Jacobs v. Lawrence Oh & Daniel Walsh, the Schulhof Collection LLC

• Decision Date: 05 June 2017
• Docket Number: INDEX NO. 451495/2016
• Citation: Jacobs v. Oh, 2017 NY Slip Op 31214(U), INDEX NO. 451495/2016 (N.Y. Sup. Ct. Jun 05, 2017)
• Parties: LISA JACOBS , individually and doing business as LISA JACOBS FINE ART, Plaintiff, v. LAWRENCE OH and DANIEL WALSH, THE SCHULHOF COLLECTION LLC, MICHAEL P. SCHULHOF, individually and as Manager of The Schulhof Collection LLC, and the CITY OF NEW YORK, Defendants.
• Court: New York Supreme Court

2017 NY Slip Op 31214(U)

LISA JACOBS , individually and doing business as LISA JACOBS FINE ART, Plaintiff, v. LAWRENCE OH and DANIEL WALSH, THE SCHULHOF COLLECTION LLC,MICHAEL P. SCHULHOF, individually and as Manager of The Schulhof Collection LLC,and the CITY OF NEW YORK, Defendants.

INDEX NO. 451495/2016

SUPREME COURT OF THE STATE OF NEW YORK — NEW YORK COUNTY PART 13

RECEIVED: June 6, 2017

June 5, 2017

NYSCEF DOC. NO. 59

PRESENT: HON. MANUEL J. MENDEZ Justice

MOTION DATE 04-19-17

MOTION SEQ. NO. 002

MOTION CAL. NO. __________

Upon a reading of the foregoing cited papers, it is Ordered that defendant, Michael P. Schulhof's motion pursuant to CPLR § 3211 [a],[1],[4],[5] and[7], dismissing the causes of action asserted against him in the First Amended Complaint, and pursuant to New York Court Rule §130-1.1 and CPLR §8303-a, sanctioning plaintiff and her counsel for frivolous litigation, is granted only to the extent of dismissing the causes of action against him in the First Amended Complaint. The remainder of the relief sought is denied.

On August 26, 2013 Michael P. Schulhof as the executor of the Estate of Hannelore B. Schulhof, his mother, commenced an action in Supreme Court, New York County, under index number 157797/2013 against Lisa Jacobs individually and doing business as Lisa Jacobs Fine Art (hereinafter in the context of other actions referred to as "Lisa Jacobs"), resulting from the sale of a Basquiat painting. In the action filed under index number 157797/2013 Mr. Schulhof on behalf of the estate asserted causes of action for fraud, breach of contract, restitution, and unjust enrichment, alleging that the sale price of the Basquiat painting was misrepresented as 5.5 million dollars, when it was actually 6.5 million dollars. It was also alleged that an undisclosed 1 million dollars was kept by Lisa Jacobs and that she charged an additional $50,000.00 to the estate for the sale.

On March 31, 2014 Lisa Jacobs filed an Amended Answer in the action filed under index number 157797/2013, asserting counterclaims against Michael P. Shulhof personally including: that Mr. Schulhof acquired her bank account records from Assistant District Attorney Lawrence Oh through a grand jury subpoena and publicly disclosed the information causing an adverse effect; abuse of process, deprivation of due process rights pursuant to 42 USC §§1983 and 1988; and intentional interference with business relations. The counterclaims were dismissed by Justice Charles E. Ramos in a decision on the record on January 14, 2015 (Mot. Exh. D).

On September 12, 2014 Lisa Jacobs commenced a third-party action under index number 595402/2014, asserting causes of action against all of the named defendants in this action. The third party action asserted claims against Michael P. Shulhof, under the fourth cause of action for violation of NY CPL §190.24[4][a] for the illegal use of information obtained from a grand jury subpoena to publicly disclose confidential information; a twelfth cause of action for breach of contract; and a thirteenth cause of action for interference with ongoing business opportunities. With the exception of the twelfth cause of action for breach of contract, the other causes of action in the third-party complaint were dismissed by Justice Charles E. Ramos on March 11, 2015 by a decision on the record (Mot. Exh. F).

By stipulation entered into on March 11, 2015 and "so ordered" on April 2, 2015 the third-party action filed under index number 595402/2014 was severed only as to Lawrence Oh and the City of New York, to be reassigned to a DCM City Part (Reply Exh. C).

On February 27, 2017 Justice Charles E. Ramos Decision and Order on Motion Sequence 007 in the action filed under index number 157797/2013, partially granted a motion for summary judgment against plaintiff on the causes of action for fraud, breach of contract and restitution. The equitable relief was denied. Lisa Jacob's motion for summary judgment was denied in all respects as stated in a February 7, 2017 decision on the record (Reply Exh. A).

