FILED: NEW YORK COUNTY CLERK 10/09/2015 03:53 PM INDEX NO. 158764/2015 NYSCEF DOC. NO. 13 RECEIVED NYSCEF: 10/09/2015 Exhibit B to the Affirmation of Howard I. Elman, Esq. in Support of Defendants Motion To Dismiss Claims That Are Time-Barred and Duplicative (Oct. 9, 2015) RJR Mechanical Inc. v. Ruvoldt et al. (Sup. Ct. N.Y. County No. 158764-2015)
FILED: NEW YORK COUNTY CLERK 08/25/2015 09:33 AM INDEX NO. 158764/2015 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 08/25/2015 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK RJR MECHANICAL INC., Plaintiff, Index No.: /2015 Date Index Number Purchased: 8/25/2015 -against- HAROLD J. RUVOLDT and HODGSON RUSS LLP, Defendants. SUMMONS Basis for Venue: Business Address of at least one Defendant (CPLR 503) TO THE ABOVE NAMED DEFENDANT (S): YOU ARE HEREBY SUMMONED to Answer the Complaint in this action and to serve a copy of your Answer, or, if the Complaint is not served with this Summons, to serve a Notice of Appearance and Demand for Complaint, on Plaintiff s attorneys (listed below) within twenty (20) days after the service of this summons, exclusive of the day of service (or within thirty (30) days after the service is complete if this summons is not personally delivered to you within the State of New York); and in case of your failure to answer or appear, judgment will be taken against you by default for the relief demanded in the notice set forth below. DATED: August 24, 2015 New York, NY /s/ Umar A. Sheikh Umar A. Sheikh, Esq. Attorney for Plaintiff RJR Mechanical Inc. DEFENDANTS ADDRESSES: Harold J. Ruvoldt, Esq. Fleming Ruvoldt PLLC 1700 Broadway, 28 th Floor New York, NY 10019 7 West 36 th Street, 16 th Floor New York, NY 10018 (212) 776-1834 Hodgson Russ LLP 1540 Broadway, 24 th Floor New York, NY 10036 Page 1 of 1
SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK RJR MECHANICAL INC., Index No.: /2015 Plaintiff, -against- VERIFIED COMPLAINT HAROLD J. RUVOLDT and HODGSON RUSS LLP, Defendants. Plaintiff, RJR Mechanical Inc., by its attorney, Umar A. Sheikh, Esq., as and for its Complaint against the Defendants, Harold J. Ruvoldt and Hodgson Russ LLP, respectfully alleges as follows, upon information and belief: THE PARTIES 1. Plaintiff, RJR Mechanical Inc. ( Plaintiff ), is a corporation duly organized and existing pursuant to the laws of the State of New York. 2. Upon information and belief, defendant, Harold J. Ruvoldt ( Ruvoldt ) is a natural person with an office address of c/o Fleming Ruvoldt PLLC, 1700 Broadway, 28 th Floor, New York, NY 10019. 3. Upon information and belief, defendant, Hodgson Russ LLP, ( HR LLP ) is a limited liability partnership organized and existing pursuant to the laws of the State of New York with an address of 1540 Broadway, 24 th floor, New York, NY 10036. 4. This Court has jurisdiction over this action because the Plaintiff and Defendants are citizens of this State. Page 1 of 13
5. The venue of this action is proper within the County of New York pursuant to CPLR 503(a). FACTUAL ALLEGATIONS 6. Plaintiff RJR is an HVAC contractor specializing in union construction contracts. 7. Prior to the formation of RJR, the then principals of RJR, Roy Leibowitz, John Fattarusso and Randy Karpman, were employed by Leewan Construction Company ( Leewan ), of which Harry Baron ( Baron ) was a principal. 8. RJR was formed after Leewan defaulted on certain construction projects and Leewan s remaining construction obligations were undertaken by Leewan s surety, Fireman s Fund. RJR was hired by Fireman s Fund to complete these construction obligations. 9. Harry Baron is also the principal of the entity known as E.M.V. Realty Corp. ( EMV ), the prior owner of that certain parcel of real estate known as 59-15 55 th Street, Maspeth, NY (the Premises ). 10. In or about 2002, EMV defaulted on its mortgage obligations with respect to the Premises to Norwest Bank and Norwest Bank commenced a mortgage foreclosure proceeding known as Norwest Bank v. EMV Realty Corp., et al., Supreme Court of the State of New York, County of Queens, Index Number 20159/2002 (the Case 1 ). Both EMV and Baron were defendants in Case 1. 11. RJR retained Defendant Ruvoldt to represent it in Case 1. Mr. Ruvoldt changed firms several times during the pendency of Case 1 and in each instance, we transferred the case to his new firm. Page 2 of 13
