FILED: NEW YORK COUNTY CLERK 11/17/2014 08:50 PM INDEX NO. 651926/2013 NYSCEF DOC. NO. 72 RECEIVED NYSCEF: 11/17/2014 SUPREME COURT OF THE STATE OF NEW YORK, NEW YORK COUNTY GREYSTONE FUNDING CORP., Plaintiff, v. EPHRAIM KUTNER, JONATHAN KUTNER, and HARBORVIEW CAPITAL PARTNERS, LLC, Defendants. Index No. 651926/2013 IAS Part 53 Hon. Charles E. Ramos ANSWER, AFFIRMATIVE DEFENSES, AND COUNTERCLAIM Ephraim Kutner ( Ephraim, Jonathan Kutner ( Jonathan, and Harborview Capital Partners, LLC ( Harborview, by their attorneys, Dechert LLP and Seyfarth Shaw LLP, hereby file this Answer, Affirmative Defenses, and Counterclaim to the complaint in the abovecaptioned action (the Complaint as follows: ANSWER NATURE OF THE ACTION 1. Admit that Ephraim and Jonathan are former employees of Greystone and that Ephraim, Jonathan, and Harborview are Defendants in this action; respond to the allegations in the second sentence of paragraph 1 of the Complaint by referring the Court to the referenced agreement between Ephraim and Greystone for the full and complete contents thereof; and deny all remaining allegations in paragraph 1 of the Complaint. PARTIES 2. Deny knowledge or information sufficient to form a belief as to the truth of the allegations contained in paragraph 2 of the Complaint, except admit that Greystone s principal place of business is at 152 West 57 th Street, New York, New York 10019. 1
3. Admit the allegations in paragraph 3 of the Complaint. 4. Admit the allegations in paragraph 4 of the Complaint. 5. Admit the allegations in paragraph 5 of the Complaint. JURISDICTION AND VENUE 6. Admit the allegations in paragraph 6 of the Complaint. 7. Admit the allegations in paragraph 7 of the Complaint. STATEMENT OF FACTS Ephraim s Employment with Greystone 8. Admit the allegations of paragraph 8 of the Complaint. 9. Admit that Ephraim and Greystone were parties to the letter agreement dated as of January 1, 2010 (the Agreement, refer the Court to the referenced Agreement for the full and complete contents thereof, and otherwise deny the remaining allegations in paragraph 9 of the Complaint. 10. Admit that Ephraim was employed by Greystone as a Senior Originator, that his office was located in Lawrence, New York, and that he supervised a team of employees, including his brother, Jonathan; state that Jonathan signed a Receipt and Acknowledgement of Greystone Employee Manual; refer to the Court to the referenced Agreement and the Receipt and Acknowledgement of Greystone Employee Manual for the full and complete contents thereof; and otherwise deny the remaining allegations in paragraph 10 of the Complaint. 11. Respond to the allegations in paragraph 11 of the Complaint by referring the Court to the referenced Agreement for the full and complete contents thereof, and otherwise deny the allegations in paragraph 11 of the Complaint. 2
12. Respond to the allegations in paragraph 12 of the Complaint by referring the Court to the referenced Agreement for the full and complete contents thereof. 13. State that paragraph 13 of the Complaint alleges legal conclusions to which no response is required. To the extent a response is required, Deny the allegations in paragraph 13. 14. Respond to the allegations in paragraph 14 of the Complaint by referring the Court to the referenced Agreement for the full and complete contents thereof, and otherwise deny the allegations in paragraph 14 of the Complaint. 15. Respond to the allegations in paragraph 15 of the Complaint by referring the Court to the referenced Agreement for the full and complete contents thereof, and otherwise deny the allegations in paragraph 15 of the Complaint. 16. Respond to the allegations in paragraph 16 of the Complaint by referring the Court to the referenced Agreement for the full and complete contents thereof. 17. Respond to the allegations in paragraph 17 of the Complaint by referring the Court to the referenced Agreement for the full and complete contents thereof. 18. Deny the allegations in paragraph 18 of the Complaint, except state that Ephraim gave Greystone notice on February 27, 2013 that he would not renew the Agreement, and as a result Greystone terminated the Agreement without cause as of March 1, 2013, and further state that Ephraim continued to work for Greystone on an at will basis until Greystone terminated its relationship with Ephraim on April 15, 2013. 19. State that paragraph 19 of the Complaint alleges legal conclusions to which no response is required. To the extent a response is required, Deny the allegations in paragraph 19. 20. State that paragraph 20 of the Complaint alleges legal conclusions to which no response is required. To the extent a response is required, Deny the allegations in paragraph 20. 3
