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Luca v. Giaccone

United States District Court, E.D. New York

August 24, 2017

JAMES R. LUCA, Plaintiff,
v.
CANDICE GIACCONE, CARLO DELLAPINA, FAIRFIELD FINANCIAL MORTGAGE GROUP, INC., MICHAEL A. HASKEL, ESQ., SCOTT A. STEINBERG, ESQ., Defendants.

          MEMORANDUM & ORDER

          Pamela K. Chen United States District Judge.

         Presently before the Court are Plaintiff James R. Luca's ("Luca") and Defendant Fairfield Financial Mortgage Group, Inc.'s ("Fairfield") competing motions for an order declaring the priority of certain liens attached to funds paid by other defendants in a settlement of related actions brought by Fairfield and deposited into an escrow account ("Escrow Settlement Fund") held by Luca's counsel, La Reddola, Lester & Associates, LLP ("LL&A"). For the reasons stated herein, Luca's motion is denied and Fairfield's motion is granted. Accordingly, the Court declares that Fairfield's attorneys ("Fairfield's Attorneys") have a charging lien on the Escrow Settlement Fund and that Fairfield's Attorneys' charging lien has priority over any charging, retaining or judgment lien Luca or his attorneys, LL&A, may have on the Escrow Settlement Fund.

         BACKGROUND

         A. Fairfield-Luca Cases

         In 2006, Fairfield commenced an action styled as Fairfield Financial Mortgage Group, Inc. v. James R. Luca, Case No. 06-CV-5962 (JMA) (SIL), (E.D.N. Y.) (hereinafter the "Disloyalty Case"). In the Disloyalty Case, Fairfield alleged that certain defendants breached their fiduciary duty owed to Fairfield as its employees, by, inter alia, diverting brokerage business from Fairfield to Defendant Shaw Mortgage Group, Inc. ("Shaw"), a competing broker. (See Zlotnick Decl., Ex. A, Second Amended Complaint in Disloyalty Case, Dkt. No. 16-1, ¶¶ 16-44.)

         In 2011, Fairfield commenced a second action, styled as Fairfield Financial Mortgage Group, Inc. v. James R. Luca, Case No. ll-CV-3802 (PKC) (ARL) (E.D.N.Y.) (hereinafter the "RICO Case"), against many of the same defendants who were sued in the Disloyalty Case, the facts of which provided a significant part of the background for the RICO Case (Collectively, the Disloyalty Case and the RICO Case will be referred to as the "Fairfield-Luca Cases"). The RICO Case arose from damages suffered by Shaw, a defendant in the Disloyalty Case, because of misappropriation of brokerage fees to which Shaw was entitled, but which were concealed from Shaw and ultimately paid to some of the defendants in the RICO Case. (See Zlotnick Decl. Ex. B, RICO Case Compl., Dkt. No. 16-2.) Shaw had assigned to Fairfield the claims asserted in the RICO Case. (See Zlotnick Decl. Ex. C, Agreement and Assignment of Claims, Dkt. No. 16-3, ¶ 3.)

         On or about July 25, 2016, Fairfield and certain defendants in the Fairfield-Luca Cases resolved both actions pursuant to a single settlement agreement ("Settlement Agreement"), which provided for a discontinuance with prejudice against all signatories upon the happening of certain events, including the payment of monies to Fairfield (i.e., the monies constituting the Escrow Settlement Fund) by certain defendants in the Fairfield-Luca Cases. (See PL's Mem. of Law in Supp. of Order to Show Cause for Turnover Order, Dkt. No. 11 at ECF[1] 6; Def's Mem. of Law in Opp'n to Mot. by Luca, Dkt. No. 17 at ECF 7-8.)

         B. The Towne Case

         On or about August 2, 2016, Luca was assigned a judgment that had been entered against Fairfield and Fairfield's principal, Charles Levesque ("Levesque"), in an unrelated action brought by Towne Mortgage Company ("Towne"), styled as Towne Mortgage Company v. Fairfield Financial Mortgage Group, Inc., Case No. 2:14-cv-14015 (E.D. Mich.) (hereinafter the "Towne Case"). (See Zlotnick Decl., Ex. D, Assignment of Judgment, Dkt. No. 16-4; Zlotnick Decl., Ex. E, Judgment against Fairfield in the Towne Case ("Luca Assigned Judgment"), Dkt. No. 16-5; see generally Zlotnick Decl., Ex. F, Towne Case Complaint ("Towne Case Compl."), Dkt. No. 16-6.) The Towne Case Complaint alleged, inter alia, that on February 26, 2008, Fairfield as a lender, had extended a loan to Abibi Ocampo-Guevara ("Guevara Loan" and "Guevara") through Linden Residential Credit Corporation ("Linden"), its broker; that Towne had purchased the Guevara Loan; that Guevara had defaulted on the Guevara Loan; that Towne subsequently sold the Guevara Loan to another entity; and that Towne had been injured because of Fairfield and Levesque's alleged breach of contract, breach of fiduciary duty, fraudulent misrepresentations, and fraudulent inducement, largely in connection with the Guevara Loan. (See Zlotnick Decl., Ex. F, Towne Case Compl., Dkt. No. 16-6, passim.)

