Moncho v Miller
| Decision Date | 12 June 2020 |
| Docket Number | INDEX NO. 155382/2017 |
| Parties | LEE MONCHO, 261 LOFTS MANAGER LLC, Plaintiff, v. HARRY MILLER, SAM SPREI, JONATHAN PASTERNAK, DELBELLO DONNELLAN WEINGARTEN WISE & WIEDERKEHR LLP Defendant. |
| Court | New York Supreme Court |
MOTION DATE 06/13/2019, 02/11/2020
MOTION SEQ. NO. 007 008 008 013
DECISION + ORDER ON MOTION
The following e-filed documents, listed by NYSCEF document number (Motion 007) 211, 212, 213, 214, 215, 216, 274, 275, 276, 277, 278, 279, 280, 281, 282, 283, 284, 285, 286, 287, 288, 289, 290, 291, 305, 315 were read on this motion to/for DISMISS.
The following e-filed documents, listed by NYSCEF document number (Motion 008) 217, 218, 219, 220, 221, 222, 223, 224, 225, 226, 227, 228, 229, 230, 231, 232, 251, 252, 253, 254, 255, 256, 257, 258, 259, 260, 261, 262, 263, 264, 265, 266, 267, 268, 269, 270, 271, 272, 273, 297, 298, 299, 300, 301, 302, 303, 304, 306, 307, 308 were read on this motion to/for DISMISS.
The following e-filed documents, listed by NYSCEF document number (Motion 008) 217, 218, 219, 220, 221, 222, 223, 224, 225, 226, 227, 228, 229, 230, 231, 232, 251, 252, 253, 254, 255, 256, 257, 258, 259, 260, 261, 262, 263, 264, 265, 266, 267, 268, 269, 270, 271, 272, 273, 297, 298, 299, 300, 301, 302, 303, 304, 306, 307, 308 were read on this motion to/for DISMISSAL.
The following e-filed documents, listed by NYSCEF document number (Motion 013) 375, 376, 377, 378, 379, 380, 381, 382, 383, 384, 385, 386, 387, 388, 389, 390, 391, 394, 395, 396, 397, 398, 399 were read on this motion to/for CONTEMPT.
Motion sequence numbers 007, 008, 009, and 013 are consolidated for disposition.
This is an action for, inter alia, fraud and legal malpractice arising out of defendants Jonathan Pasternak (Pasternak) and DelBello Donnellan Weingarten Wise & Wiederkehr LLP's representation of plaintiff 261 East 78 Realty Corp. in a Chapter 11 bankruptcy proceeding captioned In re 261 East 78 Realty Corp., Case No. 11-15624 (REG) (Bankr SD NY).
Defendants Harry Miller (Miller) and Sam Sprei (Sprei) move, pursuant to CPLR 3211 (a) (1), (7), and (10), and CPLR 1003, to dismiss the second amended verified complaint (motion sequence number 007).
Defendant DelBello Donnellan Weingarten Wise & Wiederkehr LLP (the DelBello firm) moves, pursuant to CPLR 3211 (a) (1), (3), (5), and (7), to dismiss the second amended verified complaint (motion sequence number 008).
Defendant Pasternak moves, pursuant to CPLR 3211 (a) (1), (3), (5), and (7), for an order dismissing the second amended verified complaint (motion sequence number 009).
The DelBello firm and Pasternak move, by order to show cause, for an order holding plaintiffs and their counsel, Thomas J. Goodman, Esq., in contempt of court, pursuant to Judiciary Law § 756, for: (a) improperly filing another complaint captioned 261 East 78 Lofts LLC v DelBello Donnellan Weingarten Wise & Widerkehr, LLP, Index No. 159638/2019 (Sup Ct, NY County) against the DelBello firm, Pasternak, Miller, and Sprei based on the same underlying facts asserted against defendants in the instant action; (b) serving defendants with the new complaint on December 30, 2019; and (c) filing a motion in the Chapter 11 bankruptcy proceeding In re 261 East 78 Lofts, LLC, Case No. 16-11644 (SHL) (Bankr SD NY), against the DelBello firm and Pasternak, in violation of this court's decision and order dated January 10, 2019 and the court's decision and order dated December 4, 2019. Additionally, the DelBello firm and Pasternak seek an order permanently enjoining plaintiffs and Goodman from: (a) filing, commencing or serving any new actions against them; (b) filing motions in this action; and (c) serving or issuing subpoenas or other discovery in this action or any other pending actions or proceedings concerning the claims alleged against them in this action, except by order to show cause submitted to this court seeking permission to do so, accompanied by proof that they have posted a bond of $25,000 to secure anyaward of attorneys' fees and expenses in the event that the court finds such application to be frivolous. In addition, the DelBello firm and Pasternak seek an order permanently enjoining plaintiffs and Goodman from communicating with the DelBello firm or Pasternak (other than through counsel of record) or harassing the DelBello firm or Pasternak by communicating with their respective family members, clergy, board members of their professional places of worship or professional colleagues. The DelBello firm and Pasternak also seek an order: (1) directing plaintiffs and Goodman to discontinue their new complaint and withdraw their motion in the bankruptcy proceeding; and (2) awarding the DelBello firm and Pasternak sanctions against plaintiffs and Goodman for their costs and expenses incurred in response to plaintiffs' and Goodman's repeated willful violations of this court's orders (motion sequence number 013).
