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Kossoff v. Felberbaum

United States District Court, S.D. New York

December 18, 2017


          Attorney for Plaintiff ESSNER & KOBIN, LLP By: Howard Essner, Esq.

          Attorneys for Defendants EISEMAN LEVINE LEHRHAUPT & KAKOYIANNIS, By: Eric R. Levine, Esq. Eric Aschkenasy, Esq.


          ROBERT W. SWEET U.S.D.J.

         A bench trial in this action was held before the Court between June 5 and June 19, 2017. The evidence demonstrates the heavy risks that can ensue when the personal is mixed with the professional and how the fabrics of fellowship can fray by the need for cash, perhaps paradigmatic of our present society.

         Based upon the prior proceedings, the findings of fact, and conclusions of law set forth below, Plaintiff Mitchell H. Kossoff ("Kossoff" or the "Plaintiff") has proven his claim for unjust enrichment by a preponderance of the evidence to offset his obligation to the Defendant Ricky Felberbaum ("Felberbaum"). The final judgment as between Plaintiff and Defendants Felberbaum and Florida Foreclosure Attorneys, PLLC ("FFA" and, together with Felberbaum, "Defendants") will be entered following additional submissions from the parties.

         Prior Proceedings

         Plaintiff filed his Complaint in New York State Supreme Court on January 28, 2014, alleging claims of breach of contract, unjust enrichment, accounting, fraud, and a declaratory judgment voiding a January 11, 2013 promissory note executed by Kossoff in favor of Felberbaum (the "Note"). (See Dkt. No. 2.) On February 24, 2014, Defendants removed the case to federal court under diversity jurisdiction.

         On March 3, 2014, Defendants moved to dismiss Plaintiff's Complaint. (Dkt. No. 4.) On May 7, 2014, Defendants' motion was granted except as to Plaintiff's unjust enrichment claim. (Dkt. No. 14.) On May 21, 2014, Defendants filed a counterclaim against Plaintiff seeking recovery on the Note. (Dkt. No. 15.) Discovery proceeded.

         On October 23, 2015, Defendants moved for summary judgment as to Plaintiff's remaining claim and Defendants' counterclaim. (Dkt. No. 41.) On April 5, 2016, Defendants' motion was granted with respect to Defendants' counterclaims, although without determining the issue of damages, and denied Defendants' motion with respect to Plaintiff's unjust enrichment claim. (Dkt. No. 57.) On May 5, 2016, Defendants' moved for partial summary judgment as to the amount owed to Defendants by Plaintiff under the Note, (Dkt. No. 60), which was denied on September 12, 2016, (Dkt. No. 83). Defendants' motions in limine were heard in November 2016 and addressed by the Court on March 15, 2017. (Dkt. No. 106.)

         Evidence was presented between June 5 and June 19, 2017. Final arguments and submissions were made on August 16, 2017, at which point the matter was marked fully submitted.

         Findings of Fact

         The witnesses over the course of ten days of testimony established that, as a witness, Kossoff was overly emotional, and those emotions often caused imprecision in his testimony. Kossoff periodically had to rephrase or amend prior statements made from before trial or even between days of testimony.[1] The language Kossoff employed in his Complaint, which ranged from the sloppy and hyperbolic to the incorrect, as demonstrated by testimony at trial, was troubling.[2] Nevertheless, Kossoff overall endeavored to be truthful and, underneath the occasional bluster, otherwise was truthful regarding his involvement with Felberbaum and FFA. Felberbaum, while also generally honest, was less of a details-oriented individual than Kossoff, and to the extent that his recollection of discrete events differed from Kossoff, Kossoff's account is generally believed.

         a. The Parties' Relationship and FFA's Beginnings

         Kossoff and Felberbaum's relationship covered three decades, stating in the late 1980s in New York City when Kossoff first became Felberbaum's sponsor in Alcoholics Anonymous ("AA"). (Tr. 27:12-22, 302:1-14.[3]) Through the AA program and Felberbaum's recovery process, the two became close friends. (See Tr. 343:15-20, 440:14-17, 1065:8-1066:2, 1107:20-22.) The relationship was deep and sincere. As Felberbaum aptly stated, Kossoff "was the - still, single-most influential man in my life. He became closer to me than my family." (Tr. 1065:16-17.)

         As part of putting his life back together, Felberbaum returned to Florida, where he had lived previously, and reestablished himself as a real estate lawyer, ultimately opening up a firm named Felberbaum & Associates; Kossoff remained in New York City, where he practiced law at his own law firm, then named Kossoff & Unger and, later, Kossoff, PLLC. (Tr. 28:1-23, 30:3-12, 31:9-11, 39:5-8; 655:9-15.)