12. After Case 1 was commenced, RJR acquired the interest of the plaintiff in Case 1, Norwest Bank, in the mortgage and continued the prosecution of the mortgage foreclosure in Case 1. 13. Subsequently, and still during the pendency of Case 1, on the advice of Ruvoldt, RJR also acquired the interests of Merrill Lynch Business Financial Services, Inc., which held a judgment against EMV and Baron. 14. In 2004, a related case was commenced by EMV and Baron against RJR and one of its principals, Roy Leibowtiz. The case was entitled E.M.V. Realty Corp., et al. v. RJR Mechanical, Inc., et al., Supreme Court of the State of New York, County of Queens, Index Number 14778/2004 ( Case 2 ). 15. Mr. Ruvoldt was also retained to represent RJR in Case 2. He was also representing Mr. Leibowitz in Case 2. 16. In July 2009, RJR offered to purchase the Premises for $1.4 million. 17. Subsequently, in July 2009, a private auction was held between RJR and the eventual owner of the Premises, 59-15 55 th LLC, where 59-15 55 th LLC made a high bid to purchase the Premises for $2.5 million. 18. The property was sold to 59-15 55 th LLC and the proceeds of the sale ($2,175,783.31, the Proceeds ) were held in escrow pursuant to Court order pending a hearing to determine appropriate distribution between RJR and EMV. 19. A hearing was held in Case 1 in April 2010, the result of which was a Decision dated July 30, 2010. Through the Decision, the trial court reserved decision on a portion ($300,000.00) of the total Proceeds and sought additional evidence from the parties. Page 3 of 13
20. While reserving decision on $300,000.00 of the total Proceeds, the Decision divided the remaining $1,875,783.31 of the Proceeds as follows: (i) $424,790.42 to RJR; and (ii) the remainder to EMV. 21. Notwithstanding that no order was issued as a result of the Decision, the Defendants filed a Notice of Appeal on RJR s behalf in Case 1. 22. On February 11, 2011, Kevin J. Espinosa, an attorney working in defendant Hodgson Russ litigation group at the time, sent an email to Randy Karpman of RJR advising that the appeal in Case 1 needed to be perfected by March 23, 2011 and that if defendant Hodgson Russ did not hear from RJR by February 25, 2011, it would be unable to represent RJR on the appeal of Case 1. 23. In his email, Mr. Espinosa said nothing regarding Case 2 or the balance of Case 1. 24. In a subsequent communication dated February 14, 2011, Mr. Espinosa again discussed defendant Hodgson Russ being unable to represent RJR on the appeal. 25. In his February 14, 2011 email, Mr. Espinosa said nothing regarding Case 2 or the balance of Case 1. 26. In a February 28, 2011 email, Mr. Espinosa advised that Defendants that the defendants planned on filing a motion to withdraw as counsel with respect to the appeal in Case 1 and that RJR should look for new counsel to perfect the appeal. 27. Again, Mr. Espinosa did not mention Case 2 of the balance of Case 1. 28. Defendants continued in their representation of RJR and on March 8, 2011, Mr. Espinosa informed Randy Karpman of RJR of his continuing discussions with counsel for EMV regarding an extension of time to perfect the appeal and settlement of the action. Page 4 of 13