On January 7, 2020, the court entered a temporary restraining order, pending the hearing and determination of this application, enjoining plaintiffs and Goodman from: (a) filing any motions against or concerning the DelBello firm and Pasternak in the instant action or any other action or proceeding, (b) filing, commencing or serving any new actions against the DelBello firm and Pasternak, (c) serving discovery demands or subpoenas upon any party or nonparty regarding the facts and claims alleged in the instant action, except by order to show cause submitted to the court seeking permission to do so, accompanied by proof that plaintiffs have posted a $25,000 bond to secure any award of attorneys' fees and expenses in the event that the court finds plaintiffs' application to be frivolous. The court also extended defendants' time to answer the complaint in the new action sine die.
BACKGROUND
The following facts are taken from the second amended complaint. Plaintiffs allege that, at all relevant times, Moncho was the sole shareholder of 261 East 78 Realty Corp. (NY St Cts Elec Filing System [NYSCEF] Doc No. 149, second amended verified complaint, ¶ 2). From April 1, 2007 through February 28, 2014, 261 East 78 Realty Corp. owned a six-story medical office building located at 261 East 78th Street in Manhattan (id., ¶ 4). Miller was the sole member of 261 Lofts Manager, LLC (id., ¶ 6). Sprei was Miller's business associate (id., ¶ 8). On December 6, 2011, 261 East 78 Realty Corp. filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York (id., ¶ 27).
On January 1, 2013, Moncho, in his capacity as president of 261 East 78 Realty Corp., entered into a retainer agreement with the DelBello firm (id., ¶ 11). Pursuant to the retainer agreement, the DelBello firm was to provide legal services to 261 East 78 Realty Corp., including, but not limited to, the prosecution of a Chapter 11 bankruptcy proceeding (id., ¶ 12). Pasternak was one of the attorneys who was anticipated to offer services to 261 East 78 Realty Corp. (id., ¶ 13). Pasternak was a non-equity partner in the DelBello firm (id., ¶ 14). Plaintiffs allege that, upon confirmation of the bankruptcy plan, the DelBello firm and Pasternak continued to provide legal services to Moncho individually (id., ¶ 16). The DelBello firm continued to send invoices to Moncho (id., ¶¶ 18-19; exhibit C).
Approximately one week later, on January 10, 2013, Pasternak began suggesting that Moncho utilize Sprei as a plan funder and Madison Realty Capital as lender (id., ¶ 29). Plaintiffs allege, upon information and belief, that neither Pasternak nor the DelBello firm performed any due diligence as to Sprei or Miller's suitability as plan funders (id., ¶ 30). Plaintiffs allege that there were at least seven lawsuits filed against Sprei and/or Miller, with similar allegations andwhich resulted in judgments against Miller and Sprei (id., ¶ 31). Plaintiffs allege, upon information and belief, that Sprei induced Pasternak to recommend him to plaintiffs by promising to pay him a personal brokerage commission in the amount of $25,000 (id., ¶ 32). According to plaintiffs, Sprei, in fact, paid Pasternak a $25,000 commission (id., ¶ 33).
In September 2013, Pasternak negotiated a settlement of 261 East 78 Realty Corp.'s debt with the secured creditor (id., ¶ 43). One of the key terms of the settlement was that the secured creditor would foreclose and plaintiffs would lose the property if the reorganization plan were not fully funded by Friday, February 28, 2014 (id., ¶ 44).
Plaintiffs allege that, pursuant to the reorganization plan, a new corporate entity came into existence, 261 East 78 Lofts, LLC (id., ¶ 74). Moncho became a 37.5% member and 261 Lofts Manager, LLC became a 62.5% member in 261 East 78 Lofts, LLC (id.).
According to plaintiffs, Pasternak, Miller, and Sprei worked with Madison Realty Capital to obtain $10,000,000 to pay the lion's share of the $10,700,000 debt (id., ¶ 61). Miller and Sprei obtained an "after-hours loan" from Joseph Zelik (Zelik) in the amount of $1,750,000 (id., ¶ 62). Zelik claims to hold a mortgage on the property pursuant to an assignment of mortgage dated February 27, 2014 and recorded on May 1, 2014 (id., ¶ 21).
Plaintiffs further allege that "Miller and Sprei took exclusive possession of [261 East 78 Lofts, LLC's] assets and funds and prevented Moncho from gaining access thereto" (id., ¶ 75). "Through Miller's position in Lofts Manager, Miller and Sprei engaged in subsequent transactions with [261 East 78 Loft, LLC]'s assets, including transferring the assets for their own benefit, and depriving Moncho of any benefit therefrom" (id., ¶ 76). "Defendants Miller and Sprei have refused to return monies misappropriated from the operating account of 261 [East 78 Lofts, LLC], or to render any account thereof, although requested to do so by Moncho" (id., ¶ 77). Upon information...
To continue reading
Request your trial