FILED: NEW YORK COUNTY CLERK 11/20/2014 12:08 PM
NYSCEF DOC. NO. 62
INDEX NO. 651767/2014
RECEIVED NYSCEF: 11/20/2014
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
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COLIN E. COMER and
CLASSIC AUTO L.L.C.,
Plaintiffs,
ELECTRONICALLY FILED
-againstIndex No. 651767/14
RONALD S. KROLICK, FIRST NATIONAL BANK
OF NEW YORK, FNBNY BANCORP, INC.,
MICHAEL DEL GIUDICE, MCM SECURITIES LLC,
BRIDGEHAMPTON NATIONAL BANK and BRIDGE
BANCORP, INC.
Motion Sequence No. 4
Defendants.
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RONALD S. KROLICK and MICHAEL DEL
GIUDICE,
Cross-Claim Plaintiffs,
BRIDGE BANCORP, INC.
Cross-Claim Defendant.
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MEMORANDUM OF LAW IN SUPPORT OF CROSS-CLAIM DEFENDANT BRIDGE
BANCORP, INC.'S MOTION TO DISMISS THE CROSS-CLAIM
EGAN & GOLDEN, LLP
96 South Ocean Avenue
Patchogue, New York 11772
(631) 447-8100
Attorneys for Defendants Bridge Bancorp, Inc. and
Bridgehampton National Bank, and Cross-Claim
Defendant Bridge Bancorp, Inc.
Of Counsel:
Brian T. Egan
Kim A. Smith
Christopher A. Bianco
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TABLE OF CONTENTS
PAGE
Preliminary Statement ……………………………………………………………………4
Statement of Facts………………………………………………………………………...4
Argument
POINT I
THE CROSS-CLAIM MUST BE DISMISSED PURSUANT TO CPLR
3211(A)(4)
…………………………………………………………………………………….7
POINT II
SUFFOLK COUNTY IS A PROPER VENUE FOR A DETERMINATION OF
BRIDGE'S INDEMNIFICATION OBLIGATIONS
…………………………………………………………………………………….9
POINT III
THE FIRST-FILED RULE APPLIES TO CONSOLIDATION ORDERS
MADE PURSUANT TO CPLR § 602
…………………………………………………………………………….…........10
CONCLUSION…………………………………………………………………………..11
2
TABLE OF AUTHORITIES
Page
Cases
11 E. 68th St. LLC v. Madison 68 Realty LLC, 2014 NY Slip Op 31872, Index No.
650771/14 (Sup. Ct. N.Y. Cty. July 10, 2014) ................................................................. 11
Certain Underwriters at Lloyd's v BDO Seidman LLP, 36 Misc 3d 1222(A), 2012 NY
Slip Op 51425 (Sup. Ct. N.Y. Cty. July 27, 2012)............................................................ 8
Colson v. Pelgram, 259 N.Y. 370 (1932) ................................................................................ 7
Harrison v. Harrison, 16 AD 3d 206, 207 (1st Dep't 2005) ............................................. 11
Haynes v. AAA Architectural Hardware Co., 2009 NY Slip Op 50219, 22 Misc.3d
1122(A) (Sup. Ct. N.Y. Cty. Feb. 2, 2009) ......................................................................... 8
Matter of Wallach, 130 AD 2d 495 (2nd Dept. 1987) .......................................................... 7
Parker v. Troutman Sanders, LLP, 89 AD 3d 638, 638 (1st Dep't 2011) ..................... 11
Reckson Assocs. Realty Corp. v. Blasland, Bouck & Lee, Inc., 230 AD 2d 723
(2d Dep't 1996) ............................................................................................................................ 7
Zimmerman v. Tower Insurance Company of New York, 13 AD 3d 137 (1st Dep't
2004) .......................................................................................................................................... 8
Statutes
CPLR § 503(a) .............................................................................................................................. 10
CPLR § 509..................................................................................................................................... 9
CPLR 602................................................................................................................................ 10, 11
CPLR 3211(a)(4) .......................................................................................................... 4, 6, 7, 8, 11
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PRELIMINARY STATEMENT
Cross-Claim
Defendant
Bridge
Bancorp,
Inc.
