Motion to Dismiss in Upfront Megatainment, Inc. f/k/a UPFRONT ENTERTAINMENT, INC., Darrick Stephens p/k/a/ DEVYNE STEPHENS v. Napoli Shkolnik, Pllc, Manson Johnson Conner Pllc| Trellis.Law

On August 02, 2023 a Exhibit,Appendix was filed involving a dispute between Darrick Stephens P K A Devyne Stephens, Upfront Megatainment, Inc. F K A Upfront Entertainment, Inc., and Manson Johnson Conner Pllc, Napoli Shkolnik, Pllc, for Special Proceedings - CPLR Article 75 in the District Court of New York County.

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EXHIBIT 8
FILED: NEW YORK COUNTY CLERK 08/02/2023 10:28 PM INDEX NO. 653732/2023
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THE ARBITRATION TRIBUNALS OF THE
AMERICAN ARBITRATION ASSOCIATION

NAPOLI SHKOLNIK, PLLC and MANSON Case No. 01-22-0004-6761
JOHNSON CONNER PLLC,

Claimants,
-vs-

UPFRONT MEGATAINMENT, INC., f/k/a
UPFRONT ENTERTAINTMENT, INC. and
DARRICK STEPHENS p/k/a DEVYNE
STEPHENS,

Respondents.

RESPONDENTS’ REPLY IN SUPPORT OF

MOTION TO DISMISS DEMAND FOR ARBITRATION

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TABLE OF CONTENTS

Page

I. PRELIMINARY STATEMENT ........................................................................................ 1

II. ARGUMENT ...................................................................................................................... 2
A. THE FIRMS’ CLAIMS AGAINST RESPONDENTS IN THIS
ARBITRATION ARE BARRED BY RES JUDICATA AND
COLLATERAL ESTOPPEL AND SHOULD THEREFORE BE
DISMISSED WITH PREJUDICE .......................................................................... 2
B. THE FIRMS’ REQUEST TO STAY THE ARBITRATION PENDING
APPEAL SHOULD BE DENIED .......................................................................... 7
C. RESPONDENTS ARE ENTITLED TO RECOVER THEIR ATTORNEYS’
FEES AND COSTS UNDER COMMERCIAL ARBITRATION RULE 47 ......... 9

III. CONCLUSION ................................................................................................................. 11

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TABLE OF AUTHORITIES

Page(s)

CASES
Campagnola v. Mulholland, Minion & Roe,
76 N.Y.2d 38 (1990) ..................................................................................................................5

Chanko v. Am. Broad. Cos., Inc.,
No. 152552/13, 2014 WL 3797287 (Sup. Ct. N.Y. Cnty., July 30, 2014) ................................8

CPMI, Inc. v. Kolaj,
137 A.D.3d 953 (2d Dep’t 2016) ...............................................................................................7

Nama Holdings, LLC, v. Greenberg Traurig LLP,
76 A.D.3d 804 (1st Dep’t 2010) ................................................................................................8

Napoli Shkolnik PLLC et al v. Movit, et al.,
Index No. 601427/2023 .............................................................................................................8

Plaza PH2001 LLC v. Plaza Residential Owner LP,
98 A.D.3d 89 (1st Dep’t 2012) ..................................................................................................7

Rowley, Forrest, O’Donnell & Beaumont, P.C. v. Beechnut Nutrition Corp.
55 A.D.3d 982 (3d Dep’t 2008) .................................................................................................3

Sacarello v. City of N.Y.,
124 A.D.3d 617 (2d Dep’t 2015) ...............................................................................................6

Simmons v. Trans Express Inc.,
37 N.Y.3d 107 (2021) ............................................................................................................3, 4

Siskin v. Cassar,
122 A.D.3d 714 (2d Dep’t 2014) ...........................................................................................4, 5

Steyn v. CRTV, LLC,
175 A.D.3d 1 (1st Dep’t 2019) ..................................................................................................9

Tsabbar v. Auld,
26 A.D.3d 233 (1st Dep’t 2006) ..............................................................................................10

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I. PRELIMINARY STATEMENT

The Firms’ Opposition conclusively shows that they do not consider themselves bound

by the facts or law, and will continue to pursue their frivolous claims in every available venue.

