[*1]
| Goldman v Rio |
| 2008 NY Slip Op 51698(U) [20 Misc 3d 1131(A)] |
| Decided on August 7, 2008 |
| Supreme Court, Nassau County |
| Austin, J. |
| Published by New York State Law Reporting Bureau
pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be
published in the printed Official Reports. |
Supreme Court, Nassau County
Michael Goldman,
Plaintiff,
against
Richard R. Rio and Law Offices of Richard R. Rio, PLLC,
Defendants.
|
15779/2006
PRO-SE PLAINTIFF
Michael Goldman
49 Emmet Avenue
East Rockaway, New York 11518
COUNSEL FOR DEFENDANTS
Richard M. Maltz, PLLC
488 Madison Avenue-10th Floor
New York, New York 10022
Leonard B. Austin, J.
The following papers were read on Plaintiff's motion to renew and reargue this Court's order
of January 28, 2008[FN1]:
Notice of Motion, dated March 11, 2008;
[*2]
Affidavit of Michael Goldman, sworn to on
March 14, 2008;
Corrected Affirmation in Opposition of Richard M. Maltz, Esq., dated May 28,
2008;
Reply Affidavit of Michael Goldman, sworn to on June 11, 2008.
Plaintiff, Michael Goldman ("Goldman"), moves to renew and reargue this Court's
order dated January 28, 2008, which granted Defendants' motion to dismiss this action and
denied Plaintiff's motion for summary judgment as moot.
BACKGROUND
Goldman formed a
partnership for a legal practice with Defendant, Richard R Rio ("Rio"). This practice, known as
Goldman & Rio, Esqs. ("G & R") existed until May 18, 2004, when Goldman was suspended
from legal practice. Matter of Goldman, 7 AD3d 18 (1st Dept. 2004). The suspension was based
on an investigation into six complaints regarding, inter alia, mishandling of escrow funds.
Upon Goldman's suspension, the G & R partnership terminated as a matter of law.
At that point, Rio established a new firm, Law Offices of Richard R. Rio, PLLC ("Rio PLLC").
Goldman had no connection or involvement with Rio's new firm. Subsequently, Goldman was
disbarred on October 11, 2005. Matter of Goldman, 24 AD3d 29 (1st Dept. 2005).
Following his disbarment, on October 16 ,2005, Goldman filed for Chapter 7
bankruptcy under 11 U.S.C. §701, et seq. In his bankruptcy petition, Goldman
listed Rio, G & R and Rio PLLC as creditors. There were no assets listed from which creditors
could be paid. On June 5, 2006, the United States Bankruptcy court for the Eastern District of
New York granted Goldman a discharge in bankruptcy pursuant to 11 U.S.C. §727.
Following the issuance of the discharge, the Bankruptcy Trustee instituted
proceedings to investigate the possibility that Goldman had understated his equity interest in his
home, and a possible fraudulent transfer of assets. On October 16, 2005,
Goldman entered a plea of guilty to Grand Larceny in the 3rd degree with regard to
the conversion of clients' funds.
Goldman commenced this action on September 26, 2006. In his complaint, Goldman
seeks to compel Rio to account with regard to G & R. Goldman asserts that he is entitled to a
share of the assets of G & R. Furthermore, he asserts that, at the time of his suspension, various
matters were pending within the firm. Goldman now seeks to recover the value of his share of the
assets of G & R and for his share of the legal fees realized from his work done prior to his
suspension.
On July 30, 2007, the Defendants moved to dismiss this action, and Goldman
cross-moved for summary judgment as a matter of law to compel an accounting. The Defendants
claimed that Goldman was required to list his claimed interest in pre-suspension G & R fees as
an asset in his bankruptcy proceeding. The Defendants argued that Goldman's failure to do this
barred him from bringing this action. Goldman's cross-motion asserted that he was entitled to an
accounting as a matter of partnership law.
On January 28, 2008, this Court granted Defendants' motion to dismiss and denied
Goldman's cross-motion for summary judgment as moot. This Court based its [*3]decision on the fact that Goldman lacked standing to bring this suit
as a result of his bankruptcy.
