Sanctions Granted Defendant For Plaintiff’s Maintenance Of Frivolous Claims

Posted: July 27, 2026 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Categories Attorney Fees, Sanctions

Sanctions Granted Defendant For Plaintiff’s Maintenance Of Frivolous Claims

On June 3, 2026 , Justice Robert R. Reed of the New York County Commercial Division granted a defendant’s motion for its fees and costs in defending an action that had been dismissed by the Appellate Division, First Department. The case is Cortlandt St. Recovery Corp. v. TPG Capital Mgt., L.P., Index No. 651176/2017.

Plaintiff (“Cortlandt St.”) sued Apax Partners, L.P. (“Apax”) and others, alleging that Apax, as private equity sponsor of a subordinated debt offering, had coordinated with other defendants to manipulate disclosures regarding the intended use of proceeds so Apax-affiliated entities could extract value in a manner inconsistent with the offering materials. Justice Reed had earlier dismissed two of Apax’ co-defendants and components of other causes of action, but had sustained the pleading of certain causes of action, including against Apax. Noting that it had obtained summary judgment in another action raising the same transaction and theories of liability in March 2023, which was affirmed by the First Department March 2024, Apax moved in February 2026 for summary judgment dismissing the remaining causes of action against it and awarding it the costs of defense under 22 NYCRR 130-1.1 based on Cortlandt St.’s pursuit of frivolous claims. Cortlandt St. moved for voluntary dismissal as against Apax on April 20, 2026 and did not file opposition to Apax’ motion.

On May 5, 2026, the Appellate Division modified Justice Reed’s earlier decision and dismissed the complaint in its entirety. Justice Reed found that this mooted both Apax’ motion for summary judgment insofar as it sought dismissal and Cortlandt St.’s motion to discontinue, and granted Apax’ motion under 22 NYCRR 130-1.1:

The lack of legal basis to assert claims against Apax became apparent following dismissal of virtually identical claims in the related action. Apax properly brought these facts to the attention of plaintiff's counsel and requested voluntary dismissal. The court has considered and determined that counsel for Apax properly brought the matter to the attention of plaintiff and sufficient time was available for the plaintiff to investigate the identical nature of the claims asserted against Apax (22 NYCRR 130-1.1). Plaintiff's failure to withdraw its claims, following notice of dismissal of virtually identical claims in the related action, constitutes frivolous conduct (id.). Plaintiff failed to oppose this motion and provided no basis to explain why it waited until April of 2026 to voluntarily seek dismissal of the claims against Apax. . . . Sanctions are warranted here.

Slip op., p. 2 (footnote omitted.)

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning recovery of attorneys’ fees, sanctions or frivolous claims