Defendant, United Equities, Inc. (UEI), moves to: restore this matter to the Court calendar; grant summary judgment and dismissal to defendant UEI, pursuant to CPLR Rule 3212; and, impose sanctions and costs of $16,343.75 against plaintiffs and/or their attorney, pursuant to 22 NYCRR § 130-1.1, because UEI it is not a correct entity to sue in this action. The Court restores this matter to the calendar to: grant summary judgment to [*2]UEI and dismiss the complaint against it; and, conduct a hearing, which will give plaintiffs and their counsel, Regina Felton, Esq., an opportunity to be heard as to why this Court should not sanction them and/or award defendant UEI costs for the "frivolous conduct" of plaintiffs and their counsel in continuing this action against UEI, a corporation that should never have been a party in this action.

An initial real estate proceeding, Kings County Supreme Court, Civil Term Index No. 24551/01, preceded and resulted in this action. Almost two years after the commencement of the initial proceeding, UEI, a domestic New York State corporation, was incorporated on February 3, 2003 [exhibit G of motion - New York State Department of State, Division of Corporations Entity Information and Certificate of Incorporation], with its corporate address at 630 First Avenue, New York, New York.

The summons and complaint in the initial proceeding were served on the New York Secretary of State, on July 18, 2001, for "United Equities Corporation sued herein as: United Equities, Inc." [exhibit B of motion - affidavit of service]. UEC, sued as "United Equities, Inc.," defaulted. On December 4, 2002, default judgment motion papers were served on the New York Secretary of State for "United Equities Corporation sued herein as: United Equities, Inc." [exhibit C of motion - affidavit of service]. The order for a default judgment against UEC was granted on February 13, 2003, 10 days after the incorporation of UEI, and served that day on the New York Secretary of State for "United Equities Corporation sued herein as: United Equities, Inc." [exhibit D of motion - affidavit of service]. The judgment in the initial proceeding [exhibit A of motion], dated June 10, 2003, barred "Defendant United Equities, Inc." which is actually UEC, from any claims to the 1321 Fulton Street property.

On June 16, 2004, in violation of the judgment in the initial proceeding, an entity calling itself "United Equities, Inc.," with an address at 735 Myrtle Avenue, Brooklyn, New York, transferred title of 1321 Fulton Street to defendant 1321 Fulton Street Realty Corp., in a deed signed by "Daniel Stern, President" [exhibit E of motion], and recorded in the City Register on September 13, 2004, at City Register File Number 200400567744. "John Star," presented the deed for recording, and according to the Automated City Register Information System (ACRIS) recording, signed the smoke detector affidavit as the grantee for 1321 Fulton Street Realty Corp.

Plaintiffs, in October 2004, commenced the instant action. The verified complaint, in ¶ 2, gives the address for UEI as 765 Myrtle Avenue, Brooklyn, New York, not 639 [*3]First Avenue, New York, New York. In November 2004, UEI received the summons and verified complaint in the instant action [exhibit F of motion]. Behzad Nehmadi, President of UEI, in his affidavit tin support of the motion, states that: UEI never owned or claimed to own 1321 Fulton Street; Daniel Stern is not and never was an officer, director or employee of UEI; he has no knowledge whatsoever as to whom Daniel Stern is; and, UEI never heard or transacted business with John Enos Star, Robert Robertson, Rachel Beard or the Estate of Rachel Beard.

He further states, in ¶'s 20 - 25, of his affidavit in support of the motion:

20. Amazingly, when presented with the . . . overwhelming

evidence that United Equities, Inc., the entity sued herein, is a different

entity than the entity sued in the Initial Proceeding (i.e., United Equities Corporation improperly sued as United Equities Inc.), Plaintiffs' attorneys summarily dismissed the documentary evidence and refused to acknowledge

that a serious mistake was made by Plaintiffs inasmuch as they were

seeking to enforce the Judgment [sic] against the wrong party.

21. At my December 28, 2005 deposition, I clearly and repeatedly

stated to Plaintiff's attorney, Regina Felton, Esq., that United Equities,

Inc. had never any connection whatsoever with the subject matter of this

litigation. Plaintiff's counsel admitted to me, after the deposition's

conclusion, that she believed that United Equities Inc. was not a proper

defendant in this case.

22. I also understand that, nonetheless, Plaintiff's counsel again

inexplicably refused to discontinue this matter as against United Equities

Inc. at the compliance conference held on January 18, 2006.

23. Plaintiff's counsel subsequently failed to furnish United

Equities Inc.'s attorneys with a copy of [the] December 28, 2005

deposition transcript, despite defense counsel's repeated requests for

a copy of said transcript.

24. Furthermore, as indicated in the accompanying affirmation

of Eli D. Golob, Esq., Plaintiff's counsel continued to refuse to discontinue

this action as against United Equities Inc. despite the fact that United

Equities Inc. had nothing to do with the transactions at issue herein.

