Jericho Group Ltd et al v. Mid-Town Development Limited Partnership et al

Filing 150

ORDER granting 109 Motion to Dismiss for Failure to State a Claim; granting 111 Motion to Dismiss for Failure to State a Claim; granting 113 Motion to Dismiss for Failure to State a Claim; granting 117 Motion to Dismiss for Failure to State a Claim; granting 131 Motion to Dismiss -- For the reasons set forth in the ATTACHED MEMORANDUM AND ORDER, Defendants' motions to dismiss are granted and the Complaint is dismissed with prejudice. Plaintiff and Plaintiff's princ ipals, including but not limited to, Samuel and Chana Pfeiffer, are sanctioned $10,000, payable jointly and severally to the Clerk of the Court and are enjoined from commencing any new proceedings against Defendants or their attorneys for claims relating to the transactions or occurrences alleged in the Complaint filed in this action without first obtaining permission from the court in which the action is to be filed and by showing that court a copy of this Order. Plaintiff and Plaintiff&# 039;s principles may pay the sanctions in cash or by certified check made out to the Clerk of the Court (note the docket number on the memo line of the check) on or before September 30, 2015. Defendant Goebel's request for attorneys' fees is referred to the magistrate judge to conduct an inquest. Any other defendant wishing to make a motion for sanctions and/or attorney's fees must do so by September 4, 2015. The Clerk of the Court is directed to close this case. SO ORDERED by Judge Dora Lizette Irizarry on 8/6/2015. (Irizarry, Dora)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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JERICHO GROUP LTD. and JERICHO CO., :
:
Plaintiff,
:
:
-against:
:
MID-TOWN DEVELOPMENT LIMITED
:
PARTNERSHIP, MIDTOWN
:
DEVELOPMENT. L.P., EDWARD G.
:
IMPERATORE, MAURICE L. STONE,
:
EDWARD W. ROSS, ARTHUR E.
:
IMPERATORE, WR WEST SIDE
:
ASSOCIATES, HADRIAN PROPERTIES
:
LTD, FANFARE ENTERPRISE INC,
:
ARCORP PROPERTIES, JERRART
:
VENTURE PROPERTIES, HARWOOD
:
LLOYD LLC, GEORGE BERGER,
:
JEFFREY SHORE, PHILIPS NIZER LLP,
:
FREDRICK E. SHERMAN, TODD R.
:
GEREMIA, JONES DAY, BROWN
:
HARRIS STEVENS LLC, ELAINE
:
OSBORN EMMET, MICHAEL A.
:
SZEGDA, BAYSTONE EQUITIES INC,
:
ROBERT B. GOEBEL, RICHARD
:
MARASSE, LISA SOLOMON, JOHN DOE
:
1-10 and XYZ CORPORATION 1-10,
:
:
Defendants.
:
:
---------------------------------------------------------- X

MEMORANDUM & ORDER
14-CV-2329 (DLI)(VMS)

DORA L. IRIZARRY, U.S. District Judge:
Plaintiff Jericho Group Ltd. 1 (“Plaintiff”) filed suit before this Court on April 10, 2014
against Defendants Mid-Town Development Limited Partnership, Midtown Development L.P.,
Edward G. Imperatore, Maurice L. Stone, Edward W. Ross, Arthur E. Imperatore, George
Berger, Jeffrey Shore, Philips Nizer LLP, Fredrick E. Sherman, Todd R. Geremia, Jones Day,
1

Plaintiff voluntarily dismissed Plaintiff Jericho Co. from this action on January 26, 2015. (See Notice of Voluntary
Dismissal, Dkt. Entry No. 96.)

