Moreno-Godoy v. Gallet Dreyer & Berkey, L.L.P. et al
Filing
95
MEMORANDUM AND ORDER granting 86 Motion to Amend/Correct. For the reasons set forth above, the plaintiff's motion to amend the complaint (Docket No. 86) is granted. The defendants' request to reopen discovery is granted, and all additional fact discovery shall be completed within sixty days of the date of this order. (As further set forth in this Order.) (Signed by Magistrate Judge James C. Francis on 10/4/2016) (cf)
9, 2009, attached as Exh. A to Compl.).
On February 11, 2009, Mr.
Godoy and Mr. Al Kassar executed a letter agreement also retaining
Mr. Kartagener for a “flat fee” of $100,000.
(Compl. at 6; Letter
of Steven R. Kartagener dated Feb. 11, 2009, attached as Exb. B to
Compl.).
Mr. Kartagener was to be the third attorney on the case,
along with Mr. Stavis and Ira Sorkin.
(Compl. at 6).
Members of
Mr. Al Kassar’s family -- acting on behalf of both defendants -immediately paid Mr. Kartagener, but the payment was made with Mr.
Godoy’s money.
(Compl. at 6).
However, on January 29, 2010, Mr. Stavis informed Mr. Godoy
that Mr. Kartagener could not be Mr. Godoy’s lawyer.
(Compl. at
6; Letter of Roger L. Stavis dated Jan. 29, 2010 (“1/29/10 Stavis
Letter”), attached as Exh. C to Compl.).
Furthermore, Mr. Stavis
stated, “If you and Monzer are agreeable I will represent both of
you on the appeal,” even though Mr. Stavis had already contracted
to represent Mr. Godoy and Mr. Al Kassar in all appeals.
at 7; 01/29/10 Stavis Letter).
(Compl.
Mr. Godoy then sent a letter to
Mr. Kartagener, requesting the immediate return of the $100,000
retainer; however, Mr. Kartagener never responded.
(Compl. at 8;
Letter of Luis Felipe Moreno-Godoy dated Feb. 7, 2010, attached as
Exh. D to Compl.).
Several letters later, Mr. Stavis stated that Mr. Godoy and
Mr. Al Kassar had agreed that Mr. Stavis should keep the retainer
fee that was paid to Mr. Kartagener.
2
(Compl. at 10-11).
Mr. Godoy
responded in a letter dated April 9, 2010, stating that he had
never so agreed and requesting that Mr. Stavis return the money
immediately.
(Compl. at 12; Letter of Luis Felipe Moreno-Godoy
dated April 9, 2010, attached as Exh. I to Compl.).
Mr. Stavis
sent a letter, dated April 13, 2010, stating that he would not
relinquish the $100,000.
(Compl. at 11; Letter of Roger L. Stavis
dated April 13, 2010, attached as Exh. K to Compl.).
The plaintiff
alleges that even though Mr. Stavis had already been contracted
and
paid
to
Kartagener’s
bring
$100,000
the
appeals
retainer
for
without
$125,000,
Mr.
he
Godoy’s
kept
Mr.
consent.
(First Amended Complaint (“Amend. Compl.”), attached as Exh. B to
Declaration of Noam Biale dated July 14, 2016, ¶ 32).
Procedural History
Mr. Godoy filed the original complaint pro se on August 4,
2014, claiming breach of contract, breach of fiduciary duty, and
malpractice against Mr. Stavis, GDB, and Mr. Kartagener.
at 1).
(Compl.
On September 30, 2015, Mr. Godoy’s claims for breach of
fiduciary duty and malpractice were dismissed.
WL 5737565, at *1.
Moreno-Godoy, 2015
On December 1, 2015, pro bono counsel appeared
for Mr. Godoy.
On July 14, 2016, the plaintiff filed the instant motion to
amend the complaint to add claims for unjust enrichment, money had
and received, and constructive trust against GDB and Mr. Stavis.
3
The amended complaint omits claims for breach of fiduciary duty
and malpractice.