The Arbitrator can stymie those efforts by dismissing this Arbitration, and should do so for the

following reasons in addition to those set forth in Respondents’ Motion.

First, the Firms assert a shotgun blast of misleading, incorrect and unsupported arguments

regarding res judicata and collateral estoppel, claiming that neither doctrine is applicable. With

respect to res judicata, the Firms unsuccessfully try to argue that the instant Arbitration relates to

different issues than the underlying Supreme Court dispute—even though both actions are based

on Respondents’ purported right to $250,000 that was to be secured by the charging liens that the

Supreme Court vacated because it found the Firms were terminated for cause. As to collateral

estoppel, the Firms assert that they were not given a full and fair opportunity to litigate their

claims because they were not provided an evidentiary hearing—ignoring that they submitted no

evidence giving rise to “conflicting claims,” and therefore could not overcome Respondents’

prima facie showing that they were discharged for cause (and therefore entitled to no

compensation as a matter of law).

Second, the Firms improperly request that the Arbitrator stay these proceedings pending

resolution of the Firms’ appeal of the Supreme Court’s orders vacating their Charging Liens.

The Arbitrator should reject this request because the Firms admit that the pending appeal does

not take away the Arbitrator’s ability to apply preclusion doctrines as Respondents request (and

so there is no basis for a stay). Moreover, the Firms continue to engage in several months of

delay in perfecting their appeals, during which time they have multiplied these proceedings by

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filing both this Arbitration and another lawsuit against Respondents’ counsel arising from the

same facts. The Firms have only themselves to blame for the flood of litigation they have

unleashed, and they should not be allowed to benefit from their abuse of the legal process by

now pausing this Arbitration that they commenced.

And third, the Firms unsuccessfully argue that Respondents are not entitled to recover

their attorneys’ fees incurred in connection with this arbitration because the Firms’ conduct was

not frivolous and because the Arbitrator “lacks jurisdiction” to consider their misconduct that

took place outside the confines of this Arbitration. But the Firms ignore (and thereby concede)

that Respondents are entitled to attorneys’ fees under the AAA rules regardless of any

misconduct, because all parties have requested they be awarded. That said, their claims are

unquestionably frivolous, and New York law allows courts to consider a wide range of

misconduct in imposing sanctions (i.e., not just that taking place in the case before them).

Accordingly, Respondents respectfully request that the Arbitrator grant their Motion and

dismiss the Firms’ Arbitration Demand.

II. ARGUMENT

A. THE FIRMS’ CLAIMS AGAINST RESPONDENTS IN THIS
ARBITRATION ARE BARRED BY RES JUDICATA AND COLLATERAL
ESTOPPEL AND SHOULD THEREFORE BE DISMISSED WITH
PREJUDICE

1. Res Judicata

The Firms assert a scattershot series of arguments purporting to explain why res judicata

does not apply, none of which have any merit.

First, the Firms argue that because they were non-parties in the underlying action, and

because the Firms did not file motions of their own, there purportedly was “no First Proceeding
2

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or cause of action between Claimants and Respondents that could trigger res judicata.” This is a

misguided argument, at best. By filing notices of charging liens, the Firms inserted themselves

into the proceedings and submitted to the Supreme Court’s jurisdiction. 1 This triggered a dispute

between Respondents and the Firms (i.e., whether the Firms were terminated for cause and

therefore not entitled to compensation) that the Supreme Court fully and finally resolved. The

Firms cite no legal support for this argument, and it should therefore be rejected.

