| Cardinal Holdings, Ltd. v Indotronix Intl. Corp. |
| 2010 NY Slip Op 04327 [73 AD3d 960] |
| May 18, 2010 |
| Appellate Division, Second Department |
| Cardinal Holdings, Limited,Appellant-Respondent, v Indotronix International Corporation et al.,Respondents-Appellants. (Appeal No. 1.) Cardinal Holdings, Limited, Plaintiff, v IndotronixInternational Corporation et al., Respondents. John V. Fabiani, Jr., Nonparty Appellant. (AppealNo. 2.) Cardinal Holdings, Limited, Appellant, v Indotronix International Corporation et al.,Respondents. (Appeal No. 3.) |
—[*1] Van DeWater & Van DeWater, LLP, Poughkeepsie, N.Y. (Cynthia S. Rosenzweig ofcounsel), for respondents-appellants in appeal No. 1, and respondents in appeals No. 2 and3.
In an action to enforce a money judgment, the plaintiff appeals (1), as limited by its brief,from so much of an order of the Supreme Court, Dutchess County (Pagones, J.), dated February23, 2009, as granted that branch of the defendants' motion which was to dismiss the complaintpursuant to CPLR 3211, and the defendants cross-appeal from so much of the same order asdenied that branch of their motion which was for an award of sanctions against the plaintiff andthe plaintiff's attorney pursuant to 22 NYCRR 130-1.1 (c), (2) the nonparty John V. Fabiani, Jr.,an attorney for the plaintiff, appeals, as limited by his brief, from so much of an order of thesame court dated June 22, 2009, as granted that branch of the defendants' motion which was forleave to renew that branch of their prior motion which was for an award of sanctions against himand, upon renewal, granted that branch of the defendants' prior motion and directed that he paythe sum of $2,500 to the Lawyers' Fund for Client Protection, and (3) the plaintiff appeals from ajudgment of the same court entered July 15, 2009, which, upon so much of the order dated June22, 2009, as granted that branch of the defendants' motion which was for leave to renew thatbranch of their prior motion which was [*2]for an award ofsanctions against it and, upon renewal, granted that branch of the defendants' prior motion anddirected that it pay the sum of $9,700 as sanctions, is in favor of the defendants and against it inthe sum of $9,700.
Motion by Cardinal Holdings, Limited, on appeals and a cross appeal from an order of theSupreme Court, Dutchess County, dated February 23, 2009, and an appeal from an order of thesame court dated June 22, 2009, pursuant to CPLR 5520 (c), inter alia, to deem the notice ofappeal from the order dated June 22, 2009, a premature notice of appeal from a judgment of thesame court entered July 15, 2009. By decision and order on motion of this Court dated December15, 2009, the motion was held in abeyance and referred to the panel of Justices hearing theappeals for determination upon the argument or submission of the appeals.
Upon the papers filed in support of the motion and the papers filed in opposition thereto, andupon the argument of the appeals and cross appeal, it is
Ordered that the motion by Cardinal Holdings, Limited, is granted to the extent that thenotice of appeal served and filed by Cardinal Holdings, Limited, from the order dated June 22,2009, is deemed a premature notice of appeal from the judgment entered July 15, 2009(see CPLR 5520 [c]), and the motion by Cardinal Holdings, Limited, is otherwisedenied; and it is further,
Ordered that the cross appeal by the defendants from so much of the order dated February23, 2009, as denied that branch of their motion which was for an award of sanctions against theplaintiff and the plaintiff's attorney is dismissed, as that portion of the order was superseded bythe subsequent order dated June 22, 2009, and the judgment entered July 22, 2009; and it isfurther,
Ordered that the order dated February 23, 2009, is affirmed insofar as appealed from by theplaintiff; and it is further,
Ordered that the order dated June 22, 2009, is affirmed insofar as appealed from by thenonparty John V. Fabiani, Jr.; and it is further,
Ordered that the judgment is affirmed; and it is further,
Ordered that one bill of costs is awarded to the defendants; and it is further,
Ordered that on the Court's own motion, counsel for the respective parties are directed toshow cause why an order should or should not be made and entered imposing additionalsanctions and/or costs, if any, against the plaintiff and/or its counsel pursuant to 22 NYCRR130-1.1 (c) as this Court may deem appropriate, by filing an original and four copies of theirrespective affirmations or affidavits on that issue in the office of the Clerk of this Court andserving one copy of the same on each other on or before June 18, 2010; and it is further,
Ordered that the Clerk of the Court, or his designee, is directed to serve counsel for therespective parties with a copy of this decision and order by regular mail.