         In the years that followed, Kossoff provided assistance and advice to Felberbaum in both personal and professional capacities, including, inter alia, discussing job opportunities, navigating Felberbaum's personal bankruptcy, offering support while Felberbaum sought and acquired readmission to the Florida Bar, and providing a sounding board for personal concerns. (Tr. 28:17-29:19, 38:11-39, 324:10-325:4, 334:7-17, 361:12-363:23, 1065:19-1066:2, 1067:15-17, 1068:17-20, 1069:11-22.) In the years prior to 2010, Kossoff created invoices for Felberbaum for services rendered on only two occasions, of which only one was received and paid.[4] (Tr. 33:1-7, 344:10-18, 347:16-354:21, 1070:16-1071:16; Defs.' Ex. R.) There is no documentary evidence during this time that Kossoff had a policy of keeping time records for his regular interactions with Felberbaum. (Tr. 352:3-5) Kossoff has not sought compensation for any services or assistance he provided Felberbaum or Felberbaum's businesses prior to the beginning of 2011. (Tr. 38:11-14, 306:2-8, 337:16-22.)

         In October 2008, Felberbaum started a foreclosure business, Florida Foreclosure Attorneys, PLLC. (Tr. 1076:21-24.) While a part of FFA's initial business was derived from assets purchased from an existing foreclosure law firm, the Golson Law Firm ("Golson"), by mid-to-late 2010 Felberbaum became a Federal Home Loan Mortgage Corporation ("Freddie Mac") designated vendor, which increased the number of foreclosure files to which FAA had access. (Tr. 39:9-20, 48:21-49:4, 52:13-14, 53:14-22, 203:1-13, 963:19-964:17, 1077:16-1081:10, 1079:9-1081:4, 1204:21-1205:16.)

         In late 2009, the Florida Bar filed a complaint against Felberbaum, alleging improper management of business-related escrow accounts. (Tr. 40:3-42:3, 1092:21-25.) The complaint resulted in a Florida Bar grievance committee hearing in April 2011, for which Felberbaum had local Florida counsel; Kossoff provided assistance during the proceeding by reviewing relevant documents and, at Felberbaum's request, attending the hearing and answering questions to the committee in support of Felberbaum.[5] (Tr. 42:12-47:9, 1094:9-17, 1173:13-17.) By May 2011, the proceeding resolved, and Felberbaum admitted to a minor misconduct, which resulted in no impact on his foreclosure law practice. (Tr. 47:10-17, 49:11-21, 67:12-68:8, 70:11-71:11, 1093:1-23.)

         During Kossoffs trip to Florida for Felberbaum's Florida Bar grievance committee hearing in April 2011, Kossoff and Felberbaum had a conversation in which Felberbaum asked Kossoff if Kossoff would be Felberbaum's partner with regard to FFA.[6](Tr. 51:1-4, 402:5-7.) Kossoff's testimony has varied as to the precise timing, phrasing, and location of the conversation, though the general timing of the conversation, in April 2011, location, Felberbaum's car, and thrust of the conversation, that Kossoff was invited to be involved with FFA's business, has been consistent. (See Tr. 50:12-51:4, 400:10-21, 401:12-402:7, 407:17-408:2.[7]) The consistency with which Kossoff has generally testified to the conversation, in combination with the manner in which Kossoff interacted with FFA during the subsequent years, described below, makes the existence of the conversation more likely than not. Since the grievance hearing took place on April 20, 2011, it is most likely the conversation took place around then. (See Defs.' Ex. II at 8.) At the time of this conversation, no specific details as to Kossoff s compensation as a partner were discussed. (See Tr. 410:10-20, 414:13-20, 431:21-433:18.)

         During 2011 and 2012, Kossoff provided assistance to Felberbaum and FAA on differing aspects of FFA's business as, including:

• A lawsuit brought by Golson against Felberbaum over allegations of Felberbaum's noncompliance with the terms of the purchase agreement of Golson's company, during which Kossoff assisted in reviewing files, corresponding with Golson, and providing perspective to local Florida counsel as to terms of possible settlement. (See Tr. 55:20-56:22, 59:3-65:21, 1091:11-23, 1284:16-19.)
• Issues regarding unresolved title claims, and unpaid local Florida counsel's unpaid invoices claims involving FFA. (See Tr. 77:10-78:9, 83:12-58:13, 86:25-90:6, 94:6-97:8, 1329:22-1330:19.[8])
• Applying for lines of credit from different banks and acquiring a line of credit for FFA from Northern Trust and assisting Felberbaum in acquiring credit to finance FFA operations. (See Tr. 99:13-107:3, 112:1-128:13 1081:16-1083:24, 1285:10-1286:2.)
• Locating, renting, subleasing, and acquiring insurance for additional Florida office space for FFA. (See Tr. 132:18-148:6, 1297:8-1298:13.)
• FFA employee hiring and drafting employee biographies for the FFA website. (See Tr. 159:13-179:24, 189:9-190:21, 195:3-196:24, 1090:18-24, 1310:5-14.)
• General business strategy advice, including with regard to potential litigation. (See Tr. 70:11-74:19, 97:25-99:20, 213:20-225:7, 239:9-241:6, 1320:11-1325:2.)

         Kossoff averred at trial that he was heavily involved in the day-to-day operations of FFA, a dedication inspired by his established relationship as Felberbaum's partner and as evidenced by his appointed title of FFA's Executive Vice President.[9] (See Tr. 66:13-68:8, 153:12-154:11; Pl.'s Exs. 16A, 97, 106, 121.) As part of his involvement with Felberbaum and FFA, Kossoff traveled from New York to Florida approximately a dozen to twenty times from 2011 through 2013, ...

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