Preview
FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166
NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021
STATE OF NEW YORK
SUPREME COURT COUNTY OF HERKIMER
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CHRISTOPHER SMITH AND MICHAEL SMITH AS
TRUSTEES OF THE JAY AND PATRICIA SMITH
IRREVOCABLE TRUST, VERIFIED ANSWER WITH
AFFIRMATIVE DEFENSES
Plaintiffs, AND COUNTERCLAIMS
v. Index No. EF2021-108166
THEODORE P. SMITH INCOME ONLY
IRREVOCABLE TRUST,
Defendant.
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Defendant, Anna Smith, as Trustee for the Theodore P. Smith Income Only Irrevocable
Trust (incorrectly captioned as simply THEODORE P. SMITH INCOME ONLY
IRREVOCABLE TRUST) (“Defendant”), by its attorneys, RIVKIN RADLER LLP, states for its
answer to Plaintiffs’ Verified Complaint, dated April 26. 2021 (the “Verified Complaint”), as
follows:
PRELIMINARY STATEMENT
All of the allegations in the Verified Complaint are denied unless specifically admitted,
and any factual averment admitted is admitted only as to the specific facts and not to any
inferences which may be contained in the allegation or in the Verified Complaint as a whole.
Responses are numbered to correlate with corresponding numbered paragraphs of the Verified
Complaint. Capitalize terms not otherwise defined in this Answer shall have the meanings
ascribed to them in the Verified Complaint. To the extent the Verified Complaint contains
headings, they are incorporated in this Answer for ease of reference only and are denied to the
extent, if any, that they are deemed to contain factual averments.
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RESPONSE TO THE ALLEGATIONS IN VERIFIED COMPLAINT
1. Defendant presently lacks knowledge or information sufficient to form a belief as
to the truth of the allegations in this paragraph of the Verified Complaint, and, therefore,
Defendant denies them (this response is hereafter referred to as: “DKI”).
2. Admitted.
3. Admitted.
4. Denied. Defendant is misnamed in the Complaint. The proper name of
Defendant is Anna Smith, as Trustee of the Theodore P. Smith Income Only Irrevocable Trust,
dated May 21, 2020. Theodore P. Smith has a life estate in his undivided one-third interest in the
Property (as defined in the Verified Complaint) as a co-tenant, and Anna Smith, as Trustee of the
Theodore P. Smith Income Only Irrevocable Trust, holds the reminder interest. Finally,
paragraph 4 of the Complaint fails to include an additional parcel identified as tax map parcel
100.4-2-3.
5. DKI.
6. Admitted.
7. Denied.
8. Admitted. The Verified Complaint fails to include the parcel identified on the tax
as 100.4-2-3.
9. DKI.
10. Denied. Theodore P. Smith has a life estate in his undivided one-third interest in
the Property as a co-tenant.
11. DKI.
12. Admitted.
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13. Admitted.
14. Admitted.
15. Admitted.
16. Denied. The extraction of minerals on the Property represents only a component
of the revenues earned by Ace of Diamonds.
17. Denied.
18. Denied.
19. Denied.
20. DKI.
21. Denied.
22. Denied.
23. Denied, except admits only that $21,000 in annual rent payments has been made,
50% to Jay Smith and 50% to Peter Smith, in exchange for permission to operate the Ace of
Diamonds on the Property.
24. Denied.
25. Denied, except admits that the Trust (as defined in the Verified Complaint) has
made demands for increased payments, and negotiations have taken place.
26. Denied.
27. Denied.
28. Denied.
29. Denied.
30. DKI.
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31. Denied. Defendant was ready, willing, and able to make payments to the Trust
pursuant to the agreement in principle that had been reached, and the Trust disavowed and refused
to sign the agreement.
32. Denied.
33. Denied.
34. Denied.
35. Denied.
36. Denied.
37. Denied.
38. Denied.
39. Denied.
40. DKI.
41. Denied. See response to paragraph 4.
WHEREFORE CLAUSE
Plaintiffs are not entitled to the relief set forth in the Wherefore Clause of the Verified
Complaint.
AFFIRMATIVE DEFENSES
Without assuming any burden of proof that it would not otherwise bear, Defendant
asserts the following affirmative defenses:
FIRST AFFIRMATIVE DEFENSE
The Verified Complaint fails to state a cause of action.
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SECOND AFFIRMATIVE DEFENSE
The Verified Complaint fails to name necessary parties, namely, Theodore P. Smith and
Ace of Diamonds Mine and Campground, LLC.
