Opinion
34401/05.
Decided August 7, 2008.
James T Gerardi, Esq., East Northport, NY, Plaintiff.
Regina Felton, Esq., Felton Associates, Brooklyn, NY, Defendant.
In this matter, resulting from a real estate transaction that never closed, the Court, pursuant to 22 NYCRR § 130-1.1 (a), awards costs of $40,600.50 to plaintiff Faith Astrada and imposes the maximum sanction of $10,000.00 upon defendant Regina Felton, Esq., for her "frivolous conduct" that "is completely without merit in law," in violation of 22 NYCRR § 130-1:1 (c).
Much of Ms. Felton's frivolous conduct is detailed in my prior decisions and orders in this matter ( 14 Misc 3d 1206 (A) [December 21, 2006]; 14 Misc 3d 1231 (A) [February 14, 2007]. Further, I conducted a hearing on February 9, 2007, to give Ms. Felton "a reasonable opportunity to be heard" before any imposition of costs and sanctions [ See 22 NYCRR § 130-1.1 (d)]. Ms. Felton's continued egregious defiance of Court mandates, subsequent to the hearing, delayed the issuance of this decision and order, and resulted in finding Ms. Felton guilty of civil contempt and her incarceration on Riker's Island, which lasted for eleven days, until she purged her contempt.
This decision and order is based upon my review of the minutes of the Part 130 hearing, my prior orders and decisions in the instant matter, my review of Ms. Felton's contempt hearing minutes, Ms. Felton's ultimate refund of plaintiff's down payment together with accrued and statutory interest, and the Appellate Division, Second Department unanimous affirmance of my prior orders of December 21, 2006 and February 14, 2007. Pursuant to 22 NYCRR § 130-1.2, this is the "written decision setting forth the conduct on which the award or imposition [of costs and sanctions] is based, the reasons why the court found the conduct to be frivolous, and the reasons why the court found the amount awarded or imposed to be appropriate."
Contract of sale for 70 Clifton Place
The events of this case began in April 2005 when plaintiff Astrada and defendant Archer, then 85 years old, entered into a residential contract of sale for Ms. Astrada's purchase of 70 Clifton Place, Brooklyn, New York from Mr. Archer. Defendant Felton was then the attorney for defendant Archer. Pursuant to the contract of sale, Ms. Astrada gave, on April 7, 2005, to Ms. Felton a down payment check for $30,000.00, payable to "Regina Felton as Attorney."
As outlined in my December 21, 2006 decision and order, in which I granted summary judgment to plaintiff for breach of contract and dismissed defendants' counterclaims, problems developed in fulfilling the terms of the contract of sale due to misrepresentations in the inartfully drafted contract and rider. The rider stated, in ¶ 2, that the building "is a legal one family house," while the contract stated, in ¶ 15, and the rider stated, in ¶ 8, that the building was vacant of tenants and "is registered as a Single Room Occupancy (SRO)." Records of the New York City Buildings Department showed that since 1958 the property had a certificate of occupancy as a two-family building, without any SRO registration. The New York City Department of Finance classified the building as "B1," a two-family brick-building. Despite not being an SRO since 1958, the contract of sale required the seller, Mr. Archer, to obtain a certificate of no harassment from the Commissioner of the New York City Department of Housing and Preservation Development (HPD). A certificate of no harassment is required in SRO buildings to protect low-income SRO residents from eviction ( See New York City Administrative Code, § 27-198). However, Ms. Felton did not ascertain for 17 months that the building was not an SRO, and thus not subject to obtaining a certificate of no harassment. She only learned that the premises was not an SRO when HPD sent Mr. Archer a letter to that effect, dated September 16, 2006.
Plaintiff Astrada, while waiting for a mortgage commitment, ordered a title search. The May 15, 2005-title report found that a lis pendens had been filed against the Archer property on October 26, 2004 ( La Fortune, et. al. v Archer, et. al. [Sup Ct, Kings County, Index No. 35314/04]. The title report required a satisfactory disposition of the lis pendens as a condition precedent to insuring title and closing. Further, Ms. Astrada retained an architect to plan a major renovation and rehabilitation of the premises.