In addition, this Court found that Goldman is judicially estopped from asserting that
he is owed any money from Rio or G & R. In Goldman's bankruptcy proceeding, he claimed Rio
and G & R as a creditors, indicating that Goldman owed Rio and G & R at least $75,000.00. The
Court found that upon receiving his bankruptcy discharge on the basis of owing money to Rio
and G & R, Goldman was estopped from claiming in this action that Rio and G & R owed him
money.
Accordingly, this Court dismissed Goldman's complaint for lack of standing and
based on judicial estoppel.
Goldman now moves to renew and reargue his prior motion. Goldman asserts that
the Court overlooked or misapprehended the fact that he is being held personally responsible for
funds held by G & R. Goldman further contends that new materials that were previously
unavailable to him have been obtained and are sufficient to renew the prior motion.
Goldman refers to five new items of information, two of which he attached as
Exhibit A to his notice of motion to reargue and renew. In his reply affidavit, Goldman attached
the three additional items as exhibits B, C and D. These items include correspondence from The
Lawyers Fund for Client Protection, dated November 27, 2007, in which Goldman is notified of
a claim against him. The claimant's name and amount claimed have been redacted from this
document. Goldman also attached his response to this correspondence, dated December 18, 2007.
In Goldman's reply affidavit, he asserts that he has withdrawn his guilty plea in the
New York County Criminal Term, based on his receipt of exculpatory evidence, previously
unavailable to him. Goldman further asserts that he paid $15,000.00 to a client of Rio in order to
obtain multiple adjournments regarding his criminal sentencing. Goldman avers that he paid this
money as restitution for a claim that the client wrongly brought against him, and which should
have been brought against Rio. In addition, Goldman asserts that he has only recently learned of
two new claims being brought against him by former clients for funds.
Goldman attached a copy of a check in the amount of $15,000.00 payable to Norton
& Melnik Attorney Trust Account. The check is dated July 19, 2006, and indicates that it is for
"Peo v. Goldman-[client name]." Goldman asserts that the new information obtained during
discovery in the present action has revealed that Rio should have paid the $15,000.00 to the
client from funds being held in escrow. To support this notion, Goldman attached an email, dated
April 28, 2008, in which Todd Melnik, Esq. discusses the unlikelihood of Goldman recovering
any money from the client, absent a lawsuit or through Rio.
As a final exhibit, Goldman attached two pages of his bankruptcy proceeding
documentation, in which he lists Rio and G & R as creditors in the amount of $75,000.00 each;
highlighting his claim that he had joint liability with Rio with regard to miscellaneous claims.
Goldman concluded by maintaining that reconsideration by the Court is warranted based on the
withdrawal of his guilty plea, his recent discovery that the $15,000.00 paid to the client should
have been paid by Rio and not himself, the newly discovered exculpatory evidence provided by
the District Attorney's Office and the [*4]two new claims being
brought against him.
DISCUSSION
Reargument / Renewal
Pursuant to CPLR 2221(f):
A combined motion for leave to reargue and leave to renew shall identify separately
and support separately each item of relief sought. The court, in determining a combined motion
for leave to reargue and leave to renew, shall decide each part of the motion as if it were
separately made. If a motion for leave to reargue or leave to renew is granted, the court may
adhere to the determination on the original motion or may alter that determination.
Accordingly, the Court will separately address the items of relief sought.
Leave to Reargue under CPLR 2221(d)
Pursuant to CPLR 2221(d):
A motion for leave to reargue: (1) shall be identified specifically as such; (2) shall be
based upon matters of fact or law allegedly overlooked or misapprehended by the court in
determining the prior motion, but shall not include any matters of fact not offered on the prior
motion; and (3) shall be made within thirty days after service of a copy of the order determining
the prior motion and written notice of its entry.
See, Cruz v. Masada Auto Sales, Ltd., 41 AD3d 417 (2nd Dept. 2007); and Pryor v.
Commonwealth Land Title Ins. Co., 17 AD3d 434 (2nd Dept. 2005).
