2024 WL 4485397
Only the Westlaw citation is currently available.
United States District Court, E.D. New York.
BAT LLC, Plaintiff,
v.
TD BANK, N.A., HALIFAX SECURITY, INC., d/b/a NORTH AMERICAN VIDEO, HALIFAX SECURITY, INC., LYDIA SECURITY MONITORING, INC., d/b/a COPS MONITORING and INTEGRATED SECURITY SYSTEMS, Defendants.
15 CV 5839 (NRM) (CLP)
Filed 03/30/2024
REPORT AND RECOMMENDATION
Cheryl L. Pollak United States Magistrate Judge Eastern District of New York
*1 On August 3, 2015, plaintiff BAT LLC commenced this action in New York State Supreme Court, Kings County, alleging breach of bailment contract, gross negligence, and a violation of New York Banking Law § 338 against defendant TD Bank, N.A. (“TD Bank or the “Bank”), and claims of gross negligence and breach of contract against defendant ADT LLC,1 stemming from the theft of certain items contained in a safe deposit box at the TD Bank branch located at 1602 Avenue U, Brooklyn, N.Y. 11229 (the “Avenue U Branch”), that occurred when unidentified individuals bypassed the Bank's alarm system. (Compl.2). The action was removed to this Court on October 9, 2015. (ECF No. 1).
On February 5, 2016, plaintiff filed a Second Amended Complaint, naming TD Bank and Halifax Security, Inc.,3 d/b/a North American Video, Halifax Security, Inc. and North American Video, Inc. (collectively, “Halifax”), raising the same claims against the Bank, and alleging claims of breach of contract and gross negligence against Halifax. (ECF No. 22). A Third Amended Complaint was filed on June 24, 2016, adding as additional defendants Securecom Wireless, LLC (“Securecom”), and COPS Monitoring (“COPS”), and alleging claims of breach of contract and gross negligence against each of defendants Halifax, Securecom, and COPS. (ECF No. 32). The claims against the Bank remained the same. (Id.)
On September 15, 2016, BAT filed a Fourth Amended Complaint, amending the caption to reflect that COPS was the d/b/a of Lydia Security Monitoring, Inc. (“Lydia Security”), adding breach of contract and gross negligence claims against Integrated Security Systems (“Integrated”), and removing Securecom from the Complaint. (ECF No. 46). On October 12, 2016, Lydia Security filed an Amended Answer to the Fourth Amended Complaint, with cross claims against each of its co-defendants.4 (ECF No. 66).
Currently pending before this Court on referral from the Honorable Nina R. Morrison are the following motions: 1) four motions for summary judgment filed by defendants Lydia Security, Halifax, TD Bank, and Integrated5 (ECF Nos. 304, 305, 306, 309); 2) plaintiff's cross motion for summary judgment and spoliation against defendants TD Bank and Halifax (ECF 322); 3) TD Bank's motion to preclude plaintiff's expert Donald Palmieri (ECF No. 307); 4) plaintiff's motion to preclude defendants’ various experts (ECF No. 321); and 5) plaintiff's motion to amend the Complaint (ECF No. 354). Each motion will be addressed in turn.
FACTUAL BACKGROUND
The parties appear to agree on very little in this case. Each party has filed its own Statement of Material Facts, pursuant to Rule 56.1 of the Federal Rules of Civil Procedure, but many of these factual statements have been objected to as containing legal statements and opinions, mischaracterizing testimony, inaccurately reflecting the evidence, or lacking record evidence to support the factual assertions.
I. The Parties and Summary of the Allegations
In the Fourth Amended Complaint, plaintiff BAT alleges that it is a limited liability company, organized under the laws of New York, and the assignee of all rights and claims of Chaya Bienenstock and Yaakov Bienenstock (the “Bienenstocks”). (FAC6 ¶¶ 1, 2). Although not alleged in the operative Fourth Amended Complaint, BAT also claims that it is the assignee of certain rights belonging to the Estate of Helen Sieger (“the Estate”), and Tappat, Inc. (“Tappat”). (BAT TD Opp.7 at 9-10).
Defendant TD Bank is a national bank chartered and regulated by the Comptroller of the Currency, with principal places of business in New Jersey and Maine. (FAC ¶ 3). TD Bank owns and operates a branch office at 1602 Avenue U, Brooklyn, N.Y. (the “Avenue U Branch”). (FAC ¶ 4; COPS 56.1 Stmt8 ¶ 19; Pl.’s COPS Resp.9 ¶ 19). It is undisputed that on June 10, 2010, the Bienenstocks entered into a lease agreement for the use of safe deposit box number 198, located at the Avenue U Branch of TD Bank (the “Box Agreement”). (FAC ¶ 15; Pl.’s 56.1 Stmt10 ¶¶ 1, 2; see also Integrated 56.1 Stmt11 ¶ 3; COPS 56.1 Stmt ¶ 17; TD Resp.12 ¶¶ 1, 2). It is also undisputed that on that same day, Deborah Taylor, an authorized employee of TD, acting on behalf of the Bank, entered into the Box Agreement with the Bienenstocks. (Pl.’s 56.1 Stmt ¶¶ 3-5; TD Resp. ¶¶ 3-5). The parties agree that the Box Agreement remained in effect from June 10, 2010 until after August 6, 2012, and that the Bienenstocks did not surrender the Box or terminate the Agreement with the Bank prior to August 6, 2012. (Pl.’s 56.1 Stmt ¶¶ 5-6, 18-19; TD Resp. ¶¶ 5-6, 18-19). It is also undisputed that the Bienenstocks remitted the fee to TD Bank and were current on all payments as of August 6, 2012. (Pl.’s 56.1 Stmt ¶¶ 8, 20; TD Resp. ¶¶ 8, 20). The parties disagree, however, as to whether the substantive terms of the Box Agreement were modified, with the Bank citing the Safe Deposit Rules13 which were revised in July 2012. (TD Resp. ¶ 7; but see Pl.’s 56.1 Stmt ¶ 7).
*3 Plaintiff BAT asserts that on or about June 15, 2010, Chaya Bienenstock placed the contents that are the subject of this dispute, including diamonds and cash, into the Box. (Pl.’s 56.1 Stmt ¶ 9 (citing C. Bienenstock Tr.14 at 17-18)). The Bank denies that Ms. Bienenstock placed the contents in the Box, citing her testimony that, at the direction of her father, Meyer Greisman, she simply swapped her safe deposit box with the box of an unidentified woman. (TD Resp. ¶ 9 (citing C. Bienenstock Tr. at 17)). However, it is undisputed that on June 23, 2011, approximately a year after the Lease on the Box was signed, Yaakov Bienenstock opened the Box in the presence of Donald A. Palmieri (“Palmieri”), a jewelry appraiser.15 (Pl.’s 56.1 Stmt ¶¶ 12, 13; TD Resp. ¶¶ 12, 13). The parties dispute the extent of Mr. Palmieri's examination of the contents of the Box, with the Bank stating that Mr. Palmieri did not examine certain items in the Box, including envelopes listed as “Confidential,” but he noted their presence on the inventory that he prepared. (Compare Pl.’s 56.1 Stmt ¶¶ 14, 15, with TD Resp. ¶¶ 14, 15). Both sides agree that Palmieri was present and witnessed the contents of the Box being returned and the closing of the Box. (Pl.’s 56.1 Stmt ¶ 16; TD Resp. ¶ 16). Palmieri's June 2011 appraisal valued the diamonds in the Box at $7,151,121.00 and found that $410,000.00 in cash was also in the Box.16 (TD 56.1 Stmt17 ¶ 66; Pl.’s TD Resp.18 ¶ 66).
It is also not in dispute that on or about August 5 and 6, 2012, there was an unauthorized entry into the vault at the Avenue U Branch where the safe deposit boxes were located. (Pl.’s 56.1 Stmt ¶ 22; TD Resp. ¶ 22). According to the police report, the perpetrators gained access to vacant commercial space on the second floor above the bank vault, gained access to the roof, and cut a three foot by six foot hole through the concrete of corrugated steel floor, exposing the top of the bank vault. (COPS 56.1 Stmt ¶ 3; Pl.’s COPS Resp. ¶ 319; see also Pl.’s 56.1 Stmt ¶¶ 206, 207; TD Resp. ¶¶ 205, 206). It is undisputed that the burglars actually cut two holes in the ceiling. (Pl.’s 56.1 Stmt ¶¶ 208-209; TD Resp. ¶¶ 207-208). Using a rope, the burglars lowered themselves into the vault, accessed a number of safety deposit boxes, but failed to access the Bank's cash vaults. (COPS 56.1 Stmt ¶ 3; Pl.’s 56.1 Stmt ¶ 213; TD Resp. ¶ 212).
On August 6, 2012, the Bank's employees discovered that during the prior evening, unidentified individuals had entered the Bank, and bypassed or disabled the Alarm System. (Pl.’s 56.1 Stmt ¶¶ 202, 230; TD Resp. ¶¶ 201, 229; Halifax 56.1 Stmt20 ¶ 44). Multiple boxes were invaded, including Box 198. (Pl.’s 56.1 Stmt ¶¶ 22, 23, 231, 232; TD Resp. ¶¶ 22, 23, 230, 231; TD 56.1 Stmt ¶ 69; COPS 56.1 Stmt ¶ 1; Integrated 56.1 Stmt ¶ 4; see also FAC ¶¶ 22, 25). According to BAT, the entire contents of the safe deposit box rented by the Bienenstocks, including over $7 million in diamonds, were stolen from Box 198 during the robbery on August 6, 2012, and none of the items in the Box were ever returned. (FAC ¶¶ 25-27; Halifax 56.1 Stmt ¶ 45; COPS 56.1 Stmt ¶ 17). Although plaintiff asserts that the burglars were able to break into every safe deposit box they tried to open, the Bank disputes that, noting that without asking the burglars, there is no way of knowing if they got into every box they tried. (Compare Pl.’s 56.1 Stmt ¶ 212, with TD Resp. ¶ 211).
*4 Plaintiff alleges claims of gross negligence and breach of contract against defendant TD Bank, along with claims that the Bank violated NY Banking Law § 338. (FAC ¶¶ 28-50). Plaintiff further alleges that defendants Halifax Security, Inc. (“Halifax”), doing business as North American Video, Lydia Security Monitoring, Inc. (“Lydia”), d/b/a COPS Monitoring (“COPS”), and Integrated Security Systems (“Integrated”) were each responsible for the security system at the Avenue U Branch and responsible to plaintiff, as a third party beneficiary to their respective contracts with the Bank, for breach of contract and gross negligence due to the failure of the Alarm System to notify the Bank and the authorities of the break-in. (FAC ¶¶ 51-75).
Defendant TD Bank moves for summary judgment dismissing plaintiff's claims on three grounds: 1) BAT lacks standing to pursue these claims because the 2015 assignments of claims fail to assign title or ownership, and the later assignments also fail to confer standing;21 2) the assignments are all invalid under the doctrine of champerty; and 3) BAT's claims should be barred as a matter of public policy. (TD Mem.22).
Each of the remaining defendants move for summary judgment challenging plaintiff's breach of contract and gross negligence claims on a variety of grounds, including the statute of limitations; plaintiff not being a third-party beneficiary; and lack of evidence sufficient to show duty and gross negligence. (Integrated Mem.23; Halifax Mem.24; COPS Mem.25). Integrated also moves for sanctions under Fed. R. Civ. P. 11 against plaintiff, arguing that the undisputed facts demonstrate that Integrated had no contractual duty to provide monitoring services at the Avenue U Branch, never provided such services, and never received any signals from the Avenue U Branch. (Integrated Sanctions Mot.26 at 1-2).
Before addressing the arguments of the other defendants, the Court considers TD Bank's summary judgment motion first because the Bank's challenge to the validity of the assignments, including the champerty concerns, implicate issues of BAT's standing to bring the claims against any of the defendants, and ultimately, the court's jurisdiction to consider the claims.27 Since the Court ultimately finds that BAT has failed to demonstrate that the various assignments made to BAT were sufficient to confer standing upon BAT to assert any of the claims brought against any of the defendants, the Court only addresses the facts and issues related to BAT's standing raised in the Bank's motion for summary judgment and does not consider the arguments raised by the alarm system defendants regarding plaintiff's breach of contract and gross negligence claims against them. However, in order to understand the issue of standing and the assignments in question, it is necessary to review the background of the acquisition of the diamonds and the safe deposit box.
II. The Charges and Arrest of Helen Sieger
*5 TD Bank has submitted a Rule 56.1 Statement setting forth a number of statements relating to the background of the individuals involved and the acquisition of the diamonds which are among the items BAT claims were contained in the safe deposit at the Avenue U Branch and stolen on August 6, 2012. Plaintiff has objected to many of these statements as argument, not supported by admissible evidence, lacking in proper foundation, or hearsay. Rather than repeat each of these objections, the Court has simply noted where plaintiff disputes a statement unless there are additional specific objections listed or the statement is noted as undisputed.
It is undisputed that Helen Sieger was the sole owner and operator of the Kingsbridge Rehabilitation and Care Center, a nursing home facility (“Kingsbridge”). (COPS 56.1 Stmt ¶ 15; TD 56.1 Stmt ¶ 7; Pl.’s TD Resp. ¶ 7). According to the Bank, in 2005, Ms. Sieger caused Kingsbridge to issue her a personal loan in the amount of $9,000,000, which was to be repaid in 2006. (TD 56.1 Stmt ¶ 7; but see Pl.’s TD Resp. ¶ 7 (disputing and indicating that all claims by Kingsbridge and its receiver were released and discontinued)). On August 7, 2008, felony grand larceny charges were filed against Ms. Sieger based on allegations that she had paid bribes to a hospital social worker to steer patients to Kingsbridge, which would then profit from additional Medicaid payments. (TD 56.1 Stmt ¶ 8; but see Pl.’s TD Resp. ¶ 8 (disputing and objecting to the statement as inadmissible and noting that Sieger was never convicted of a crime)). Ms. Sieger was also charged with failing to provide workers’ compensation for Kingsbridge employees. (TD 56.1 Stmt ¶ 8; but see Pl.’s TD Resp. ¶ 8).
During this same period, Ms. Sieger was involved in a civil lawsuit pending in the Southern District of New York. (TD 56.1 Stmt ¶ 9 (citing Trustees of The 1199/SEIU Greater New York Benefit Fund v. Kingsbridge Heights Rehabilitation Care Center, No. 07 Civ. 9744 (the “1199/SEIU action”)); but see Pl.’s TD Resp. ¶ 9 (disputing and noting that all claims were resolved and Ms. Sieger's Estate was released from any claims)). The Bank contends that in February 2009, the district court in that case issued an Order placing Ms. Sieger under what was essentially house arrest after her failure to comply with discovery and court orders. (TD 56.1 Stmt ¶ 9 (citing 07 Civ. 9744, ECF No. 62); but see Pl.’s TD Resp. ¶ 9). On August 6, 2009, Ms. Sieger was indicted in Supreme Court, Bronx County, and charged with Grand Larceny and Medical Assistance Provider Prohibited Practice, based on allegations that Kingsbridge had received $1,253,362.98 from fraudulent billings submitted by Ms. Sieger to Medicaid. (TD 56.1 Stmt ¶ 10; but see Pl.’s TD Resp. ¶ 10 (objecting to statements as inadmissible since she was never convicted of a crime)).
In October 2009, the Receiver appointed for Kingsbridge – Kingsbridge Heights Receiver LLC (“Receiver”) – commenced a lawsuit against Ms. Sieger for conversion based on allegations that she had left Kingsbridge with accounts payable in excess of $10 million for services provided to Kingsbridge, and that Kingsbridge owed millions of dollars to the New York State Department of Health for Medicaid overpayments. (TD 56.1 Stmt ¶ 11; Pl.’s TD Resp. ¶ 11 (admitting but noting that the action by the receiver was discontinued and the Estate was released from any claims)).
In January 2010, Ms. Sieger went to Miami, Florida and was subsequently indicted for bail jumping. (TD 56.1 Stmt ¶ 12; but see Pl.’s TD Resp. ¶ 12). A bench warrant was issued for her arrest on January 29, 2010, for her failure to appear in Bronx Supreme Court. (TD 56.1 Stmt ¶ 13; but see Pl.’s TD Resp. ¶ 13 (objecting on various grounds)). Investigators from the New York Attorney General's Office located Ms. Sieger at the Eden Roc Renaissance Miami Beach Hotel, where she had been living under an assumed name, and placed her under arrest. (TD 56.1 Stmt ¶ 14; COPS 56.1 Stmt ¶ 15, Ex. R; but see Pl.’s TD Resp. ¶ 14). The investigators recovered thousands of dollars of cash and jewelry in Ms. Sieger's hotel room. (TD 56.1 Stmt ¶ 14; but see Pl.’s TD Resp. ¶ 14). The Bank cites a number of assertions by Special Assistant Attorney General, Jill D. Brenner, of the Medicaid Fraud Control Unit, relating to Ms. Sieger's status as a fugitive and her expenditure of assets while a fugitive. (TD 56.1 Stmt ¶¶ 15-18; but see Pl.’s TD Resp. ¶¶ 15-18 (disputing and noting that Sieger was never convicted of any crimes)).
*6 In support of the emergency application filed by the New York State Attorney General, seeking a Temporary Restraining Order and Order of Attachment, the Senior Special Auditor-Investigator for the New York City Regional Office of the Medicaid Fraud Control Unit submitted an affidavit, stating that upon review of financial records and interviews, Ms. Sieger was the owner of a variety of New York corporations, including Kingsbridge, Tappat, Inc., Chaya Foundation and others. (TD 56.1 Stmt ¶¶ 15, 19-21; but see Pl.’s TD Resp. ¶¶ 15, 19-21 (disputing that Ms. Sieger owned Tappat)). The affidavit further stated that between December 28, 2006 and February 4, 2008, Ms. Sieger transferred more than $10 million between accounts in her name and, among others, including Tappat, Inc., for no apparent business purpose. (TD 56.1 Stmt ¶¶ 20-21; but see Pl.’s TD Resp. ¶¶ 20-21 (asserting that Tappat transferred funds “for purposes including to purchase and invest in diamonds”)). On September 20, 2010, the State Supreme Court issued an injunction preventing Ms. Sieger and persons acting on her behalf from transferring, assigning and disposing of any of her assets. (TD 56.1 Stmt ¶ 22; but see Pl.’s TD Resp. ¶ 22 (admitting that the injunction was issued but noting that it was issued after the contents were placed in the safe deposit box and noting that the attachment order was dismissed two years before the instant action was commenced)).
III. The Acquisition of the Safe Deposit Box
According to Meyer Greisman, Ms. Sieger contacted him when she was hiding out in Miami and asked him to meet with her. (TD 56.1 Stmt ¶ 30; but see Pl.’s TD Resp. ¶ 30 (admitting but objecting to the statement as argument)). Plaintiff does not dispute that Greisman knew Ms. Sieger because Kingsbridge was one of his customers. (TD 56.1 Stmt ¶ 23; Pl.’s TD Resp. ¶ 23). Greisman testified that he met with Ms. Sieger in Miami and she told him she would like to “ ‘transfer a safe deposit box to him.’ ” (TD 56.1 Stmt ¶ 30; Pl.’s TD Resp. ¶ 30). Although Greisman was told that the box belonged to Ms. Sieger (TD 56.1 Stmt ¶ 27; but see Pl.’s TD Resp. ¶ 27 (disputing the statement)),28 he was not told what was in the box, or from where she got the contents of the box. (TD 56.1 Stmt ¶ 30; Pl.’s TD Resp. ¶ 30).
