Conway & Conway v Kaplan

[*1] Conway & Conway v Kaplan 2021 NY Slip Op 50059(U) Decided on January 29, 2021 Supreme Court, New York County Lebovits, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 January 29, 2021
Supreme Court, New York County

Conway & Conway, Plaintiff,

against

Adam Kaplan and Daniel Kaplan, Defendants.



651264/2020



Conway & Conway, New York, NY (Kevin P. Conway of counsel), for plaintiff.

Daniel L. Abrams, PLLC, New York, NY (Daniel Abrams of counsel), for defendants.
Gerald Lebovits, J.

The following e-filed documents, listed by NYSCEF document number (Motion 001) 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 41 were read on this motion to DISMISS AND STRIKE.

The following e-filed documents, listed by NYSCEF document number (Motion 002) 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 61, 62, 63, 64, 65, 66, 67 were read on this motion to DISMISS AND FOR SANCTIONS.

Plaintiff, Conway & Conway, a law firm, commenced this action against defendants, Adam Kaplan and Daniel Kaplan, who had previously retained plaintiff to represent them in an employment dispute. But, the Kaplans allegedly did not pay for plaintiff's legal services. Instead, they sued the law firm for legal malpractice. Supreme Court, New York County (Nervo, J.), dismissed that suit upon the law firm's motion to dismiss and awarded the law firm costs and disbursements, which the Kaplans have still not paid. The law firm has now sued the Kaplans for breach of contract and is seeking payment for the services rendered during their employment dispute, for the costs and disbursements awarded to the law firm by the motion court, and for sanctions and costs to be awarded against the Kaplans.

In motion sequence 001, defendants move to (1) strike the "Preliminary Statement" and Paragraphs 40-43 of plaintiff's complaint pursuant to CPLR 3014 and 3024 (b); and (2) dismiss the second, third, and fourth claims against the defendants regarding account stated, breach of the covenant of good faith and fair dealing, and quantum meruit, respectively, on the grounds that plaintiff failed to state a cause of action under CPLR 3211 (a) (7) and (a) (8).

In motion sequence 002, plaintiff moves to (1) dismiss defendants' counterclaims and certain affirmative defenses under CPLR 3211 (a) (1), (a) (5), (a) (7), and (b); and (2) for sanctions and costs to be awarded against defendants under NYCRR 130-1.1.

Defendants' motion is granted in full. The branch of plaintiff's motion seeking dismissal of counterclaims and affirmative defenses is granted; the branch of plaintiff's motion requesting sanctions and costs is denied.

Background

In April 2017, defendants—twin brothers who were both employed at Morgan Stanley—hired plaintiff to handle their employment dispute. Morgan Stanley was investigating allegations about their conduct. In exchange for plaintiff's legal services, defendants agreed to pay a retainer amount of $7,500 and to be billed hourly for legal services. The retainer agreement also stated that an interest rate of 1.5% per annum would accrue for nonpayment of fees from the date of nonpayment until the date of payment.

In May 2017, defendants voluntarily resigned from Morgan Stanley. Because the investigation was not formally concluded when they resigned, Morgan Stanley indicated on defendants' Financial Industry Regulatory Authority ("FINRA") U-5 forms that an investigation was still open at the time of their resignation.

Between April 2017 and August 2017, plaintiff sent bills to defendants, initially billing against the $7,500.00 retainer and then sending periodic invoices containing the outstanding balances that defendants owed to plaintiff. By August 3, 2017, they owed plaintiff an outstanding balance of $30,971.60.

On August 3, 2017, defendants terminated plaintiff and wrote to plaintiff in response to the invoice to contest the validity of the bill. Defendants disputed the billing because defendants claimed in part that (1) plaintiff did not remember information from previous conversations and therefore repeated conversations unnecessarily and (2) plaintiff was negligent and committed legal malpractice by providing incorrect information about the U-5 forms. Afterwards, plaintiff sent bills on a monthly basis to defendants seeking payment but defendants have not paid. As of February 26, 2020, $13,892.68 in interest accrued since the date of nonpayment.