29. On March 9, 2011, Randy Karpman of RJR informed Mr. Espinosa that RJR has obtained separate counsel to handle the appeal. This was in line with Mr. Espinosa s guidance. Nothing was said about Case 2 or the balance of Case 1. 30. On or about March 9, 2011, RJR had come to terms with the law firm of Loanzon Sheikh LLC for the prosecution of the appeal of Case 1. 31. At this time, on or about March 9, 2011, RJR had no intention of replacing the defendants as their counsel in the balance of Case 1 or in Case 2 and communicated the same to the defendants, that Loanzon Sheikh LLC would be handling the appeal in Case 1 only. 32. Thereafter, in communications between Hodgson Russ LLP and RJR, RJR sought its files related the appeal of Case 1 so that the firm of Loanzon Sheikh LLC could proceed with the prosecution of the appeal. 33. During that effort, the defendants demanded payment and sought to withhold the files necessary for the prosecution of the appeal, notwithstanding that they were under the impression that the appeal was to be perfected in only days and had discussed Loanzon Sheikh LLC handling the appeal in Case 1. 34. Still, until March 15, 2011, the Defendants did not communicate that they were not willing to represent RJR in the balance of Case 1 or in Case 2. RJR did not communicate that it was seeking to terminate the relationship. Based on Defendants communications with opposing counsel regarding the matter and settlement, RJR continued in the good faith belief that Defendants continued to represent RJR. 35. As a result of the Defendants actions in demanding payment and being uncooperative regarding the files, on March 15, 2011, RJR came to terms with Loanzon Sheikh LLC on taking over the entirety of both cases from the Defendants and Loanzon Sheikh LLC Page 5 of 13
communicated the same to Defendants while securing an agreement with defendants to turn over such files as were necessary to prosecute the appeal. 36. On March 15, 2011, the Defendants prepared a Substitution of Counsel for both Case 1 and Case 2 and requested that they be executed. 37. Until such execution of the Substitution of Counsel forms, which were not simply a ministerial act, there was no certainty that the Court would have granted any request by the Defendants to be relieved as counsel. Also, until that point, there was no discussion between the Plaintiff and the Defendants concerning the termination of representation with respect to the balance of Case 1 and Case 2. 38. The Defendants remained counsel of record and continued to represent the Plaintiff in both Case 1 and Case 2 through March 15, 2011. 39. On March 15, 2011, the firm of Loanzon Sheikh LLC was substituted as counsel for RJR in the entirety of Case 1 and in Case 2. 40. After the appeal (and cross-appeal), the Appellate Division, Second Department, by order dated April 10, 2012, reduced RJR s portion from $424,790.02 to $24,856.60. 41. Prior to the Appellate Division s Order of April 10, 2012, counsel for EMV and Baron, Joseph Dineen, and counsel for the Plaintiff, Loanzon Sheikh LLC, attempted to engage in settlement discussions. 42. During those attempted settlement discussions, Mr. Dineen questioned why RJR did not agree to a prior settlement offer conveyed by Mr. Dineen on behalf of EMV and Baron through which EMV offered to transfer the Premises to RJR in full satisfaction of the mortgage lien and judgment that RJR then owned and that were existing as liens upon the Premises. Page 6 of 13
43. RJR had no knowledge of any settlement offer from Mr. Dineen that included a transfer of the Premises. 44. Mr. Dineen advised that in response to such settlement offer, Defendant Ruvoldt had asked Mr. Dineen to provide a financial statement on behalf of Mr. Baron. 45. Mr. Dineen advised that Mr. Ruvoldt had asked for this information because Mr. Baron was personally responsible on the judgment acquired from Merrill Lynch and it was necessary to evaluate what was being given up as part of the proposed settlement. 46. Mr. Dineen advised that the requested information was supplied to Defendant Ruvoldt. 47. Mr. Dineen advised that Defendant Ruvoldt declined the settlement offer and thereafter the Action continued. 48. Prior to the commencement of this action, RJR, through counsel, communicated with Defendants to ascertain any information concerning the settlement offer communicated by Mr. Dineen to Mr. Ruvoldt, any information concerning the transmittal of that settlement offer to RJR, any information concerning RJR s response. 49. In response to RJR s inquiries to the Defendants, no information was received. 50. The Defendants never disputed that Mr. Dineen communicated the settlement offer to Defendant Ruvoldt. 51. The Defendants never disputed that the settlement offer communicated by Mr. Dineen to Defendant Ruvoldt was not communicated to RJR. 52. The Defendants never disputed that the settlement offer communicated by Mr. Dineen to Defendant Ruvoldt and not communicated to RJR, was declined by Defendant Ruvoldt. Page 7 of 13
