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FILED: NEW YORK COUNTY CLERK 09/03/2015 05:31 PM INDEX NO. 653476/2013
NYSCEF DOC. NO. 73 RECEIVED NYSCEF: 09/03/2015
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- - -- - - -- - - --- - - -- - - -- - - - --- - - - -- - - - - -- - - -X
PETER STERN and EXPRESS TRADE CAPITAL,
INC., Index No. 653476113
Plaintiffs,
-against-
OLEG ARDACHEV, AIR CARGO SERVICES L.L.C.,
DELEX INC., DELEX AIR CARGO, LLC, a Delaware
limited liability company, and DELEX AIR CARGO,
LLC, a Washington limited liability company,
Defendants.
-----------------------------------------X
PLAINTIFFS' MEMORANDUM OF LAW
IN OPPOSITION TO MOTION TO DISMISS
PRELIMINARY STATEMENT
By this motion, the Defendants ask that the Plaintiffs' former counsel's accidental non-
attendance at the August 3, 2015 conference relieve the Defendants of their obligations to pay
more than $500,000 that the Defendants owe based on their breach of contract and commission
of fraudulent transfers.
As explained below, New York law does not authorize dismissal of a party's meritorious
claims based on an accidental calendaring mistake made by counsel.
As explained below, the Defendants' motion to dismiss should be denied.
ARGUMENT
THERE IS NO BASIS FOR DISMISSAL. PLAINTIFFS' COUNSEL'S
NON-APPEARANCE ON AUGUST 3, 2015 WAS DUE TO AN INNOCENT
CALENDARING MISTAKE AND THE PLAINTIFFS HAVE SHOWN THAT
THEY HAVE MERITORIOUS CLAIMS
The Defendants' motion to dismiss should be denied because the motion record is clear
that (1) the Plaintiffs' counsel's non-appearance at the August 3, 2015, conference was due to an
innocent calendaring mistake on the part of counsel, and (2) the Plaintiffs have substantial
meritorious claims.
There is a "strong public policy" in New York to "dispose of cases on their merits."
Dokmecian v. ABN North Am., Inc., 304 A.D.2d 445, 758 N.Y.S.2d 638 (1st Dep't 2003);
Mediavilla v. Gurman, 272 A.D.2d 146, 707 N.S.Y.S.2d 432,434 (1st Dep't 2000).
Consistent with New York's strong public policy in favor of deciding cases on their
merits, the First Department has held, repeatedly, that a counsel's non-appearance at a
conference cannot result in a claim's dismissal if (1) there is a reasonable excuse for counsel's
mistake and (2) the client's claim has merit. See Dokmecian, 304 A.D.2d 445, 758 N.Y.S.2d
638; Empire Entertainment Group, LLC v. Wanderlust Pictures, Inc., 307 A.D.2d 811, 763
N.Y.S.2d 296 (1st Dep't 2003); Cruz v. Bronx Lebanon Hasp. Ctr., 73 A.D.3d 597, 598, 905
NY.2d 135 (1st Dep't 2010).
Indeed, the First Department has consistently reversed trial court orders that dismissed
meritorious pleadings when the dismissal was based on a counsel's inadvertent failure to attend
one or more court conferences.
2
Although the Defendants' moving papers do not discuss any authorities on point, set forth
below is a discussion of six (6) First Department decisions that are on point and establish that the
Defendants' motion to dismiss should be denied.
First, in Dokmecian, supra, the First Department reversed the dismissal of a complaint
due to counsel's failure to appear at a conference because he inadvertently scheduled the wrong
date. 758 N.Y.S.2d at 639. The First Department held that "[c]ounsel's failure to appear at both
the originally scheduled preliminary conference and on its adjourned date amounted to excusable
law office failure." !d. (citations omitted). The court further held that such law office failure,
coupled with an affidavit of merit from the client, required that the client's action be decided on
the merits. !d. Accordingly, the trialcourt's dismissal of the action due to counsel's failure to
attend the court conference was reversed. !d.
Second, in Mediavilla, supra, the First Department reversed the denial of a motion to
vacate a dismissal where the default was based on counsel's failure to appear at a conference.
The court held that counsel's law office failure, which was due to a clerical error at the law
office, coupled with an affidavit of merit from the client, required that the client's action proceed
on the merits. 707 N.Y.S.2d at 434.
A third example of reversal is found in American Audio Service Bureau Inc. v. AT&T
Corp., 33 A.D.3d 473, 823 N.Y.S.2d 25 (1st Dep't 2006), a case in which the First Department
reversed the denial of a motion to vacate a dismissal of a complaint, where the dismissal was
based in large part on the plaintiffs counsel's non-appearance at two status conferences. As the
court explained: "[t]he motion to vacate the dismissal ... should have been granted by the court
in light of the strong public policy of this State to dispose of cases on their merits .... The
3
record ... does not demonstrate a pattern of delay that would justify dismissal of plaintiffs
case." 823 N.Y.S.2d at 28 (citations omitted).
