SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK -------------------------------------------------------------------------X ATLANTIC SPECIALTY INSURANCE COMPANY, Index No.: 652833/2017 Plaintiff, -against- (Hon. Barry R. Ostrager) (Motion Seq. 002) BAY RIDGE AUTOMOTIVE COMPANY, LLC d/b/a BAY RIDGE FORD, BICOM NY, LLC d/b/a JAGUAR LAND ROVER MANHATTAN, BNF PARTNERSNY LLC, KINGS AUTOMOTIVE HOLDINGS, LLC dlb/a KINGS CHRYSLER DODGE JEEP RAM, WHITE PLAINS AUTO COMPANY, LLC d/b/a WHITE PLAINS NISSAN, GARY B. FLOM, VENIAMIN NILVA and ALEXANDER BOYKO, Defendants. ----------------------------------------------------------------------X X AFFIRMATION OF MICKEE HENNESSY INSUPPORTOFSUMMARYJUDGMENT Mickee Hennessy, pursuant to the penalties of perjury, states: 1. My name is Mickee Hennessy. I am a member in good standing of the Bar of the State of New York and a partner with Westerman Ball Ederer Miller Zucker 8 Sharfstein, LLP (Westerman Ball), co-counsel for plaintiff, Atlantic Specialty Insurance Company (ASIC). I make this Affirmation in support of ASIC's motion for summary judgment against defendants, BNF Partners NY LLC, Kings Automotive Holdings, LLC d/b/a Kings Chrysler Dodge Jeep Ram, White Plains Auto Company, LLC d/b/a White Plains Nissan, Gary B. Flom, Veniamin Nilva and Alexander Boyko (collectively, the Indemnitors).¹ My knowledge of the facts set forth in this Affirmation is based on an ¹ Defendants, BICOM NY, LLC (BICOM) and Bay Ridge Automotive Company, LLC d/b/a Bay Ridge Ford (Bay Ridge) are also indemnitors, however, on or about July 10, 2017, BICOM and Bay Ridge separately filed for chapter 11 bankruptcy protection. This action is stayed as against BICOM and Bay Ridge and proceeding against the remaining defendants. Therefore, this motion does not seek any relief affecting the interests of BICOM or Bay Ridge. 1 of 7
investigation conducted as counsel in this matter, review of information, affirmations and pleadings submitted to this Court and, in some instances, my personal knowledge. 2. This action involves the breach of a General Indemnity Agreement executed by them (and BICOM and Bay Ridge) on or about September 10, 2015 (the Indemnity Agreement), under which the Indemnitors agreed to indemnify ASIC for all losses, costs and expenses, including counsel fees, incurred as a result of ASIC's suretyship of BICOM. A. Summary of Facts.2 i. The Lease, Indemnity Agreement and Bond. 3. Upon information and belief, BICOM entered into a lease agreement with Georgetown Eleventh Avenue Owners, LLC (Georgetown) in connection with certain retail lease space (the Lease). As a condition of the Lease, BICOM was required to obtain a lease bond that would, under certain conditions, guarantee payment to Georgetown should BICOM default in its Lease obligations.3 4. Upon information and belief, BICOM and the other Indemnitors requested that ASIC issue the needed bond. Before it would do so, ASIC required the Indemnitors to execute the Indemnity Agreement.4 Pursuant to the Indemnity Agreement, the Indemnitors agreed, among other things, (i) to provide collateral on demand to protect ASIC against loss,5 and (ii) to reimburse and indemnify ASIC for all losses incurred, 2 A full recitation of the facts relating to this matter are set forth in the accompanying Affidavit of Terence J. Dahl, sworn to on February 22, 2018 (Dahl Aff.). 3 See Dahl Aff., 3. 4 See Dahl Aff., 4. A copy of the Indemnity Agreement is attached to the Dahl Aff. as Exhibit 1. 5 see Dahl Aff., Exhibit 1 (Indemnity Agreement), 3. AFFIRMATION OF MICKEE HENNESSY PAGE 2 2 of 7
