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Arbor Realty Funding, LLC v. Herrick, Feinstein LLP

Supreme Court of New York, New York County

July 24, 2013

HERRICK, FEINSTEIN LLP, Defendant. No. 651079/2011.

Editorial Note:

This decision has been referenced in a table in the New York Supplement.

Vincent J. Syracuse, Tannenbaum Helpern Syracuse & Hirschtritt LLP, New York, for Plaintiff, Arbor Realty Funding LLC.

John Stephen McDonnell, McDonnell Daly, LLP Lake Success, Stephen Wagner, Cohen, Tauber, Spievack & Wagner P.C., New York, Rex Whitehorn, Rex Whitehorn & Associates, P.C., Great Neck, for Plaintiff, East 51st Street Development Company, LLC.

Frederick B. Warder, Patterson, Belknap, Webb & Tyler LLP, New York, for Defendant, Blank Rome LLP.

Hallie S. Goldblatt, Gerard E. Harper, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, for Defendant, Cozen O'Connor P.C.

Susan T. Dwyer, Herrick, Feinstein LLP, New York, for Defendant, Herrick, Feinstein LLP.

Kriton A. Pantelidis, Gogick Byrne & O'Neill, New York, for Defendant, Garrett Gourlay.



In this legal malpractice action, defendant Herrick, Feinstein LLP (" Herrick" ) and defendants Garrett Gourlay and Garrett Gourlay Architect PLLC (" Gourlay" or the " Architect" ) in a related professional malpractice action, move pursuant to CPLR § 602(a), to consolidate for joint discovery and trial three actions pending before this court: (1) Arbor Realty Funding, LLC v. Garrett Gourlay, et al., Index No. 601122/2010 (the " Gourlay Action" ); (2) Arbor Realty Funding, LLC v. Herrick, Feinstein LLP, Index No. 651079/2011 (the " Herrick Action" ); and (3) East 51st Street Development Co., LLC, 968 Kingsmen, LLC and 964 Associates, LLC v. Blank Rome, LLP and Cozen O'Connor, Index No. 651623/2011 (the " Developer Action" ).[1]

Factual Background

The three cases at issue arise from, inter alia, zoning questions concerning the construction and financing of a residential tower at 303-309 East 51st Street, New York, New York (the " Project" ).

The developer of the Project, East 51st Street Development Co., LLC (" East 51st Street" or the " Developer" ) alleges that prior to May 2007, it retained Cozen O'Connor (" Cozen" ) as its legal representative in connection with determining the applicable zoning regulations for the Project, including obtaining necessary approvals from the New York City Department of Buildings (" DOB" ). Also, in May 2007, East 51st Street allegedly retained Blank Rome LLP (" Blank Rome" ) as its legal representative in connection with obtaining zoning permits for the Project (Developer Complaint, ¶¶ 20-21). As part of its engagement of Cozen and Blank Rome, East 51st Street asked each of them to confirm that the proposed Project could be lawfully constructed pursuant to the Zoning Resolution of the City of New York (the " Zoning Resolution" ). Marvin Mitzner, Esq. (" Mitzner" ), while at Cozen, allegedly began the DOB permit application process and continued the process when he left to work at Blank Rome (see Developer's Complaint, ¶¶ 130-131; Transcript, pp. 11-12).[2]

Based on the advice from Cozen and Blank Rome ( via Mitzner) regarding the applicable zoning laws and the ability to obtain permits, in April 2007, East 51st Street sought short-term bridge loans from Arbor Realty Funding, LLC (" Arbor" ) to refinance existing debt obligations and finance certain early development costs of the Project, which East 51st Street described as a " tower" building pursuant the Zoning Resolution (see Gourlay Complaint, ¶¶ 19, 21; Herrick Complaint, ¶ 6, Developer Complaint, ¶ 24). East 51st Street claims that its description of the proposed Project as a " tower" building was based on advice from Mitzner.[3] And, all parties to the loan understood and anticipated that Arbor's short-term bridge loans would be paid off by loans East 51st Street would secure from subsequent " construction lenders" a year later (Transcript, p. 10).