A fourth example of reversal is Empire Entertainment Group, L.L. C. v. Wanderlust
Pictures, Inc., 307 A.D.2d 811, 763 N.Y.S.2d 296 (1st Dep't 2003). In Empire, the First
Department reversed the entry of default that was entered based on counsel's failure to attend
four conferences because, as the appellate court held: "it was an improvident exercise of the
court's discretion to strike defendants' answer ... particularly where there was no evidence of
willfulness." 763 N.Y.S2d at 297.
At least another two First Department decisions hold the same - that a motion seeking to
dismiss a meritorious pleading based on counsel's inadvertent mistake resulting in a missed court
conference must be denied. See Cruz v. Bronx Lebanon Hasp. Ctr., 73 A.D.3d 597, 598, 905
N.Y.S.2d 135, 136 (1st Dep't 2010) (citations omitted) ("Here, plaintiff demonstrated that her
failure to appear at the scheduled conference was neither willful nor part of a pattern of dilatory
behavior, but the result of inadvertent law office failure .... Furthermore, plaintiffs affidavit
was sufficient to establish a meritorious claim .... "); Barsel v. Green, 264 A.D.2d 649, 695
N.Y.S.2d 350, 350 (1st Dep't 1999) (citations omitted) (counsel's "failure to appear at the
pretrial conference was properly excused upon a showing that such failure was due to ... an
oversight on the part of their attorneys in entering the date of the conference in their
calendars."). 1
1
The one decision relied upon by the Defendants, Yang Gon Cha v. Warwick Hotel, 272 A.D.2d 154, 707 N.Y.S.2d
428 (1st Dep't 2000), is clearly distinguishable and does not support the relief requested. In Yang Gon, unlike
here, the reason why the third-party defendant's answer was stricken was because that party had failed to comply
with an order conditionally striking its answer. Specifically, the court in Yang Gon had issued "an order
conditionally striking [defendant's] answer" if certaindisclosure was not provided within thirty (30)days. 707
N.Y.S.2d at 429. Despite the conditional order, the disclosure was never made. In stark contrast toYang Gon,
this Court has not issued a conditional order in the present case. Further, inYang Gon, unlike here, the party at
issue had failedto show that it had a meritorious pleading. Here, however, the Plaintiffs haveestablished that
they have meritorious claims.
4
The many above authorities are controlling here.
Here, the Plaintiffs have shown a reasonable excuse for counsel's non-appearance at the
August 3, 2015, conference. The accompanying Affirmation of the Plaintiffs' counsel, David
Estrakh, explains that counsel's non-appearance at the August 3, 2015, conference was due to an
inadvertent calendaring error. Counsel believed that the conference was scheduled for the next
day, August 4, 2015. There was no willfulness or intentional misconduct on the part of the
Plaintiffs and their counsel. This was simply an accidental calendaring mistake.
In addition, the Plaintiffs have shown that they have meritorious claims. The
accompanying Affidavit of Plaintiff Peter Stern ("Mr. Stern") explains that Mr. Stern is owed
$500,000 due to the Defendants' failure to pay for the purchase of Mr. Stern's 50% ownership
interest in Defendant Air Cargo Services, LLC.
And the accompanying Affidavit of Douglas Milo, CPA ("Mr. Milo") - the tax preparer
for Air Cargo Services, LLC - corroborates both Peter Stern's Affidavit and the Plaintiffs'
claims in this action. Mr. Milo's Affidavit explains that there was, in fact, a contract between
Peter Stern and Oleg Ardachev, pursuant to which Oleg Ardachev purchased Peter Stern's 50%
ownership interest.
Thus, the Plaintiffs have established a reasonable excuse for not appearing at the August
3, 2015, conference, and the Plaintiffs have also established that they have meritorious claims.
CONCLUSION
The Defendants owe more than $500,000 due to, among other things, their breach of
contract and commission of fraudulent transfers.
The Plaintiffs should not suffer the harsh sanction of dismissal of their meritorious and
valuable claims due to an innocent calendaring mistake made by counsel.
5
In accordance with New York's public policy of deciding cases on their merits, the
Plaintiffs should be permitted to conduct discovery and obtain relief on their claims.
For all of the foregoing reasons, the Defendants' motion to dismiss should be denied.
Dated: September 3, 2015
Respectfully submitted,
DIAMOND McCARTHY LLP
Attorneys for Plaintiffs
By: .
d./~
./J~
.0
~--· : --------·
1Lon
\ .f Seid~tl,
. ~
Esq.
