Fierro v. Yellen

Decision Date31 August 2022
Docket NumberIndex No. 523796/2021,Mot. Seq. Nos. 1,2,3 & 4
Citation2022 NY Slip Op 32959 (U)
CourtNew York Supreme Court

Unpublished Opinion



The following e-filed papers read herein: NYSCEF Doc Nos.:

Notice of Motion/Order to Show Cause/ Petition/Cross Motion and Affidavits (Affirmations) Annexed 13-25 26-51 53-83 85-98

Opposing Affidavits (Affirmations)_ 106-109 110-113 114-117 124

Affidavits/ Affirmations in Reply _ 123 120-122

Memoranda of Law--52 84.

Upon the foregoing papers, in this action by plaintiffs Patsy Fierro ("Fierro") and Denise Zucaro, as administrator of the estate of Luigi Zucaro ("Zucaro")[1] (collectively "plaintiffs") against defendants Brendan C. Kombol, Esq. ("Kombol"), Richard L. Yellen, Esq. ("Yellen"), Richard L. Yellen & Associates, LLP ("the Yellen firm"), J.C. Ryan EBCO/H&G LLC ("J.C. Ryan"), Dana F. Schnipper ("Schnipper"), and Monica E Kipiniak, Esq. ("Kipiniak") (collectively "defendants") for violation of Judiciary Law § 487, conspiracy to violate Judiciary Law § 487, and common-law fraud and deceit, Kombol, appearing pro se, moves (Motion Seq. 1) for an order, pursuant to CPLR § 3211 including but not limited to subsections (a) (1) and (7), dismissing plaintiffs' complaint as against him. Yellen (appearing pro se), the Yellen firm, J.C. Ryan, and Schnipper move (Motion Seq. 2), for an order, pursuant to CPLR § 3211 (a)(1), (5), and (7), CPLR § 213 (8), and CPLR § 3016 (b), dismissing plaintiffs' complaint as against them. Kipiniak moves (Motion Seq. 3) for an order, pursuant to CPLR § 3211 (a) (1), (5), and (7), CPLR § 213 (8), and CPLR § 3016 (b), dismissing plaintiffs' complaint as against her. Plaintiffs move, by order to show cause (Motion Seq. 4) for an order: (1) disqualifying the Yellen firm from representing J. C. Ryan in this action based on the ground of collateral estoppel; (2) disqualifying the Yellen firm from representing J.C. Ryan, Schnipper, and Kipiniak in this action based on the grounds that such representation violates Rule 3.7 (a) of the Rules of Professional Conduct (22 NYCRR 1200.0), known as the advocate-witness rule; and (3) sanctioning the Yellen firm for attempting to represent J.C. Ryan after it was previously disqualified from representing J.C. Ryan by a predecessor Justice, the late Honorable Johnny Lee Baynes.

On August 2, 2000, Cyber-Struct, Inc. ("Cyberstruct")[2], as general contractor, entered into a Standard Form of Agreement ("the contract") with Dean Boerum Owners, Inc. ("DBO"), as the owner, to construct a new, three-story building containing 21 apartments at 119-125 Boerum Place, 42 Dean Street, in Brooklyn, New York ("the property"). Pursuant to the contract, Cyberstruct was responsible for the coordination of the construction of the project, and its responsibilities included retaining subcontractors and material suppliers, as necessary, and paying them for their work and the materials provided by them. Cyberstruct alone (not DBO) was to compensate its subcontractors and material suppliers by using funds paid to Cyberstruct by DBO. Cyberstruct's contract with DBO required Cyberstruct to complete an American Institute of Architects Application and Certificate for payment at the end of each pay period in order to be paid by DBO. Once Cyberstruct received its funds from DBO, it was obligated, pursuant to the contract and the Lien Law, to forward the appropriate payment to each subcontractor or materialman who applied for payment.

DBO terminated the contract with Cyberstruct in April 2002. According to plaintiffs, at that time, DBO owed Cyberstruct $328,286.49 on the contract. Approximately $160,000 of said sum was retainage, i.e., money earned by the general contractor, but held by the owner, pending job completion. At a meeting held in April 2002 between DBO and Cyberstruct, Cyberstruct presented Philip Mendlow ("Mendlow"), the president of DBO, with a spreadsheet dated April 25, 2002, which indicated that 19 of its subcontractors, suppliers, and/or vendors were owed $353,566.93. Cyberstruct, however, alleges that this amount was the amount owed only if the contract had been fully performed.