Ephraim s Breach Of The Agreement And Defendants Other Wrongful And Unlawful Conduct 21. Deny the allegations in paragraph 21 of the Complaint. 22. Deny the allegations in paragraph 22 of the Complaint. 23. Deny the allegations in paragraph 23 of the Complaint, except admit that Ephraim apologized in writing to a prospective borrower for delays and mistakes caused by Greystone s underwriting and processing staff (not mistakes by the Kutner Team in the Lawrence office. 24. State that paragraph 24 of the Complaint alleges legal conclusions to which no response is required. To the extent a response is required, Deny the allegations in paragraph 24, except admit that Harborview was formed in April 2013, and further state that Harborview provides consulting services in connection with mortgage loans made by unaffiliated entities. 25. Admit the allegations in paragraph 25 of the Complaint. 26. Admit the allegations in paragraph 26 of the Complaint. 27. Deny the allegations in paragraph 27 of the Complaint, except admit that Greystone s employment of Reynaldo Flores ( Flores and Gershon Yarmush ( Yarmush ended on or about April 15, 2013, and further state that Melissa Sheps ( Sheps resigned her employment with Greystone on or about May 8, 2013 and that Flores, Yarmush, and Sheps are currently employed by Clarity Capital Partners LLC and act as agents of Harborview. 28. Deny the allegations in paragraph 28 of the Complaint, except admit that that Flores, Yarmush, and Sheps are currently employed by Clarity Capital Partners LLC and act as agents of Harborview, and further state that Harborview provides consulting services in connection with mortgage loans made by unaffiliated entities. 29. Deny the allegations in paragraph 29 of the Complaint, except admit that Ephraim has discussed his home mortgage loan with Hudson City Savings Bank and Cross River Bank; 4
that Ephraim or a representative of Harborview has communicated with representatives of Feiner Investments/FNR Healthcare and Carino & Associates; that Ephraim cancelled a business meeting with HUD in Seattle, Washington, at the request of the prospective borrower; and that Ephraim and Harborview have provided consulting services for Shlomo Rechnitz in connection with mortgage loans made by unaffiliated entities. 30. Deny the allegations in paragraph 30 of the Complaint, except admit that Greystone has made allegations about Ephraim, and refer the Court to the May 22, 2013 Greystone letter for the full and complete contents thereof. AS AND FOR A FIRST CAUSE OF ACTION (Breach Of Contract As Against Ephraim Kutner 31. Repeat and reallege their responses to paragraphs 1 through 30 herein. 32. Deny the allegations in paragraph 32. 33. Deny the allegations in paragraph 33. 34. Deny the allegations in paragraph 34. 35. Deny the allegations in paragraph 35. 36. Deny the allegations in paragraph 36. AS AND FOR A SECOND CAUSE OF ACTION (Breach Of Covenant Of Good Faith And Fair Dealing As Against Ephraim Kutner 37. Repeat and reallege their responses to paragraphs 1 through 36 herein. 38. State that paragraph 38 of the Complaint alleges legal conclusions to which no response is required. To the extent a response is required, deny all allegations in paragraph 38. 39. Deny the allegations in paragraph 39. 40. Deny the allegations in paragraph 40. 41. Deny the allegations in paragraph 41. 5
AS AND FOR A THIRD CAUSE OF ACTION (Breach Of Duties As Against Ephraim and Jonathan Kutner 42. Repeat and reallege their responses to paragraphs 1 through 41 herein. 43. State that paragraph 43 of the Complaint alleges legal conclusions to which no response is required. To the extent a response is required, deny all allegations in paragraph 43. 44. Deny the allegations in paragraph 44. 45. Deny the allegations in paragraph 45. 46. Deny the allegations in paragraph 46. AS AND FOR A FOURTH CAUSE OF ACTION (Faithless Servant As Against Ephraim and Jonathan Kutner 47. Repeat and reallege their responses to paragraphs 1 through 46 herein. 48. State that paragraph 48 of the Complaint alleges legal conclusions to which no response is required. To the extent a response is required, deny all allegations in paragraph 48. 49. Deny the allegations in paragraph 49. 50. Deny the allegations in paragraph 50. 51. Deny the allegations in paragraph 51. AS AND FOR A FIFTH CAUSE OF ACTION (Tortious Interference With Contract As Against Jonathan Kutner and Harborview 52. Repeat and reallege their responses to paragraphs 1 through 51 herein. 53. Deny the allegations in paragraph 53, except admit that Jonathan knew of the Agreement between Ephraim and Greystone, and otherwise respond to the allegations in paragraph 53 of the Complaint by referring the Court to the referenced Agreement for the full and complete contents thereof. 54. Deny the allegations in paragraph 54. 55. Deny the allegations in paragraph 55. 6