1

Michael A. Szegda, Baystone Equities Inc., Robert B. Goebel, and Lisa Solomon (collectively
the “Defendants”) 2. Defendants, except for Defendants Szegda and Baystone Equities, Inc. who
defaulted, moved to dismiss the action. Plaintiff then filed an Amended Verified Complaint (the
“Complaint”) on November 4, 2014.
The Complaint pleads twenty causes of action including fraud on Plaintiff and the New
York State Supreme and Appellate Division courts, violations of the RICO statute, breach of
contract, tortious interference with contract (Claims 1-15 and 17), conversion (Claim 16),
intentional infliction of emotional distress (Claim 18), violations of New York Judiciary Law §
487 (Claim 19), and violations of Plaintiff’s civil rights under the United States Constitution
(Claim 20). (Compl. ¶¶ 670-867.) Plaintiff seeks, among other things, a declaration that a
contract Plaintiff previously entered into with Defendant Midtown Development LP (the
“Contract”) remains in effect and that Defendants defrauded Plaintiff and the state courts,
specific performance of the Contract, and damages of at least $200,000,000. (Id.) Plaintiff also
makes allegations against Defendant Szegda and Defendant Baystone Equities Inc. about an
unrelated incident.
Defendants again moved to dismiss the Complaint for various reasons including that: 1)
the Complaint fails to comply with Federal Rule of Civil Procedure Rule 8(a); 2) Plaintiff’s
claims are barred under the doctrine of res judicata; 3) the Court does not have jurisdiction to
review the state court judgments; 4) and Plaintiff has failed to state a claim for which relief can
be granted. (See generally Mems. of Law in Supp. of Defs. Mots. to Dismiss, Dkt. Entry Nos.
109, 112, 114, & 118.) Defendants Goebel and Solomon additionally requested sanctions and
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Although named in the original complaint, Plaintiff dismissed Defendants WR West Side Associates, Hadrian
Properties Ltd, Fanfare Enterprise Inc., Arcorp Properties, Jerrart Venture Properties, Brown Harris Stevens LLC,
Elaine Osborn Emmet, Harwood Lloyd LLC, and Richard Marrasse from the action on Dec. 25, 2014. (See Notice
of Voluntary Dismissal, Dkt. Entry No. 86.)

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injunctive relief in their motions to dismiss. (See generally Mem. of Law in Supp. of Def.
Goebel’s Mot. to Dismiss, Dkt. Entry No. 112; Mem. of Law in Supp. of Def. Solomon’s Mot.
to Dismiss, Dkt. Entry No. 114.) Defendant Goebel also requested attorney’s fees pursuant to a
Release Agreement signed by Plaintiff, Plaintiff’s principal, Samuel Pfeiffer, and Defendant
Goebel. (See generally Mem of Law in Supp. of Def. Goebel’s Mot to Dismiss.) Defendants
Mid-Town Development Limited Partnership, Midtown Development LP, Edward G.
Imperatore, Maurice L. Stone, Edward W. Ross, Arthur E. Imperatore, George Berger Esq.,
Jeffrey Shore, ESQ., and Phillips Nizer LLP (collectively the “Midtown Defendants) also
requested injunctive relief. (See Mem. of Law in Supp. of Defs. Mot. to Dismiss, Dkt. Entry No.
109.)
On March 4, 2015, the Court held a status conference where it sua sponte dismissed
Claims 1-15, 17, 18, and 19 as barred under the doctrine of res judicata (Claims 1-15, 17 and 19)
and for failure to state a claim for which relief can be granted under Rule 12(b)(6) (Claim 18).
(See Minute Entry for Mar. 3, 2015 Status Conference, Dkt. Entry No. 108; Tr. of Mar. 4, 2015
Status Conference at 32, Dkt. Entry No. 133.) The Court also dismissed Defendant Solomon
from the action. (See Tr. of Mar. 4, 2015 Status Conference at 40.) On March 25, 2015, Plaintiff
voluntarily dismissed the action against Defendants George Berger, Jeffrey Shore, Phillips Nizer
LLP, Fredrick E. Sherman, Todd R. Geremia, and Jones Day. In its response to the motions to
dismiss, Plaintiff does not oppose dismissal of Claim 20. Therefore, Claim 20 is dismissed on
consent and the Court now addresses Claim 16 and Defendants’ requests for injunctive relief,
sanctions, and attorney’s fees. For the reasons set forth below, the Court dismisses the remaining
claim, issues an injunction preventing Plaintiff or Plaintiff’s principals from further filing any
action based on the same transactions or occurrences as alleged in the Complaint, orders Plaintiff

