Hoffenberg v. Hoffman & Pollok
| Decision Date | 23 October 2003 |
| Docket Number | No. 00 Civ. 3151 (RWS).,00 Civ. 3151 (RWS). |
| Citation | 288 F.Supp.2d 527 |
| Parties | Steven Jude HOFFENBERG, Plaintiff, v. HOFFMAN & POLLOK, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Steven Jude Hoffenberg, Federal Medical Center Devens, Ayer, MA, pro se.
Hoffman Pollok & Pickholz, New York City, By: John L. Pollok, of counsel, for Defendant.
Defendant Hoffman & Pollok, now known as Hoffman Pollok & Pickholz LLP ("HPP") has moved pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the complaint of pro se plaintiff Steven Jude Hoffenberg ("Hoffenberg") and permanently enjoining Hoffenberg from filing any further frivolous lawsuits pursuant to 28 U.S.C. § 1651. For the reasons set forth below, the motion is converted into a motion for summary judgment and as such it is granted.
Hoffenberg has cross-moved under Rule 60(a) and (b) seeking recusal. This motion is denied as explained below.
Hoffenberg filed the complaint in this action (the "Complaint") on April 25, 2000, alleging diversity jurisdiction. Hoffenberg first alleges that HPP issued fraudulent billing to him for services that were never provided (Complaint at ¶¶ 16, 43-49). Second, he alleges that HPP fraudulently induced Hoffenberg to "write a letter about the over one million dollars advanced to HP by Pro Se"—an apparent reference to a letter dated May 29, 1996 in which Hoffenberg released all claims he had against HPP. Third, Hoffenberg alleges that HPP committed malpractice and breached their fiduciary duty not only throughout the course of HPP's representation of Hoffenberg (id. at ¶ 41), but also in connection with the monies set aside for legal services by the consent judgment (id. at ¶¶ 19-42) by taking a $450,000 set aside from a third party. They thus acted adversely to Hoffenberg, colluding with a third party and forcing Hoffenberg to enter into an adverse agreement for HPP's benefit. (Id.).
On September 9, 2001, an order was entered granting Hoffenberg an additional 45 days to serve HPP because Hoffenberg, based on a review of the court files, had failed to serve HPP within 120 days of the filing of the Complaint. On November 14, 2001, this Court dismissed the action because of Hoffenberg's failure to serve HPP during the additional 45-day period granted in the September 9, 2001 order. Hoffenberg appealed this dismissal and on May 14, 2002, the Second Circuit vacated the dismissal and remanded the case to consider whether service was proper, having before it evidence of service. Hoffenberg v. Hoffman Pollok & Pickholz, LLP, 34 Fed.Appx. 18 (2d Cir.2002).
On May 20, 2002, Hoffenberg filed a motion to recuse this Court, which was denied on October 30, 2002. HPP with-drew its efficacy of service claim and moved to dismiss. On July 16, 2003, the motion was marked fully submitted.
In early February 1993, the Securities and Exchange Commission ("SEC") commenced a civil action in the United States District Court for the Southern District of New York against Hoffenberg and others. SEC v. Towers Fin. Corp., No. 03 civ. 0744, 1996 WL 406685, at *1 (S.D.N.Y. Mar.26, 1996). Simultaneously with the action brought by the SEC, a criminal investigation commenced against Hoffenberg and others for conspiracy to obstruct the SEC's investigation during 1991 and 1992 and for a multitude of other criminal violations involving the securities laws. United States v. Hoffenberg, Nos. 94 Cr. 213, 95 Cr. 321, 1997 WL 96563, at *6 (S.D.N.Y. Mar.5, 1997). On February 17, 1993, Hoffenberg, and others, agreed to a preliminary injunction that enjoined him from dissipating assets which was entered as an order in September 1993. Hoffenberg's living expenses and reasonable attorney's fees were exempted. 93 Civ. 0744(WK) ("Expenses Consent Order").
On October 25, 1994, Hoffenberg consented to entry of a final judgment against him and various entities he controlled with the Towers Trustee (the "Consent Judgment"). The Consent Judgment was a product of negotiations between Hoffenberg and his counsel, HPP, the Trustee, counsel for the Trustee, and the SEC. Hoffenberg signed the Consent Judgment, which was "So Ordered" by the Honorable Prudence Abrams who was overseeing the Towers bankruptcy. The Consent Judgment provided that the defendants named, including Hoffenberg and Towers, agreed to pay $400,000,000 to the creditors of Towers, which represented the losses resulting from Hoffenberg's fraud, ultimately found to be $475,157,340. It further provided that prejudgment interest of $108,000,000, which constituted a portion of the funds restrained by the SEC, be transferred to the Trustee in partial satisfaction of the $400,000,000 judgment. The transfer of these funds to the Trustee was subject to approval by the SEC.