THIRD AFFIRMATIVE DEFENSE
Defendant is not identified properly in the captain of the Verified Complaint.
FOURTH AFFIRMATIVE DEFENSE
The Property described in the Verified Complaint is “heirs property” and this action must
be administered in accordance with RPAPL § 993.
FIFTH AFFIRMATIVE DEFENSE
Plaintiffs’ claims are barred by the doctrines of waiver, laches, unclean hands, and similar
equitable doctrines.
SIXTH AFFIRMATIVE DEFENSE
Plaintiffs have failed to post the necessary undertaking required by the CPLR before a
preliminary injunction can be granted.
SEVENTH AFFIRMATIVE DEFENSES
Some or all of Plaintiffs’ claims are barred by the statute of limitations and/or the statute
of frauds.
EIGHTH AFFIRMATIVE DEFENSE
Defendant objects to the method of service of the Verified Complaint and the Order to
Show Cause and the amount of notice that was given to respond to the Order to Show Cause.
Accordingly, the Court lacked personal jurisdiction over Defendant and other necessary parties
(Theodore P. Smith and Ace of Diamonds) at the time it granted the TRO.
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NINTH AFFIRMATIVE DEFENSE
The granting of the TRO in this case has violated Defendant’s rights to equal protection
and substantive and procedural due process under the United States and New York State
constitutions.
TENTH AFFIRMATIVE DEFENSE
The Verified Complaint fails to meet the requirements of RPAPL § 905 because it does
not identify several other lands held in common by Plaintiffs and Defendant. The Ace of
Diamonds tract includes tax map parcel 100.4-2-3, which is not identified in the Verified
Complaint. The parties also own other lands in common that are used by Plaintiffs and not used
by Ace of Diamonds.
ELEVENTH AFFIRMATIVE DEFENSE
To avoid the unnecessarily harsh and inequitable consequences to Defendant that would
be caused by a partition by sale, the Court should award an owelty payment, in either direction,
as necessary, to achieve equity pursuant to RPAPL § 943 and avoid the need for partition by
sale.
TWELFTH AFFIRMATIVE DEFENSE
Under no circumstance are Plaintiffs entitled to a partition by “private” sale as demanded
in the Verified Complaint. RPAPL § 915 requires that a sale be held at a public auction only if a
partition thereof in kind cannot be made without great prejudice to the owners. The Property can
be partitioned in kind and it need not be sold.
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THIRTEENTH AFFIRMATIVE DEFENSE AND FIRST COUNTERCLAIM
(By way of alternative pleading)
In the event this case culminates in the Court ordering a partition in kind, or a partition in
sale, Defendant is entitled to a credit for all capital improvements made to the Property by
Defendant, Theodore P. Smith, and/or Ace of Diamonds.
FOURTEENTH AFFIRMATIVE DEFENSE AND SECOND COUNTERCLAIM
Plaintiffs earn revenues on a warehouse parcel located at 200 King Street, Herkimer,
New York, and owned with Defendant without accounting to Defendant. In the event of any
accounting by Defendant for Ace of Diamonds’ use of the Property, a credit will be due to
Defendant for Defendant’s share of profits derived by Plaintiffs on said property.
FIFTEENTH AFFIRMATIVE DEFENSE AND THIRD COUNTERCLAIM
THIS ACTION MUST BE ADMINISTERED PURSUANT TO RPAPL § 993
1. The Property is held in tenancy in common.
2. There is no agreement in this record binding the co-tenants which governs the
partition of the Property.
3. Theodore P. Smith acquired his interest in the Property from his mother.
4. Anna Smith, as Trustee of the Theodore P. Smith Income Only Irrevocable Trust,
acquired her interest in the Property from her father, Theodore P. Smith.
5. Theodore P. Smith and Anna Smith, as Trustee of the Theodore P. Smith Income
Only Irrevocable Trust, each acquired their title to the Property from a relative.
6. More than twenty percent of the interests in the Property are held by co-tenants
who are relatives (or relatives serving in fiduciary capacities to other relatives).
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7. More than twenty percent of the interests in the Property are hold by an individual
who acquired title from a relative.
8. More than twenty percent of the co-tenants are relatives of each other.
9. Accordingly, this property must be partitioned in accordance with the provisions
of RPAPL § 993.
