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Paul B. GOTTBETTER & Gottbetter & Partners, LLP, Plaintiffs, v. CRONE KLINE RINDE, LLP & CKR Law LLP, Defendants. CKR Law LLP f/k/a Crone Kline Rinde, LLP, Third-Party Plaintiff, Adam Gottbetter, Venturini & Associates and August Venturini, Third-Party Defendants.
Defendant/third-party plaintiff CKR Law LLP f/k/a Crone Kline Rinde, LLP (CKR) moves, pursuant to CPLR 2304, 3101, and 3211 (a) (1) and (a) (7), for an order dismissing the unjust enrichment and wrongful eviction claims asserted in the amended complaint; quashing plaintiffs' eight nonparty subpoenas duces tecum and ad testificandum issued December 22, 2016; staying all further discovery until plaintiffs produce certain documents demanded in CKR's March 2016 demand and plaintiff Paul Gottbetter appears for deposition in accordance with CKR's February 2016 notice; imposing sanctions on plaintiffs and their counsel for chronic misconduct; and scheduling a preliminary conference in this action.
Paul Gottbetter and plaintiff Gottbetter & Partners, LLP (G & P) cross-move, pursuant to CPLR 2308, 3124, and 3126, for an order compelling CKR to answer plaintiffs' first set of interrogatories and to produce all documents requested in plaintiffs' first notice for discovery and inspection; compelling nonparties to respond to, or comply with, plaintiffs' eight nonparty subpoenas duces tecum and ad testificandum; and imposing sanctions on CKR and its counsel for willfully failing to respond to plaintiffs' discovery requests.
The parties dispute, first, whether the unjust enrichment and wrongful eviction claims asserted in the amended complaint 1 are legally viable.
On a motion addressed to the sufficiency of the pleadings, the court must accept each and every allegation in the complaint as true, and liberally construe those allegations in the light most favorable to the pleading party (Leon v. Martinez, 84 NY2d 83, 87-88 ; see CPLR 3211 [a]  ). “We․ determine only whether the facts as alleged fit within any cognizable legal theory” (Leon v. Martinez, 84 NY2d at 87-88).
However, “allegations consisting of bare legal conclusions, as well as factual claims either inherently incredible or flatly contradicted by documentary evidence, are not presumed to be true and [are not] accorded every favorable inference” (Biondi v. Beekman Hill House Apt. Corp., 257 AD2d 76, 81 [1st Dept 1999], affd 94 NY2d 659  [internal quotation marks and citation omitted]; David v. Hack, 97 AD3d 437, 438 [1st Dept 2012]; see CPLR 3211 [a] , [a]  ).
That branch of CKR's motion to dismiss the second cause of action for unjust enrichment is granted on the ground that the claim is duplicative of the breach of contract claim. To assert a legally cognizable claim of unjust enrichment, a plaintiff must allege that the plaintiff bestowed a benefit upon the defendant, that the benefit remains with the defendant, and that the defendant has not adequately compensated the plaintiff for that benefit (see Wiener v. Lazard Freres & Co., 241 AD2d 114, 120-121 [1st Dept 1998] ). A claim for unjust enrichment sounds in quasi contract and will be held fatally defective on its face, where the claim is duplicative of a breach of contract cause of action, and the dispute is governed by an express contract. “The existence of an express agreement, whether oral or written, governing a particular subject matter precludes recovery in quasi contract for events arising out of the same subject matter” (Morales v. Grand Cru Assoc., 305 AD2d 647, 647 [2d Dept 2003], citing Clark-Fitzpatrick, Inc. v. Long Is. R.R. Co., 70 NY2d 382, 388  ).
Here, plaintiffs allege that CKR was unjustly enriched when it acquired G & P's legal business, office, and assets, including good will, without having adequately compensated G & P.
