SGM Holdings LLC et al v. Andrews et al

Filing 273

ORDER After careful consideration of the parties' written submissions and oral argument, the Court concludes that this case shall be dismissed on three independent grounds. The Court holds that: (1) it lacks subject matter jurisdiction over this action, in part because Section 487 is preempted by federal law; (2) even if the preemption issue is not jurisdictional, it bars the Section 487 suit on the merits, see Scully, 943 F.2d at 260; (3) even if Section 487 is not preempted by federa l law, it does not apply to the defendants in this case, who are not admitted to the New York Bar and are not alleged to have practiced before any New York state court in connection with the instant litigation, see id. A Decision and Order explain ing the Court's analysis, reasoning, and conclusions supporting these holdings will issue in due course. Final judgment will not enter until theCourt issues the reasons for its decision. In the meantime, the trial scheduled for July 29 is hereby adjourned sine die, and any other deadlines in this case are hereby suspended. SO ORDERED. (Signed by Judge Victor Marrero on 7/17/2024) (jca)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

7/17/24

SGM HOLDINGS LLC, et al.,

15 Civ. 8142 (VM)

Plaintiffs,

ORDER

- against A. JAMES ANDREWS, et al.,
Defendants.
VICTOR MARRERO, United States District Judge.

Plaintiffs brought this lawsuit under New York Judiciary
Law § 487 (“Section 487”), alleging attorney misconduct in a
prior

federal

litigation

involving

the

parties

to

this

action. This case was reassigned to this Court on April 15,
2024. A trial is scheduled to begin July 29, 2024. As that
date approached and as the Court delved closely into the
issues in dispute, the Court undertook an inquiry into whether
it

has

subject

matter

jurisdiction

over

the

action.

Accordingly, because the issue of subject matter jurisdiction
can be raised by the Court and at any time during the pendency
of litigation, the Court on July 1 (see Dkt. No. 260) ordered
the parties to submit briefing on the issue, specifically
directing the parties to address four questions relating to:
subject matter jurisdiction, federal preemption, the scope of
Section

487,

and

whether

the

Court,

even

if

it

has

jurisdiction, should dismiss the suit for failure to state a
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claim. See Thomas v. Scully, 943 F.2d 259, 260 (2d Cir. 1991)
(per curiam) (stating that district courts have “the power to
dismiss a complaint sua sponte for failure to state a claim
on which relief can be granted” as long as the plaintiff has
“an opportunity to be heard”).
The

parties

filed

their

briefs

July

8,

2024.

Additionally, the Court heard oral argument from the parties
with respect to these issues during a pretrial conference
held July 12, 2024.
After

careful

consideration

of

the

parties’

written

submissions and oral argument, the Court concludes that this
case shall be dismissed on three independent grounds. The
Court holds that: (1) it lacks subject matter jurisdiction
over this action, in part because Section 487 is preempted by
federal

law;

(2)

even

if

the

preemption

issue

is

not

jurisdictional, it bars the Section 487 suit on the merits,
see Scully, 943 F.2d at 260; (3) even if Section 487 is not
preempted by federal law, it does not apply to the defendants
in this case, who are not admitted to the New York Bar and
are not alleged to have practiced before any New York state
court in connection with the instant litigation, see id.
A Decision and Order explaining the Court’s analysis,
reasoning, and conclusions supporting these holdings will
issue in due course. Final judgment will not enter until the
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Court issues the reasons for its decision. In the meantime,
the trial scheduled for July 29 is hereby adjourned sine die,
and any other deadlines in this case are hereby suspended.
SO ORDERED.
Dated:

17 July 2024
New York, New York

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