According to Arbor, a " tower" configuration consisting of a building constructed on less than 40% of the zoning lot can virtually rise without height restrictions, and is generally set back at least 10 feet from a wide street and at least 15 feet from a narrow street (Gourlay Complaint, ¶ 36). In contrast, a " tower-on-base" configuration consists of a tower built on top of a low, wide " base" building, which building is 60 to 85 feet high, and extends continuously along the street line (as opposed to being set back from the sidewalk) ( id. ¶ 38). A tower-on-base is typically a smaller building, while a " tower" building (as proposed) can include much more square footage (Transcript, p. 11).

In connection with collecting information to close on the loans, Arbor allegedly retained Herrick, a law firm, to analyze whether the Project could be constructed pursuant to the Zoning Resolution as proposed, and to represent it in closing the loan. Herrick allegedly sought the zoning opinion of Mitzner (as East 51st Street's " zoning counsel" ) as required by Arbor's closing file, but Mitzner was unable to give an opinion in light of his move to a new law firm and instead, suggested that " the next best thing" would be to get a certification from Gourlay (Transcript, pp. 7, 9). On May 2, 2007, Herrick allegedly requested that Mitzner obtain a " zoning certification letter" from Gourlay (the Developer's architect), addressed to Arbor, explaining that the building planned for construction is " as-of-right." (Herrick Complaint, ¶ 34). Herrick allegedly advised Arbor that the opinion from Gourlay would be meaningless as the architect was not a lawyer (Transcript, p. 8)). On May 4, 2007, Gourlay issued a letter addressed to " Arbor Realty Funding LLC" opining that " [The Project] is being developed on an as-of-right basis as a tower (without any height limit) ... and ... is not required to be developed under [New York City's tower-on-base regulations ...." (the " Gourlay Opinion" ). Herrick allegedly reviewed the Gourlay Opinion and assured Arbor of its accuracy. Thus, Arbor closed on the loans days later for a principal amount of approximately $70 million, which were to mature on March 7, 2008.

The DOB issued building permits, and construction of the tower began.

With the loans approaching maturity, in early 2008, East 51st Street sought and obtained preliminary commitments from lenders ( i .e., ULLICO for at least $187 million) for construction and mezzanine financing to repay Arbor and proceed with the next phase of construction (Transcipt, pp. 10-11). The lenders (and the DOB) then began a zoning review of the Project, during which period, Herrick assured Arbor that East 51st Street's interpretation of the Zoning Resolution was accurate (Herrick Complaint, ¶ 60).

According to Herrick, Mitzner " went back to" the DOB and " got the General Counsel of the Department of Buildings to confirm that the approvals given by the technical staff in the Department of Buildings were in fact legally correct, ULLICO notified Arbor on ... March 6th of 2008 that it had overcome its problems with the zoning issues ... [and] was prepared to close .... " notwithstanding the downturn in the economic market (Transcript, pp. 13-14).

However, after completing their due diligence, which uncovered issues concerning the zoning of the Project, in February and March 2008, two of the lenders declined to close on their loans.[4] (Gourlay Complaint, ¶¶ 44, 48). And by this time, the Developer had already completed the foundation of the " tower" and begun preliminary construction on the body of the tower.

Then tragically, on March 15, 2008, (two weeks before ULLICO was going to close) a crane operating at the Project collapsed, resulting in several fatalities and property damage in the surrounding area. (Transcript, p. 14). On March 24th, Arbor met with Herrick, and was advised for the first time that Herrick's advice concerning the zoning viability of the Project was " aggressive." (Herrick Complaint, ¶ 69-70) And, on May 1, 2008, at the request of East 51st Street, Arbor agreed to extend the maturity date of its loans for two months (Gourlay Complaint, ¶ 46).

On June 13, 2008, the DOB revoked East 51st Street's building permits, citing zoning violations which purportedly included the regulations governing the " tower" and " tower-on-base" configurations (Developer Complaint, ¶ 83). The Developer ultimately defaulted on Arbor's loans, and to mitigate its losses, Arbor sold the loans at a substantial loss.

The Gourlay Action

To recover its losses ($64,000,000), on June 16, 2010, Arbor brought an action against Gourlay alleging professional malpractice and negligent misrepresentation based on Gourlay's Opinion regarding the Project's compliance with the zoning regulations (Gourlay Complaint ¶¶ 24-29). Arbor alleges that had it known Gourley's Opinion, that the building could be built as planned, was erroneous, it would have never made its loans to East 51st Street. Arbor claims that as a result of Gourley's Opinion, it was deprived of the ability to be repaid by East 51st Street in accordance with the terms of the loans, and the ability to realize the true value of the loans ( id., ¶¶ 50, 59).