Discussion
Rule 15 of the Federal Rules of Civil Procedure provides that
courts
should
requires.”
“freely
give
leave”
to
amend
“when
justice
so
Fed. R. Civ. P. 15(a)(2); see also Foman v. Davis, 371
U.S. 178, 182 (1962); Aetna Casualty & Surety Co. v. Aniero
Concrete
Co.,
404
F.3d
566,
603–04
(2d
Cir.
2005).
“This
permissive standard is consistent with ‘[the Second Circuit’s]
strong preference for resolving disputes on the merits.’” Williams
v. Citigroup Inc., 659 F.3d 208, 212–13 (2d Cir. 2011) (quoting
New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005)).
However, a
motion to amend may be denied for any of the following reasons:
(1) undue prejudice to the non-moving party, (2) futility, (3) bad
faith or dilatory motive, (4) repeated failure to cure deficiencies
by previous amendments, and (5) undue delay.
Burch v. Pioneer
Credit Recovery, Inc., 551 F.3d 122, 126 (2d Cir. 2008); McCarthy
v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007).
The
party opposing amendment bears the burden of establishing that
amendment would be inappropriate.
Allison v. Clos-ette Too,
L.L.C., No. 14 Civ. 1618, 2015 WL 136102, at *2 (S.D.N.Y. Jan. 9,
2015); Ferring B.V. v. Allergan, Inc., 4 F. Supp. 3d 612, 618
(S.D.N.Y. 2014).
amend.
The court has broad discretion over motions to
See McCarthy, 482 F.3d at 200.
4
A.
Undue Prejudice
“Prejudice is one of ‘the most important reasons for denying
a motion to amend.’”
Baez v. Delta Airlines, Inc., No. 12 Civ.
3672, 2013 WL 5272935, at *7 (S.D.N.Y. Sept. 18, 2013) (quoting
Berman v. Parco, 986 F. Supp. 195, 217 (S.D.N.Y. 1997)).
Undue
prejudice arises “when an amendment [comes] on the eve of trial
and would result in new problems of proof,” Ruotolo v. City of New
York, 514 F.3d 184, 192 (2d Cir. 2008) (alteration in original)
(quoting State Teachers Retirement Board v. Fluor Corp., 654 F.2d
843, 856 (2d Cir. 1981)), or when a defendant would be compelled
to expend significant additional resources, AEP Energy Services
Gas Holding Co. v. Bank of America, N.A., 626 F.3d 699, 727 (2d
Cir. 2010).
Adding new, alternative claims to a complaint is not
typically a basis for denial of a motion to amend.
LSSi Data Corp.
v. Time Warner Cable, Inc., No. 11 Civ. 7780, 2012 WL 933078, at
*2 (S.D.N.Y. March 20, 2012).
The defendants assert that it would be unduly prejudicial for
them to be required to respond to a rewritten complaint and pursue
additional
discovery.
Opposition
to
Plaintiff’s
(Defendants’
Motion
for
Memorandum
Leave
to
of
File
Law
in
Amended
Complaint (“Def. Memo.”) at 7-8). However, the plaintiff’s amended
complaint
merely
streamlines
alternative claims.
the
original
complaint
and
adds
Both complaints name the same defendants and
5
allege the same substantive facts.
(Compl. at 5-8; Amend. Compl.,
¶¶ 4-21). 1
Furthermore, although the defendants assert that they would
need to re-depose the plaintiff and pursue “additional document
disclosure” (Def. Memo. at 9), they do not specify the document
disclosure required.
For his part, the plaintiff asserts that
further discovery is unnecessary.
(“Pl. Memo.”) at 10).
(Plaintiff’s Memorandum of Law
There is no trial date and no pending
dispositive motions, and the legal issues raised by the added
claims are likely to overlap considerably with the original claims.
“Indeed,
‘allegations
that
an
amendment
will
require
the
expenditure of additional time, effort, or money do not themselves
constitute undue prejudice.’”
