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Current Developments in the Commercial Divisions of the
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Posted: November 29, 2014

Court Sanctions Plaintiff for Asserting Previously-Decided Claims

On November 24, 2014, Justice Demarest of the Kings County Commercial Division issued a decision in Sherman v. Mulerman, 2014 NY Slip Op. 51655(U), sanctioning plaintiffs for bringing claims that they already had lost in prior litigations.

In Sherman, the plaintiffs brought claims against the defendants that, the trial court found, duplicated claims that already had been resolved in prior litigation among the parties. The court sanctioned the plaintiff for this conduct, explaining:

Pursuant to 22 NYCRR 130-1.1, the court, in its discretion, may award a party to an action costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney’s fees, resulting from frivolous conduct as defined in this Part, and, in addition to awarding such costs, may impose financial sanctions upon a party. Conduct constitutes frivolous conduct under this section where it is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law, or where it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another.

Here, [the plaintiff] commenced this third action by him, continuing to assert the same issues and claims which were the subject of the A-Express action, the Mulerman action, and the Sherman I action, and which were already adjudicated and dismissed in the Sherman I action. At the time [the plaintiff] commenced the present action, the lack of any legal or factual basis for his claims asserted in it should have been apparent by the court’s June 9, 2011 decision and order in the Sherman I action. Moreover, it appears that [the plaintiff’s] commencement of this action was undertaken primarily to continue to prolong his dispute with Mulerman, Silver, and Rogg by continuing to litigate already resolved claims and to harass them in bad faith. Notably (as discussed above), the court, in its June 9, 2011 decision and order, previously imposed financial sanctions in the amount of $500 payable to the Lawyers’ Fund or Client Protection based upon Sherman’s frivolous conduct.

While Mulerman and Silver are already entitled to reimbursement of their reasonable attorneys’ fees, costs, and expenses, pursuant to paragraph 20 (l) of the 2010 Share Purchase Agreement, Rogg was not a party to the 2010 Share Purchase Agreement, and it appears that he is entitled to recover his attorneys’ fees and costs, pursuant to 22 NYCRR 130-1.1, as a result of the frivolous conduct engaged in by [the plaintiff] in commencing this action against him. In addition, a further financial sanction payable to the Lawyers’ Fund for Client Protection may be warranted. However, since Mulerman, Silver, and Rogg have not moved for sanctions, the court must provide [the plaintiff] with a reasonably opportunity to be heard before imposing such sanctions. Thus, at the hearing to determine Mulerman and Silver’s reasonable attorneys’ fees, expenses, and other costs, the court will also determine the issue of the amount of sanctions to be awarded.

(Internal quotations and citations omitted).

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