Lambe et al v. Kahlon et al

Filing 108

MEMORANDUM AND ORDER denying in part and dismissing in part 95 Motion for Summary Judgment. For the reasons discussed herein, Defendants' motion for summary judgment is denied, except as to Plaintiffs' claims for negligence and malpractice, which are hereby dismissed. Counsel are reminded that jury selection is scheduled for January 19, 2016 at 9:30am. (Ordered by Judge Leonard D. Wexler on 1/14/2016.) (Fagan, Linda)

FlLED

IN CLERK'S OFFICE
·
US DISTRICT COURT E 0 NY

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

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LONG ISLAND OFFICE

TROY LAMBE, SUNRAY SOLAR INC., and
MA)( DIVERSIFIED INC.,

JAN 14:016

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MEMORANDUM AND ORDER

cv 13-3126

Plaintiffs,
-against-

(Wexler, J.)

YOSSEF KAHLON, a/k/a JOSSEF KAHLON,
ATLAS SOLAR HOLDINGS LLC, ERICA T.
YITZHAK, THE LAW OFFICES OF ERICA T.
YITZHAK, and ERIKA T. YITZHAK, ESQ. P.C.,
Defendants.

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APPEARANCES:
Paul W. Verner, Esq.
Verner Simon
30 Wall Street, gth Floor
New York, NY 10005
Attorney for Plaintiffs
Brett A. Scher, Esq.
Megan E. Yllanes, Esq.
Kaufman Dolowich & Voluck, LLP
135 Crossways Park Drive, Suite 201
Woodbury, NY 11797
Attorneys for Defendants Erica T. Yitzhak,
The Law Offices of Erica T. Yitzhak and
Erica T. Yitzhak Esq. P.C.
WE)(LER, District Judge:
Plaintiffs Troy Lambe ("Lambe"), Sunray Solar Inc. ("Sunray"), and Max Diversified Inc.
("Max") (collectively "Plaintiffs"), bring this diversity action against defendants Yossef Kahlon,
alk/a JossefKahlon ("Kahlon"), Atlas Solar Holdings LLC ("Atlas"), Erica T. Yitzhak, the Law
Offices of Erica T. Yitzhak, and Erika T. Yitzhak, Esq. P.C. (together "Yitzhak") (collectively
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"Defendants"). Defendant Yitzhak moves for summary judgment pursuant to Federal Rules of
Civil Procedure ("Fed.R.Civ.P."), Rule 56.
DISCUSSION
The facts are briefly stated. Plaintiff Lambe is the sole shareholder and principal owner
of Plaintiffs Sunray and Max, which from 2007 through 2013 were in the business of facilitating
renewable solar energy systems in projects in the state ofNew Jersey. 1 Once a system was
approved and active, it would generate "Solar Renewable Energy Certificates ("SRECs"), which
are a publically-traded market commodity.
At the center of this dispute is the business arrangement between Plaintiffs and
Defendants Kahlon and Atlas whereby Defendants provided funding for the systems facilitated
by Plaintiffs in return for SRECs, amongst other things. Defendants' Local Rule 56.1 Statement,
("Def. 56 Stmt.") ~ 13; Plaintiffs' Counter-Rule 56.1 Statement ("Pl. Ctr-56.1 Stmt."), ~ 13.
Defendant Yitzhak was retained by Atlas in connection with the agreements it entered into with
Plaintiffs. Def. 56 Stmt., ~ 8; Pl. Ctr-56.1 Stmt., ~ 8. Plaintiffs claim that after policy changes in
the state of New Jersey caused a drop in the market value of SRECs, Defendants Kahlon and
Atlas cut off funding for the systems. Amended Complaint ("AC"),

~~

44-46. Thereafter,

Plaintiffs sought other investment partners- NJR Clean Energy Ventures Corporation ("NJR"),
Clean Power Finance ("CPF"), and NRG Energy ("NRG"). AC, ~~ 50-61.
The gravaman of Plaintiffs claims are that Defendants and their counsel Defendant
Yitzhak interfered with these other business relationships by filing liens against Plaintiffs,