The Herrick Action

In April 2011, almost a year later, Arbor commenced the instant action against Herrick for legal malpractice, alleging that but for Herrick's failure to advise that the Project could not be built as a " tower," and that the Project could not be built on the proposed zoning lot because of an underlying " split lot" condition (Herrick Complaint ¶¶ 57, 82-133), Arbor would have not made its loans to East 51st Street. Arbor claims that Herrick failed to conduct an independent due diligence examination and neglected to advise that both the Gourlay Opinion and Herrick's own advice about the accuracy of the Opinion were " wrong, ‘ aggressive,’ or that the applicable zoning regulations were unclear and difficult to interpret" ( id., ¶¶ 39-40).[5]

The Developer Action

Two months later, on June 13, 2011, East 51st Street sued Blank Rome and Cozen for professional (legal) malpractice, negligent misrepresentation, and breach of contract in connection with the zoning advice they gave prior and subsequent to the crane collapse. East 51st Street claims that but for the improper zoning advice of Mitzner (while at Cozen and Blank Rome) that the building could be built as planned, and the failure to conduct its independent due diligence with respect to the applicability of the zoning regulations, East 51st Street would not have decided to build the building at the site, sought out and obtained financing from Arbor, and defaulted on the loans. As a result of the alleged malpractice, East 51st Street overestimated the value of the Project and was unable to obtain appropriate construction financing by the March 31, 2008 maturity date of Arbor's loans (Developer Complaint, ¶¶ 19, 24-25).

The Developer also alleged that the law firms failed to properly respond to the DOB's inquiry and subsequent revocation of the permit following the crane collapse.


In support of consolidation, Herrick (and Gourlay) argue that all three actions should be consolidated as they all share common questions of law and fact arising from malpractice relating to the same zoning issues at the same Project.[6] Like Arbor, the Developer alleges that because of the defendants' participation in the zoning issues, the Developer was ultimately unable to obtain construction financing, and therefore, defaulted on its loans to Arbor. The crane collapse, Mitzner's opinions (from the outset and subsequent to the crane collapse), and the economic downturn which affected the New York real estate market overlap in all three cases, such that a finding of negligence against any of the defendants would affect the causation analysis with respect to Arbor's losses. There is also a substantial overlap of the parties, witnesses and evidence.

In addition, consolidation would promote judicial economy by avoiding multiple depositions of the same witnesses on the same issues. It would also save unnecessary costs and prevent delay. Since no depositions have taken place in any of the three cases, consolidation would allow the witnesses, parties and non-party subpoena recipients to be heard once.

Furthermore, consolidation is necessary to prevent any injustice that would result from divergent decisions, as the court would be forced to analyze the zoning issues, weigh the reasonableness of the professional zoning advice in light of the surrounding circumstances and determine the causation issues in each of the three actions, based on the same set of facts.

Finally, no party will suffer prejudice if the actions are consolidated.

In response, Arbor argues that its actions against Herrick and Gourlay should not be joined with the Developer Action because of the overriding risk of jury confusion during a consolidated trial, which would cause prejudice to Arbor.

First, argues Arbor, although there are common questions of law and fact in the three actions, material differences exist between Arbor's two actions on the one hand, and the Developer Action on the other. For example, the bases of malpractice in the Arbor actions, i.e., Herrick's advice to Arbor and the Gourlay Opinion, are different from the basis of malpractice in the Developer Action, i .e., Cozen/Blank Rome's advice.

Second, there are different issues of negligence and proximate cause in the three actions that would cause jury confusion. A jury will be confused by having to consider claims and irrelevant evidence of two separate plaintiffs against four different defendants, whose alleged acts of malpractice occurred over different periods of time. And, the nature of Arbor's claims as a short-term lender is different from that of the Developer's, and involves different interests and risks. Further, evidence of malpractice and advice by the three different law firms (Herrick, Blank Rome and Cozen) are not identical, and despite overlapping witnesses, there are some witnesses not common to all three actions. And, if Arbor's actions (which are advanced in discovery), are consolidated with the Developer Action (in which no discovery has been exchanged), undue delay may occur if Gourlay or Blank Rome moves for summary judgment.