25. The foregoing facts inescapably lead to the conclusion that

Plaintiffs wrongfully commenced this action against United Equities Inc.

Mr. Golob, UEI's counsel, in his affirmation in support of the motion, states in ¶ 13 that:

this office prepared the Certificate of Incorporation for United Equities,

Inc. and acted as incorporator for it, which included handling all

aspects of the incorporation. Thus, this firm is intimately familiar with

the existence and status of United Equities, Inc. and can affirmatively

state that the entity sued herein, United Equities Inc., is not the entity [*4]

sued in the Initial Proceeding and never owned or claimed to own any

property in Kings County.

Mr. Golob claims, that after he received the complaint in the instant matter from UEI, he called Ms. Felton to explain that the wrong party had been sued, but Ms. Felton demanded that UEI answer the complaint. Mr. Golob attached copies of various

letters and faxes from his colleague, Aubrey E. Riccardi, Esq., to Ms. Felton, in January and February 2005, which provided numerous documents that the wrong party had been sued [exhibits K, L, M, and O of motion]. The only response from Ms. Felton was a letter, dated February 15, 2005 [exhibit N of motion], which stated "if you wish to make your Motion to Dismiss, I would suggest that you do so, otherwise, I expect your client to appear for any conferences that are held in connection with this case. Otherwise, your client will be deemed to be in default." Mr. Golob also points out in his affirmation in support that Mr. Nehmadi was deposed on December 28, 2005 [¶ 35], but that Ms. Felton failed to provide a copy of the deposition, despite repeated requests [¶ 37]. Like Mr. Nehmadi, Mr. Golob states, in ¶ 35, that after the deposition ended, "Ms. Felton finally concluded that she believed that United Equities Inc. was not a proper defendant in this case." He then notes, in ¶ 36, that Ms. Felton refused to discontinue the action against UEI at the January 16, 2006-compliance conference. Mr. Golob, in ¶ 38, states that in spite of the evidence that the wrong party, UEI, was sued, "Plaintiffs knowingly, intentionally and in bad faith continued to prosecute this action against United Equities Inc." Then, in ¶ 39, Mr. Golob claims that this "is the precise type of conduct that Rule 130-1.1 (a) seeks to discourage."

Ms. Felton, in ¶ 21 of her affirmation in opposition to the motion, states that she requested that UEI's President execute a statement that he is in no way connected with 1321 Fulton Street Realty Corp. and John Enos Star, and then she would "withdraw the action." She states, in ¶ 22, "I do not understand why the principal Behzad Nehmadi did not execute the sworn statement requested." Mr. Nehmadi did this in UEI's verified answer, filed on January 21, 2005 [exhibit B of reply affirmation]. Ms. Felton appears to have forgotten that CPLR § 105 (u) states, "A verified pleading' may be utilized as an affidavit whenever the latter is required."

It is crystal clear that UEI is the wrong party sued by plaintiffs. While plaintiffs may be properly aggrieved by the actions of John Enos Star and 1321 Fulton Street Realty Corp., the other defendant should be UEC, not UEI. The Court restores this matter to the calendar for the sole purpose of granting summary judgment and dismissal of the action against UEI, and, pursuant to 22 NYCRR §130-1.1, to conduct a hearing to give plaintiffs and their counsel, Regina Felton, Esq., an opportunity to be heard as to why this Court should not sanction them and/or award defendant UEI costs for the "frivolous conduct" of plaintiffs and their counsel in continuing this action against UEI, a corporation that should never have been sued.

In opposing the instant motion, plaintiffs present nothing that refutes UEI's motion for summary judgment. Plaintiff' s counsel, in the face of clear evidence that UEI was the wrong party to sue, obstinately continued to prosecute this action against UEI. Ms. Felton, in her affirmation in opposition, in ¶ 20, claims that she requested that UEI's counsel obtain a statement from UEI's President that UEI "is in no way connected with 1321 Fulton Street Realty, and that he does not know and has not met John Enos Star who perpetrated a fraud upon the senior citizen, plaintiff Robert Robertson." She then claims, in ¶ 21, "that upon obtaining such a statement, I would indeed withdraw the action but only if his client would make such a statement. Counsel, Eli Golob, would not do so." Ms. Felton continues, in ¶ 22, that "I do not understand why the principal Behzad Nehmadi did not execute the sworn statement requested."