submits
this
memorandum of law in support of its Motion to Dismiss the Cross-Claim of CrossClaim Plaintiffs RONALD S. KROLICK and MICHAEL DEL GIUDICE. More than
three weeks before Cross-Claim Plaintiffs brought this claim, Bridge Bancorp, Inc.
commenced a declaratory judgment action in the Supreme Court, Suffolk County
where it seeks the exact same declaratory relief requested by Cross-Claim
Plaintiffs—a declaratory determination as to Bridge Bancorp, Inc.'s obligation to
indemnify and advance fees and costs to RONALD S. KROLICK and MICHAEL
DEL GIUDICE. Pursuant to CPLR 3211(a)(4) and the first-filed rule, the CrossClaim should be dismissed or in the alternative, consolidated with the Suffolk
Action and transferred to the Supreme Court, Suffolk County.
STATEMENT OF FACTS
A detailed discussion of the events underlying the claims of Plaintiffs
Colin E. Comer and Classic Auto, LLC, (the "Comer Plaintiffs") is set forth in the
memorandum of law filed by Bridgehampton National Bank and Bridge Bancorp,
Inc. in support of their motion to dismiss the action.
The following is a short
summary of the background of this case, the declaratory action filed by Bridge
Bancorp, Inc., and the subsequent cross-claim filed by Krolick and Del Giudice.
FNBNY Bancorp, Inc. was a Delaware corporation formed on or about
January 21, 2010 ("FNBNY Delaware").
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Krolick was the President and Chief
Executive Officer of FNBNY Delaware.
On or about April 2, 2012 FNBNY
Delaware merged with Madison National Bancorp, Inc. ("Madison"). As a result of
the merger, Madison remained as the surviving entity, and FNBNY Delaware
ceased to exist. As part of the 2012 Merger Agreement, Madison, the surviving
entity of the merger, amended its Certificate of Incorporation to change its name to
FNBNY Bancorp, Inc. ("FNBNY New York").
Krolick was named the Chief
Executive Officer of FNBNY New York. Upon information and belief Michael Del
Giudice was a member of FNBNY New York's Board of Directors.
On or about February 14, 2014, FNBNY New York merged with Bridge
Bancorp, Inc. ("Bridge"). Under the merger agreement, Bridge remained as the
surviving corporation and FNBNY New York ceased to exist as a business entity.
Defendant Bridgehampton National Bank is a wholly-owned subsidiary of Bridge.
On or about August 22, 2014 the Comer Plaintiffs commenced this action against
Ronald S. Krolick, First National Bank of New York, FNBNY Bancorp, Inc.,
Michael Del Giudice, MCM Securities LLC, Bridgehampton National Bank and
Bridge Bancorp, Inc. ("Comer Defendants"). The Comer Plaintiffs allege that before
the 2012 merger of FNBNY Delaware and Madison, the Comer Defendants misled
and/or defrauded the Comer Plaintiffs into investing in and lending funds to the
entities involved in the 2012 Merger. On October 6, 2014, the Comer Defendants
filed motions to dismiss this action.
Krolick and Del Giudice ("Cross-Plaintiffs") argue that Bridge is
obligated to indemnify and advance fees and costs in connection with this action.
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Bridge has made clear in its communications with counsel for Cross-Plaintiffs that
it believes no such obligation exists under the indemnification provisions of the two
merger agreements or under New York's Business Corporation Law. (Exhibit A1.)
On October 9, Bridge brought a declaratory judgment action against
Krolick and Del Giudice seeking a judgment declaring that it is not obligated to
indemnify Cross-Plaintiffs or advance costs for their defense of this action2 (the
"Suffolk Action"). (Exhibit B.) Bridge commenced the declaratory action in Suffolk
County, the county where the principal places of business for FNBNY New York
and Bridge are located.
On October 31, more than three weeks after Bridge
commenced the Suffolk Action, Krolick and Del Giudice brought this cross-claim
against Bridge seeking the exact same declaratory relief on the issue of
indemnification and advancement of fees. (Exhibit C.) Krolick and Del Giudice also
brought a motion to dismiss the Suffolk Action under CPLR 3211(a)(4), and in the
alternative, to change venue pursuant to CPLR 510(3). (Exhibit D.) Bridge now
moves to dismiss this cross-claim pursuant to CPLR Section 3211(a)(4).
