Sitt Entity Defendants on the ground that Plaintiff had failed to make the necessary showing of

Transcription

1 Katten Katten MuchinRosenman llp 575 Madison Avenue New York, NY tel April 8,2016 Howard E. Cotton direct fax BY HAND and ECF Hon. Eileen Bransten Supreme Court of the State of New York 60 Centre Street, Room 442 New York, New York Re: Jack Sitt V. Ralyh Situ et. ah. Index No /14 Dear Judge Bransten: We are counsel for plaintiff. Jack Sitt ( Plaintiff ), in the above-referenced action. With reluctance, we write in response to the letter of today s date from Stephen B. Meister, counsel for defendants ( Defendants ) in the above-referenced action, seeking to burden the Court with Defendants revisionist history of events to bolster their disingenuous request for an adjournment and stay to which they are not entitled. We also enclose herewith a Proposed Order with respect to the aforementioned adjournment and stay requests. As the Court may recall, it recently granted, in part, and denied, in part, Plaintiff s motion for leave to amend its complaint pursuant to CPLR 3025(b) (the Prior 3025(b) Motion ) allowing Plaintiff to assert 18 claims against defendants, Ralph Sitt ( Ralph ) and Sitt Asset Management LLC ( SAM ), and to add (and assert claims against) 7 new defendants (collectively, with Ralph and SAM, Defendants ). In the Decision and Order on the Prior 3025(b) Motion (see ECF Doc. No. 47, the Decision and Order, with accompanying Transcript of Proceedings on February 25, 2016 ( Tr. )), Plaintiff was afforded leave to assert derivative claims on behalf of SAM, but denied leave to assert derivative claims on behalf of three other ii; Sitt Entity Defendants on the ground that Plaintiff had failed to make the necessary showing of 1 demand futility with respect to those Defendants. i Contrary to Mr. Meister s indelicate contention that I attempted to backdoor a rewriting of the Court s Decision, after the transcript of the Decision became available, I sent a letter to the Court on March 4, 2016 to confirm Plaintiffs assumption, that, consistent with the Court s prior rulings in the more stringent 3211(a) context involving demand futility, the Court s denial of leave to amend with respect to Plaintiffs proposed derivative claims on behalf of the other Sitt Entity Defendants was without prejudice and with leave to replead. (See ECF Doc. Nos ) My March 4 letter resulted in a flurry of correspondence on that date (see ECF Doc. Nos ), with Defendants essentially disagreeing with Plaintiffs assumption, yet conceding that nothing in an order denying leave to amend formally bars the bringing of a second motion to amend. The Court did not respond to the AUSTIN CENTURY CITY CHARLOTTE CHICAGO HOUSTON IRVING LOS ANGELES NEW YORK ORANGE COUNTY SAN FRANCISCO BAY AREA SHANGHAI WASHINGTON, DC LONDON: KATTEN MUCHIN ROSENMAN UK LLP A limited liability partnership Including professional corporations of 8

2 Hon. Eileen Bransten April 8,2016 Page 2 Katten KattenMuchinRosenman llp In an attempt to spare the Court and the parties unnecessary motion practice, Plaintiff: (i) on March 24th, served and filed his Verified First Amended Complaint (the First Amended Complainf ), as per the Court s Decision and Order (see ECF Doc. Nos. 51 through 62), and (ii) on April 1st, sent Defendants counsel a Proposed Second Amended Complaint, in which Plaintiff repleaded the proposed derivative claims on behalf of those Sitt Entity Defendants for which leave to amend had been denied, asking Defendants counsel to stipulate to the filing of that proposed amended pleading (to be So Ordered by the Court) since there could be no serious dispute that the demand futility requirements had been met. Nevertheless, on April 5th, Defendants refused to consent to service and filing of the Proposed Second Amended Complaint, baldly contending (as Mr. Meister does in his April 8th letter to the Court) that Plaintiff still had not fulfilled the demand futility pleading requirements. As such. Plaintiff was forced to file another CPLR 3025(b) motion for leave to amend his complaint (the Current 3025(b) Motion, see ECF Nos ). Defendants also had taken the position in a letter to the undersigned on March 25th that the First Amended Complaint that Plaintiff did serve and file on March 24th did not comply with the Court s Decision and Order. Even though there was no basis for Defendants position, in order to obviate Defendants threatened CPLR 3024(b) motion to correct the pleading, on April 5th, Plaintiff filed the Verified First Amended Complaint in accord with Defendants March 25th letter. (See ECF Doc. No. 63.) By letter dated April 5th, a copy of which is enclosed herewith, I advised Mr. Meister of the foregoing filings. Even though Plaintiff appropriately, and in good faith, responded to Defendants actions in a manner designed to avoid motion practice. Defendants still want to have it both ways. Mr. Meister disingenuously contends in his April 8th letter to the Court that he wrote to me to seek Plaintiffs consent to either withdraw the... [First Amended Complaint] or grant Defendants a reasonable adjournment of their time to respond to if following disposition of the Current 3025(b) Motion. To the contrary, as borne out by Mr. Meister s letter to me of April 6th, a copy of which is enclosed herewith, after refusing to stipulate, without basis, to Plaintiffs filing of the Proposed Second Amended Complaint, Mr. Meister sought to reap the benefit of an indefinite delay in responding to the First Amended Complaint during the pendency of the Current 3025(b) Motion, demanding that by noon on April 7th, Plaintiff acquiesce to such indefinite extension, or that Plaintiff withdraw the First Amended Complaint, barring which Mr. Meister threatened to burden this Court with a Rule 130 motion for sanctions against Plaintiff parties colloquy on this issue and instead, on March 15, 2016, entered an Order memorializing its statements on the February 25, 2016 record, which Decision and Order was entered by the Clerk of the Court on March 16, (See ECF Doc. No. 47.) of 8