53. RJR s ultimate goal in the Action was to acquire the Premises. This goal was known to Defendant Ruvoldt. RJR, had it known of the settlement offer that included a transfer of the Premises to it, would have accepted the same. 54. If the Action had been settled, RJR would have ceased paying and incurring thousands of dollars in legal fees and costs to the Defendants. 55. RJR owning the Premises would ensure a rent-free space from which to operate their business. It was known to Defendant Ruvoldt that RJR had invested hundreds of thousands of dollars into the Premises. 56. Ultimately, RJR was forced to vacate the Premises and continue operations elsewhere. 57. Defendant HR LLP, as the employer of Defendant Ruvoldt and the entity through which Defendant Ruvoldt practiced law for a period of time, is responsible for the actions and omissions of Defendant Ruvoldt, including Defendant Ruvoldt s failure to communicate the settlement offer to RJR prior to the trial of the Action. 58. As a result of the Defendants actions and omissions, RJR has suffered damages equal to the fair market value of the Premises, a sum no less than $2.5 million dollars, together with all legal fees paid to the Defendants and/or incurred as a result of services provided by the Defendants, all together with interest, and the reasonable attorneys fees, costs and disbursements of this action. 59. The Plaintiff originally filed an action against the Defendants on March 14, 2014. The same was dismissed without prejudice by order dated April 14, 2015. 60. This prior action was timely commenced and this action is timely commenced pursuant to CPLR 205 and the Plaintiff s filing date relates back to March 14, 2014. Page 8 of 13
AS AND FOR A FIRST CAUSE OF ACTION AGAINST DEFENDANTS FOR NEGLIGENCE AND LEGAL MALPRACTICE 61. The Plaintiff repeats the allegations contained within Paragraphs 1 60 of the Complaint as if fully set forth herein. 62. Rule 1.4 of the Rules of Professional Conduct provides that a lawyer shall promptly inform the client of material developments in the matter including settlement offers. 63. The attorney-client relationship, such as the one that existed between the Plaintiff and the Defendants is one of special trust. 64. The attorney-client relationship, such as the one that existed between the Plaintiff and the Defendants is one where the Defendants owe fiduciary obligations to the Plaintiff. 65. One of the fiduciary duties the Defendants owed to the Plaintiff was to communicate all material developments in the Action to the Plaintiff, including any settlement offers. 66. The Defendants breached their fiduciary duty to the Plaintiff by failing to communicate a settlement offer to the Plaintiff. 67. As a direct and proximate result of the Defendants breach of fiduciary duty, the Plaintiff has suffered damages. 68. Defendants owed the Plaintiff a duty to undertake the representation of the Plaintiff pursuant to accepted levels of professionalism and practice in the legal community. 69. As part of the Defendants duties to the Plaintiff in the course of such representation is to promptly communicate all material information, including settlement offers, to the Plaintiff. 70. The Defendants breached their duty to the Plaintiff when they failed to communicate a settlement offer to the Plaintiff. Page 9 of 13