On January 16, 2018, defendants commenced a legal malpractice suit against plaintiff. They alleged that they resigned only because of plaintiff's legal advice and that plaintiff failed to inform them that resigning before the investigation was closed would result in negative U-5 forms. They also alleged that plaintiff failed to advocate for the formal closure of the investigation. On September 6, 2018, the Supreme Court, New York County (Nervo, J.), granted plaintiff's motion to dismiss for failure to state a cause of action. (See Kaplan v Conway & Conway, 2018 NY Slip Op 32178[U] [Sup Ct, NY County 2018], affd 173 AD3d 452 [1st Dept 2019], lv denied 2019 NY Slip Op 80467[U] [1st Dept 2019].) Plaintiff was awarded $340 for costs and disbursements, which defendants have still not paid.

Defendants filed an appeal with the Appellate Division, First Department, which upheld the motion court's decision. (See Kaplan v Conway & Conway, 173 AD3d 452 [1st Dept 2019].) Defendants then moved for reargument or, in the alternative, leave to appeal to the Court of Appeals. The First Department denied the motion in its entirety. (See Kaplan v Conway & Conway, 2019 NY Slip Op 80467[U] [1st Dept 2019].) On January 30, 2020, defendants moved by order to show cause before the Supreme Court, asking the court to vacate its dismissal and reinstate defendants' claims for legal malpractice on the grounds that they had learned new facts in a FINRA expungement proceeding. On February 4, 2020, the Supreme Court declined to sign the order to show cause on the grounds that it was "an improper attempt to relitigate issues decided by this Court and unanimously affirmed by the Appellate Division, First Department." (NY St Cts Elec Filing [NYSCEF] Doc No. 39, at 1.)

On February 26, 2020, plaintiff sued defendants for breach of contract, account stated, breach of the duty of good faith and fair dealing, and quantum meruit for failing to pay for plaintiff's legal services and for the costs and disbursements ordered by Supreme Court.

I. Defendants' Motion to Strike Allegations

In motion sequence 001, defendants move to strike plaintiff's "Preliminary Statement" and paragraphs 40 to 43 of the complaint under CPLR 3014 and 3024 (b).

In the complaint, plaintiff included a preliminary statement before the numbered paragraphs. In the preliminary statement, plaintiff provided the background of the legal malpractice suit and the current complaint as well as defendants' history of litigation before and after the legal malpractice suit and also litigation that defendants' father initiated on their behalf. (NYSCEF Doc No. 20, complaint at 1—6.) Plaintiff also discussed how much time he spent defending himself in the malpractice suit, which "would have been billable professional time," and noted the cost "[h]ad such time been billed at Plaintiff's standard rates." (Id. at 4.) Plaintiff included a footnote explaining that he "strongly considered appending an additional count of quantum [meruit] damages" for this amount and "[d]epending on Defendants' conduct within and throughout the instant lawsuit, Plaintiffs give notice herein that Plaintiffs may move for these costs in particular to be considered by the Court in connection with any potentially-sanctionable conduct which may arise throughout the course of this lawsuit . . . ." (Id. at 6, n 5.) Paragraphs 40 to 43 of the complaint similarly discuss defendants' litigation history, the time plaintiff spent defending itself in the legal malpractice suit, and the fee that would have resulted had plaintiff been hired at his regular rate.

Although plaintiff claims broadly that the court should not strike any of its allegations, plaintiff argues that only the preliminary statement and paragraphs 40 and 41 are relevant to its case. (See NYSCEF Doc No. 28, plaintiff's memorandum of law in opposition to defendants' motion at 2—5.) Plaintiff does not specifically challenge defendants' motion to strike paragraphs 42 and 43. Because the information in the preliminary statement and paragraphs 40 to 43 of the complaint are unnecessary and prejudicial, defendants' motion to strike these allegations is granted.

CPLR 3014 requires that pleadings "consist of plain and concise statements in consecutively numbered paragraphs." Moreover, under CPLR 3026, pleadings "shall be liberally construed" such that "defects shall be ignored if a substantial right of a party is not prejudiced." However, a complaint that fails to comply with both CPLR 3014 and 3024 should be dismissed with leave to file an amended complaint. (See Barsella v New York, 82 AD2d 747 [1st Dept 1981].) In Barsella, the First Department categorized "references to irrelevant other litigations, to the nursing home investigation, to the alleged reports in the press, facts claimed to have been 'widely reported', rumors, derogatory characterizations such as 'slumlordism' and 'front' corporations" as irrelevant, unnecessary, and prejudicial. (See id. at 747—748.) The Court granted defendants' motion to dismiss the complaint with leave to file an amended complaint that consists of plain and concise statement and omits unnecessary and prejudicial allegations. (Id. at 747.)