Blank Rome opposes consolidation on similar grounds, adding that, unlike the Arbor Action, the Developer Action contains allegations of post-crane collapse malpractice and other causes of action, which do not primarily or exclusively relate to the Arbor's loan.[7] That the allegations in all three cases are almost identical, does not mean that the cases are also identical. The applicable standards of care, particular circumstances related to causation and comparative fault, and the nature and extent of damages in each action are different, since each plaintiff had a different relationship to the Project and was affected differently by the crane collapse. Further, the crane collapse, while crucial, is only one of the causal factors in all three actions. And, postcrane collapse advice by Blank Rome is unique to the Developer Action and the Developer seeks damages which go beyond repaying the Arbor's loan, i.e., for lost profits and lost business opportunities. Arbor's claims against Herrick and Gourlay have nothing to do with Blank Rome's advice after the crane collapse.

Consolidation would cause jury confusion at great prejudice to Blank Rome, and there is no risk of divergent verdicts because many of the important issues and circumstances in the three actions are unique, rendering any differing verdicts reasonable. Finally, Blank Rome agrees to coordinate overlapping discovery among the three actions in order to avoid unnecessary burdens on the parties, non-parties and the court. There is no prejudice to the parties in denying consolidation.

Cozen also opposes the motion on almost identical grounds, arguing that individual issues in each case predominate. For example, issues of whether and how the Developer's lawyers breached their duty of care to their clients have nothing to do with whether Arbor's lawyers and the Architect separately breached their duties to Arbor. The different roles and legal advice of the Developer's/borrower's and the Arbor's/lender's attorneys and the time during which the alleged malpractice was committed or leading to malpractice, are different, and therefore, unique to each case. Courts have held that a common property is insufficient to establish common question of law or fact for purposes of consolidation.

Cozen further contends that the evidence required to prove claims in the Developer and Arbor Actions does not overlap and no risk of divergent decisions exist. That different juries may come to different conclusions on the issue of whether the zoning advice was correct, has no bearing on the proof that each defendant will submit in defense of its actions. For example, unlike Herrick, as Arbor's counsel, Cozen, as Developer's counsel, may demonstrate that the Developer had been for many years fully aware of the zoning issues and the DOB's pre-crane collapse view of those issues, and that Cozen acted well within its required standard of care. Thus, since the jury issues are different, a verdict in one action will have no collateral estoppel or res judicata effect in the other.

Cozen also contends it will suffer prejudice due to the jury confusion if the actions are consolidated, because presenting all three cases in one trial would bolster each claim to defendants' disadvantage.[8]

Notably, Cozen and Blank Rome do not object to conducting joint discovery with respect to potentially overlapping discovery and to scheduling joint depositions where necessary. However, Arbor disapproves, contending that it would be forced to either participate in the depositions of witnesses not noticed in its actions, or risk missing an opportunity to cross-examine a witness; and that it would be problematic if during jointly conducted depositions, the Developer objects to Arbor's examining witnesses it noticed first.[9]

In reply, Herrick argues that neither Gourlay nor the Developer opposes consolidation of the Herrick and the Gourlay Actions, and that most defendants effectively acknowledge that consolidation of such two matters is warranted. Consolidation of the Developer Action with the two Arbor Actions is also appropriate as the important facts and legal issues linking the Developer Action to the Arbor actions are the zoning issues at the Project, the representations made and the advice given by the Developer's and Arbor's counsel regarding the zoning compliance of the Project, and the intervening events of the crane collapse and the economic downturn. The Developer expressly alleged that Cozen's and Blank Rome's actions impacted its decision to obtain the loan from Arbor (see Developer's Amended Complaint, ¶¶ 19, 24, 47, 50-51).

The chronology of the events and the " cast of characters" in the Developer Action are intertwined with and directly relevant to the Arbor actions. Mitzner, in representing the Developer, was " instructed" by Herrick to obtain a " zoning certification letter" from Gourlay regarding the Project zoning issues. Mitzner also prepared the DOB " Precon" letters at the heart of Arbor's actions and was a central figure regarding the Project zoning issues during the weeks that Herrick worked to close the loans. The documents produced by the Developer in the Herrick action prove that the Developer directed both Gourlay and Mitzner (while at Blank Rome), to be very cautious about sharing the zoning information with other interested parties (Susan Dwyer Affirmation, exhibit D).