The misconduct alleged is substantially identical to the misconduct alleged in the first cause of action for breach of a letter agreement between CKR and G & P dated July 1, 2014. Pursuant to that letter agreement, CKR purchased G & P's business and assets and subleased G & P's office space, in exchange for a monetary payment; offering Paul Gottbetter an “of counsel” relationship with CKR; assuming P & G's office lease; providing plaintiffs with an office, rent-free, for five years; and other benefits. Plaintiffs allege that CKR breached the letter agreement by, among other things, threatening to evict plaintiffs from the office space it had provided them; failing to provide them with space in CKR's new offices; and failing to provide P & G with legal malpractice insurance. Plaintiffs further allege that G & P fully performed its obligations imposed by the contract by, among other things, transferring to CKR its ownership interests in its legal business, furniture, electronic equipment, office supplies, and books, and subleasing its office space to CKR.
That branch of CKR's motion to dismiss the third cause of action for wrongful eviction, pursuant to Real Property Actions and Proceedings Law (RPAPL) § 853, is denied.
RPAPL § 853 provides that:
“[i]f a person is disseized, ejected, or put out of real property in a forcible manner, or, after he has been put out, is held and kept out by force or by putting him in fear of personal violence or by unlawful means, he is entitled to recover treble damages in an action against the wrong-doer.”
That statute has been held to mandate “recovery where no force or threat is employed but an unlawful eviction nevertheless takes place” (Lyke v. Anderson, 147 AD2d 18, 24 [2d Dept 1989]; see RPAPL § 853).
In the amended complaint, plaintiffs allege that CKR wrongfully evicted them, without their consent, from office space CKR had reserved for plaintiffs, well before expiration of the five-year period mandated by the letter agreement. Plaintiffs further allege that CKR subsequently wrongfully refused plaintiffs access to that space, in breach of the letter agreement.
The letter agreement provides, in relevant part, that, “CKR shall provide to G & P the right to sole use and occupancy of one windowed office at the premises CKR leases in Manhattan for a period of five (5) years free of any and all rental charges in a size and condition similar to the G & P Office, File Space and file safe” (letter agreement § 4).
CKR admits that it provided office space to plaintiffs in July 2014, at G & P's former offices sublet by CKR; in December 2014, at temporary office space leased by CKR; and, in August 2015, at CKR's new and permanent offices (see CKR memorandum in support at 4). Significantly, however, CKR also admits that, on October 26, 2015, it “recaptured its premises by terminating [Paul] Gottbetter's security access, thus denying Paul Gottbetter any further access to the [CKR's] Permanent Offices” (id.).
Plaintiffs' allegations, particularly when considered in conjunction with CKR's admissions, are sufficient to state a claim for wrongful eviction. The court notes that nothing in this decision may be construed as a determination regarding whether CKR's actions constituted breach of the letter agreement or wrongful eviction, as defined by statute, or whether plaintiffs occupied the office space as tenants or licensees.
CKR also seeks to quash eight non-party subpoenas duces tecum and ad testificandum on procedural grounds. Plaintiffs issued the subpoenas, dated December 22, 2016, to eight former G & P/present CKR clients. The subpoenas scheduled the nonparty depositions to occur on January 11, 2017. That branch of the motion is granted on procedural grounds, with leave to properly serve the subpoenas, if so advised.
While it appears that plaintiffs properly served each of the nonparties, there is no evidence that plaintiffs timely notified CKR of such service. The affidavit of service of each subpoena demonstrates that each was properly served on each nonparty on December 22, 2016, either pursuant to CPLR 311, by personal delivery on a corporation at its place of business, or pursuant to Business Corporations Law (BCL) § 306, by personal delivery of two copies of each subpoena on the Secretary of the State of New York. A subpoena requiring attendance or production of document must be served in the same manner as a summons, except for certain exceptions not relevant here (see CPLR 2303 [a] ). None of the recipients served a response stating its objections within 20 days after service of the subpoena, as required by CPLR 3122 (a), in order to preserve those objections.
Significantly, however, the notice of nonparty subpoena duces tecum served on CKR demonstrates that such notice was not served until January 3, 2017, some 12 days after service on the nonparties, all, allegedly, CKR clients. The party issuing a nonparty subpoena is required by statute to serve a copy of the subpoena on all parties “at the same time” (CPLR 3120  ).