Lin v. Toyo Food, Inc., No. 12 Civ.
7392, 2016 WL 4502040, at *2 (S.D.N.Y. Aug. 26, 2016) (quoting
A.V.E.L.A. v. Estate of Monroe, 34 F. Supp. 3d 311, 318 (S.D.N.Y.
2014)).
In any event, I will reopen discovery to the extent
necessary, as I discuss further below.
B.
Futility
“An amendment to a pleading will be futile if a proposed claim
could not withstand a motion to dismiss pursuant to Rule 12(b)(6).”
Dougherty v. Town of North Hempstead Board of Zoning Appeals, 282
1
The amended complaint adds a few minor facts; for example,
Mr. Godoy -- before contacting Mr. Kartagener -- first contacted
the Federal Defenders. (Amend. Compl., ¶ 10). None of the added
facts are dispositive to the case.
6
F.3d 83, 88 (2d Cir. 2002); accord AEP Energy, 626 F.3d at 726.
Accordingly, the court must accept all facts pled as true and
construe them in the light most favorable to the plaintiff.
See
Panther Partners Inc. v. Ikanos Communications, Inc., 681 F.3d
114, 119 (2d Cir. 2012); Alexander Interactive, Inc. v. Adorama,
Inc., No. 12 Civ. 6608, 2014 WL 113728, at *4 (S.D.N.Y. Jan. 13,
2014).
The defendants argue that the motion ought to be denied since
the plaintiff pleads both contract and quasi-contract claims.
(Def. Memo. at 11-12). A plaintiff cannot ultimately recover under
both theories.
MacDraw, Inc. v. CIT Group Equipment Financing,
377 F.3d 209, 213 (2d Cir. 2004).
Furthermore, a plaintiff may
not prosecute a quasi-contract claim where the existence of a
contract is uncontested.
Clark–Fitzpatrick, Inc. v. Long Island
Railroad Co., 70 N.Y.2d 382, 389, 521 N.Y.S.2d 653, 656 (1987).
However, a plaintiff may plead both quasi-contract and contract
claims if the existence of an enforceable agreement is in dispute.
Kalimantano GmbH v. Motion in Time, Inc., 939 F. Supp. 2d 392, 416
(S.D.N.Y. 2013); accord Hoyle v. Diamond, 612 F. Supp. 2d 225, 231
(W.D.N.Y. 2009); Zuccarini v. Ziff–Davis Media, Inc., 306 A.D.2d
404, 405, 762 N.Y.S.2d 621, 622 (2d Dep’t 2003) (“Where . . . there
is a bona fide dispute as to the existence of a contract, or where
the contract does not cover the dispute in issue, a plaintiff may
proceed upon a theory of quasi contract as well as breach of
7
contract, and will not be required to elect his or her remedies.”).
The existence of a contract is disputed here, and thus quasicontract claims may be pled in the alternative. 2
1.
Unjust Enrichment Claim
“The essence of unjust enrichment is that a party has received
a benefit or money at the expense of the other.”
Navana Logistics
Limited v. TW Logistics, LLC, No. 15 Civ. 856, 2016 WL 796855, at
*7 (S.D.N.Y. Feb. 23, 2016) (quoting Goldman v. Simon Property
Group, Inc., 58 A.D.3d 208, 220, 869 N.Y.S.2d 125, 134 (2d Dep’t
2008)).
“To establish a claim for unjust enrichment under New
York law, a plaintiff must show that: (1) defendant was enriched,
(2) at plaintiff’s expense, and (3) equity and good conscience
militate against permitting defendant to retain what plaintiff is
seeking to recover.” Id. (quoting Diesel Props S.r.l. v. Greystone
Business Credit II LLC, 631 F.3d 42, 55 (2d Cir. 2011)).
The plaintiff has alleged facts that satisfy the elements of
unjust enrichment.
Mr. Godoy contracted with and paid Mr. Stavis
on December 9, 2009, yet Mr. Stavis later came into possession of
Mr. Kartagener’s separate fee.