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to pay $10,000 in sanctions, and refers the issue of Defendant Goebel’s attorney fees to the
magistrate judge for an inquest.
BACKGROUND
This is Plaintiff’s sixth lawsuit attempting to reinstate a contract it canceled over a decade
ago. The history of the dispute is most clearly described in Jericho Group, Ltd. v. Midtown
Development, 32 A.D.3d 294 (1st Dep’t 2006) (“Jericho I”). In sum, on June 18, 2002, Plaintiff
and Defendant Midtown Development LP (“Midtown”) entered into a contract for Plaintiff to
purchase two undeveloped properties in Manhattan for $28,000,000, with a $250,000 deposit
(the “Contract”). The Contract provided that, prior to closing, there would be a 75-day study
period and, during the study period, Midtown would provide Plaintiff with any documents
related to the condition of the property that Plaintiff reasonably requested. After unsuccessfully
attempting to negotiate an extension of the study period from September 2, 2002 to a later date,
and about a week before the expiration of the study period, the parties to the Contract discussed
an alleged oil spill that occurred at or near the property, as well as exhibits to a development
agreement between Midtown and Amtrak. The day after the study period expired, Plaintiff sent
a letter to Midtown stating that Plaintiff wanted its $250,000 down payment returned, in
accordance with the contract, unless Midtown extended the study period or indemnified Plaintiff
for any cleanup of the alleged oil spill. Id. at 295-96. On September 12, 2002, after Midtown
requested an express statement as to whether Plaintiff was cancelling the contract, Plaintiff
provided “confirmation” that the September 3, 2002 letter was “intended as the exercise of [its]
right [under the Contract] . . . to cancel said [C]ontract,” and Midtown returned the down
payment to Plaintiff on September 13, 2002. Id. at 297.

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Plaintiff’s first action, which was filed in New York State Supreme Court, New York
County in November 2004, alleged that Midtown breached the Contract, failed to return the
down payment and defrauded Plaintiff by failing to disclose information about the oil spill and
easements to the property held by Amtrak. The New York State Appellate Division, First
Department (“Appellate Division”), rejected these claims twice. See Jericho I, 32 A.D.3d at 298300; Jericho Grp., Ltd. v. Midtown Dev., L.P., 47 A.D.3d 463, 463-64 (1st Dep’t 2008), lv
dismissed 11 N.Y.3d 801 (2008) (“Jericho II”).
Plaintiff then initiated a second action against Midtown and its attorneys alleging that the
first state court judgment against it had been procured by fraud. The trial court dismissed that
lawsuit as well and held that Plaintiff’s claims were barred under the doctrines of res judicata
and collateral estoppel. The Appellate Division unanimously affirmed the dismissal. See Jericho
Grp., Ltd. v Midtown Dev., L.P., 67 A.D.3d 431, 431-32 (1st Dep’t 2009), lv denied 14 N.Y.3d
712 (2010) (“Jericho III”). Since losing the second action, Plaintiff has initiated three more state
court actions against Midtown and various other defendants, both which Plaintiff attempted to
discontinue. Most recently, the New York Appellate Division, First Department dismissed
Plaintiff’s third state court action as barred by the doctrines of res judicata and collateral
estoppel. (See Appellate Division Order attached to Letter dated June 18, 2015 from Midtown
Defs., Dkt. Entry No. 139.) The Appellate Division remanded the case for the trial court to
address Defendants’ requests for sanctions and injunctive relief. (Id.) On June 23, 2015, the trial
court enjoined Plaintiff from filing any new action against Defendants based on the same claims
and also sanctioned Plaintiff by imposing a $250 fine.
As discussed at the March 4, 2015 status conference, the Complaint alleges the identical
claims that were adjudicated in the first and second state court actions; namely, that Plaintiff

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never cancelled the Contract, Midtown never returned Plaintiff’s $250,000 down payment, and
that Midtown fraudulently obtained the state court judgments by misrepresenting the facts to the
state courts. However, the instant action also alleges that the fraud committed on the state courts
was part of an elaborate RICO scheme involving the Midtown Defendants and their lawyers in
their individual capacities (Defendants George Berger, Jeffrey Shore, Philips Nizer LLP,
Fredrick Sherman, Todd Geremia, and Jones Day), and Plaintiff’s lawyers in the original
Contract negotiation (Defendant Szegda) and in the second action (Defendants Goebel and Lisa
Solomon). Plaintiff also alleges that Defendant Szegda misappropriated $150,000 of Plaintiff’s
money that he had been holding in escrow. (Compl. ¶¶ 139-46, 220, 547-61, 826-35.)
DISCUSSION
I.

