JALOR COLOR v. UNIVERSAL ADV.

• Decision Date: 27 December 1999
• Citation: 703 N.Y.S.2d 370,183 Misc.2d 294
• Parties: JALOR COLOR GRAPHICS, INC., Plaintiff,<BR>v.<BR>UNIVERSAL ADVERTISING SYSTEMS INC., Defendant.
• Court: New York Civil Court

183 Misc.2d 294

703 N.Y.S.2d 370

JALOR COLOR GRAPHICS, INC., Plaintiff,

v.UNIVERSAL ADVERTISING SYSTEMS INC., Defendant.

December 27, 1999.

Frank Taddeo, Jr., New York City, for plaintiff.

Fred S. Rosenberg, New York City, for defendant.

OPINION OF THE COURT

ROLANDO T. ACOSTA, J.

During the pendency of this court's issuance of a judgment on this breach of contract action, tried before the court without a jury, plaintiff's counsel moved for an order imposing sanctions upon defense counsel and granting other related relief. The motion is based upon plaintiff's counsel's allegation, undisputed by defendant, that defense counsel, a former Assistant District Attorney, had attempted to intimidate plaintiff into withdrawing its already-tried lawsuit by threatening criminal prosecution against plaintiff's vice-president and plaintiff's counsel. The threat of criminal prosecution was based upon defense counsel's contention that plaintiff submitted to the court certain false affidavits. The motion requires the court to determine whether the alleged threat of criminal prosecution during the pendency of this civil action was "undertaken primarily to * * * harass or maliciously injure another," such that it is sanctionable under section 130-1.1 (c) (2) of the Rules of the Chief Administrator of the Courts (22 NYCRR).

Factual Background and Plaintiff's Motion for Sanctions

Prior to the commencement of this action, plaintiff's counsel sent defendant a letter demanding payment for plaintiff's production and delivery of 1,200 brochures. In response to that letter, defense counsel (the CEO of defendant corporation) promptly sent plaintiff and plaintiff's counsel a letter claiming that the brochures were "expressly at no charge." In that letter defendant's counsel also stated:

"To be clear, any attempt to now illegally demand payment for your clients stated past services at no charge will not be tolerated.

"As an attorney and former Assistant District Attorney for the State of New York, I can assure you that such fraudulent demands for moneys will be considered and treated as fraudulent and/or extortion. Such a pattern of acts, communications and or conduct, with the intent to obtain unlawful economic gain through the use of illegal intimidating, threatening acts and/or harassing communications [sic] * * *

"Your clients cannot rationally believe they can extort payment from individuals with this illegal scheme.

"Any further unlawful demands for payment will be promptly prosecuted as previously stated" (emphasis in original).

Plaintiff later commenced this action and the case was tried before the court without a jury.

During the actual trial, defense counsel sought to impeach plaintiff's vice-president with certain prior sworn statements which defense counsel claimed were perjurious. Following the completion of the trial, the parties agreed to submit posttrial memoranda, and defense counsel expressly "reserv[ed] [his] rights to make a motion to this court for a separate hearing to determine issues of sanctions and possible perjurious testimony [sic]."

Prior to such submission, however, defense counsel sent plaintiff and plaintiff's counsel a letter apparently in response to plaintiff's counsel's attempt to conference the action for purposes of a posttrial settlement. Defense counsel's letter, however, contained the following threats/admonitions:

"This case involves potential future, extensive litigation including trial briefs, appellate proceedings and related ongoing litigation. Moreover, to be absolutely clear, as an officer of the court, I am continuing to investigate the extremely serious issues regarding the commission of felony and other related offenses by [plaintiff's vice-president], and yourself [plaintiff's counsel].

"These offenses involve perjury and related offenses under Article 210 of the New York State Penal Law, Article 215, Offenses relating to Judicial, Contempt and other proceedings, Article 195, Offenses against Public Administration, and other related crimes. I must inform you herein, make no mistake, these are extremely serious offenses.

"Again, based on your request, I will await a response from your office, on or before [a specified date] * * * with a view towards conferencing these matters.

"In the event I do not receive any communications, I must assume you have elected to litigate these matters in all appropriate courts and related forums" (emphasis in original).

Annexed to defense counsel's letter were copies of four pages of article 210 of the Penal Law setting forth the substance of the 11 Penal Law sections under article 210.