Misrepresentations and Fabrications by Defendant Felton
Plaintiff received, on July 15, 2005, a mortgage commitment from HSBC Bank. The commitment required that prior to the closing, similar to the title company, the lis pendens be dismissed. Ms. Felton, in ¶ 25 of her affirmation in opposition to plaintiff's motion for summary judgment, claimed that plaintiff's allegation that she could not close because of the outstanding lis pendens and the absence of a certificate of no harassment "is a total and complete fabrication." I held in 14 Misc 3d 1206 (A) [December 21, 2006], at 4-5, that:
Actually, this is "a total and complete fabrication" by Ms. Felton. The Title Report required the resolution of the lis pendens prior to closing, whether by discontinuance or vacating of any judgments. Only the defendants had the power to resolve the lis pendens. The October 26, 2004 lis pendens has never been dismissed or vacated. The Court requisitioned and reviewed the Kings County Clerk's file for Supreme Court Index Number 35313/04. Ms. Felton, in paragraph 36 of her affirmation in opposition states, "[t]he Notice of Pendency was for a sum of less than $10,000 for which I obtained a stipulation that the said sum would be paid out of the proceeds of the closing." In support of this, Ms. Felton attached to her papers as exhibit D the first page of a document entitled "Stipulation," with Index Number 35314/04. This purported stipulation names Mark E. Tulip, Esq., as escrow agent, to receive the money in dispute and discontinue the lis pendens upon clearance of the funds in dispute. Ms. Felton failed to attach any other pages of the purported "stipulation." . . . Mr. Tulip, in exhibit D of plaintiff's reply affirmation in support of the motion, states in an affirmation, that he faxed a proposed stipulation of settlement to Ms. Felton on June 3, 2005 and "[t]he same was never executed nor was there even an agreement by Ms. Felton of its terms." The complete proposed stipulation is included in exhibit D of the reply affirmation in support of the motion. It shows unexecuted signature lines for the former attorney for Mr. Archer, Carl H. Smith, who resigned from the bar for disciplinary reasons, as well as Mr. Archer. There is no signature line for Ms. Felton's agreement. Further, the proposed stipulation does not state that the sums due will be paid out of the closing proceeds, as represented above by defendant Felton.
[ Emphasis added]
The contract of sale provided, in ¶ 10, that purchaser would obtain at her own expense a mortgage commitment of $714,00.00 and "shall exercise his [sic] best effort in good faith to obtain the said mortgage commitment." Further, "[i]f after applying diligently and in good faith, Purchaser fails to obtain the said mortgage commitment within forty-five (45) days from the date hereof, then unless Purchaser waives this paragraph 10' in writing within the said number of days, this contract shall be deemed cancelled and Seller shall return Purchaser's down-payment."
Ellen M. Boyle, Esq., plaintiff's former counsel, in an October 12, 2005-letter to Ms. Felton, advised Ms. Felton of her client's failure to obtain a certificate of no harassment, and requested the return of the $30,000.00 down payment. Ms. Boyle sent a notice to Ms. Felton, on October 28, 2005, with a copy to Mr. Archer, pursuant to ¶ 12 of the rider, demanding the return of the down payment, because even though Ms. Felton advised Ms. Boyle that she had obtained the certificate of no harassment, Ms. Boyle's "investigation reveals that no application had been submitted for a Certificate of No Harassment." Even though ¶ 12 of the rider required the notice to Mr. Archer, Ms. Felton filed a complaint with the Grievance Committee for the Second and Eleventh Judicial Districts, claiming that Ms. Boyle violated § 1200.35 of the Code of Professional Responsibility by communicating with Mr. Archer and his wife.
Ms. Boyle then withdrew from the case and James T. Gerardi, Esq., was engaged by plaintiff as her new counsel. Mr. Gerardi, on January 27, 2006, informed Ms. Felton that if she did not obtain a certificate of no harassment by February 8, 2006, the contract of sale would "be deemed null and void and purchaser demands the return of the contract deposit." Ms. Felton ignored the demand.
In defendants' answer to the verified complaint, Ms. Felton denied under oath, "each and every allegation set forth," including her failure to obtain the certificate of no harassment. Ms. Felton's counterclaims were replete with misrepresentations. She claimed that "the premises was being sold as a single room occupancy," when it was a legal two-family house since 1958. She demanded damages from plaintiff for the house being off the market for months. It was Ms. Felton's delay in determining that a certificate of no harassment was unnecessary and her failure to dispose of the lis pendens in La Fortune, et. al. v Archer, et. al., supra, which caused Ms. Astrada's mortgage commitment to expire.
I held, at 6 — 8, of my December 21, 2006 decision and order:
Plaintiff's motion for partial summary judgment . . . demonstrates a prima facie entitlement to judgment as a matter of law. Plaintiff has established: that she and Mr. Archer entered into a contract for the sale of 70 Clifton Place; the terms of the contract; plaintiff's inability to obtain a firm mortgage commitment; defendants' breach in failing to resolve both the certificate of no harassment and lis pendens issues; and, defendants' breach in failing to refund the down payment to plaintiff. It is clear that plaintiff made a good faith effort to obtain a mortgage commitment, and that the inaction of defendants led to plaintiff's failure to secure a "firm written commitment," as stated in paragraph10 of the Rider.