Plaintiff commenced this action on August 12, 2016 and subsequently filed the First Amended Complaint asserting a second cause of action for defamation, and a fourth cause of action for tortious interference with economic opportunity against the defendant (Mot. Exh. A). The remainder of the relief is sought against Assistant District Attorney Lawrence Oh and the City of New York.

Michael P. Schulhof, Individually and as Manager of the Schulhof Collection LLC hereinafter referred to as "defendant") makes this motion pursuant to CPLR §3211[a][1], [4], [5] and[7] to dismiss the First Amended Complaint, and pursuant to New York Court Rule §130-1.1 and CPLR §8303-a, sanctioning plaintiff and her counsel for frivolous litigation.

Defendant argues that pursuant to CPLR §215[3] the second cause of action for defamation is subject to a one year statute of limitation and is time-barred warranting dismissal. Defendant claims that allegations of defamation and defamation per se are from comments made to co-defendant Lawrence Oh, an assistant district attorney in Kings County, during a criminal investigation that took place on September 19, 2012. It is also claimed that even if the statements made by defendant were published by Lawrence Oh on June 9, 2014 in Criminal Court, King County, the latest the statute of limitations would have expired is September 22, 2015. It is argued this untimely action commenced on August 12, 2016 is more than a year after the statute of limitations.

Pursuant to CPLR §3211[a][5], an action can be dismissed because it is time barred by the statute of limitations (Education Resources Institute, Inc. v. Hawkins, 88 A.D. 3d 484, 931 N.Y.S. 2d 11 [1^st Dept., 2011]). Pursuant to CPLR §215[3], a cause of action for defamation is governed by a one year statute of limitations that accrues from when the alleged statements are uttered (Arvanitakis v. Lester, 145 A.D. 3d 650, 44 N.Y.S. 3d 71 [2^nd Dept., 2016]).

Plaintiff has not shown that the second cause of action for defamation is subject to CPLR § 203[d], and relates back to either the action filed under index number 157797/2013 or the third-party action under index number 595402/2014, extending the one year statute of limitations.

CPLR § 203[d] applies the relation back theory to defenses or counterclaims interposed when a pleading is served, that arise out of the same transaction as the claims asserted in the complaint, and that would have been time-barred if an independent action was commenced (Balanoff v. Doscher, 140 A.D. 3d 995, 34 N.Y.S. 3d 154 [2^nd Dept., 2016]).

The stipulation "so ordered" on April 2, 2015 severed only those claims in the third-party action filed under index number 595402/2014 that were asserted againstdefendants Lawrence Oh and the City of New York, for assignment to the DCM City Part under the same index number (Reply Exh. C). This action filed under its own index number is not an extension of the counterclaims or third-party action, but a separate action. Plaintiff has not previously identified any asserted claims of defamation or defamation per se in either of the actions filed under index number 157797/2013 or 595402/2014. This action is not an extension of the third-party action merely because the same defendants are named. Plaintiff had the opportunity to timely file a claim for defamation before the statute of limitations expired and failed to do so, warranting dismissal of the second cause of action.

Defendant has also shown that the second counterclaim for defamation should be dismissed pursuant to CPLR §3211[a][7], for failure to state a cause of action.

A claim of defamation requires that the plaintiff establish "(1) a false statement that is (2) published to a third party (3) without privilege or authorization, and that (4) causes harm, unless the statement is one of the types of publications actionable regardless of harm" (Stephanov v. Dow Jones & Co., 120 A.D. 3d 28, 987 N.Y.S. 2d 37 [1^st Dept., 2014]).

A district attorney in prosecuting a crime is performing a quasi-judicial function (Moore v. Dormin, 252 A.D. 2d 421, 676 N.Y.S. 2d 90 [1^st Dept. 1998]). Pertinent and material statements uttered in the course of a quasi-judicial proceeding are absolutely privileged (Rosenberg v. Metlife, Inc., 8 N.Y. 3d 359, 866 N.E. 2d 439, 834 N.Y.S. 2d 494, [2007] and Stega v. New York Downtown Hospital, 148 A.D. 3d 21, 44 N.Y.S. 3d 417 [1^st Dept., 2017]).

The alleged defamatory statements were made by the defendant to Lawrence Oh, the assistant district attorney, as part of a criminal investigation and are privileged. Plaintiff's second cause of action for defamation also fails to state a cause of action because the statements were privileged. Having stated a basis for dismissal of the second cause of action pursuant to CPLR §3211[a][5] and CPLR §3211[a][7], there is no need to address defendant's remaining arguments.

Defendant seeks to dismiss the fourth cause of action for tortious interference with economic opportunity pursuant to CPLR §3211[a][7] arguing that it fails to state an actionable claim and essentially parrots the defamation claim in the second cause of action. Defendant also argues that there is no specificity because the plaintiff failed to allege any specific business relations that were interfered with or identify an economic relationship that would have been entered into but for the alleged wrongdoing. It is...