Preview
FILED: WARREN COUNTY CLERK 04/12/2024 04:45 PM INDEX NO. EF2018-65232
NYSCEF DOC. NO. 140 RECEIVED NYSCEF: 04/12/2024
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF WARREN
EVELYN O'BRIEN, JAMIE LYNN Index No.: 65232/2018
PATCHETT, CHRIS FORTNER, MICHAEL
PETTA, JESSICA TAYLOR-MACKRODT,
and HEATHER MARTIN on behalf of DEFENDANTS’ MEMORANDUM OF
themselves and LAW IN SUPPORT OF MOTION
others similarly situated, TO STAY ENFORCEMENT PENDING
APPEAL OF THE COURT’S ORDER
Plaintiffs, DATED MARCH 22, 2024
v.
SAGBOLT, LLC, OCEAN PROPERTIES,
LTD., PORTSMOUTH CORPORATE
FINANCIAL SERVICES, INC., PATRICK
WALSH and THOMAS GUAY,
Defendants.
Defendants Sagbolt, LLC (“Sagbolt”), Ocean Properties, Ltd. (“Ocean Properties”),
Portsmouth Corporate Financial Services, Inc. (“PCSFI”), Patrick Walsh and Thomas Guay
(collectively “Defendants”), by and through their undersigned attorneys, submit this memorandum
of law in support of their motion to stay enforcement of the Court’s March 22, 2024, Decision and
Order pending appeal, and state as follows:
INTRODUCTION AND RELEVANT BACKGROUND
Plaintiffs in this class action allege, among other things, that Defendants misrepresented to
customers of The Sagamore Hotel the nature and disposition of a “service charge” added to their
bills for various banquet and similar events. The parties reached a class-wide settlement of these
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claims. Following administration of the settlement, an issue arose concerning the proper
disposition of unclaimed settlement funds – plaintiffs argued that the funds should be redistributed
to those class members who had made an initial claim, while Defendants argued that no such
redistribution process was contemplated by the Settlement Agreement. Plaintiffs moved for an
Order enforcing the Settlement Agreement in accordance with their interpretation, which motion
Defendants opposed.
On March 22, 2024, the Court issued a Decision and Order on Plaintiffs’ motion. Briefly,
the Court adopted Plaintiffs’ view of the Settlement Agreement, and directed that the claims
administrator should “redistribute the residual [unclaimed funds] to participating class members.”
Defendants intend to appeal the Court’s March 22 Decision and Order. For purposes of
maintaining the status quo pending that appeal, and to avoid both a potential windfall to Plaintiffs
and irreversible loss to Defendants should Defendants prevail on that appeal, Defendants
respectfully move for a stay of enforcement of the March 22 Decision and Order pending appeal.
MEMORANDUM OF LAW
Defendants Are Entitled to Stay Pending Appeal
C.P.L.R. Rule 2201 generally empowers “the court in which an action is pending [to] grant
a stay of proceedings in a proper case, upon such terms as may be just.” Additionally, C.P.L.R.
Rule 5519(c) stipulates that “[t]he court from which … an appeal is taken … may stay all
proceedings to enforce the judgment or order appealed from pending an appeal….”
As Professor Siegel explains, Rule 5519(c) governs “the well known stay of enforcement
of the judgment pending appeal.” See David D. Siegel, New York Practice § 535 (4th Ed. 2005).
Professor Siegel describes the quintessential stay of enforcement pending appeal:
This category of stay seeks to prevent the respondent – assume the plaintiff is the
respondent and the defendant the appellant – from realizing on the judgment or
2
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order while an appeal is taking place, the appellant’s hope being that the appeal will
succeed and get the disposition reversed. If that does happen, but without a stay
having been granted, and the judgment has meanwhile been enforced, e.g., a money
judgment has been paid …, the appellant will afterwards be put to the trouble of
seeking restitution. In the meantime, the appellant may have been divested of
valuable property without any guarantee that such restitution as might later be
ordered against the respondent will be collectible; the respondent may have
squandered the money and become insolvent in the interim. A stay avoids that.
Id. (footnotes omitted).