Plaintiffs allege that Mendlow entered into a series of executed assignments with not less than eight of Cyberstruct's subcontractors and suppliers, one of whom was J.C. Ryan, a supplier of architectural doors, frames, and finish hardware. The assignment between J.C. Ryan and DBO was dated May 2, 2002 (NYSCEF Doc No. 89), and was executed by Schnipper, who was J.C. Ryan's President and Chief Executive Officer. There was also an assignment dated May 2, 2002 by A&A Cibco Construction Inc., an assignment dated May 2, 2002 by Alta Recycling, an assignment dated May 2, 2002 by Bay Ridge Mechanical Corp., an assignment dated May 7, 2002 by Express Contracting Corp., an assignment dated May 6, 2002 by Kamco Supply Co., an assignment dated May 2002 by Empire Restoration Corp., and an assignment dated June 21, 2002 by Professional Tile Contracting Corp.

Each of these assignments by the subcontractors and suppliers (NYSCEF Doc No. 18) set forth that Cyberstruct did not have adequate funds to pay materialmen, laborers, subcontractors, and other miscellaneous vendors, who had supplied services and/or material in connection with the contract, and that DBO desired to avoid further delay in x the completion of the building. The assignments further set forth that upon request of the subcontractors, who had not been paid by Cyberstruct, that DBO may, from time to time, pay or cause to be paid, such subcontractors as it deems appropriate and necessary, in its sole discretion, to facilitate the timely completion of the building. It was also contemplated that to the extent that payments were received from DBO, the Subcontractors assigned all right title and interest in their claims against Cyberstruct related to the building and would cooperate with DBO in any action brought by DBO for the recovery of such sums from Cyberstruct. It was further stipulated that the agreement, or the payment of any sums by DBO to subcontractors, would not interfere with the contractual relationship between Cyberstruct and the subcontractors, nor would it constitute a contractual relationship between any subcontractor and DBO, but that the agreement was made solely for the purpose of facilitating the completion of the construction of the Building. It was also agreed that all such payments made or caused to be made by DBO would be without prejudice to any claims that the parties may have -against one another or any third party.

Plaintiffs allege that three of the subcontractors and suppliers, including J.C. Ryan, filed mechanic's liens against the property. Plaintiffs state that since J.C. Ryan received $28,000 from Mendlow, it filed a mechanic's lien dated September 24, 2002 against the property in the reduced amount of $42,598 (NYSCEF Doc No. 90), and hired Mark Allen, Esq., a collection specialist with ALK Industries, Inc., a collection firm located in New Bern, North Carolina, to pursue DBO for the balance of money it was owed. According to plaintiffs, in response to the mechanic's lien filed by J.C. Ryan and the collection attempts, Yellen, who was Mendlow and DBO's counsel and the founding partner of the Yellen firm, made a deal, or arrangement, with the collection agent, Mark Allen, Esq., in which DBO agreed to pay J.C. Ryan the sum of $10,000 to settle its mechanic's lien against the property, and J.C. Ryan agreed to release its mechanic's lien, give DBO a general release, and retain Yellen to commence a class action against Cyberstruct, Zucaro, Fierro, and Damon Coromilas ("Coromilas"), who is Cyberstruct's controller, for violation of article 3-A of the Lien Law.

In a letter dated February 27, 2003 (NYSCEF Doc No. 91) to Mark Allen, Esq., Yellen enclosed the $10,000 to hold in escrow pending the release of J.C. Ryan's mechanic's lien and general release. This letter stated that Cyberstruct was in violation of the Lien Law and that the subcontractor who has been harmed by this violation had the right to bring an action on behalf of itself and all other subcontractors similarly situated. This letter provided that J.C. Ryan would retain Yellen, as its attorney, to commence an action against Cyberstruct and its principals and that all costs and expenses would be paid solely by DBO with the understanding that between J.C. Ryan and DBO, that the first $10,000 recovered would be paid to DBO as reimbursement for the monies paid therewith.

On May 19, 2003, J.C. Ryan, as the named plaintiff, on behalf of itself and all other subcontractors similarly situated commenced a class action against Cyberstruct, Zucaro,[3] Fierro, and Coromilas, as defendants, pursuant to article 3-A of the Lien Law to recover damages for diversion of trust assets (Sup Ct, Kings County, Index No. 18549/2003[4]) ("the class action"). The class-action complaint was filed by Yellen, who, along with the Yellen firm, represented J.C. Ryan. The complaint in the class action alleged, among other things, that Cyberstruct, Zucaro, and Fierro violated the Lien Law by diverting monies paid to them by DBO for purposes other than the payment of subcontractors. Specifically, the complaint alleged that after entering into the contract, Cyberstruct commenced work on the project, and then ultimately abandoned its responsibilities following the conversion of substantial Lien Law trust funds...

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