         On March 21, 2016, judgment was entered in the Towne Case, in favor of Towne and against Fairfield only, in the amount of $400, 000. (Zlotnick Decl., Ex. E., Luca Assigned Judgment, Dkt. No. 16-5.) The judgment in Towne Case was assigned to Luca from Towne on August 2, 2016. (Zlotnick Decl., Ex. D, Assignment of Judgment, Dkt. No. 16-4.)

         C. The Turnover Case

         On September 7, 2016, Plaintiff Luca filed the Complaint in the instant action (hereinafter the "Turnover Case"). (Complaint ("Compl.") Dkt. No. 1.) Luca initiated this action in an effort to collect on the Luca Assigned Judgment. Specifically, Luca seeks the following relief: (1) judgment requiring Disloyalty and Rico Case Defendants Candice Giaccone ("Giaccone") and Carlo Dellapina ("Dellapina") turn over to Luca the amount Giaccone and Dellapina owe to Fairfield under the Settlement Agreement;[2] (2) a declaratory judgment declaring that upon Giaccone and Dellapina's turnover of the Settlement Amount to Luca, the Settlement Amount under the Settlement Agreement has been paid in full by the Settling Parties in the Fairfield-Luca Actions, and directing Fairfield to file stipulations of dismissal with prejudice in the Fairfield-Luca Actions with respect to the Settling Parties; and (3) a temporary restraining order and preliminary injunction staying, during the pendency of this action, the entry of judgment by Fairfield against the Settling Parties in the Fairfield-Luca Actions based upon any alleged violations of the terms of the Settlement Agreement by the Settling Parties. (Compl. at ECF 7-8.)

         On September 8, 2016, the Court held a hearing where it ordered, in relevant part, (1) "the full amount due from all Defendants other than Tarasco and the Mob erg Defendants shall be transferred timely, by 9/10/16, to Mr. Lester's [Luca's counsel in the Turnover Case] attorney escrow account, with Mr. Lester sending Plaintiff confirmation thereof;" (2) Jonathan Bruno, counsel for the Moberg Defendants in the Disloyalty Case, to "obtain the full agreed-upon settlement amounts due from the Moberg Defendants . . . and from Tarasco, and [to] transfer said settlement amounts to Mr. Lester, sending Plaintiff confirmation that he has done so;" and (3) "[u]pon receipt of these additional amounts, Mr. Lester shall inform Plaintiff that he holds the full agreed-upon settlement amounts from both [the RICO Case] and [the Disloyalty Case]. (Minute Entry dated September 8, 2016, in RICO Case, No. ll-cv-3802.) "Mr. Lester shall hold these settlement amounts in escrow, pending the Court's resolution of the priority of various liens asserted on those settlements amounts." (Id.) Giaccone deposited by wire transfer to LL&A's attorney IOLA[3] account the entirety of the amount she and the other settling defendants owed to Fairfield under the Settlement Agreement in the Fairfield-Luca cases. (See Def's Mem. of Law in Opp'n to Mot. by Luca, Dkt. No. 17 at ECF 10.)

         By stipulation dated September 29, 2016, Luca, Fairfield, and Fairfield's counsel have agreed that if the Court determines that Fairfield's Attorneys have priority over Luca and LL&A with respect to the Escrow Settlement Fund, the Turnover Case Complaint will be dismissed with prejudice as against Fairfield and Fairfield's counsel, and any restraining notices affecting any funds deposited by Giaccone and Dellapina into LL&A's attorney IOLA account shall be withdrawn with prejudice with respect to the funds at issue in the Turnover Case, so that the Escrow Settlement Fund may be delivered to Fairfield and/or Fairfield's counsel. (Dkt. No. 9 ¶ 6.) On the other hand, if Luca or his attorneys prevail as to the priority issue, the funds deposited by Giaccone and Dellapina into LL&A's attorney IOLA account shall be used to satisfy the proceeds of the Luca Assigned ...


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