Further, plaintiff relied upon defendant seller and her defendant attorney to secure a certificate of no harassment from HPD. Seller failed to obtain this or a document from HPD that a certificate of no harassment was not required, as the certificate of occupancy was changed in 1958 to a two-family residence. Seller's failure to dispose of the lis pendens filed against the property in Index Number 35313/04 was a condition precedent for HSBC Bank's firm commitment and the title company insuring title at closing. Paragraph 10 of the Rider, the mortgage contingency clause, embraces the mutual benefits to the prospective seller and the prospective purchaser. Either party could have cancelled the Contract upon purchaser's failure to obtain a firm mortgage commitment . . .
Further, defendants' counterclaim is without merit. In essence, defendants allege that they have been damaged because they left the property off the market while they waited for plaintiff to obtain a mortgage commitment. This alleged cause of action flies in the face of the terms of the Contract, which defendant Felton prepared as defendant Archer's attorney . . . It is clear that plaintiff has not breached the Contract and defendants' failure to clear the lis pendens frustrated plaintiff's performance. Defendants, after plaintiff's failure to get a firm mortgage commitment, for whatever reason, could have voided the contract and refunded plaintiff's down payment.
Further, defendant Felton has presented the Court with material misrepresentations. She recites, in her affirmation in opposition, that she had difficulties in securing a certificate of no harassment because of Mr. Archer's age and infirmities. She claims that the application for a certificate of no harassment was twice rejected, but fails to provide any documentary proof. The September 28, 2006-letter from HPD to Mr. Archer, attached to the sur-affirmation of Ms. Felton, states that after determining that a certificate of no harassment is not necessary because of the 1958 change in the certificate of occupancy, "[y]our application is deemed withdrawn." There is no mention of any previous rejections of certificate of no harassment applications.
Ms. Felton also claims, in her affirmation in opposition, to have
secured a stipulation to resolve the lis pendens on the property out of the closing proceeds. This is clearly false. Removal of the lis pendens was a condition precedent for plaintiff to receive a firm mortgage commitment.
In Kressel, Rothlein Roth v Gallagher, 155 AD2d 587, 588 (1st Dept 1989), the Court held that, a "conditional subject to mortgage such as the one at bar is not a firm commitment and does not satisfy a mortgage contingency clause. Such a clause requires that a final approval or commitment be obtained." . . .
It is clear that defendant Felton must return to plaintiff the $30,000.00 down payment. Pursuant to CPLR § 5001 the Court has the discretion to award interest from the date that damages occurred. Therefore, Ms. Felton is to pay plaintiff the accrued interest on the $30,000.00 down payment from April 19, 2005, the day defendant Felton deposited plaintiff's $30,000.00 check, to October 28, 2005, the date of the last demand for refund of the down payment from plaintiff's former counsel. Ms. Felton shall pay interest on the $30,000.00 down payment to Ms. Astrada at the CPLR § 5004 statutory rate of 9 per cent from October 28, 2005 to the date of refund.
February 9, 2007 Part 130 hearing for costs and sanctions
Further, in my December 21, 2006 decision and order, after discussing the legal standard for frivolous conduct, pursuant to 22 NYCRR § 130-1.1, at 10, I found that:
The broad pattern of defendant Felton's conduct in this action is subject to costs and sanctions. It appears that Ms. Felton's arguments are "completely without merit in law or fact." Defendant Felton never ascertained in a timely manner that the premises were a two-family dwelling, not an SRO. If she had done so, plaintiff would not have relied upon the need for a certificate of no harassment. Ms. Felton did not dispose of the lis pendens on the premises. Meanwhile, Ms. Astrada was incurring bills for lawyers, the prospective lender, title company, and an architect. Instead of just returning the down payment to plaintiff, the intransigence of Ms. Felton compelled plaintiff to commence the instant action and motion practice. It appears that this litigation and the complaint filed by Ms. Felton against plaintiff's former counsel delayed or prolonged this litigation and attempted "to harass or maliciously injure another."
I ordered that, since it appeared that Ms. Felton engaged in frivolous conduct as defined in 22 NYCRR § 130-1.1(c), Ms. Felton shall appear on February 9, 2007 for a hearing to determine if she engaged in frivolous conduct, and that pursuant to 22 NYCRR § 130.1.1 (d), "[a]n award of costs or the imposition of sanctions may be made . . . upon the court's own initiative, after a reasonable opportunity to be heard."
Both Ms. Felton and plaintiff Astrada's counsel, Mr. Gerardi, were present at the February 9, 2007 hearing. Ms. Felton, at the hearing, admitted that she had not complied with my December 21, 2006 order to return to Ms. Astrada the $30,000.00 down payment with both accrued and statutory interest. She unequivocally stated that she had the $30,000.00 in her escrow account but would not return the down payment because she had filed a Notice of Appeal on January 22, 2007. However, she presented no testimony or evidence that the Appellate Division, Second Department stayed enforcement of my order, pursuant to CPLR § 5519, pending her appeal.