To strike scandalous or prejudicial matter under CPLR 3024 (b), a party must show that the matter is "unnecessarily" inserted into the pleading, where "unnecessarily" is understood as "irrelevant." Matter is relevant to a pleading if it would be admissible at trial under the evidentiary rules of relevancy. (See New York City Health and Hosp. Corp. v St. Barnabas Cmty. Health Plan, 22 AD3d 391, 391 [1st Dept 2005].) However, "[i]f there is significant doubt at the [*2]pleading stage as to whether or not certain pleaded allegations are relevant enough to the controversy to be admissible, and their inclusion in the case is prejudicial without the reasonable likelihood that they are properly in the case at all, the motion to strike may be justified." (Patrick M. Connors, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3024:4, citing Soumayah v Minnelli, 41 AD3d 390, 393 [1st Dept 2007].)

In Van Caloen v Poglinco (214 AD2d 555, 556 [2d Dept 1995]), the Court granted defendant's motion to strike scandalous and prejudicial materials from the plaintiff's bill of particulars, which referenced "collateral matters regarding the defendant Poglinco's past history that are unrelated to the instant litigation," because these matters were "unnecessary" to the plaintiffs' causes of action and were "seriously prejudicial to the defendant." (Id. at 557.) The Court noted that if the facts "become relevant at trial, their admissibility should be determined by the Trial Judge in light of the posture of the case at that junction." (Id.)

Although plaintiff could reformat the preliminary statement to match the proper formatting required by CPLR 3014, most of the content in the preliminary statement is already stated in consecutively numbered paragraphs in the "Facts" section. The remaining information in the preliminary statement, repeated in paragraphs 40 to 43, concerns allegations relating to defendants' history of litigation, the amount of time that plaintiff spent defending himself in the malpractice suit, and the corresponding cost that plaintiff would have been owed had he been hired for that amount of time. Even if these allegations may be admissible later at trial, they are not necessary for plaintiff to state a claim regarding breach of contract, among others, and they would be prejudicial to defendants.

Defendants' motion to strike the preliminary statement and paragraphs 40 to 43 of the complaint is granted.

II. Defendants' Motion to Dismiss Claims

In motion sequence 001, defendants move to dismiss plaintiff's second, third, and fourth claims for account stated, breach of the covenant of good faith and fair dealing, and quantum meruit, respectively, on the ground that plaintiff failed to state a cause of action under CPLR 3211 (a) (7) and (a) (8). Defendants do not mention CPLR 3211 (a) (8) in any documents other than the notice of motion and do not argue anywhere that the court does not have jurisdiction over them. But, under CPLR 3211 (a) (7), defendants' motion to dismiss the second, third, and fourth claims is granted.

a. Motion to Dismiss Second Claim (Account Stated)

Defendants' motion to dismiss plaintiff's account-stated claim is granted.

An account-stated claim is an agreement on the amount due for past transactions that is separate from and "independent of the underlying agreement" or contract. (Federated Fire Protection Systems Corp. v 56 Leonard Street, LLC, 170 AD3d 432, 433 [1st Dept 2019].) An account-stated claim requires the defendant to accept an invoice as correct; acceptance can be demonstrated explicit or implicitly by failing to object to the amount stated within a reasonable time. (See Cushman & Wakefield, Inc. v Kadmon Corp., LLC, 175 AD3d 1141, 1142 [1st Dept 2019].) A reasonably timely objection to the amount owed rebuts the account stated. (See Bernard v De Rham, 161 AD3d 686, 687 [1st Dept 2018].)

Plaintiff bases its account-stated claim on the agreement defendants signed when they retained the law firm to represent them in their employment dispute. The invoices plaintiff sent to defendants do not constitute independent agreement that is separate from the underlying retainer agreement. Additionally, the defendants objected to the amount stated in the invoices in [*3]a timely manner. Although plaintiff does not specify the exact dates it sent invoices to defendants, it states that it billed defendants between April 12, 2017 and August 3, 2017. On August 3, 2017, defendants terminated plaintiff and disputed the accuracy of the bill. (See NYSCEF Doc No. 22, at 1.)

b. Motion to Dismiss Third Claim (Breach of the Covenant of Good Faith and Fair Dealing)

Defendants' motion to dismiss the claim sounding in breach of the covenant of good faith and fair dealing is granted.

