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Ronald A. NIMKOFF, Practicing Law Under the Name, the Nimkoff Firm, Plaintiff, v. Solomon SHARBAT, Qualified Settlement Management, LLC, Defendant.
The following e-filed documents, listed by NYSCEF document number (Motion 013) 665, 666, 667, 668, 669, 670, 671, 672, 673, 674, 675, 676, 677, 678, 679, 680, 681, 682, 683, 684, 685, 686, 687, 688, 689, 690, 691, 692, 693, 694, 695, 696, 697, 698, 699, 700, 701, 703, 704, 705, 706, 707, 708, 709, 710, 711, 712, 713, 714, 715, 716, 717, 718, 719, 720, 721, 722, 723, 724, 725 were read on this motion to DISMISS.
ROBERT R. REED, J.
In this action to recover legal fees, plaintiff Ronald A. Nimkoff, practicing law under the name The Nimkoff Firm (Nimkoff), moves, pursuant to, inter alia, CPLR 3211 (a) (5), to dismiss the second and third counterclaims, and to strike certain affirmative defenses set forth in the amended answer of defendants Solomon Sharbat and Qualified Settlement Management, LLC (together Sharbat).
The Wolk Action
This action arises from Nimkoff's legal representation of Sharbat in an action, entitled Sharbat v. Law Offs. of Michael B. Wolk, P.C. (Sup Ct, NY County, Index No. 600151/2008) (the Wolk Action). In that action, Nimkoff moved to withdraw from representing Sharbat on the ground that Sharbat failed to pay for Nimkoff's services and the disbursements incurred on Sharbat's behalf in connection with the Wolk Action, as well as in connection with another action in which Nimkoff represented Sharbat, entitled Harstein v. Sharbat (SDNY, No. 09 CIV 9799) (the Harstein Action). By order dated March 9, 2011, the court (Paul Feinman, J.) granted Nimkoff's motion and ordered a hearing before a special referee appointed to hear and determine the quantum meruit amount of fees and disbursements owed (NYSCEF Doc. Nos. 575 & 576).
After a hearing, the special referee issued a determination finding that Nimkoff was entitled to a fee in quantum meruit in the amount of $336,784.22 and directing the entry of a judgment in favor of Nimkoff and against Sharbat in that amount (NYSCEF Doc. No. 7). The Clerk of the Court then entered a judgment on the special referee's determination in the sum of $338,248.78, which included interest and costs (NYSCEF Doc. No. 8).
Sharbat moved to vacate the judgment and the special referee's determination, as well as the order directing the special referee to determine Nimkoff's legal fees (NYSCEF Doc. No. 9). By order entered May 6, 2013, the court (Barbara Jaffe, J.) denied the motion (Solomon Sharbat v. Law Offs. of Michael B. Wolk, P.C., 39 Misc 3d 1224 [A], 2013 NY Slip Op 50718(U) [Sup Ct, NY County 2013]; NYSCEF Doc. No. 10).
On Sharbat's appeal from the May 6, 2013 order, the Appellate Division modified the order to the extent of vacating the judgment and the devices issued to enforce the judgment, stating:
“While the special referee's fee determination entitles Nimkoff to bring a petition for a charging lien within the underlying action against the proceeds in that action and/or to file a plenary action against all of Sharbat's assets, the determination should not have resulted in the immediate issuance of a judgment. Accordingly, the improperly issued judgment is vacated and declared void, along with the devices issued to enforce the judgment”
(Sharbat v. Law Offs. of Michael B. Wolk, P.C., 121 AD3d 426, 426-427 [1st Dept 2014] [internal citations omitted] ). The Court determined, however, that no grounds existed “to vacate the order directing a special referee to determine Nimkoff's legal fees or the special referee's legal fee determination” (id. at 427).
The Instant Action
On November 10, 2014, Nimkoff commenced this plenary action against Sharbat to recover the unpaid legal fees and disbursements based upon the referee's determination (NYSCEF Doc. No. 1). In January 2015, Sharbat filed an answer which included general denials and three affirmative defenses: that Nimkoff unduly inflated charges for the legal services he rendered in the Wolk Action; that he unduly inflated charges for the legal services rendered in the Harstein Action; and that the special referee failed to take into account all of the necessary factors in making his determination (NYSCEF Doc. No. 13). Sharbat's answer also included one counterclaim against Nimkoff for breach of contract related to Nimkoff's representation of Sharbat in the Hartstein Action (id.).
