EISENBERG & CARTON. Capital One Equipment Finance Corp. v. Tsitiridis, et al. Index No /2016

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1 EISENBERG & CARTON ATTORNEYS AT LAW 1227 MAIN STREET, SUITE 101 PORT JEFFERSON, NEW YORK TELEPHONE (631) FACSIMILE (631) BY FEDERAL EXPRESS and NYSCEF Hon. Jeffrey K. Oing 60 Centre Street New York, New York Re: Capital One Equipment Finance Corp. v. Tsitiridis, et al. Index No /2016 Dear Justice Oing: This firm represents in the above-referenced action Defendants Silke Tsitiridis, Savas Tsitiridis and 1617A LLC (collectively referred to herein as the "Tsitiridis Defendants"). This letter is being submitted in to response to the May 1, 2017 letter submitted by Plaintiff s attorneys seeking to compel the production of certain documents, and in support of the Tsitiridis Defendants' application to compel Plaintiff to produce certain documents. As an initial matter, Mrs. Tsitiridis is sued herein solely in her alleged capacity as trustee of The Bridge Funding Trust. Mrs. Tsitiridis was such a trustee in the past, but is not now and was not at the time that this action was commenced. Without belaboring the point, and as more fully stated in the Tsitiridis Defendants' answer, Mr. Tsitiridis denies that the transfers at issue were made when he was in solvent and/or had capital insufficient to pay his existing debts, or that the conveyances rendered him insolvent. However, even were that true, which the Tsitiridis Defendants deny, as set forth in the Tsitiridis Defendants' Answer, Plaintiffs claims are barred by the doctrines of unclean hands and/or equitable estoppel. (Answer irg 100 to 103) Specifically, Plaintiff accepted as collateral taxi medallions but has deliberately caused taxi medallion prices to decline substantially by funding and favoring ride-sharing companies, such as Uber and Lyft. (Id. 101) Indeed, Plaintiffs funding and favoring ride-sharing companies such as Uber and Lyft not only has substantially harmed companies operating with taxi medallions by substantially lowering the value of those medallions, but at the same time thereby further benefits ride-sharing companies such as Uber and Lyft by reducing competition from companies operating with taxi medallions. (Id. 102) As set forth in Plaintiffs own Complaint (Paragraphs 51 and 52), Plaintiff admits that taxi medallion prices have substantially declined with the rising popularity of ride-sharing apps over the past few years, and that Plaintiff's purported loans allegedly are not properly secured due to those circumstances. (Id. 103) Accordingly, inasmuch as Plaintiff itself has caused the circumstances of which it complains, the remedies it seeks should be denied.

2 Page 2 Plaintiff Should Be Ordered to Produce Documents Relating to its Funding and Favoring of Uber, Lyft and Similar Companies Notwithstanding the Tsitiridis Defendants' affirmative defense set forth above, Plaintiff has refused to produce ANY documents in response to the Tsitiridis Defendants' document demands relating to that affirmative defense. Specifically, the Tsitiridis Defendants requested: 17. Documents sufficient to evidence the dollar amount of loans or other financing of any type provided by Plaintiff to Uber each calendar year 2009 to the present, broken down by loan or other financing of any type. 18. Documents sufficient to evidence the dollar amount of loans or other financing of any type outstanding from Plaintiff with Uber each calendar year 2009 to the present, broken down by loan or other financing of any type. 19. Documents sufficient to evidence the dollar amount of loans or other financing of any type provided by Plaintiff to Lyft each calendar year 2009 to the present, broken down by loan or other financing of any type. 20. Documents sufficient to evidence the dollar amount of loans or other financing of any type outstanding from Plaintiff with Lyft each calendar year 2009 to the present, broken down by loan or other financing of any type. 21. Documents sufficient to evidence the dollar amount of loans or other financing of any type provided by Plaintiff to Persons owing and/or operating taxi medallions or taxi cabs each calendar year 2009 to the present. 22. Documents sufficient to evidence the dollar amount of loans or other financing of any type outstanding from Plaintiff with Persons owing and/or operating taxi medallions or taxi cabs each calendar year 2009 to the present. 23. All Documents concerning the decline of taxi medallion prices as a result of the rising popularity of ride-sharing companies such as Uber and Lyft. 24. All Documents concerning Plaintiffs decision to favor the financing of ride-sharing companies, such as Uber and Lyft, over taxi medallions and/or taxi cabs. 25. All Documents concerning the impact of ride-sharing companies such as Uber and Lyft on companies operating with taxi medallions, including but not limited to the ability of companies operating with taxi medallions to compete with ride-sharing companies such as Uber and Lyft. Such document requests clearly go directly to the Tsitiridis Defendants' affirmative defense, and therefore must be produced by Plaintiff