(Compl., ¶¶ 4, 23).
Mr. Godoy
never agreed that Mr. Stavis would be entitled to that fee.
2
The defendants erroneously argue that since “[t]here is
no dispute that GDB, and not Mr. Stavis, received the disputed
money,” the claims are futile at least as to Mr. Stavis. (Def.
Memo. at 14). In fact, the plaintiff has alleged that Mr. Stavis
received the money (Amend. Compl., ¶ 23), and a plaintiff’s
allegations in the complaint are to be taken as true.
8
(Compl., ¶¶ 26-29, 32).
Mr. Stavis has not returned it, despite
the fact that Mr. Godoy has repeatedly requested that he do so.
(Compl., ¶¶ 28-29, 32).
2.
Money Had and Received
To establish a claim for money had and received, the plaintiff
must
show
that
“(1)
defendant
received
money
belonging
to
plaintiff; (2) defendant benefitted from receipt of money; and (3)
under principles of equity and good conscience, defendant should
not be permitted to keep the money.” 3
Fischer, 2016 WL 3181157,
at *4 (quoting Panix Promotions, Ltd. v. Lewis, No. 01 Civ. 2709,
2002 WL 122302, at *2 (S.D.N.Y. Jan. 22, 2002)).
“Traditionally,
the remedy for money had and received is available if one man has
obtained money from another, through the medium of oppression,
imposition,
trespass.”
extortion,
or
deceit,
or
by
the
commission
of
a
Id. (quoting Panix, 2002 WL 122302, at *2).
The complaint alleges that Mr. Stavis came into possession of
Mr. Kartagener’s former retainer, and that Mr. Godoy did not agree
that Mr. Stavis would be entitled to it.
Furthermore,
the
complaint
alleges
that
(Compl., ¶¶ 23, 30).
Mr.
Stavis
falsely
reassured Mr. Godoy that he would remit Mr. Kartagener’s retainer,
3
“The cause of action for money had and received ‘is
essentially identical to a claim of unjust enrichment.’” Fischer
v. Graham, No. 15 Civ. 6414, 2016 WL 3181157, at *4 n.3 (S.D.N.Y.
June 3, 2016) (quoting Belda v. Doerfler, No. 14 Civ. 941, 2015 WL
5737320, at *4, n.4 (S.D.N.Y. Sept. 30, 2015), appeal dismissed
(Jan. 7, 2016) (collecting cases)).
9
but Mr. Stavis never returned it.
(Compl., ¶¶ 23-24).
Thus, the
plaintiff has alleged facts that satisfy the elements of a money
had and received claim.
3.
A
Constructive Trust
constructive
trust
“is
the
formula
conscience of equity finds expression.
through
which
the
When property has been
acquired in such circumstances that the holder of the legal title
may not in good conscience retain the beneficial interest, equity
converts him into a trustee.”
Counihan v. Allstate Insurance Co.,
194 F.3d 357, 360 (2d Cir. 1999) (quoting Simonds v. Simonds, 45
N.Y.2d 233, 241, 408 N.Y.S.2d 359, 363 (1978)); see In re First
Central Financial Corp., 377 F.3d 209, 213 (2d Cir. 2004).
constructive trust is a flexible equitable remedy.
A
Counihan, 194
F.3d at 361.
There are four elements under New York law to establish a
constructive trust: “(1) a confidential or fiduciary relationship;
(2) a promise, express or implied; (3) a transfer of the subject
res made in reliance on that promise; and (4) unjust enrichment.”
In re First Central, 377 F.3d at 212 (quoting United States v.
Coluccio, 51 F.3d 337, 340 (2d Cir. 1995)).
factors
provide
important
guideposts,
the
“[A]lthough these
constructive
trust
doctrine is equitable in nature and should not be rigidly limited.”
Counihan, 194 F.3d at 362 (quoting In re Koreag, Controle et
Revision, S.A. v. Refco F/X Associates, Inc., 961 F.2d 341, 352
10
(2d Cir. 1992)).