71. The Defendants breached their duty to the Plaintiff when they rejected a settlement offer without consultation with the Plaintiff. 72. As part of the Defendants duties to the Plaintiff in the course of such representation is to adequately prepare for hearings and trials. 73. In addition, the Defendants breached their duty to the Plaintiff by failing to adequately prepare for the trial of the action, and failing, among other things, to properly use information provided by the Plaintiff for the cross-examination of Harry Baron. 74. As a direct and proximate result of the Defendants omissions and failure to adequately prepare for trial, all of which the Plaintiff relied upon, the Plaintiff has suffered damages. 75. As a result of the Defendants various breaches, the Plaintiff has suffered damages equal to the fair market value of the Premises, a sum no less than $2.5 million dollars, together with all legal fees paid to the Defendants and/or incurred as a result of services provided by the Defendants, all together with interest, and the reasonable attorneys fees, costs and disbursements of this action. AS AND FOR A SECOND CAUSE OF ACTION AGAINST THE DEFENDANTS FOR UNJUST ENRICHMENT 76. Plaintiff repeats the allegations contained within Paragraphs 1 73 of the Complaint as fully set forth herein. 77. As a result of the Defendants actions and omissions, the Defendants were enriched through the continued payment of fees. Page 10 of 13
78. The Defendants enrichment occurred through circumstances that were unjust, namely, Defendants failure to advise the Plaintiff of a settlement offer and failure to adequately prepare for trial. 79. As a direct and proximate result of the Defendants unjust conduct, the Plaintiff has suffered damages. 80. As a result of the Defendants unjust conduct, the Plaintiff has suffered damages equal to the fair market value of the Premises, a sum no less than $2.5 million dollars, together with all legal fees paid to the Defendants and/or incurred as a result of services provided by the Defendants, all together with interest, and the reasonable attorneys fees, costs and disbursements of this action. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] Page 11 of 13
WHEREFORE, the Plaintiff respectfully demands Judgment against the Defendants, on each of the Plaintiff s causes of action, in a sum no less than $2.5 million dollars, together with all legal fees paid to the Defendants and/or incurred as a result of services provided by the Defendants, all together with interest, and the reasonable attorneys fees, costs and disbursements of this action, and such other and further relief as to this Court seems just, proper and equitable. DATED: August 24, 2015 New York, NY /s/ Umar A. Sheikh Umar A. Sheikh, Esq. Attorney for Plaintiff RJR Mechanical Inc. 7 West 36 th Street, 16 th Floor New York, NY 10018 (212) 776-1834 TO: Harold J. Ruvoldt, Esq. Fleming Ruvoldt PLLC 1700 Broadway, 28 th Floor New York, NY 10019 Hodgson Russ LLP 1540 Broadway, 24 th Floor New York, NY 10036 Page 12 of 13
STATE OF NEW JERSEY ) )ss.: COUNTY OF MIDDLESEX ) VERIFICATION UMAR A. SHEIKH, under penalties of perjury, hereby affirms as follows: 1. I am an attorney duly admitted to practice law before the Courts of the States of New York and New Jersey. 2. I am the attorney for the Plaintiff, RJR Mechanical, Inc., in the within action. As a result, I am fully familiar with the facts and circumstances in this matter. 3. I have read the foregoing Complaint and know the same to be true to my own knowledge, except as to those matters alleged on information and belief. As to those matters, the source of my knowledge is conversations with people with knowledge of the events and happenings, and such information as is contained in my office file. 4. That the reason this verification is made by the undersigned and not the Plaintiff is because the Plaintiff does not maintain an office in the same county as where the undersigned maintains an office for the practice of law. DATED: August 24, 2015 /s/ Umar A. Sheikh UMAR A. SHEIKH Page 13 of 13