Mr. Gerardi, at the hearing, presented evidence that Ms. Astrada had paid: $3,525.00 to her former counsel, Ellen M. Boyle, Esq. for legal fees and disbursements; $900.00 to Central Mortgage Corporation for a mortgage application fee and an appraisal; and, $11,000.00 to K.B. Lambiris Architect for site visits, surveys, property record research, renovation and design planning, and filing documents with the New York City Building Department. She also owed Mr. Gerardi $15,682.50 in legal fees ($225.00 per hour x 69.7 hours) plus $293.00 for disbursements and expenses.
Civil Contempt by Defendant Felton
Five days subsequent to the hearing, I issued my decision and order of February 14, 2007, supra, in which I observed, at 2 — 3:
I reserved decision on whether or not Ms. Felton engaged in "frivolous conduct" and if so, what costs and sanctions shall be awarded. However, with respect to Ms. Felton's failure to comply with my Decision and Order to return the $30,000.00 down payment, together with accrued and statutory interest from April 19, 2005, it appears that Ms. Felton is engaging in conduct that may result in a finding that Ms. Felton is guilty of civil contempt . . .
. . . In McCain v Dinkins, 84 NY12d 216 (1994), the Court held, at 226, that to sustain civil contempt, there must be: (1) a "lawful judicial order expressing an unequivocal mandate must have been in effect and disobeyed"; (2) "the party to be held in contempt must have had knowledge of the order, although it is not necessary that the order actually have been served upon the party"; (3) and, "prejudice to the rights of a party to the litigation must be demonstrated." . . . In the instant action, Ms. Felton explicitly admitted in Court on February 9, 2007, that she disobeyed my December 21, 2006 Decision and Order, by not returning the $30,000.00 down payment, together with accrued and statutory interest to plaintiff's attorney, Mr. Gerardi. Clearly, defendant Felton has knowledge of my December 21, 2006 Decision and Order since she filed an appeal with the Appellate Division, Second Department. Further, plaintiff Astrada has been prejudiced by her loss of the enjoyment of the $30,000.00 down payment that should have been returned to her in October 2005, after the real estate contract for the purchase of 70 Clifton Place, Brooklyn, New York, did not close. Despite her January 22, 2007 appeal of my December 21, 2006 Decision and Order, it appears that defendant Felton is engaging in wilful conduct by her noncompliance. In Gloveman Realty Corp. v Jeffreys, 29 AD3d 858, 858-859 [2d Dept 2006], the Court directed that "[a] party is obligated to comply with a court order, however incorrect the party may consider that order to be, until that order is set aside, either by appeal or otherwise, so long as the court issuing the order had jurisdiction to do so." Thus, with no stay in place while my December 21, 2006 Decision and Order is being appealed, defendant Felton must comply with my order to pay back the $30,000.00 down payment, together with accrued and statutory interest.
While the instant action was pending, defendant Archer's family commenced an Article 81 guardianship proceeding, Matter of Archer v Archer, Supreme Court, Kings County, Index No. 100131/06. In her February 6, 2007 interim order and judgment appointing a guardian, Justice Betsy Barros appointed the Vera Institute of Justice, Inc. (Vera Institute) as Guardian "for the property management of the incapacitated person," Hulbert Archer. In a subsequent order, on April 7, 2007, Justice Barros ordered the Vera Institute to defend Mr. Archer in the instant Astrada v Archer and Felton matter.
Ms. Felton also appealed my February 14, 2007 decision and order. The Appellate Division, Second Department, sua sponte, in its March 23, 2007 decision and order on whether to stay enforcement of my December 21, 2006 and February 14, 2007 orders, directed the Vera Institute, as guardian for the management of Mr. Archer's property, to advise the Clerk of the Appellate Division, Second Department by April 13, 2007, whether it wished to withdraw the appeal for Mr. Archer, or continue the appeal with Ms. Felton as counsel, or continue the appeal with new counsel. Jean Callahan, Director of the Vera Institute's Guardianship Project, in her April 12, 2007 letter to Mr. James Pelzer, Clerk of the Appellate Division, Second Department, stated:
Ms. Felton refers to the fact that a guardian has been appointed for Mr. Archer in her appeal, and at no time in the past three months has she contacted my office and at no time have we received documents or other communications from her. My office has never directed Ms. Felton to proceed with any litigation on behalf of Mr. Hulbert Archer. We do not wish to retain Ms. Felton at this time and as guardian of the property for Hulbert Archer we wish to withdraw the appeal filed by Ms. Felton, allegedly on behalf of Mr. Archer. [ Emphasis added].