Under both Rules 2201 and 5519(c), “[t]he granting of a stay pending appeal rests in the
sound discretion of the court.” People ex rel. Schneiderman v. College Network, Inc., 48 N.Y.S.3d
266 (Sup. Ct. 2016) (citing Burgdorf v. Kasper, 183 AD3d 1553 (4th Dept. 2011)). “Courts
consider the following factors when determining whether a discretionary stay is appropriate, i.e.,
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 proceedings.” Id. (citing Application of Mott, 123 N.Y.S.2d 603
(Sup. Ct. 1953)). Applying these factors here, a stay of enforcement pending appeal is warranted.
First, Defendants’ appeal plainly has merit. As this Court noted in deciding Plaintiff’s
underlying motion, “’[a] settlement agreement is a legally binding and enforceable contract subject
to enforcement in the same manner as any other contract.’” Order at 3-4 (citation omitted).
Because the Appellate Division will thus be “engaging in contract interpretation, ‘the standard of
review is for [that] Court to examine the contract’s language de novo.’” MPEG LA, LLC v.
Samsung Electronics Co., Ltd., 86 N.Y.S.3d 4, 17 (1st Dept. 2018) (citations omitted).
This Court noted the Settlement Agreement’s ambiguity concerning the proper disposition
of unclaimed settlement funds. Among other comments, this Court observed (i) “[t]he settlement
agreement lacks specific provisions about what is to be done if checks are returned or uncashed,”
and (ii) “[t]he agreement also neither specifically authorizes nor specifically precludes the claims
administrator from making a second effort to provide class members with” a share of the residual.
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Order at 6. In other words, this Court engaged in an interpretation of the Settlement Agreement’s
admittedly unclear terms and came to its conclusion as to the correct reading. Upon a de novo
review, however, the Appellate Division may – and Defendants respectfully submit should – come
to the contrary conclusion. Defendants’ appeal thus has merit.
Second, only Defendants would suffer any prejudice from the denial of a stay, while
Plaintiffs would enjoy a windfall. All participating class members – including some who failed to
meet the initial claims deadline – have received their originally intended share of the settlement.
Had there been a 100% participation rate – and as the Court is aware, here the parties achieved as
close to that goal as could possibly be hoped – then they would not be entitled to another cent. It
is only because there was a less than 100% participation rate that there are residual funds. In effect,
participating class members would receive an additional payment to which they were not originally
entitled, and the potential loss of that bonus cannot possibly be considered prejudice.
Defendants, on the other hand, risk significant prejudice if a stay is not granted and the
Decision and Order are reversed on appeal. Participating class members are hourly workers, many
of who live outside of New York and are not easily reached. This situation thus presents exactly
the paradigmatic scenario Professor Siegel described as warranting the “well known known stay
of enforcement of the judgment pending appeal.”
Finally, Defendants do not make this application, nor will they pursue their appeal, for any
dilatory or other improper purpose. Defendants intend to pursue their appeal diligently, and by
this motion seek only to maintain the status quo so that any eventual victory will not prove Pyrrhic.
To that end, Defendants are prepared to post any necessary bond or other undertaking the Court
deems necessary and appropriate.
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I. CONCLUSION
Wherefore, Defendants respectfully request this Court enter stay of enforcement of the
March 22, 2024, Decision and Order pending appeal.