In August 2019, Sharbat moved to amend the answer, asserting, among other things, that during discovery, it became clear that the entity named as the plaintiff in the caption of the summons and complaint, “the Nimkoff Firm,” was not a proper legal entity, did not have a license to operate a business in New York, and never entered into a contract with Sharbat (Mot. Seq. No. 008). Sharbat's proposed amended answer included four new affirmative defenses, including that “The Nimkoff Firm” lacked standing and capacity to sue because it never had a legal relationship with Sharbat and that the legal services for which Nimkoff is seeking compensation were provided by a different entity (NYSCEF Doc. No. 432).
Nimkoff then moved to amend the summons and complaint to identify the plaintiff in this action as “Ronald A. Nimkoff, practicing law under the name The Nimkoff Firm,” instead of as “The Nimkoff Firm” (Mot. Seq. No. 10). On December 12, 2019, after hearing oral argument on both motions, this court granted Nimkoff leave to amend the summons and complaint and denied Sharbat's motion to amend his answer as moot, seeing that if Nimkoff filed the amended complaint, Sharbat would, in the normal course, have the opportunity to submit a responsive pleading (Transcript [12-12-19], NYSCEF Doc. No. 613, at 26-27).
Nimkoff thereafter filed an amended summons and complaint identifying the plaintiff as “Ronald A. Nimkoff, practicing law under the name The Nimkoff Firm,” which was accepted for e-filing on January 14, 2020 (NYSCEF Doc. Nos. 600-601). On February 3, 2020, Sharbat filed an answer to the amended complaint in which he asserted an additional twenty-seven affirmative defenses, including lack of standing and capacity to sue, and interposed two newly asserted, second and third, counterclaims (NYSCEF Doc. No. 619). On February 18, 2020, Sharbat filed an amended answer to the amended complaint (the amended answer) (NYCEF Doc. No. 658), providing more detailed allegations with respect to the newly asserted, second and third counterclaims, clarifying that they pertain to Nimkoff's representation of Sharbat in an unrelated action entitled Sharbat v. Cancer Survivors, Inc. (Sup Ct, NY County Index No. 113444/2006) (the Cancer Survivors Action).
Nimkoff now moves, pursuant to, inter alia, CPLR 3211 (a) (5), to dismiss the second and third counterclaims in the amended answer as time-barred, and to strike the twenty-seven newly asserted affirmative defenses on the ground that Sharbat waived these defenses by failing to plead them in his original answer or in a pre-answer motion to dismiss.
The Second and Third Counterclaims
Sharbat's newly asserted second and third counterclaims are based upon Nimkoff's representation of Sharbat in the Cancer Survivors Action and seek damages for violations of Judiciary Law § 487, breach of fiduciary duty, unjust enrichment, breach of contract, and improper disbursement of escrow funds. They allege that Nimkoff threatened to withdraw from representing Sharbat in the Cancer Survivors Action if Sharbat did not pay Nimkoff for the legal services rendered in another action entitled Shirotkin v. Sharbat (Sup Ct, NY County Index No. 601874/2005) (the Shirotkin Action). This threat purportedly forced Sharbat to settle the Cancer Survivors Action on “extremely disadvantageous terms” and Nimkoff thereafter improperly took the money he claimed he was owed in the Shirotkin Action out of the settlement funds from the Cancer Survivors Action, even though such funds should have remained in escrow. Nimkoff moves to dismiss these claims on the ground that they are time-barred.
CPLR 3211 (a) (5) provides that “[a] party may move for judgment dismissing one or more causes of action asserted against him on the ground that . . . the cause of action may not be maintained because of . . . [the] statute of limitations.” “On a motion to dismiss a cause of action pursuant to CPLR 3211 (a) (5) on the ground that it is barred by the statute of limitations, [the movant] bears the initial burden of establishing, prima facie, that the time in which to sue has expired” (Benn v. Benn, 82 AD3d 548, 548 [1st Dept 2011][internal quotations marks and citation omitted] ). “The burden then shifts to the nonmoving party to raise a question of fact as to the applicability of an exception to the statute of limitations, as to whether the statute of limitations was tolled, or as to whether the action was actually commenced within the applicable limitations period” (HSBC Bank USA, N.A. v. Janvier, ––– AD3d ––––, 2020 NY Slip Op 05893, *2 [2d Dept 2020] ).
