Court Opinion

ID: 9918934
Source: CourtListenerOpinion
Date Created: 2024-01-16 22:08:01.969926+00
Date Added: 2024-06-11T08:06:35.866423
License: Public Domain

Gelwan v Youni Gems Corp.
               2024 NY Slip Op 30126(U)
                    January 10, 2024
           Supreme Court, New York County
        Docket Number: Index No. 653656/2013
                 Judge: James d'Auguste
Cases posted with a "30000" identifier, i.e., 2013 NY Slip
 Op 30001(U), are republished from various New York
 State and local government sources, including the New
  York State Unified Court System's eCourts Service.
 This opinion is uncorrected and not selected for official
                       publication.
                                                                                                  INDEX NO. 653656/2013
  NYSCEF DOC. NO. 290                                                                      RECEIVED NYSCEF: 01/10/2024

                           SUPREME COURT OF THE STATE OF NEW YORK
                                     NEW YORK COUNTY
         PRESENT:        Hon. James d'Auguste                             PART    55
                                                              Justice
         --------------------X                                           INDEX NO.           653656/2013
          LLOYD A GELWAN, SABHARWAL & ASSOCIATES,
                                                                         MOTION DATE          08/16/2023
                                             Plaintiff,
                                                                         MOTION SEQ. NO.          014
                                     - V -

          YOUNI GEMS CORPORATION, YOUNATAN AHARON,
                                                                            DECISION + ORDER ON
          DAVID AHARONI, YOSSEF AHARONI,
                                                                                  MOTION
                                             Defendants.

         --------------------X

         The following e-filed documents, listed by NYSCEF document number (Motion 014) 278, 279, 280, 281,
         282,283,284,285,286,287,288,289
         were read on this motion to/for                      ENTRY OF JUDGMENT ON ARREARS

                  Upon the foregoing documents, the motion is granted to the extent set forth in the discussion

         below.

         Background:

                  This action involves a fee dispute between an attorney and his former clients which had

         purportedly been resolved by a settlement agreement reached by the parties, and which had been

         transcribed, so ordered by this Court on July 11, 2019, and docketed on September 11, 2019 (Settlement

         Agreement or Agreement) (NYSCEF Doc No. 281). Non-movant Sabharwal & Associates (S&A) is a

         law firm in Manhattan, with which plaintiff/movant Lloyd A. Gelwan ("Gelwan") collaborated, under a

         contingent fee agreement (Contingent Fee Agreement), in representing defendants in yet another action,

         captioned Youni Gems Corporation v Bassco Creations Incorporated, et al., Index No. 603053/2002

         (the Bassco Action).

                  This action premised on Gelwan's claims against defendants for legal fees owed to him under

         the Contingent Fee Agreement, and for other fees owed to him in his continued representation of

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          Motion No. 014

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         defendants in the Bassco Action, including subsequent proceedings for execution and holdover tenant

         eviction, and appeal (Bassco Appeal) (see Complaint, ,r,rl 1-37). Gelwan contends that, as the result of

         defendants' continuing refusal to pay legal fees owed, he and his appellate co-counsel moved to

         withdraw from representation of the defendants in the Bassco Appeal, which motion was granted by the

         Appellate Division on August 25, 2009 (id. ifif38-41). Defendants retained new counsel and, in 2010,

         prevailed in the Bassco Appeal (id. ,r,r42-43).

                 Gel wan asserted several causes of action against defendants in this, including claims for breach

         of contract, an attorney charging lien, and a declaration that, by virtue of the Contingency Agreement, he

         and S&A are owed one-third of any money defendants recover in connection with Bassco Action and

         the Bassco Appeal, whether obtained through settlement or satisfaction of judgment (id. ,r,rs0-132).

         The Settlement Agreement

                 In motion sequence number 014, e-filed on May 3, 2023, Gelwan filed a proposed order to show

         cause, with supporting papers, seeking entry of a judgment against the defendants under CPLR Rule

         5016(a) (NYSCEF Doc No. 278). The supporting papers included a proposed judgment (NYSCEF Doc

         280) and a copy of a transcript of a hearing held before Justice Charles E. Ramos on July 11, 2019,

         which was "so ordered" on September 11, 2019 (NYSCEF Doc No. 281 ), in which Gel wan (appearing

         pro se) and defendants' counsel memorialized their Settlement Agreement. The transcript states, in

         pertinent part:

                 Mr. Miller: 1 "This is the settlement, as I understand. I would ask everyone to
                       pay attention. If I'm wrong, speak now or forever hold your peace.