Greisman agreed to take out a new box, but because he travelled for work, he asked his daughter and son-in-law, the Bienenstocks, to take out the lease on a safe deposit box so they would be available if Ms. Sieger needed to access the box. (TD 56.1 Stmt ¶ 28; Pl.’s TD Resp. ¶ 28). Greisman testified that the items in the box did not belong to him or to the Bienenstocks. (TD 56.1 Stmt ¶ 28; Pl.’s TD Resp. ¶ 28). On June 10, 2010, based on the instructions of Greisman, the Bienenstocks signed a lease agreement for safe deposit box 198 at the Avenue U Branch (the “Lease Agreement” or “Agreement”) because this was where Ms. Sieger had indicated the other box was located. (TD 56.1 Stmt ¶¶ 29, 31; COPS 56.1 Stmt ¶ 17; Pl.’s TD Resp. ¶¶ 29, 31). The Bienenstocks asked for a large box at Greisman's direction in order to “ ‘put some items which were already in a safe deposit box in TD Bank into this box.’ ” (TD 56.1 Stmt ¶ 35 (citing C. Bienenstock Tr. at 16); Pl.’s TD Resp. ¶ 35)). At the time the Bienenstocks entered into the Lease, Ms. Sieger had already been indicted and jumped bail. (TD 56.1 Stmt ¶ 29; but see Pl.’s TD Resp. ¶ 29 (admitting that the Bienenstocks leased the Box on June 10, 2010)).
The Lease Agreement's July 2012 modification (TD 56.1 Stmt Ex. 29 at 2-3) contained “Safe Deposit Rules & Regulations,” which limited access to Box 198 to the Bienenstocks absent a written request to the Bank to allow another person access. (TD 56.1 Stmt ¶ 37, Ex. 29; but see Pl.’s TD Resp. ¶ 37 and Pl.’s 56.1 Stmt ¶ 7 (stating that the Lease Agreement was not modified in July 2012)). The 2012 modification also contains the following “Important Notice:”
The contents of your safe deposit box are not protected against loss by insurance purchased by TD Bank. For your protection, you may wish to secure your own insurance for protection against loss with an insurance company of your own choice.
You should keep a complete list and description of all of your property stored in your safe deposit box and any available proof of ownership.
*7 (TD 56.1 Stmt ¶ 38; Pl.’s TD Resp. ¶ 38).
A few weeks after meeting Greisman in Miami, Ms. Sieger contacted him and told him to go to the bank and “ ‘accept the box’ ” from another person. (TD 56.1 Stmt ¶ 31 (citing Greisman Tr.29 at 29); Pl.’s TD Resp. ¶ 31). Greisman testified that Ms. Sieger did not give him any identifying information about the woman he was to meet at the Bank, and Greisman did not know who she was. (TD 56.1 Stmt ¶ 32; but see Pl.’s TD Resp. ¶ 32 (objecting on general grounds but admitting to the substance of the testimony)).
It is undisputed that on June 15, 2010, five days after the Bienenstocks rented Box 198, Greisman and Chaya Bienenstock went to the Avenue U Branch where they met an unidentified woman. (TD 56.1 Stmt ¶ 40; Pl.’s TD Resp. ¶ 40). According to Chaya Bienenstock, Greisman told her that this woman was who she was to switch boxes with. (TD 56.1 Stmt ¶ 41; Pl.’s TD Resp. ¶ 41). Chaya Bienenstock went into the safe deposit box room with the unidentified woman, who advised Bienenstock to put the woman's heavy box into the slot for Box 198. (TD 56.1 Stmt ¶ 43; Pl.’s TD Resp. ¶ 43). Greisman did not go into the safe deposit box room that day, nor did Chaya Bienenstock learn the identity of the woman; she never asked. (TD 56.1 Stmt ¶¶ 42, 46; Pl.’s TD Resp. ¶¶ 42, 46). Chaya Bienenstock testified that after Ms. Sieger died, she learned that Ms. Sieger was the person for whom the box was exchanged. (TD 56.1 Stmt ¶ 47 (citing C. Bienenstock Tr. at 21); Pl.’s TD Resp. ¶ 47 (admitting but disputing certain characterizations in TD's assertion)). Even though Chaya Bienenstock learned about Ms. Sieger's arrest and knew that the contents of the safe deposit box belonged to Ms. Sieger, Chaya Bienenstock never notified the police after Ms. Sieger's death to tell them that she was holding the box for Ms. Sieger. (TD 56.1 Stmt ¶ 47; but see Pl.’s TD Resp. ¶ 47 (disputing)).
It is undisputed that the Bienenstocks did not own the contents of the box and were not paid to hold the contents for Ms. Sieger. (TD 56.1 Stmt ¶ 48; but see Pl.’s TD Resp. ¶ 48 (admitting but disputing that the Bienenstocks were holding the box “solely” for Ms. Sieger and disputing that the Bienenstocks never received “consideration”)).
IV. Ms. Sieger's Estate
At the time Ms. Sieger died, on April 18, 2011, she was an inmate at Rikers Island. (TD 56.1 Stmt ¶ 49; COPS 56.1 Stmt ¶ 16; but see Pl.’s TD Resp. ¶ 49 (admitting only that she died of cancer on that date). It is undisputed that her son, Abraham Sieger, and his sister, Chana Brachfeld, were appointed as the administrators of Helen Sieger's Estate. (TD 56.1 Stmt ¶ 49; Pl.’s TD Resp. ¶ 49). The Estate was valued at approximately $3 million, but there were $29 million in judgments pending against the Estate, including a $20 million judgment for Medicaid fraud. (TD 56.1 Stmt ¶ 52; but see Pl.’s TD Resp. ¶ 52 (disputing the assertion)). The Bank cites the Certificate of Appointment of Administrators and notes that the administrators were restrained from collecting and administering more than $3 million (TD 56.1 Stmt ¶ 51), but plaintiff counters by noting that the amount was later increased to more than $9 million. (Pl.’s TD Resp. ¶ 51).
*8 On May 10, 2011, a separate $2,733,362.11 judgment was entered against Ms. Sieger in the 1199/SEIU action, representing a debt she owed to Kingsbridge Heights Rehabilitation Center. (TD 56.1 Stmt ¶ 54; but see Pl.’s TD Resp. ¶ 54 (admitting that a judgment was entered but disputing the details)). In connection with that action, Abraham Sieger filed an affidavit in which he asserted that he and his sister had been “ ‘estranged’ ” from Helen Sieger “ ‘for many years’ ” and that they had no records relating to the Estate “ ‘due to our lack of any relationship with our mother for many years; her illness; her incarceration and her death.’ ” (TD 56.1 Stmt ¶ 55 (quoting 5/24/11 Affidavit of Abraham Sieger, Ex. 31); but see Pl.’s TD Resp. ¶ 55 (objecting to the statement as argument but admitting that Abraham Sieger executed the affidavit)). Abraham Sieger and his sister also signed an affidavit in an accounting action in Surrogate's Court, Kings County, attesting to Helen Sieger's estrangement from her children and acknowledging that she had “ ‘taken many irrational actions’ ” prior to her death. (TD 56.1 Stmt ¶ 57 (quoting 1/31/14 Affidavit of Abraham Sieger and Chana Brachfeld, Ex. 32); but see Pl.’s TD Resp. ¶ 57 (admitting that Abraham Sieger signed the affidavit but objecting to it as argument)).
Despite the representations of estrangement, and their not having seen their mother in “ ‘many years,’ ” both siblings testified during their depositions in the instant action that they had previously given their mother $8 million to buy diamonds and allowed her to hold the diamonds for them, even while she was in jail. (TD 56.1 Stmt ¶ 58 (citing A. Sieger Tr.30 at 21 and Brachfeld Tr.31 at 38, 43, 74); Pl.’s TD Resp. ¶ 58 (objecting as argument)). The siblings claim that their mother purchased the diamonds for a corporation named Tappat, Inc. (TD 56.1 Stmt ¶ 76). Although they claimed to have lost touch with their mother and had no idea where the diamonds were, both testified that their mother had told them that the diamonds were safe with Mr. Greisman's family. (TD 56.1 Stmt ¶ 97; Pl.’s TD Resp. ¶ 97). Despite this, the siblings never asked to take possession of the diamonds and they failed to notify the Surrogate's Court despite being obligated to do so as executors of Ms. Sieger's Estate. (TD 56.1 Stmt ¶¶ 50, 51, 97; but see Pl.’s TD Resp. ¶¶ 50, 51 (admitting that the Bienenstocks were in possession of the box at the time of Sieger's death, but disputing the assertion regarding the siblings not notifying the Surrogate's Court as inadmissible)).
According to Abraham Sieger, he met with Greisman after Ms. Sieger's death to discuss the diamonds. (TD 56.1 Stmt ¶ 60; but see Pl.’s TD Resp. ¶ 60 (objecting that the statement consists of multiple parts and cannot be responded to32)). Mr. Sieger testified that Greisman told him the diamonds were safe, but did not tell him who had the diamonds. (TD 56.1 Stmt ¶ 60; but see Pl.’s TD Resp. ¶ 60). Greisman, however, denies that he ever met with Mr. Sieger during any time that he was holding the diamonds and he testified that he never spoke to Abraham Sieger regarding the contents of the safe deposit box. (TD Stmt ¶¶ 60, 98; but see Pl.’s TD Resp. ¶¶ 60, 98 (disputes)).33 Mr. Sieger testified that he has never met either Chaya or Yaakov Bienenstock. (TD 56.1 Stmt ¶ 68; Pl.’s TD Resp. ¶ 68).
V. The Palmieri Appraisal
Greisman testified that when he learned of Ms. Sieger's death, he contacted an attorney, Bradley Nash, because he was concerned that he was in possession of a safe deposit box that belonged to someone who was deceased – namely, Helen Sieger. (TD 56.1 Stmt ¶ 59; Pl.’s TD Resp. ¶ 60 (disputes)). Plaintiff does not dispute that on June 23, 2011, Greisman, Yaakov Bienenstock, Nash, and Donald Palmieri, a gem appraiser who had been hired by Nash, met at the Avenue U Branch so that Palmieri could undertake an appraisal. (TD 56.1 Stmt ¶ 62; Pl.’s TD Resp. ¶ 62). In his June 24, 2011 appraisal report, Palmieri valued the diamonds in the box at $7,151,121.00,34 and noted that $410,000.00 in cash was also in the box. (TD 56.1 Stmt ¶ 66; Pl.’s TD Resp. ¶ 66). Neither Abraham Siegel or Chaya Brachman reported the amount in diamonds and cash to the Surrogate's Court or any other government agency. (TD 56.1 Stmt ¶ 67; but see Pl.’s TD Resp. ¶ 67 (objecting)).
VI. The Burglary
*9 As described in greater detail supra at pp. 5-6, in August 2012, there was an unauthorized entry into the Bank's vault; the Box at issue was invaded, and its contents were never returned to the Bienenstocks. (Pl.’s 56.1 Stmt ¶¶ 22, 23; TD Resp. ¶¶ 22, 23). After being told of the burglary, Yaakov Bienenstock contacted Greisman, and Greisman indicated that he would contact lawyers. (TD 56.1 Stmt ¶ 70; Pl.’s TD Resp. ¶ 71).
Although not alleged in any of the pleadings, including the Fourth Amended Complaint, plaintiff now claims that at the time of the burglary, a corporate entity, Tappat, Inc., owned the gems in the Box, and the Estate of Helen Sieger owned other valuable items in the Box. (Pl.’s 56.1 Stmt ¶¶ 27, 31, 37). The ownership of the gems is hotly contested. (TD Resp. ¶ 27).
DISCUSSION
I. Summary Judgment Standards
It is well-settled that a party moving for summary judgment has the burden of establishing that there is “no genuine dispute as to any material fact” and that the moving party is therefore entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986); New York Marine & Gen. Ins. Co. v. Lafarge N. Am., Inc., 599 F.3d 102, 114 (2d Cir. 2010). Since summary judgment is an extreme remedy, cutting off the rights of the non-moving party to present their case to the jury, see Buck v. Cleary, 345 F. App'x 660, 662 (2d Cir. 2009) (summary order); Egelston v. State Univ. Coll. at Geneseo, 535 F.2d 752, 754 (2d Cir. 1976); Gibralter v. City of New York, 612 F. Supp. 125, 133-34 (E.D.N.Y. 1985), the court should not grant summary judgment unless “ ‘it is quite clear what the truth is’ ” and “ ‘there can be but one reasonable conclusion as to the verdict.’ ” Rogoz v. City of Hartford, 796 F.3d 236, 246 (2d Cir. 2015) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. at 250; Poller v. Columbia Broad. Sys., Inc., 368 U.S. 464, 467 (1962)). However, “ ‘the mere existence of some alleged factual dispute between the parties alone will not defeat an otherwise properly supported motion for summary judgment.’ ” Garden City Apartments, LLC v. Xcel Plumbing of N.Y., Inc., 233 F. Supp. 3d 346, 350 (E.D.N.Y. 2017) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. at 247-48).
Once the moving party discharges its burden of proof, the party opposing summary judgment has the burden of setting forth “ ‘specific facts showing that there is a genuine issue for trial,’ wherein ‘a reasonable jury could return a verdict for the non-moving party.’ ” International Bus. Machs. Corp. v. BGC Partners, Inc., No. 10 CV 128, 2013 WL 1775367, at *4 (S.D.N.Y. Apr. 25, 2013) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. at 248). A party opposing a properly supported motion for summary judgment “ ‘may not rest upon the mere allegations or denials of his pleadings.’ ” Mitsubishi Motor Credit of Am., Inc. v. Country Motors LLC, No. 07 CV 3528, 2008 WL 3200248, at *2 (E.D.N.Y. Aug. 5, 2008) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. at 248). Although “[a]ll ambiguities must be resolved, and all inferences drawn, in favor of the non-moving party ... ‘[t]he non-moving party may not rely on mere conclusory allegations nor speculation, but instead must offer some hard evidence showing that its version of the events is not wholly fanciful.’ ” Adler v. Kent Vill. Housing Co., 123 F. Supp. 2d 91, 97 (E.D.N.Y. 2000) (quoting D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir. 1998), cert. denied, 524 U.S. 911 (1998); citing Kulak v. City of New York, 88 F.3d 63, 71 (2d Cir. 1996)); see also Mhany Mgmt, Inc. v. County of Nassau, 819 F.3d 581, 621 (2d Cir. 2016). Even if a motion for summary judgment is unopposed, the court must still ensure “that each statement of material fact is supported by record evidence sufficient to satisfy the movant's burden of production.” Jackson v. Federal Exp., 766 F.3d 189, 194 (2d Cir. 2014).
*10 Federal Rule of Civil Procedure 56 provides that, in moving for summary judgment or responding to such a motion, “[a] party asserting that a fact cannot be or is genuinely disputed must support the assertion by ... citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials.” Fed. R. Civ. P. 56(c)(1)(A). “An affidavit or declaration used to support or oppose a [summary judgment] motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.” Fed. R. Civ. P. 56(c)(4). Rule 56’s “requirement that affidavits be made on personal knowledge is not satisfied by assertions made ‘on information and belief.’ ” Patterson v. County of Oneida, New York, 375 F.3d 206, 219 (2d Cir. 2004) (citing Sellers v. M.C. Floor Crafters, Inc., 842 F.2d 639, 643 (2d Cir. 1988)). If assertions in an affidavit “are not based upon the affiant's personal knowledge, contain inadmissible hearsay, or make generalized and conclusory statements,” a court may strike those portions of the filing, or decline to consider those portions that are not based on personal knowledge or are otherwise inadmissible. Serrano v. Cablevision Sys. Corp., 863 F. Supp. 2d 157, 163 (E.D.N.Y. 2012) (citations omitted). While the Court need consider only the materials cited by the parties, it may consider any other materials in the record in deciding a motion for summary judgment. Fed. R. Civ. P. 56(c)(3).
II. TD Bank's Motion for Summary Judgment35
A. BAT Lacks Standing Based on the Language of the 2015 Assignments
The Bank, joined by the other defendants, moves for summary judgment on the grounds that BAT lacks standing to pursue the claims alleged in the Fourth Amended Complaint. As the Second Circuit in Rhulen Agency, Inc. v. Alabama Insurance Guaranty Association noted, when a defendant asserts lack of subject matter jurisdiction and also moves to dismiss on other grounds as well, the Court must generally consider the jurisdictional challenge first. 896 F.2d 674, 678 (2d Cir. 1990). A case is properly dismissed for lack of subject matter jurisdiction “when the district court lacks the statutory or constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000).
1. Article III Standing and The Assignments
Article III of the United States Constitution limits the jurisdiction of the federal courts to “Cases” and “Controversies.” U.S. Const. art. III § 2. “This inquiry involves ‘both constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise.’ ” Phoenix Light SF Ltd. v. U.S. Bank Nat'l Ass'n, 612 F. Supp. 3d 263, 277 (S.D.N.Y. 2020) (quoting Hillside Metro Assocs., LLC v. JP Morgan Chase Bank, Nat'l Ass'n, 747 F.3d 44, 48 (2d Cir. 2014) (quoting Kowalksi v. Tesmer, 543 U.S. 125, 128-29 (2004)), aff'd sub nom. Phoenix Light SF DAC v. U.S. Bank Nat'l Ass'n, No. 20 CV 1312, 2021 WL 4515256 (2d Cir. Oct. 4, 2021). Whether a litigant has standing to have a federal court hear its grievance is an issue that must be decided before the Court can consider the merits of the claims. Cortlandt St. Recovery Corp. v. Hellas Telecom., S.A.R.L., 790 F.3d 411, 417 (2d Cir. 2015); see also Phoenix Light SF Ltd. v. U.S. Bank Nat'l Ass'n, 612 F. Supp. 3d at 277.
A plaintiff seeking to bring suit in federal court must establish “the irreducible constitutional minimum of standing,” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992), by demonstrating that: (1) he or she has suffered an “injury in fact” that is concrete and not conjectural or hypothetical; (2) the injury suffered was “fairly traceable” to the actions of the defendant; and (3) it is likely that the injury will be “redressed” by a favorable judicial determination. Marcavage v. City of New York, 689 F.3d 98, 103 (2d Cir. 2012) (citing Lujan v. Defenders of Wildlife, 504 U.S. at 560-61). All three elements must be pleaded in order to establish standing. Renaissance Equity Holdings LLC v. Donovan, No. 12 CV 1639, 2013 WL 2237547, at * 3 (E.D.N.Y. May 21, 2013).