Second, the Firms argue that the dispute over the validity of the charging lien constituted

an in rem proceeding against an “asset” (the $250,000 to which they claim to be entitled), and so

it was not a claim levied personally against the Firms, making res judicata inapplicable. The

Firms again cite no authority for this proposition, and indeed New York courts have held that

efforts to obtain a charging lien can be the basis for later applying res judicata. See, e.g.,

Rowley, Forrest, O'Donnell & Beaumont, P.C. v. Beechnut Nutrition Corp. 55 A.D.3d 982, 984

(3d Dep’t 2008) (law firm’s effort to obtain charging lien barred by res judicata because

charging lien could have been sought in prior lawsuit to recover legal fees).

Third, Defendants assert a hodgepodge of unavailing arguments regarding other elements

of res judicata:

• Defendants cite to Simmons v. Trans Express Inc., 37 N.Y.3d 107, 111–12 (2021),

a case involving small claims court judgments, to argue that their causes of action

1
This refutes the Firms’ argument that the Supreme Court lacked jurisdiction over its present
claims. The Supreme Court unquestionably had jurisdiction to vacate the charging liens sought
by the Firms, and all of the Firms’ causes of action in this Arbitration are founded on a purported
right to payment of the same sum that was to be secured by the charging liens (i.e., $250,000).
Because the Supreme Court’s rejection of the charging liens eviscerates all of the Firms’ causes
of action, this jurisdictional argument is nothing more than a red herring.
3

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in this Arbitration do not arise from the same transaction as the dispute regarding

the charging liens in the Supreme Court. But in Simmons, the Court of Appeals

held that courts should analyze whether claims turn on facts that are “related in

time, space, origin, or motivation, whether they form a convenient trial unit, and

whether their treatment as a unit conforms to the parties’ expectations or business

understanding or usage,” in order to prevent litigants from “taking two bites at the

apple.” That is precisely the case here; as the Firms’ own Arbitration Demand

confirms, their claims in this Arbitration are founded on their alleged entitlement

to the same $250,000 that was the subject of the charging liens that the Supreme

Court vacated because it found the firms were terminated for cause. This more

than meets the standard discussed in Simmons.

• The Firms next assert that the existence of an agreement to arbitrate between the

parties “does not preclude enforcement of the charging lien.” Respondents have

never made this argument; instead, enforcement of the charging lien is precluded

as a matter of black letter law by the Supreme Court’s undisputed finding that the

Firms were terminated for cause.

• Lastly, the Firms contend that they “should be paid for the completed services and

efforts that created the $3,250,000 settlement fund” by mischaracterizing the

holding of Siskin v. Cassar, 122 A.D.3d 714, 716 (2d Dep’t 2014), a case cited by

Respondents. The Firms latch on to Siskin’s citation of the well-recognized

proposition that “an attorney who is discharged without cause before the

completion of services may recover the reasonable value of his or her services in

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quantum meruit,” and claim that they fall into this category. However, the Firms

ignore the second part of the quoted passage, also cited in Respondents’ Motion,

stating that “an attorney who is discharged for cause is not entitled to any

compensation or lien.” 122 A.D.3d at 716 (emphasis added). Because the Firms

indisputably were terminated for cause, their mischaracterization of Siskin is

irrelevant.

2. Collateral Estoppel

The Firms’ arguments pertaining to collateral estoppel are even more disjointed and

confusing but essentially rest on two points: (1) that Respondents purportedly have not shown an

identity of issues between the Arbitration and the underlying action and (2) that the Firms did not

have a full and fair opportunity to litigate the issues at hand. They are wrong on both points.

On the first point, the Firms make much of their asserting a breach of contract claim in

this action seeking damages and claim that it makes this proceeding wholly different from their

efforts to obtain a charging lien. This is sophistry. As the Arbitration Demand clearly states, all

of the Firms’ claims for “damages” are founded on Respondents’ alleged failure to pay the

$250,000 that was the subject of the charging liens the Firms sought (and which were vacated).

The Supreme Court found on the merits that the Firms were terminated for cause, meaning that

they are not entitled to any compensation as a matter of law, “notwithstanding a specific

retainer agreement.” Campagnola v. Mulholland, Minion & Roe, 76 N.Y.2d 38, 44 (1990)

(emphasis added). Accordingly, because the Firms were not entitled to the $250,000 that forms

the basis of all of their claims, this eviscerates any breach of contract cause of action the Firms

claim to have. The issues are therefore clearly identical.