                                   The defendants agree to pay the plaintiffs in settlement of all
                           claims, counterclaims, cross claims, known or unknown, liquidated
                           or contingent at law or at equity that were actually raised or could
                           have been raised in connection with the representation of [the

                 Jeffrey H. Miller, Esq. appeared on the record as counsel to the defendants, as did Boris Kogan,
         Esq.
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          Motion No. 014

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  NYSCEF DOC. NO. 290                                                                         RECEIVED NYSCEF: 01/10/2024

                        defendants by] Mr. Gelwan and Sabharwal & Associates, the
                        plaintiffs here and in the triple A.

                                In consideration of these claims, the defendants agree to pay the
                        plaintiff the total sum of $200,000 as follows:

                                Within 30 days of the date hereof, the defendants will pay the
                        plaintiff $10,000. When Mr. Gel wan speaks, he can instruct us,
                        either on or off the record, how he would like those funds paid.

                                The balance of $190,000 will be due 18 months thereafter. The
                        balance will not accrue at any interest rate [sic}; and, to the extent
                        that the defendants breach in either of those two payments the
                        plaintiff will give notice of breach with five days opportunity to
                        cure to counsel of record in this case. Counsel for the plaintiff will
                        give that notice by e-mail is sufficient [sic].

                                If there is no cure within the time allotted, the plaintiff is entitled to
                        enter judgment in the amount of $200,000. The defendants waive
                        any defense to such a judgment.

                               To be clear, this is a complete settlement of all claims against the
                       defendants as broadly defined as possible. It includes the
                defendants, officers, directors, shareholders, heirs, assigns,
                children and the like, although I don't believe any claims have
                been asserted against anybody else.

                                Mr. Gelwan?

                Plaintiff:      If that is a question, I'm not aware of any claims against anybody
                        else.

                Mr. Miller:   So, this is a complete waiver. Agents, attorneys, assigns. This is as
                       complete as it can be of anything arising out of the representations
                       of Mr. Gel wan against the defendants herein. I don't think I missed
                       anything with respect to the settlement. Did I?

                Plaintiff:      No, you did not"

         (Tr. 19:6 to 20:25 [emphasis added]).

                Following discussions off the record, Mr. Miller informed the Court that the parties would

         allocute to the terms of their settlement (id. 21 :17-18). Mr. Kogan then asked that a provision be added

         to their Agreement stating that the 2013 Action is to be marked settled (id. 21 :21-22). In response,

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          Motion No. 014

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         Justice Ramos stated that he would inform Justice d' Auguste that the parties had settled the matter on

         the record before him (id. 21 :23-24). Mr. Kogan added that:

                 "I would like to make clear that other than the promises made in this stipulation as an
                 inducement for both parties to enter into this stipulation, both parties waive[,] release and
                 discharge any claims or causes of action, known or unknown, of any kind whatsoever,
                 whether in law or in equity, from the beginning of the world until the end of the world"

         (id. 22:2-8).

                 Mr. Kogan further added that:

                 "each of the parties agrees that they're entering into the stipulation voluntarily and
                 without duress [and that] [i]t should be deemed to have been jointly drafted by the
                 parties. No provision shall be construed or interpreted for or against any of the parties
                 because such provision or any provision of the stipulation as a whole was purportedly
                 prepared or requested by such party. Last but not least both parties agree to execute any
                 additional documents that may be necessary to effectuate the terms of the stipulation and
                 a merger clause"

         (id. 24:6-18).

