A couple of entrepreneurs meet in college and start up a translation company. Many years later, successful as hell, they embark on a new hobby…litigation. Both take to the sport and become pros. Shawe v Elting 2017 NY Slip Op 31406(U) June 29, 2017 Supreme Court, New York County Docket Number: 153375/2016 is a wonderful story, well told by Judge Shirley Werner Kornreich. It touches, tangentially, on Judiciary Law § 487.
“These cases concern the acrimonious disputes between Elizabeth Elting and Philip Shawe that resulted in the Delaware Court of Chancery (Bouchard, C.) ordering the forced sale of Transperfect, the company they co-founded in college. In a 104-page post-trial opinion dated August 13, 2015, Chancellor Bouchard appointed a custodian and ordered the company’s sale because:
the state of management of the corporation has devolved into one of complete dysfunction between Shawe and Elting, resulting in irretrievable deadlocks over significant matters that are causing the business to suffer and that are threatening the business with irreparable injury, notwithstanding its profitability to date. The stockholders of the corporation have stipulated to their inability to elect successor directors, and there is no prospect they will do so in the future …. [A ]ppointment of a custodian to sell the corporation, with a view toward maintaining the business as a going concern and maximizing value for the stockholders, affords the only just and viable remedy under the unique circumstances of this case. ”
“An extensive review of the Post-Trial Decision, with which the court assumes familiarity, makes it clear that while there are no angels in this case, Elting and Shawe are not on anything close to equal equitable footing. Simply put, the Post-Trial Decision was a massive win for Elting; it amounts to a worst-case-scenario loss for Shawe. Shawe’s displeasure is manifest in his vigorous appeal to the Supreme Court of Delaware and political campaign to limit the Court of Chancery from ordering the sale of a profitable closely-held company.”
“Finally, Shawe asserts a claim under Judiciary Law§ 487 based on a defamation counterclaim Elting filed on July 16, 2014 in another action commenced by Shawe (and still pending in a non-commercial part), in which he alleged that Elting assaulted him. See Shawe v Elting, Index No. 155890/2014, Dkt. 22 at 14-16 (Sup Ct, NY County). This claim borders on the frivolous.
On June 10, 2014, “Shawe went to Elting’s office to confront her about [a] tax distribution.” Post-Trial Decision, 2015 WL 4874733, at *20. “According to Elting, Shawe would not leave her office despite repeated requests and blocked her from closing the door by putting his foot in it, at which point Elting tried to move it with [her] foot.”. Id. (citation and quotation marks omitted). “Curiously, while his foot was in the door, Shawe called one of his attorneys from Sullivan & Cromwell, rather than focus on resolving the situation at hand (i.e., removing his foot from the door).” Id. The very next day: On June 11, 2014, Shawe filed a “Domestic Incident Report” in which he accused Elting of pushing him and kicking him in the ankle the previous day. In a parenthetical at the very end of the report, Shawe identified Elting as his exfiancee, even though their engagement ended seventeen years earlier, apparently to ensure that the matter would be treated as a domestic violence incident and require Elting’s arrest. Shawe’s denial of reporting the incident in this manner to have Elting arrested is not credible. The police called Elting the next day and told her she was going to be arrested for assault and battery. After Elting’s lawyers intervened, the charges were dropped, but Shawe filed a civil tort case against her that remains pending. Id. at *21.
Shawe now complains that, before alleging in his tort case that there was an active police investigation, Elting’s counsel should have informed him that they knew that, by June 18, 2014, the police had decided not to arrest Elting. Shawe cynically maintains that, notwithstanding his deceptive reporting of the alleged assault to the police, the failure of Elting’s counsel to notify him of the police decision amounts to egregious conduct sufficient to give rise to a claim under section 487. As explained below, he is wrong. “