3 Page 3 Significantly, the foregoing defense was applied last month in the April 19, 2017 Commercial Division (Nassau County) decision annexed hereto as Exhibit A. In that decision the Court (Driscoll, J.) denied Capital One Equipment Corp.'s (the same Plaintiff here) application for an order of attachment, citing, among other reasons, the defense asserted in this action by the Tsitiridis Defendants. The Court summarized the defendant's defense, including the documentary evidence supporting the same, as follows: [Defendant's Affiant] Sapino submits that Plaintiff... is not an 'innocent casualty' of the effect of ride-sharing services on value of taxi medallions. Rather, Plaintiff actively promotes Uber and, therefore, is a factor in the downturn of the taxi industry. In support, [Defendant] provides copies of promotions launched by Plaintiff by which consumers would receive a 20% discount on all Uber rides when they paid with a Capital One Quicksilver credit card, and a September 14, 2015 report discussing the significant decrease in taxi usage in New York and increase in Uber users (Exs. C and D to Sapino Aff. in Opp.). Sapino affirms that Plaintiff, through its partnership with Uber, has been pushing OSG's borrowers to default on their commitments while simultaneously undermining the value of OSG's collateral. (Decision at 9-10) The Court then concluded in relevant part that: "Plaintiff has not established that a balancing of the equities favors Plaintiff, both because of the significant factual disputes regarding whether Guarantors in fact engaged in fraudulent transfers of properties, and in consideration of evidence presented by Defendants in support of their contention that Plaintiff has partnered with at least one ride-sharing company and, therefore, itself contributed to the decline in Guarantors' net worth on which Plaintiff relies." (Decision at 19) (emphasis added). Undaunted, even after its counsel was provided with the above-referenced/annexed decision, Plaintiff has refused to produce ANY documents relating to the Tsitiridis Defendants' foregoing affirmative defense. In other words, Plaintiff has offered absolutely no compromise with respect to documents requested with respect to the Tsitiridis Defendants' foregoing affirmative defense. (Of course, it is irrelevant whether Plaintiff is entitled to a judgment against Mr. Tsitiridis, the guarantor of the loans at issue, since the Tsitiridis Defendants' affirmative defense is asserted as against Plaintiffs fraudulent conveyance claims.) Plaintiff's Application Should Be Denied Notably, Plaintiffs demand for the production of documents included 30 separate requests. After discussion and compromise, dispute remains with respect to only five of those requests. Request Nos. 1 & 18. As stated in Plaintiffs May 1 letter, "[t]hese requests seek all documents relating to the origin, purpose, motive, implementation and effects of the [alleged] fraudulent transfers and the creation, purpose and formation of the Bridge Funding Trust." Plaintiff, however, fails to note that it defined the term "relating to" as meaning:

4 Page 4 about, analyzing, collaborating, commenting on, comprising, concerning, connected to, considering, constituting, containing, contradicting, controverting, dealing with, describing, discussing, disputing, embodying, evaluating, evidencing, identifying, illustrating, memorializing, mentioning, providing, referring to, reflecting, regarding, refuting, rebutting, responding to, showing, stating, supporting, made in connection with, in respect of, in any way pertaining to, or derived or arising from, either explicitly or implicitly. That turgid definition goes far beyond what Plaintiff itself claims in its May 1 letter that it needs to know for purposes of this action "the origin, purpose, motive, implementation and effects of the [alleged] fraudulent transfers and the creation, purpose and formation of the Bridge Funding Trust." Moreover, Plaintiff's May 1 letter misleadingly states that the Tsitiridis Defendants' merely offered to produce "documents" sufficient to show or evidencing the information requested. To the contrary, the Tsitiridis Defendants offered to produce ALL documents (not merely "documents") sufficient to show and/or evidencing the information requested. The Tsitiridis Defendants respectfully request that the Court accept the offered compromise. Requests Nos. 8 & 9. These requests seek all of Mr. Tsitiridis' account statements with respect to any financial institution, including but not limited to bank and securities accounts. As an initial matter, Mr. Tsitiridis is not obligated contractually or otherwise to submit to such an intrusive invasion of privacy, and should not be required to do so for purposes of this action. Mr. Tsitiridis has agreed to produce personal financial statements, tax returns and documents concerning the transfers at issue. Plaintiff does not need to know contractually or for purposes of this action the identity of every recipient of every check written by Mr. Tsitiridis (or any joint account holder), the location of every ATM withdrawal, etc. etc. Request No. 19: This request seeks the tax returns of the Bridge Funding Trust. As noted above, Mrs. Tsitiridis is not a trustee of that trust, nor was she a trustee on the date that this action was commenced. Accordingly, she has no power to compel the production of the Trust's tax returns. Mr. Tsitiridis likewise has no such power. In any event, none of the Tsitiridis Defendants should be compelled to produce the Trust's tax returns to the extent that any of the defendants are in the possession of any such return. The Trust's tax returns are not relevant to any issue in this case, and the production of those returns is not necessary for other legitimate discovery purposes. For example, the transfers here at issue relate to interests in real property, and the Tsitiridis Defendants have agreed to produce documents evidencing the transfer of such interests to the Trust and the Trust's ownership of such interests is reflected by public records. For the foregoing reasons, the Court should order Plaintiff to produce the abovereferenced documents requested by the Tsitiridis Defendants, accept the Tsitiridis Defendants compromise with respect to Plaintiffs Requests 1 and 18, and otherwise deny Plaintiff s application.

5 EISENBERG & CARTON ATTORNEYS AT LAW 1227 MAIN STREET, SUITE 101 PORT JEFFERSON, NEW YORK TELEPHONE (631) FACSIMILE (631) May 5,2017 BY FEDERAL EXPRESS and NYSCEF Hon. Jeffrey K. Oing 60 Centre Street New York, New York Re: Capital One Equipment Finance Corp. v. Tsitiridis, et al. Index No /2016 Dear Justice Oing: This firm represents in the above-referenced action Defendants Silke Tsitiridis, Savas Tsitiridis and 1617A LLC (collectively referred to herein as the "Tsitiridis Defendants"). This letter is being submitted in to response to the May 1, 2017 letter submitted by Plaintiff's attorneys seeking to compel the production of certain documents, and in support of the Tsitiridis Defendants' application to compel Plaintiff to produce certain documents. As an initial matter, Mrs. Tsitiridis is sued herein solely in her alleged capacity as trustee of The Bridge Funding Trust. Mrs. Tsitiridis was such a trustee in the past, but is not now and was not at the time that this action was commenced. Without belaboring the point, and as more fully stated in the Tsitiridis Defendants' answer, Mr. Tsitiridis denies that the transfers at issue were made when he was in solvent and/or had capital insufficient to pay his existing debts, or that the conveyances rendered him insolvent. However, even were that true, which the Tsitiridis Defendants deny, as set forth in the Tsitiridis Defendants' Answer, Plaintiff's claims are barred by the doctrines of unclean hands and/or equitable estoppel. (Answer 100 to 103) Specifically, Plaintiff accepted as collateral taxi medallions but has deliberately caused taxi medallion prices to decline substantially by funding and favoring ride-sharing companies, such as Uber and Lyft. (Id. 101) Indeed, Plaintiff's funding and favoring ride-sharing companies such as Uber and Lyft not only has substantially harmed companies operating with taxi medallions by substantially lowering the value of those medallions, but at the same time thereby further benefits ride-sharing companies such as Uber and Lyft by reducing competition from companies operating with taxi medallions. (Id. 102) As set forth in Plaintiff's own Complaint (Paragraphs 51 and 52), Plaintiff admits that taxi medallion prices have substantially declined with the rising popularity of ride-sharing apps over the past few years, and that Plaintiff's purported loans allegedly are not properly secured due to those circumstances. (Id. 103) Accordingly, inasmuch as Plaintiff itself has caused the circumstances of which it complains, the remedies it seeks should be denied.

6 Page 5 Thank you for Your Honor's continued attention to this matter. Respectfully submitted, cc: All Counsel (Via NYSCEF) Lloyd M Eisenberg