Here, the claims at issue are governed by limitation periods of three or six years (see Melcher v. Greenberg Traurig, LLP, 23 NY3d 10, 15  [claims for attorney deceit under common law or under Judiciary Law § 487 are subject to the six-year statute of limitations in CPLR 213 (1)]; Town of Oyster Bay v. Lizza Indus., Inc., 22 NY3d 1024, 1030 [“A breach of contract action must be commenced within six years from the accrual of the cause of action”], citing CPLR 203 [a], 213 ; IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 NY3d 132, 139  [claim for breach of fiduciary duty subject to three-year limitation period where the remedy sought is purely monetary and six-years where the relief sought is equitable in nature], citing CPLR 214, 213; U.S. Bank N.A. v. Salem, 164 AD3d 1289, 1290 [2d Dept 2018][“cause of action alleging unjust enrichment is . . . governed by the six-year statute of limitations of CPLR 213 (1)”] ).
In support of this motion, Nimkoff presents evidence demonstrating that the Cancer Survivors Action, upon which all of the newly asserted claims are based, was settled in December 2007 (NYSCEF Doc. No. 672) and that the settlement funds were disbursed on January 4, 2008 (NYSCEF Doc. No. 677). Nimkoff argues that Sharbat's second and third counterclaims claims are time-barred because they were not asserted until February 2020, after the statute of limitations on all of the claims had expired.
In opposition, Sharbat relies on the relation-back doctrine to render the newly asserted counterclaims timely. CPLR 203 (f), which codifies New York's relation-back doctrine, states: “[a] claim asserted in an amended pleading is deemed to have been interposed at the time the claims in the original pleading were interposed, unless the original pleading does not give notice of the transactions [or] occurrences . . . to be proved pursuant to the amended pleading” (CPLR 203 [f]).
Sharbat contends that the newly asserted counterclaims relate back to the counterclaim in his original answer. Relying on O'Halloran v. Metropolitan Transp. Auth. (154 AD3d 83 [1st Dept 2017]), Sharbat argues that he is merely asserting new claims against Nimkoff, who is already a party to this action, and, therefore, a more relaxed standard applies in deciding whether the doctrine is available. In O'Halloran, the Appellate Division explained that
“where ․ a proposed amended complaint contains an untimely claim against a defendant who is already a party to the litigation, the relevant considerations are simply (1) whether the original complaint gave the defendant notice of the transactions or occurrences at issue and (2) whether there would be undue prejudice to the defendant if the amendment and relation back are permitted”
(O'Halloran v. Metropolitan Transp. Auth., 154 AD3d at 87 [ citations omitted]; see also Carlino v. Shapiro, 180 AD3d 989, 990 [2d Dept 2020] [relation-back doctrine is unavailable where the original allegations do not provide notice of the need to defend against the allegations of the amended pleading] ).
Here, Sharbat is asking the court to apply the relation-back doctrine so as to deem the newly asserted second and third counterclaims as having been interposed at the time the initial complaint was filed. However, this would not render the second and third counterclaims timely. It is undisputed that the Cancer Survivors Action, upon which these claims are based, was settled in December 2007 and the settlement funds were disbursed on January 4, 2008. Therefore, by the time this action was commenced on November 10, 2014, the second and third counterclaims were already time-barred.
In any event, the newly asserted second and third counterclaims arise from an entirely different, unrelated set of allegations. The original counterclaim is premised on allegations related to Nimkoff's agreement and the legal services he rendered in the course of representing Sharbat in the Harstein Action. These allegations were not sufficient to put Nimkoff on notice of the need to defend against claims related to an agreement or the legal services rendered in the Cancer Survivors Action. In other words, the original counterclaim did “not give notice of the transactions, occurrences, or series of transactions or occurrences” to be proved on the newly asserted counterclaims (CPLR 203 [f]; see Darby & Darby, P.C. v. VSI Intl., 95 NY2d 308, 315 ; 300 W. End Assoc. v. Nelligan, 35 AD3d 306, 306 [1st Dept 2006]; see also Moezinia v. Ashkenazi, 136 AD3d 990, 992 [2d Dept 2016]). Therefore, Sharbat's reliance on the relation-back doctrine is misplaced.