including resulting counsel fees and costs, in the event of a claim under the bond or in enforcing the Indemnity Agreement.6 5. Upon information and belief, on or about November 17, 2015, at BICOM's request and in reliance on the Indemnity Agreement, ASIC issued the bond (the Bond) in connection with the Lease. The Bond had a penal sum of $3,300,000. Under the terms of the Bond, ASIC agreed, under certain conditions, to be liable to Georgetown to the extent BICOM defaulted under the terms of the Lease.7 Upon information and belief, BICOM and Georgetown entered into the Lease on or about November 18, 2015.8 ii. BICOM's Breach of the Lease, Georgetown's Claim, Demand for Collateral and Breach. 6. Subsequently, upon information and belief, BICOM failed to pay millions of dollars in base rent and additional rent required under the Lease for the months of April, May and June 2017, resulting in a claim by Georgetown under the Bond (the Bond Claim) in the amount of $3,300,000, the full penal sum of the Bond.9 7. On June 28, 2017, Georgetown commenced an action against ASIC, filing and serving a Summons and Complaint seeking damages in the amount of $3,300,000 under the Bond (the Georgetown Action).10 ASIC served and filed its Answer in the Georgetown Action on or about July 18, 2017.¹¹ 6 See Dahl Aff., Exhibit 1 (Indemnity Agreement), 2. 7 Dahl Aff., 12. A copy of the Bond is attached to the Dahl Aff. as Exhibit 2. 6 Dahl Aff., 13. A copy of the Lease is attached to the Dahl Aff. as Exhibit 3. 9 Dahl Aff., 14-16. A copy of Georgetown's May 8, 2017, May 10, 2017 and May 18, 2017 letters are attached to the Dahl Aff. as Exhibits 4, 5 and 6, respectively. ¹0 Affirmation of Michael J. Rosenthal, dated February 23, 2018 (Rosenthal Aff.), 8. A copy of Georgetown's Summons and Complaint are attached to the Rosenthal Aff., collectively, as Exhibit A. ¹¹ Rosenthal Aff., 8. A copy of ASIC's Answer in the Georgetown Action is attached to the Rosenthal Aff. as Exhibit B. AFFIRMATION OF MICKEE HENNESSY PAGE 3 3 of 7
B. Bankruptcy by BICOM and Bay Ridqe. 8. On or about July 10, 2017, BICOM and Bay Ridge, separately, filed for chapter 11 bankruptcy protection (collectively, the Bankruptcy Proceedings).¹2 In or around July 2017, Westerman Ball was retained by ASIC as co-counsel in connection with the Bankruptcy Proceedings. BICOM and Georgetown subsequently entered into a stipulation in the BICOM bankruptcy proceeding concerning the payment of post-petition rent under the Lease, wherein BICOM acknowledged its failure to pay rent and Georgetown took the position that it would continue seeking payment from ASIC under the Bond.¹3 C. ASIC's Damages for Attorney's Fees as a Result of its Issuance of the Bond. 9. As a result of the Bond Claim and the breach of the Indemnity Agreement, ASIC was required to retain Westerman Ball, a law firm of over 40 attorneys, with offices located in Uniondale, New York, as co-counsel to represent ASIC in the Bankruptcy Proceedings. Westerman Ball primarily concentrates its practice in the area of debtor-creditor rights, bankruptcy, restructuring and transactional matters. 10. I am the primary attorney assigned at Westerman Ball to handle this matter. I graduated Fordham Law School in 1995 with a JD. I was admitted to practice in New York in 1996, and to the United States District Court for the Southern District of New York in 1997. I have over 20 years of experience in debtor-creditor rights, bankruptcy, restructuring and transactional matters. I have spent over 50 hours representing ASIC in connection with the Bankruptcy Proceedings. My time was spent reviewing bankruptcy ¹2 Rosenthal Aff. 9. Copies of BICOM's and Bay Ridge's bankruptcy petitions are attached to the Rosenthal Aff. as Exhibits C and D, respectively. ¹3 Rosenthal Aff. 9. A copy of the Stipulation is attached to the Rosenthal Aff. as Exhibit E. AFFIRMATION OF MICKEE HENNESSY PAGE 4 4 of 7