*11 The Constitution requires that a plaintiff seeking to establish standing must have suffered “an invasion of a legally protected interest which is concrete and particularized, as well as an injury that is ‘actual or imminent’ rather than ‘conjectural or hypothetical.’ ” Maxineau v. City of New York, No. 11 CV 2657, 2013 WL 3093912, at *3 (E.D.N.Y. June 18, 2013) (quoting Lujan v. Defenders of Wildlife, 504 U.S. at 560)). Further, a plaintiff must demonstrate that the asserted injury “ ‘affect[s] plaintiff in a personal and individual way’ ” to “avoid having the federal courts serve as ‘merely publicly funded forums for the ventilation of public grievances or the refinement of jurisprudential understanding.’ ” Baur v. Veneman, 352 F.3d 625, 632 (2d Cir. 2003) (quoting Valley Forge Christian Coll. v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 473 (1982)). A person invoking the power of a federal court must demonstrate that “he has suffered a concrete and particularized injury that is fairly traceable to the challenged conduct, and is likely to be redressed by a favorable judicial decision.” Hollingsworth v. Perry, 570 U.S. 693, 704 (2013) (citing Lujan v. Defenders of Wildlife, 504 U.S. at 560-561).
When subject matter jurisdiction is challenged, the plaintiff has the burden of establishing that it has standing to pursue its claims. Marcavage v. City of New York, 689 F.3d at 103 (citing Raines v. Byrd, 521 U.S. 811 (1997)), cert. denied, 568 U.S. 1212 (2013); see also Lujan v. Defenders of Wildlife, 504 U.S. at 561; Clarex Ltd. v. Natixis Sec. Am. LLC, No. 12 CV 0722, 2012 WL 4849146, at *2 (S.D.N.Y. Oct. 12, 2012) (quoting Giammatteo v. Newton, 452 F. App'x 24, 27 (2d Cir. 2011)) (holding that “Once subject matter jurisdiction is challenged, ‘[a] plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that jurisdiction exists’ ”).
“A plaintiff's burden to demonstrate standing increases over the course of litigation,” such that “ ‘each element of standing must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.’ ” Cacchillo v. Insmed, Inc., 638 F.3d 401, 404 (2d Cir. 2011) (quoting Lujan v. Defenders of Wildlife, 504 U.S. at 561). Thus, in response to a summary judgment motion, a plaintiff “can no longer rest on such ‘mere allegations,’ but must ‘set forth’ by affidavit or other evidence ‘specific facts,’ Fed. R. Civ. P. 56(e), which for purposes of the summary judgment motion will be taken to be true.” Lujan v. Defenders of Wildlife, 504 U.S. at 561.
Before a plaintiff can establish that he suffered an injury-in-fact, the plaintiff must have legal title or a proprietary interest in the claim. W.R. Huff Asset Mgmt. Co., LLC v. Deloitte & Touche LLP, 549 F.3d 100, 109 (2d Cir. 2008) (holding that where the plaintiff lacks an ownership interest in the claims, there is no injury-in-fact); Cortlandt St. Recovery Corp. v. Hellas Telecom., S.A.R.L., 790 F.3d at 420 (holding that “the minimum requirement for an injury-in-fact is that the plaintiff have legal title to, or a proprietary interest in, the claim [at issue]”); see also Phoenix Light SF Ltd. v. U.S. Bank Nat'l Ass'n, 612 F. Supp. 3d at 277 (same). Litigants who have no legally protected interest are barred by the prudential standing rule “from asserting the rights or legal interests of others in order to obtain relief from injury to themselves.” Warth v. Seldin, 422 U.S. 490, 509 (1975).
When a plaintiff has no legally protected right to vindicate, Article III's injury requirement can be satisfied by the valid assignment to the plaintiff of the right at issue, thus allowing the plaintiff to “ ‘stand in the place of the injured party’ and satisfy constitutional standing requirements.” Cortlandt St. Recovery Corp. v. Hellas Telecom., S.A.R.L., 790 F.3d at 418 (quoting W.R. Huff Asset Mgmt. Co., LLC v. Deloitte & Touche LLP, 549 F.3d at 107). “Lawsuits by assignee ...are ‘cases and controversies of the sort traditionally amenable to, and resolved by, the judicial process.’ ” Sprint Comm'ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269, 285 (2008) (quoting Vermont Agency of Nat. Res. V. U.S. ex rel Stevens, 529 U.S. 765, 777-78 (2000)). The Second Circuit has held that “[i]n general, claims or choses in action may be freely transferred or assigned to others.” Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 17 (2d Cir. 1997). An assignee of a claim takes it “subject to all the infirmities, equities and defenses that could have been claimed against the assignor at the time of the assignment.” Trans-Res., Inc. v. Nausch Hogan & Murray, 746 N.Y.S.2d 701 (2002). The Supreme Court and Second Circuit have indicated that where standing is based on an assignment, “the lack of valid assignments... deprive Plaintiffs of both Article III and prudential standing.” Phoenix Light SF Ltd. v. U.S. Bank Nat'l Ass'n, 612 F. Supp. 3d at 278.
*12 The Court first considers the Bank's argument that BAT lacks both Article III and prudential standing. (TD Mem. at 7-35).
a. The Formation of BAT
Plaintiff BAT asserts that it is the assignee of all rights and claims of the Bienenstocks, Tappat, and the Estate of Helen Sieger (the “Estate”). (Pl.’s 56.1 Stmt ¶¶ 25, 26, 30). The defendants contend that the assignments are invalid. (TD Resp. ¶¶ 25, 26, 30).
BAT is a Limited Liability Corporation (“LLC”) formed through an Operating Agreement executed on July 29, 2015, a week prior to the expiration of the three-year statute of limitations to bring a claim for torts in this case under New York law. (Pl.’s 56.1 Stmt ¶ 24; TD Resp. ¶ 24; COPS 56.1 Stmt ¶ 10, Ex. N; Pl.’s COPS Resp. ¶ 10; TD 56.1 Stmt ¶ 72). BAT was registered with the New York Department of State the following day, on July 30, 2015. (ECF No. 267-2 (Department of State Division of Corporations Entity Information)). The two members of the LLC listed in the Operating Agreement (ECF No. 258-16) are Abraham Sieger, Helen Sieger's son, and Tappat Inc. (“Tappat”), a corporation that was dissolved as of April 27, 2011, more than a year before the burglary and four years before the formation of BAT. (COPS 56.1 Stmt ¶¶ 10, 11, Ex. O; Pl.’s COPS Resp. ¶¶ 10, 11). Helen Sieger's daughter, Chana Brachfeld, also claims to be an owner of BAT, but she conceded in her deposition that she had never seen the Operating Agreement. (TD 56.1 Stmt ¶ 73 (citing Brachfeld Tr. at 70); but see Pl.’s TD Resp. ¶ 73 (admitting that this is Ms. Brachfeld's testimony, but asserting that Chana is a 50% owner of Tappat, which is a 99% owner of BAT)).
On July 30, 2015 – one day after the execution of the Operating Agreement forming BAT – three assignments were executed transferring to BAT any claims of Chaya Bienenstock and Yaakov Bienenstock (the “2015 Bienenstock Assignment”), the Sieger Estate (the “2015 Estate Assignment”), and Tappat (the “2015 Tappat Assignment”), resulting from the theft from the safe deposit box.36 (COPS 56.1 Stmt ¶ 9; TD 56.1 Stmt ¶ 99; but see Pl.’s TD Resp. ¶ 99 (admitting but noting other assignments were executed)).
b. The 2015 Bienenstock Assignment
In the Fourth Amended Complaint, filed on September 15, 2016, plaintiff BAT alleges that it has standing to bring this action because it was the “assignee of all rights and claims of Chaya Bienenstock and Yaakov Bienenstock.” (FAC ¶ 2). Despite the numerous issues of fact in dispute, there is no dispute that the 2015 Bienenstock Assignment from the Bienenstocks to BAT was signed by Yaakov and Chaya Bienenstock and by Mr. Sieger on behalf of BAT. (TD 56.1 Stmt ¶ 112 (citing Ex. 25); Pl.’s TD Resp. ¶ 112). The language of this Assignment, which is also not in dispute, provides:
*13 WHEREAS, ASSIGNORS are the owner of certain claims against TD Bank, N.A. [and others] ... for any claims related in any manner to the TD Bank, N.A., box (“the Box”) which was rented by Assignors... in consideration of the payment of the sum of ten and 00/100 ($10) Dollars, and for other good and valuable consideration ... ASSIGNORS hereby assign to ASSIGNEE all of the rights of ASSIGNORS as to (i) their ownership rights or any other rights whatsoever concerning any items previously contained in the Box; and (ii) the Claims whether or not previously asserted by ASSIGNORS.
(TD 56.1 Stmt Ex. 25). The Bienenstock Assignment also appoints “Assignee's president as the true and lawful attorney-in-fact.” (Id.)
The Bank argues that the 2015 Bienenstock Assignment, which is the only one of the three Assignments referenced in the Fourth Amended Complaint (or in any of the complaints), fails to confer standing on BAT because it fails to assign title or ownership of the diamonds or any of the items in the safe deposit box to BAT.37 (TD Mem. at 11).
“To assign a claim effectively, the claim's owner ‘must manifest an intention to make the assignee the owner of the claim.’ ” Cortlandt St. Recovery Corp. v. Hellas Telecom., S.A.R.L., 790 F.3d at 418 (quoting Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 17 (2d Cir. 1997)). In order to validly assign a claim, the language of the assignment must “manifest[ ] [the assignor's] intention to transfer at least title or ownership... i.e., to accomplish ‘a complete transfer of the entire interest of the assignor in the particular subject of assignment.’ ” Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d at 17 (quoting Coastal Commercial Corp. v. Samuel Kosoff & Sons, Inc., 10 A.D.2d 372, 376, 199 N.Y.S.2d 852, 855 (4th Dep't 1960)). Assignments that make “no mention of title to, or ownership of, the claims” have been found to be invalid. Cortlandt St. Recovery Corp. v. Hellas Telecom., S.A.R.L., 790 F.3d at 420.
The grant of the power to sue on and collect on a claim, standing alone, “is not the equivalent of an assignment of ownership,” and “does not enable the grantee to bring suit in his own name.” Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d at 17-18. Such a grant may validly create a power of attorney, but because it does not purport to accomplish the transfer of title or ownership of the assignor's entire interest in the assignment's subject, it is not a valid assignment of a claim. Id. In Cortlandt, the complaint alleged that the plaintiff was the assignee of “full rights... to collect principal and interest due and to pursue all remedies” with respect to several notes, but the court concluded that because the assignment did not convey the title to or ownership of the claim, it only conveyed power of attorney and the plaintiff did not have standing. 790 F.3d at 418.
BAT brings breach of contract and gross negligence claims against the defendants, along with a claim under NY Banking Law § 338 against the Bank, which requires safe deposit box agreements to contain certain notices. (FAC). These claims all stem from the safe deposit box Lease Agreement and the property that was stored in the Box. Therefore, to convey standing, any assignments at issue here must transfer “at least title or ownership” in these underlying subjects of the claims. Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d at 17; see Phoenix Light SF Ltd. v. U.S. Bank Nat'l Ass'n, 612 F. Supp. 3d at 278 (S.D.N.Y. 2020) (holding that standing turns on whether plaintiff(s) “were validly assigned the rights to the contracts underlying their breach of contract claims”); Raymond A. Semente, D.C., P.C. v. Empire Healthchoice Assurance, Inc., 523 F. Supp. 3d 269, 280 (E.D.N.Y. 2021) (citing cases requiring an assignee to have legal or equitable title “in the subject of the cause in action” in order to have standing).
*14 The Bank argues that the 2015 Bienenstock Assignment fails for two reasons: 1) the Assignment did not assign title or ownership of any of the items in the Box or even the Lease, which are the subjects of the claims at issue; 2) nor could it assign title or ownership to the Box's contents since the Bienenstocks have admitted and it is undisputed that they did not own or have title to any of the contents of the Box. (TD Mem. at 11 (citing C. Bienenstock Tr. at 37, 44; Y. Bienenstock Tr.38 at 54)). Although the 2015 Bienenstock Assignment indicated that the assignors – the Bienenstocks – were the “owner of claims against TD [and others]” related to the Box, the Bienenstocks admitted that they did not own the contents of the box. (TD Mem. at 12 (citing C. Bienenstock Tr. at 20-21, 44; Y. Bienenstock Tr. at 40, 54, 80-81)).
In response, BAT argues that the Bienenstocks as the lessees/bailors of the Box had standing to bring this action for damages arising from the Box and the loss of the contents of the Box. (BAT TD Opp. at 27 (citing Grace v. Sterling, Grace & Co., 30 A.D.2d 61, 65-66 (1st Dep't 1968))). Citing the language of the 2015 Bienenstock Assignment, BAT argues that the language was “extremely broad” and intended to encompass “everything and anything” concerning the Bienenstocks’ rights “in, to and regarding” the Box and the contents of the Box including “their complete ownership interest” in the contents and claims. (Id. at 29). Since the Bienenstocks as lessess/bailors “owned the claims against TD and the other defendants,” BAT contends that they had “the ability to assign all of their interests and claims concerning the Box and the Box's Contents to plaintiff.” (Id. at 28).
The Bank argues that the fact that the Bienenstocks were leaseholders of the safe deposit contract with the Bank alone did not confer upon them the right to assign claims for the contents of the Box, which they conceded they did not own. (TD Mem. at 11). To the extent that the Bienenstocks intended to assign their rights as leaseholder of the Box, the Bank argues that the language of the 2015 Assignment demonstrates that the Bienenstocks never assigned the Lease to the Box to BAT. (TD Reply39 at 6-7). The language at best assigns “claims” but according to the Bank, in the absence of a specific assignment of the Lease, BAT lacks standing to bring this action. (Id. at 7-8).40 Citing Rizack v. Signature Bank, 169 A.D.3d 612, 95 N.Y.S.3d 171, 172 (1st Dep't 2019), the Bank argues that when the assignment is unambiguously limited to certain items, in this instance, “claims,” an enumeration of specifics excludes others not listed. (TD Reply at 8).
i. Analysis
*15 Regardless of plaintiff's efforts to argue the intent behind the 2015 Bienenstock Assignment, it is well established under New York law, that “ ‘[w]hen the terms of a written contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving practical interpretation to the language employed and the parties’ reasonable expectations.’ ” BOCA Aviation Ltd. v. AirBridgeCargo Airlines, LLC, 669 F. Supp. 3d 204, 223 (S.D.N.Y. 2023) (quoting Willsey v. Gjuraj, 65 A.D.3d 1228, 885 N.Y.S.2d 528, 530 (2d Dep't 2009)). Here, the language of the Assignment is clear and not in dispute. Nowhere does the language confer standing on BAT because it transfers only the right to bring claims and does not manifest the intent to transfer title or ownership to the subjects of the claims. Cortlandt St. Recovery Corp. v. Hellas Telecommunications, S.A.R.L, 790 F.3d at 418.
First, the Assignment's transfer of “all of the rights of ASSIGNORS as to... ownership rights or any other rights whatsoever concerning any items previously contained in the Box” (TD 56.1 Stmt Ex. 25), did not transfer title or ownership, nor could it, since it is undisputed that the Bienenstocks did not have title to or own any of the items in the Box. (TD 56.1 Stmt ¶ 48, Pl.’s TD Resp. ¶ 48).
Therefore, it must be considered whether the rest of the assignment language transferred title or ownership. The only remaining assignment by the Bienenstocks was to “all of the rights of ASSIGNORS as to... the Claims whether or not previously asserted.” (TD 56.1 Stmt Ex. 25). This transfer language makes “no mention of title to, or ownership of, the claims.” Cortlandt St. Recovery Corp. v. Hellas Telecommunications, S.A.R.L, 790 F.3d at 420; compare with Sprint Commc'ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269, 272 (2008) (holding an assignment of “all rights, title and interest ... in the claims” was valid).
Even though the language in the 2015 Bienenstock Assignment does not mention assigning title or ownership of the claims, the assignment could still be considered valid if elsewhere it conveyed title or ownership to the subject of the claims. For example, where an assignment separately transferred a business and its property to the assignee, an assignment of “the benefit of all rights and claims” of the business was found to be a valid assignment of the claims. PS US LLC v. Moulding, No. 21 CV 1049, 2021 WL 5597152, at *3-5 (S.D.N.Y. Nov. 30, 2021); see also ACLI Int'l Commodity Servs., Inc. v. Banque Populaire Suisse, 609 F. Supp. 434, 438 (S.D.N.Y. 1984) (holding that an assignment of “all rights, claims and causes of action” was valid where the assignment also conveyed “right, title and interest” in the underlying accounts). However, the language of the 2015 Bienenstock Assignment does not even convey the Lease to BAT, which is the only interest that the Bienenstocks arguably had in regard to the Box. For these reasons, the 2015 Bienenstock Assignment only conveys power of attorney and does not give BAT standing to sue in its own name. Id.41
*16 Given that the 2015 Bienenstock Assignment was not sufficient to give BAT the right to sue in its own name, the Assignment does not give BAT standing or give the Court subject matter jurisdiction over the claims at issue. Cortlandt St. Recovery Corp. v. Hellas Telecommunications, S.A.R.L., 790 F.3d at 416-17.
c. The Other 2015 Assignments
Since the 2015 Bienenstock Assignment did not convey standing, the Court must consider whether the 2015 Estate and 2015 Tappat Assignments – although not mentioned anywhere in the pleadings – could provide standing to BAT.
The Bank argues that the 2015 Bienenstock Assignment should be wholly determinative of the standing issue since nowhere in the Fourth Amended Complaint or any of the prior pleadings does BAT allege that it received assignments from Tappat or the Estate or that it bases standing on these assignments; indeed, the Fourth Amended Complaint fails to even mention these entities. (TD Mem. at 7; see FAC).
BAT argues that the Bank has not provided caselaw to support their claim that plaintiff is limited to asserting jurisdiction based on the Bienenstock Assignment because it was the only assignment alleged in the complaint as providing standing. (BAT TD Opp. at 22-23). Plaintiff argues that under Rule 9(a) of the Federal Rules of Civil Procedure, since it alleged jurisdiction based on the Bienenstock Assignment, it did not have to allege any additional means of jurisdiction or capacity to sue, and therefore was not required to plead the 2015 Tappat and Estate Assignments. (BAT TD Opp. at 22-23 (citing Fed. R. Civ. P. 9(a); Lang v. Tex. & Pac. Ry Co., 624 F.2d 1275 (5th Cir. 1980)). BAT also asserts that it has standing under the 2015 Estate and Tappat Assignments since those assignors were the owners of all of the contents of the Box and thus had Article III and prudential standing to commence claims against the Bank as bailee and could assign the claims. (Id. at 23-24 (citing Grace v. Sterling, Grace & Co., 30 A.D.2d at 65-66)). BAT also states that it provided the 2015 Estate and Tappat Assignments early on in the litigation and so the defendants cannot claim unfair surprise regarding this basis for jurisdiction. (Id. at 22-23).
i. Analysis
Rule 9(a), entitled “Capacity or Authority to Sue; Legal Existence,” provides in relevant part that: “(1) In General. Except when required to show that the court has jurisdiction, a pleading need not allege: (A) a party's capacity to sue or be sued; (B) a party's authority to sue or be sued in a representative capacity...” Fed. R. Civ. P. 9(a)(1) (emphasis added).
The issue here is whether BAT adequately alleged standing in the pleadings as necessary to show that the court has jurisdiction. BAT argues that it showed the court had jurisdiction by alleging the 2015 Bienenstock Assignment and thus was not required to plead anything regarding the 2015 Tappat and Estate Assignments. (BAT TD Opp. at 23). However, as discussed above, the 2015 Bienenstock Assignment was not a valid assignment and hence failed to convey standing and jurisdiction.