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On the second point, the Firms argue they were not given a full and fair opportunity to

litigate the issues that they are raising in this Arbitration. Their main contention is that they

should have been provided an evidentiary hearing to determine whether they were terminated for

cause. What the Firms omit is that they were denied an evidentiary hearing because there was no

basis for one. In their oppositions to Respondents’ Motions to Vacate the Charging Liens, the

Firms conceded the conduct alleged by Respondents and made purely legal arguments,

contending that the conduct did not constitute violations of the ethical rules, nor was it grounds

for their termination for cause. The facts freely admitted by the Firms included:

• The Firms’ failure to obtain Akon’s signature on an Affidavit of Confession of

Judgment (as required by the Settlement Agreement), which would have allowed

Respondents to immediately collect $1,750,000 from Akon in the event he

defaulted on the Settlement Agreement;

• The Firms’ failure to advise Respondents that, in the time they neglected to obtain

the Affidavit of Confession of Judgment, New York law had changed to make

such an instrument ineffective on an out-of-state individual like Akon; and

• The authenticity of text messages showing that the Napoli Firm had consented to

Respondents obtaining new counsel experienced in music law, thereby waiving a

right to any future payments under the Retainer Agreement.

Accordingly, absent evidence that created a factual dispute, the Firms could not

overcome Respondents’ prima facie showing that they were terminated for cause—making an

evidentiary hearing pointless. The authorities are in accord with this outcome. See Sacarello v.

City of N.Y., 124 A.D.3d 617, 618 (2d Dep’t 2015) (evidentiary hearing unnecessary to

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determine that attorney was fired for cause because factual assertions were unopposed and there

were thus no “conflicting claims” to be resolved at hearing); CPMI, Inc. v. Kolaj, 137 A.D.3d

953, 956 (2d Dep’t 2016) (evidentiary hearing unnecessary to resolve plaintiff’s motion to vacate

charging lien, because attorney who imposed charging lien submitted no evidence). 2

Accordingly, the Firms had a full and fair opportunity to litigate the issues at play in this

Arbitration but simply chose not to do so.

B. THE FIRMS’ REQUEST TO STAY THE ARBITRATION PENDING
APPEAL SHOULD BE DENIED

At the close of their opposition, the Firms request to stay these proceedings pending

resolution of the appeals filed in case nos. 2022-05219 and 2022-05221. However, there is no

basis for a stay, and the request is therefore unwarranted, for two independent reasons.

First, the Firms admit that “Respondents are correct in arguing that the pendency of an

appeal does not preclude the use of the appealed judgment as the basis of res judicata or

collateral estoppel.” Opp. at 18; see also Respondents’ MTD at 14, n. 6; Plaza PH2001 LLC v.

Plaza Residential Owner LP, 98 A.D.3d 89, 98 (1st Dep’t 2012) (citing Petrella v Siegel, 843

F.2d 87, 90 (2d Cir. 1988)). There is therefore no basis for a stay of the instant Arbitration based

on the pendency of the appeals, given that the Firms themselves recognize the preclusion

doctrines may properly be applied under the present circumstances.

A stay is further unwarranted because the Firms have not diligently prosecuted the

appeals, and are only seeking to further delay proceedings. The granting of a stay pending

2
Moreover, the Court’s Order to Show Cause (NYSCEF No. 137), issued on April 25, 2022,
indicated that a hearing on the motion to vacate the charging lien would take place on May 25,
2022. The Napoli Firm therefore had notice a hearing would take place, and any claims it was
unaware it should submit evidence in support of its positions is disingenuous at best.
7

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appeal rests in the sound discretion of the court. Nama Holdings, LLC, v. Greenberg Traurig

LLP, 76 A.D.3d 804, 804-05 (1st Dep’t 2010). “Courts consider the following factors when

determining whether a discretionary stay is appropriate: Whether (1) the appeal has merit, (2)

any prejudice will result from granting or denying a stay, and (3) the stay is designed to delay the

proceeding.” Chanko v. Am. Broad. Cos., Inc., No. 152552/13, 2014 WL 3797287, at *1 (Sup.