Contrary to plaintiffs' contention, the affirmation in support of the motion to quash constitutes an affirmation of good faith sufficient to satisfy the requirements of 22 NYCRR 202.7 (a). Annexed to the affirmation is an email exchange between counsel for plaintiffs and CKR's counsel demonstrating that they discussed the subpoenas and their method of service, and were not able to resolve their dispute without motion practice (see Lawrence E. Tofel Jan. 10, 2017 affirmation ¶ 2, ex B).
That branch of CKR's motion to stay all further discovery until plaintiffs produce the documents demanded in CKR's March 2016 demand for discovery and inspection and Paul Gottbetter appears for deposition in compliance with CKR's February 2016 notice is denied. CKR has failed to demonstrate any justifiable reason to stay discovery until plaintiffs have complied with CKR's discovery demands.
Turning to the cross motion, plaintiffs seek, first, to compel CKR to answer plaintiffs' first set of interrogatories and to produce all documents requested in plaintiffs' first notice for discovery and inspection, both dated March 2, 2015. That branch of the cross motion is granted.
A review of those demands reveals that each was properly served and seeks information and documents that are material and necessary to the prosecution of this action and defense of the counterclaims (see Allen v. Crowell-Collier Publ. Co., 21 NY2d 403, 406 ; CPLR 3101, 3120). Where, as here, the documents sought relate to the subject matter of the action, the requests are not palpably improper, and the defendant must be directed to produce the documents (see Zurich Ins. Co. v. State Farm Mut. Auto. Ins. Co., 137 AD2d 401, 402 [1st Dept 1988] ).
That branch of the cross motion to compel the nonparties to respond to or comply with plaintiffs' nonparty subpoenas duces tecum issued December 22, 2016 is denied on the ground that the subpoenas have been quashed on procedural grounds.
Last, the branches of CKR's motion for sanctions against plaintiffs and their counsel, and plaintiffs' cross motion for sanctions against CKR and its counsel for chronic frivolous misconduct and failure to comply with discovery demands are denied.
“Generally, the nature and degree of the penalty to be imposed pursuant to CPLR 3126 against a party who refuses to comply with court-ordered discovery [are] a matter within the discretion of the court” (Savin v. Brooklyn Mar. Park Dev. Corp., 61 AD3d 954, 954 [2d Dept 2009] [internal quotation marks citation omitted]; Zletz v. Wetanson, 67 NY2d 711, 713 ). In addition, conduct can only be found frivolous, and, therefore, sanctionable, where “it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law” (22 NYCRR § 130-1.1 [c] ; see Premier Capital v. Damon Realty Corp., 299 AD2d 158, 158 [1st Dept 2002] ). Here, neither side has demonstrated that the other's conduct rose to the egregious level required for the imposition of sanctions, pursuant to either CPLR 3126 or 22 NYCRR § 130-1.1.
Accordingly, it is
ORDERED that the motion of defendant/third-party plaintiff is granted to the extent that the second cause of action for unjust enrichment asserted in the amended complaint is dismissed; the eight nonparty subpoenas duces tecum and ad testificandum issued December 22, 2016 by plaintiffs are quashed; and a preliminary conference will be held; and is otherwise denied; and it is further
ORDERED that plaintiffs' cross motion is granted to the extent that CKR Law LLP f/k/a Crone Kline Rinde, LLP (CKR) is directed to answer plaintiffs' first set of interrogatories and to produce all documents requested in plaintiffs' first notice for discovery and inspection within 20 days from service of this order with notice of entry; and is otherwise denied and it is further
ORDERED that the parties are directed to appear for a preliminary conference in Room 581, in 111 Centre Street, on November 8, 2018, at 9:30 AM.
1. The proposed amended complaint dated December 4, 2015 was deemed served by the decision and order issued by The Honorable Geoffrey D. Wright dated January 19, 2016.
Robert R. Reed, J.
Response sent, thank you
Docket No: 652715/2015
Decided: October 09, 2018
Court: Supreme Court, New York County, New York.
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