                 This prompted Mr. Miller to add: "That's the agreement. Any discussions we had prior to this

         agreement were for this purpose only. This is the sum total of the agreement. Any changes to this

         agreement have to be in writing and fully executed by the parties thereto" (id. 24: 19-23). Mr. Miller then

         asked Gel wan to "allocute for himself' (id. 25: 13-14). This exchange followed:

                 Mr. Kogan: "We need to be clear that Mr. Gelwan will not assert any further
                       claims under any retainer, any prior agreement, any retainer
                       agreement between the parties and all of the obligations between
                       the parties are reduced to the settlement sum that we've discussed
                       and agreed upon."

                 Mr. Gel wan:   "I think I understand your-"

                 Mr. Kogan:     "I'm open to expressing it another way."

                 Mr. Gelman: "I take your meaning to be that all the parties agree that any
                        liabilities, known or unknown, contingent, expressed or
                       unexpressed are being compromised in this agreement with respect
                       to all claims over which any party has any control"

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          Motion No. 014

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         (id. 25:15- 26:1).

                The parties also concurred that their Agreement included "an exchange of general releases but

         for the obligations set forth in the stipulation" (id. 26:2-5). The one concern that Gelwan raised about

         protecting his rights involved the title to a house Gelwan seized on defendants' behalf, as part of his

         legal representation:

                Mr. Gelman: "I agree with all the terms that you have stated. I am a little bit at a
                      disadvantage not being a real estate lawyer to say what types of
                      protections I might ask with respect to the house such as a
                      commitment not to sell it until after the terms of the payout on this
                      agreement is satisfied. I might ask that although it's not been
                      agreed to."

                Mr. Miller:  "Can I suggest we keep it simple and agree with the agreement we
                      have."

                The Court:       "Do you have an interest in the house now?"

                Mr. Gelwan: "No but the problem is that after the title was taken to the house,
                       after we seized it, the money - I beg your pardon, the title. I'm not
                       suggesting anything nefarious but the title was taken and put in the
                      name of two overseas defendants and if that asset vanishes for
                       some reason, then I have the word of somebody I don't necessarily
                      mistrust but I have no domestic collateral."

                 Mr. Miller:     "You'd be in no worse position than you're currently in."

                Mr. David     "If, for seven years we haven't run away, you can rest assured           Aharoni:
                we're not going to run away now."

                Mr. Miller:  "Mr. Gelwan, do you understand-you understood the terms of the
                       agreement?"

                Mr. Gelwan: "I did although we have this question that is lingering now. I don't
                       speak Hebrew so I don't know what David has just said, although I
                       gather it's something in the nature ofl can trust them, they're not
                       going to run away. I don't mistrust them. That is not what this
                       comment is about but anything can happen."

                Mr. Miller:   "I will say this, and you make a good point: The defendants agree,
                      your Honor, to the jurisdiction of New York and, moreover, I
                       would say that the defendants agree that for any purpose

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          Motion No. 014

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                         whatsoever they would agree to allow service of process of any
                         action on either Mr. Kogan or myself. That is a lot."

                 Mr. David      I didn't understand what you meant by that. Why is the-"
                 Aharoni:

                 The Court:     "Off the record."
                                (Discussion held off the record.)

                 Mr. Miller:    "So, there was some off the record discussion. The defendants
                        agree to be bound and to accept service of process in the State of
                       New York by either of the attorneys representing the defendants
                       today. Service upon us through the CPLR Article 3 would be
                       deemed service upon the defendants."

                 The Court:     "Fine."

         (id. 26:8 - 28:6).

                 Gelwan filed a proposed order to show cause, in motion sequence number 014 (see NYSCEF

         Doc Nos. 278 et seq.), seeking to enter a proposed consent judgment. In that motion, Gel wan alleged

         that defendants made their first settlement payment of $10,000 within thirty days of the date of the July

         11, 2019 Court hearing, as agreed, but failed to make the second $190,000 payment within 18 months

         thereafter, that is, by January 11, 2021 (corrected affidavit of Lloyd A. Gelwan, Esq., sworn to May 31,

         2023 [Gelwan affJ, ,r,r18-19 [NYSCEF Doc No. 279]). Gelwan further alleged that, after several

         unsuccessful attempts to contact defendants, he sent Boris Kogan, defendants' counsel, an email on

         February 23, 2021, giving notice of default and a demand for payment of the balance due, in accord with

         the Settlement Agreement (Default Notice) (Gelwan affif22, and ex 1 [NYSCEF Doc No. 283]).