Certain sections of the Penal Law, and the elements thereof, were highlighted in green by defense counsel, such as perjury in the second degree (Penal Law § 210.10), perjury in the first degree (Penal Law § 210.15), making an apparently sworn false statement in the second degree (Penal Law § 210.35), making an apparently sworn false statement in the first degree (Penal Law § 210.40), and making a punishable false written statement (Penal Law § 210.45). Defense counsel also highlighted the class of the felony of the foregoing offenses (i.e., "a class D felony").

Upon receipt of the aforementioned letter, plaintiff's counsel promptly notified the court and sought the imposition of sanctions upon defense counsel pursuant to section 130-1.1 of the Rules of the Chief Administrator of the Courts (22 NYCRR). Plaintiff claims that sanctions are required because defense counsel, by his letter, "is seeking to accomplish by threats and intimidation what [counsel] * * * has failed to accomplish at the trial itself, namely prevailing in the" lawsuit. The letter, according to plaintiff, "suggests that should plaintiff not abandon pursuit of its claim now," defense counsel will "saddl[e] plaintiff—and its counsel—with criminal liability for alleged `perjury' and `related offenses,' or minimally with the cost and aggravation of having to defend against them."

Plaintiff specifically asks the court to "consider carefully the in terrorem effect" of the letter, contending that defense counsel was attempting to instill in plaintiff the fear that "[a]s a former prosecutor, no doubt still with friends in the New York County District Attorney's Office ready to do his bidding, [defense counsel] will seek to precipitate an investigation of the bogus charges solely to cause plaintiff and its counsel as much distress as possible." Plaintiff's counsel concludes that the letter "crosses the line so far to the side of egregious misconduct that the Court must take action by using the power it possesses to maintain the very dignity of the system itself."

Although plaintiff's motion specifically sought the immediate imposition of sanctions, defense counsel never answered the motion. Nor did defendant's counsel answer plaintiff's counsel's subsequently filed affirmation in support of the motion, in which plaintiff's counsel reiterated his contentions, or defendant's counsel's letter dated October 13, 1999, in which plaintiff's counsel laments the defendant's complete refusal to address the issue.

Instead of answering plaintiff's motion for sanctions, defendant's counsel moved (in his posttrial memorandum and later by order to show cause), for an order holding plaintiff and plaintiff's counsel in contempt (for alleged perjury) and imposing sanctions. The court ultimately consolidated the motions of the parties.

In a separate order and decision issued herewith, the court has now denied defense counsel's motion for contempt and sanctions, finding that the sworn statements contained in the affidavits in this case were not sufficiently misleading as to warrant a finding of contempt or perjury or a finding that the affidavits contain "material factual statements that are false."

Plaintiff's counsel's motion for an order imposing sanctions upon defendant's counsel, however, is hereby granted pursuant to section 130-1.1 of the Rules of the Chief Administrator of the Courts (22 NYCRR).

The Court's Findings

Section 130-1.1 (a) of the Rules of the Chief Administrator of the Courts (22 NYCRR 130-1.1 [a]) provides, in pertinent part, that: "The court, in its discretion, may award to any party or attorney in any civil action or proceeding before the court * * * costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney's fees, resulting from frivolous conduct as defined in this Part. In addition to or in lieu of awarding costs, the court, in its discretion[,] may impose financial sanctions upon any party or attorney in a civil action or proceeding who engages in frivolous conduct." Frivolous conduct is defined as conduct which, inter alia, "is undertaken primarily to delay or prolong the resolution of the litigation or to harass or maliciously injure another." (22 NYCRR 130-1.1 [c] [2].)

In determining whether certain conduct is frivolous, the court shall consider "[1] the circumstances under which the conduct took place, including the time available for investigating the legal or factual basis of the conduct, and [2] 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] [3].)

Here, the court finds that defense counsel's letter threatening criminal prosecution was "undertaken primarily to * * * harass or maliciously injure" plaintiff and plaintiff's counsel, sufficient to impose sanctions upon defense counsel. (22 NYCRR 130-1.1 [c] [2].) The import and tenor of the letter, coupled with defense counsel's prior announcement that he was a "former Assistant District Attorney for the State of New York," unmistakably conveys the bold impression that should plaintiff refuse or fail to abandon its already-tried civil claims, defense counsel will wreak havoc upon his adversaries by commencing criminal prosecutions.

Impressions...