The exhibits referenced in this memorandum are attached to the Affirmation of
Brian T. Egan dated November 20, 2014.
2 Bridge Bancorp, Inc. v. Krolick et al., Index No. 068419/14 (Sup. Ct. Suffolk Cty.)
(the "Suffolk Action")
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ARGUMENT
POINT I
THE CROSS-CLAIM MUST BE DISMISSED PURSUANT TO CPLR
3211(a)(4)
As noted above, Bridge commenced the Suffolk Action approximately
three weeks prior to the filing of this cross-claim. Since another action is pending
for the exact same relief, the cross-claim must be dismissed pursuant to CPLR
3211(a)(4).
CPLR 3211(a)(4) states: "[a] party may move for judgment dismissing
one or more causes of action asserted against him on the ground that:
4. there is another action pending between the same parties for the same
cause of action in a court of any state or the United States; the court need not
dismiss upon this ground but may make such order as justice requires"
In interpreting CPLR 3211(a)(4) courts have generally applied a "first-filed rule"
and have dismissed the second filed action in deference to the court which was the
first to assume jurisdiction over the matter. Colson v. Pelgram, 259 N.Y. 370, 375
(1932) ("It is also the general rule that where separate actions have been instituted
between the same parties in reference to the same subject-matter in courts having
concurrent jurisdiction the court which first obtains jurisdiction with adequate
power to administer full justice should continue to exercise it."); Reckson Assocs.
Realty Corp. v. Blasland, Bouck & Lee, Inc., 230 AD 2d 723, 725 (2d Dep't 1996)
(complaint brought just one day before subsequent action still entitled to deference
under first-filed rule); Matter of Wallach, 130 AD 2d 495, 496 (2nd Dept. 1987) ("It
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is a settled principle of law that where two courts have equal and concurrent
jurisdiction, the first to assume jurisdiction should retain it to the exclusion of the
other."); Haynes v. AAA Architectural Hardware Co., 2009 NY Slip Op 50219, 22
Misc.3d 1122(A) (Sup. Ct. N.Y. Cty. Feb. 2, 2009) (dismissing cross-claims in
personal injury action since they were identical to a pending declaratory judgment
action before another court).
The filing of a separate declaratory judgment action to determine the
extent of a party's insurance coverage and indemnification liability is commonly
employed by insurance companies whose clients are the defendants in personal
injury actions. See, e.g., Zimmerman v. Tower Insurance Company of New York, 13
AD 3d 137 (1st Dep't 2004); see also Certain Underwriters at Lloyd's v BDO
Seidman LLP, 36 Misc 3d 1222(A), 2012 NY Slip Op 51425 (Sup. Ct. N.Y. Cty. July
27, 2012).
Departure from the first-filed rule is unwarranted in this matter.
Here, as required by CPLR 3211(a)(4), the parties and the relief sought in both the
cross-claim and the declaratory action are identical. Both parties are seeking a
declaratory determination as to the obligation of Bridge to indemnify the CrossPlaintiffs. Further, Cross-Plaintiffs offer no reason as to why the declaratory action
in Suffolk County should be dismissed in favor of their cross-claim, which they
commenced more than three weeks after Bridge brought its declaratory action
seeking the same relief.
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The Cross-Complaint and the declaratory complaint demonstrate that
this matter is limited to an interpretation of certain indemnification clauses in the
2012 and 2014 Merger Agreements and the case law and provisions in the Business
Corporation Law related to indemnification obligations. (Exhibits B and C.) A
determination as to Bridge's obligation to indemnify will not require an order or
decision that interferes with the underlying action brought by the Comer Plaintiffs.
The claims set forth by the Comer Plaintiffs involve their investments in and
purported loans to Madison and FNBNY Delaware and will not require an
interpretation of the Merger Agreements or a determination of Bridge's
indemnification obligations to Cross-Plaintiffs. Thus, a declaratory judgment in the
Suffolk Action will not in any way impair this Court's ability to adjudicate the
underlying claims made by the Comer Plaintiffs. If anything, dismissing the crossclaim and permitting the Supreme Court Suffolk County to determine the
declaratory action will ensure that the underlying action can proceed without
burdening the Court with an extraneous claim.