Mitzner's conduct in obtaining the DOB's approvals and permits for the Project even prior to Arbor's and Herrick's involvement with the Project are relevant to the issue of whether Herrick breached its duty under the relevant standard of care. Likewise relevant to the Herrick Action is that Mitzner, upon Herrick's request, provided to Herrick information concerning the Project's zoning (Vincent J. Syracuse, Esq. (for Arbor) Affirmation, exhibit 2).

As to common witnesses, Arbor has issued subpoenas for documents and testimony from all parties in the Developer Action as integral witnesses in the Arbor actions. In any event, the allegations in the Developer's Amended Complaint virtually track the allegations in Arbor's Complaint filed in the Herrick Action, and contrary to the opposition, individual issues do not predominate. Any potential jury confusion can be mitigated at trial by the appropriate jury instructions and any risk of prejudice is outweighed by the possibility of inconsistent verdicts if separate trials ensue, i.e ., different jury finding with respect to the impact of the intervening events, like the fatal crane collapse and the economic meltdown, on causation.

Furthermore, there is no prejudice of the delay. While the discovery in the Arbor actions is more advanced than in the Developer Action, the Arbor actions are far from being trial ready and have not been placed on a trial calendar. As recognized by the opposing parties, unnecessary costs can be avoided through joint coordination of discovery.

In a separate reply, Gourlay does not object to consolidation of the Arbor actions, but makes an exception to " the interpretation of fact as presented by Herrick" (Gourlay Affirmation reply, ¶ 4). Gourlay also clarifies its position, stating that the three actions should be simply " joined" for discovery and trial.


Pursuant to CPLR § 602(a), when actions involving a common question of law or fact are pending before a court, the court " may order a joint trial of any or all the matters in issue, may order the actions consolidated, and may make such other orders concerning proceedings therein as may tend to avoid unnecessary costs or delay" (CPLR 602[a] ). While it is not necessary that all rules and all facts be common to both actions, " [t]here must at least be some important rules of law and some substantial issues of fact to be determined that are in common to both actions" ( Siegel v. Greenberg, 85 A.D.2d 516, 444 N.Y.S.2d 622 [1st Dept 1981], citing Gibbons v. Groat, 22 A.D.2d 996, 254 N.Y.S.2d 843 [3d Dept 1964] ). Indeed, consolidation is mandated by judicial economy where two lawsuits are intertwined with common questions of law and fact ( Teitelbaum v. PTR Co., 6 A.D.3d 254, 774 N.Y.S.2d 699 [1st Dept 2004] (consolidation warranted where both actions arose out of the same partnership agreement, the parties to each possess knowledge and information relevant to the claim in the other, and the lists of potential witnesses in the two cases are almost identical) (emphasis added)).

Further, consolidation is generally favored by the courts " in the interest of judicial economy and ease of decision making where there are common questions of law and fact, unless the party opposing the motion demonstrates that consolidation will prejudice a substantial right" ( Amcan Holdings, Inc. v. Torys LP, 32 A.D.3d 337, 340 [1st Dept 2006], citing Amtorg Trading Corp. v. Broadway & 56th St. Assoc., 191 A.D.2d 212, 213 [1st Dept 1993] ). The burden of demonstrating prejudice to a substantial right is on the party opposing consolidation ( Progressive Ins. Co. v. Vasquez, 10 A.D.3d 518, 519 [1st Dept 2004]; Geneva Temps Inc. v. New World Communities, Inc., 24 A.D.3d 332, 334 [1st Dept 2005] ).

At the outset, it cannot be disputed that Arbor's actions against Herrick and Gourlay Actions share the same plaintiff (Arbor), and are premised upon the same (allegedly mistaken) Gourlay Opinion which served as a critical basis for Arbor's loan to East 51st Street, whose default allegedly caused Arbor significant monetary damages. Notably, no party offered any meaningful opposition to the consolidation of these two actions. Therefore, these two actions (the " Arbor actions" ) are consolidated for all purposes.

However, whether consolidation of the Arbor actions with the Developer Action is not as simply analyzed.

The Court finds that there are material questions of law and fact common to all three actions, such that judicial economy would be served in consolidating these actions, without resulting in significant prejudice to the parties.