“What the New York courts do insist upon is a
showing that property is held under circumstances that render
unconscionable
property
and
enrichment.”
and
that
Id.
inequitable
the
remedy
the
is
continued
essential
to
holding
prevent
of
the
unjust
“Although the doctrine of constructive trust is
a flexible remedy, a promise by Defendant in some form is an
absolute requirement.”
Dobbs v. Dobbs, No. 06 Civ. 6104, 2008 WL
3843528, at *3 (S.D.N.Y. Aug. 14, 2008).
The promise need not be
explicit, but may be inferred from the circumstances.
Id.
It is clear that Mr. Stavis and Mr. Godoy were in a fiduciary
relationship, as Mr. Stavis was Mr. Godoy’s lawyer.
As for the
second factor, although there was no explicit promise before the
retainer was transferred to Mr. Stavis, it can be inferred that
Mr. Stavis implicitly promised to transfer the retainer to Mr.
Godoy.
(Compl., ¶¶ 23-24); see Counihan, 194 F.3d at 362 (holding
promise may be inferred from transaction itself).
Third, although
it appears on the face of the complaint that a transfer was not
made to Mr. Stavis in reliance on a promise, “this deficiency
should not be allowed to spawn an inequitable result.
[The Second
Circuit] impose[s] a constructive trust where the holder of legal
title
should
not,
in
good
conscience
benefits derived from such title.”
and
equity,
Id. at 362.
retain
the
Mr. Stavis had
already contracted with Mr. Godoy to represent him on appeal, yet
Mr. Stavis kept Mr. Kartagener’s fee, which Mr. Godoy repeatedly
11
requested be returned.
(Amend. Compl., ¶¶
4, 29).
Mr. Godoy
never agreed to Mr. Stavis keeping Mr. Kartagener’s retainer, and
Mr. Stavis refuses to return the retainer.
30).
(Amend. Compl., ¶¶ 29-
Under these facts, Mr. Stavis would be unjustly enriched,
and it would be inequitable to allow Mr. Stavis to keep the
retainer.
See Skippers & Maritime Services, Ltd. v. KFW, No. 06
Civ. 7041, 2008 WL 5215990, at *4 (S.D.N.Y. Dec. 8, 2008).
To be sure, “New York courts have held that ‘[a]s an equitable
remedy, a constructive trust should not be imposed unless it is
demonstrated that legal remedy is inadequate.’”
Usov v. Lazar,
No. 13 Civ. 818, 2014 WL 4354691, at *11 (S.D.N.Y. Sept. 2, 2014)
(alteration in original) (quoting In re First Central, 377 F.3d at
212).
“When
a
plaintiff
has
a
contractual
claim
against
a
defendant, there is no reason to believe that a legal remedy is
inadequate and the constructive trust claim is duplicative.”
Id.
(citing Northern Shipping Funds I, LLC v. Icon Capital Corp., 921
F.Supp.2d
94,
107
(S.D.N.Y.
2013)).
Furthermore,
“[f]or
restitution to lie in equity, the action generally must seek not
to impose personal liability on the defendant, but to restore to
the plaintiff particular funds or property in the defendant’s
possession.”
Great-West Life & Annuity Insurance Co. v. Knudson,
534 U.S. 204, 213 (2002).
But because the existence of a contract is not undisputed, it
cannot yet be determined whether the plaintiff’s legal claims will
12
be sufficient or whether an equitable remedy would need to be
imposed.
See Speedfit LLC v. Woodway USA, Inc., 53 F. Supp. 3d
561, 580-81 (E.D.N.Y. 2014) (holding that where plaintiff pleads
unjust enrichment and existence of contract is disputed, plaintiff
may
bring
constructive
trust
claim).
Thus,
Mr.
Godoy’s
constructive trust claim is not futile.
C.