Given defendants’ persistent efforts to challenge BAT's standing based on the 2015 Bienenstock Agreement, BAT's arguments that it did not need to plead anything related to the other 2015 Assignments, is directly contradicted by another provision of Rule 9. Rule 9(a)(2) provides that to raise any issues regarding a party's capacity to sue or authority to sue in a representative capacity, “a party must do so by a specific denial.” Fed. R. Civ. P. 9(a)(2). In the Bank's Second and Sixth affirmative defenses, asserted by the Bank in its October 2015 Answer to the original complaint, the Bank clearly asserted that “BAT did not have a valid assignment of the rights of Chaya Bienenstock and Yaakov Bienenstock,” and that “BAT lacks standing to bring the within cause of action.” (ECF No. 5). This sufficed to put BAT on notice of potential challenges to BAT's capacity to sue and this defense. Indeed, at the time, the Bank had not yet been made aware of the existence of either the 2015 Estate or Tappat Assignments. (TD Reply at 15-16).
*17 Thereafter, in response to each of the four amended complaints filed by BAT in December 2015, February 2016, June 2016, and September 2016, TD Bank continued to assert the same affirmative defenses of lack of standing and invalid assignment. (TD Am. Opp.42 at 5-6; ECF Nos. 14, 27, 33, 56). COPS also asserted affirmative defenses that plaintiff lacked standing and there was no valid assignment in its Amended and Second Amended Answer to the Fourth Amended Complaint filed in September and October 2016, along with an affirmative defense that plaintiff “has failed to join a necessary party.” (ECF Nos. 51, 66). Integrated, which was only added to the case with the filing of the Fourth Amended Complaint, on September 15, 2016, also asserted a lack of standing defense (First Affirmative Defense), and that BAT had failed to join indispensable parties, including the owners of the property that was allegedly stolen. (ECF No. 68). Halifax also raised the affirmative defense that plaintiff lacks standing (Sixteenth Affirmative Defense) in its September 2016 Answer to the Fourth Amended Complaint. (ECF No. 57). Finally, if the challenge to jurisdiction was not clear based on these affirmative defenses asserting the invalidity of the 2015 Bienenstock Assignment, in September 2016, the Bank sought leave from the district court to dismiss the action, pursuant to Rule 12(b), addressing the invalid assignment issue and arguing that the Bienenstocks did not own the items in the Box. (ECF No. 55).
However, BAT chose to ignore these challenges to its capacity to sue, and continued to rely solely on the 2015 Bienenstock Assignment to provide standing. As discussed infra in connection with BAT's pending Motion to Amend, BAT has provided no explanation as to why it did not move to amend to add the 2015 Assignments from the Estate and Tappat earlier in the litigation in light of all the challenges. Given the foregoing, it is respectfully recommended that the District Court not consider the 2015 Estate and Tappat Assignments in determining the issue of standing.
With respect to BAT's argument that it provided the Estate and Tappat Assignments early on in the litigation, it is not clear from the record exactly when plaintiff provided the various assignments. However, the letter from the Bank, dated September 28, 2016, requesting permission to file a motion to dismiss based on lack of standing, noted that despite having served a request in April 2016, for documents demonstrating the assignment from the Bienenstocks, BAT had still not provided the assignment. (ECF No. 55). The fact that the additional assignments were not even mentioned in this letter suggests that the Bank was not even aware of them at this time. Although BAT does not state when the 2015 Estate and Tappat Assignments were produced, it was significantly after BAT had been alerted to the questions raised as to its standing and the court's jurisdiction in the Bank's first Answer dated October 15, 2015.
Since the sole basis for asserting standing in the Fourth Amended Complaint is the Bienenstock Assignment which, as explained supra, utterly fails to convey standing, the Court respectfully recommends that the case be dismissed for lack of subject matter jurisdiction.
Even if the court were to consider BAT's standing based on the 2015 Estate Assignment and the 2015 Tappat Assignments, these assignments suffer from similar deficiencies to the 2015 Bienenstock Assignment.
d. The 2015 Estate Assignment
The 2015 Assignment from the Estate to BAT was signed by Abraham Sieger on behalf of both BAT and the Estate; his sister also signed on behalf of the Estate. (TD 56.1 Stmt ¶ 103 (citing Ex. 24); Pl.’s TD Resp. ¶ 103). Mr. Sieger asserts that there was $410,000 in cash in the Box that belonged to his mother, and hence became an asset of the Estate. (TD 56.1 Stmt ¶ 104; Pl.’s TD Resp. ¶ 104).
i. The Language of the Estate Assignment
Like the 2015 Bienenstock Assignment, the language of the 2015 Estate Assignment is deficient in that it fails to convey title or ownership in the claims or the contents of the Box. The 2015 Estate Assignment provides that the Assignor “may [be] the owner of certain claims against TD Bank, N.A. and any additional persons or entities for any claims related in any manner to” the safe deposit box located at the Avenue U Branch. (TD 56.1 Stmt Ex. 24). The 2015 Estate Assignment further provides that “in consideration of the payment of the sum of ten and 00/100 ($10) Dollars, and for other good and valuable consideration” the “ASSIGNOR hereby assigns to ASSIGNEE all of the rights of ASSIGNOR as to the Claims whether or not previously asserted by ASSIGNOR.” (Id.) Like the Bienenstock Assignment, the Estate Assignment also has a separate clause appointing BAT as attorney-in-fact. (Id.)
*18 In response to the Bank's argument that the 2015 Estate Assignment does not confer standing because it fails to confer title or ownership of the contents of the Box (TD Mem. at 14-15), BAT asserts that the language of the assignment from the Estate is legally sufficient, since it was the “intention of the agreement between the parties was to assign all interests to plaintiff.”43 (BAT TD Opp. at 25).
As with BAT's arguments as to the intention of the parties in entering into the 2015 Bienenstock Assignment, the undisputed language of the 2015 Estate Assignment clearly and only assigns “all of the rights of ASSIGNOR as to the Claims.” (TD 56.1 Stmt Ex. 24). This language does not mention any transfer of ownership or title to the claims. The 2015 Assignment also does not convey the cash in the Box that the Estate allegedly owned; in fact, it does not even mention that the Estate owned cash or any other item inside the Box. (Id.) Therefore, the Assignment language does not manifest intent to transfer “the entire interest of the assignor in the particular subject of assignment.” Cortlandt St. Recovery Corp. v. Hellas Telecom., S.A.R.L., 790 F.3d at 418 (internal citation omitted). Since the language of the 2015 Estate Assignment fails to transfer ownership rights or title to the claims or the contents of the Box, see id., the 2015 Estate Assignment does not convey standing on the part of BAT to bring this suit.
ii. Additional Issues with the Estate Assignment
The Bank also raises additional concerns with the 2015 Estate Assignment. First, although the Bank does not dispute that Abraham Sieger and Chana Brachfeld are the co-administrators of the Estate (Pl.’s 56.1 Stmt ¶ 28; TD Resp. ¶ 28), the Bank asserts that it has no way to determine if their claims to be the sole beneficiaries of the Estate are accurate. (TD Resp. ¶ 29). The Bank also states that the Assignment could not designate authority to collect on any claims exceeding $3 million, which is the value of the Estate as represented to the Surrogates Court by the Estate's administrators, Sieger and Brachfeld. (TD Mem. at 16). Since the Court finds that the 2015 Estate Assignment fails to transfer ownership or title, and therefore does not give BAT standing to sue in its own name, it does not need to reach these additional issues.
e. The 2015 Tappat Assignment
The third assignment relied upon by BAT to confer standing is the 2015 Assignment purportedly from Tappat to BAT. With respect to the 2015 Assignment from Tappat, the Bank argues: 1) BAT did not allege the Tappat Assignment as a basis for jurisdiction in the Fourth Amended Complaint; 2) the Assignment fails to confer ownership or title of the contents of the Box to BAT; 3) there is no evidence that Tappat owned the diamonds or had the authority to assign rights to them; 4) there is no evidence that Abraham Sieger or Chana Brachfeld had the authority to enter into an assignment; and 5) Tappat was dissolved four years before the 2015 Tappat Assignment was entered into. (TD Mem. at 18). BAT argues that, as with the 2015 Estate Assignment, the intention of the 2015 Tappat Assignment was to assign all interests to plaintiff. (BAT TD Opp. at 25).
i. The Language of the Tappat Assignment
*19 The 2015 assignment from Tappat was signed by Abraham Sieger on behalf of both Tappat and BAT,44 at a time when Tappat had already been dissolved for over four years. (TD 56.1 Stmt ¶¶ 106, 107; Pl.’s TD Resp. ¶¶ 106, 107). The 2015 Tappat Assignment stated that: “Assignor is the owner of: (a) diamonds and other items that were located in the Box... and (b) certain claims against TD Bank, N.A. and any additional persons... for any claims related” to the safe deposit box at the Avenue U Branch. (TD 56.1 Stmt Ex. 23). However, the actual assignment language states only that “ASSIGNOR hereby assigns to ASSIGNEE all of the rights of ASSIGNOR as to the Claims whether or not previously asserted by ASSIGNOR.” (Id.)
As with the other two assignments from 2015, the undisputed language of the 2015 Tappat Assignment does not manifest an intent to convey title or ownership of the claims or contents to BAT. Although the Assignment mentions Tappat's ownership of both diamonds and claims in its introductory paragraphs, the language of the actual assignment only assigns “all of the rights of ASSIGNOR as to the Claims.” (TD 56.1 Stmt Ex. 23). This language notably does not include any conveyance of title or ownership of the diamonds or claims and thus does not convey standing to the assignee. Cortlandt St. Recovery Corp. v. Hellas Telecommunications, S.A.R.L., 790 F.3d at 419.
ii. Additional Issues with the Tappat Assignment
Even if the language of the 2015 Tappat Assignment was sufficient to convey all rights and title to Tappat's ownership in the contents of the Box, the plaintiff has failed to carry its burden of showing that the Assignment was executed by an authorized representative of Tappat. There are also disputes about whether Tappat was, in fact, the owner of the diamonds.
Although not alleged in the Fourth Amended Complaint, plaintiff claims that Tappat is the owner of the diamonds; this is disputed by the Bank. (Pl.’s 56.1 Stmt ¶ 27; TD Resp. ¶ 27). There are material issues of fact in dispute relating to the acquisition of the diamonds and the establishment of Tappat; however, what is clear is that in responding to the motion for summary judgment, plaintiff has failed to provide any record evidence to demonstrate that Abraham Sieger was an authorized representative of Tappat who could assign the interests of Tappat to BAT. Instead, BAT relies solely on the testimony of Mr. Sieger, which is contradicted not only by bank records and other documents, but by Mr. Sieger's own changing account of what occurred.
Mr. Sieger initially testified during his deposition that Tappat was created in or around 201045 for the purpose of buying diamonds and to hold the diamonds. (TD 56.1 Stmt ¶ 82; Pl.’s TD Resp. ¶ 82 (admitting but stating that the correct date is 2006)). Although Mr. Sieger claimed that he and his sister were the owners of Tappat, they have no certificate of incorporation showing Mr. Sieger to be “President” as he claims on the BAT Operating Agreement (ECF No. 261-23), nor are there any other corporate documents, bylaws, or corporate minutes whatsoever to show Sieger's ownership in Tappat. (TD 56.1 Stmt ¶ 83; but see Pl.’s TD Resp. ¶ 83 (objecting and disputing)). Indeed, Abraham Sieger did not know where Tappat was located, had no idea when it was closed, and neither he nor his sister had any idea where the name Tappat came from. (TD Mem. at 21 (citing A. Sieger Tr. at 15-16, 179; Brachfeld Tr. at 28)).
*20 The Bank contends that the evidence does not support Mr. Sieger's claim that he and his sister are the sole shareholders of Tappat. (TD 56.1 Stmt ¶ 78). In fact, contrary to Mr. Sieger's testimony, bank records show that on December 31, 2007, Helen Sieger opened an account at Flushing Bank in Tappat's name – three years earlier than Sieger claims Tappat was created. (TD 56.1 Stmt ¶ 79 (citing Tappat Flushing Bank Documents, Ex. 27); Pl.’s TD Resp. ¶ 79 (admits)). Helen Sieger is listed on the Flushing Bank Documents as the registered owner of the Tappat assets at the Flushing Bank, and is listed as the “primary business contact name.” (COPS 56.1 Stmt ¶ 12; TD 56.1 Stmt ¶ 93; but see Pl.’s TD Resp. ¶ 93 (admitting that Helen Sieger is listed as “primary business contact name” but disputing the remainder of TD's statements)). Helen Sieger is the only individual who signed and submitted the application to open the company's bank account at Flushing Bank, and Helen Sieger also signed documents submitted to the bank indicating that she was “President of Tappat.” (TD 56.1 Stmt ¶¶ 78, 79; but see Pl.’s TD Resp. ¶¶ 78, 79). Helen Sieger's signature on these bank records was confirmed by her daughter, Chana Brachfeld. (TD 56.1 Stmt ¶ 79 (citing Brachfeld Tr. at 75)).
The Flushing Bank records also show that Helen Sieger is the only individual who completed any transactions on the Tappat account. (TD 56.1 Stmt ¶¶ 78; but see Pl.’s TD Resp. ¶ 78 (disputes)). The only check ever deposited into the account was signed by Helen Sieger, and on March 27, 2008, a check in the amount of $10,028,326.39 was issued by the bank to her from the Tappat account. (TD 56.1 Stmt ¶¶ 93, 94; but see Pl.’s TD Resp. ¶¶ 93, 94 (disputing certain statements as lacking support)).
In further support of the Bank's argument that Helen Sieger, and not her children, was the authorized representative of Tappat, on the Flushing Bank Documents, Tappat's business address is listed at 3400 Cannon Place, Bronx, N.Y., which is also the address of Kingsbridge Rehabilitation and Care Center, a nursing home of which Helen was the sole owner. (TD 56.1 Stmt ¶¶ 7, 80; Pl.’s TD Resp. ¶ 80; COPS 56.1 Stmt ¶¶ 13, 14, 15; Pl.’s COPS Resp. ¶¶ 13, 14, 15 (asserting that Tappat also used another mailing address)). In addition, the address listed with the New York State Division of Corporations for service of process on Tappat is 22 Hudson Street, Selden, N.Y. 11784, which is the same address used by Kingsbridge. (TD 56.1 Stmt ¶ 81 (citing NYS Div. of Corp. Information for Tappat, Exhibit 28); but see Pl.’s TD Resp. ¶ 81 (disputes)).
The Bank also points to the fact that when Palmieri conducted his initial appraisal of the contents of the Box, he was directed that anything above $3,000,000, which was the original valuation of the Estate, would trigger legal implications. (TD 56.1 Stmt ¶¶ 51, 65; Pl.’s TD Resp. ¶¶ 51, 65). Additionally, a letter written by attorney Nash to TD Bank on August 24, 2012, stated: “The contents of the safe deposit box are the property of an estate, and we are working on securing the involvement of an appropriate estate administrator.” (TD Reply at 12-13 (citing ECF No. 319-5)). In a subsequent letter dated September 7, 2012 to the Bank, Mr. Nash again represented that: “The items in the box are believed to be the property of an estate, as they were entrusted to Mr. Bienenstock to hold on behalf of a woman who has since died.” (Id.)
Furthermore, according to the New York State Division of Corporations, Tappat was dissolved by proclamation and has been inactive since April 27, 2011. (TD 56.1 Stmt ¶ 77; Pl.’s TD Resp. ¶ 77). Thus, Tappat was a dissolved corporation at the time of the burglary and at the time Mr. Sieger executed the BAT Operating Agreement on July 29, 2015.46 (TD 56.1 Stmt ¶ 6).
*21 There is also no evidence to show that Tappat ever purchased or possessed the diamonds at issue. (TD 56.1 Stmt ¶ 83; but see Pl.’s TD Resp. ¶ 83 (disputing)). Indeed, Chana Brachfeld testified that her mother, Helen Sieger, created Tappat and that neither she or her brother had any part in purchasing the diamonds; “that was allegedly done by Helen.” (TD 56.1 Stmt ¶¶ 85, 86, 89 (citing A. Sieger Tr. at 106; Brachfeld Tr. at 28, 119); but see Pl.’s TD Resp. ¶¶ 85, 86, 89 (objecting and claiming that the siblings remitted $8 million for Tappat to purchase diamonds)). Although the siblings claimed to have given $8 million to their mother to purchase the diamonds on behalf of Tappat, neither has any evidence, such as checks or bank information, to show that they each gave their mother $4 million. (TD 56.1 Stmt ¶¶ 87, 88, 90; but see Pl.’s TD Resp. ¶¶ 87, 88, 90). Ms. Brachfeld could not even recall the name of the bank from which she obtained the $4 million that she allegedly gave her mother to purchase the gems. (TD 56.1 Stmt ¶ 88; but see Pl.’s TD Resp. ¶ 88). The siblings also have no records showing the purchase of the diamonds, although they claim to have been shown the diamonds and the corresponding invoices at some point by Helen Sieger.47 (TD 56.1 Stmt ¶ 96; BAT TD Opp. at 5). Plaintiff asserts that “it is most likely” that Tappat's documents and the invoices for the diamonds were in the Box and thus lost during the burglary. (BAT TD Opp. at 5 n.2).
Despite the siblings’ claim to having seen the diamonds, neither one had any idea where Ms. Sieger bought the diamonds. (TD 56.1 Stmt ¶ 89; Pl.’s TD Resp. ¶ 89). According to Mr. Sieger, he did not know and never asked his mother where the diamonds were being held; he never arranged to have them appraised; and there was no plan to sell them. (TD 56.1 Stmt ¶ 91; Pl.’s TD Resp. ¶ 91 (admits)). Despite claiming to have close to $8 million in diamonds, Tappat never insured them and never filed any type of tax return regarding their loss. (TD 56.1 Stmt ¶ 96; but see Pl.’s TD Resp. ¶ 96 (denies)).
Although the Court does not need to reach the question of whether Tappat owned the diamonds or had the authority to assign rights to them, plaintiff has utterly failed to demonstrate that Abraham Sieger held any position within Tappat such that he would have had actual or apparent authority to bind Tappat to the 2015 Tappat Assignment.
Thus, not only does the undisputed language of the 2015 Tappat Assignment fail for the same reasons as the 2015 Bienenstock and Estate Assignments for failing to convey title or ownership to BAT, but the plaintiff has failed to demonstrate that Abraham Sieger had any corporate authority to convey assets of Tappat or to execute the 2015 Tappat Assignment.
For all of the aforementioned reasons, the Court finds that BAT lacks standing to bring the claims in this case and that the case should be dismissed for lack of subject matter jurisdiction.
B. TD Bank's Champerty Argument
The Bank also argues that all of the assignments in 2015 constitute “champerty” in that they were made “ ‘with the intent and for the primary purpose of bringing a lawsuit,’ ” in violation of New York Judiciary Law § 489. (TD Mem. at 35 (quoting Phoenix Light SF DAC v. U.S. Bank Nat'l Ass'n, 2021 WL 4515256, at *1, cert. denied, 142 S. Ct. 1371 (2022)).
