| Stone Mtn. Holdings, LLC v Spitzer |
| 2014 NY Slip Op 04915 [119 AD3d 548] |
| July 2, 2014 |
| Appellate Division, Second Department |
[*1]
| 1 Stone Mountain Holdings, LLC,Respondent, v Eliyahu Spitzer et al., Appellants, et al.,Defendants. |
Jeremy Rosenberg, New York, N.Y., for appellants.
Siegel & Reiner LLP, New York, N.Y. (Richard H. Del Valle of counsel), forrespondent.
In an action to foreclose a mortgage, the defendants Eliyahu Spitzer, also known asEliot Spitzer, Sharona Spitzer, Michael Steinberg, and the 2nd Ave Project, LLC, appeal,as limited by their brief, from so much of an order of the Supreme Court, RocklandCounty (Kelly, J.), entered May 22, 2012, as denied their cross motion for an orderdirecting the plaintiff to provide them a satisfaction of judgment and to impose sanctionson the plaintiff.
Ordered that the order is affirmed insofar as appealed from, with costs.
In December 2007, Eliyahu Spitzer, also known as Eliot Spitzer (hereinafter Spitzer),and Michael Steinberg borrowed $3 million from the plaintiff on behalf of EverydayLogistics, LLC. Spitzer and Steinberg executed various notes and guaranties, and Spitzerand his wife, Sharona Spitzer (hereinafter Mrs. Spitzer), pledged their home as partialcollateral for the loan and gave the plaintiff a mortgage thereon. Spitzer and Steinbergfailed to repay the loan and the plaintiff brought this action against, inter alia, Spitzer,Mrs. Spitzer, and Steinberg (hereinafter collectively the defendants) seeking, amongother things, to foreclose on the mortgage and obtain, if relevant, a deficiency judgmentagainst Spitzer and Steinberg.
The Supreme Court entered a judgment of foreclosure and sale in favor of theplaintiff in the sum of $4.32 million. However, after that judgment was entered, theplaintiff, in two separate documents, released the mortgage and cancelled the lis pendensin exchange for a payment of $100,000. In a third document, the parties purportedlystipulated to the discontinuance of the action with prejudice. Nevertheless, the plaintiffsought postjudgment depositions of the defendants for the purpose of discovering assetsand, when the defendants failed to appear, obtained a conditional order of contempt, inwhich the court stated that defendants could avoid contempt by appearing for depositionswithin 30 days of the service of the order. That order was served on September 7, 2011.Thereafter, the plaintiff was able to obtain Spitzer's and Steinberg's depositions, but Mrs.Spitzer refused to appear. On February 29, 2012, the plaintiff moved to enforce theconditional order and hold Mrs. Spitzer in contempt. The defendants cross-moved for anorder directing the plaintiff to provide them a satisfaction of judgment and for sanctionsagainst the plaintiff for frivolous behavior on the ground that they had no basis forseeking Mrs. Spitzer's deposition. The court granted the plaintiff's motion to hold Mrs.Spitzer in contempt and denied both branches of the defendants' cross [*2]motion. The defendants appeal from the denial of theircross motion.
The Supreme Court properly denied that branch of the defendants' cross motionwhich sought an order directing the plaintiff to provide them a satisfaction of judgment.In general, "[w]hen an action is discontinued, it is as if it had never been; everythingdone in the action is annulled and all prior orders in the case are nullified" (Newmanv Newman, 245 AD2d 353, 354 [1997]). However, pursuant to CPLR 3217 (a) (2),the parties may stipulate to discontinuance only "before the case has been submitted tothe court or jury." In this case, the Supreme Court's entry of a judgment of foreclosureand sale indicates that the matter had been submitted to the court and, therefore, at thetime the parties entered into the stipulation, discontinuance by stipulation was no longerpermitted (see CPLR 3217 [b]). In any event, the parties did not treat thestipulation as having annulled the action but instead continued to litigate. Accordingly,the court correctly determined that the stipulation did not entitle the defendants todocuments enabling them to expunge the judgment.
Moreover, the defendants' submissions did not establish that the plaintiff agreed toaccept the $100,000 in full satisfaction of the judgment. A court's fundamental objectivein interpreting a contract is to determine the parties' intent from the language employedand to fulfill their reasonable expectations (see Rivera v Wyckoff Hgts. Med. Ctr., 113 AD3d 667, 670[2014]; St. John's Univ., N.Y. vButler Rogers Baskett Architects, P.C., 92 AD3d 761, 764 [2012]; 131 Heartland Blvd. Corp. v C.J.Jon Corp., 82 AD3d 1188, 1189 [2011]). Here, to read the plaintiff's release ofthe mortgage and cancellation of the lis pendens in exchange for a payment of $100,000as constituting their agreement to accept that sum in full satisfaction of the judgmentwould be to strain the language of these documents beyond the breaking point and tocreate a windfall for the defendants by allowing them to obtain satisfaction of thejudgment by paying roughly 3.3% of the principal sum borrowed and less than 2.4% ofthe judgment. This result could not have been within the parties' expectations whennegotiating these documents. Instead, giving a reasonable reading to the plain languageof documents (see Greenfield v Philles Records, 98 NY2d 562, 569 [2002]; NML Capital v Republic ofArgentina, 17 NY3d 250, 259 [2011]; Brad H. v City of New York, 17 NY3d 180, 185 [2011]; Vermont Teddy Bear Co. v 538Madison Realty Co., 1 NY3d 470, 475 [2004]; St. John's Univ., N.Y. vButler Rogers Baskett Architects, P.C., 92 AD3d at 765), it appears that the plaintiffagreed to accept a payment of $100,000 either as collateral in lieu of the house or simplyas a partial payment of the $4.32 million judgment. Accordingly, the Supreme Courtcorrectly determined that the defendants did not demonstrate that they were entitled to anorder directing the plaintiff to provide them a satisfaction of judgment enabling them toexpunge the judgment against them.
The Supreme Court also properly denied that branch of the defendants' cross motionwhich was for sanctions. A court, "in its discretion, may award to any party or attorney inany civil action or proceeding before the court . . . costs in the form ofreimbursement for actual expenses reasonably incurred and reasonable attorney's fees,resulting from frivolous conduct" (22 NYCRR 130-1.1 [a]). Although the advancementof a meritless position may serve as the basis for a finding of frivolity, the standard forsuch a showing is high: the rule provides that a position will be deemed frivolous onlywhere it is "completely without merit in law and cannot be supported by a reasonableargument for an extension, modification or reversal of existing law" (22 NYCRR 130-1.1[c] [1]; see Mascia vMaresco, 39 AD3d 504, 505 [2007]; Kucker v Kaminsky & Rich, 7 AD3d 491, 492[2004]). The party seeking sanctions has the burden to demonstrate that its opponent'sconduct was frivolous within the meaning of 22 NYCRR 130-1.1 (c).
Here, according to the Supreme Court's August 25, 2011, conditional order ofcontempt, which was served on September 7, 2011, the plaintiff was entitled to seek afinal order of contempt as early as October 7, 2011. By waiting to seek enforcement untilFebruary 29, 2012, the plaintiff gave the defendants approximately 4 1/2 and one half additional months to produce Mrs. Spitzer, to which they were notentitled. Under these circumstances, the plaintiff's motion to enforce the conditionalorder of contempt was not frivolous.
The defendants' remaining contention is without merit. Eng, P.J., Austin,Hinds-Radix and LaSalle, JJ., concur.