David M. Rubinstein
620 Eighth A venue, 39th Floor
New York, New York 10018
Tel. (212) 430-5400
Fax (212) 430-5499
lseidman@diamondmccarthy. com
drubinstein@diamondmccarthy. com
6
Preview
FILED: NEW YORK COUNTY CLERK 09/03/2015 05:31 PM INDEX NO. 653476/2013 NYSCEF DOC. NO. 73 RECEIVED NYSCEF: 09/03/2015 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK - - -- - - -- - - --- - - -- - - -- - - - --- - - - -- - - - - -- - - -X PETER STERN and EXPRESS TRADE CAPITAL, INC., Index No. 653476113 Plaintiffs, -against- OLEG ARDACHEV, AIR CARGO SERVICES L.L.C., DELEX INC., DELEX AIR CARGO, LLC, a Delaware limited liability company, and DELEX AIR CARGO, LLC, a Washington limited liability company, Defendants. -----------------------------------------X PLAINTIFFS' MEMORANDUM OF LAW IN OPPOSITION TO MOTION TO DISMISS PRELIMINARY STATEMENT By this motion, the Defendants ask that the Plaintiffs' former counsel's accidental non- attendance at the August 3, 2015 conference relieve the Defendants of their obligations to pay more than $500,000 that the Defendants owe based on their breach of contract and commission of fraudulent transfers. As explained below, New York law does not authorize dismissal of a party's meritorious claims based on an accidental calendaring mistake made by counsel. As explained below, the Defendants' motion to dismiss should be denied. ARGUMENT THERE IS NO BASIS FOR DISMISSAL. PLAINTIFFS' COUNSEL'S NON-APPEARANCE ON AUGUST 3, 2015 WAS DUE TO AN INNOCENT CALENDARING MISTAKE AND THE PLAINTIFFS HAVE SHOWN THAT THEY HAVE MERITORIOUS CLAIMS The Defendants' motion to dismiss should be denied because the motion record is clear that (1) the Plaintiffs' counsel's non-appearance at the August 3, 2015, conference was due to an innocent calendaring mistake on the part of counsel, and (2) the Plaintiffs have substantial meritorious claims. There is a "strong public policy" in New York to "dispose of cases on their merits." Dokmecian v. ABN North Am., Inc., 304 A.D.2d 445, 758 N.Y.S.2d 638 (1st Dep't 2003); Mediavilla v. Gurman, 272 A.D.2d 146, 707 N.S.Y.S.2d 432,434 (1st Dep't 2000). Consistent with New York's strong public policy in favor of deciding cases on their merits, the First Department has held, repeatedly, that a counsel's non-appearance at a conference cannot result in a claim's dismissal if (1) there is a reasonable excuse for counsel's mistake and (2) the client's claim has merit. See Dokmecian, 304 A.D.2d 445, 758 N.Y.S.2d 638; Empire Entertainment Group, LLC v. Wanderlust Pictures, Inc., 307 A.D.2d 811, 763 N.Y.S.2d 296 (1st Dep't 2003); Cruz v. Bronx Lebanon Hasp. Ctr., 73 A.D.3d 597, 598, 905 NY.2d 135 (1st Dep't 2010). Indeed, the First Department has consistently reversed trial court orders that dismissed meritorious pleadings when the dismissal was based on a counsel's inadvertent failure to attend one or more court conferences. 2 Although the Defendants' moving papers do not discuss any authorities on point, set forth below is a discussion of six (6) First Department decisions that are on point and establish that the Defendants' motion to dismiss should be denied. First, in Dokmecian, supra, the First Department reversed the dismissal of a complaint due to counsel's failure to appear at a conference because he inadvertently scheduled the wrong date. 758 N.Y.S.2d at 639. The First Department held that "[c]ounsel's failure to appear at both the originally scheduled preliminary conference and on its adjourned date amounted to excusable law office failure." !d. (citations omitted). The court further held that such law office failure, coupled with an affidavit of merit from the client, required that the client's action be decided on the merits. !d. Accordingly, the trialcourt's dismissal of the action due to counsel's failure to attend the court conference was reversed. !d. Second, in Mediavilla, supra, the First Department reversed the denial of a motion to vacate a dismissal where the default was based on counsel's failure to appear at a conference. The court held that counsel's law office failure, which was due to a clerical error at the law office, coupled with an affidavit of merit from the client, required that the client's action proceed on the merits. 707 N.Y.S.2d at 434. A third example of reversal is found in American Audio Service Bureau Inc. v. AT&T Corp., 33 A.D.3d 473, 823 N.Y.S.2d 25 (1st Dep't 2006), a case in which the First Department reversed the denial of a motion to vacate a dismissal of a complaint, where the dismissal was based in large part on the plaintiffs counsel's non-appearance at two status conferences. As the court explained: "[t]he motion to vacate the dismissal ... should have been granted by the court in light of the strong public policy of this State to dispose of cases on their merits .... The 3 record ... does not demonstrate a pattern of delay that would justify dismissal of plaintiffs case." 823 N.Y.S.2d at 28 (citations omitted). A fourth example of reversal is Empire Entertainment Group, L.L. C. v. Wanderlust Pictures, Inc., 307 A.D.2d 811, 763 N.Y.S.2d 296 (1st Dep't 2003). In Empire, the First Department reversed the entry of default that was entered based on counsel's failure to attend four conferences because, as the appellate court held: "it was an improvident exercise of the court's discretion to strike defendants' answer ... particularly where there was no evidence of willfulness." 