Knopf et al v. Esposito et al

Filing 450

MEMORANDUM OPINION AND ORDER re: 433 MOTION for Summary Judgment Rule 56.1 Statement. filed by Frank M. Esposito, 430 MOTION for Summary Judgment . filed by Frank M. Esposito, 432 MOTION for Summary Judgment De claration and Exhibits. filed by Frank M. Esposito, 420 MOTION for Summary Judgment against defendants Frank M. Esposito and Edward S. Feldman and dismissing Feldman's Sixth Affirmative Defense. MOTION for Judgment on the P leadings Dismissing Affirmative Defenses. filed by Michael Knopf, Norma Knopf, 431 MOTION for Summary Judgment Memorandum of Law. filed by Frank M. Esposito. Knopf's motion for summary judgment against Esposito, and Espos ito's motion for summary judgment on liability, are denied. Issues of material fact remain regarding the alleged agreement between Esposito, Sanford, and a state court employee to deprive Knopf of her due process rights and her property interest in the Penthouse. Esposito's motion for summary judgment is granted to the extent that Knopf may recover only up to $976,460.48 in actual damages. Finally, Knopf's motion to dismiss Esposito's affirmative defenses, which is unopposed by Esposito, is granted. (Signed by Judge Denise L. Cote on 5/26/2021) (nb) Transmission to Finance Unit (Cashiers) for processing.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------- X
:
NORMA KNOPF, individually and as a
:
Distributee and the Executor Named in :
Michael Knopf’s Last Will,
:
:
Plaintiff,
:
-v:
:
FRANK M. ESPOSITO, DORSEY & WHITNEY,
:
LLP, NATHANIEL H. AKERMAN, EDWARD S.
:
FELDMAN, and MICHAEL HAYDEN SANFORD,
:
:
Defendants.
:
:
-------------------------------------- X

17cv5833(DLC)
MEMORANDUM OPINION
AND ORDER

APPEARANCES:
For the plaintiffs:
Eric Berry
Eric W. Berry, PC
5 Columbus Circle, 8th Floor
New York, NY 10022
Gary Greenberg
Gary Greenberg, Esq.
666 Fifth Avenue, 27th Floor
New York, NY 10103
For defendant Frank Esposito:
Frank Esposito
Esposito Partners
175 Madison Avenue, 14th Floor
New York, NY 10016
DENISE COTE, District Judge:
Plaintiff Norma Knopf1 (“Knopf”) has moved for summary
judgment on her claim of conspiracy to violate § 1983.

1

Knopf

Michael Knopf -- who was previously a plaintiff in this action - died on January 10, 2021. An Order of April 12 granted a
1

claims that defendants Frank Esposito (“Esposito”), Edward
Feldman (“Feldman”), and others conspired with Esposito’s wife –
- a state court employee -- to violate Knopf’s Fourteenth
Amendment due process rights.

Knopf has also moved to dismiss

Esposito’s affirmative defenses.
Esposito and Feldman have filed cross-motions for summary
judgment.

A separate Opinion addresses Feldman’s motion for

summary judgment.

In this Opinion, the portion of Esposito’s

motion for summary judgment that addresses the amount of actual
damages Knopf may recover is granted in part.

Knopf’s motion

for summary judgment against Esposito is denied.

Knopf’s motion

to dismiss Esposito’s affirmative defenses, which is unopposed,
is granted.
The relevant facts for this Opinion are set out in a
separate Opinion of May 26, 2021, which addresses Feldman’s
motion for summary judgment.

It is incorporated by reference.

Knopf contends that Esposito conspired with his wife, Melissa
Ringel, who is a state court employee, and others to deprive
Knopf of her due process rights and her property interest in
condominium unit Penthouse C at 44 East 67th Street (the

motion to substitute Norma Knopf, individually and as
distributee and the executor named in Michael Knopf’s last will.
This Opinion refers to Michael and Norma Knopf as the “Knopfs”
and Norma Knopf as “Knopf.”