filings, communicating with ASIC and its surety counsel, Westermann Sheehy Keenan Samaan 5 Aydelott, LLP, attending court conferences, researching relevant issues, drafting and revising documents for filing in the Bankruptcy Proceedings and protecting ASIC's rights under the Indemnity Agreement in the Bankruptcy Proceedings. 11. My professional rate for ASIC is $550 per hour, which rate is entirely reasonable for an attorney with my experience performing work of this type in this geographic area. 12. William Heuer is a partner with Westerman Ball, with over 15 years of experience in debtor-creditor rights, bankruptcy, restructuring and transactional matters. Mr. Heuer graduated from St. John's University School of Law in 1997 with a JD. Mr. Heuer was admitted to practice in New York in 1998, and to the United States District Court for the Southern District of New York in 1999. Mr. Heuer has spent over 14 hours representing ASIC in connection with the Bankruptcy Proceedings. His time was spent attending conferences regarding strategy, conducting analysis of filings, drafting objections to various filings, communicating with debtors' debtors counsel, attending hearings in the Bankruptcy Proceedings and engaging in settlement discussions, among other things. 13. Mr. Heuer's professional rate for ASIC is $550 per hour, which rate is entirely reasonable for an attorney with his experience performing work of this type in this geographic area. 14. Thomas Draghi is a senior partner with Westerman Ball, with almost 25 years of experience in debtor-creditor rights, bankruptcy, restructuring and transactional matters. Mr. Draghi graduated from New York Law School in 1990 with a JD. Mr. Draghi was admitted to practice in New York in 1990, and to the United States District Court for AFFIRMATION OF MICKEE HENNESSY PAGE 5 5 of 7
the Southern District of New York in 1991. Mr. Draghi has spent over 4 hours representing ASIC in connection with the Bankruptcy Proceedings. His time was spent attending matters regarding strategy, hearings and settlement and reviewing documents. 15. Mr. Draghi's professional rate for ASIC is 3600 per hour, which rate is entirely reasonable for an attorney with his experience performing work of this type in this geographic area. 16. Other individuals at Westerman Ball spent negligible time in connection with this matter and are reflected on Westerman Ball's invoices. 17. The total amount paid by ASIC to Westerman Ball to date in connection with this matter (after voluntary reductions, as identified in the firm's invoices as "N/C," meaning "no charge") aggregates $30,073.53, which includes costs and expenses.¹4 18. The amount of the attorney's fees and costs is entirely reasonable and consistent with the requirements and criteria of Rule 1.5 of the Model Rules of Professional Conduct. 19. The professional services were required due to Georgetown's claim under the Bond, the subsequent action commenced by Georgetown, BICOM's and Bay Ridge's Bankruptcy Proceedings, the breach of the Indemnity Agreement and ASIC's enforcement of its rights under the Indemnity Agreement. The services of Westerman Ball provided substantial benefit to ASIC by assisting in protecting its interests and its rights under the Indemnity Agreement. ¹4 A copy of Westerman Ball's legal bills to date (redacted for privilege) are attached to this Affirmation as Exhibit A. AFFIRMATION OF MICKEE HENNESSY PAGE 6 6 of 7
20. In this case, the undisputed material facts, including the terms of the Indemnity Agreement and controlling law, are clear and ASIC is entitled to summary judgment as a matter of law. Accordingly, ASIC respectfully requests that its motion be granted in its entirety. Dated: Uniondale, New York February 2, 2018 ~ 'k~(6~ ickee Hennessy AFFIRMATION OF MICKEE HENNESSY PAGE 7 7 of 7