Undue Delay
This motion to amend comes two years after the filing of the
original
appeared.
complaint,
The
and
Second
seven
Circuit
months
has
after
pro
repeatedly
bono
counsel
recognized
that
“[m]ere delay, . . . absent a showing of bad faith or undue
prejudice, does not provide a basis for a district court to deny
the right to amend.”
Fluor Corp., 654 F.2d at 856; Rotter v.
Leahy, 93 F. Supp. 2d 487, 497 (S.D.N.Y. 2000).
If, however, a
motion to amend comes after a lengthy delay, “it is incumbent upon
the movant to offer a valid explanation for the delay.”
Deere v.
Goodyear Tire and Rubber Co., 175 F.R.D. 157, 166 (N.D.N.Y. 1997).
The plaintiff attempts to excuse this delay, arguing that he
had assumed, until the defendants asserted otherwise, that the
case would hinge on whether the Stavis contract was modified to
allow Mr. Stavis to keep Mr. Kartagener’s retainer, and that there
was therefore no need to plead quasi-contractual claims.
this
explanation
is
not
satisfying,
since
if
there
However,
was
no
modification of the Stavis contract, then there is no contract
13
regarding Mr. Stavis’ retention of Mr. Kartagener’s retainer, and
the plaintiff’s recourse would then necessarily be in quasicontract.
However, courts routinely grant leave to amend where
the
was
delay
much
satisfactory excuse.
longer
than
two
years,
even
without
a
See Commander Oil Corp. v. Barlo Equipment
Corp., 215 F.3d 321, 333 (2d Cir. 2000) (holding no abuse of
discretion in grant of leave to amend after seven year delay, in
absence of prejudice); Rachman Bag Co. v. Liberty Mutual Insurance
Co., 46 F.3d 230, 235 (2d Cir. 1995) (giving leave to amend
properly granted after four-year delay); Block v. First Blood
Associates, 988 F.2d 344, 351 (2d Cir. 1993) (holding amendment
allowed four years after complaint filed).
D.
Bad Faith or Dilatory Motive
The defendants assert that the plaintiff is using amendment
merely to gain a procedural advantage.
(Def. Memo. at 9-10).
“[T]he fact that a party may have had evidence to support a
proposed amendment earlier in the litigation does not, in itself,
give rise to an inference of bad faith.”
Randolph Foundation v.
Duncan, No. 00 Civ. 1172, 2002 WL 32862, at *3 (S.D.N.Y. Jan. 11,
2002).
Nevertheless, “the Court may deny a motion to amend when
the movant knew or should have known of the facts upon which the
amendment
is
based
when
the
original
pleading
was
filed,
particularly when the movant offers no excuse for the delay.”
Lyondell-Citgo Refining, LP v. Petroleos, No. 02 Civ. 795, 2004 WL
14
2650884, at *2 (S.D.N.Y. Nov. 22, 2004) (quoting Berman v. Parco,
986 F. Supp. 195, 217 (S.D.N.Y. 1997)).
The plaintiff was unrepresented when he filed the original
compliant.
As noted, he assumed the case would hinge on whether
the Stavis contract was modified, and only after the deposition of
Mr. Stavis did the plaintiff realize that the defendants would
assert that there is no valid agreement governing the dispute.
Although that assumption was legally unsound, it does not suggest
that this amendment is sought in bad faith or merely to delay the
resolution of this action.
E.
Reopening Discovery
The defendants request that if the plaintiff’s motion is
granted, they be permitted to reopen discovery.
Rule 16 of the
Federal Rules of Civil Procedure allows a scheduling order to “be
modified only for good cause and with the judge’s consent.”
R. Civ. P. 16(b)(4).
amended
complaint,
additional
Fed.
The plaintiff has added new claims in the
and
deposition
the
of
defendants
the
plaintiff
have
asserted
and
further
that
an
document
discovery are necessary. Discovery shall be re-opened for these
purposes.
Conclusion
For the reasons set forth above, the plaintiff’s motion to
amend the complaint (Docket No. 86) is granted.
The defendants’
request to reopen discovery is granted, and all additional fact
15
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