Dated: April 12, 2024 Respectfully submitted,
GREENBERG TRAURIG, LLP
By: /s/ Michael J. Slocum________
Michael J. Slocum
500 Campus Drive
Suite 400
Florham Park, New Jersey 07932
(973) 443-3509
slocumm@gtlaw.com
Catherine H. Molloy
Florida Bar No. 33500
101 E. Kennedy Boulevard
Suite 1900
Tampa, Florida 33602
molloyk@gtlaw.com
Admitted pro hac vice
(813) 318-5700 – Telephone
Attorneys for Sagbolt, LLC,
Ocean Properties, Ltd., Patrick Walsh and
Thomas Guay
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Preview
FILED: WARREN COUNTY CLERK 04/12/2024 04:45 PM INDEX NO. EF2018-65232 NYSCEF DOC. NO. 140 RECEIVED NYSCEF: 04/12/2024 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF WARREN EVELYN O'BRIEN, JAMIE LYNN Index No.: 65232/2018 PATCHETT, CHRIS FORTNER, MICHAEL PETTA, JESSICA TAYLOR-MACKRODT, and HEATHER MARTIN on behalf of DEFENDANTS’ MEMORANDUM OF themselves and LAW IN SUPPORT OF MOTION others similarly situated, TO STAY ENFORCEMENT PENDING APPEAL OF THE COURT’S ORDER Plaintiffs, DATED MARCH 22, 2024 v. SAGBOLT, LLC, OCEAN PROPERTIES, LTD., PORTSMOUTH CORPORATE FINANCIAL SERVICES, INC., PATRICK WALSH and THOMAS GUAY, Defendants. Defendants Sagbolt, LLC (“Sagbolt”), Ocean Properties, Ltd. (“Ocean Properties”), Portsmouth Corporate Financial Services, Inc. (“PCSFI”), Patrick Walsh and Thomas Guay (collectively “Defendants”), by and through their undersigned attorneys, submit this memorandum of law in support of their motion to stay enforcement of the Court’s March 22, 2024, Decision and Order pending appeal, and state as follows: INTRODUCTION AND RELEVANT BACKGROUND Plaintiffs in this class action allege, among other things, that Defendants misrepresented to customers of The Sagamore Hotel the nature and disposition of a “service charge” added to their bills for various banquet and similar events. The parties reached a class-wide settlement of these ACTIVE 697190744v1 1 of 5 FILED: WARREN COUNTY CLERK 04/12/2024 04:45 PM INDEX NO. EF2018-65232 NYSCEF DOC. NO. 140 RECEIVED NYSCEF: 04/12/2024 claims. Following administration of the settlement, an issue arose concerning the proper disposition of unclaimed settlement funds – plaintiffs argued that the funds should be redistributed to those class members who had made an initial claim, while Defendants argued that no such redistribution process was contemplated by the Settlement Agreement. Plaintiffs moved for an Order enforcing the Settlement Agreement in accordance with their interpretation, which motion Defendants opposed. On March 22, 2024, the Court issued a Decision and Order on Plaintiffs’ motion. Briefly, the Court adopted Plaintiffs’ view of the Settlement Agreement, and directed that the claims administrator should “redistribute the residual [unclaimed funds] to participating class members.” Defendants intend to appeal the Court’s March 22 Decision and Order. For purposes of maintaining the status quo pending that appeal, and to avoid both a potential windfall to Plaintiffs and irreversible loss to Defendants should Defendants prevail on that appeal, Defendants respectfully move for a stay of enforcement of the March 22 Decision and Order pending appeal. MEMORANDUM OF LAW Defendants Are Entitled to Stay Pending Appeal C.P.L.R. Rule 2201 generally empowers “the court in which an action is pending [to] grant a stay of proceedings in a proper case, upon such terms as may be just.” Additionally, C.P.L.R. Rule 5519(c) stipulates that “[t]he court from which … an appeal is taken … may stay all proceedings to enforce the judgment or order appealed from pending an appeal….” As Professor Siegel explains, Rule 5519(c) governs “the well known stay of enforcement of the judgment pending appeal.” See David D. Siegel, New York Practice § 535 (4th Ed. 2005). Professor Siegel describes the quintessential stay of enforcement pending appeal: This category of stay seeks to prevent the respondent – assume the plaintiff is the respondent and the defendant the appellant – from realizing on the judgment or 2 ACTIVE 697190744v1 2 of 5 FILED: WARREN COUNTY CLERK 04/12/2024 04:45 PM INDEX NO. EF2018-65232 NYSCEF DOC. NO. 140 RECEIVED NYSCEF: 04/12/2024 order while an appeal is taking place, the appellant’s hope being that the appeal will succeed and get the disposition reversed. If that does happen, but without a stay having been granted, and the judgment has meanwhile been enforced, e.g., a money judgment has been paid …, the appellant will afterwards be put to the trouble of seeking restitution. In the meantime, the appellant may have been divested of valuable property without any guarantee that such restitution as might later be ordered against the