1

The individual Defendants are all residents ofNew York, and the corporate Defendants
are incorporated in New York. Cmplt., ~ 7-11.
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initiating a lawsuit against Plaintiffs, and sending letters to NJR, CPF and NRG, informing them
that liens had been filed and a legal action commenced, and that Defendants suffered as a result
of Lambe's and Sunray's "fraudulent and deceitful actions." The Letters request that the third
party recipients "refrain from forwarding any payments, credits, remittances or other transfer of
asserts" to Plaintiffs. See Declaration of Megan E. Yllanes ("Yllanes Dec.")2, Exhibit ("Ex.") R:
letters from Erica T. Tizhak, Esq. to NJR, NRG and CPF, dated January 30, 2013 ("Yitzhak
Letters" or "Letters"). The Yitzhak Letters attach copies of the complaint and the recorded liens.
Plaintiffs' complaint alleges twelve causes of action, including three claims for tortious
interference, and claims for defamation/trade libel, malicious use/abuse of process, violation of
New York Judiciary Law§ 487, negligence, professional malpractice/negligence, two claims for
breach of contract, prima facie tort, and the unauthorized filing ofUCC statements.
The Court has reviewed the parties' submissions and finds that issues of fact preclude
summary judgment on the majority of Plaintiffs' claims, except for the negligence and
malpractice claims, as discussed below. Such disputed facts include, inter alia, what exactly was
the nature of the business relationship between Plaintiffs and NJR, CPF and NRG at the time the
Yitzhak Letters were sent, whether the Letters had any impact on those relationships, and what
intention Defendant Yitzhak had in sending the letters. Factual differences also exist regarding
whether the statements in the Letters were privileged as "pertinent to litigation." Sexton &
Warmflash v. Magrabe, 38 A.D.3d 163, 828 N.Y.S.2d 315, 322 (1st Dept. 2007). 3

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Defendants refer to the declaration as that of Brett A. Scher, but it titled as a declaration
of Megan E. Yllanes.
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Defendants urge the Court be guided by Front v. Khahil, 24 N.Y.3d 713 (2015) on the
issue of whether the letters were privileged, even if sent in anticipation of litigation. The letter at
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i

The Court grants Defendants' motion for summary judgment on Plaintiffs' claims for
negligence and malpractice. As noted by the Yitzhak Defendants, it owed no duty to Plaintiffs as
required to support a negligence or professional malpractice claim. "This Court has long held
that _before a party may recover in tort for pecuniary loss sustained as a result of another's
negligent misrepresentations there must be a showing that there was either actual privity of
contract between the parties or a relationship so close as to approach that of privity." Prudential
Insurance Co. v. Dewey Ballantine. Bushby. Palmer & Wood, 80 N.Y.2d 377, 382, 590 N.Y.S.2d
831, 833 (1992). In Prudential, the court found privity to support a negligence claim where the
law firm knew that the opinion letter it wrote on behalf of its clients was to be used for business
purposes and would be relied upon by the third party, Prudential. See Prudential, 80 N.Y.2d at
385, 590 N.Y.S.2d at 835. Thus, the court found that the bond was "sufficiently close to
establish a duty of care" from the law firm to the recipient. Id.
The Court finds that there is no such privity here. Even if the Yitzhak's Letters did
provide advice to the recipients of the letters, and Yitzhak knew or expected that the statements
would be relied upon by those recipients, any "sufficiently close" bond that would have been
created to establish a duty of care would run from Yitzhak and those recipients, not Plaintiffs.
Since there is no such privity or duty here between Plaintiffs and Defendant Yitzhak, Plaintiffs'
negligence claim fails.

issue in Front was a letter sent by defendants' counsel to the plaintiff regarding plaintiffs theft of
defendants' confidential information and threatened that the plaintiff may be subject to
punishment. The court there found there that the letter, sent in "anticipation oflitigation" was
privileged, extending the rule that letters made in the course of litigation are privileged. The
Court notes that the Letters here were not sent between parties to a (potential) litigation, but finds
that issues of fact preclude summary judgment on this issue.

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Similarly, to state an attorney malpractice claim, "absent privity, plaintiff must set forth a
claim of fraud, collusion, malicious acts or other special circumstances." AG Capital Funding
Partner. L.P. v. State Street Bank and Trust Co., 5 N.Y. 582, 595, 842 N.E.2d 471, 478, 808
N.Y.S.2d 573, 581 (2005) (citations omitted). It is undisputed that Defendant Yitzhak did not
have an attorney-client relationship with Plaintiffs, and as with the negligence claim, the Court
finds that there is no basis to create the privity required for Plaintiffs to state a malpractice claim
against these Defendants. Therefore, Defendants' motion for summary judgment on the
negligence and malpractice claims is granted.
CONCLUSION
For the reasons discussed above, Defendants' motion for summary judgment is denied,
except as to Plaintiffs' claims for negligence and malpractice, which are hereby dismissed.
Counsel are reminded that jury selection is scheduled for January 19, 2016 at 9:30am.
SO ORDERED.

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s/ Leonard D. Wexler

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LEONARD D. WEXLER
UNITED STATES DISTRICT JUDGE

Dated: Central I,spp, New York
January}~ 2016

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