Board of Mgrs. of Foundry at Wash. Park Condominium v Foundry Dev. Co., Inc.   2013 NY Slip Op 51423(U)   Decided on August 23, 2013   Supreme Court, Orange County   Marx, J. is a short caption for a very convoluted case.  It involves real estate as does much NY litigation.  What is particularly interesting here is that the attorney defendants (admittedly the tail of the dog) seem to have been vindicated earlier, yet are dragged in again.  More to the point, the Court strongly admonishes plaintiff, who is "a judge in a lower court" and hits him with the full $ 10,000 sanction along with attorney fees.
 

"It is obvious that Plaintiffs are attempting to use this derivative action to launch a collateral attack on counsel for The Foundry in an effort to hobble their legal representation of The Foundry in Action No. 1. The Foundry’s claims against Plaintiffs in Action No. 1 have survived pleading motions but their ultimate merit remains to be determined. Plaintiffs must await the trial and/or resolution of Action No. 1 and advance their defenses appropriately in that action instead of raising them here under the guise of an action that purports to vindicate the rights of the very entity that is prosecuting claims against them. Essentially, Plaintiffs’ claim is that but for the negligence of counsel, the action brought against them on The Foundry’s behalf would not have been filed. While they may incorporate that notion into their defense against The Foundry’s claims, it cannot serve as the basis for a derivative action on behalf of The Foundry against their own counsel, particularly while The Foundry’s case is ongoing. This Court declines to be made a party to such efforts. As the Court previously noted in its Decision and Order dismissing Plaintiffs’ claims against Smith, Buss & Jacobs, the liens are intended to protect the interest of The Foundry and its ability to recover on its claims in Action No.1. Plaintiffs may not thwart that effort with this collateral attack on counsel’s representation of The Foundry. Accordingly, BSRB’s motion to dismiss is granted.

Sanctions

BSRB requests sanctions against Plaintiffs pursuant to 22 NYCRR §130-1.1(c) for filing a frivolous claim.

Pursuant to 22 NYCRR §130-1.1(c) "conduct is frivolous if:

(1) it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law;
(2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or
(3) it asserts material factual statements that are false."
The Court finds Plaintiffs’ conduct in asserting the claim for breach of fiduciary duty against BSRB to be frivolous within the meaning of 22 NYCRR §130-1.1(c), because it is "completely without merit in law" and was "undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another; or
(3) it asserts material factual statements that are false."
The Court finds Plaintiffs’ conduct in asserting the claim for breach of fiduciary duty against BSRB to be frivolous within the meaning of 22 NYCRR §130-1.1(c), because it is "completely without merit in law" and was "undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another." It is apparent, as this Court has already stated, that Plaintiffs undertook a claim against BSRB in an effort to thwart their efforts to adequately represent The Foundry. In fact, Plaintiffs’ suit against BSRB is part of a disturbing pattern that has emerged in these cases, whereby the defendants in Action No. 1, including Plaintiffs herein, seek to attack the attorneys representing The Foundry rather than address the merits of the claims that are alleged against them. The Court is deeply dismayed at [*5]the dilatory and disingenuous conduct that has been displayed, including the filing of related actions in other courts, the existence of which was not disclosed to this Court until the filing of a motion to consolidate and/or join such actions with Action No. 1, which has been pending in this Court. The pattern of delay and distraction which has emerged is a drain upon the resources of this Court and counsel who have had to respond to the unrelenting efforts to protract the litigation and prevent the adjudication of Action No. 1 on the merits. Such conduct cannot and will not be tolerated by this Court. What makes this matter even more egregious is the fact that Joseph Suarez is not only an attorney, but a judge in a lower court. As such, he should know how taxing baseless actions are on the Court’s already strained resources. Further, he persisted in pursuing this action against BSRB even after this Court cautioned him, on the record in open court, that the Court took a dim view of any effort to unnecessarily delay this case[FN4] and/or to attempt to improperly chill BSRB’s representation of The Foundry. Accordingly, as permitted by Court Rule 22 NYCRR §130-1.1(a), the Court imposes a sanction on Mr. Suarez, in the amount of $10,000.00, to be paid to the client security fund within 30 days of the date hereof.The Court also awards BSRB attorney’s fees for bringing both the motion to consolidate and/or join Action No. 3 with Action No. 1 and the instant Order to Show Cause, together with costs and disbursement related thereto. BSRB shall file an application for said attorney’s fees, costs and disbursements within 15 days of the date of this Order. "