Under New York's General Obligations Law Section 13-101, any claim or demand can be transferred, except where, inter alia, the claim is to recover damages for personal injury or “[w]here a transfer ...is expressly forbidden by: (a) a statute of the state.” Section 489 of the New York Judiciary Law prohibits the purchase of claims with the intent to bring a lawsuit unless the purpose of the assignment is to protect a legitimate claim. Trust for the Certificate Holders of the Merrill Lynch Mortgage Investors, Inc. v. Love Funding Corp., 13 N.Y. 3d 190, 200-01 (2009).
“Champerty is a common law doctrine to ‘prevent or curtail the commercialization or trading in litigation,’ ” and is codified in New York's Judiciary Law § 489. Phoenix Light SF Ltd. v. U.S. Bank Nat'l Ass'n, 612 F. Supp. at 276 n.16 (citation omitted). Section 489 provides:
No person or co-partnership, engaged directly or indirectly in the business of collection and adjustment of claims, and no corporation or association, directly or indirectly, itself or by or through its officers, agents or employees, shall solicit, buy or take an assignment of, or be in any manner interested in buying or taking an assignment of a bond, promissory note, bill of exchange, book debt, or other thing in action, or any claim or demand, with the intent and for the purpose of bringing an action or proceeding thereon
*22 If the primary purpose of the assignment is to bring a lawsuit or proceeding, then the assignment is in violation of the champerty statute and null. See Justinian Cap. SPC v. West LB AG, 28 N.Y.3d 160, 166 (2016). Indeed, the critical issue in determining if an acquisition of rights is champertous is the purpose of the assignment and whether a lawsuit is the “very essence” of the assignment and not just an incidental or secondary purpose. Id. at 167.
Champerty is an affirmative defense and the defendant bears the burden of proof. Phoenix Light SF Ltd. v. U.S. Bank, 612 F. Supp. 3d at 281. “Although the intent and purpose of an assignee is usually a factual question that cannot be decided on summary judgment, where a plaintiff fails to rebut evidence that its purpose in seeking an assignment was to commence suit, a court may grant summary judgment in favor of a defendant.” Id.; see also Justinian Cap. SPC v. West LB AG, 28 N.Y.3d at 168; Trust For the Certificate Holders of Merrill Lynch Mortg. Invs., Inc. v. Love Funding Corp., 13 N.Y.3d 190, 200 & n.6 (2009) (granting summary judgment and stating that although “[t]he inquiry into purpose is a factual one,” “[t]hat is not to say [ ] that the issue may not be amenable to summary judgment in an appropriate case”).
It is undisputed that plaintiff BAT was not in existence at the time of the burglary. (TD 56.1 Stmt ¶ 72; Pl.’s TD Resp. ¶ 72). The Bank contends that the evidence properly before the court on the purpose of the formation of BAT and the related assignments of claims to BAT is the testimony of Abraham Sieger, the creator and owner of BAT. (TD Mem. at 37). During his deposition, Mr. Sieger was asked what the purpose was of BAT LLC, to which he responded: “It's a company that we have that was created for this case.” (A. Sieger Tr. at 12). When asked, “So the sole purpose of BAT is a holding company for the rights of the contents of a safe deposit box. Is that correct?” his response was “Yes.” (Id.) Further supporting Sieger's testimony, BAT was asked in an interrogatory to “[s]et forth a detailed description of the purpose of the formation of BAT and the nature of BAT's current business purpose.” (TD Am. Opp. at 7, Ex. 1 thereto). BAT represented in its January 9, 2017 response to that interrogatory stating: “plaintiff states that its sole current business is the prosecution and ownership of the claims concerning Box 198.” (Id.)
The Bank also notes that the 2015 Assignments themselves made it clear that the Assignments were for the sole purpose of pursuing claims in connection with the burglary. (TD Mem. at 37-38). In considering a defense of champerty under New York law, courts have held that “receiv[ing] [a] cause of action... absent any related obligations or assets,” which is precisely what the Bank argues was assigned to BAT here, is evidence of champerty. BSC Assocs., LLC v. Leidos, Inc., 91 F. Supp. 3d 319, 329 (N.D.N.Y. 2015); see also Koro Co. v. Bristol-Myers Co., 568 F. Supp. 280, 287–88 (D.D.C. 1983) (finding that an assignment was champertous under New York law, in part because “the claim [ ] was not assigned along with all the other assets”).
The Bank further notes that the exception set out in Love Funding Corp. does not apply here because BAT holds no preexisting interest in either the safe deposit lease agreement which was executed five years before BAT was created or in the contents of the Box, which were stolen during the burglary three years prior to BAT's creation. Trust For the Certificate Holders of Merrill Lynch Mortg. Invs., Inc. v. Love Funding Corp., 13 N.Y.3d at 195; see also Sharbat v. Loveance Biotherapeutics, Inc., No. 20 CV 1391, 2023 WL 34377, at *16 (S.D.N.Y. Jan. 4, 2023) (holding that plaintiff held no proprietary interest in the assigned claims because it was not formed until ten years after the execution of the agreement at issue).
*23 Plaintiff argues that defendants waived the champerty defense by not raising it as an affirmative defense in its answer. (BAT TD Opp. at 31 (citing Phoenix Light SF Ltd. v. U.S. Bank Nat'l Ass'n, 612 F. Supp. 3d 263)). Plaintiff asserts that not only did the Bank fail to plead the affirmative defense of champerty, but in the seven years of litigation, never once mentioned the word “champerty.” (Id. at 32).
The Bank disagrees, contending that its Second and Sixth affirmative defenses clearly asserted that BAT did not have a valid assignment of the rights of the Bienenstocks, and BAT lacks standing to bring the action. (TD Reply at 15-16). The Bank argues that this sufficed to put BAT on notice of this defense, noting that at the time, the Bank had not yet been made aware of the Estate and Tappat Assignments. (Id.) However, BAT contends that pleading a lack of standing does not encompass the defense of champerty. (BAT TD Opp. at 31 (citing Phoenix Light SF Ltd. v. Bank of New York Mellon, No. 14 CV 10104, 2020 WL 2950799, at *1 (S.D.N.Y. June 3, 2020))). BAT also relies on TD's responses to interrogatories to support its position that at no time did the Bank raise the champerty defense. (Id. at 32-33). Lastly, BAT argues that the 2015 Assignments from the Estate and Tappat, which is owned by the co-administrators of the Estate, cannot be champertous according to the text of Section 489 which states that “judgments or other things in action may be solicited, bought, or assignment thereof taken, from any executor [or] administrator...” (Id. at 34).
The Bank attempts to distinguish the circumstances in Phoenix where the only affirmative defense pleaded was lack of standing, whereas here, there was a second affirmative defense challenging the validity of the assignments. (TD Reply at 17). In LNC Investments, Inc. v. First Fidelity Bank, the court addressed the sufficiency of a champerty defense, where the defendant asserted a defense of lack of standing based on the assertion that the claims were not “assignable.” No. 92 CV 7584, 2000 WL 375236, at *2 (S.D.N.Y. Apr. 11, 2000). Even though the language of the affirmative defenses did not expressly track the language of the Judiciary Law, the court concluded that defendants were on notice of the defense and the court could not imagine how it would cause the plaintiff unfair prejudice. (Id.)
Given that the assignments do not give BAT the right to sue in its own name, the Court does not have to reach the issue of champerty or the other challenges to the validity of the assignments. It is respectfully recommended that the action be dismissed since the Court lacks subject matter jurisdiction due to plaintiff's lack of standing.
C. Production of New Documents
Perhaps in recognition of the arguments made in the Bank's pre-summary judgment motion conference request filed August 9, 2022, regarding the ineffectiveness of the assignments, BAT produced three new documents on September 23, 2022 – never previously disclosed during discovery – two new assignments of claims to BAT from the Estate and from Tappat dated August 30, 2022, and a Surrogate Court certificate from March 2022. (TD Mem. at 5-6 (citing ECF No. 276 and Exhibits)).
The Bank argues that despite the Bank's affirmative defenses filed years ago, raising a claim of lack of a valid assignment from the Bienenstocks (TD's Second Affirmative Defense), and claims that BAT lacked ownership in the property at issue (TD's Tenth and Eleventh Affirmative Defenses), and despite making demands for information relating to the Estate and the assignments at issue, these documents were only provided and created after the close of discovery and in direct response to the Bank's pre-motion submission in connection with the anticipated motion for summary judgment. (Id.) Indeed, the Bank contends that BAT failed to disclose the March 2022 Order from the Surrogate's Court for more than six months until responding to the Bank's request for permission to move for summary judgment. (Id.) In addition to the new 2022 assignments and the Surrogate Court document, BAT also submitted a new Declaration from Abraham Sieger, dated September 23, 2022, in which he revised his statement regarding the formation of BAT, contradicting his prior deposition testimony in certain ways. (A. Sieger 9/23/2022 Decl.48)
*24 This production of new documents in late 2022 was not the last; following the service of defendants’ motion papers and in response to the expanded arguments set out in those papers, BAT produced a second Declaration from Abraham Sieger, dated May 3, 2023. (A. Sieger 5/3/2023 Decl.49). In support of its own summary judgment motion, BAT produced a Declaration from Yaakov Bienenstock, also dated May 3, 2023. (ECF No. 319-7). Both of these declarations appear to provide support for BAT's new explanation about its formation as set forth in BAT's Memorandum of Law in Opposition to the Motion for Summary Judgment of the Defendant TD Bank N.A., filed on May 4, 2023. Specifically, BAT sets forth a series of new factual assertions regarding an oral settlement agreement reached among the Bienenstocks and the Sieger siblings following the burglary.50 These facts, supported by the 2022 and 2023 Sieger and Bienenstock Declarations, had never before been disclosed to defendants and were provided significantly after the close of discovery in July 2020. (See Electronic Order dated 6/30/2020). Finally, on August 23, 2023, BAT produced an additional Assignment from the Bienenstocks to BAT, dated August 21, 2023 (ECF No. 347-4), along with BAT's Reply to the Motion for Summary Judgment.
1. The 2022 and 2023 Assignments
The Bank contends that BAT produced these new assignments from the Estate and Tappat, executed in response to the Bank's arguments in its pre-motion conference letter, in an attempt to correct the problems identified with the original 2015 Assignments. The new 2022 Assignments now contain language assigning “all of the rights, ownerships and interests” of the assignors to BAT, and the 2023 Bienenstock Assignment now conveys the Lease Agreement. (TD Mem. at 26; ECF Nos. 276-11, 276-12, 347-4). The Bank argues that the court should disregard the new assignments presented for the first time in opposition to the motions for summary judgment. (TD Mem. at 25 (citing Lyman v. CSX Transp., Inc., 364 F. App'x 699, 701 (2d Cir. 2010))).
“As a threshold matter, courts generally do not consider claims or completely new theories of liability asserted for the first time in opposition to summary judgment. Casseus v. Verizon New York, Inc., 722 F. Supp. 2d 326, 344 (E.D.N.Y. 2010) (citing Lyman v. CSX Transp., Inc., 364 F. App'x at 701-02 (affirming district court's determination that it should not consider claims raised for the first time in opposition to summary judgment)); see also Greenidge v. Allstate Ins. Co., 446 F.3d 356, 361 (2d Cir. 2006). In Heletsi v. Lufthansa German Airlines, Inc., this Court held that “[a] party cannot amend their complaint simply by alleging new facts and theories in their memoranda opposing summary judgment.” No. 99 CV 4793, 2001 WL 1646518, at *1 n. 1 (E.D.N.Y. Dec. 18, 2001). See also Brandon v. City of New York, 705 F. Supp. 2d 261, 278 (S.D.N.Y. 2010) (stating: “It is black letter law that a party may not raise new claims for the first time in opposition to summary judgment”); see also 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1183 n.11 (4th ed.) (“An opposition to a summary judgment motion is not the place for a plaintiff to raise new claims”).
There is no dispute that these new Assignments were produced long after the close of discovery and although no explanation has been given for the assignments, the new language in the assignments was clearly intended to correct the absence of a full assignment of rights to the contents of the Box, which was the basis for defendants’ standing motions.
The Bank urges the court to disregard these new assignments and argues that, in any event, the original 2015 assignments of power-of-attorney were irrevocable; therefore, plaintiff cannot not assert standing based on this new set of assignments. (TD Mem. at 27-28). The Bank also contends that any amendment to the pleadings would be futile because it would not relate back since “[a] plaintiff cannot ‘fix its own standing problems retroactively,’ ” and any new claims would be time-barred. (TD Mem. at 25, 31-32 (quoting Multistack LLC v. Arctichill Inc., No. 05 CV 3865, 2006 WL 510506, at *5 (S.D.N.Y. Mar. 1, 2006))); see also Nomura Asset Acceptance Corp. Alternative Loan Tr. v. Nomura Credit & Cap., Inc., 139 A.D.3d 519, 520, 31 N.Y.S.3d 863 (1st Dep't 2016) (holding that where the plaintiffs lacked standing, a later claim “could not relate back to the defective summons, because no valid action was commenced”).
*25 BAT disputes the Bank's argument that the 2022 Assignments are invalid because the 2015 Assignments were irrevocable, arguing that the new assignments were simply “a clarification that Tappat and the Estate had assigned all of their interests in connection with the claims and assets.” (BAT TD Opp. at 25 (citing Dubuque Stone Prods. Co. v. Fred L. Gray Co., 356 F.2d 718, 724 (8th Cir. 1966))).
a. Analysis
The Court agrees with the Bank that the newly submitted 2022 assignments by Tappat and the Estate and the 2023 assignment by the Bienenstocks should not be considered in evaluating the plaintiff's standing. The Second Circuit has made it clear that claims raised and documents presented for the first time in opposing a motion for summary judgment are not appropriate, Lyman v. CSX Transp., Inc., 364 F. App'x at 701, and a party cannot simply amend its pleadings by alleging new facts and theories in opposing summary judgment. Heletsi v. Lufthansa German Airlines, Inc., 2001 WL 1646518, at *1 n. 1; see also Casseus v. Verizon N.Y., Inc., 722 F. Supp. 2d at 344. In any event, as noted above, these new assignments cannot cure BAT's lack of standing given that the initial assignments entered into in 2015 were invalid and the statute of limitations had run prior to the date of the new assignments. See Nomura Asset Acceptance Corp. Alternative Loan Trust v. Nomura Credit & Capital, Inc., 139 A.D.3d at 520.
Therefore, the Court respectfully recommends that the new 2022 and 2023 Assignments not be considered in determining whether BAT has standing.
2. The New Declarations and the “Verbal” Agreement
In addition to presenting new assignments from the Estate, Tappat and the Bienenstocks, BAT has submitted new Declarations from Abraham Sieger and Yaakov Bienenstock, as well as a new version of events as described in BAT's Memorandum of Law opposing TD's Motion for Summary Judgment. In essence, BAT claims that it was formed as part of a verbal agreement reached among the Bienenstocks, Sieger and Brachfeld, and Tappat to resolve possible disputes relating to the contents of the Box. (BAT TD Opp. at 9-10). BAT offers this new information and testimony in an effort to dispute the Bank's claim of champerty, contending that the primary purpose of BAT's formation and the assignments was to settle difficult issues between the Bienenstocks, Tappat, and the Estate, contrary to the Bank's assertion that the primary intent was to file this lawsuit. (Id. at 33-38).
The Bank urges the Court to disregard this latest version of events alleged by BAT on the grounds that the information in these new Declarations was never disclosed or even mentioned to defendants during the seven years that discovery in the case has been ongoing. (TD Reply at 3-5).
Regarding the newly alleged oral settlement agreement, BAT asserts that after the burglary, the Bienenstocks became concerned that the owners of the contents of the Box would commence an action for the return of the contents of the Box. (BAT TD Opp. at 8). The Sieger children also allegedly had concerns given the lack of documentation and potential misunderstandings as to who owned the contents of the Box. (Id.) According to BAT, the “siblings reasonably sought the assignment of all of the Bienenstocks’ rights and ownership to the Box (including the Lease Contract) and the Box's Contents.” (Id. at 9). Moreover, since the contents were owned in part by the Estate and in part by Tappat, the parties “negotiated through counsel” and reached the following agreement:
*26 (i) The Bienenstocks would assign their “full and complete ownership of all of their interests in the Box (including without limitation the Box Lease), the Box's Contents and any claims that the Bienenstocks had concerning the Box and the Box's Contents to a newly formed entity to be owned and controlled by Tappat and Abraham Sieger on behalf of the Helen Sieger Estate.”
(ii) The Estate would assign its “full and complete ownership of all of its interests in the Box, the Box's Contents and any claims that the Helen Sieger Estate had concerning the Box and the Box's Contents to the new entity;”
(iii) Tappat would assign its “full and complete ownership of all of its interests in the Box, the Box's Contents and any claims that the Helen Sieger Estate had concerning the Box and the Box's Contents to the new entity.”
(Id. at 9-10 (citing A. Sieger 5/3/2023 Decl.)). Also, as part of the newly disclosed 2022 Assignments, the Estate and Tappat agreed not to sue the Bienenstocks and to reimburse them for their expenses. (Id.) According to BAT, the parties knew that all of the terms of the verbal settlement agreement were not part of the 2015 assignments, which is why the 2015 assignments provided for the execution of further documents to reflect the parties’ intent. (Id.)
a. Analysis
As noted supra, a plaintiff may not amend its Complaint by alleging new facts and theories in opposition to a motion for summary judgment. See Casseus v. Verizon N.Y., Inc., 722 F. Supp. 2d at 344; see also Greenidge v. Allstate Ins. Co., 446 F.3d at 361. Moreover, the Second Circuit has made it clear that a party may not show a triable issue of fact merely by submitting an affidavit that disputes his own prior sworn testimony. See, e.g., Trans-Orient Marine Corp. v. Star Trading & Marine, Inc., 925 F.2d 566, 572 (2d Cir. 1991). Where the party “was not previously asked sufficiently precise questions to elicit the amplification or explanation” of prior testimony, Rule v. Brine, 85 F.3d 1002 (2d Cir. 1996), his subsequent sworn statement may raise a material issue of fact, so long as it does not contradict his prior testimony. See, e.g., Villante v. Department of Corrections, 786 F.2d 516, 522 (2d Cir. 1986).
A comparison of Yaakov Bienenstock's deposition testimony with his Declaration of May 3, 2023 is instructive. During his deposition, Mr. Bienenstock could not recall much in the way of the steps taken after he was advised of the burglary by a branch manager. (Y. Bienenstock Tr. at 46-48). He testified that he contacted Greisman, but said “[t]hat's all I did;” he never called or went to the Bank. (Id.) Although he went to the police with the lawyer Nash, he could not remember when that was, with whom they met, what was said, or whether a report was filed. (Id.) He also had no recollection of whether a lawsuit was filed on his behalf and he explicitly testified that he had no conversations with attorney Nash other than during the Box inspection and at the police department. (Id. at 49-50).
As for the 2015 Bienenstock Assignment, Mr. Bienenstock testified during his deposition that Greisman showed him the assignment and told him to sign it. (Id. at 51-52). He did not know who prepared it and he had no recollection of when he signed it. (Id. at 52). He also testified that no attorney looked at it for him. (Id. at 52-53). Mr. Bienenstock testified that Greisman did not tell him why he needed the assignment, but also that Greisman told him it would protect him from being sued by Helen Sieger or her estate. (Id.) However, he testified that he did not know why he could have been sued. (Id.) At no time during his deposition did he mention entering into a settlement with the Sieger Estate or Abraham Sieger. Indeed, he testified that he had never met Abraham Sieger or spoken with him and Sieger testified that he had never met the Bienenstocks. (Id. at 27, 45; A. Sieger Tr. at 41).
