Knopf v. Phillips, et al.

Filing 279

OPINION AND ORDER re: (174 in 1:17-cv-05833-DLC) MOTION for Recusal . filed by Michael Knopf, Norma Knopf, (266 in 1:16-cv-06601-DLC-SN) MOTION for Recusal . filed by Michael Knopf, Norma Knopf. The plaintiffs' March 4 motions for recusal are denied. (Signed by Judge Denise L. Cote on 5/29/2020) (jca)

Case 1:16-cv-06601-DLC-SN Document 279 Filed 05/29/20 Page 1 of 8

-------------------------------------- X
:
NORMA KNOPF and MICHAEL KNOPF,
:
:
Plaintiffs,
:
-v:
:
MICHAEL PHILLIPS, PURSUIT HOLDINGS,
:
LLC, and MICHAEL H. SANFORD,
:
:
Defendants.
:
:
-------------------------------------- X
-------------------------------------- X
:
NORMA KNOPF and MICHAEL KNOPF,
:
:
Plaintiffs,
:
-v:
:
FRANK M. ESPOSITO, DORSEY & WHITNEY
:
LLP, NATHANIEL AKERMAN, EDWARD
:
FELDMAN, and MICHAEL SANFORD,
:
:
Defendants.
:
:
-------------------------------------- X
Appearances
For the plaintiffs:
Eric William Berry
Eric W. Berry, PC
5 Columbus Circle, 8th Floor
New York, NY 10022
For the defendant Michael Phillips:
Lorraine Nadel
Nadel & Ciarlo P.C.
3 East 54th Street, 16th Floor
New York, NY 10022
For the defendant Michael Sanford:
Michael H. Sanford
10 Bedford Street

16cv6601 (DLC)
17cv5833 (DLC)
OPINION AND ORDER

Case 1:16-cv-06601-DLC-SN Document 279 Filed 05/29/20 Page 2 of 8

New York, NY 10014
For the defendant Frank Esposito:
Frank Esposito
Esposito Partners
175 Madison Avenue, 14th Floor
New York, NY 10016
For the defendants Dorsey & Whitney
LLP and Nathanial Akerman:
Nathaniel Akerman
Anthony Peter Badaracco
Dorsey & Whitney LLP
51 West 52nd Street
New York, NY 10019
For the defendant Edward Feldman:
Edward Feldman
Feldman & Associates, P.L.L.C.
33 East 33rd Street
Suite 802
New York, NY 10016
DENISE COTE, District Judge:
The plaintiffs have moved to recuse this Court from
continued oversight of this litigation.

The motion is denied.

The disputes between the parties involve substantial,
longstanding litigation in state court and four related actions
filed in federal court.

The two federal actions at issue here

shall be referred to as the Section 1983 Action and the Breach
of Contract Action.
The Section 1983 Action was filed on August 2, 2017.

On

December 7, 2017, the Court granted defendants’ motion to
dismiss plaintiffs’ claim brought pursuant to 42 U.S.C. § 1983
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and declined to exercise supplemental jurisdiction over
plaintiffs’ state law claims.

Knopf v. Esposito, No. 17CV5833

(DLC), 2017 WL 6210851, at *8 (S.D.N.Y. Dec. 7, 2017).

On March

5, 2018, the Court sanctioned plaintiffs and their attorney,
Eric Berry.

Knopf v. Esposito, No. 17CV5833 (DLC), 2018 WL

1226023, at *1 (S.D.N.Y. Mar. 5, 2018).

That sanctions decision

was revised and the sanctions were reduced in an Opinion issued
in July of 2018.

Knopf v. Esposito, No. 17CV5833 (DLC), 2018 WL

3579104, at *6 (S.D.N.Y. July 25, 2018).
Meanwhile, the plaintiffs filed the Breach of Contract
Action on August 22, 2016.

On December 2, 2016, the Court

entered default against Pursuit Holdings LLC (“Pursuit”) with
respect to plaintiffs’ breach-of-contract claim after no
attorney appeared on its behalf.

On December 12, 2016, the

Court granted Phillips’ motion to dismiss plaintiffs’ tortious
interference with contract claim brought against him
individually.

Knopf v. Phillips, No. 16CV6601(DLC), 2016 WL

7192102, at *1 (S.D.N.Y. Dec. 12, 2016).

In December 2017,

Phillips was granted summary judgment on the sole surviving
claim brought against him, a claim for fraudulent conveyance.
Knopf v. Phillips, No. 16CV6601(DLC), 2017 WL 6561163, at *13
(S.D.N.Y. Dec. 22, 2017).

The Knopfs’ motion for summary

judgment was granted to the extent that Michael Sanford was
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declared an alter ego of Pursuit.

Id. at *11-13.

The claims

against Sanford as an alter ego of Pursuit were set for trial.
They were claims for constructive and actual fraudulent
conveyance, breach of fiduciary duty, and imposition of a
constructive trust.

At the final pretrial conference on January

31, 2018, the Court dismissed the remaining claims against
Sanford with prejudice, vacated the default entered against
Pursuit, and dismissed the claims against Pursuit.

Knopf v.