2

“Penthouse”).

Ringel gave advice as a state court employee in a

telephone call of January 12, 2016 (the “January 12 Call”) that
made it possible for the sale of the Penthouse to proceed on
February 1, 2016.
At the time of the January 12 Call, the Appellate Division,
First Department had denied summary judgment to the Knopfs on
their constructive trust claim.
18, 20 (1st Dept. 2014).

Knopf v. Sanford, 1 N.Y.S.3d

But, in the words of the Second

Circuit, the Knopfs’ “constructive trust claims were pending.”
Knopf v. Esposito, 803 F. App'x 448, 455–56 (2d Cir. 2020).
Knopf argues that, as a result of this conspiracy, she was
unaware of the January 12 Call and thus unable to stop the sale
of the Penthouse, unable to obtain a lien to give her priority
over unsecured creditors, and unable to negotiate with those
creditors over the proper disbursements of the sale proceeds.
As Knopf explains, if she had known of the January 12 Call, she
could have asserted a “constructive trust claim to establish the
priority position of [her] lien.”2
“Opportunities to negotiate are difficult if not impossible
to recreate.”

In Matter of Motors Liquidation Co., 829 F.3d

To the extent that Knopf argues that she would have had a lien
in 2006 but for Pursuit’s breach of its contract with the
Knopfs, that argument is unsuccessful. After a decade of
litigation, the Knopfs had not obtained a lien due to that
breach. Any damages Knopf may recover in this action are due to
the alleged violation of § 1983 in 2016.
2

3

135, 164 (2d Cir. 2016).

In In Matter of Motors Liquidation

Co., the Court of Appeals held that plaintiff creditors suffered
a violation of procedural due process where they received
inadequate notice and lacked any meaningful opportunity to be
heard before a proposed “free and clear” sale.

Id. at 163.

The

Second Circuit could not “say with fair assurance that the
outcome of the . . . sale proceedings would have been the same
had . . . [the] plaintiffs voiced their objections to the free
and clear provision.”

Id.

Esposito argues that Knopf has failed to show a right to
any damages for her claim.3
amount of $2,228,772.68.

Knopf seeks actual damages in the

This number represents $3 million (the

proceeds from the sale of the Penthouse), minus $771,227.32, an
amount that Knopf has already collected from the proceeds of the
sale of the Penthouse.
The funds from the sale of the Penthouse were distributed
as follows:

Esposito’s brief incorporates by reference Feldman’s arguments
about Knopf’s damages.
3

4

Category

Party
Credited to buyer Phillips

(1) Buyer
(2) Recorded Mortgage to Meister Seelig4
mortgage

(3) Taxes

(4)
Condominium
Lien

(5) Closing
costs

Amount
Total:
$579,688.32

Total:
$650,000

Two City of New York Real Estate Tax $41,101.41
liens and one Judgment based upon
$42,355.78
unpaid New York City real estate
$132,354.71
taxes
Past due NYC real estate taxes plus
$24,450.30
interest that had not yet been
reduced to a lien
NYC and New York state transfer
$54,750
taxes
Total: $295,012.20
Liens for condominium charges
pursuant to a settlement with the
condominium

Total:
$381,999.64

Title closer
Managing agent fee
Closing attorney Feldman
Title charges to Royal Abstract of
New York, LLC
Condominium flip tax (payment
required by condominium as a
condition of closing)

$500
$200
$25,000
$1,600
$30,000
Total:

(6) Payment
to seller

Payment to the seller, Pursuit

$57,300

$975,000
$10,999.84

This amount was to be held in escrow by the title company to
satisfy a January 6, 2015 mortgage plus interest in favor of the
law firm Meister Seelig pending the resolution of a dispute over
the mortgage between the Knopfs and Meister Seelig. This
dispute was resolved in Knopf v. Meister, Seelig & Fein, LLP,
No. 15CV5090(DLC), 2017 WL 1449511 (S.D.N.Y. Apr. 21, 2017),
when this Court granted summary judgment to Meister Seelig on
the sole remaining claim brought against them by the Knopfs.
That decision was affirmed on appeal. See Knopf v. Meister,
Seelig & Fein LLP, 721 F. App'x 96 (2d Cir. 2018).
4

5

Total: $985,999.84
(7) Payment
to Esposito

Esposito Partners PLLC

Total:
$50,000

Knopf has not shown that she is entitled to certain
categories of the sale proceeds.