*27 By contrast, Mr. Bienenstock's Declaration of May 3, 2023 reflects a much more detailed memory of events. While his deposition testimony makes it very clear that the concern about a potential lawsuit and the need for the assignment was instigated by Greisman, in his Declaration, he explains: “After the Box was burglarized in August 2012, our lawyer engaged in a dialogue with a claims manager on behalf [of] TD.” (Bienenstock Decl.51 ¶ 6). Not only did he fail to mention this discussion with the Bank in his deposition, but in his post-deposition Declaration, he further represents that “as these discussions dragged on, I became concerned that we could potentially be sued by the owners of the Box's contents.” (Id. ¶ 7). This is in direct contradiction to his deposition testimony which was that it was Greisman's idea to have the Bienenstocks enter into the assignment and it was Greisman who told him that the purpose was to prevent him from being sued. More concerning, however, is the statement in the new Declaration describing the “settlement” which was never mentioned in his deposition and contradicts his testimony that after the visit to the police station, he had no other conversations with lawyers:
8. Through counsel, we came to a settlement agreement that (i) we assigned all of our rights, ownership, the lease, all of our interests in the Box and the Box's contents and all claims with respect to the Box and the Box's contents52 to BAT, LLC, an entity formed by the owners of the Box's contents; and (ii) in exchange, the Box's contents’ owners would not sue us. After we came to the agreement, we executed the assignment and provided it to the plaintiff in this action.
9. We were aware that additional documents may be required with regard to the ownership of the Box's contents and that the assignment was not the complete agreement between us. We, therefore, agreed that we would execute any additional documents to effect this complete assignment of everything and anything concerning the Box and the Box's contents.
(Bienenstock Decl. ¶¶ 8, 9).
Abraham Sieger's recent 2022 and 2023 Declarations also contradict his prior testimony in certain respects. In contrast to his deposition testimony where he stated that the purpose of forming BAT was to file this case, Mr. Sieger's recent 2023 Declaration claims that the primary purpose of the assignments “was to effect the resolution between all of the parties and for the new entity to hold the assets.” (BAT TD Opp. at 10 (citing A. Sieger 5/3/2023 Decl. ¶¶ 3, 5, 6)). BAT attempts to explain Mr. Sieger's prior deposition testimony regarding the formation of BAT by asserting that he was only questioned about the “purpose of BAT,” and not about the intent of the assignments. (Id. at 38-39). Despite Mr. Sieger's earlier statement that BAT's purpose was to sue TD and the other defendants and BAT's similar January 9, 2017 interrogatory response, discussed supra, BAT now cites the 2023 Sieger Declaration and argues that the purpose did not involve a transaction in champerty. (Id.)
This is not the only inconsistency between Mr. Sieger's deposition testimony and his 2023 Declaration. When asked during his deposition if he had paid the Bienenstocks any money for the assignment of their claims, Sieger testified “no,” and then answered “no” to the question: “Did you promise them anything in return for signing this document [referring to the Bienenstock Assignment].” (A. Sieger Tr. at 69-70). By contrast, in his May 3, 2023 Declaration, Sieger represented that “the parties including through counsel had verbally come to an agreement.” (A. Sieger 5/3/2023 Decl. ¶ 5). There was no mention of any verbal agreement during his deposition, although he was questioned extensively about the events leading up to the execution of the various assignments. In addition, in direct contradiction to his deposition testimony, Sieger's 2023 Declaration stated that in return for the Bienenstocks’ Assignment, “[t]he Helen Sieger Estate and Tappat agreed not to sue the Bienenstocks and would reimburse the Bienenstocks for their incurred expenses.” (Id. ¶ 5(i)). An agreement to pay incurred expenses and a release appears to be a promise in return for the Bienenstocks’ agreeing to the assignment. The May 2023 Declaration further represents that “[t]he main intention of this agreement” was “to resolve all claims with the Bienenstocks; that Tappat and the Helen Sieger Estate would also resolve any conflicts as they owned different interests in the Box's Contents...” (Id. ¶ 6). Despite being questioned extensively about the original 2015 Assignments, Sieger made no mention of this alleged verbal agreement during his deposition.
*28 Nor did he mention any “verbal” settlement agreement in his September 23, 2022 Declaration (ECF No. 276-10), although he did represent that “BAT was not specially and exclusively formed to commence this litigation,” nor were the assignments exclusively executed to commence the litigation. (A. Sieger 9/23/2022 Decl. ¶¶ 11, 12). Instead, he set forth several reasons for the formation of BAT and the assignments, including that BAT was to hold the rights to the diamonds and other contents of the Box; the Bienenstocks’ Assignment was to ensure that they would not lay claim to owning the contents of the Box; that BAT would manage and hold the rights of the three assignors; and to enable the orderly windup of Helen Sieger's Estate and Tappat. (Id. ¶ 14). Again, the September 2022 Declaration, which was prepared and executed years after the close of discovery, is devoid of any mention of the fact that the original assignments or even the new assignments attached to the Declaration were pursuant to a settlement agreement reached in 2015. This significant change in testimony from September 2022 to May 2023 is concerning to the Court.
The plaintiff has not submitted any explanation as to why the court should consider the May 3, 2023 sworn statements of Bienenstock and Sieger, offered following the Bank's Motion for Summary Judgment, when this information about a verbal settlement among the parties, which allegedly occurred in 2015 before the filing of the action, could have been disclosed at any time during the seven years in which the parties were exchanging discovery. Moreover, the detailed explanations contained in Mr. Bienenstock's newly filed Declaration stand in stark contrast to his deposition testimony in which he essentially denied knowledge of the reasons for the assignments. More importantly, Mr. Sieger's new 2023 Declaration directly contradicts his deposition testimony about whether anything was exchanged for the assignments, and his earlier 2022 Declaration regarding the purpose of the assignments. The defendants are clearly prejudiced by the introduction of these Declarations at a time when discovery has been completed for over two years and defendants have had no opportunity to question the witnesses about their changed testimony.
“[A]n interested witness who has given clear answers to unambiguous questions cannot create a conflict and resist summary judgment with an affidavit that is clearly contradictory, without providing a satisfactory explanation of why the testimony is changed.” 10A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2726.1 (4th ed.); see also Trans-Orient Marine v. Star Trading & Marine, 925 F.2d at 572-73 (2d Cir. 1991); Davidson & Jones Dev. v. Elmore Dev., 921 F.2d 1343, 1352 (6th Cir. 1991).
Accordingly, it is respectfully recommended that the District Court disregard the recently filed Declarations of Abraham Sieger and Yaakov Bienenstock, along with BAT's arguments based thereon, and consider the motions for summary judgment without taking into account the newly disclosed “verbal” settlement agreement and other information that is now offered to defeat the Bank's standing arguments, including their champerty arguments.
D. BAT's Claims Should Be Barred as a Matter of Public Policy
The Bank's final argument is that BAT's claims should be barred as a matter of public policy since BAT “seeks to profit from its fraudulent scheme to hide contraband in a TD Bank safe deposit box.” (TD Mem. at 39). The Bank argues that BAT seeks to “profit from an illegal scheme akin to money laundering” and “essentially seeks to commit a fraud on TD Bank, the government, and this Court,” as demonstrated through its behavior during the litigation. (Id.)
Again, since the Court is recommending dismissal based on lack of jurisdiction, it does not need to reach this argument. However, the Court shares the Bank's concerns regarding plaintiff's late disclosures, changing stories, and the questionable nature of Helen Sieger's activity, as discussed further in connection with Plaintiff's Motion to Amend.
III. The Remaining Summary Judgment Motions
*29 Given the foregoing analysis, the Court respectfully recommends that the District Court decline to consider the newly provided evidence, including the 2022 and 2023 assignments, and grant summary judgment in favor of all defendants, dismissing the action for lack of subject matter jurisdiction. It is further recommended that the court need not consider the arguments set forth in the other defendants’ summary judgment motions at this time.53
IV. Plaintiff's Motion to Amend54
Plaintiff BAT moves to amend its Fourth Amended Complaint, pursuant to Fed. R. Civ. P. 15, 17, and 21, to add Chaya Bienenstock, Yaakov Bienenstock, Abraham Sieger, Chana Brachfeld and Tappat, Inc. as new plaintiffs to the action (the “New Plaintiffs”), who together with BAT constitute all the parties that allegedly have an interest against the defendants arising from the Avenue U Branch burglary. (Pl.’s Am. Mem.55 at 1). Given that the defendants did not withdraw their champerty defense, plaintiff seeks to moot the dispute over standing by adding all possible real parties in interest. (Id. at 2). BAT contends that the amendment is timely given that defendants raised the champerty defense for the first time in connection with their motions for summary judgment56 and they would not be prejudiced by the addition of these New Plaintiffs, all of whom are known to defendants and have been previously deposed. (Id. at 2-3). BAT further contends that no discovery will be necessary as a result of the amendments. (Id. at 3).
Pursuant to Federal Rule of Civil Procedure 15(a)(1), a party may amend its complaint “once as a matter of course within 21 days after serving the [original] complaint or within 21 days after a responsive pleading has been served.” Blanchard v. Doe, No. 17 CV 6893, 2019 WL 2211079, at *3 (E.D.N.Y. May 22, 2019). After that, amendments are allowed “only with the opposing party's written consent or the court's leave.” Fed. R. Civ. P. 15(a)(2). Rule 15 expresses a strong presumption in favor of allowing amendment, stating that “[t]he court should freely give leave when justice so requires.” Id. While courts have broad discretion in deciding whether to grant motions to amend, the Second Circuit has cautioned that an amendment should only be denied “ ‘for good reason, including futility, bad faith, undue delay, or undue prejudice to the opposing party.’ ” Bensch v. Estate of Umar, 2 F.4th 70, 81 (2d Cir. 2021) (quoting McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 200 (2d Cir. 2007)).
B. Undue Delay
*30 The defendants oppose plaintiff's motion to amend on a number of grounds. First, they object on grounds of timeliness. (TD Am. Opp. at 1; Meier Decl.57 ¶¶ 2, 5). The Bank argues that “[e]ight years after bringing this lawsuit, after summary judgment motions have been fully briefed, and after the parties have already spent an inordinate amount of time and money in defending the claims in this action, BAT seeks to amend the complaint to add new parties, new facts, new claims and new categories of damages.” (TD Am. Opp. at 1). Indeed, the Bank complains that although it laid out its arguments regarding standing and the validity of the assignments in its August 9, 2022 pre-motion letter, BAT waited an additional year, after the parties had spent “hundreds of thousands of dollars” briefing the motions for summary judgment, to file this motion to amend in October 2023. (Id.)
The Bank contends that plaintiff has been aware of the existence of the New Plaintiffs and their claims since at least 2015, since plaintiff was formed to bring these claims, and argues that plaintiff was also aware of challenges to its standing and objections to the validity of the assignments, but chose not to correct these issues in a timely fashion. (Id. at 1-2). Contrary to plaintiff's assertion that these issues were only raised in connection with the motions for summary judgment, defendant TD Bank asserted these defenses in its Answer to the original complaint filed in October 2015. (Id. at 2). Specifically, the Second Affirmative Defense interposed in the Bank's original Answer filed October 15, 2015, asserted that “BAT did not have a valid assignment of the rights of Chaya Bienenstock and Yaakov Bienenstock,” and the Sixth Affirmative Defense asserted that “BAT lacks standing to bring the within cause of action.”58 (ECF No. 5). The Bank continued to raise these defenses in response to each of four amended complaints filed by BAT and “in submissions to the Court, in discovery responses, and in support of its motion for summary judgment,” and yet BAT persisted in alleging that it was bringing the action based only on the assignment from the Bienenstocks; there was no mention in any of the complaints that BAT's standing was based on assignments from Tappat or the Estate. (TD Am. Opp. at 2).
At the initial discovery conference held before former Magistrate Judge Marilyn Go on April 7, 2016, the Court set a deadline to file amended pleadings by May 31, 2016. (See Minute Entry dated 4/7/2016). Thereafter, BAT filed its Third and Fourth Amended Complaints, to which the Bank continued to interpose the same affirmative defenses of lack of standing and invalid assignments. (TD Am. Opp. at 5-6). Halifax, COPS, and Integrated also asserted affirmative defenses in their Answers, challenging BAT's standing and failure to join necessary parties. (ECF Nos. 57, 66, 68).
The Bank contends that not only did it make it clear in its consistent assertion of the affirmative defenses, and in its September 2016 pre-motion conference request, that it was challenging BAT's ability to pursue this case, but the Bank also served interrogatories asking BAT to explain if it had any preexisting ownership interest in the claims and to explain the purpose behind BAT. (TD Am. Opp. at 6). As discussed supra, in its January 9, 2017 response to an interrogatory asking BAT to “[s]et forth a detailed description of the purpose of the formation of BAT and the nature of BAT's current business purpose,” BAT stated: “plaintiff states that its sole current business is the prosecution and ownership of the claims concerning Box 198.” (Id. at 7, Ex. 1). This response was consistent with the testimony of Abraham Sieger during his deposition when he testified that BAT was formed solely for the purpose of bringing this case. (Id. at 11 (citing A. Sieger Tr. at 12)). Moreover, the Operating Agreement for BAT demonstrates that BAT was formed on July 29, 2015, approximately three years after the burglary, and less than a week before the State Court action was filed on August 3, 2015. (ECF No. 261-23). The assignments were executed on July 30, 2015, the day after the formation of BAT.
*31 In the 2017 responses to interrogatories, BAT also identified the Siegers and Yaakov Bienenstock as individuals with knowledge, represented that Tappat owned items in the Box, and that “Helen Sieger did not bequeath any of the items in the safe deposit box to BAT or to the Bienenstocks.” (TD Am. Opp. at 7). Thus, in 2017, BAT not only admitted that the purpose of forming BAT was to bring this lawsuit, but it was clearly aware of each of the New Plaintiffs and was aware or should have been aware of their alleged claims. (Id.)
Indeed, BAT served its own interrogatories inquiring about the Bank's defense challenging BAT's standing. (Id. at 7-8). The Bank contends, as it did in response to the plaintiff's arguments on champerty in the opposition to the summary judgment motion (see discussion supra), that its affirmative defenses raised the champerty concern, as did the Bank's interrogatory answers which tracked the elements of Champerty Law. (Id. at 8-9 (citing the response that BAT was not a party to the Lease, had no preexisting ownership in the items in the Box, no valid assignment existed at the time of the theft, and the purported assignment was executed well after the burglary)). The Bank's Contention Interrogatories also made clear that the Bank was challenging the validity of the assignments. (Id.) The fact that the Bank did not specifically use the word “Champerty”59 has been held unnecessary where additional information is sufficient to put the plaintiff on notice. See LNC Invs., Inc. v. First Fid. Bank, 2000 WL 375236 at *2. Even if was not clear that the defendants were raising a defense of champerty, the plaintiff cannot plausibly argue that it was unaware of the challenges to standing and the assignments.
The parties submitted pre-motion letters and Rule 56.1 Statements on August 9, 2022. Once again, the defendants reiterated defenses of invalid assignments and lack of standing.
As discussed supra, on September 23, 2022, BAT submitted completely new assignments dated August 30, 2022, from the Estate and Tappat, and a Surrogate Court's Certificate of Appointment. (ECF Nos. 276-8, 276-11, 276-12). A new assignment from the Bienenstocks was submitted on August 21, 2023. (ECF No. 347-4). Moreover, after the Bank filed its motion for summary judgment on March 3, 2023, BAT filed new Declarations from Abraham Sieger and Yaakov Bienenstock, describing the purported verbal ‘settlement agreement’ that had never been mentioned during discovery. (ECF Nos. 317, 319-7). As discussed supra, these new Declarations contradicted the testimony of both declarants. After the motions for summary judgment were fully briefed, BAT then filed this motion to amend.
Given the foregoing, defendants argue that the plaintiff has been on notice since 2016 that there was an issue as to BAT's standing to bring the action and the validity of the assignments, and thus, BAT should have sought to join these parties at that time. (Meier Decl. ¶ 5). Instead, BAT waited more than seven years to correct this error and to attempt to name the New Plaintiffs, after the parties had completed discovery and fully briefed extensive motions for summary judgment.
A district court has the discretion to deny leave to amend a pleading for good reason, including undue delay. See Bensch v. Estate of Umar, 2 F.4th at 81. Undue delay exists when the plaintiff has known of the facts and parties comprising the proposed amendments for a long time and summary judgment briefing has already occurred. Lee v. Delta Airlines, Inc., No. 20 CV 01705, 2023 WL 9184679, at *8 (E.D.N.Y. Mar. 14, 2023).
*32 Here, the plaintiff has filed four amended complaints, with the most recent amendment filed on September 15, 2016. Seven years passed before plaintiff moved to file the current amendment. Plaintiff has offered no excuse for the delay to add these new claims and parties, except to contend that it was not until defendants refused to withdraw their champerty defense that plaintiff realized that the best course was to add the New Plaintiffs to protect their ability to pursue these claims. This argument is not persuasive. Given the number of times, both before the filing of the Fourth Amended Complaint and afterwards, that the defendants raised challenges to BAT's standing to pursue these claims, BAT was on notice long before the filing of the summary judgment motions that standing was a potential problem.
C. Prejudice
Apart from the undue delay in seeking to amend the Complaint, defendants argue that they will be severely prejudiced if plaintiff is allowed to file the proposed amended complaint. (TD Am. Opp. at 37; Meier Decl. ¶ 7). The Bank argues that contrary to plaintiff's representations, the proposed Fifth Amended Complaint seeks to materially change the allegations and claims and adds a new claim of punitive damages against the Bank. (TD Am. Opp. at 1). COPS asserts that the New Plaintiffs will have to be re-deposed (Meier Decl. ¶ 7), and that it would be required to refile its motion for summary judgment against the New Plaintiffs, causing further delay and prejudice in the resolution of this action. (Id. ¶¶ 9, 11).
Specifically, the Bank notes that the proposed Fifth Amended Complaint contains new allegations about the legal status of Tappat and asserts that despite Tappat's dissolution in 2011 – over 13 years ago – this action concerns the “winding up” of Tappat's business. (TD Am. Opp. at 31-32). The Bank argues that not only has plaintiff never produced any documentary evidence relating to the ownership or identity of Tappat, but this new claim requires an investigation into the assets and winding up60 of that business.61 (Id.) The Bank also asserts that the original complaint never mentioned Tappat or the Siegel children or the Estate; as a result, there will need to be discovery on the citizenship of the New Plaintiffs to determine whether diversity jurisdiction exists in this court. (Id.)
