Sterling Commercial Credit, LLC v. Federal Electrical Utilities, Inc. et al

Filing 50

ORDER granting 37 Motion to Reopen Case; denying 48 Motion to Compel. For the reasons set forth herein, the court grants Plaintiff's motion to re-open the case, and denies at this time Plaintiff's motion to enter a default judgment. C ounsel for all parties are directed, within two weeks of the date of this Order, to either (1) contact the Magistrate Judge assigned to this matter for the purpose of conducting limited discovery on whether the default occurred, or (2) set a date for the hearing on that issue before this court. In addition, Defendants' motion to compel prior counsel to turn over files, docketentry # 48 , is also denied without prejudice to renew if necessary before the Magistrate Judge. ( Ordered by Judge Leonard D. Wexler on 8/15/2012.) (Fagan, Linda)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

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STERLING COMMERCIAL CREDIT, L.L.C.,
Plaintiff,
-againstFEDERAL ELECTRICAL UTILITIES, INC.,
CABLELOT SYSTEM, INC., SHERRI
HOTTON and MARK HOTTEN,
Defendant.

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MEMORANDUM AND ORDER

cv 10-4004
(Wexler, J.)

FILED

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APPEARANCES:

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LONG ISLAND OFFICE

ROE TAROFF TAITZ & PORTMAN LLP
BY: LINDA D. CALDER, ESQ.
Attorneys for Plaintiff
One Corporate Drive, Suite I 02
Bohemia, New York 11716
ROBERT L. FOLKS & ASSOCIATES, L.L.P.
BY: ROBERT L. FOLKS, SR., ESQ.
Attorneys for Defendants
510 Broad Hollow Road, Suite 305
Melville, New York 11747
LAW OFFICE OF BRIAN J. DAVIS
BY: BRIAN J. DAVIS, ESQ.
Attorneys for Defendants
400 Garden City Plaza, Suite 450
Garden City, New York 11530
WE)(LER, District Judge
Plaintiff Sterling Commercial Credit, L.L.C. (the "Plaintiff' or "Sterling") moves this
court to re-open this action and enter a judgment against the defendants for the relief sought in
Plaintiffs complaint, on the ground that the defendants have defaulted in their obligations under
a settlement agreement previously executed by the parties.

I.

Background
Plaintiff initiated this action in September 2010 alleging ten causes of action against

defendants Federal Electrical Utilities, Inc. ("Federal"), Cablelot System, Inc. ("Cablelot"),
Sherri Hotton and Mark Hotten (collectively the "Defendants"). Plaintiff claims that, amongst
other things, Federal and Cablelot breached factoring agreements with the Plaintiff by which the
Plaintiff purchased certain accounts receivable. According to the Plaintiff's complaint, the
individual defendants provided personal guarantees.
Pursuant to a settlement agreement dated July 29, 2011 (the "Settlement Agreement" or
"Agreement"), the parties settled the case, and it was subsequently closed by the court. Plaintiff
now brings the instant motion to reopen the case and enter a judgment against the Defendants,
alleging that the Defendants have defaulted in their obligations under the Settlement Agreement.
Plaintiff argues that under the terms of the Agreement, in the event of a default, the Plaintiff is
entitled to enter judgment in the full amount sought in the complaint, and thus seeks a judgment
in the amount of$1,239,517.38 with interest from September 1, 2010, and attorneys' fees in the
amount of$152,664.00, plus costs of this action.
Defendants respond by arguing that much of Plaintiff's basis for the motion -- that
Plaintiff was unaware that certain accounts receivable at issue were connected to Defendants'
sister company and were the subject of a protracted bankruptcy proceeding-- is not true.
Defendants also disagree with Plaintiff's claim that certain satisfactions of liens required by the
Settlement Agreement were never provided. Finally, Defendants request that the matter be
referred to the Bankruptcy Court, which the Plaintiff opposes, claiming that the Bankruptcy
Court has resolved the relevant issues with the relevant parties, and has no role in this dispute.

II. The Motion
The current record before the court is insufficient for the purpose of determining whether
the default alleged by the Plaintiff actually occurred. Therefore, the court grants Plaintiff's
motion to re-open the case, and denies at this time Plaintiff's motion to enter a default judgment.
Counsel for all parties are directed, within two weeks of the date of this Order, to either (1)
contact the Magistrate Judge assigned to this matter for the purpose of conducting limited
discovery on whether the default occurred, or (2) set a date for the hearing on that issue before
this court. In addition, Defendants' motion to compel prior counsel to turn over files, docket
entry #48, is also denied without prejudice to renew if necessary before the Magistrate Judge.
SO ORDERED.

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0 ARD D. WEXLER
UNITED STATES DISTR CT JUDGE

Dated: Central I~, New York
Augustl)2012