A party pleading a breach of contract claim may not also state a claim for breach of the implied covenant of good faith and fair dealing if the two claims arise from the same set of facts and seek the same damages. (Mill Fin., LLC v Gillett, 122 AD3d 98, 104 [1st Dept 2014].)

Plaintiff's first claim is breach of contract. However, plaintiff bases its breach-of-contract claim and the breach of the covenant of good faith and fair dealing claim upon the same set of facts: defendants refused to pay for plaintiff's legal services. Additionally, plaintiff seeks the same damages for both claims.

c. Motion to Dismiss Fourth Claim (Quantum Meruit)

Defendants' motion to dismiss the quantum-meruit claim is granted.

A party cannot plead a cause of action for quantum meruit when (1) an express contract exists between the two parties and (2) the contract covers the same subject matter as the quantum-meruit claim. (See Hudson Ins. Co., Inc. v City of New York, 170 AD3d 622, 623 [1st Dept 2019].)

An explicit contract existed between plaintiff and defendants in the form of the retainer agreement. Plaintiff's quantum-meruit claim is based only on the retainer agreement and the fact that defendants did not pay plaintiff for its services.

III. Motion to Dismiss Defendants' Counterclaims and Certain Affirmative Defenses

In motion sequence 002, plaintiff moves to dismiss defendants' counterclaims and first, third, fourth, and eighth affirmative defenses pursuant to CPLR 3211(a) (1), (a) (5), (a) (7), and (b).

Defendants assert counterclaims against plaintiff for damages for legal malpractice and disgorgement. Defendants allege that plaintiff "advised and convinced" them to resign before the formal closure of Morgan Stanley's investigation. (NYSCEF Doc No. 43, answer, affirmative defenses and counterclaims, at 14, ¶ 5.) As a result, Morgan Stanley indicated on their U-5 forms that an investigation was still open at the time of their resignation. Defendants allege "even modest advocacy" by plaintiff "could have and would have led Morgan Stanley to . . . formally close the already-completed investigations prior to" their resignations. (Id. at 21, ¶ 37.) Defendants allege plaintiff did not advocate for the formal closure of the investigation and was therefore negligent. (Id. at 23, ¶ 41—42.)

Defendants' legal-malpractice counterclaim alleges that,

"Had Conway offered a competent representation of Adam and Daniel, there would have been no investigation against the Kaplans which was reported on the Kaplan's respective U-5, and the U-5's would not have had any false, misleading or defamatory language concerning the false allegations which were purportedly being investigated. Instead, the investigations would have been closed prior to the voluntary resignations, and the U-5's would not have reported any pending investigations or false allegations." (Id. at 27, ¶ 48.)

Defendants allege that they suffered reputational damage, loss of client opportunities, and [*4]expended "costs associated with attempting to mitigate damages, including without limitation the retention of counsel to defend against FINRA investigations and also pursue a lengthy and expensive expungement proceeding . . . ." (Id. at 27, ¶ 49.) Defendants claim they spent $735,266.81 in legal fees and expenses as a result of plaintiff's legal malpractice and seek "judgment from Conway for legal malpractice in an amount to be determined at trial but believed to exceed $1,000,000 . . . ." (Id.)

Defendants' disgorgement counterclaim alleges that they already paid plaintiff $17,689.26 for legal services and that plaintiff must disgorge this amount even if the Court does not conclude that plaintiff committed legal malpractice, because "whatever services he performed for Adam and Daniel were done in a negligent manner." (Id. at 28, ¶ 51-54.)

The first affirmative defense alleges that plaintiff breached the contract because he failed to adequately perform his end of the contract. The third affirmative defense alleges that plaintiff's

"quest for legal fees is precluded in part by the doctrine of judicial estoppel because [plaintiff's] bills refer to considerable work done on [defendants'] human resources investigation against their immediate supervisor, but [plaintiff] previously—albeit falsely—represented to the Court that he did not represent [defendants] in this investigation, and the Court adopted [plaintiff's] argument. [Plaintiff] cannot have it both ways—limiting the scope of retention to avoid malpractice liability for mistakes he made, and then expanding the scope to collect legal fees for work he performed negligently, or did not perform at all." (Id. at 10, ¶ 3.)

The fourth affirmative defense alleges that plaintiff breached the contract by performing the work negligently. The eighth affirmative defense alleges that plaintiff's claims fail because plaintiff provided "erroneous and negligent advice on the core issue of the representation." (Id. at 11, ¶ 8.)

