specifically, the Agreement states "Kenneth Kelner retained the services of Ronald Bergrin . . . The Condominium was transferred to Kenneth Kelner . . . and Ronald Bergrin's compensation . . . has been earned . . ." (id.).

The Bergrin/Kelner Agreement establishes a sliding scale for payment of a fee from defendant to plaintiff should defendant receive a minimum of four million dollars from his father's estate. Specifically, the parties agreed that:

a. If [defendant receives] $4,000,000-$4,999,999.99 from the estate of Joseph Kelner, then [defendant] shall pay to [plaintiff] a Commission Fee equal to Five Hundred Thousand Dollars and 00/1000 ($500,000), andb. If [defendant receives] $5,000,000-$5,999,999.99 from the estate of Joseph Kelner, then [defendant] shall pay to [plaintiff] a Commission Fee equal to One Million Dollars and 00/1000 ($1,000,000), andc. If [defendant receives] $6,000,000-$6,999,999.99 from the estate of Joseph Kelner, then [defendant] shall pay to [plaintiff] a Commission Fee equal to One Million and Five Hundred Thousand Dollars and 00/1000 ($1,500,000), andd. If [defendant receives] $7,000,000 or more from the estate of Joseph Kelner, then [defendant] shall pay to [plaintiff] a Commission Fee equal to Two Million Dollars and 00/1000 ($2,000,000), ande. If the Last Will and Testament of Joseph Kelner (or a Codicil thereto or a Contract), [*3]shall be disputed, challenged, contested or litigated, and as a result of that dispute, challenge, contest or litigation Robert Kelner shall receive less than $4,000,000 from the estate of Joseph Kelner, and as a result of such dispute, challenge, contest or litigation, the balance of Robert Kelner's inheritance is then given, transferred, distributed, or paid to Kenneth Kelner, then Kenneth Kelner agrees to pay Ronald Bergrin a Commission Fee equal to Four Million Dollars ($4,000,000).

(Bergrin/Kelner Agreement, ¶ 7). To the extent that defendant received any distributions from his father's estate, either in an outright bequest or within the 24-month period following (1) the death of Joseph Kelner, (2) the final termination of any litigation concerning defendant's father's estate, and (3) the final conclusion of any probate estate of defendant's father, defendant was to pay plaintiff the Commission Fee delineated above within 30 days from receipt of the distribution of assets by defendant (id., ¶ 8). The parties further agreed that, if defendant did not receive the minimum distribution of $4,000,000, or if defendant received a "distribution of assets in a Trust which fails to distribute a minimum of $4,000,000, to Kenneth Kelner during the 24-month period following the death of Joseph Kelner, the final termination of any litigation concerning defendant's father's estate and the final conclusion of any probate estate of defendant's father, then defendant would have no obligation to pay plaintiff any commission fee (id., ¶ 9).

According to defendant, based on the above language, the Agreement expressly acknowledges that defendant's payment obligation arises only upon receipt of funds from the estate of Joseph Kelner (id., ¶¶ 6, 7).

The parties also agreed that, if the commission fee was not paid within 30 days from receipt of assets by defendant, and plaintiff commences legal proceedings to collect the commission fee, then, in addition to the payment of the commission fee, defendant "shall bear the cost of all legal fees, costs and expenses which may be incurred by Ronald Bergrin up to and including [33 1/3%] of the total amount of the Commission Fee, plus a [1%] late fee, and interest calculated at [1 ½%] computed monthly" (id., ¶ 11).

The Bergrin/Kelner Agreement also states that the "Agreement constitute[s] the entire Agreement between the parties with respect to the Commission Fee payable to [plaintiff]" (id., ¶ 13), and further that

"[i]n the event that any term or provision of this Agreement shall be finally determined to be superseded, invalid, or otherwise unenforceable pursuant to applicable law by a governmental authority having appropriate jurisdiction and venue, that determination shall not impair or otherwise affect the validity, legality or enforceability of any of the other terms and provisions of this Agreement"

(id., ¶ 15). Defendant argues that any such claims with respect to an oral agreement must fail based on the merger clause of the Agreement noted above. Based on the documentary evidence, including the will of Joseph Kelner, the Receipt and Release Agreement, and the Morgan Stanley sworn statement, no direct bequests have yet been made to defendant, and the trust income provided to defendant falls short of the minimum standards required in the Bergrin/Kelner Agreement.

The Kelner/Kelner Agreement

According to plaintiff, on November 28, 2005, as a result of plaintiff's negotiations with Joseph Kelner, defendant and his father executed an agreement whereby defendant was to receive [*4]at least $12.75 million dollars upon Joseph Kelner's death (complaint, ¶¶ 29-40). Plaintiff alleges that defendant executed the "Kelner/Kelner Agreement" in plaintiff's presence on that day, and that defendant then took the agreement to Joseph Kelner, who executed the agreement in the presence of a notary in Manhattan later that same day (complaint, ¶¶ 31-35). Plaintiff claims that defendant phoned plaintiff after the agreement was fully executed, stating that defendant's father had executed the agreement (complaint, ¶ 36). According to the Kelner/Kelner Agreement, Joseph Kelner also agreed to give an inter vivos gift to defendant in the amount of $750,000 (Kelner/Kelner Agreement, Bowles affidavit, exhibit 3 at ¶ B.2).

