Chabra et al v. Maplewood Partners, L.P. et al

Filing 96

MEMORANDUM & ORDER ADOPTING REPORT AND RECOMMENDATION; For the foregoing reasons, Judge Lindsay's R&R (Docket Entry 92) is ADOPTED in its entirety; Plaintiff's motion to voluntarily dismiss this case pursuant to Federal Rule of Civil Proc edure 41(a)(2) (Docket Entry 80) is GRANTED; and Defendant's cross-motion for sanctions (Docket Entry 81) is DENIED. The Clerk of the Court is directed to mark this matter CLOSED. So Ordered by Judge Joanna Seybert on 3/7/2016. C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------X
SURINDER CHABRA, PARVINDER CHABRA,
and NARINDER CHABRA,
Plaintiffs,
-against-

MEMORANDUM & ORDER
12-CV-1113(JS)(ARL)

MAPLEWOOD PARTNERS, L.P.,
Defendant.
---------------------------------------X
APPEARANCES
For Plaintiffs:
Howard W. Burns, Esq.
Law Offices of Howard W. Burns Jr.
170 Broadway, Suite 609
New York, NY 10038
For Defendant:

Scott Michael Kessler, Esq.
Akerman Senterfitt LLP
666 Fifth Avenue, 20th floor
New York, NY 10103

SEYBERT, District Judge:
Pending before the Court is (1) a motion filed by
plaintiffs Surinder Chabra, Parvinder Chabra, and Narinder Chabra
(collectively, “Plaintiffs”) seeking to voluntarily dismiss this
case pursuant to Federal Rule of Civil Procedure 41(a)(2) (Docket
Entry

80);

(2)

a

cross-motion

filed

by

defendant

Maplewood

Partners, L.P. (“Defendant”) for sanctions (Docket Entry 81); (3)
Magistrate Judge Arlene R. Lindsay’s Report and Recommendation
(“R&R”), recommending that this Court grant Plaintiffs’ motion and
deny

Defendant’s

motion

(Docket

Entry

92);

and

Defendant’s

Objection to Judge Lindsay’s R&R (Docket Entry 93.)

For the

following reasons, the Court ADOPTS Judge Lindsay’s R&R in its
entirety and OVERRULES Defendant’s Objection.
BACKGROUND
This action arose following the collapse of AMC Computer
Corporation (“AMC”).
outstanding shares.

Plaintiffs previously owned all of AMC’s
(R&R at 2.)

In the year 2000, however,

Defendant and its managing partner acquired a controlling interest
in AMC. (R&R at 2.) After the acquisition, Defendant marginalized
Plaintiffs’

roles

in

AMC

and

ultimately led to AMC’s demise.

made

business

decisions

that

(R&R at 2.)

During discovery, Plaintiffs were compelled by Defendant
to withdraw one claim after another when it was revealed that each
claim was meritless.

(See R&R at 5-8.)

For example, the First

Amended Complaint alleged that Defendants’ managing partner and a
limited

partner

made

fraudulent

representations

in

June

2003

concerning an emergency loan that Surinder Chabra allegedly made
to AMC.

(R&R at 6.)

But documents produced during discovery

revealed that a company called Paran Realty actually made the loan
to AMC, not Surinder Chabra. (R&R at 6.) Plaintiffs eventually
agreed to voluntarily dismiss their claims concerning the loan.
(R&R at 7.)

Defendant accomplished the voluntarily dismissal of

a substantial number of Plaintiffs’ claims by serving Plaintiff
with Rule 11 motions.

(See R&R at 8.)

2

On August 18, 2015, Plaintiffs filed a motion seeking to
dismiss all of the remaining claims in this case.
80.)

(Docket Entry

Subsequently, in September 2015, Defendant cross-moved for

sanctions.

(Docket Entry 81.)

On October 9, 2015 the undersigned

referred Plaintiffs’ motion to Magistrate Judge Arlene R. Lindsay
for an R&R on whether the motion should be granted.

(Docket Entry

89.)
On

January

(Docket Entry 92.)

12,

2016

Judge

Lindsay

issued

her

R&R.

The R&R recommends that the Court grant

Plaintiff’s motion seeking to voluntarily dismiss Plaintiffs’
remaining claims and deny Defendant’s motion for sanctions.
at 18.)

(R&R

Judge Lindsay reasoned that Defendant’s sanctions motion

should be denied because “there is no clear evidence in the record
to suggest that counsel failed to conduct any investigation prior
to filing Plaintiffs’ claims or that counsel had knowledge that
the pleadings contained any false allegations.”

(R&R at 17.)

On January 26, 2016 Defendant filed an Objection to Judge
Lindsay’s R&R.

(Objection, Docket Entry 93.)

Defendant argues

that its sanctions motion should be granted because there is
significant evidence that Plaintiffs filed this case in bad faith.
(Objection at 7.)
DISCUSSION
The Court will first discuss the relevant standard of
review before addressing Defendant’s Objection more specifically.
3

I. Standard of Review
“When evaluating the report and recommendation of a
magistrate judge, the district court may adopt those portions of
the report to which no objections have been made and which are not
facially erroneous.”