Ms. Felton overlooked that UEI in its verified answer, verified by its President, Mr. Nehmadi, denied: being the correct entity sued [¶ 21]; and, ever owning any real property [*6]in Kings County [¶25 and 27]. UEI's verified answer, states, in ¶ 31, that UEI "never transacted business with any individual by the name of John Enos Star or any entity by the name of 1321 Fulton Street Realty Corp. In fact, Until [sic] its receipt of the summons and complaint served herein, United never heard of either John Enos Star or 1321 Fulton Street Realty Corp." As mentioned previously, CPLR § 105 (u) instructs that "[a] verified pleading' may be utilized as an affidavit whenever the latter is required." The Court, in Kempf v Magida, 37 AD3d 763 (2d Dept 2007) held that "a verified pleading may be utilized as an affidavit whenever the latter is required (see CPLR 105 [u])." See Travis v Allstate Ins. Co., 280 AD2d 394 (1st Dept 2001); Hladczuk v Epstein, 98 AD2d 990 (4th Dept 1983). Ms. Felton set unreasonable conditions to discontinue the instant action. UEI should have been removed from the case after the relevant documentation was presented to Ms. Felton.

Ms. Felton, for reasons unknown to the Court, persistently continued the action against UEI, the wrong defendant. This forced UEI to continue to litigate this matter and needlessly incur litigation-related expenses. Defendant's counsel, in January and February 2005, provided Ms. Felton with numerous documents demonstrating that the wrong party had been sued [exhibits K, L, M, and O of motion]. UEI's President was deposed on December 28, 2005. Despite Mr. Nehmadi's clear denials that UEI had no connection whatsoever with the subject of this litigation, Ms. Felton failed to provide defendant's counsel with a copy of the deposition transcript [¶ 37 of Golob affirmation in support of the motion].

The failure of Regina Felton, Esq. to discontinue the instant action against UEI, after being presented with clear evidence that UEI was the wrong corporation sued appears to be "frivolous." 22 NYCRR § 130-1.1 (a) states that "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 as defined in this Part, which shall be payable as provided in section 130-1.3 of this Subpart." Further, it states in 22 NYCRR § 130-1.1 (2), that "sanctions may be imposed upon any attorney appearing in the action or upon a partnership, firm or corporation with which the attorney is associated."

22 NYCRR § 130-1.1(c) states that:

For purposes of this part, conduct is frivolous if:

(1) it is completely without merit in law and cannot be supported

by a reasonable argument for an extension, modification or

reversal of existing law;

(2) it is undertaken primarily to delay or prolong the resolution of

the litigation, or to harass or maliciously injure another; or

(3) it asserts material factual statements that are false.

It is clear that since February 2005 plaintiffs' counsel ignored UEI's good faith attempts to resolve this matter without resort to lengthy and costly proceeding. The continued action against UEI, the wrong party, "is completely without merit in law" and "asserts material factual statements [about UEI] that are false." [*7]

In Guttridge v Schwenke, 155 Misc 2d 317 (Sup Ct, Westchester County1992), plaintiffs claimed a balance due under a contract. Defendants presented plaintiffs with clear documentary evidence that the outstanding balance had been paid. Just as in the instant case, plaintiffs continued to refuse to discontinue the action. The Court, at 320, instructed that:

Viewed against an objective standard, the failure of plaintiffs to

perform any reasonable inquiry into the facts before asserting the

second cause of action and the failure to admit incontrovertible

facts constituted frivolous conduct. Such conduct was completely

without merit and could not be supported by a reasonable argument

for an extension, modification or reversal of existing law (22 NYCRR

§ 130-1.1) . . . Plaintiffs' counsel must share the blame for such

frivolous conduct as it was also his responsibility in preparing and

verifying the complaint, and in conducting this litigation, to make

diligent inquiry into the facts and to discontinue litigation when

it became apparent it lacked any merit. The frivolous conduct by

plaintiffs and their attorney has not only burdened defendant by

forcing him to incur legal expenses in defense of needless litigation,

it has burdened the court by having to intervene on defendant's

behalf. An award of costs and sanctions is needed here not only

to compensate defendant, but to deter abuse of the judicial system

and to ensure the orderly administration of justice.

In two cases, Moran v Regency Savings Bank, F.S.B., 20 AD3d 305 (1st Dept 2005) and Timoney v Newmark & Co. Real Estate, Inc., 299 AD2d 201 (1st Dept 2002), the Appellate Division, First Department, affirmed sanctions and costs against plaintiffs' counsel for continuing actions in the face of unrebutted documentary evidence that plaintiffs' claims were meritless. The Moran Court, at 306, held:

The motion court's award of costs and sanction was a proper

exercise of discretion in light of plaintiff's counsel unjustifiable and

consistent refusal to discontinue the action against the Rosenfeld firm

in the face of unrebutted documentary evidence showing that another

party was the owner of the premises, coupled with counsel's unreasonable insistence on tying such discontinuance to the obtaining of an admission

of ownership and control from an unrelated defendant.