She does not argue that she

would have been able to negotiate priority over state and city
taxes5 or the various closing costs listed in the chart above.
Together, the taxes and closing costs are $352,012.20.

Knopf

also admits that she has already collected $771,227.32 from the
proceeds of the sale of the Penthouse.

Additionally, Esposito

argues that it is appropriate to subtract $250,000 from Knopf’s
potential damages because she has already recovered $250,000
from her settlement with defendants Dorsey & Whitney, LLP and
Nathaniel Akerman.

Knopf does not dispute this contention.

Subtracting these amounts from the $3 million proceeds from the
sale of the Penthouse leaves Knopf with a total of $1,626,460.48
in potential damages.
Knopf argues that, but for the January 12 Call, she would
have been able to go to court to prevent the sale altogether or
to negotiate over the following categories of disbursements from
the sale of the Penthouse: (1) the mortgage to Meister Seelig;

5

“It is well established that unpaid taxes constitute a lien upon
the real estate against which they are assessed prior and
superior to that of any mortgage.” McCarthy v. Emma, 304 N.Y.
153, 157 (1952).
6

(2) the condominium liens; (3) the payment to Esposito; and (4)
the payment to the seller, Pursuit.
Knopf has not shown that, had she received notice of the
January 12 Call and gone to court to obtain a lien on the
Penthouse in January 2016 (or threatened to do so), that that
lien would have had priority over the Meister Seelig mortgage,
which was filed in 2015.

New York adheres to the common-law

principle of “first in time, first in right.”

Sanford v.

Bennett, 783 N.Y.S.2d 423, 425 (3rd Dept. 2004); Bank Leumi Tr.
Co. of New York v. Liggett, 496 N.Y.S.2d 14, 16 (1st Dept.
1985); Bd. of Educ. of Pleasantville Union Free Sch. Dist. No. 9
v. Leen, 896 N.Y.S.2d 836, 841 (Sup. Ct. 2010).

Even if Knopf

obtained a lien immediately after the January 12 Call, this lien
would have been later in time than the 2015 Meister Seelig
mortgage.

As a result, the Meister Seelig mortgage -- $650,000

-- is subtracted from the potential damages, leaving Knopf with
a total of $976,460.48 in potential damages.
Knopf may be able to demonstrate that she is entitled to
damages based on the other three categories of disbursements.
Knopf makes extensive arguments about why the condominium liens
are “unenforceable.”

These liens were filed in 2009 and 2014.

Unless Knopf can demonstrate that these liens are unenforceable,
the condominium liens would have had priority over any lien
Knopf could have obtained in January 2016 because they were

7

“first in time.”

The parties will be given an opportunity to

file motions in limine to address Knopf’s argument that the
condominium liens were “unenforceable.”

The burden will be on

Knopf at her trial against Esposito to prove an entitlement to
actual damages in an amount of up to $976,460.48.
Conclusion
Knopf’s motion for summary judgment against Esposito, and
Esposito’s motion for summary judgment on liability, are denied.
Issues of material fact remain regarding the alleged agreement
between Esposito, Sanford, and a state court employee to deprive
Knopf of her due process rights and her property interest in the
Penthouse.
Esposito’s motion for summary judgment is granted to the
extent that Knopf may recover only up to $976,460.48 in actual
damages.
Finally, Knopf’s motion to dismiss Esposito’s affirmative
defenses, which is unopposed by Esposito, is granted.

Dated:

New York, New York
May 26, 2021
____________________________
DENISE COTE
United States District Judge

8