Ct. N.Y. Cnty., July 30, 2014). Here, each factor weighs strongly in favor of denying a stay.

Since filing their notices of appeal in June and August of 2022, the Firms have sought multiple

extensions of time to perfect their meritless appeals, resulting in both having over eight months

to prepare opening briefs. Rather than use this period of time to perfect the appeals, however,

the Firms instead chose to substantially multiply proceedings relating to their purported claim to

$250,000 in attorneys’ fees. For example, shortly before Napoli’s first extension request was

filed, the Firms commenced this Arbitration seeking payment of the exact same $250,000 at

issue on appeal, and have continued to actively prosecute this Arbitration following receipt of the

initial 60-day extension of time to perfect. Then, shortly before the Napoli Firm requested an

additional extension of time to perfect its appeal, the Napoli Firm commenced a lawsuit in

Suffolk County Supreme Court against the undersigned counsel, his law firm, and his

professional corporation, again seeking payment of the very same $250,000 at issue on the

appeal and in this Arbitration. See Napoli Shkolnik PLLC et al v. Movit, et al., Index No.

601427/2023.

To make matters worse, a stay could suspend this Arbitration for at least six months

because the Firms have delayed perfecting their appeals. The appeal by the Conner Firm (Case

No. 2022-05221) has not yet been perfected; therefore, the earliest term in which argument on

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that appeal possibly could be heard would be the September 2023 Term. 3 Similarly, the appeal

by the Napoli Firm (case no. 2022-05219), while fully briefed, also has not yet been perfected

because the First Department has not received the original record from the trial court. As a

result, the hearing for that appeal may be scheduled for September 2023 as well. Accordingly,

there is no basis for a stay; the Firms cannot simply hit pause when the time comes for them to

actually prove their case, as it was their choice to unleash this torrent of proceedings (which has

been extremely expensive and prejudicial to Respondents) seeking the same recovery and

litigating the same issues. They should not be able to benefit from their frivolous filings,

harassment and obvious delay tactics by kicking the can down the road in this Arbitration for

several additional months.

C. RESPONDENTS ARE ENTITLED TO RECOVER THEIR ATTORNEYS’
FEES AND COSTS UNDER COMMERCIAL ARBITRATION RULE 47

In their Motion, Respondents clearly articulated that they are entitled to recover their

attorneys’ fees and costs under Commercial Arbitration Rule 47 because the parties to this

Arbitration have all requested recovery of fees and costs. See Steyn v. CRTV, LLC, 175 A.D.3d

1, 8 (1st Dep’t 2019) (“Rule 47(d) of the AAA explicitly provides that an award of attorneys’

fees may be made ‘if all parties have requested such an award or it is authorized by law or [the]

arbitration agreement.’”). The Firms do not address or dispute this, and therefore concede that

Respondents are entitled to fee recovery on this basis.

The Firms instead spend several pages of their Opposition disputing a second point raised

in the Motion: that Respondents are further entitled to recover their fees and costs because the

Firms have engaged in conduct that unquestionably is frivolous under New York law. The

3
See https://www.nycourts.gov/courts/ad1/calendar/index.shtml.
9

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Firms’ arguments on this point are entirely unavailing, and focus mainly on contentions that it is

Respondents who have engaged in misconduct by seeking relief from the Firms’ efforts to

endlessly re-litigate the same issues via every forum and every mechanism available to them. 4

As set forth in Respondents’ Motion, the Firms’ initiation of this Arbitration was

undoubtedly frivolous because it is both legally meritless and was maliciously filed for purposes

of harassment. This is evident for several reasons, including by virtue of the Firms’ decision to

forum shop and circumvent the New York County Supreme Court’s two prior orders and file suit

against their former client’s new counsel in a different venue (Suffolk County Supreme Court),

based on the same underlying dispute over fees. 5 The Firms also ignore that in the pending

action in New York County, Justice Engoron stated on the record that he would entertain an

application for sanctions if the Napoli Firm’s motion for reargument/renewal regarding its

purported charging lien were not withdrawn.