3 Hon. Eileen Bransten April 8, 2016 Page 3 Katten Katten MuchinRosenman llp As I explained to Mr. Meister in my letter of April 7th delivered by the noon deadline (a copy of which is enclosed herewith), there is no provision under the CPLR that would operate to stay Defendants time to respond to the Verified First Amended Complaint, i.e., the currently active pleading, pending the disposition of Plaintiffs Current 3025(b) Motion. And notably, in his April 8th letter to the Court, Mr. Meister does not, and cannot, dispute this point. Further, in my April 7th letter, I proposed to Mr. Meister that, to avoid unnecessary motion practice. Defendants should stipulate to Plaintiffs filing of the Proposed Second Amended Complaint, which would eliminate the need for Defendants to respond to the First Amended Complaint. However, Mr. Meister refused such proposal and instead sought relief from the Court. It should be noted that Defendants have known of the contents and claims of the First Amended Complaint since February 25th (the day the Court read its Decision on the Prior 3025(b) Motion into the record), and in fact. Defendants advised the Court during the pendency of the Prior 3025(b) Motion that upon disposition of that Motion, Defendants were going to seek dismissal of the pleading. As such. Defendants request for an indefinite stay in responding to this active pleading while opposing the filing of the Proposed Second Amended Complaint is wholly unwarranted. To the extent that Defendants persist in their refusal to stipulate to the filing of the Proposed Second Amended Complaint and the Current 3025(b) Motion goes forward, Mr. Meister also contends in his April 8th letter that he asked for the professional courtesy of briefly extending Defendants time to respond to [the Current 3025(b) Motion] from April 14th to April 28th. As evidenced by Mr. Meister s April 7th letter to me, such request was not premised on professional courtesy, but rather was included in his extortionate threat to seek sanctions against Plaintiff absent complete acquiescence to Defendants demands. Further, while we typically extend such courtesies to opposing counsel, since Defendants, by their actions, have sought, at every juncture, to ratchet up Plaintiffs expenses and delay the date when the merits of this case are reached, we can only view their adjournment request as part of the same strategy. In any event, Defendants request is disingenuous, given their own recent refusal to afford Plaintiff the very same courtesy. Indeed, defendant, Ralph, recently purported to levy a highly dubious capital call on Plaintiff and the other Members of defendant, 6 Times Square Member EEC, notwithstanding allegations in the instant litigation that Ralph became Managing Member of that company by falsifying its operating agreement. Despite reasonable requests from Plaintiff for additional information about the bona fides of the $216,615 capital call demanded by Ralph on five business days notice and additional time to consider the same, Defendants furnished incomplete materials (i.e., unexecuted agreements) rife with inconsistencies (e.g., spreadsheets with unsubstantiated valuation data and conflicting valuation methodologies) two days before the deadline and took the audacious position that two days was more than sufficient time to review the enclosed material and consider the opportunity. Defendants purported to consummate the transaction that prompted the capital call on the of 8