The proposed Fifth Amended Complaint also changes the nature of the first cause of action from one sounding in breach of contract arising out of the safe deposit lease, to a claim of breach of bailment which can sound in either contract or tort. (Id. at 32-33). It also contains the allegation that “[i]n addition to the duties imposed by the agreement upon TD, TD as bailee has a duty imposed by law to the Bienenstocks, Tappat and the Estate of Helen Sieger to exercise reasonable care in the preservation and protection of the Box and Valuables.” (Id. at 33). The Bank argues that this is a completely new theory sounding in tort and equity, plus there is a new claim based on negligence; the original complaints only asserted claims of gross negligence. (Id.) The proposed Fifth Amended Complaint now also adds a claim for punitive damages against TD Bank. (Id. at 34). While claims for punitive damages were asserted against Halifax, COPS and Integrated in the original pleadings, plaintiff did not seek punitive damages against the Bank. (Id.)
More importantly, defendants also note that the recently filed Declarations of Abraham Sieger and Yaakov Bienenstock describe a verbal agreement which they claim was intended to assign title, ownership, and the Lease of the Box to BAT. (Id. at 38). Not only was this verbal agreement never disclosed during the last eight years of litigation, but the earlier testimony of both Sieger and Bienenstock contradict various statements in their new Declarations. (See discussion supra). The Declarations suggest that this oral agreement was separate from the assignments, as evidenced by the contrast between the assigning language in the documents and their explanation that the intent of the parties was broader than reflected in the actual assignments. Defendants contend that this raises issues implicating New York's Statute of Frauds in that the oral agreements imposed ongoing, unended obligations which neither party could terminate. (TD Am. Opp. at 39 (citing Kaplan v. Old Mut., PLC, No. 08 CV 8366, 2009 WL 10655794, at *3 (S.D.N.Y. July 10, 2009))). Therefore, the Bank argues that additional discovery regarding the content of the new Declarations is definitely necessary. (Id.)
*33 After considering all the evidence presented during the briefing on the motions for summary judgment and the allegations in the proposed Fifth Amended Complaint, this Court finds that discovery would need to be reopened, at the very least, to explore the new Declarations and the new allegations regarding Tappat. This discovery would undoubtedly involve not only documentary discovery but the reopening of some, if not all, of the depositions of the New Plaintiffs. Moreover, because the current motions for summary judgment have only been filed against BAT, if plaintiff were allowed to amend, defendants may well wish to file new motions for summary judgment against the New Plaintiffs and the newly added claims. If the court were to grant BAT's motion to amend, rather than have the court decide the outstanding motions against BAT, considerations of judicial economy favor denying the existing motions and ordering defendants to file new motions for summary judgment based on the Fifth Amended Complaint. Under these circumstances it is hard to see how the defendants will not suffer prejudice in being required to expend additional time and fees to re-litigate these entirely new theories of the case.
Given the undue delay and prejudice that the amendment would cause, the Court respectfully recommends that plaintiff's motion to amend under Rule 15 be denied.
D. Futility
The Bank also contends that because the proposed amendment is not the result of a mistake or error, but rather a deliberate choice – “a tactical decision” made by BAT to prosecute the action in BAT's name only – even if the amendment was allowed, it would not relate back and thus is time barred and futile. (TD Am. Opp. at 2, 20-25). The Bank also asserts futility based on the irrevocability of the 2015 assignments, and the failure of the proposed amendment to assert that Abraham and Chana are bringing the action in their capacity as administrators of the Helen Sieger Estate. (Id. at 25-30).
Plaintiff argues that the amendment is not futile, and specifically that if the assignments are not valid, then it made a mistake and relation back should apply. (Pl.’s Am. Reply62 at 14).
Rule 15(c)(1)(C)(ii) provides that amendments to pleadings that change the party relate back to the date of the original pleading if the party “(ii) knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party's identity.” Fed. R. Civ. P. 15(c)(1)(C)(ii). “While Rule 15(c) is framed in terms of an amendment that would change the party ‘against’ whom a claim is asserted and of the new party's ability to maintain a ‘defense,’ it is also applicable to a proposed change of plaintiffs.” Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d at 19. A “strategic decision” does not constitute a mistake within the meaning of Rule 15(c). Charlot v. Ecolab, Inc., 97 F. Supp. 3d 40, 84 (E.D.N.Y. 2015)
The Court does not have to reach the issue of futility, as it has already recommended that plaintiff's motion to amend under Rule 15 be denied for reasons of undue delay and prejudice. However, it seems clear from the prior pleadings and the affirmative defenses challenging the assignments and raising the notion of necessary parties, of which plaintiff has been aware at least as early as 2016, that plaintiff made a deliberate choice not to amend much earlier in the litigation. A plaintiff faced with challenges to standing and the validity of an assignment cannot reasonably gamble on the court's determination of those challenges and then later claim “mistake” because the law was against them.
Accordingly, for all of these reasons, the Court respectfully recommends that the motion to amend under Rule 15 be denied.
E. Federal Rules of Procedure 17 and 21
BAT also seeks leave to amend pursuant to Fed. R. Civ. P. 17(a)(3) and 21. As the Second Circuit noted in Advanced Magnetics, Inc. v. Bayfront Partners, Inc., the court needs to consider Rule 17 in determining if joinder of a new party is required and if the amendment relates back to the date of the initial filing of the action. 106 F.3d 11, 20 (2d Cir. 1997).
*34 Rule 17 provides that “[a]n action must be prosecuted in the name of the real party in interest.” Fed. R. Civ. P. 17. Subsection (a)(3) of the Rule states:
The court may not dismiss an action for failure to prosecute in the name of the real party in interest until, after an objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action. After ratification, joinder, or substitution, the action proceeds as if it had been originally commenced by the real party in interest.
Fed. R. Civ. P. 17(a)(3). Thus, if an amendment to a pleading is granted under Rule 17 to join an indispensable party, the new parties’ claims relate back for purposes of the statute of limitations.
Substitution under Rule 17(a) “ ‘should be liberally allowed when the change is merely formal and in no way alters the original complaint's factual allegations as to the events or the participants.’ ” Klein on behalf of Qlik Techs., Inc. v. Qlik Techs., Inc., 906 F.3d 215, 226 (2d Cir. 2018) (quoting Advanced Magnetics, Inc. v. Bayfront Partners, 106 F.3d at 20). However, it should be denied if it is in bad faith or would result in “ ‘unfairness to defendants.’ ” Id. (quoting Advanced Magnetics, Inc. v. Bayfront Partners, 106 F.3d at 21).
Plaintiff asserts that, as in Advanced Magnetics, there are no material changes in the factual allegations or legal claims asserted in the proposed amended complaint that would prevent Rule 17(a) substitution. (Pl.’s Am. Reply at 26-27). However, as addressed supra, the changes in the amended pleadings here are not “merely formal” as in Advanced Magnetics and do more than simply substitute the proper parties in interest; they include alterations in the factual allegations and the legal basis for the claims, as discussed above. Compare Advanced Magnetics, 106 F.3d 11.
Moreover, Rule 17 itself contains a time limit in which indispensable parties are expected to join in an action, allowing for the joining of the real party in interest after an objection until “a reasonable time has been allowed for the real party in interest to ratify, join, or be substituted into the action.” Fed. R. Civ. P. 17 (emphasis added). Thus, even if the proposed Fifth Amended Complaint did not alter the factual allegations or claims in any way, there is no way that waiting almost 8 years after defendants challenged standing could be considered a “reasonable time” period for plaintiff to attempt to amend to add parties of which plaintiff has been aware since the beginning of the action. This would clearly result in prejudice to the defendants.
Accordingly, because the Court finds that plaintiff has unduly delayed in seeking to file the proposed amendments and that allowing these amendments to proceed would cause serious prejudice to the defendants, the Court respectfully recommends that plaintiff's motion to amend be denied.
Additionally, it is respectfully recommended that the requests by Halifax, the Bank, and Integrated for legal fees incurred responding to the motion to amend be denied. Although plaintiff's arguments are not meritorious, they are not clearly frivolous or for improper purpose, as is required for sanctions. Fed. R. Civ. P. 11.
V. The Parties’ Motions to Preclude Experts
*35 Given the foregoing analysis recommending dismissal of this action, the Court respectfully recommends that the parties’ cross motions to preclude each other's experts be denied as moot.
VI. Plaintiff's Motion for Spoliation Sanctions
BAT requests that sanctions be imposed against the Bank and Halifax for spoliation of evidence. (BAT SJ Mem.63 at 1). Plaintiff claims that the Bank and Halifax spoliated evidence concerning the Alarm System and its components and asks that the Court strike their Answers as a sanction. (Id. at 22-26). Plaintiff also alleges that TD destroyed videos of the branch during the burglary (id. at 13-15) and that the Bank destroyed the Box. (Pl.’s Reply64 at 51-52).
Spoliation has three elements: “(1) that the party having control over the evidence had an obligation to preserve it at the time it was destroyed; (2) that the [evidence was] destroyed with a culpable state of mind[;] and (3) that the destroyed evidence was relevant to the party's claim or defense such that a reasonable trier of fact could find that it would support that claim or defense.” Dorchester Fin. Holdings Corp. v. Banco BRJ S.A., 304 F.R.D. 178, 182 (S.D.N.Y. 2014) (internal quotation marks and citation excluded). The sanction should be crafted to “deter parties from engaging in spoliation;” “place the risk of an erroneous judgment on the party who wrongfully created the risk;” and “restore ‘the prejudiced party to the same position he would have been in absent the wrongful destruction of evidence by the opposing party.’ ” West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir. 1999) (quoting Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998)).
Here, plaintiff's claim that certain evidence was spoliated, even assuming the truth of this claim, would have no impact on the issue of whether plaintiff had standing to bring the action in the first place or whether the court has subject matter jurisdiction. Moreover, the sanctions plaintiff seeks – namely, the striking of the Bank's and Halifax's Answers or alternatively an adverse inference – would not be appropriate sanctions nor would they serve to “restore” plaintiff to the same position it would have been in absent spoliation, given that the Court is recommending dismissal of the entire case and denial of plaintiff's Motion to Amend.
Although the Court has discretion to impose monetary sanctions for spoliation, such sanctions “are typically tailored to the attorney's fees specifically related to the spoliation.” ELG Utica Alloys, Inc. v. Niagara Mohawk Power Corp., No. 16 CV 1523, 2023 WL 5806327, at *6 (N.D.N.Y. Sept. 7, 2023). However, plaintiff's sanctions motion fails to provide sufficient information for the court to find that the three elements of spoliation have been shown; specifically, there is no showing that the evidence – if it even existed – was destroyed with the requisite state of mind, or that the evidence would have supported plaintiff's claims. Indeed, the motion does not even request an award of fees and costs nor does it provide any specifics as to costs and fees faced because of the alleged spoliation. Thus, the Court respectfully recommends that plaintiff's motion for spoliation sanctions be denied without prejudice to renew should the court allow the case to proceed.
VII. Integrated's Motion for Sanctions
*36 On December 2, 2022, defendant Integrated filed a motion seeking sanctions against BAT and its counsel, pursuant to Rule 11(c) of the Federal Rules of Civil Procedure,65 arguing that there has never been any factual or legal basis to support the claims asserted against Integrated in the Fourth Amended Complaint. (Int. Rule 11 Mem.66 at 1). Integrated notes that when the initial complaint in this matter was filed in state court on August 3, 2015 – three days prior to the expiration of the statute of limitations – Integrated was not named as a defendant and did not become a defendant until the filing of the Fourth Amended Complaint on September 16, 2016. (Id. at 2). Integrated argues that now that discovery has closed, it is clear that the contract between TD Bank and Integrated, which was provided as part of Integrated's Rule 26 disclosures, specifically provided that COPS would provide monitoring services at the Avenue U Branch; Integrated had no contractual duty to and did not provide monitoring services at the Bank; and there was an explicit provision precluding third-party beneficiary liability. (Id. (citing Ex. 1). Moreover, the Bank admitted that Integrated conducted no monitoring activity at the Bank. (Id. at 2-3 (citing Ex. 2)).
Integrated contends that sanctions under Rule 11(b)(2) and 11(b)(3) are warranted here because the contractual exclusion for third-party beneficiaries is determinative and binding of any breach of contract claims against Integrated and there are no facts on the record to demonstrate a claim of gross negligence against Integrated. (Id. at 9 (citing Abacus Fed. Sav. Bank v. ADT Sec. Servs., Inc., 77 A.D.3d 431, 908 N.Y.S.2d 654, 656 (2010) (holding that New York law precludes a finding of gross negligence when an alarm company fails to properly install or monitor an alarm system))).
A. Legal Standard
In the Second Circuit, it is well established that “the decision whether to impose sanctions is not mandatory, but rather is a matter for the court's discretion.” Lorber v. Winston, 993 F. Supp. 2d 250, 253 (E.D.N.Y. 2014) (citing Perez v. Posse Comitatus, 373 F.3d 321, 325 (2d Cir. 2004)). Indeed, the Second Circuit has held that Rule 11 sanctions should be “made with restraint.” Schlaifer Nance & Co. v. Estate of Warhol, 194 F.3d 323, 334 (2d Cir. 1999).
Federal Rule of Civil Procedure 11 focuses on preventing specific enumerated types of misconduct by litigants or their counsel. Under Rule 11(b), an attorney who presents “a pleading, written motion, or other paper” to the court certifies that a reasonable inquiry was performed under the circumstances and “that to the best of the [attorney's] knowledge, information, and belief,” the pleading:
(1) is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; (2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law; (3) the factual contentions have evidentiary support, or ... will likely have evidentiary support after a reasonable opportunity for further investigation or discovery; and (4) the denials of factual contentions are warranted on the evidence ... and are reasonably based on belief or a lack of information.
Fed. R. Civ. P. 11(b). The Supreme Court has held that the Rule's central purpose “is to deter baseless filings in district court and ... streamline the administration and procedure of the federal courts.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990). Thus, “Rule 11 imposes a duty on attorneys to certify that they have conducted a reasonable inquiry and have determined that any papers filed with the court are well grounded in fact, legally tenable, and ‘not interposed for any improper purpose.’ ” Id. In light of the relatively narrow scope of Rule 11, sanctions should be “limited to what is ‘sufficient to deter repetition of such conduct.’ ” Margo v. Weiss, 213 F.3d 55, 64 (2d Cir. 2000) (quoting Fed. R. Civ. P. 11(c)(2)).
*37 Since the “inquiry must be ‘reasonable under the circumstances,’ liability for Rule 11 violations requires only a showing of objective unreasonableness on the part of the attorney ... signing the papers.” In re Australia & New Zealand Banking Grp. Ltd. Sec. Litig., 712 F. Supp. 2d 255, 263 (S.D.N.Y. 2010) (quoting ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 579 F.3d 143, 150 (2d Cir. 2009)); Margo v. Weiss, 213 F.3d at 65 (noting that in general, “the standard for triggering the award of fees under Rule 11 is objective unreasonableness”). This inquiry is “not based on the subjective beliefs of the person making the statement.” Storey v. Cello Holdings, L.L.C., 347 F.3d 370, 387 (2d Cir. 2003).
Whether sanctions under Rule 11 are “appropriate” is “distinct from the underlying merits of a claim.” East Gluck Corp. v. Rothenhaus, 252 F.R.D. 175, 179 (S.D.N.Y. 2008) (citing Abdelhamid v. Altria Group, Inc., 515 F. Supp. 2d 384, 392 (S.D.N.Y. 2007) (holding that “[w]hen divining the point at which an argument turns from merely losing to losing and sanctionable[,] courts must resolve all doubts in favor of the signer of the pleading” (internal citations and quotation marks omitted))). Further, the Advisory Committee Notes to Rule 11 provide that a Rule 11 motion should not be used “ ‘to test the legal sufficiency or efficacy of allegations in the pleadings,’ ” since other motions “ ‘are available for those purposes.’ ” East Gluck Corp. v. Rothenhaus, 252 F.R.D. at 179 (quoting Fed. R. Civ. P. 11 Advisory Committee's Note to 1993 Amendment). Thus, “not all unsuccessful arguments are frivolous or warrant sanction.” Mareno v. Rowe, 910 F.2d 1043, 1047 (2d Cir. 1990).
In order to demonstrate that a pleading is frivolous under Rule 11(b)(2), it must be “ ‘patently clear that a claim has absolutely no chance of success under the existing precedents, and where no reasonable argument can be advanced to extend, modify or reverse the law as it stands.’ ” East Gluck Corp. v. Rothenhaus, 252 F.R.D. at 179 (quoting Park v. Seoul Broad. Sys. Co., No. 05 CV 8956, 2008 WL 619034, at *1 (S.D.N.Y. Mar. 6, 2008)); see also Star Mark Mgmt., Inc. v. Koon Chun Hing Kee Soy & Sauce Factory, Ltd., 682 F.3d 170, 177 (2d Cir. 2012) (quoting Fishoff v. Coty Inc., 634 F.3d 647, 654 (2d Cir. 2011)) (holding that “[w]ith respect to legal contentions, ‘[t]he operative question is whether the argument is frivolous, i.e., the legal position has no chance of success, and there is no reasonable argument to extend, modify or reverse the law as it stands’ ”) (internal quotation marks and citation omitted).
A violation of Rule 11(b)(3) occurs when, “after reasonable inquiry, a competent attorney could not form a reasonable belief that the pleading is well grounded in fact.” Kropelnicki v. Siegel, 290 F.3d 118, 131 (2d Cir. 2002) (internal citations omitted). With respect to the factual contentions in the pleadings, “ ‘sanctions may not be imposed unless a particular allegation is utterly lacking in support.’ ” East Gluck Corp. v. Rothenhaus, 252 F.R.D. at 179 (quoting Storey v. Cello Holdings, L.L.C., 347 F.3d at 388) (internal citation omitted); see also In re Australia & New Zealand Banking Grp. Ltd. Sec. Litig., 712 F. Supp. 2d at 263 (quoting Kiobel v. Millson, 592 F.3d 78, 81 (2d Cir. 2010)) (holding that “[a]n erroneous statement of fact within a pleading ‘can give rise to the imposition of sanctions only when the particular allegation is utterly lacking in support’ ”) (internal citation omitted). The Second Circuit has made it clear that “ ‘Rule 11 neither penalizes overstatement nor authorizes an overly literal reading of each factual statement.’ ” Kiobel v. Millson, 592 F.3d at 83 (quoting Navarro–Ayala v. Hernandez–Colon, 3 F.3d 464, 467 (1st Cir.1993)).
B. Analysis
*38 In its Memorandum of Law in Opposition to Integrated's motion for summary judgment, BAT submits a two-paragraph response to the Rule 11 sanctions motion, contending that there is no basis for imposing sanctions and that all of plaintiff's arguments in this case were made “in good faith and with valid legal bases.” (BAT Int. Opp.67 at 19). BAT cites the conduct of one of Integrated's employees as “a critical part of the security response protocol being set to ignore” the cutting of the phone lines. (Id.) In Reply, Integrated contends that the purported “critical part” was the forwarding of an email with instructions from the Bank, and that are no facts to demonstrate that Integrated played any role in programming the alarm system and had no knowledge of the programming protocols implemented by the Bank, because that was not part of Integrated's obligation under the contract. (Int. SJ Reply68 at 20). In response to BAT's argument that Integrated owed a duty to the Bank's customers, Integrated argues that there is “no statutory, legal, or public policy that require[d] Integrated to undertake the full panoply of alarm system supervision and monitoring when it sign[ed] a contract with TD Bank.” (Id. at 20-21).