The Court Declines to Exercise Supplemental Jurisdiction over the Remaining
Claim (Claim 16)
The only remaining claim in this action involves the dispute between Plaintiff and

Defendants Szegda and Baystone Equities, Inc. over whether Defendant Szegda or his alter ego,
Baystone Equities, Inc. stole $150,000 from Plaintiff they held in escrow. All the federal law
claims have been dismissed. Plaintiff has not asserted any independent basis justifying this
Court’s jurisdiction over this state law claim. Upon its own review of this matter, the Court finds
no independent federal subject matter jurisdiction exists to adjudicate the remaining claim and
declines to exercise supplemental jurisdiction over it pursuant 28 U.S.C. § 1367. Claim 16 is
purely a state law question, as it involves a separate contract dispute. There also is no diversity
jurisdiction pursuant to 28 U.S.C. § 1332 because, according to Plaintiff’s pleadings, Plaintiff
and Defendant Baystone Equities, Inc. are both citizens of New York. (See Compl. ¶¶ 32-33, 4243.) It is of no moment that these Defendants have defaulted, as the Court is not able to enter
default judgment where it lacks subject matter jurisdiction. See Transatlantic Marine Claims

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Agency, Inc. v. Ace Shipping Corp., Div. of Ace Young Inc., 109 F.3d 105, 108 (2d Cir. 1997)
(addressing in a similar case “whether the default judgment itself is void for lack of subject
matter jurisdiction”). Therefore, Claim 16 is dismissed for lack of subject matter jurisdiction.
II.

Injunctive Relief
“[I]n determining whether or not to restrict a litigant's future access to the courts” through

a filing injunction, the court should consider the following factors:
(1) the litigant's history of litigation and in particular whether it entailed vexatious,
harassing or duplicative lawsuits; (2) the litigant's motive in pursuing the litigation, e.g.,
does the litigant have an objective good faith expectation of prevailing?; (3) whether the
litigant is represented by counsel; (4) whether the litigant has caused needless expense to
other parties or has posed an unnecessary burden on the courts and their personnel; and
(5) whether other sanctions would be adequate to protect the courts and other parties.
Safir v. U.S. Lines, Inc., 792 F.2d 19, 24 (2d Cir.1986). A litigant must be provided with notice
and an opportunity to be heard before a filing injunction is imposed. See Moates v. Barkley, 147
F.3d 207, 208 (2d Cir.1998).
As an initial matter, Plaintiff was given notice and an opportunity to be heard, as the
Court ordered Plaintiff to respond to Defendants’ requests for a filing injunction. (See Order of
Mar. 9, 2015.) Plaintiff opposed the issuing of a filing injunction in its response to Defendants’
motions to dismiss. (See Pl.’s Mem. in Opp’n to Requests for Sanctions and Injunction (“Pl’s
Opp’n”) at 10-12; Dkt. Entry No. 125.) However, the Court finds Plaintiff’s arguments in
opposition unavailing, and holds that Plaintiff’s actions and litigation history meet the factors for
the issuance of a filing injunction, and Defendants’ request is granted. 3
First, Plaintiff has a history of pursuing vexatious, harassing, and duplicative lawsuits
against the Defendants as this is now the fifth lawsuit that Plaintiff has brought regarding the
same cancelled Contract. Second, in pursuing this litigation, Plaintiff does not have an objective
3

Notably, on June 23, 2015, the state trial court both enjoined Plaintiff from filing any new action against
Defendants based on the same claims and sanctioned Plaintiff. (See p.5 supra.)