Ms. Felton, having been relieved by Mr. Archer's guardian, the Vera Institute, still persisted in her intransigent behavior and never returned the $30,000.00 down payment with accrued and statutory interest. Mr. Archer died on January 4, 2008. A certified copy of his death certificate is in the official file of the Kings County Clerk for Archer v Archer, supra. Yet, Ms. Felton, who no longer represented Mr. Archer, and then did not represent his estate, still did not pay to Ms. Astrada the $30,000.00 down payment together with accrued and statutory interest. Plaintiff, in February 2008, moved to have defendant Felton found guilty of civil contempt, in violation of Judiciary Law § 753 (A). I conducted a contempt hearing, on March 28, 2008. Ms. Felton. at the hearing, admitted that no stays were in place to prevent the return of the $30,000 down payment together with the accrued and statutory interest to Ms. Astrada. The following colloquy took place [tr., p. 4, line 13 — p. 5, line 2]:
THE COURT: Ms. Felton, believe me, the last thing I want to do is hold anybody in contempt. My question is, you told me you have not refunded the money; is that correct?
MS. FELTON: That's correct.
THE COURT: What is the problem in refunding the money?
MS. FELTON: There is no problem with refunding the money, as I notified you by mail that I appealed both of your orders. Your orders are currently pending before the Appellate Division.
THE COURT: Is there a stay by the Appellate Division?
MS. FELTON: No, there is not, absolutely not.
Further, at tr., p. 7, lines 1 — 4:
THE COURT: Okay, so could we agree that there is no stay in place at the moment?
MS. FELTON: At the present time, there is no stay.
The following was stated, at tr. p. 10, line 10 — p. 11, line 23:
THE COURT: So, I come back to what is before me now which is the fact that we have an order of mine ordering you [Ms. Felton] to return the money. There is no stay. The point is that we don't have compliance with my order. That is the dilemma I am faced with. I issued an order. There is lack of compliance. You admitted it to me. Where do we go from here? Further, the question then becomes as an attorney, as an officer of the Court one thing, lack of compliance. Mr. Gerardi asked for sanctions; is that correct?
MR. GERARDI: That's correct.
THE COURT: Clearly, from what you have told me you violated an order — it appears you violated an order of The Court willfully, unless you tell me otherwise. I don't know what you have to say, Ms. Felton, unless Mr. Gerardi wants to add anything.
MR. GERARDI: Your Honor, this is a — she is willfully — As an attorney, all I can do is sue to recover damages in my case. I could win cases and get an order. Then it is up to the Court to enforce the order. You made an order on February 14, 2007. The Appellate Division made it clear on August 22, 2007, all stays are vacated forthwith. She didn't want to pay the money. She can't ignore your order. The reason, she says, is I have incurred damages. The lady over there with the black [Ms. Astrada], she has not seen her money for two years.
THE COURT: Okay.
MR. GERARDI: She has not seen the money in two and a half years. The sum of $36,527.85 is due. I think she should be put in jail. Then she would make a phone call and tell her office to pay the money which you ordered more than a year and a half ago. There is no stay. She has no basis for doing it other than she doesn't want to obey your order. You should sanction her.
During the hearing, I took a recess to draft a decision and order with respect to whether Ms. Felton was guilty of civil contempt. At the end of the recess, I read into the record my unpublished decision and order [tr., p. 19, line 19 — p. 23, line 17]. The decision and order, stated, inter alia:
Defendant Felton admitted in open court that she has failed to comply with my prior orders that she refund to plaintiff Faith Astrada by payment to her counsel, James T. Gerardi, Esq., plaintiff's $30,000.00 down payment, together with accrued interest from April 19, 2005 to October 28, 2005, and statutory interest, at the CPLR § 5004 rate of nine per cent, from October 28, 2005 to the date of refund. Ms. Felton argues that since my prior orders are on appeal in the Appellate Division, Second Department, she should not have to pay the money at issue to Ms. Astrada. Ms. Felton acknowledged today that there are no stays in effect of my prior orders. In Gloveman Realty Corp. v Jeffreys ( 29 AD3d 858, 858-859 [2d Dept 2006]), the Court directed that "[a] party is obligated to comply with a court order, however incorrect the party may consider that order to be, until that order is set aside, either by appeal or otherwise, so long as the court issuing the order had jurisdiction to do so." Thus, with no stay in place while my prior orders are being appealed, defendant Felton must comply with my orders to pay back the $30,000.00 down payment, together with accrued and statutory interest. ( See Kalish v Lindsay , 47 AD3d 889 [2d Dept 2008]; Galanos v Galanos , 46 AD3d 507 [2d Dept 2007]; Matter of Bickwid v Deutsch, 229 AD2d 533 [2d Dept 1996]; Busters Cleaning Corp. v Frati, 203 AD2d 409 [2d Dept 1994]). Further, in Tihanyi v Girmando (36 AD3 893, 894 [2d Dept 2007]), the Court instructed that:
Judiciary Law § 753 grants a court the power to hold a party in civil contempt for failing to obey a lawful mandate of the court (see Gordon v Janover, 121 AD2d 599, 600 [1986]. To sustain a finding of civil contempt based upon a violation of a court order, "it must appear with reasonable certainty that the party charged has violated a clear and unequivocal mandate" ( Bay Parkway Super Clean Car Wash, Inc. v Accurate Auto Repair, Inc., 220 AD2d 549, 550; see McCormick v Axelrod, 59 NY2d 574, 583). In the instant matter, with reasonable certainty, defendant Felton has clearly and unequivocally violated my prior orders of December 21, 2006 and February 14, 2007 by her wilful failure to refund the $30,000.00 down payment plus interest as ordered, and has prejudiced the rights of plaintiff Astrada. The court finds Ms. Felton, pursuant to Judiciary Law § 753 (A), guilty of civil contempt . . .