4 Hon. Eileen Bransten April 8,2016 Page 4 Katten KattenMuchinRosenman llp specified date, refusing to answer Plaintiffs numerous material questions about the transaction. In fact. Defendants continue to be nonresponsive to questions regarding the questionable transaction at issue. In sum. Plaintiff is not looking to ratchet up conflicts or deny courtesies to opposing counsel. However Plaintiff is compelled to point out that he has significant meritorious claims against Defendants, which Defendants seem intent on subverting with an apparent campaign to delay the day before the merits of this case are reached. Even though Defendants have known of the contents of the currently pending amended pleading for more than 6 weeks, to resolve any disputes regarding Defendants response time, Defendants can respond by no later than April 25th to the Verified First Amended Complaint filed on April 5th (ECF Doc. No. 63.) However, if Defendants opposition to the Current 3025(b) Motion is in earnest, then they should be required to respond to the Current 3025(b) Motion in accord with Plaintiffs notice of motion (ECF Doc. No. 64) which is entirely in accord with the requirements of CPLR 2214(b). Consistent with the foregoing. Defendants protestations of time exigency and threats to file a show cause order should be rejected, as should their proposed order. Instead, we respectfully request that the Court sign the enclosed Proposed Order consistent with the foregoing. Alternatively, we are available to participate in a conference by telephone or in person, should the Court wish to proceed in that fashion. ;ctfully submitted. FIEC:dmp Enclosures 'ard E. Cotton cc; Michael S. Gordon, Esq. (Plaintiffs counsel) Stacey Ashby, Esq. (Defendant s counsel) Stephen B. Meister, Esq. (Defendant s counsel) of 8

5 IV FISTER SEKLIG & FEIN LLP ATi'ORNLYS AT i..aw u.% Avenui th Flooi' New FTfk, NY ieicj'ihunc (712/ 65v->)00 aceirri! (212) 6))-3525 WWW. mcislcfseeliieoini Stephen B. Meister Partner Direct (212) Fax (646) com April 6, 2016 Via Howard Cotton Katten Muchin Roseninan.L.L,P 575 Madison Avenue New York, NY Re: Jack sat V. Ralph Sift, el al, Index No /2014 Dear Ploward, We received your letter dated April 5 ^'enclosing Plaintiffs revised Verified First Amended Complaint ( Revised First Amended Complaint ), as well as Plaintiffs motion seeking leave to file and serve a Second Amended Complaint. Your letter made several misstatements. First, the acceptance of the Verified First Amended Complaint dated March 24, 2016 (the March 24^' Amended Complaint ) that you refer to in your letter was merely Ms. Ashby agreeing to have ray firm accept service on behalf of the seven new defendants, thereby saving your client the time and expense of a process server. We extended this courtesy in response to an inquiry from your colleague, Mr. Gordon, made before the March 24" Amended Complaint was actually served and filed. Ms. Ashby s agreement to accept service prior to even seeing the March 24"' Amended Complaint did not constitute a waiver of Defendants right to reject this pleading, which Plaintiff has now admitted was not drafted in conformity with the Court s Decision. Ms..Ashby s March 25* letter directed your attention to the numerous errant paragraphs given the Court s Decision (which you have now stricken from the Revised First Amended Complaint) and stated that unless Plaintiff refiled and re-served a revised confoiniing pleading, Defendants would file a motion to strike pursuant to CPI..R 3024(b). We are not sure how you can interpret the foregoing as anything other than Defendants rejecting the March 24" Amended Complaint. Since you have now filed the Revised First Amended Complaint dated and verified April 5, 2016 and it is materially different than the March 24'"Amended Complaint (which of course would require different response from Defendants), your assertion that Defendants have to respond to the Revised First Amended Complaint by April 13, 2016 is also wrong. a')n ICi'KUl.1,V.IrORKlA M.AS A.1 5 of 8