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good faith expectation of prevailing. The lawsuit involves the same Defendants and claims that
Plaintiff litigated to completion twice in state court, losing both times in the lower and appellate
courts. Third, although Plaintiff was represented by counsel in all of its previous actions and the
present one, Plaintiff clearly made a habit of finding an attorney willing to litigate his claims as
he presented them. Plaintiff also had a new attorney for each of his new actions. Furthermore,
the fact that Plaintiff had counsel did not prevent its principal, Samuel Pfeiffer, from filing
baseless, harassing, and demeaning letters and motions against Defendants on the docket
throughout the litigation of this case, despite repeated admonitions from the Court that he desist
in doing so. Thus, the fact that Plaintiff had an attorney had no bearing on the legitimacy of this
case. Fourth, Plaintiff plainly has caused needless expense to Defendants and frivolously has
burdened this Court and the court’s personnel. In litigating this action alone, Defendants have
drafted eight motions to dismiss and the Midtown Defendants were forced to move to vacate the
lis pendens that attached to the property when Plaintiff filed this action. 4 This does not include
the countless hours Defendants likely spent litigating the Plaintiff’s first two state court actions
through to the Appellate Courts and on remand to address injunctive relief and sanctions against
Plaintiff. Throughout this case, Plaintiff and Samuel Pfeiffer also taxed the Court’s scarce
resources in responding to the numerous meritless motions and letters that it filed on the docket.
Lastly, an injunction appears to be the only remedy available to protect the courts and
Defendants from future litigation as the Court has every reason to believe that Plaintiff will
continue to abuse the federal and state judicial systems.
Therefore, Defendants’ requests for a filing injunction are granted.

Plaintiff and

Plaintiff’s principals, including but not limited to, Samuel and Chana Pfeiffer, are enjoined from
4

It bears noting that some of the Defendants in this case are elderly and in poor health. The stress and strain of the
vicious, vexatious, and frivolous allegations made against Defendants, collectively, surely has had an unquantifiable
toll on them.

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commencing any new proceedings against Defendants or their attorneys for claims relating to the
transactions or occurrences alleged in the Complaint filed in this action without first obtaining
permission from the Court in which the action is to be filed and by showing that court a copy of
this Order.
III.

Sanctions
“If a party wishes to move for Rule 11 sanctions, the Rule 11 motion must ‘be made

separately from other motions or requests and shall describe the specific conduct alleged to
violate’” the rule. Martens v. Thomann, 273 F. 3d 159, 178 (2d Cir. 2001) (quoting Fed. R. Civ.
P. 11(c)(1)(A)) (emphasis in original). However, a court may impose sanctions sua sponte after
giving the party “notice and an opportunity to be heard.” Sanko S.S. Co. v. Galin, 835 F.2d 51,
53 (2d Cir. 1987). Before awarding sanctions, the court must also “set forth its reasons or
findings” as to why sanctions are warranted. Id. at 53.
Defendants Goebel and Solomon failed to comply with Rule 11’s requirements in moving
for sanctions in their motions to dismiss, and therefore, the Court does not issue sanctions
pursuant to their request. However, the Court provided Plaintiff, Plaintiff’s principal Samuel
Pfeiffer, and Plaintiff’s counsel with notice of its intention to impose sanctions and an
opportunity to be heard, and therefore, the Court will issue sanctions under Rule 11(c)(3) of the
Federal Rules of Civil Procedure for violations of Rule 11(b)(1).
At the March 4, 2015 status conference, the Court made it very clear that it found
Plaintiff’s lawsuit to be “utterly frivolous” and “clearly intended . . . to be vexatious and to
harass defendants” as this is now the fifth action Plaintiff has brought over the same transaction
that occurred nearly thirteen years ago, each lawsuit attaching a new notice of lis pendens
preventing the property from being sold. (See Tr. of Mar. 4, 2015 Status Conference at 12-13.)

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Additionally, the Court stated its finding on the record that Samuel Pfeiffer obviously has a
“personal vendetta” against Defendants, that motivated the filing of these numerous and
frivolous actions. (Id. at 13.) Samuel Pfeiffer expressed as much in the letters containing
baseless accusations against Defendants that he continuously filed on the docket. (See, e.g.
Letter of Feb. 1, 2015 by Samuel Pfeiffer, Dkt. Entry No. 100; Letter of May 8, 2015 by Samuel
Pfeiffer, Dkt. Entry No. 137.) The Complaint included baseless claims, such as that Plaintiff, a
corporation, suffered intentional infliction of emotional distress, which claim the Court discussed
on the record. (Id. at 13-14.)
In addition to dismissing most of the claims orally at the conference and warning Plaintiff
the action was meritless, the Court also admonished Plaintiff that it would consider sanctions in
this case and directed Plaintiff to respond to Defendant Goebel and Solomon’s requests for
sanctions. (Id.) Despite this warning, Plaintiff continued to pursue the action and Plaintiff and
Samuel Pfeiffer filed meritless motions that required the parties and the Court to expend
substantial resources in order to address them. (See Letter Mot. to Stay, Dkt. Entry No. 135.)
Plaintiff was both warned and given an opportunity to be heard.
Plaintiff argues that sanctions should not be imposed against it because it was represented
by counsel and the Court cannot impose sanctions on a represented party, its claims were not
frivolous, and it told its prior counsel it probably was not worth proceeding with this action. (See
Pl.’s Opp’n 6-10; Decl. of Samuel Pfeiffer attached to Pl.’s Opp’n.) The Court finds Plaintiff’s
reasoning unpersuasive. First, the Court only is restricted from sanctioning represented parties
for violations of Rule 11(b)(2).