As to the common question of law, professional malpractice is the crux of each of the consolidated cases. Malpractice is the negligence of a professional toward a person for whom a service is rendered ( Tyree Organization, Ltd. v. Cashin Associates, P.C., 14 Misc.3d 1220(A), 836 N.Y.S.2d 490 (Table) [Sup.Ct., Nassau County 2007] citing Santiago v. 1370 Broadway Assoc., 264 A.D.2d 624, 695 N.Y.S.2d 326 [1st Dept1999] ). As alleged in the complaints, all defendants herein are allegedly liable for malpractice based on their departures from the standard of care expected of members of their respective professions and their departures were a proximate cause of each plaintiff's injury ( Giambona v. Stein, 265 A.D.2d 775, 697 N.Y.S.2d 399 [3d Dept 1999] ). The Court notes that the proximate cause and actual damages elements of the legal malpractice claims require Arbor and East 51st Street to demonstrate, additionally, " that ‘ but for’ the attorney's conduct the client would have prevailed in the underlying matter or would not have sustained any ascertainable damages had defendants exercised due care ( Levine v. Lacher & Lovell-Taylor, 256 A.D.2d 147 [1st Dept 1998]; Rubinberg v. Walker, 252 A.D.2d 466 [1st Dept 1998]; Perks v. Lauto & Garabedian, 306 A.D.2d 261 [2d Dept 2003]; see also, Bazinet v. Kluge, 14 A.D.3d 324 [1st Dept 2005]; Gonzalez v. Ellenberg, 5 Misc.3d 1023 [Sup.Ct., New York County 2004] ). However, there is no showing that this additional legal issues would cause any jury confusion or other prejudice to Arbor, and of note, East 51st Street does not oppose consolidation of its action with Arbor's Actions.

Further, common questions of fact exist concerning the accuracy of the same zoning opinion allegedly rendered and/or endorsed by each of the defendants, i.e., that the " tower" could be built, as proposed, on the lots in question. This zoning opinion, allegedly endorsed by Cozen/Blank Rome ( via Mitzner) in East 51st Street's action, and by Herrick/Gourlay in Arbor's actions, which caused East 51st Street to borrow, and Arbor to lend, funds to finance the Project is a critical, material fact shared in all actions. Mitzner's legal advice in forming the opinion, with Gourley, that the " tower" could be built, as proposed, on the lots in question, is the common thread woven in the fabric of each action.

Critically, Arbor's cases against Herrick and Gourlay stemming from the advice Herrick gave during the limited time period of the loan process, are not materially different from East 51st Street's case against Cozen/Blank Rome, which involves advice Cozen/Blank Rome gave to build a project that " evolve[d] overtime." (Transcript, p. 36). The advice given by Mitzner (of Cozen/Blank Rome) to East 51st Street at the outset of the Project and before the loan was pursued, later resurfaced when Mitzner allegedly consulted with Herrick to obtain the certification from Gourlay during the loan process. Contrary to Arbor's contention, the issue of " did you [Herrick] give proper zoning advice or not" or " should you [Herrick] have told me that the advice you were giving me was aggressive" (Transcript, p. 36) is intertwined, and interdependent on whether the opinion given, i.e., the Gourley Opinion (allegedly created with the assistance of Mitzner of Cozen/Blank Rome), was proper, which is the very issue in the Developer's case. As shown by the parties' efforts at consolidated document and deposition discovery, there is a significant overlap of witnesses and documents common to each action.

And, although the parties on the plaintiffs' side, and the parties on the defendants' side, are different, it has been stated if " it is otherwise proper, a consolidation will not be denied because the parties involved are not identical" ( MCC Funding LLC v. Diamond Point Enterprises, LLC, 36 Misc.3d 1206(A), 954 N.Y.S.2d 760 (Table) [Sup.Ct., Kings County 2012] citing Philip Shlansky & Bro., Inc. v. Grossman, 273 A.D. 544, 546 [1st Dept 1948] ). Further, while it cannot be disputed that the plaintiff in the Developer Action was the " borrower," and the plaintiff in the Arbor actions was the " lender," each of which served different purposes with respect to the Project, each had the same interest in the legitimacy of the Opinion that " tower" could be built as planned and represented by Mitzner. Due to the interdependency and relationship of the different defendants (and Mitzner), whose alleged acts and omissions affected the coordination and financing of the Project, and who allegedly coordinated their opinions to complete the Project, consolidation is warranted, notwithstanding that the plaintiffs are the lender and borrower of this Project.

