Entertainment Partners Group, Inc. v. Davis

Decision Date08 October 1992
Citation155 Misc.2d 894,590 N.Y.S.2d 979
PartiesIn the Matter of ENTERTAINMENT PARTNERS GROUP, INC., d/b/a the Crane Club, Plaintiff, v. Gail DAVIS, Lawrence D. Bernfeld, and Ed Green, Defendants. .A.S. Part 8
CourtNew York Supreme Court

Elizabeth St. Clair and David B. Goldstein, Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C., New York City, for defendants Gail Davis and Ed Green.

Lawrence D. Bernfeld and Ronnie L. Silverberg, Graubard, Mollen, Horowitz, Pomeranz & Shapiro, New York City, for defendant Lawrence D. Bernfeld.

Saul Jakubowitz, Jakubowitz & Stern, Schwab Goldberg Price & Dannay, Raymond C. James, New York City, for plaintiff on the motion.

DIANE A. LEBEDEFF, Justice:

This court previously dismissed the plaintiff's claims against each defendant and concluded that the claims were frivolous and represented "part of an ominous trend towards litigation brought against public interest groups, known as SLAPP suits (Strategic Lawsuits Against Public Participation)" (Entertainment Partners Group, Inc. v. Davis, NYLJ 6/26/91, p. 22, col. 1 (Sup.Ct., N.Y. Co.1991).

The fixing of the amount of sanctions and attorney's fees is now raised by motion because the hearing directed by the judgment was frustrated by the failure of plaintiff's counsel to appear with any regularity. The defendants observed that the legal efforts expended on their behalf were billable at far beyond $10,000 each and now move for an order awarding costs and attorney's fees against plaintiff in the amount of $10,000 to be awarded to each remaining defendant, payable to the two law firms representing defendants.

To resolve the issues, the court must determine the maximum amount to be awarded under CPLR 8303-a, which is in the nature of a sanction for a frivolous suit. As a part of that determination, the court must decide two previously unaddressed issues, specifically whether the $10,000 specified in CPLR 8303-a applies to the case as a whole or permits a higher total costs in a case, and the treatment to be accorded a successful party when represented on a pro bono basis.

The Litigation Background

This case had its seeds in community opposition to the application of plaintiff Entertainment Partners Group ("EPG"), for a special zoning permit to operate a restaurant and nightclub known as the Crane Club in Manhattan. Defendants Gail Davis and Ed Green were leaders of the block association which opposed the application before a Community Board and the Board of Standards and Appeals ("BSA"). After a special permit was granted, Davis and Green, among others, commenced an Article 78 proceeding in which defendant Lawrence D. Bernfeld, an attorney, represented the neighborhood group.

In that Article 78 proceeding, this court remanded certain issues to the BSA. BSA modified the conditions imposed upon the permit by limiting the size of the dance area, which ameliorated some of the community's concern that the Club would be a dance hall, and otherwise adhered to its original determination.

Before the final BSA decision was rendered, EPG commenced this action. On motions to dismiss, the complaint was found to lack legal merit. The first cause of action, which included several different theories, could not withstand dismissal because: (1) the defamation assertions were untimely under CPLR 215, except as to statements in the court proceeding which were covered by absolute privilege (Toker v. Pollak, 44 N.Y.2d 211, 405 N.Y.S.2d 1, 376 N.E.2d 163 [1978]; and (2) the prima facie tort and tortious interference with prospective business relationships lacked necessary allegations regarding the defendants' motives and could not lie given the complaint's allegation that defendants acted out of self-interest (see, Burns, Jackson, Miller, Summit & Spitzer v. Lindner, 59 N.Y.2d 314, 464 N.Y.S.2d 712, 451 N.E.2d 459 [1983]; Nifty Foods Corp. v. Great Atlantic & Pacific Tea Co., 614 F.2d 832 [2nd Cir.1980], applying New York law; Rosenberg v. Del-Mar Division, Champion International Corp., 56 A.D.2d 576, 391 N.Y.S.2d 452 [2d Dept.1977].

The second cause of action asserted that the block association lacked proper legal status under General Business Law Section 133 and General Associations Law Section 18, which defendants refuted as a factual matter. This claim was dismissed because those statutes do not create a recognized tort cause of action.