See Fed. R. Civ. P. 11(c)(5)(A).

However, the Court is

sanctioning Plaintiff for violations of Rule 11(b)(1), and specifically for bringing and
maintaining this action for the purpose of harassing Defendants and causing unnecessary delay.

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After the status conference, Plaintiff had the opportunity to withdraw its Complaint,
which the Court suggested strongly that it do.

Instead, Plaintiff hired another attorney to

continue litigating the case and Samuel Pfeiffer filed a 74-page motion accusing Defendant
Goebel of committing a fraud on the Court, the same claim made in the underlying Complaint.
As the Court stated at the status conference, it is manifest
from the papers that Plaintiff has a personal vendetta against Defendants and that
Plaintiff filed this lawsuit as part of that vendetta. Given the vexatious multiplicity of actions
filed, this Court can only reasonably conclude that Plaintiff’s actions were undertaken to harass
defendants and prevent the sale of the property through the attachment of the lis pendens, a
course of conduct Plaintiff has undertaken for thirteen years. The Court has also spent valuable
time and resources addressing this action. Therefore, the Court finds a $10,000 sanction
warranted.
IV.

Attorney’s Fees Pursuant to the Release Agreement
The Court now turns to the remaining issue of Defendant Goebel’s counterclaim for

attorney’s fees related to a Release Agreement that was executed on May 16-17, 2013 and signed
by Defendant Goebel, Plaintiff’s principal, Samuel Pfeiffer, and a representative for Plaintiff.
“When the district court dismisses all claims over which it has original jurisdiction, the court has
discretion to consider [a] compulsory counterclaim even if there is no independent basis for
jurisdiction.” Reid v. IBM Corp., 1997 WL 357969, at *17 (S.D.N.Y. June 26, 1997) (citing 28
U.S.C § 1367(c)(3)). A counterclaim is considered compulsory if it “arises out of the transaction
or occurrence that is the subject matter of the opposing party’s claim” and the “‘essential facts of
the various claims are so logically connected that considerations of judicial economy and
fairness dictate that all the issues be resolved in one lawsuit.’” Id. (quoting Harris v. Steinem,

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571 F.2d 119, 123 (2d Cir.1978)). Defendant Goebel’s counterclaim for a breach of the Release
Agreement is compulsory as the Release Agreement bars exactly the type of claims that Plaintiff
asserted in his action, and it is in the interest of judicial economy to address the counterclaim
while resolving the other issues in this case. See id. at 17-18; Frumkin v. Int'l Bus. Machines
Corp., 801 F. Supp. 1029, 1045 (S.D.N.Y. 1992).
The Release Agreement has a choice of law provision stating that it is “entered into
under, and shall be governed for all purposes by, New York State law.” (Release Agreement
attached as Exhibit C to Aff. of Robert Goebel in Supp. of Mot. to Dismiss, Dkt. Entry No. 111.)
Under New York law, “a contract is unambiguous when it has a definite and precise meaning,
unattended by danger of misconception in the purport of the [contract] itself, and concerning
which there is no reasonable basis for a difference of opinion.” Krumme v. WestPoint Stevens
Inc., 238 F.3d 133, 138-39 (2d Cir. 2000) (internal quotations omitted). Although Plaintiff does
not dispute the terms of the Release Agreement, the Court interprets its terms with this standard
in mind. 5
The Release Agreement states that:
Jericho and Pfeiffer and each of their affiliates, successors, assigns, partners, members,
attorneys, agents, and representatives (collectively referred to as the “Jericho Parties”
hereby unconditionally release, acquit and forever discharge Goebel and his successors,
assigns, attorneys, agents, and representatives (collectively referred to herein as the
“Goebel Parties”), from any and all possible future action and actions; cause and causes
5