In Janitschek v Trustees of Friends World College, 249 AD2d 368 (2d Dept 1998), plaintiffs Nickin and Raphael, and their attorney, were sanctioned. because for a number of years preceding the commencement of the litigation there was no legal or factual basis to sue defendant college. See Laing v Laing, 261 AD2d 622 (2d Dept 1999).

The Court, in Levy v Carol Management Corporation, 260 AD2d 27, 33 (1st Dept 1999), stated that in determining if sanctions are appropriate the Court must look at the broad pattern of conduct by the offending attorneys or parties. Further, "22 NYCRR [*8]

130-1.1 allows us to exercise our discretion to impose costs and sanctions on an errant party . . ." The Levy Court held, at 34, that "[s]anctions are retributive, in that they punish past conduct. They also are goal oriented, in that they are useful in deterring future frivolous conduct not only by the particular parties, but also by the Bar at large."

The Court, in Kernisan, M.D. v Taylor, 171 AD2d 869 (2d Dept 1991), noted that the intent of the Part 130 Rules "is to prevent the waste of judicial resources and to deter vexatious litigation and dilatory or malicious litigation tactics (cf. Minister, Elders & Deacons of Refm. Prot. Church of City of New York v 198 Broadway, 76 NY2d 411; see Steiner v Bonhamer, 146 Misc 2d 10) [Emphasis added]." Since at least February 2005 the instant action is "a waste of judicial resources." This conduct, as noted in Levy, must be deterred. In Weinstock v Weinstock, 253 AD2d 873 (2d Dept 1998), the Court ordered the maximum sanction of $10,000.00 for an attorney who pursued an appeal "completely without merit," and holding, at 874, that "[w]e therefore award the maximum authorized amount as a sanction for this conduct (see, 22 NYCRR 130-1.1) calling to mind that frivolous litigation causes a substantial waste of judicial resources to the detriment of those litigants who come to the Court with real grievances [Emphasis added]." Citing Weinstock, the Appellate Division, Second Department, in Bernadette Panzella, P.C. v De Santis, 36 AD3d 734 (2d Dept 2007), affirmed a Supreme Court, Richmond County $2,500.00 sanction, at 736, as "appropriate in view of the plaintiff's waste of judicial resources [Emphasis added]."

In Navin v Mosquera, 30 AD3d 883 (3d Dept 2006), the Court instructed that when considering if specific conduct is sanctionable as frivolous, "courts are required to

examine whether or not the conduct was continued when its lack of legal or factual basis was apparent [or] should have been apparent' (22 NYCRR 130-1.1 [c])." In Sakow ex rel. Columbia Bagel, Inc. v Columbia Bagel, Inc., 6 Misc 3d 939, 943 (Sup Ct, New York County 2004), the Court held that "[i]n assessing whether to award sanctions, the Court must consider whether the attorney adhered to the standards of a reasonable attorney (Principe v Assay Partners, 154 Misc 2d 702 [Sup Ct, NY County 1992])." In the instant action, a reasonable attorney whould have discontinued the action when presented with the documentation that proved that UEI is the wrong party to sue.

This Court will examine the conduct of plaintiff's counsel, in a hearing, pursuant to 22 NYCRR § 130-1.1, to determine if plaintiff and plaintiff's counsel engaged in frivolous conduct, and to allow plaintiff and plaintiff's counsel a reasonable opportunity to be heard. See Mascia v Maresco, 39 AD3d 504 (2d Dept 2007); Yan v Klein, 35 AD3d 729 (2d Dept 2006); Greene v Doral Conference Center Associates, 18 AD3d 429 (2d Dept 2005); Kucker v Kaminsky & Rich, 7 AD3d 39 (2d Dept 2004).

ORDERED that the motion of defendant United Equities, Inc. (UEI), to restore this matter to the Court calendar to grant summary judgment and dismissal to defendant UEI, pursuant to CPLR Rule 3212, is granted; and it is further [*9]

ORDERED that it appearing that Robert Robertson and his counsel, Regina Felton, Esq., engaged in "frivolous conduct," as defined in the Rules of the Chief Administrator, 22 NYCRR § 130-1(c), and that pursuant to the Rules of the Chief Administrator, 22 NYCRR § 130.1.1 (d), "[a]n award of costs or the imposition of sanctions may be made . . . upon the court's own initiative, after a reasonable opportunity to be heard," this Court will conduct a hearing affording Mr. Robertson and Ms. Felton "a reasonable opportunity to be heard," before me in Part 27, on Friday, November 16, 2007, at 2:15 P.M., in Room 479, 360 Adams Street, Brooklyn, NY 11201; and it is further

ORDERED, that Ronald D. Bratt, my Principal Law Clerk, is directed to serve this order by first-class mail, upon plaintiff Robert Robertson and Regina Felton, Esq.

This constitutes the Decision and Order of the Court.

ENTER

___________________________

Hon. Arthur M. SchackJ. S. C.