Plaintiff's motion to dismiss these counterclaims and affirmative defenses is granted.

a. Plaintiff's Motion to Dismiss Counterclaims under CPLR 3211(a) (5) (Res Judicata)

Plaintiff's motion to dismiss defendants' counterclaims is granted as barred by the doctrine of res judicata.

Under CPLR 3211(a) (5), "a party may move for judgment dismissing one or more causes of action on the ground that . . . the cause of action may not be maintained because of . . . res judicata." The doctrine of res judicata bars claims "where a judgment on the merits exists from a prior action between the same parties involving the same subject matter." (Matter of Hunter, 4 NY3d 260, 269 [2005].) Although res judicata does not bar claims that concern conduct that "took place after the commencement of the prior action" (UBS Sec. LLC v Highland Capital Mgt., 159 AD3d 512, 513 [1st Dept 2018], lv dismissed 32 NY3d 1080 [2018] [emphasis added]), res judicata prevents a party from litigating a claim that concerns conduct arising out of the same transaction at issue in the prior action, "even if based upon different theories or seeking a different remedy." (O'Brien v City of Syracuse, 54 NY3d 353, 357 [1981].) Additionally, "[t]he proper inquiry for res judicata purposes is when [the party] could have raised a cause of action, not when it had enough evidence to prove the claim at trial." (UBS Sec. LLC v Highland Capital Mgt., 86 AD3d 469, 476 [1st Dept 2011].)

Defendants' counterclaims for damages for legal malpractice and disgorgement rely on "new" facts they discovered during the FINRA expungement proceeding, which took place after [*5]they initiated the legal-malpractice suit. But the counterclaims for legal malpractice and disgorgement only concern plaintiff's conduct in relation to his legal representation of defendants during their employment dispute with Morgan Stanley. Because the conduct in their counterclaims arose out of the same transaction at issue in the prior action, the counterclaims are barred by the doctrine of res judicata.

b. Plaintiff's Motion to Dismiss Affirmative Defenses under CPLR 3211 (b)

Plaintiff's motion to dismiss defendants' affirmative defenses one, three, four, and eight is granted as barred by the doctrine of res judicata.

Under CPLR 3211 (b), "[a] party may move for judgment dismissing one or more defenses, on the ground that a defense is not stated or has no merit." Although defendants argue that the doctrine of res judicata only applies to claims and cannot bar affirmative defenses (NYSCEF Doc No. 51, at 19), affirmative defenses may be dismissed as barred by res judicata. (See CIBC Mellon Trust Co. v HSBC Guyerzeller Bank AG, 56 AD3d 307, 308 [1st Dept 2008].)

Defendants' affirmative defenses one, three, four, and eight concern plaintiff's legal representation of defendants during their employment dispute with Morgan Stanley. Because the conduct mentioned in these affirmative defenses arose out of the same transaction at issue in the prior action, they too are precluded by res judicata.

c. Plaintiff's Motion to Dismiss Legal-Malpractice Counterclaim under CPLR 3211 (a) (1), (a) (5), and (a) (7)

Although this Court does not need to consider plaintiff's other arguments for dismissing the legal-malpractice counterclaim, if it did, it would dismiss the counterclaim under CPLR 3211 (a) (1), (a) (5), and (a) (7).

Under CPLR 3211 (a) (1), a motion to dismiss may be granted "only where the documentary evidence utterly refutes the plaintiff's factual allegations, conclusively establishing a defense as a matter of law." (Goshen v Mut. Life. Ins. Co. of New York, 98 NY2d 314, 316 [2002].) Defendants allege that plaintiff was negligent in his representation of them because he did not inquire into the status of the investigation and did not advocate for its formal closure before they voluntary resigned. However, documentary evidence refutes these claims. (See NYSCEF Doc No. 66; see NYSCEF Doc No. 33, at 7; see also Kaplan v Conway & Conway, 173 AD3d at 453 [noting that NYSCEF Doc No. 33 refutes defendants' claim that Morgan Stanley would have changed the language in the U-5 forms in a more favorable way had plaintiff offered competent legal representation].) Because documentary evidence refutes defendants' factual allegations, plaintiff's motion to dismiss the legal-malpractice counterclaim would be granted.