I then ordered Ms. Felton to again pay plaintiff, by payment to Mr. Gerardi, of the $30,000.00 down payment, together with accrued and statutory interest to the date of the payment, within 10 days, April 7, 2008, and to appear in Court that day to determine if she purged herself of contempt or to incarcerate Ms. Felton for her civil contempt. I also continued to reserve decision on plaintiff's motion for costs and sanctions.
Both Ms. Felton and Mr. Gerardi appeared on April 7, 2008. I gave Ms. Felton an opportunity to purge herself of contempt. Ms. Felton stated that she had in her possession a check for $30,438.81, the $30,000 down payment and the accrued escrow account interest. However, she still refused to pay the statutory interest, computed at the hearing to be $6,608.52. The following took place [tr., p. 6, line 9 — p. 7, line 13]:
THE COURT: Ms. Felton, if I give you an opportunity, would you be able to come up with the other $6,608.52 in the next hour?
MS. FELTON: You are asking me if I would produce it in the next hour?
THE COURT: Yes.
MS. FELTON: No, Judge.
THE COURT: Execute sentence. You are found guilty of contempt. You've got the keys to the jail. I will hold you in contempt. Let the record reflect that the Officer placed handcuffs on Ms. Felton. We are awaiting the arrival of a female officer. We are prepared to submit a commitment order for the sheriff. Ms. Felton holds the keys to the jail to purge herself from civil contempt.
MR. GERARDI: Your Honor, may I ask the Court to compel Ms. Felton to deliver the $30,438.81 that she has put back in her pocket? The money is here.
THE COURT: Ms. Felton, will you be willing to hand over the $30,438.81 check.
MS. FELTON: No, I am not.
THE COURT: I am not going to compel her to hand over the check.
I then fined Ms. Felton, pursuant to Judiciary Law § 773, $500.00 for civil contempt, and, sentenced Ms. Felton, pursuant to Judiciary Law § 774 (1), to six months jail or until she purged herself of contempt, by paying to Ms. Astrada's counsel the $30,000.00 down payment together with the accrued and statutory interest. The Commitment Order to the Sheriff stated, in part:
The Court hereby adjudged REGINA FELTON (Contemnor) guilty of: Civil Contempt for willfully failing to obey the orders of said Court, dated December 21st, 2006, February 14th, 2007 and March 28th, 2008; by Hon. Arthur M. Schack and conduct that was calculated to and did actually defeat, impair, impede and prejudice the rights of FAITH ASTRADA . . . And it is further ORDERED that the Contemnor may purge her contempt by performing the act of fully complying with the mandates of the Court's March 28th, 2008 order. NOW, THEREFORE WE COMMAND YOU, as Sheriff to take the body of REGINA FELTON, Contemnor, and commit her to the N.Y.C. Department of Corrections, Civil Jail of the City of New York for 6 (six) months for civil contempt or until she purges herself of said contempt or until discharged according to law.
Ms. Felton, eleven days later, purged herself of contempt by paying to Mr. Gerardi, as Ms. Astrada's counsel, the $30,000.00 down payment together with the accrued and statutory interest to that date, April 18, 2008. I then ordered the Warden of the Civil Jail and the Sheriff of the City of New York to immediately release Ms. Felton from incarceration.
December 21, 2006 and February 14, 2007 orders unanimously affirmed
Almost six weeks after Ms. Felton's purging of her contempt, the Appellate Division, Second Department issued its decision with respect to Ms. Felton's appeals of both my December 21, 2006 and February 14, 2007 orders, which granted summary judgment to Ms. Astrada on her breach of contract cause of action and ordered Ms. Felton to refund to Ms. Astrada the $30,000.00 down payment together with the accrued and statutory interest. The Court, in a unanimous decision, ( Astrada v Archer , 51 AD3d 954) held, at 955:
The Supreme Court properly granted that branch of the plaintiff's motion which was for summary judgment on the breach of contract cause of action and properly directed the defendant Regina Felton (hereinafter the defendant), to return the plaintiff's down payment. Where, as here, a contract for the sale of real property contains a mortgage contingency clause, "[ a]s long as purchasers exert a genuine effort to secure mortgage financing and act in good faith, they are entitled to recover their down payment if the mortgage is not in fact approved through no fault of their own" ( Sciales v Foulke, 217 AD2d 693, 694 [1995]; see Garber v Girodano, 16 AD3d 454, 455 [2005]). The plaintiff made a prima facie showing that, despite her good-faith efforts and through no fault of her own, she was unable to obtain a "firm" mortgage commitment in accordance with the mortgage contingency clause ( Miranda v Jay Constr. Corp., 2 AD3d 420, 420 [2003]. In opposition, the defendant failed to raise a triable issue of fact ( see generally Zuckerman v City of New York, 49 NY2d 557, 562 [1980].
