Morrison Cohen Scores Two Novel Dismissals

September 12, 2016 - Morrison Cohen partners Y. David Scharf and Terence K. McLaughlin recently notched successive dismissals of two cases, each brought by the same Plaintiff but assigned to two separate Justices of the New York State Supreme Court, New York County.  In each case, Plaintiff (the law firm JSBarkats PLLC) asserted claims for payment of legal fees against US Suite LLC and/or its affiliate US Suite Management LLC (the “Suite Entities”) together with other defendants arising out of Barkats' alleged engagement in a separate litigation.  What makes the cases noteworthy is the novel “derivative” nature of the firm's representation of US Suite LLC and US Suite Management LLC, which the Firm succeeded in authorizing by three separate Courts. 

US Suite LLC is the prior owner of a commercial property located at 440 West 41st Street in west midtown Manhattan's.  Morrison Cohen client U-Trend  New York Investment LP (“U-Trend”), a limited partnership comprised of approximately 200 Israeli individuals and pensioners, is an indirect 35% owner of US Suite LLC.  In July 2014, U-Trend initiated an action before the Honorable Charles E. Ramos in the Commercial Division of the New York State Supreme Court for New York County derivatively on behalf of US Suite LLC.  Since that time, U-Trend and the other stakeholders in US Suite LLC have been embroiled in contentious litigation before Justice Ramos.  At the time the Barkats action was commenced in 2015, US Suite LLC purported to be represented by former JSBarkats partner M. Teresa Daley.   After Ms. Daley's conflict was identified, the other stakeholders in US Suite LLC were unwilling to work with U-Trend to appoint new and independent counsel.  Accordingly, to prevent the Suite Entities from defaulting, the Firm successfully petitioned Justice Ramos to allow U-Trend (through its counsel) to represent the interests of US Suite derivatively.  The other stakeholders were invited to do the same (through their respective counsels), but none did so.  Both Justice Eileen Rakower and Ellen Coin, in turn, accepted the firm's derivative representation on behalf of the Suite Entities and granted the Firm's motions to dismiss all claims in both actions as against the Suite Entities.  Among other arguments accepted by the Courts, the Firm submitted documentary evidence pursuant to CPLR 3211(a)(1) demonstrating that the purported retention of the Barkats firm by the Suite Entities had not been effectuated in compliance with their respective operating agreements.