POINT II
SUFFOLK COUNTY IS A PROPER VENUE FOR A DETERMINATION OF
BRIDGE'S INDEMNIFICATION OBLIGATIONS
"Notwithstanding any provision of [Article Five of the CPLR], the place
of trial of an action shall be in the county designated by the plaintiff, unless the
place of trial is changed to another county by order upon motion, or by consent as
provided in subdivision (b) of rule 511." CPLR § 509. "Except where otherwise
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prescribed by law, the place of trial shall be in the county in which one of the
parties resided when it was commenced." CPLR § 503(a). Bridge, with its principal
place of business in Suffolk County since its founding in 1910, is for purposes of
Article Five of the CPLR, a resident of Suffolk County. (Exhibit B at ¶ 8.) The
venue for the declaratory action is indisputably proper.
Further, the Merger Agreements, which form the basis for the claims
of indemnification, were largely consummated by entities in Suffolk County.
Madison, later renamed FNBNY Bancorp, Inc. (or FNBNY New York) after the
2012 Merger, was, since its incorporation in 2009, a New York corporation with a
principal place of business in Suffolk County.
(See Exhibit E; see also Cross-
Complaint Exhibit D at § 12.4.) Krolick was named the Chief Executive Officer of
FNBNY New York after the 2012 Merger and Michael Del Giudice was a member of
FNBNY New York's Board of Directors.
The 2014 Merger Agreement between
FNBNY New York and Bridge involved two Suffolk-based entities. Cross-Plaintiffs
cannot now credibly argue that the convenience of material witnesses and the ends
of justice will be promoted by dismissing the Suffolk Action or by consolidating it in
New York County. There is more than sufficient basis to support venue in Suffolk
County.
POINT III
THE FIRST-FILED RULE APPLIES TO CONSOLIDATION ORDERS MADE
PURSUANT TO CPLR § 602
Under CPLR Section 602 a court may "remove to itself an action
pending in another court" or have the action before it consolidated in the other
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court. The first-filed rule is applicable to consolidation orders made under CPLR
602.
"Where two actions involving identical issues are pending in separate
counties, the actions should be consolidated pursuant to CPLR 602 in the county
where the first action was commenced absent special circumstances." Harrison v.
Harrison, 16 AD 3d 206, 207 (1st Dep't 2005). Where a party fails to show that
"material witnesses would be inconvenienced" or that other special circumstances
warrant placement in the second-filed action, venue in the consolidated action
should be placed in the original action. Parker v. Troutman Sanders, LLP, 89 AD
3d 638, 638 (1st Dep't 2011); see also 11 E. 68th St. LLC v. Madison 68 Realty LLC,
2014 NY Slip Op 31872, Index No. 650771/14 (Sup. Ct. N.Y. Cty. July 10, 2014).
As discussed in the previous two sections, there are no special
circumstances here that would warrant the transfer of the first-filed Suffolk Action
to this Court.
If the Court decides that consolidation is more suitable than
dismissal of the Cross-Claim, then it should still apply the first-filed rule and
transfer the Cross-Claim to the Supreme Court, Suffolk County.
CONCLUSION
For the reasons set forth above, the Court should grant CrossDefendant Bridge Bancorp, Inc.'s Motion to Dismiss the Cross-Claim pursuant to
CPLR 3211(a)(4). Should the Court decide that consolidation of the two actions is
preferable to dismissal of the Cross-Claim, Cross-Defendant asks that the Court
transfer the Cross-Claim to the Justice in the Supreme Court, Suffolk County
assigned to the declaratory action.
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Dated: November 20, 2014
Respectfully Submitted,
EGAN & GOLDEN, LLP
By: ______________________
Brian T. Egan (egan@egangolden.com)
Kim A. Smith (ksmith@egangolden.com)
Christopher Bianco (cbianco@egangolden.com)
96 South Ocean Avenue
Patchogue, New York 11772
631.447.8100
Attorneys for Defendants Bridge Bancorp, Inc. and
Bridgehampton National Bank, and Cross-Claim
Defendant Bridge Bancorp, Inc.
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