The Supreme Court properly awarded the plaintiff statutory interest on her down payment (see CPLR 5001 [a]; Nikolis v Reznick, 214 AD2d 658, 659 [1995]; Patrick v Guarniere, 204 AD2d 702, 704 [1994]. Under the circumstances of this case, the defendant's contention that she could not be held liable for payment of such interest is without merit. [ Emphasis added]
Frivolous conduct and 22 NYCRR § 130-1.1
22 NYCRR § 130-1.1 (a) gives the Court, in its discretion, the authority to award costs "in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney's fees" and/or the imposition of financial sanctions upon a party or attorney who engages in frivolous conduct.' 22 NYCRR § 130-1.1 (c) states that:
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.
Conduct is frivolous and can be sanctioned under the above court rule if "it is completely without merit . . . and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law." ( Gordon v Marrone, 202 AD2d 104, 110 [2d Dept 1994] lv denied 84 NY2d 813). ( See Glenn v Annunziata, ___ AD3d___, 2008 NY Slip Op 06285 [2d Dept July 15, 2008]; Miller v Dugan , 27 AD3d 429 [2d Dept 2006]; Greene v Doral Conference Center Associates, 18 AD3d 429 [2d Dept 2005]; Ofman v Campos , 12 AD3d 581 [2d Dept 2006]; Tyree Bros. Environmental Services, Inc. v Ferguson Propeller, Inc., 247 AD2d 376 [2d Dept 1998].
In determining if sanctions are appropriate, the Court must look at the broad pattern of conduct by the offending attorneys or parties ( Levy v Carol Management Corporation ( 260 AD2d 27, 33 [1st Dept 1999]). The Levy Court, at 33, held that, " 22 NYCRR 130-1.1 allows us to exercise our discretion to impose costs and sanctions on an errant party under circumstances particularly applicable here. The relief may include, inter alia, sanctions against the offending party or its attorney ( 22 NYCRR 130-1.1) in an amount to be determined by us, which we would make payable to the Lawyers' Fund for Client Protection ( 22 NYCRR 130-1.3)" Further, the Levy Court instructed, at 34, that "[s]anctions are retributive, in that they punish past conduct. They also are goal oriented, in that they are useful in deterring future frivolous conduct not only by the particular parties, but also by the Bar at large." The Court, in Kernisan, M.D. v Taylor ( 171 AD2d 869 [2d Dept 1991]), noted that the intent of the Part 130 Rules "is to prevent the waste of judicial resources and to deter vexatious litigation and dilatory or malicious litigation tactics ( cf. Minister, Elders Deacons of Refm. Prot. Church of City of New York v 198 Broadway, 76 NY2d 411; see Steiner v Bonhamer, 146 Misc 2d 10) [ Emphasis added]."
Clearly, the pattern of defendant Felton's conduct in the instant action is subject to costs and sanctions. Ms. Felton's arguments are frivolous in that they are "completely without merit in law or fact." Ms. Felton did not dispose of the lis pendens on the premises. Ms. Felton should have been able to ascertain in a timely fashion that the building was a legal two-family building, not subject to SRO regulations. While Ms. Astrada relied on defendant Felton to clear the lis pendens and the presumed SRO need for a certificate of no harassment, Ms. Astrada accumulated bills for legal fees, the prospective lender, the title company, and, an architect. Ms. Felton's intransigent conduct, demonstrated by her refusal to return the down payment with the accrued and statutory interest to plaintiff, compelled plaintiff to commence the instant action and motion practice. This action and the complaint filed by Ms. Felton against plaintiff's former counsel delayed or prolonged this litigation and attempted "to harass or maliciously injure another."