Phillips, No. 16CV6601(DLC), 2018 WL 1320267, at *3 (S.D.N.Y.
Feb. 1, 2018).
In two summary orders of February 25, 2020, the Second
Circuit Court of Appeals reversed the dismissals of the two
actions.

It vacated the dismissal and the post-judgment

sanctions orders in the Section 1983 Action.

While it affirmed

the dismissal of plaintiffs’ tortious interference claim against
Phillips in the Breach of Contract Action, it vacated the
dismissal of the fraudulent conveyance claim against Phillips,
and the dismissal of the claims against Sanford and Pursuit.
On March 4, plaintiffs filed motions for recusal and
reassignment of the further proceedings in both cases.

The

mandates returning jurisdiction to this Court issued on April 8
and 17.

Plaintiffs’ motions for recusal were fully submitted by

May 8.
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Pursuant to 28 U.S.C. § 455(a), a judge must recuse herself
“in any proceeding in which [her] impartiality might reasonably
be questioned.”

28 U.S.C. § 455(a); see Cox v. Onondaga Cty.

Sheriff’s Dep’t, 760 F.3d 139, 150 (2d Cir. 2014).

Similarly,

under 28 U.S.C. § 144 and § 455(b)(1), a judge must recuse
herself whenever she has a “personal bias or prejudice”
concerning a party.

“[A] judge has an affirmative duty to

inquire into the legal sufficiency of” allegations of bias and
prejudice, however, “and not to disqualify [her]self
unnecessarily, particularly where the request for
disqualification was not made at the threshold of the litigation
and the judge has acquired a valuable background of experience.”
LoCascio v. United States, 473 F.3d 493, 498 (2d Cir. 2007)
(citation omitted).

“[R]ecusal motions are to be made at the

earliest possible moment after obtaining knowledge of facts
demonstrating the basis for such a claim.”

Id. at 497 (citation

omitted).
To be disqualifying, “the alleged bias and prejudice must
stem from an extrajudicial source and result in an opinion on
the merits on some basis other than what the judge has learned
from [her] participation in the case.”

S.E.C. v. Razmilovic,

738 F.3d 14, 29 (2d Cir. 2013) (emphasis in original) (citation
omitted); see also Liteky v. United States, 510 U.S. 540, 555
5

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(1994).

Recusal is required where “an objective, disinterested

observer fully informed of the underlying facts, would entertain
significant doubt that justice would be done absent recusal.”
Cox, 760 F.3d at 150 (citation omitted).

“[J]udicial rulings

alone almost never constitute a valid basis for a bias or
partiality motion.”

LoCascio, 473 F.3d at 495 (citation

omitted).
[R]ecusal is not warranted where the only challenged
conduct consists of judicial rulings, routine trial
administration efforts, and ordinary admonishments to
counsel and to witnesses, where the conduct occurs
during judicial proceedings, and where the judge
neither (1) relies upon knowledge acquired outside
such proceedings nor (2) displays deep-seated and
unequivocal antagonism that would render fair judgment
impossible.
Razmilovic, 738 F.3d at 29-30 (citation omitted).
Plaintiffs principally argue that recusal is necessary
because many of this Court’s rulings were wrong and have been
reversed on appeal.

They contend that these rulings displayed

animus towards plaintiffs’ counsel and favoritism towards
defendants.

They argue that this Court should not have

sanctioned either plaintiffs’ counsel or the plaintiffs but
should have imposed sanctions instead on Nathaniel Akerman and
Dorsey & Whitney LLP. 1

In their reply they add that the Court

In making this argument, the plaintiffs do not take issue with
the facts underlying the decision to impose sanctions for their
1

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cannot fairly assess defendant Akerman’s credibility because he
and this Court both served in the United States Attorney’s
Office for the Southern District of New York at the same time
roughly forty years ago.
Error in rulings is always to be regretted, but the fact
that rulings by a district court have been reversed on appeal is
not a ground for recusal of the district court judge.

All of

the rulings, whether made in error or not, are an outgrowth of
the matters presented to the Court during the litigation, and do
not emanate from any extrajudicial knowledge of the parties,
their claims, or their defenses.
The fact that these motions for recusal are brought after
more than three years of litigation before this Court is yet
another reason for denying the motions.

Any reassignment of

these actions at this stage would unfairly burden another court.
Finally, no reasonable person, fully informed of all
pertinent facts, would have significant doubt that justice could
be done in the litigation even though some four decades earlier
a judge and a party worked for the same employer, as did scores

attorney’s conduct. For instance, the plaintiffs do not deny
that their attorney falsely stated five times during Sanford’s
deposition that he was not recording that deposition. The
attorney later emailed a video recording of Sanford’s deposition
to Esposito. Knopf v. Esposito, No. 17CV5833(DLC), 2018 WL
3579104, at *5 (S.D.N.Y. July 25, 2018).
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of other lawyers. 2

Suggesting that recusal is required in such

circumstances is an extreme argument that requires no further
discussion.
Conclusion
The plaintiffs’ March 4 motions for recusal are denied.
Dated:

New York, New York
May 29, 2020
__________________________________
DENISE COTE
United States District Judge

The plaintiffs acknowledge that in a conference in 2015 in
related litigation this Court disclosed to all parties that she
knew Akerman, who at that time was representing defendant
Sanford.
2

8