Under the terms of the Consent Judgment, HPP received $450,000 to be held in escrow for legal services which were subsequently to be provided ("Set Aside"). Part V of the Consent Judgment states:
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the Trustee shall transfer $450,000 to two interest-bearing Accounts at Republic National Bank with the law firm of Hoffman & Pollok, as signatories, $200,000 to one account ("Account A") and $250,000 to the other account ("Account B"). Both Accounts A and B shall be used solely for providing legal services to Hoffenberg by Hoffman & Pollok, and any amounts not spent on fees for legal services actually rendered shall be remitted to the Trustee. Funds in Account A may be used for legal representation (including attorneys' fees and expenses) of Hoffenberg in any criminal actions now pending against him. Hoffman & Pollok shall remit to the Trustee any unspent funds in Account B, plus related interest, within thirty (30) business days after the completion of all legal representation now pending against him in the Southern District of New York and the Northern District of Illinois. Hoffman & Pollok shall remit to the Trustee any unspent funds from account A within ten days after the termination of all civil litigation or twenty-four (24) months from the execution of this agreement whichever is earlier.
Hoffman & Pollok shall provide the Trustee with monthly statements from the Accounts, along with Hoffman & Pollok's monthly invoices for legal services rendered to Hoffenberg. If the necessity arises, funds may be transferred from Account A to Account B and/or Account B to Account A.
The Trustee shall review for reasonableness the monthly invoices within five (5) business days of receipt from Hoffman & Pollok and approve the invoices, in writing, in whole or in part.
Hoffman & Pollok shall withdraw funds from the account and/or transfer funds between accounts only upon written authorization of the Trustee, but the Trustee shall not unreasonably withhold his authorization. Any and all disputes as to the reasonableness of any invoices shall be adjudicated by the United States Bankruptcy Court for the Southern District of New York.
Hoffenberg waived any right to appeal the Consent Judgment and attested that he entered into the Consent Judgment voluntarily, acknowledging that "no tender offer, promise or threat of any kind has been made by Trustee or any of their officers, agents, or representatives, in consideration of this Consent." (Consent Judgment at ¶ 4). He also attested that the consent embodied the entire understanding of all parties thereto. The Consent Judgment was entered by the Honorable Whitman Knapp on November 2, 1994.
Hoffenberg pled guilty on April 20, 1995 to five criminal counts: (1) conspiracy to violate the securities laws by fraudulently selling securities; (2) mail fraud; (3) conspiracy to obstruct justice; (4) tax evasion; and (5) mail and wire fraud. United States v. Hoffenberg, 1997 WL 96563, at *1. Hoffenberg's motion to withdraw this plea was subsequently denied. United States v. Hoffenberg, 169 F.R.D. 267, 268 (S.D.N.Y.1996) and Hoffenberg was sentenced to 240 months in prison and required to make restitution of $475,157,340, representing the losses resulting from Hoffenberg's fraud at Towers as determined by the Bankruptcy Court. The Second Circuit affirmed this judgment on September 22, 1998. United States v. Hoffenberg, 164 F.3d 620 (2d Cir.1998). Hoffenberg is currently serving this sentence.
On April 19, 1993, Hoffenberg executed a formal retainer agreement with HPP for the purposes of his representation in both pending and future civil and criminal matters against him. (Complaint at ¶ 13). The initial retainer provided that HPP would receive one million dollars for its services. Id. This agreement was amended on May 25, 1993. Since Hoffenberg's assets had been frozen by the SEC two months earlier, the funding of the retainer was subject to SEC approval, which was granted.
During the first quarter of 1994, the initial retainer had been exhausted. Pursuant to the freeze order obtained by the SEC, the firm made an application to the SEC for the payment of additional funds. Each of the invoices sent to the SEC for approval contained a detailed breakdown of legal services, supported by HPP's worksheets and each attorney's handwritten time slips. From April until June 1994 these invoices were sent to the SEC, and payment was approved. Between July and August 1994, the attorneys for the Trustee in Bankruptcy for Towers, with the approval of the SEC, oversaw and approved the invoices as submitted.
HPP's invoices continued to be approved by a replacement trustee and his counsel. HPP's submitted invoices for February, March, and June 1996, totaling $51,341.96, were declined approval. However, this dispute was settled with approval from the Bankruptcy Court, and HPP returned $96,890.96 on December 20, 1996 to the Trustee. This represented the unused criminal portion of the $450,000 Set Aside allocated to...
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