AS AND FOR A SIXTH CAUSE OF ACTION (Tortious Interference With Prospective Economic Advantage and Prospective Business Relations As Against Each Defendant 56. Repeat and reallege their responses to paragraphs 1 through 55 herein. 57. Deny the allegations in paragraph 57. 58. Deny the allegations in paragraph 58. 59. Deny the allegations in paragraph 59. 60. Deny the allegations in paragraph 60. 61. Deny the allegations in paragraph 61. AS AND FOR A SEVENTH CAUSE OF ACTION (Unfair Competition As Against Each Defendant 62. Repeat and reallege their responses to paragraphs 1 through 61 herein. 63. Deny the allegations in paragraph 63. 64. Deny the allegations in paragraph 64. 65. Deny the allegations in paragraph 65. AS AND FOR AN EIGHTH CAUSE OF ACTION (Unjust Enrichment As Against Each Defendant 66. Repeat and reallege their responses to paragraphs 1 through 65 herein. 67. Deny the allegations in paragraph 67. 68. Deny the allegations in paragraph 68. 69. Deny the allegations in paragraph 69. AS AND FOR A NINTH CAUSE OF ACTION (Accounting/Constructive Trust As Against Each Defendant 70. Repeat and reallege their responses to paragraphs 1 through 69 herein. 71. Deny the allegations in paragraph 71. 72. Deny the allegations in paragraph 72. 73. Deny the allegations in paragraph 73. 7
PRAYER FOR RELIEF Defendants deny that Plaintiff is entitled to any relief on its claims. AFFIRMATIVE DEFENSES First Affirmative Defense The Complaint fails to state a claim upon which relief can be granted. Second Affirmative Defense Plaintiff s claims are barred by the provisions of the Agreement. Third Affirmative Defense Plaintiff s claims are barred because it breached the Agreement on which its claims are based. Fourth Affirmative Defense Plaintiff s claims are barred because it terminated Ephraim s employment pursuant to the Agreement on which its claims are based without cause. Fifth Affirmative Defense Plaintiff s claims are barred, in whole or in part, because the restrictive covenants contained in the Agreement on which its claims are based are unduly broad and unnecessary to protect any legitimate interest of Plaintiff. Sixth Affirmative Defense Plaintiff s claims are barred, in whole or in part, by various equitable doctrines, including unclean hands, waiver, laches, and estoppel. Seventh Affirmative Defense Plaintiff s claims are barred in whole or in part by Plaintiff s own actions or the actions of others. 8
Eighth Affirmative Defense Plaitniff s claims are barred, in whole or in part, because two or more of its claims are duplicative of each other. Ninth Affirmative Defense Defendants reserve the right to assert and rely on all additional affirmative defenses which become available or apparent during discovery proceedings in this action. WHEREFORE, Defendants Ephraim Kutner, Jonathan Kutner, and Harborview Capital Partners, LLC respectfully request that this Court dismiss the Complaint with prejudice and grant such other and further relief as the Court deems just and proper. 9
COUNTERCLAIM Defendant Jonathan Kutner ( Jonathan, 1 by and through his attorneys, Dechert LLP and Seyfarth Shaw LLP, for his counterclaim against Greystone Funding Corp. ( Greystone or Counterclaim-Defendant states and alleges as follows: 1. The Parties to this action are embroiled in litigation involving claims stemming from Greystone s termination of Ephraim Kutner ( Ephraim without cause and subsequent wrongful actions, including its decision to withhold millions of dollars of vested and earned compensation and its efforts to prevent Ephraim and Jonathan from operating a successful business following Greystone s termination of Ephraim. 2. In addition to withholding vested and earned compensation from Ephraim, Greystone has failed to provide compensation earned by Jonathan. PARTIES 3. Counterclaim-Plaintiff Jonathan Kutner is a former employee of Greystone and the brother of Defendant Ephraim Kutner. Until April 15, 2013, he worked for Greystone as a senior originator. Jonathan resides at 9 Harborview West, Lawrence, New York. 4. Counterclaim-Defendant Greystone is a Virginia corporation with its principal place of business at 152 West 57th Street, New York, New York. JURISDICTION AND VENUE 5. This Court has jurisdiction over this matter pursuant to Article 3 of the CPLR. 6. Venue is proper in this County pursuant to Section 503 of the CPLR. The principal office of the Counterclaim-Defendant is in New York County. 1 Ephraim Kutner has previously asserted claims against Greystone in Kutner v. Greystone Funding Corp., et al., No. 652210/2013. Greystone has requested that the Court consolidate the two actions. 10