Here, the opponents to consolidation have not met their burden of demonstrating prejudice to a substantial right. Courts have found that substantial rights are prejudiced when consolidation would result, for example, where the " presentation of both claims to the same jury would tend to bolster each claim to defendants' disadvantage" ( Tarshish v. Assoc. Dry Goods Corp., 232 A.D.2d 246, 247, 648 N.Y.S.2d 298 [1st Dept 1996] ); where consolidation would result in jury confusion, prejudicing the rights of a party to a fair trial ( Skelly v. Sachem Cent. Sch. Dist., 309 A.D.2d 917, 918 [2d Dept 2003] ); where jury confusion would result when consolidation causes a party to be identified as both a plaintiff and a defendant ( Geneva Temps, Inc. v. New York Communities, Inc., 24 A.D.3d 332, 335 [1st Dept 2005] ); or it would unduly complicate the issues ( Durante Bros. & Sons, Inc. v. Rentar Indus. Development Corp., 76 A.D.2d 825, 428 N.Y.S.2d 485 [1st Dept 1980] ).

That East 51st Street has additional claims stemming from advice it received after Herrick's advice to Arbor ceased, will not confuse the jury or cause them to unduly sort through evidence. Likewise, although the issue of whether Herrick properly discharged its duties to Arbor is distinct from whether Cozen/Blank Rome properly discharged their duties to the Developer, such that the proof for each of these claims would not overlap, and the Developer's additional claim against Blank Rome regarding the DOB's revocation of the permits are irrelevant to the Arbor's actions, these differences would not result in jury confusion and are not obstacles to consolidation.

Any prejudice to counsel in requiring them to work more skillfully or strategically in shaping the evidence for the jury to fit their claims and defenses is outweighed by the possibility of inconsistent verdicts if separate trials ensue.

And, any alleged prejudice to the parties in the Arbor actions arising from the different procedural stages to which the two actions have progressed can be cured by the expeditious completion of discovery in Developer Action ( see, Progressive Ins. Co. v. Vasquez, 10 A.D.3d 518, 782 N.Y.S.2d 21 [1st Dept 2004]; Chinatown Apts. v. New York City Tr. Auth., 100 A.D.2d 824, 825, 474 N.Y.S.2d 76 [1st Dept 1984] (affirming consolidation where opposing parties argued that because of the need for extensive discovery in action No. 2 consolidation will delay the prosecution of action No. 1 where substantial discovery has already taken place, and directing that the parties complete all pretrial discovery in action No. 2 expeditiously)). Thus, the purported prejudice arising from the fact that Arbor's Actions are at a different stage than the Developer Action would not result in considerable, undue delay of Arbor Actions.

Under the circumstances of these matters, although seemingly complex issues are intertwined " it would be better ... to facilitate one complete and comprehensive hearing and determine all the issues involved between the parties at the same time ( Shanley v. Callanan Industries, Inc., 54 N.Y.2d 52, 57, 444 N.Y.S.2d 585, 588, 429 N.E.2d 104, 107 1981] ). Thus, public policy favors joint discovery and joint trials of the three matters.[10]


Based on the foregoing, it is hereby

ORDERED that the motion (sequence 001) by the defendants Garrett Gourlay and Garrett Gourlay Architect PLLC, and motion (sequence 002) by the defendant Herrick Einstein LP pursuant to CPLR § 602(a) to consolidate and join for discovery and trial the three cases: (1) Arbor Realty Funding, LLC v. Garrett Gourlay, et al., Index No. 601122/2010; (2) Arbor Realty Funding, LLC v. Herrick, Feinstein LLP, Index No. 651079/2011; and (3) East 51st Street Development Co., LLC, 968 Kingsmen, LLC and 964 Associates, LLC v. Blank Rome, LLP and Cozen O'Connor, Index No. 651623/2011 is granted; and it is further

ORDERED that counsel for defendants Herrick Einstein LP shall serve a copy of this order with notice of entry upon all parties in each of the above actions, and upon the County Clerk.

This constitutes the decision and order of the Court.

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