6 MEISTER SEELIG & FEIN LLP Howard CoUon, Esq. Page 2 April 6, 2016 More important, any demand that Defendants respond to the Revised First Amended Complaint in light of Plaintiffs now filed motion for leave to file and serve a Second Amended Complaint is improper since it is Plaintiffs intention that the Revised First Amended Complaint be replaced with the Proposed Second Amended Complaint. The parties (and the Court) have already expended substantial time and expense on Plaintiffs first amendment attempt, which as you know', in addition to the first amendment motion filed back in November 2015, also included Plaintiffs numerous attempts to reargue the Court s Decision by filing a proposed order and letters regarding same, which w'ould have effectively allow'ed Plaintiff to circumvent the "decision and order of the couit" (as stated in the transcript) and file an amended pleading that included the disallowed allegations regarding the new defendants, without the need for filing the second motion for leave to amend Plaintiff just filed. Since Plaintiff has now' filed his second motion for leave to amend, Defendants should not be forced to respond to the First Amended Complaint, as Plaintiff himself seeks to supersede that very pleading. Accordijrgly, Defendants demand that the Plaintiff consent to either: (a) stipulate that Defendants time to respond to the First Amended Complaint is adjourned until a reasonable period following the filing of Notice of Entry of a decision denying Plaintiffs request to file and serve the Proposed Second Amended Complaint; or (b) formally w'ithdraw the Revised First Amended Complaint (and March 24^'' Amended Complaint) in writing. We also require a reasonable adjournment of Defendants time to respond to the current motion for leave to amend from April 14 'Do April 28 ''. Absent Plaintiff agreeing to the foregoing, Defendants intend on moving on an emergency basis for the foregoing relief and w'ill seek Rule 130 sanctions. We request a response by noon tomorrow; otherwise we w'ill assume Plaintiff refuses to agree to the above. Very fo yours, Stephen B. Meister cc: Michael Gordon, Esq. (via ) Stacey M. Ashby,.Esq. (via ) (3088-4/ /I] 6 of 8

7 Katten KattenMuchInRosenman up 575 Madison Avenue New York, NY tel fax April 7, 2016 Howard E. Cotton com 212, direct fax By Stephen B. Meister, Esq. Meister Seelig & Fein LLP 125 Park Avenue, 7th Floor New York, New York Re: Dear Stephen: Jack Sift V. Ralph Sitt. ei. al.. Index No /14 (N.Y. Supr. Ct N.Y. County) 1 am in receipt of your letter dated April 6th setting forth your ultimatum that Plaintiff consent to (i) the indefinite adjournment of Defendants time to respond to Plaintiffs Verified First Amended Complaint dated April 5, 2016 (the First Amended Complaint ) or (ii) the formal withdrawal of the First Amended Complaint, in light of Plaintiff s recent motion for leave to file a Proposed Second Amended Complaint under CPLR 3025(b) (the 3025(b) Motion ). Rather than attempt to correct your revisionist history of what transpired with respect to Defendants acceptance of the Verified First Amended Complaint (Ms. Ashby s March 25th letter nowhere states that Defendants were rejecting that pleading), suffice it to say that we disagree with your positions, and Plaintiff rejects Defendants purported demands referenced in the preceding paragraph and on page two of your April 6th letter. That being said, we reiterate that we wish to spare the Court and the parties unnecessary motion practice. Accordingly, Plaintiff would urge Defendants to reconsider their prior position regarding the Proposed Second Amended Complaint, and consent to the service and filing thereof, which would (upon the Court s So Ordering the parties stipulation) obviate unnecessary motion practice by superseding the Verified First Amended Complaint, as well as mooting out the currently pending 3025(b) Motion. Put simply, Defendants cannot have it both ways, opposing the Proposed Second Amended Complaint on their own timetable, while also flouting the Court s direction that Defendants respond to the Verified First Amended Complaint. Consistent with the foregoing, there is no provision under the CPLR that Defendants time to respond to the Verified First Amended Complaint, i.e., the currently active pleading, should be stayed indefinitely, pending the disposition of Plaintiffs 3025(b) Motion (which Motion Defendants have forced Plaintiff to make). To the extent that Defendants purport to carry out their threat of moving on an emergency basis to enforce their unreasonable demands, we would ask that you ^ follow the proper protocol for seeking adjournments (or any other relief) on an emergent basis, as set forth CENTURY CITY CHARLOTTE CHICAGO IRVING LONDON LOS ANGELES NEW YORK OAKLAND ORANGE COUNTY SHANGHAI WASHINGTON, DC VWVW.KATTENLAW.COM LONDON AFFILIATE: KATTEN MUCHIN ROSENMAN UK LLP US A limited liability partnership including professional corporations 7 of 8

8 Katten Katten MuchinRosenman llp Stephen B, Meister, Esq. April 7, 2016 Page 2 in item number 3 on page 1 and item number 5 on page 3 of the Practices for Part 3. ^ further, Defendants threat to seek sanctions under Rule 130 is itself outrageous, given the circumstances. : Please be guided accordingly. Vely truly yours, A- m Si E. Cotton PIEC:dmp cc: Michael S. Gordon, Esq. (via ) Stacey M. Ashby, Esq. (via ) us of 8