         Defendants failed to cure their default within the five-day Default Notice period, but on March 4, 2021

         paid $70,000 against the outstanding balance (id. if23).

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                   In his affidavit in support, however, Gel wan initially claimed that, by virtue of the Settlement

         Order, he was entitled to entry of a consent judgment in the principal amount of $200,000, 2 plus

         statutory interest at the legal rate of 9% per annum for the period from the accrual of his claims through

         May 27, 2023, in the sum of $28,653.07, plus post-judgment interest through the date on which

         defendants fully satisfy their liability under the consent judgment (Gel wan aff, i/58).

                   Gelwan's proposed consent judgment, submitted as NYSCEF Document Number 280, also

         acknowledged receipt of "a Seventy Thousand Dollar interim payment made by JUDGMENT

         DEBTORS." Still, Gel wan claims he is due interest at the statutory rate of 9% per annum from January

         11, 2021 through May 3, 2023 on the full principal amount of$200,000, in the sum of $27,883.88, for a

         total of$227,883.88, and only then credited the interim payment(s) of $70,000.00, for a balance

         purportedly due of $157,883.88.

                   An "Internal Comment" recorded on the CEF system on May 30, 2023, at 9:46 AM, with respect

         to NYSCEF Document Number 280, reflects the text of an e-mail sent to Gelwan, informing him of

         deficiencies in the proposed judgment he had filed and instructing him on the corrections that were

         needed:

                   280 - JUDGMENT - (PROPOSED) SUBMIT JUDGMENT PER JUDGES DECISION
                   The affidavit in support of entry of judgment, refers to the judgment as a consent
                   judgment. Consent judgments must be signed by the Judge before they can be entered by
                   the clerk. To submit a proposed judgment for the Judge to sign, use the document type
                   Judgment To Court (Proposed). A proposed consent judgment should provide a place for
                   the Judge to sign. A money judgment adjudicates the recovery of money. The
                   adjudication paragraph needs to name the judgment creditors and the judgment debtors
                   and provide the physical street address for of both. Care of (c/o) and P.O. boxes are not
                   accepted. Once the consent judgment is signed by the Judge, the part clerk will upload
                   the signed judgment as a Judgment signed by Court to County Clerk. Then the clerk will

         2       Gel wan had asserted that defendants were not entitled to credit for either the $10,000 or $70,000
         payments under the Agreement because, as Mr. Miller stated, after default, "[i]f there is no cure within
         the time allotted, the plaintiff is entitled to enter judgment in the amount of $200,000. The defendants
         waive any defenses to such a judgment" (Tr. 20:5-8 [NYSCEF Doc No. 275]).
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             Motion No. 014

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                 be able to enter the judgment. Thank you. macorket@nycourts.gov
                 (ReturnRemoveDocument)

                 On May 31, 2023, Gelwan filed a JUDGMENT-TO COURT (PROPOSED)- *Corrected*,

         which was listed on the NYSCEF System as Document Number 276. This corrected proposed judgment

         included a signature block for the Judge to sign and included the full names and physical street

         addresses for the judgment creditor and judgment debtors, in accordance with the clerk's instructions of

         the previous day. It also acknowledged receipt of "a Seventy Thousand Dollar interim payment made by

         JUDGMENT DEBTORS" but first calculated interest Gelwan claims he is due at the statutory rate of

         9% per annum from January 11, 2021 through May 27, 2023 on the principal amount of $200,000, in the

         sum of $28,653.08, for a total of $228,653.08, and only then credited the interim payment of

         $70,000.00, for a balance purportedly due of $158,653.08.

                 On June 15, 2023, the Court signed a show cause order with respect to Gelwan's application for

         entry of a judgment based on the parties' Agreement, to be heard on July 19, 2023.

                 In opposition, defendants' counsel, Jason M. Baxter, Esq., submitted an affirmation executed on

         July 13, 2023 (NYSCEF Doc No. 288), taking issue with two parts of Gelwan's proposed consent

         judgment. First, defendants dispute Gelwan's claim for interest, asserting that the Agreement does not

         grant Gelwan the right to recover any interest (citing NYSCEF Doc No. 281 [Tr. 19:24-25]).