The Kelner/Kelner Agreement, however, was never entered into probate. Plaintiff contends that the Kelner/Kelner Agreement is relevant to his claims to the extent that it shows that defendant "could have" received at least $12.75 million.

Defendant claims that the Kelner/Kelner Agreement is not valid as defendant now admits he signed his father's name as part of an elaborate plan formulated in 2005 by plaintiff's cousin, now disbarred attorney, Paul Bergrin (Kelner aff). After signing the document, defendant reconsidered and has never uttered or published the document as true. Plaintiff, defendant asserts, retained a copy of the forged document as a means to secure money to which plaintiff is not entitled. Notably, defendant offers a transcript of a surreptitiously recorded conversation between the parties on August 20, 2013, concerning plaintiff's knowledge of the forgery (Presant aff, exhibit 9).

The Alleged Breach of Contract

According to plaintiff, despite the parties' agreement to answer questions about Joseph Kelner's estate, defendant has been evasive and not forthcoming with any information concerning the estate. Joseph Kelner passed away on March 4, 2013 (complaint, ¶ 41). Plaintiff repeatedly demanded information concerning what defendant had received, or would be receiving, from the estate, but those demands went unanswered (id., ¶¶ 62-63). Plaintiff contends defendant's failure to provide the information is in breach of paragraph 6 of the Bergrin/Kelner Agreement (see exhibit B, ¶ 6).

Plaintiff's Amended Allegations, as Raised in the Proposed Amended Complaint

According to plaintiff, defendant's documents show that probate on the estate has not closed, and that, therefore, the 24-month clock as outlined in the Bergrin/Kelner Agreement has not even begun to run, requiring plaintiff to revise his current claims for breach of contract. In addition, plaintiff asserts that defendant's documents reflect that, while defendant's assets have been placed into a trust, it appears that defendant has access to those funds, which requires plaintiff to revise his good faith and fair dealing cause of action. Lastly, plaintiff argues that, if defendant's claim that defendant forged his father's signature on the Kelner/Kelner Agreement is true, plaintiff has a new claim of fraud against defendant for the purported forgery.

Threat of Criminal Prosecution

According to plaintiff, defendant's attorney Robert Costello threatened plaintiff with criminal prosecution in an attempt to intimidate him from bringing the instant lawsuit. Specifically, after trying to set up an in-person meeting, Costello, wrote to Bowles, stating, among other things, "Any attempt by Ron Bergrin to offer this document [the Kelner/Kelner Agreement] as genuine will be a crime. I am sure that is not something that you want to be a part of" (Bowles aff, exhibit F).

Bowles met with Costello, and another attorney, Joseph Jaffee, on August 2, 2017 (Bowles aff, ¶ 13). During the meeting, plaintiff contends, Costello and Jaffee again threatened plaintiff with criminal prosecution if he pursued the lawsuit through the Kelner/Kelner Agreement (Bowles aff, ¶ 14). Bowles documented the meeting with a letter dated August 7, 2017, stating:

Unfortunately, you went further than offering me evidence, and threatened my client with criminal prosecution . . .. In the August 2 meeting, you told me again that if my client used the Kelner/Kelner Agreement in any litigation, 'that's a crime.' When I asked for clarification, you said that, if the agreement was used in court, you would 'go to the authorities.' Mr. Jaffe listed approximately five or six criminal offenses that would be complained of, including but not limited to perjury, false instrument, grand larceny and possession of a forged instrument. Your statement, expressly made, is that you would seek prosecution of my client if he used this piece of evidence in a civil matter.

(Bowles aff, exhibit G).


It is well settled that leave to amend a complaint should be freely granted at any time absent prejudice or surprise resulting directly from the delay (see CPLR 3025 [b]; see also Liebowitz v Mount Sinai Hosp., 296 AD2d 340, 342 [1st Dept 2002]; Tishman Constr. Corp. of New York v City of NY, 280 AD2d 374 [1st Dept 2001]). Here, plaintiff filed an amended complaint as of right (see Johnson v Spence, 286 AD2d 481, 483 [2d Dept 2001] [the defendant's motion to dismiss the complaint extended the defendant's time to answer and also extended the plaintiff's time to amend the complaint]; CPLR 3025 [a]). Then, in response to defendant's now withdrawn initial motion to dismiss (motion seq. No. 001), plaintiff also cross-moved to amend the complaint. Whether filed as of right or sought by motion, the amendment of the complaint herein hardly seems the basis for any assertion by the defense of "prejudice or surprise resulting directly from the delay" (McCaskey, Davies & Assocs., Inc. v New York City Health & Hosps. Corp., 59 NY2d 755, 757 [1983]; Tishman Const. Corp. of NY v City of New York, supra). As noted above, plaintiff seeks to amend the complaint by: (1) removing Robert S. Kelner as a defendant; (2) alleging that the probate period had not closed, thereby precluding arguments regarding the statute of limitations; (3) adding a claim of fraud against defendant, based on defendant's allegation that defendant forged the Kelner/Kelner Agreement; and (4) withdrawing the quasi-contractual claims of unjust enrichment and promissory estoppel.