Further, defendant Felton engaged in frivolous conduct by asserting false material representations. These include: statements claiming to have secured a stipulation to settle the lis pendens out of the proceeds of the closing; claiming to have filed twice for a certificate of no harassment and presenting no documentary evidence in support of this; and, her denial, in her verified answer to the sixth paragraph of the verified complaint, that she failed to obtain a certificate of no harassment, when she had never secured a certificate of no harassment. Ms. Felton finally provided documentary proof in her sur-affirmation in opposition that a certificate of no harassment was not necessary because the premises has not been an SRO since 1958. "Nothing could more aptly be described as conduct completely without merit in fact' than the giving of sworn testimony or providing an affidavit, knowing the same to be false, on a material issue." ( Sanders v Copley, 194 AD2d 85, 88 [1st Dept 1993]). Conduct of counsel is "frivolous because it was without merit in law and involved the assertion of misleading factual statements." ( Curcio v J.P. Hogan Coring Sawing Corp., 303 AD2d 357, 358 [2d Dept 2003].
Ms. Felton's continuous refusal to refund Ms. Astrada's down payment, after Ms. Astrada could not close despite her good faith effort to secure her mortgage commitment, was "completely without merit in law." Also "completely without merit in law" was defendant Felton's refusal to refund the down payment with accrued and statutory interest, despite being relieved by defendant Archer's guardian and continuing even after Mr. Archer's death, and her refusal to comply with my December 21, 2006 and February 14, 2007 orders, that were not stayed by the Appellate Division.
In Navin v Mosquera ( 30 AD3d 883 [3d Dept 2006], the Court instructed that when considering if specific conduct is sanctionable as frivolous, "courts are required to examine whether or not the conduct was continued when its lack of legal or factual basis was apparent [or] should have been apparent' ( 22 NYCRR 130-1.1 [c])." In Sakow ex rel. Columbia Bagel, Inc. v Columbia Bagel, Inc. ( 6 Misc 3d 939, 943 [Sup Ct, New York County 2004]), the Court held that "[i]n assessing whether to award sanctions, the Court must consider whether the attorney adhered to the standards of a reasonable attorney ( Principe v Assay Partners, 154 Misc 2d 702 [Sup Ct, NY County 1992])." In the instant action, a reasonable attorney would have refunded plaintiff her down payment after the real estate contract was unable to close. Further, a reasonable attorney would not make material misrepresentations to the Court, comply with Court orders that are not stayed, and not subject the reasonable attorney from being found in contempt for willful failure to comply with Court orders. It is clear that Ms. Felton's course of conduct in the instant action is not reasonable.
Therefore, based upon the totality of Ms. Felton's frivolous conduct in this matter, the Court finds it is appropriate to award costs of $40,600.50 to plaintiff Astrada. Ms. Astrada, paid: $3,525.00 to her former counsel, Ellen M. Boyle, Esq. for legal fees and disbursements; $900.00 to Central Mortgage Corporation for a mortgage application fee and an appraisal; and, $11,000.00 to K.B. Lambiris Architect for site visits, surveys, property record research, renovation and design planning, and filing documents with the New York City Building Department. Ms. Astrada, at the time of the February 9, 2007 Part 130 hearing, owed Mr. Gerardi $15,682.50 in legal fees ($225.00 per hour x 69.7 hours) plus $293 for disbursements and expenses. The Court, in its discretion, adds another 40 hours to the legal fees owed to Mr. Gerardi, for his subsequent appearances, preparation and correspondence, and an additional $200 for his subsequent expenses. Thus, the Court awards to Ms. Astrada costs of $24,682.50 for legal fees owed to Mr. Gerardi ($225.00 per hour x 109.7 hours) and $493.00 for disbursements and expenses.
Conclusion
Accordingly, it is
ORDERED that, after conducting a hearing on February 9, 2007, to determine if defendant Regina Felton, Esq., engaged in "frivolous conduct," as defined in the Rules of the Chief Administrator, 22 NYCRR § 130-1.1 (c), and that defendant Regina Felton, Esq. was granted "a reasonable opportunity to be heard," pursuant to the Rules of the Chief Administrator, 22 NYCRR § 130-1.1 (d), the Court finds that Regina Felton, Esq. engaged in "frivolous conduct," as defined in 22 NYCRR § 130-1.1, in the instant matter, and it is further
ORDERED that Regina Felton, Esq., pursuant to the Rules of the Chief Administrator, 22 NYCRR § 130-1.2, shall pay costs of $40,600.50 to plaintiff Faith Astrada, c/o James T. Gerardi, Esq., 58 Rofay Drive, East Northport, New York 11731, for Faith Astrada's: reasonable attorney's fees, disbursements and expenses; and, reimbursement for Faith Astrada's payments for her mortgage application, appraisal, and architect fees, incurred in attempting to purchase 70 Clifton Place, Brooklyn, New York, within thirty (30) days after service of the notice of entry of this decision and order, and it is further
ORDERED that Regina Felton, Esq., pursuant to the Rules of the Chief Administrator, 22 NYCRR § 130-1.3, shall pay a sanction of $10,000.00, to the Lawyer's Fund for Client Protection, 119 Washington Avenue, Albany, NY 12210, within thirty (30) days after service of the notice of entry of this decision and order.
This constitutes the Decision and Order of the Court.