Plaintiff argues that the legal-malpractice counterclaim should be dismissed as barred by the doctrine of collateral estoppel under CPLR 3211 (a) (5). Collateral estoppel precludes an issue when "(1) the issues raised and resolved in the prior proceeding are identical to those decisive in the present proceeding; and (2) the party against whom collateral estoppel is asserted has had a full and fair opportunity to litigate the issues now said to be controlling." (Matter of Donzinger, 163 AD3d 123, 124 [1st Dept 2018].) Defendants' counterclaim for legal-malpractice concerns plaintiff's allegedly negligent legal representation of defendants during their employment dispute, which is identical to the issue raised and resolved in the previous legal-malpractice lawsuit. Additionally, defendants had a full and fair opportunity to litigate the issue. (See Kaplan v Conway & Conway, 173 AD3d 452; see Kaplan v Conway & Conway, 2019 NY Slip Op 80467[U]; see NYSCEF Doc No. 39, at 1.) Therefore, plaintiff's motion to dismiss [*6]the legal-malpractice counterclaim would be granted as barred by the doctrine of collateral estoppel.

Under CPLR 3211 (a) (7), a motion to dismiss may be granted if the pleading fails to state a cause of action. To establish a prima facie case of legal malpractice, a party must prove "(1) that the attorney was negligent; (2) that such negligence was a proximate cause of [the party's] losses; and (3) proof of actual damages." (Excelsior Capitol LLC v K & L Gates LLP, 138 AD3d 492, 492 [1st Dept 2016] [citation omitted].) Defendants fail to establish a prima facie case of legal malpractice because they do not prove that plaintiff's alleged negligence was the proximate cause of their losses. As the Supreme Court noted in the legal-malpractice suit, the claim that the Kaplans "would not have suffered damages, had [Conway] secured 'more favorable language,' is utterly vague, and the claim, that some other language, to which Morgan Stanley would have agreed, would have averted [the Kaplans'] damages, is speculative, and, therefore, insufficient to support a claim of legal malpractice." (Kaplan v Conway & Conway, 2018 NY Slip Op 32178[U], at *4.) Therefore, plaintiff's motion to dismiss defendants' legal-malpractice counterclaim would be granted for failing to state a cause of action.

IV. Motion for Sanctions and Costs to be Awarded Against Defendants

In motion sequence 002, plaintiff moves for sanctions and costs to be awarded against defendants under 22 NYCRR 130-1.1. In a close call, the Court declines to award sanctions.

A court may impose costs and sanctions on a party for "frivolous conduct," which occurs when the conduct is "completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law . . . ." (22 NYCRR 130-1.1 [c] [1].) When a court determines whether the conduct is frivolous, it shall consider "whether or not the conduct was continued when its lack of legal or factual basis was apparent, should have been apparent, or was brought to the attention of counsel or the party." (22 NYCRR 130-1.1 [c]). Although unpersuasive arguments brought in good faith do not warrant sanctions (see Levy v Carol Mgt. Corp., 260 AD2d 27, 35 [1st Dept 1999]), raising claims barred by res judicata may be considered frivolous conduct that warrants sanctions. (See Borstein v Henneberry, 132 AD3d 447, 451 [1st Dept 2015].)

Plaintiff argues that defendants' conduct is frivolous because their claims are barred by res judicata. As discussed above, defendants' argument why their counterclaims and affirmative defenses is plainly without merit. This court ultimately concludes that plaintiff has not met the high bar of showing that defendants raised these claims and defenses in bad faith. Given the weakness of defendants' res-judicata arguments, though, the assertion of the claims and defenses at issue comes perilously close to being sanctionable.

Accordingly, it is

ORDERED that the branch of defendants' motion under CPLR 3014 and 3024 (b) seeking to strike the preliminary statement and paragraphs 40-43 of the complaint (mot. seq. 001) is granted; and it is further

ORDERED that the branch of defendants' motion under CPLR 3211 seeking dismissal of plaintiffs' second, third, and fourth claims (mot. seq. 001) is granted; and it is further

ORDERED that the branch of plaintiffs' motion under CPLR 3211 seeking dismissal of defendants' counterclaims and certain affirmative defenses (mot. seq. 002) is granted; and it is further

ORDERED that the branch of plaintiffs' motion under NYCRR 130-1.1 seeking sanctions against defendants (mot. seq. 002) is denied.

Dated: January 29, 2021

Hon. Gerald Lebovits

J.S.C.