The Firms also make another jurisdictional argument, this time contending that regardless

of whether the Firms engaged in frivolous conduct (indeed they did), in levying sanctions the

Arbitrator lacks jurisdiction to consider actions by the Firms that took place outside the confines

of this Arbitration. Once again the Firms cite no support for this proposition, and in any event it

is incorrect, because New York law allows courts to broadly consider misconduct—regardless of

whether it took place within a given case—in considering whether and to what extent to impose

sanctions for frivolous conduct. See, e.g., Tsabbar v. Auld, 26 A.D.3d 233, 234 (1st Dep’t 2006)

4
All told, the cost to Respondents to deal with the Firms’ unwarranted flood of legal action may
exceed the $250,000 that the firms are seeking via their various proceedings.
5
Tellingly, the Firms have refused to consent to a transfer of venue for that proceeding to New
York County, despite there being no connection between that lawsuit and Suffolk County.
10

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(holding sanctions proper under Rules of Court arising from plaintiff’s “highly litigious and

uniformly unsuccessful quest” to repeatedly assert the same “patently meritless claims,” which

had resulted in the filing of four separate actions that plaintiff pursued even after res judicata and

collateral estoppel were applied and plaintiff was warned he could be sanctioned if he continued

to press his claims). See Movit Decl. in Support of Motion to Dismiss, Ex. 5 at 29:5-23.

Regardless, the Firms concede that the Arbitrator has the ability to award costs and fees

even absent frivolous behavior. Accordingly, Respondents respectfully request that the

Arbitrator issue a ruling that they are entitled to the attorneys’ fees and costs that they have

incurred and will incur in connection with this Arbitration.

III. CONCLUSION

Respondents respectfully request that the Arbitrator summarily dismiss the Firms’

baseless claims with prejudice, and award Respondents the attorneys’ fees and costs that

Respondents have been and will be forced to incur in defense of this harassing Arbitration which

never should have been commenced. Respondents additionally request that the Arbitrator award

them such other and further relief as the Arbitrator deems just and proper.

DATED: New York, New York MITCHELL SILBERBERG & KNUPP LLP
March 23, 2023

By: /s/ Jeffrey M. Movit
Jeffrey M. Movit
Mark C. Humphrey
437 Madison Ave., 25th Floor
New York, New York 10022-7001
Telephone: (212) 509-3900
Facsimile: (212) 509-7239

Attorneys for Respondents

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Case Info

Judge

Arthur F. Engoron Track Judge’s New Case

Case No.

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Document Filed Date

August 02, 2023

Case Filing Date

August 02, 2023

County

Parties

BUSTAMANTE, BRETT SCOTT Attorney for the Defendant
Darrick Stephens p/k/a/ DEVYNE STEPHENS Plaintiff
MANSON JOHNSON CONNER PLLC Defendant
MOVIT, JEFFREY MARK Attorney for the Plaintiff
NAPOLI SHKOLNIK, PLLC Defendant
UPFRONT MEGATAINMENT, INC. f/k/a UPFRONT ENTERTAINMENT, INC. Plaintiff
JONATHAN DAVIS Attorney
SALVATORE BADALA Attorneys for Defendants
PAUL NAPOLI Attorney
D'LESLI DAVIS Attorney
CYNTHIA ARATO Attorneys for Defendants
XAVIER DONALDSON Attorneys for Plaintiffs
MADISON KUCKER Attorney
PAUL LICALSI Attorney

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Exhibit,Appendix: Upfront Megatainment, Inc. f/k/a UPFRONT ENTERTAINMENT, INC., Darrick Stephens p/k/a/ DEVYNE STEPHENS v. Napoli Shkolnik, Pllc, Manson Johnson Conner Pllc

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