         Defendants, however, quote the transcript as stating, "The balance will not accrue interest at any rate,"

         but these lines state that "The balance will not accrue at any interest rate" (id.).

                 Second, defendants assert that Gelwan has neglected to credit their initial payment of $10,000,

         made prior to their $70,000 in installment payments (id. ~~3-6). Mr. Baxter concludes that defendants'

         liability should be only $120,000 and avers that defendants "are willing to pay the balance in full upon

         confirmation that such payment shall be considered full and final payment of the amounts owed to

         Plaintiff' (id. ~7).

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          Motion No. 014

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                  In reply, Gelwan argues that the $10,000 "good faith" payment, to be made within thirty days of

         entry of the Settlement Agreement, was, "by design," intended to be forfeited if defendants had not fully

         paid the remaining balance by January 11, 2021 and, as defendants did default, such payment was

         forfeited (Gelwan Reply aff, executed July 17, 2023 [NYSCEF Doc No. 289], at ,r6). Gelwan, however,

         does revise his ad damnum claim on reply, abandoning his initial pursuit of the full $200,000 principal

         amount:

                  •      "Plaintiff seeks no interest on the principal for the eighteen months before
                         payment was due from July 11, 2019 to January 11, 2021;

                  •       Plaintiff seeks interest only on the $200,000 balance from the January 11, 2021
                  date defendants were to have paid the $200,000 settlement consideration to the date of
                  their $70,000 payment on March 4, 2021; and

                  •       Plaintiff credits defendants for their March 4, 2021 $70,000 payment,
                          seeking interest only on the $130,000 balance from March 4, 2021 to the date
                  that the defendants satisfy the Settlement [Agreement] and the       requested judgment"

         (id. i!16).

         Discussion:

                  The two issues in dispute are whether the $10,000 payment should be credited to the balance due

         and owing by defendants and whether defendants owe interest from the date of breach. Gel wan has not

         demonstrated that the $10,000 payment was intended to be forfeited in the case of defendants' breach,

         and, accordingly, the $10,000 payment will be credited to the amount owed to Gelwan. Similarly,

         defendants have not demonstrated that Gelwan intended to waive interest in the event of defendants'

         breach; the plain reading of the settlement agreement shows that parties intended to waive interest

         during the 18-month period between the initial $10,000 payment and payment of the remaining

         $190,000 balance. Gelwan is entitled to enter judgment for the entire $200,000 following defendants'

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          Motion No. 014

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         breach if defendants fail to cure, which entitles Gelwan to interest pursuant to CPLR 5004.3 Therefore,

         the Court is not persuaded by defendants' contention that Gelwan waived all interest on the $200,000

         settlement if defendants breached the agreement.

                    Accordingly, it is hereby

                    ORDERED that the motion is granted to the extent that the Clerk shall enter judgment in this

         action in favor of plaintiff Lloyd A. Gel wan and against all defendants in the amount of $120,000

         (calculated as $200,000 minus the $10,000 initial payment and minus the $70,000 paid on March 4,

         2021) with interest as calculated by the Clerk from March 4, 2021, plus costs and disbursements as

         calculated by the Clerk.

                    This constitutes the decision and order of the Court.

                      1/10/2024
                        DATE
             CHECK ONE:                    CASE DISPOSED                    NO -J;I AL DISPOSITION

                                           GRANTED          □ DENIED        GRANTED IN PART                □ OTHER
             APPLICATION:                  SETTLE ORDER                     SUBMIT ORDER

             CHECK IF APPROPRIATE:         INCLUDES TRANSFER/REASSIGN       FIDUCIARY APPOINTMENT          □ REFERENCE

         3      In New York, "interest is not a penalty. Rather, it is simply the cost of having the use of another
         person's money for a specified period . . .. It is intended to indemnify successful plaintiffs 'for the
         nonpayment of what is due to them' and is not meant to punish defendants." Love v State, 78 N.Y.2d
         540,544 (1991).

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             Motion No. 014

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