Plaintiff informed the Court that it omitted its arguments against enforcement of the Release Agreement because
the Court did not specifically order Plaintiff to respond to that argument and asked for leave to file an additional
brief addressing this counterclaim. (See Letter of May 8, 2015; Dkt. Entry No. 136.) The Court finds this argument
disingenuous at best and utterly lacking in merit as the issue of attorney fees also was discussed at the conference.
Plaintiff was directed to respond to all Defendants’ motions. Plaintiff bears the responsibility for asserting its own
rights and defenses in this action. Plaintiff may not use the Court as an excuse for its own omission. Plaintiff
defaulted in asserting a defense to this counterclaim, and the Court, therefore, deems any defense abandoned. See
Jackson v. Fed. Exp., 766 F.3d 189, 196 (2d Cir. 2014) (“Generally, but perhaps not always, a partial response
reflects a decision by a party's attorney to pursue some claims or defenses and to abandon others. Pleadings often are
designed to include all possible claims or defenses, and parties are always free to abandon some of them.”)
Furthermore, the terms of the Release Agreement are clear, and the Court doubts Plaintiff could have made a
plausible argument to the contrary.

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of action; suits; . . . contracts; controversies; agreements; promises; . . . claims; damages;
. . . allegations; demands; and liabilities [that] have accrued in whole or in part or ever
may accrue in whole or in part against Goebel Parties based upon facts or conduct
occurring prior to the date of this Agreement, whether known or unknown, and the
Jericho Parties shall be enjoined from asserting, bringing, assisting, participating in or
furthering in any manner any action or proceeding based upon the matters released herein
....
(Release Agreement at section V.) The Release Agreement further provides for remedies,
including attorney’s fees. It goes on to state that, “[i]n the event that litigation shall arise out of
this Agreement between the parties, the prevailing party shall be entitled to seek to recover
reasonable attorneys’ fees and expenses from the non-prevailing party.” (Id. at section VII. A.)
Defendant Goebel is the prevailing party as his motion to dismiss was granted. See Tornheim v.
Eason, 363 F.Supp.2d 674, 678 (S.D.N.Y. 2005) (awarding attorneys' fees to defendants after
defendants prevailed on motion to dismiss), aff'd 175 F. App'x 427 (2d Cir.2006); see also
Neroni v. Coccoma, 2014 WL 3866307, at *2 (N.D.N.Y. Aug. 6, 2014) (declaring defendant the
prevailing party where the action was dismissed as frivolous and vexatious).
The terms of the release agreement are unequivocal that Plaintiff relinquished his right to
sue Defendant Goebel over the failed Contract and any other incidents related to the failed
Contract, which is the entirety of Plaintiff’s claims against Defendant Goebel.

Therefore,

Plaintiff breached the release agreement when it initiated this action. As the Court sees no
reason to question the validity of the Release Agreement and as Plaintiff is the non-prevailing
party, Plaintiff is liable for attorney’s fees.

The Court refers the issue of the amount of

reasonable attorney’s fees owed Defendant Goebel to the magistrate judge to conduct an inquest
to determine an appropriate amount.

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CONCLUSION
For the reasons set forth above, Defendants’ motions to dismiss are granted and
Plaintiff’s Complaint is dismissed with prejudice. Plaintiff and Plaintiff’s principals, including
but not limited to, Samuel and Chana Pfeiffer, are sanctioned $10,000, payable jointly and
severally to the Clerk of the Court and are enjoined from commencing any new proceedings
against Defendants or their attorneys for claims relating to the transactions or occurrences
alleged in the Complaint filed in this action without first obtaining permission from the court in
which the action is to be filed and by showing that court a copy of this Order. Plaintiff and
Plaintiff’s principles may pay the sanctions in cash or by certified check made out to the Clerk of
the Court (note the docket number on the memo line of the check) on or before September 30,
2015. Defendant Goebel’s request for attorneys’ fees is referred to the magistrate judge to
conduct an inquest.

Any other defendant wishing to make a motion for sanctions and/or

attorney’s fees must do so by September 4, 2015.

SO ORDERED.
Dated: Brooklyn, New York
August 6, 2015
/s/
DORA L. IRIZARRY
United States District Judge

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