respondent will be collectible; the respondent may have squandered the money and become insolvent in the interim. A stay avoids that. Id. (footnotes omitted). Under both Rules 2201 and 5519(c), “[t]he granting of a stay pending appeal rests in the sound discretion of the court.” People ex rel. Schneiderman v. College Network, Inc., 48 N.Y.S.3d 266 (Sup. Ct. 2016) (citing Burgdorf v. Kasper, 183 AD3d 1553 (4th Dept. 2011)). “Courts consider the following factors when determining whether a discretionary stay is appropriate, i.e., 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 proceedings.” Id. (citing Application of Mott, 123 N.Y.S.2d 603 (Sup. Ct. 1953)). Applying these factors here, a stay of enforcement pending appeal is warranted. First, Defendants’ appeal plainly has merit. As this Court noted in deciding Plaintiff’s underlying motion, “’[a] settlement agreement is a legally binding and enforceable contract subject to enforcement in the same manner as any other contract.’” Order at 3-4 (citation omitted). Because the Appellate Division will thus be “engaging in contract interpretation, ‘the standard of review is for [that] Court to examine the contract’s language de novo.’” MPEG LA, LLC v. Samsung Electronics Co., Ltd., 86 N.Y.S.3d 4, 17 (1st Dept. 2018) (citations omitted). This Court noted the Settlement Agreement’s ambiguity concerning the proper disposition of unclaimed settlement funds. Among other comments, this Court observed (i) “[t]he settlement agreement lacks specific provisions about what is to be done if checks are returned or uncashed,” and (ii) “[t]he agreement also neither specifically authorizes nor specifically precludes the claims administrator from making a second effort to provide class members with” a share of the residual. 3 ACTIVE 697190744v1 3 of 5 FILED: WARREN COUNTY CLERK 04/12/2024 04:45 PM INDEX NO. EF2018-65232 NYSCEF DOC. NO. 140 RECEIVED NYSCEF: 04/12/2024 Order at 6. In other words, this Court engaged in an interpretation of the Settlement Agreement’s admittedly unclear terms and came to its conclusion as to the correct reading. Upon a de novo review, however, the Appellate Division may – and Defendants respectfully submit should – come to the contrary conclusion. Defendants’ appeal thus has merit. Second, only Defendants would suffer any prejudice from the denial of a stay, while Plaintiffs would enjoy a windfall. All participating class members – including some who failed to meet the initial claims deadline – have received their originally intended share of the settlement. Had there been a 100% participation rate – and as the Court is aware, here the parties achieved as close to that goal as could possibly be hoped – then they would not be entitled to another cent. It is only because there was a less than 100% participation rate that there are residual funds. In effect, participating class members would receive an additional payment to which they were not originally entitled, and the potential loss of that bonus cannot possibly be considered prejudice. Defendants, on the other hand, risk significant prejudice if a stay is not granted and the Decision and Order are reversed on appeal. Participating class members are hourly workers, many of who live outside of New York and are not easily reached. This situation thus presents exactly the paradigmatic scenario Professor Siegel described as warranting the “well known known stay of enforcement of the judgment pending appeal.” Finally, Defendants do not make this application, nor will they pursue their appeal, for any dilatory or other improper purpose. Defendants intend to pursue their appeal diligently, and by this motion seek only to maintain the status quo so that any eventual victory will not prove Pyrrhic. To that end, Defendants are prepared to post any necessary bond or other undertaking the Court deems necessary and appropriate. 4 ACTIVE 697190744v1 4 of 5 FILED: WARREN COUNTY CLERK 04/12/2024 04:45 PM INDEX NO. EF2018-65232 NYSCEF DOC. NO. 140 RECEIVED NYSCEF: 04/12/2024 I. CONCLUSION Wherefore, Defendants respectfully request this Court enter stay of enforcement of the March 22, 2024, Decision and Order pending appeal. Dated: April 12, 2024 Respectfully submitted, GREENBERG TRAURIG, LLP By: /s/ Michael J. Slocum________ Michael J. Slocum 500 Campus Drive Suite 400 Florham Park, New Jersey 07932 (973) 443-3509 slocumm@gtlaw.com Catherine H. Molloy Florida Bar No. 33500 101 E. Kennedy Boulevard Suite 1900 Tampa, Florida 33602 molloyk@gtlaw.com Admitted pro hac vice (813) 318-5700 – Telephone Attorneys for Sagbolt, LLC, Ocean Properties, Ltd., Patrick Walsh and Thomas Guay 5 ACTIVE 697190744v1 5 of 5