Reargument will not be made available if the movant seeks to argue "a new theory of
liability not previously advanced." Frisenda v. X Large Enterprises, 280 AD2d 514, 515
(2nd Dept. 2001). Instead, the movant must demonstrate the matters of fact or law that he
believes the court has misapprehended or overlooked. Hoffmann v. Debello-Teheny, 27 AD3d
743 (2nd Dept. 2006). Absent a showing of misapprehension or the overlooking of a fact, the
court must deny the motion. Barrett v. Jeannot, 18 AD3d 679 (2nd Dept. 2005).
Goldman's motion to reargue is made on the basis that this Court overlooked or
misapprehended the fact that he is personally being held responsible for funds held by G & R.
Goldman further asserts that the instant action has been brought to enable him to "mount a
defense to the criminal charges that he faces."
Goldman cites no cases to indicate that a pending criminal prosecution against an
individual creates an exception to the requirement that a suing party has capacity or standing to
bring the suit. Furthermore, Goldman fails to explain how his being personally responsible for
funds which are in controversy bears any relationship to his having standing to bring such a claim
following a bankruptcy.
A plaintiff who declares bankruptcy lacks capacity to sue on a cause of action if (1)
the cause of action accrued prior to the filing of the bankruptcy petition; (2) the plaintiff knew or
should have known the cause of action existed when he filed for bankruptcy; and (3) the plaintiff
failed to disclose the existence of the cause of action as [*5]an
asset in the bankruptcy hearing. Dynamics Corp. of America v. Marine Midland Bank-New
York, 69 NY2d 191 (1987); Whelan v. Longo, 23 AD3d 459 (2nd Dept. 2005) and Quiros v.
Polow, 135 AD2d 697 (2nd Dept. 1987).
In addition, the doctrine of judicial estoppel prevents a party from asserting a
position that is inconsistent with a position taken in a prior litigation. Black v. White & Case,
280 AD2d 407 (1st Dept. 2001); and McCaffrey v. Shaffer, 251 AD2d 300 (2nd Dept. 1998).
Here, Goldman obtained a discharge in bankruptcy naming Rio and G & R as creditors. That is a
judicial determination in Goldman's favor which cannot be ignored by now claiming he is the
creditor of Rio and G & R.
Goldman fails to refute these longstanding principles, except to assert that the Court
overlooked his being held personally responsible for the funds. The only cases cited by Goldman
indicate that a partner is entitled to an accounting upon dissolution of a partnership. There is no
dispute that a cause of action for an accounting does exist. LoGerfo v. Trustees of Columbia
Univ. in City of New York, 35 AD3d 395, (2nd Dept. 2006). The problem is that, due to his
bankruptcy, the Bankruptcy Trustee is the proper party to pursue such claims; not Goldman who
is also judicially estopped from making an assertion that is inconsistent with those made in his
bankruptcy proceeding. See, Dynamics Corp. of America v. Marine Midland Bank-New York,
supra; Whelan v. Longo, supra; Quiros v. Polow, supra; Black v. White &
Case; supra; and McCaffrey v. Shaffer, supra.
Goldman misapprehends this Court's prior order. That order did not require him to "run to
court to sue on the day when a cause of action accrue[d]." Rather, the Court merely observed that
all of Goldman's causes of action accrued prior to the bankruptcy proceeding; thus
negating his standing to sue. Furthermore, in Goldman's initial moving papers, he indicated that
he was presently being "held personally liable for repaying these sums in a criminal proceeding."
Therefore, Goldman's assertion that the Court overlooked that fact is without merit. Even had the
Court overlooked such a fact, Goldman would still not have standing to bring the present action
as the causes of action accrued prior to the bankruptcy.
Leave to Renew
Pursuant to CPLR 2221(e):
A motion for leave to renew: (1) shall be identified specifically as such; (2) shall be
based upon new facts not offered on the prior motion that would change the prior determination
or shall demonstrate that there has been a change in the law that would change the prior
determination; and (3) shall contain reasonable justification for the failure to present such facts
on the prior motion.