FACTUAL ALLEGATIONS 7. Jonathan worked for Greystone as a member of Ephraim s team in Greystone s Lawrence, New York office. 8. Pursuant to an Employment Agreement between Ephraim and Greystone, Ephraim was compensated by Greystone in the form of commissions based on the business that he originated for the company. The Agreement provided that the salaries of members of Ephraim s team would be deducted from these commissions. 9. Jonathan Kutner was compensated by Greystone in the form of a base salary plus a bonus. 10. Ephraim s Employment Agreement was limited to a two-year term, but would renew automatically on January 1, 2013 unless he or Greystone provided notice of non-renewal by December 1, 2012. As the deadline for non-renewal approached, Ephraim had substantial concerns about Greystone s work environment and its business, and was unwilling to renew the Agreement unless his concerns were addressed. To allow discussions between the parties to take place, the parties agreed to several brief extensions to the Employment Agreement. 11. The ultimate deadline for Ephraim s non-renewal of the Employment Agreement was February 27, 2013, with a term ending on March 27, 2013. With the parties having failed to reach a resolution of Ephraim s concerns, Ephraim notified Greystone on February 27 that he would not renew the Agreement. 12. On March 1, 2013, Greystone formally notified Ephraim Kutner that unless he renewed his Employment Agreement by March 4, Greystone would terminate the Agreement immediately, as of March 1, 2013. Mr. Kutner did not agree to renew the Agreement, and as a result, Greystone terminated the Agreement. 11
13. Despite the termination of the Employment Agreement, Ephraim and Jonathan continued working for Greystone after March 1, 2013. The Kutner Team was in the process of closing deals that would generate millions of dollars in net income to Greystone. 14. During this period, Greystone made no indication that it would withhold payment to Jonathan for his work on deals that had closed prior to March 1 or on the pending deals that he continued working to complete. 15. On March 22, 2013, Greystone gave notice to Ephraim that it would terminate his employment as of April 15, 2013. 16. On or about April 15, 2013, Greystone notified Jonathan and other members of Ephraim s team that the Lawrence office would be closed and that they would be required to report to the New York office. 17. Jonathan refused to relocate to the New York office and, as a result, Greystone terminated his employment. 18. To date, Jonathan has not received the bonus due to him on deals that he worked on for Greystone s benefit through April 15, 2013 or thereafter. COUNT 1 (Unjust Enrichment 19. Jonathan repeats and realleges the claims contained in paragraphs 1 through 18 above as if fully set forth herein. 20. As described above, Greystone was knowingly enriched at Jonathan s expense by retaining profits earned through Jonathan s efforts while withholding the bonus earned by Jonathan for his work on those deals. 12
21. Jonathan was injured in that he has not received payment earned for his work for the benefit of Greystone. 22. It is against good conscience and equity to permit Greystone to retain the proceeds of its misconduct at Jonathan s expense. 23. Jonathan seeks damages to be determined at trial. WHEREFORE, Counterclaim-Plaintiff asks the Court to enter judgment in his favor, and against Counterclaim-Defendant, awarding to Counterclaim-Plaintiff damages, plus prejudgment interest, post-judgment interest, and reasonable attorney s fees, and granting to Counterclaim-Plaintiff such other and further relief as the Court deems just and proper. Dated: New York, New York November 17, 2014 DECHERT LLP /s/ Steven A. Engel Andrew J. Levander Steven A. Engel 1095 Avenue of the Americas New York, New York 10036 (212 698-3500 SEYFARTH SHAW LLP Dov Kesselman Jacob Oslick 620 Eighth Avenue New York, NY 10002 Phone: (212 218-5500 Fax: (917 344-1210 Attorneys for Defendants 13