763 N.Y.S2d at 297. At least another two First Department decisions hold the same - that a motion seeking to dismiss a meritorious pleading based on counsel's inadvertent mistake resulting in a missed court conference must be denied. See Cruz v. Bronx Lebanon Hasp. Ctr., 73 A.D.3d 597, 598, 905 N.Y.S.2d 135, 136 (1st Dep't 2010) (citations omitted) ("Here, plaintiff demonstrated that her failure to appear at the scheduled conference was neither willful nor part of a pattern of dilatory behavior, but the result of inadvertent law office failure .... Furthermore, plaintiffs affidavit was sufficient to establish a meritorious claim .... "); Barsel v. Green, 264 A.D.2d 649, 695 N.Y.S.2d 350, 350 (1st Dep't 1999) (citations omitted) (counsel's "failure to appear at the pretrial conference was properly excused upon a showing that such failure was due to ... an oversight on the part of their attorneys in entering the date of the conference in their calendars."). 1 1 The one decision relied upon by the Defendants, Yang Gon Cha v. Warwick Hotel, 272 A.D.2d 154, 707 N.Y.S.2d 428 (1st Dep't 2000), is clearly distinguishable and does not support the relief requested. In Yang Gon, unlike here, the reason why the third-party defendant's answer was stricken was because that party had failed to comply with an order conditionally striking its answer. Specifically, the court in Yang Gon had issued "an order conditionally striking [defendant's] answer" if certaindisclosure was not provided within thirty (30)days. 707 N.Y.S.2d at 429. Despite the conditional order, the disclosure was never made. In stark contrast toYang Gon, this Court has not issued a conditional order in the present case. Further, inYang Gon, unlike here, the party at issue had failedto show that it had a meritorious pleading. Here, however, the Plaintiffs haveestablished that they have meritorious claims. 4 The many above authorities are controlling here. Here, the Plaintiffs have shown a reasonable excuse for counsel's non-appearance at the August 3, 2015, conference. The accompanying Affirmation of the Plaintiffs' counsel, David Estrakh, explains that counsel's non-appearance at the August 3, 2015, conference was due to an inadvertent calendaring error. Counsel believed that the conference was scheduled for the next day, August 4, 2015. There was no willfulness or intentional misconduct on the part of the Plaintiffs and their counsel. This was simply an accidental calendaring mistake. In addition, the Plaintiffs have shown that they have meritorious claims. The accompanying Affidavit of Plaintiff Peter Stern ("Mr. Stern") explains that Mr. Stern is owed $500,000 due to the Defendants' failure to pay for the purchase of Mr. Stern's 50% ownership interest in Defendant Air Cargo Services, LLC. And the accompanying Affidavit of Douglas Milo, CPA ("Mr. Milo") - the tax preparer for Air Cargo Services, LLC - corroborates both Peter Stern's Affidavit and the Plaintiffs' claims in this action. Mr. Milo's Affidavit explains that there was, in fact, a contract between Peter Stern and Oleg Ardachev, pursuant to which Oleg Ardachev purchased Peter Stern's 50% ownership interest. Thus, the Plaintiffs have established a reasonable excuse for not appearing at the August 3, 2015, conference, and the Plaintiffs have also established that they have meritorious claims. CONCLUSION The Defendants owe more than $500,000 due to, among other things, their breach of contract and commission of fraudulent transfers. The Plaintiffs should not suffer the harsh sanction of dismissal of their meritorious and valuable claims due to an innocent calendaring mistake made by counsel. 5 In accordance with New York's public policy of deciding cases on their merits, the Plaintiffs should be permitted to conduct discovery and obtain relief on their claims. For all of the foregoing reasons, the Defendants' motion to dismiss should be denied. Dated: September 3, 2015 Respectfully submitted, DIAMOND McCARTHY LLP Attorneys for Plaintiffs By: . d./~ ./J~ .0 ~--· : --------· 1Lon \ .f Seid~tl, . ~ Esq. David M. Rubinstein 620 Eighth A venue, 39th Floor New York, New York 10018 Tel. (212) 430-5400 Fax (212) 430-5499 lseidman@diamondmccarthy. com drubinstein@diamondmccarthy. com 6