Defendant argues, however, that the court must dismiss the amended complaint, pursuant to CPLR 3211 (a) (3), asserting that plaintiff lacks the legal capacity to bring the action. Capacity to sue is a threshold question involving the authority of a litigant to present a grievance for judicial review (Matter of Graziano v City of Albany, 3 NY3d 475[2004]). A person may not bring an action unless he/she possesses the legal capacity to sue (Silver v Pataki, 274 AD2d 57 [1st Dept 2000]). "In general a party's competence to commence an action is presumed" and, thus, a party seeking to dismiss a complaint pursuant to CPLR 3211 (a) (3) bears "the burden of demonstrating that the plaintiff was not competent" (Vasilatos v Dzamaba, 148 AD3d 1275, 1276 [3d Dept 2017]).

Defendant, in this case, offers evidence that plaintiff was previously involved in a criminal matter in federal court in Ohio. According to defendant, on January 6, 2015, plaintiff [*5]was indicted by a federal grand jury on three counts of cyber-stalking and threatening a Special Agent of the Federal Bureau of Investigation (FBI) (Presant aff, exhibit 3). Then, on October 27, 2016, after psychiatric evaluations of plaintiff by the U.S. Bureau of Prisons, the Ohio federal court found plaintiff incompetent to stand trial and dismissed the indictment against him without prejudice (Presant aff, exhibit 2). Defendant argues that the Ohio federal court finding of incompetency — less than a year before the suit at bar was filed — is persuasive evidence that plaintiff lacks the capacity to sue here in New York. In this regard, it is worth observing that the Court of Appeals has held that, while a court order from another state finding incompetence is not necessarily binding on the courts of this State, it may be used as evidence to support such a finding (Sengstack v Sengstack, 7 Misc 2d 1012, 1017 [1957], affd 4 NY2d 502 [1958]). Defendant alleges, as well, that plaintiff is exhibiting behavior in this case similar to that he displayed in the Ohio case, in that he is now on his third attorney in the instant matter, and has filed at least one document which defendant claims is "indisputably fraudulent," i.e., the Kelner/Kelner Agreement.

Defendant requests, in the alternative, that the court appoint a guardian ad litem for plaintiff, pursuant to CPLR 1201. CPLR 1201 states, "A person shall appear by his guardian ad litem if he is . . . [a] person judicially declared to be incompetent." Pursuant to CPLR 1202, the court may appoint a guardian ad litem at any stage of a proceeding upon its own initiative or upon motion of a relative, friend, guardian, committee of the property or conservator, or by any other party to the action. "[W]here there is a question of fact as to whether a guardian ad litem should be appointed, a hearing must be conducted" (Matter of Mary H. [Sanders-Spender], 126 AD3d 794, 795 [2d Dept 2015] [internal quotation marks and citation omitted]). On his cross-motion, defendant offers objective evidence that plaintiff may, indeed, lack the capacity to sue — given the finding of incompetence by another court of competent jurisdiction, not long before plaintiff filed the instant action. In addition, the court is mindful that plaintiff has had a number of attorneys in this matter and has conveyed different reasons for using the allegedly fraudulent Kelner/Kelner Agreement in this matter. The court will, therefore, set a date for a hearing to determine whether plaintiff lacks the capacity to sue in the Supreme Court of the State of New York, and, if not, whether the appointment of a guardian ad litem is necessary for plaintiff to pursue his claims (id.; see also Piggott v Lifespire Inc., 149 AD3d 785, 786 [2d Dept 2017] ["the court should have conducted a hearing to determine whether a guardian should be appointed for plaintiff pursuant to CPLR 1201"]).


Accordingly, it is

ORDERED that the motion by plaintiff, Ronald Bergrin, and cross-motion by defendant, Kenneth A. Kelner, are held in abeyance until a hearing is held to determine if defendant can establish as a threshold matter that plaintiff is incapable of prosecuting this action; and it is further

ORDERED that no action shall be taken in this action until a determination is made regarding whether Ronald Bergrin is deemed competent and/or whether a guardian ad litem need be appointed for him; and it is further

ORDERED that counsel are directed to appear for a hearing in Room 581, 111 Centre Street, on February 26, 2019, at 11:00 a.m.

Dated: November 27, 2018

Hon. Robert R. Reed

J.S.C. Footnotes

Footnote 1:On October 16, 2017, plaintiff and Robert Kelner stipulated to the dismissal of the action as against Robert Kelner. Thereafter, on November 1, 2017, the initial motion to dismiss was withdrawn (see notice of withdrawal of motion, NYSCEF Doc. No. 62).