Walker v. Vaughan, 216 F. Supp. 2d 290, 291

(S.D.N.Y. 2002) (citation omitted).

A party may serve and file

specific, written objections to a magistrate judge’s report and
recommendation within fourteen days of receiving the recommended
disposition.

See FED. R. CIV. P. 72(b)(2).

Upon receiving any

timely objections to the magistrate judge’s recommendation, the
district “court may accept, reject, or modify, in whole or in part,
the findings or recommendations made by the magistrate judge.”
U.S.C. § 636(b)(1)(C); see also FED. R. CIV. P. 72(b)(3).

28

A party

that objects to a report and recommendation must point out the
specific portions of the report and recommendation to which they
object.

See Barratt v. Joie, No. 96-CV-0324, 2002 WL 335014, at

*1 (S.D.N.Y. Mar. 4, 2002) (citations omitted).
When a party raises an objection to a magistrate judge’s
report, the Court must conduct a de novo review of any contested
sections of the report.
815, 817 (S.D.N.Y. 1991).
or

general

objections,

See Pizarro v. Bartlett, 776 F. Supp.
But if a party “makes only conclusory
or

simply

reiterates

his

original

arguments, the Court reviews the Report and Recommendation only
for clear error.”

Pall Corp. v. Entegris, Inc., 249 F.R.D. 48, 51
4

(E.D.N.Y. 2008) (internal quotation marks and citation omitted).
Furthermore, even in a de novo review of a party’s specific
objections, the Court ordinarily will not consider “arguments,
case law and/or evidentiary material which could have been, but
[were]

not,

instance.”

presented

to

the

magistrate

judge

in

the

first

Kennedy v. Adamo, No. 02-CV-1776, 2006 WL 3704784, at

*1 (E.D.N.Y. Sept. 1, 2006) (internal quotation marks and citation
omitted).
II.

Defendant’s Objection
Defendant objects to the R&R on the grounds that Judge

Lindsay failed to “consider the entire record of Plaintiffs’ and
their

counsel’s

cavalier

pattern

of

failing

investigate the claims asserted in this case.”

to

appropriately

(Objection at 1.)

However, Defendant rehashes the exact same points in his Objection
that he made in his original motion for sanctions. (Compare Def.’s
Objection at 3-4 with Def.’s Br., Docket Entry 82, at 2-3.)
Lindsay

already

analyzed

the

conduct

Defendant

Judge

claims

is

sanctionable, and found insufficient evidence to conclude that
Plaintiffs’ claims were clearly baseless at the start of the case.
(R&R at 17.)
Defendant argues that this case is exactly like the
plaintiff’s conduct in Reichmann v. Neumann, 553 F. Supp. 2d 307,
309 (S.D.N.Y. 2008), where defense counsel wrote a letter to
plaintiff’s counsel enclosing a settlement agreement that should
5

have put the plaintiff and his attorneys on notice that the claims
lacked merit.
plaintiff

Id. at 320 (See Objections at 8).

pursued

the

case

and

repeatedly

There, the

changed

his

legal

theories until documents produced by a third party ultimately
foreclosed the claims. Id. at 319. The Court found that sanctions
were

warranted

litigation

because

that

the

it

was

clear

plaintiff’s

from

the

claims

outset

lacked

of

merit,

the
but

plaintiff’s attorneys failed “to investigate any of the obvious
and accumulating clues to the truth.”

Id. at 321.

This case is

distinguishable from the conduct in Reichmann because there is no
evidence

that

Plaintiff’s

counsel

was

put

on

notice

beginning of the case that their claims lacked merit.

at

the

Rather,

Plaintiffs agreed to drop each of their claims during discovery.
Although it is troubling that Defendants were forced to file
numerous Rule 11 motions to compel Plaintiffs to withdraw their
claims, Plaintiffs did in fact withdraw the claims pursuant to
Rule 11’s safe harbor provision.

Star Mark Mgmt., Inc. v. Koon

Chun Hing Kee Soy & Sauce Factory, Ltd., 682 F.3d 170, 177 (2d
Cir.

2012)

(explaining

that

the

purpose

of

the

safe

harbor

provision is “to give the opponent notice and an opportunity to
consider withdrawing the filing without the court’s involvement”).
Since Defendant cannot point to any evidence or law that Judge
Lindsay overlooked, the Court will not disturb Judge Lindsay’s

6

conclusion that sanctions are not warranted here.

Therefore,

Defendant’s Objection is OVERRULED.
CONCLUSION
For the foregoing reasons, Judge Lindsay’s R&R (Docket
Entry 92) is ADOPTED in its entirety; Plaintiff’s motion to
voluntarily dismiss this case pursuant to Federal Rule of Civil
Procedure 41(a)(2) (Docket Entry 80) is GRANTED; and Defendant’s
cross-motion for sanctions (Docket Entry 81) is DENIED.

The Clerk

of the Court is directed to mark this matter CLOSED.

SO ORDERED.
/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated:

March
7 , 2016
Central Islip, New York

7