While the Court has recommended dismissal of plaintiff's claims due to a lack of standing, the Court is mindful of the distinction between the “underlying merits of a claim,” often demonstrated through the discovery process, and whether Rule 11 sanctions are “appropriate.” East Gluck Corp. v. Rothenhaus, 252 F.R.D. at 179. The “operative question” is whether plaintiff's legal arguments at the time of pleading were “frivolous, i.e., the legal position has ‘no chance of success.’ ” Fishoff v. Coty Inc., 634 F.3d at 654 (quoting Morley v. Ciba–Geigy Corp., 66 F.3d 21, 25 (2d Cir. 1995)). Here, it does not appear to this Court that BAT acted other than in good faith in pursuing its claims against Integrated– whether ultimately successful or not.
Given all of the circumstances, this Court declines to recommend that Integrated's motion for Rule 11 sanctions be granted.
CONCLUSION
As explained above, the Court respectfully recommends dismissal of the action due to lack of subject matter jurisdiction and denial of plaintiff's motion to amend. The Court also respectfully recommends that the motions to preclude experts, plaintiff's motion for spoliation sanctions, and Integrated's motion for sanctions be denied.
Any objections to this Report and Recommendation must be filed with the Clerk of the Court within fourteen (14) days. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b)(2); see also Fed. R. Civ. P. 6(a) (providing the method for computing time). Failure to file objections within the specified time waives the right to appeal the District Court's order. See, e.g., Caidor v. Onondaga Cty., 517 F.3d 601, 604 (2d Cir. 2008) (explaining that “failure to object timely to a ... report [and recommendation] operates as a waiver of any further judicial review of the magistrate [judge's] decision”).
SO ORDERED.
All Citations
Slip Copy, 2024 WL 4485397
Footnotes
Defendant ADT LLC was voluntarily dismissed by BAT on December 15, 2015. (ECF No. 11). On that same date, December 15, 2015, plaintiff filed an Amended Complaint, naming Security and Data Technologies, Inc. as a defendant. Security and Data Technologies was then voluntarily dismissed from the action on February 5, 2016. (ECF Nos. 12, 21).
Citations to “Compl.” refer to the Complaint captioned BAT LLC v. TD Bank, N.A., et al, Index Number 509508/2015 filed in Kings County Supreme Court on August 3, 2015. (ECF No. 1-3).
In its Rule 56.1 Statement filed in connection with its motion for summary judgment, Halifax represents that it is incorrectly named in the action as Halifax Security, Inc., when its actual name is “Halifax Security Holdings, Inc.” (ECF No. 264-1).
TD Bank's motion to amend its answer to include counterclaims was denied on September 28, 2018, as was BAT's motion to strike the proposed counterclaims and associated motion papers. (ECF No. 144).
Integrated's motion includes a request for sanctions against BAT. (ECF No. 294).
Citations to “FAC” refer to plaintiff's Fourth Amended Complaint, filed on September 15, 2016 (ECF No. 46).
Citations to “BAT TD Opp.” refers to plaintiff's Memorandum of Law in Opposition to the Motion for Summary Judgment of the Defendant TD Bank N.A. (ECF No. 316).
Citations to “COPS 56.1 Stmt” refer to Lydia Security Monitoring Inc.’s Rule 56.1 Statement filed on August 9, 2022 (ECF No. 258-1).
Citations to “Pl.’s COPS Resp.” refer to Plaintiff's Response to Lydia Security Monitoring Inc., d/b/a COPS Monitoring's Rule 56.1 Statement of Undisputed Facts, filed on September 23, 2022 (ECF No. 277-2).
Citations to “Pl.’s 56.1 Stmt” refer to Plaintiff's Rule 56.1 Statement, filed August 10, 2022 (ECF No. 267).
Citations to “Integrated 56.1 Stmt” refer to Integrated Security Systems’ Rule 56.1 Statement of Undisputed Facts filed on August 9, 2022 (ECF No. 263-1).
Citations to “TD Resp.” refer to TD Bank's Responses and Objections to Plaintiffs’ Rule 56.1 Statement, filed on September 23, 2022 (ECF No. 280-8).
The Safe Deposit Rules are attached to TD Bank's Response as Exhibit A.
Citations to “C. Bienenstock Tr.” refer to the transcript of Chaya Bienenstock's deposition taken on April 4, 2017 (ECF No. 267-9).
The Bank disputes certain allegations regarding Mr. Palmieri's credentials and opinions, contending that many are not factual and unsupported by admissible evidence. (TD Resp. ¶¶ 10-11).
Palmieri has issued several revised appraisals of the diamonds since being designated as BAT's expert witness, all above $7,000,000. (TD 56.1 Stmt ¶¶ 117-132; but see Pl.’s TD Resp. 117-132).
Citations to “TD 56.1 Stmt” refers to TD Bank, N.A.’s Statement of Material Facts filed on August 9, 2022 (ECF No. 261-1).
Citations to “Pl.’s TD Resp.” refers to Plaintiff's Response to TD Bank's Rule 56.1 Statement of Undisputed Material Facts, filed September 23, 2022 (ECF No. 276-1).
Plaintiff admits that the Police DD5 report makes these statements. (Pl.’s COPS Resp. ¶ 3).
Citations to “Halifax 56.1 Stmt” refer to Halifax Security Holdings, Inc.’s Rule 56.1 Statement filed on August 9, 2022 (ECF No. 262-1).
As addressed infra at pp. 47-50, BAT submitted new assignments executed long after the close of discovery.
Citations to “TD Mem.” refer to TD Bank, N.A.’s Brief in Support of Summary Judgment Pursuant to F.R.C.P. 56, filed March 3, 2023 (ECF 306-1).
Citations to “Integrated Mem.” refer to the Defendant Integrated Security Systems Brief in Support of Motion For Summary Judgment, filed March 3, 2023 (ECF No. 309-1).
Citations to “Halifax Mem.” refer to the Memorandum of Law in Support of Defendant Halifax Security Holdings, Inc.’s Motion for Summary Judgment, filed March 3, 2003 (ECF No. 305-2).
Citations to “COPS Mem.” refer to the Memorandum of Law in Support of Lydia Security Monitoring Inc.’s Motion to Dismiss the Third and Fourth Amended Complaints, dated February 26, 2023 (ECF No. 304-2).
Citations to “Integrated Sanctions Mot.” refer to the Defendant Integrated Security Systems Motion For Sanctions, filed March 3, 2023 (ECF No. 294).
TD Bank's arguments that the assignments to BAT are invalid for a variety of reasons were joined in by Halifax (ECF No. 305-2 at 25), Integrated (ECF No. 309-1 at 19), and COPS (ECF No. 304-2 at 16 n.4).
But see TD 56.1 Stmt ¶ 30, where it states that Greisman did not ask Ms. Sieger “whose box it was.”
Citations to “Greisman Tr.” refer to the transcript of Meyer Greisman's deposition taken on July 26, 2017 (ECF No. 261-16).
Citations to “A. Sieger Tr.” refer to the transcript of Abraham Sieger's deposition taken on July 27, 2017 (ECF No. 261-22).
Citations to “Brachfeld Tr.” refer to the transcript of Chana Brachfeld's deposition taken on November 5, 2018 (ECF No. 261-27).
The Court notes that many of TD Bank's statements contain multiple parts. Plaintiff has responded to others by breaking them into separate subparts or separate sentences. (See, e.g., Pl.’s TD Resp. ¶¶ 1, 2, 3, 6, 7, 47, 48, 49, 50).
Even if Greisman was mistaken in testifying that he never spoke to Mr. Sieger, this statement and his other testimony demonstrate that Greisman believed the diamonds belonged to Helen Sieger. (See discussion infra at pp. 38-42).
On May 7, 2017, Mr. Palmieri, who has since been designated as BAT's expert witness, issued a second appraisal report in which he valued the approximate wholesale value of the diamonds to be $7,208,780. (TD 56.1 Stmt ¶ 119 (citing 5/7/17 Palmieri Rep., Ex. 34); Pl.’s TD Resp. ¶ 119 (admits)). Thereafter, on November 20, 2018, Mr. Palmieri authored a third appraisal report and addendum, providing a wholesale value of $7,208,780 for the diamonds. (TD 56.1 Stmt ¶ 120 (citing 11/20/18 Palmieri Rep., Ex. 35); Pl.’s TD Resp. ¶ 120). On February 10, 2020, Mr. Palmieri authored an addendum to his 2011 report, containing reference to two xxx round brilliant diamonds premium valued at $42,603 (TD 56.1 Stmt ¶ 121 (citing 2/10/20 Palmieri Rep., Ex. 36); Pl.’s TD Resp. ¶ 121), with a total valuation of $7,251,383. (Id.) After his deposition was taken on April 21, 2020, Mr. Palmieri issued a supplemental appraisal report, dated April 25, 2020, valuing the approximate wholesale value of the diamonds at $7,201,887. (TD 56.1 Stmt ¶¶ 122, 123 (citing 4/25/20 Palmieri Rep., Ex. 38); Pl.’s TD Resp. ¶¶ 122, 123 (admits)). Mr. Palmieri was deposed a second time on June 29, 2021, after which he submitted a supplemental “corrected” report to the April 25, 2020 report, reducing the wholesale value of the diamonds to $7,054,347. (TD 56.1 Stmt ¶¶ 124, 125 (citing 9/5/21 Palmieri Rep., Ex. 40); Pl.’s TD Resp. ¶¶ 124, 125 (admits)).
On June 22, 2022, Mr. Palmieri was deposed a third time and when asked to explain the differences between his 2020 and 2021 reports, he testified that he decided to change his valuation after the earlier deposition, and deducted 15% across the board. (TD 56.1 Stmt ¶ 128; but see Pl.’s TD Resp. ¶ 128). When asked why he decided to change the percentage discount, he testified that he changed it because defendant's counsel “ ‘was making an issue of that, and I thought that, you know, first of all, there's no one price for a diamond. You can talk to any expert you like. There is no one price for a diamond or one value for a diamond. There are many, many different prices.’ ” (TD 56.1 Stmt ¶ 129 (quoting Palmieri Tr.34 at 27-28); but see Pl.’s TD Resp. ¶ 129 (disputes)). Palmieri explained that he “ ‘trued up’ ” the percentages because it was a “ ‘major issue’ ” for defense counsel, who was asking “ ‘pointed’ ” questions about why he had not used liquidation value, “ ‘so we gave it to you. We were trying to please you.’ ” (TD 56.1 Stmt ¶¶ 130, 131 (quoting Palmieri Tr. at 30-33); but see Pl.’s TD Resp. ¶¶ 130, 131 (admitting in part and disputing in part).
As mentioned supra, TD Bank's arguments are joined in by Integrated, Halifax, and COPS.
All three Assignments assert that they were made in consideration of the payment of ten dollars. (TD 56.1 Stmt Exs. 23-25). Despite this language in the Assignments, Abraham Sieger, testified during his deposition that no consideration was exchanged for these Assignments. (TD 56.1 Stmt ¶ 101; but see Pl.’s TD Resp. ¶ 101 (disputing this characterization of the testimony)). The Bienenstocks also confirmed that they had not received anything. (TD 56.1 Stmt ¶ 114; but see Pl.’s TD Resp. ¶ 114 (disputes)).
The Bank also argues that the doctrine of prudential standing prohibits BAT from asserting claims seeking to enforce the terms of the safe deposit box contract since it is neither a party or third-party beneficiary to the contract. (Id. at 13 (citing Hillside Metro. Assocs., LLC v. JPMorgan Chase Bank, Nat. Ass'n, 747 F.3d 44, 50 (2d Cir. 2014))).
Citations to “Y. Bienenstock Tr.” refer to the transcript of Yaakov Bienenstock taken on April 4, 2017 (ECF No. 261-18).
Citations to “TD Reply” refer to TD Bank, N.A.’s Brief in Reply and in Further Support of Summary Judgment Pursuant to F.R.C.P. 56 (ECF No. 327).
The Bank also contends that even if the 2015 Assignment assigned rights to the Lease, BAT would be subject to all of the limitations under the contract to which the Bienenstocks were subject, including the contract provisions advising the leaseholder to obtain insurance and maintain a list of all your property in the Box, along with proof of ownership. (TD Mem. at 13-14 (citing Safe Deposit Lease Contract, Ex. 29)). Since there is no dispute that the Bienenstocks never obtained insurance for the items in the Box or even owned any of the items in the Box, the Bank argues that they would not be able to collect under the contract and therefore, BAT would also not have standing to collect even if the assignment was valid. (Id. (citing O'Brien v. Argo Partners, Inc., 736 F. Supp. 2d 528, 535 (E.D.N.Y. 2010), aff'd, 426 F. App'x 36 (2d Cir. 2011))).
The Bank contends that, as in Rizack, because the 2015 Bienenstock Assignment failed to transfer the right to the Lease, a subsequent assignment to correct this language would not cure plaintiff's lack of standing at the commencement of the action, and furthermore, any claims under the new assignment would now be time barred. (Id.) See Nomura Asset Acceptance Corp. Alternative Loan Trust v. Nomura Credit & Capital, Inc., 139 A.D.3d 519, 520, 31 N.Y.S.3d 863 (1st Dep't 2016) (holding that the claim was untimely and could not relate back to the defective summons because no valid action was commenced by the filing of the original summons) (citing Goldberg v. Camp Mikan–Recro, 42 N.Y.2d 1029 (1977); Southern Wine & Spirits of Am., Inc. v. Impact Envtl. Eng'g, PLLC, 80 A.D.3d 505, 505-06 (1st Dep't 2011)). See discussion of the new assignments infra pp. 47-50.
Citations to “TD Am. Opp.” refer to TD Bank, N.A.’s Memorandum of Law in Opposition to Plaintiff's Motion to Amend, filed November 3, 2023 (ECF No. 355).
In its opposition, BAT also references an oral agreement prior to the written assignments, and assignments it produced from 2022, all of which are discussed infra. (BAT TD Opp. at 25).
Despite claiming to be a part owner of Tappat, Chana Brachfeld did not sign the Tappat Assignment. (TD 56.1 Stmt ¶ 100; Pl.’s TD Resp. ¶ 100).
Sieger's testimony is not only disputed by BAT, but it is also belied by records from the Department of State Division of Corporations Entity Information for Tappat, which states that the initial filing for Tappat was February 27, 2006 (ECF No. 261-29), and by records from Flushing Bank, described infra, which show that Helen Sieger opened an account at the Bank on December 31, 2007, with additional transactions from 2008. (ECF No. 261-28).
Although defunct corporations can pursue certain claims after dissolution, it is generally in the context of the “winding up” of the corporation's business. However, “New York courts have held that... the wind up period [for corporations] is limited to a ‘reasonable period of time.’ ” Next Millenium Realty, LLC v. Adchem Corp., 690 F. App'x 710, 716 (2d Cir. 2017) (quoting Lance Int'l, Inc. v. First Nat'l City Bank, 86 A.D.3d 479, 927 N.Y.S.2d 56, 58 (1st Dep't 2011)). Here, there are serious questions as to whether the 2015 Tappat Assignment could properly be considered “winding up” since Tappat had been dissolved four years earlier.
Ms. Brachfeld testified that she saw the diamonds shortly after Tappat was opened and the diamonds were purchased— “within a few months, maybe a year. I don't remember.” (Brachfeld Tr. at 31-32).
Citations to “A. Sieger 9/23/2022 Decl.” refer to the Declaration of Abraham Sieger, dated September 23, 2022 (ECF No. 276-10).
Citations to “A. Sieger 5/3/2023 Decl.” refer to the Declaration of Abraham Sieger dated May 3, 2023 (ECF No. 317). The date of the Declaration is mislabeled as May 3, 2003.
While certain of the facts asserted in these new Declarations are consistent with the earlier version of events testified to during discovery, there are significant changes in the factual assertions provided by Mr. Sieger and Mr. Bienenstock that were never previously disclosed.
Citations to “Bienenstock Decl.” refer to the Declaration Yaakov Bienenstock dated May 3, 2023 (ECF No. 319-7).
This language is significantly broader than the language in the 2015 written assignments and appears to be in direct response to the arguments raised challenging the original assignments.
If the District Court disagrees with this Court's analysis of standing, it is respectfully recommended that the defendants’ remaining issues in support of summary judgment be referred back to this Court for a Report and Recommendation.
All of the defendants join in opposing plaintiff's motion to amend. The oppositions submitted by Halifax, the Bank, and Integrated all contain requests for the legal fees incurred for responding to the motion to amend. (ECF Nos. 355, 356, 358).
Citations to “Pl.’s Am. Mem.” refer to Plaintiff's Memorandum of Law in Support of Motion For Leave to Amend the Fourth Amended Complaint, filed October 10, 2023 (ECF No. 354-1).
This argument is essentially a red herring in that the main challenge to plaintiff's standing and the court's jurisdiction is not the champerty defense (which the court found no reason to resolve) but it is the lack of valid assignments which plaintiff has been aware of since the filing of the answer to the original complaint.
Citations to “Meier Decl.” refer to the Declaration of Katie A. Mabanta Meier, counsel to COPs, dated Nov. 3, 2023 (ECF No. 357).
See discussion supra at pp. 32-33.
Even if the defendants had not raised the defense of champerty, the various affirmative defenses challenging the validity of the assignments and BAT's standing to bring these claims should have alerted BAT to the need to bring in indispensable parties years before the motions for summary judgment were filed.
As noted supra, a dissolved corporation can only act in connection with a “winding up” of its business. Hence, in order for Tappat to have validly executed the most recent assignment, there would have to be a finding that in fact, it was operating for the purpose of winding up its business.
As noted supra, Mr. Sieger testified that the whole purpose of Tappat was to acquire and hold diamonds.
Citations to “Pl.’s Am. Reply” refer to Plaintiff's Reply Memorandum of Law in Further Support of Motion for Leave to Amend the Fourth Amended Complaint (ECF No. 360).
Citations to “BAT SJ Mem.” refer to Plaintiff's Memorandum of Law in Support of Motion For Summary Judgment Against TD Bank, N.A. and For a Finding of Spoliation Against Defendants TD Bank, N.A. and Halifax Security Inc., filed May 4, 2023 (ECF No. 322).
Citations to “Pl.’s Reply” refer to Plaintiff's Reply Memorandum of Law in Further Support of Motion for Summary Judgment on its Claims Against Defendant TD Bank, N.A. and for a Finding of Spoliation Against Defendants TD Bank, N.A. and Halifax Security, Inc. (ECF No. 346).
Integrated filed a declaration with the motion confirming their compliance with Rule 11’s “safe harbor” provision. (ECF No. 294-4); see Fed. R. Civ. P. 11(c)(2) Advisory Committee's Note to 1993 Amendment.
Citations to “Int. Rule 11 Mem.” refer to Defendant Integrated Security Systems Motion for Sanctions Pursuant to Fed. Rule Civ. P. 11(b)(2) and (b)(3), filed December 2, 2022 (ECF No. 294).
Citations to “BAT Int. Opp.” refer to Plaintiff's Memorandum of Law in Opposition to the Motion for Summary Judgment and Rule 11 Sanctions of Defendant Integrated Security Systems filed on May 3, 2023 (ECF No. 312).
Citations to “Int. SJ Reply” refer to Defendant Integrated Security Systems’ Reply Memorandum of Law in Support of Its Motion for Summary Judgment and Reply in Support of Motion for Rule 11 Sanctions filed on July 5, 2023 (ECF No. 337).