See, 515 Ave. I Corp. v. 515 Ave. I Tenants Corp., 44 AD3d 707, (2nd Dept. 2007);
and Veitsman v. G & M Ambulette
Serv., Inc., 35 AD3d 848 (2nd Dept. 2006).
It is not sufficient that new facts merely be presented to the Court. Specifically, the movant
must demonstrate why facts known at the time of the original motion were not then presented to
the Court. Delvecchio v. Bayside Chrysler Plymouth Jeep Eagle, Inc., 271 AD2d 636 (2nd Dept.
2000). Indeed, "[a] motion for leave to renew is not a [*6]second
chance freely given to parties who have not exercised due diligence in making their first factual
presentation." Lardo v. Rivlab
Transportation. Corp., 46 AD3d 759 (2nd Dept. 2007). However, where the facts could
not be known at the time of the original motion, or a reasonable justification is given for
non-disclosure, the court may properly grant leave to renew. Lafferty v. Eklecco, LLC, 34 AD3d
754 (2nd Dept. 2006).
Goldman proffers five new items of information which he asserts would have
changed the Court's prior determination, had they been known. Those five items are (1) a new
claim by The Lawyer's Fund for Client Protection dated November 27, 2007; (2) information
obtained from the New York County District Attorney's Office indicating that The Lawyer's Fund
for Client Protection had previously paid money on behalf of a G & R client; (3) Goldman had
withdrawn his guilty plea based on newly found exculpatory evidence; (4) the $15,000.00 paid by
Goldman to the client is unrecoverable; and (5) two additional new claims have been submitted
to The Lawyers' Fund for Client Protection to recover against Goldman in the time he was
drafting his reply.
Goldman argues that the three new claims, the unrecoverability of the $15,000.00
and the new information obtained from the New York County District Attorney's Office with
regard to past payment of money relating to a G & R case is new evidence that was unavailable at
the time of the initial motion. However, Goldman admitted in his moving papers that he was
aware of potential claims against him by former clients. Although Goldman provides
correspondence that was generated after the initial motion was made, he offers no reasonable
justification as to why he did not notify the Court of the possibility of the claims in his initial
motion.
More importantly, Goldman does not indicate how this new information should
affect this Court's prior decision. The fact that he is now aware that his previous clients, who
could have previously taken action against him, have now done so in no way changes the effect
of his declaring bankruptcy. Goldman asserted in his bankruptcy papers, which he has now
provided to the Court, that he was a creditor of G & R for the claims which he is now
referencing. Accordingly, he was aware at the time of the bankruptcy proceedings that such
claims existed. Therefore, Goldman's assertion that these new facts should change the Court's
decision in this matter is without merit, as the Court previously considered the possibility of
these claims maturing.
Goldman's argument is also based on the premise that the vacatur of his guilty plea is
a new fact sufficient to cause the Court to reconsider its prior order. At no point does Goldman
indicate how the vacatur of his initial guilty plea should change the Court's decision. The Court's
initial decision did not rely on Goldman's guilty plea as a ground for denying his motion. Rather,
the Court determined that Goldman did not have standing to bring this action based on his
declaration of bankruptcy and because he is estopped from taking inconsistent positions in
separate litigations.
Therefore, this Court's initial determination that Goldman is estopped from taking
inconsistent positions in subsequent litigation and his failure to assert his claims in the
bankruptcy proceeding bars him from asserting them now, is wholly consistent with the new
evidence proffered by Goldman.
Accordingly, Goldman's motion to renew is without merit and must be denied.
[*7]
Accordingly, it is,
ORDERED, that Plaintiff's motion to reargue is denied; and it is further,
ORDERED, that Plaintiff's motion to renew is denied.
This constitutes the decision and order of this Court.
Dated: Mineola, NY
August 7, 2008
Hon. Leonard B. Austin, J.S.C.
Footnotes
Footnote 1:By letter, dated June 24, 2008,
Defendants requested permission to file a sur-reply or, in the alternative, have the Court disregard
Plaintiff's reply due to the introduction of new facts and/or issues not previously raised in initial
moving papers.Defendants' request is denied.