Additionally, two well-recognized public policies were applicable and supported a finding of its lack of colorable merit. Specifically, as to defendant Bernfeld, it was relevant that an attorney, acting in his or her professional role, cannot be found civilly liable for acts performed in good faith and honest purpose of protecting the interests of a client (Hahn v. Wylie, 54 A.D.2d 629, 387 N.Y.S.2d 855 [1st Dept.1976]. As to the entire action, absent an actionable tort, it impermissibly assailed an exercise of the defendants' constitutional right to petition government for a redress of grievances, which protects from tort claims a citizen who attempts to influence governmental action through an invocation of administrative, legislative or judicial process to achieve political or economic goals (see, Eastern Railroad Presidents Conference v. Noerr Motor Freight, 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 [1961]; also Aknin v. Phillips, 404 F.Supp. 1150, aff'd, 538 F.2d 307 [2nd Cir.1976], property owners adjacent to discotheque filed noise complaint; Anchorage Joint Venture v. Anchorage Condominium, 670 P.2d 1249 [Col.App.1983], suit over zoning variance protest; Havoco of America v. Hollobow, 702 F.2d 643 [7th Cir., 1983], Securities and Exchange Commission complaint; Gorman Towers, Inc. v. Bogoslavsky, 626 F.2d 607 [8th Cir.1980], housing project opponents; see also Miracle Mile Associates v. City of Rochester, 617 F.2d 18 [2nd Cir.1980], and Sutton Area Community, Inc. v. City of New York, N.Y.L.J. 11/9/88, p. 21, col. 4 [Sup.Ct., New York Co., Nardelli, J.]. To use the words of Justice Colabella, who awarded sanctions in a similar case in Gordon v. Marrone, 151 Misc.2d 164, 169, 573 N.Y.S.2d 105 (Sup.Ct., Westchester Co. 1991, Colabella, J.), the courts of New York State do not countenance litigation which is "an effort to chill the ... exercise of ... First Amendment rights."

Frivolity

Finding the case without merit, the court determined sanctions were appropriate, specifically in the form of costs under CPLR 8303-a, which allows the imposition of costs in a personal injury case upon a determination that an action or claim is "frivolous." Section 8303-a(a) of the CPLR provides:

"If in an action to recover damages for personal injury ... an action or claim is commenced ... or a counterclaim, defense or cross claim is commenced ... that is found, at any time during the proceedings or upon judgment, to be frivolous by the court, the court shall award to the successful party costs and reasonable attorney's fees not exceeding ten thousand dollars".

A finding of frivolity requires a determination that the action, claim or defense "[w]as commenced, used or continued in bad faith, solely to delay or prolong the resolution of the litigation", and, when found, requires the imposition of costs and attorney's fees upon the frivolous litigant, the litigant's counsel, or both (CPLR 8303-a[c][i]. Once frivolity is determined, CPLR 8303-a is mandatory where applicable (Grasso v. Mathew, 164 A.D.2d 476, 564 N.Y.S.2d 576, app. dism., 77 N.Y.2d 940, 569 N.Y.S.2d 613, 572 N.E.2d 54, app. den., 78 N.Y.2d 855, 573 N.Y.S.2d 645, 578 N.E.2d 443 [1991]; Mitchell v. Herald Co., 137 A.D.2d 213, 220, 529 N.Y.S.2d 602 [4th Dept.1988]; see also, Patane v. Griffin, 164 A.D.2d 192, 562 N.Y.S.2d 1005 [3rd Dept.1990], and Fritze v. Versailles, 158 A.D.2d 669, 551 N.Y.S.2d 854 [2nd Dept.1990].

CPLR 8303-a is a legislative recognition that the remedy of an "assessment of attorneys' fees and disbursements has become the single most important device suggested to deter [frivolous litigation]" (Matter of A.G. Ship Maintenance Corp. v. Lezak, 69 N.Y.2d 1, 4, 511 N.Y.S.2d 216, 503 N.E.2d 681 [1986]. Its purpose and legislative history is fully set forth in Matter of Eagle Ins. Co. (Ruiz), 141 Misc.2d 815, 535 N.Y.S.2d 294 (Sup.Ct., Nassau Co., Christ, J.), and need not be repeated here. There are two similar provisions bearing the same number, an oddity described as "the apparent result of the Legislature's attempt to amend a statute which had previously been amended out of existence (compare, L.1986, ch. 220, § 35 [eff. June 28, 1986] with L.1986, ch. 485, § 11 [eff. July 21, 1986]" (Mitchell v. Herald Company, supra, 137 A.D.2d at 218, fn. 2, 529 N.Y.S.2d 602), and the personal injury provision which is examined here.

An examination of CPLR 8303-a indicates that it is applicable here. Although CPLR 8303-a is limited to actions for "damages for personal injury, injury to property or wrongful death" (CPLR 8303-a[a], "personal injury" is to be read broadly in light of the definition given to the term by General Construction Law § 37-a and includes defamation, extortion and abuse of process (Mitchell v. Herald Company, 137 A.D.2d 213, 529 N.Y.S.2d 602, appeal dismissed, 72 N.Y.2d 952, 533 N.Y.S.2d 59, 529 N.E.2d 427 [1988]; Gordon v. Siben & Siben, Esqs., 146 Misc.2d 553, 557, 558 N.Y.S.2d 439 [A.T. 9th & 10th J.D.1990]. Given that both personal injury and economic injury were alleged, the court finds the tort claims raised here fall within the ambit of CPLR 8303-a. The action here was commenced after the effective date of the statute.

CPLR 8303-a requires "a showing that the plaintiff and counsel knew or should have known that the action lacked merit" (McGill v. Parker, 179 A.D.2d 98, 111, 582 N.Y.S.2d 91 [1st Dept.1992]. The party seeking sanctions under CPLR 8303-a must be held to the burden of demonstrating entitlement to relief as is imposed upon claimants under 22 NYCRR 130 (see, Schulz v. Washington...

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