In October 2000, a foreign money judgment (hereinafter the Chandre judgment) was enteredin favor of the plaintiff Cardinal Holdings, Limited (hereinafter Cardinal), against nonpartyChandre Corporation (hereinafter Chandre). The Chandre judgment was docketed againstChandre in the Office of the Dutchess County Clerk in 2002. On March 25, 2003, Chandre filedfor bankruptcy protection. In 2004, Cardinal commenced an action against the defendants namedin this action (hereinafter the defendants) in federal District Court seeking to enforce theChandre judgment against the defendants under an alter-ego theory. The District Court dismissedthat action on the ground that only the trustee of the Chandre bankruptcy estate had standing toassert that claim. Thereafter, the trustee of the Chandre bankruptcy estate commenced anadversary proceeding in the Bankruptcy Court against the defendants seeking, inter alia, toenforce the Chandre judgment against [*3]the defendants underan alter-ego theory. The defendants and the trustee entered into a stipulation and order approvingsettlement and a general release which was so ordered by the Bankruptcy Court on October 20,2006. In September 2008, Cardinal commenced the instant action again seeking to enforce theChandre judgment against the defendants on the same alter ego theory.
The Supreme Court properly granted that branch of the defendants' motion which was todismiss the complaint on the ground that the action was barred by a general release. " 'A releaseis a contract, and its construction is governed by contract law' " (Lee v Boro Realty, LLC, 39 AD3d715, 716 [2007], quoting Kaminsky v Gamache, 298 AD2d 361, 361 [2002])."Where a release is unambiguous, the intent of the parties must be ascertained from the plainlanguage of the agreement" (Kaminsky v Gamache, 298 AD2d at 361; see Chaudhryv Garvale, 262 AD2d 518, 519 [1999]). In this regard, the documentary evidence establishedthat the clear and unambiguous terms of the General Release executed and made part of thestipulation and order approving settlement by the trustee of the Chandre bankruptcy estateresolved and settled the claims asserted by Cardinal in this action. Moreover, contrary toCardinal's contentions, the cause of action seeking recovery on the Chandre judgment under analter-ego theory was the property of the bankruptcy estate (see St. Paul Fire & Mar. Ins. Co.v PepsiCo, Inc., 884 F2d 688, 704 [1989]). There also was no showing in the record that thebankruptcy trustee abandoned the cause of action now asserted by Cardinal (see 11 USC§ 554). Cardinal's failure to name Chandre as a party also required the dismissal of thisaction (see CPLR 1001; Corman v LaFountain, 38 AD3d 706, 708 [2007]; StewartTenants Corp. v Square Indus., 269 AD2d 246, 248 [2000]).
The Supreme Court providently exercised its discretion in granting the defendants' motionfor leave to renew that branch of their original motion which was for sanctions pursuant to 22NYCRR 130-1.1 (c). The defendants provided a reasonable justification for their failure tosubmit, on the original motion, affirmations for legal services rendered (see Heaven v McGowan, 40 AD3d583 [2007]; Gomez v NeedhamCapital Group, Inc., 7 AD3d 568, 569 [2004]). Upon renewal, the Supreme Court alsoprovidently exercised its discretion in granting that branch of the defendants' motion which wasto impose sanctions upon Cardinal and its counsel pursuant to 22 NYCRR 130-1.1 (c) forfrivolous conduct. The record supports the Supreme Court's finding that the commencement ofthis action by Cardinal and its counsel was frivolous and was undertaken primarily to harass thedefendants (see Kornblum vKornblum, 34 AD3d 749, 751 [2006]). The continuation of the same meritlessarguments on appeal would appear to constitute frivolous conduct. Therefore, we direct counselfor the parties to show cause why additional sanctions and/or costs should or should not beimposed (see Tornheim v Blue & White Food Prods. Corp., 73 AD3d 749 [2010]; Caplan v Tofel, 65 AD3d 1180,1181-1182 [2009]).
Cardinal's remaining contentions are without merit. Skelos, J.P., Santucci, Angiolillo andChambers, JJ., concur.