NY Lawyer Who Sued the Wrong Party Stuck With $13,287.50 Tab

NY Lawyer Who Sued the Wrong Party Stuck With $13,287.50 Tab
New York Lawyer by Mark Fass - July 8, 2008

A Brooklyn attorney who refused to discontinue a real-estate action even though it was "crystal clear" she had sued the wrong entity has been ordered to reimburse the defendant for the costs it incurred defending the suit. However, Supreme Court Justice Arthur M. Schack of Brooklyn awarded defendant United Equities Inc. only about half of the $25,000 it sought in attorney's fees, and declined to add sanctions, calling the $13,287.50 in costs a "sufficient penalty." "In the instant action, a reasonable attorney would have discontinued the action against defendant UEI when presented with documentation demonstrating that UEI was the wrong party," Justice Schack wrote in Robertson v. United Equities Inc., 35178/04. In the underlying real-property action, plaintiff Robert Robertson secured a default judgment against United Equities Corp., among others. The plaintiff's attorney, Regina Felton, subsequently tried to enforce that judgment against United Equities Inc., an entity wholly unrelated to its near namesake, United Equities Corp. In phone calls, faxes and depositions, attorneys for United Equities Inc., informed Ms. Felton that she had the wrong entity.

After she consistently refused to discontinue the action, United Equities Inc. moved for summary judgment and for costs and sanctions for Ms. Felton's purportedly "frivolous" conduct. In September 2007, Justice Schack granted summary judgment and, in a decision last week, he awarded the defense $13,287.50 in costs. "It is clear that Ms. Felton, since February 2005, ignored UEI's good faith attempts to resolve this matter without resort to lengthy and costly proceeding," he concluded. "Ms. Felton's continuance of the action against the wrong defendant UEI, 'is completely without merit in law' and 'asserts material factual statements [about UEI] that are false,'" he added, citing the New York Code Rules and Regulations' definition of frivolous conduct. New York's Business Corporations Law Section 301 states that a business' name must "distinguish it from the names of corporations of any type or kind."

A spokeswoman for the New York Department of State said United Equities Inc. was allowed to take its name in 2003 because United Equities Corp. had dissolved in 2001. Matthew Hearle of Goldberg Weprin & Ustin represented United Equities Inc. Mr. Hearle said such name confusion "happens a lot," particularly between LLC's and corporations. "Generally once [it] is explained to plaintiff's counsel, it's discontinued," he said. "That's why this became such a megillah." Ms. Felton responded to a request for comment by e-mailing a time line of the case and a copy of her brief, in which she contended, among other things, that she had offered to withdraw the suit if the defense had provided her with a sworn statement that it is "in no way connected" to the proper parties. Justice Schack concluded in his decision that the company's verified answer "may be utilized" as exactly the type of affidavit Ms. Felton sought.