To the extent Sharbat may be understood as arguing that the second and third counterclaims are saved by CPLR 203(d), this contention also lacks merit. Under CPLR 203(d), “[a] defense or counterclaim is not barred if it was not barred at the time the claims asserted in the complaint were interposed, except that if the defense or counterclaim arose from the transactions, occurrences, or series of transactions or occurrences, upon which a claim asserted in the complaint depends, it is not barred to the extent of the demand in the complaint notwithstanding that it was barred at the time the claims asserted in the complaint were interposed.” Here, the second and third counterclaims do not arise from the transactions, occurrences, or series of transactions or occurrences, upon which any claim asserted in the complaint depends.
Thus, the second and third counterclaims are dismissed pursuant to CPLR 3211 (a) (5) as time-barred.
The Newly Asserted Affirmative Defenses
The amended answer includes the three affirmative defenses set forth in Sharbat's original answer, plus twenty-seven additional affirmative defenses, including lack of standing and capacity to sue, that were not included in the original answer. Nimkoff asserts that such defenses should be deemed waived because they were not pleaded in the original answer or in a motion to dismiss (see CPLR 3018 [b]; 3211 [a], [e] ). He further contends that the court has already ruled that discovery in this action has concluded. Therefore, it would be inequitable, after more than five years of ongoing litigation, to permit Sharbat to maintain these newly asserted affirmative defenses as they would be insulated from any further examination through depositions, document disclosure, or otherwise.
In opposition, Sharbat argues that he had the right to assert new affirmative defenses in his amended answer because, in deciding Nimkoff's motion for leave to file an amended complaint, the court permitted him to answer, and where an answer to an amended complaint is served pursuant to CPLR 3025 (d), affirmative defenses raised in that answer are not limited to those asserted in the superseded original answer. Sharbat asserts, therefore, that this branch of Nimkoff's motion should be denied.
Nimkoff's motion to amend the summons and complaint (Motion Sequence No. 10) was made pursuant to, inter alia, CPLR 3025 (b), and in granting that motion, this court permitted Sharbat to answer the amended complaint (Transcript [12-12-19], NYSCEF Doc. No. 613, at 25-27). In this regard, CPLR 3025 (d) provides that
“[e]xcept where otherwise prescribed by law or order of the court, there shall be an answer or reply to an amended or supplemental pleading if an answer or reply is required to the pleading being amended or supplemented. Service of such an answer or reply shall be made within twenty days after service of the amended or supplemental pleading to which it responds”
(CPLR 3025 [d]).
“Although CPLR 3025 (d) is silent as to whether new affirmative defenses may be raised in an answer served under this subdivision, significantly, an amended complaint is deemed to supersede an original complaint, and thus, a defendant's original answer has no effect. As such, an answer to an amended complaint served pursuant to CPLR 3025 (d) is in fact an original answer to the amended complaint, and thus, affirmative defenses raised in that answer are not limited to those asserted in the original answer”
(Mendrzycki v. Cricchio, 58 AD3d 171, 174-175 [2d Dept 2008] [internal citations omitted]; see Seidler v. Knopf, 186 AD3d 886, 888 [2d Dept 2020][“In answering an amended complaint, [d]efendants are not confined to answering the amended pleading ․, and the amended answer may contain new allegations in their defenses and counterclaims(,) (as well as) affirmative defenses which were not raised, but could have been raised, in their answer to the prior complaint”][internal quotation marks and citations omitted]; Moezinia v. Ashkenazi, 136 AD3d at 991).
In light of the foregoing, this branch of Nimkoff's motion is denied.
Accordingly, it is
ORDERED that plaintiff's motion is granted to the extent that the second and third counterclaims in defendants' amended answer are dismissed; and it is further
ORDERED that plaintiff's motion is otherwise denied; and it is further
ORDERED that all dispositive motions must be filed by January 18, 2021; and it further
ORDERED that this constitutes the decision and order of the court.
Robert R. Reed, J.
Response sent, thank you
Docket No: 161168/2014
Decided: November 18, 2020
Court: Supreme Court, New York County, New York.
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