10. Pursuant to paragraph 5(g) of RPAPL § 993, Plaintiffs’ motion for a TRO and
preliminary injunction should be held in abeyance while the settlement process contemplated by
section 993 is ongoing, and the current TRO should be vacated immediately.
FOURTH COUNTERCLAIM
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS
AND INTERFERENCE WITH BUSINESS RELATIONS
11. Defendant repeats and realleges the allegations contained in paragraphs 1 through
10, above, as if set forth herein.
12. Theodore P. Smith ran the Ace of Diamonds business with his mother and father
(Don and Helen Smith) for many years prior to their retirement.
13. Upon the retirement of Don Smith and Helen Smith in 1996, Theodore P. Smith
and his wife, Anita Smith, took over the Ace of Diamonds business and have run it ever since.
14. Theodore P. Smith’s daughter, Anna Smith, has assisted her mother and father in
running the Ace of Diamonds for her entire life.
15. Anna Smith’s boyfriend, Dan Sabastian, assists Theodore P. Smith with mining
operations as an independent contractor.
16. At no point prior to 2020 did Jay Smith, Christopher Smith, and/or Michael Smith
ever express interest in running the Ace of Diamonds business.
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17. In late 2020, for the first time, Jay Smith and Michael Smith, attempted to usurp
ownership of Ace of Diamonds by engaging in a course of extreme and outrageous misconduct.
18. Among other things, Jay Smith and Michael Smith initially attempted to displace
Theodore Smith and his team from operating the Ace of Diamonds.
19. Subsequently, Jay Smith and Michael Smith demanded increased payments from
Ace of Diamonds and when an agreement in principle was reached with respect to a co-tenancy
agreement that would have acceded to their demands, they balked and refused to sign the
agreement.
20. During this period in late 2020 and continuing into 2021, Jay Smith and
Michael Smith repeatedly stated an intention to commence their own mining operations, and
Theodore P. Smith never objected to said plans.
21. Theodore P. Smith simply asked that Jay Smith and Michael Smith conduct their
mining operations in a manner as to not interfere with Ace of Diamonds.
22. At no point, however, did Jay Smith and Michael Smith follow through with their
stated intentions to commence their own mining activities.
23. In the Spring of 2021, on the evening of Good Friday, Jay Smith and Michael
Smith took yet another abrupt turn, and Michael Smith told Theodore P. Smith that Jay Smith
intended to interrupt opening weekend at Ace of Diamonds, which has always been a busy
weekend, by placing himself at the entrance of the facility and harassing tourists as they arrive
by attempting to collect his own fees from them.
24. Theodore P. Smith was required to issue a cease a desist notice to Jay Smith out
of concern for his guests and the reputational injury that would be caused to the Ace of
Diamonds if Jay Smith had followed through with his stated threats.
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25. Jay Smith has also yet to follow through with his stated intention to commence his
own mining operations.
26. Jay and Michael Smith did, however, remove Ace of Diamonds signage from
various locations where it had previously been located with permission.
27. Most recently, however, in April of 2021, Jay Smith and Michael Smith informed
Theodore Smith through their counsel that they intended to share a proposal to partition the
Property, and then within a few days of their attorney making this announcement, they switched
attorneys at their law firm and suddenly commenced this action and sought a TRO on
approximately 30 minutes notice to Defendant’s counsel, delivered only by email.
28. Plaintiffs attempted to justify their unlawfully and unconstitutionally short notice
by claiming that counsel to the Defendant had been involved in prior negotiations with Plaintiffs.
29. Within minutes of receiving the email, Defendant’s counsel telephoned Plaintiffs’
new counsel, explained the statues of negotiations that had taken place thus far, and requested
Plaintiffs’ counsel to remove the TRO from the Order to Show Cause to allow the action to
proceed in any orderly and thoughtful manner without causing unnecessary and unlawful
disruption and damage to the Ace of Diamonds business.
30. Upon information and belief, Plaintiffs’ new counsel stated that he had no
authority to alter his course of action, but he remained open to continuing settlement negotiations
that were already underway.
31. Upon information and belief, Plaintiffs have commenced this action and sought a
TRO under false and misleading pretenses for the purpose of obtaining unlawful disruption and
harm to the business of Ace of Diamonds and to the health of Theodore P. Smith.
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32. Upon information and belief, Plaintiffs are attempting to use the emotional
distress caused by their misconduct and abuse of process to create negotiating leverage over
Defendant and Theodore P. Smith to pressure them to accede to their demands.
33. The stress caused by Plaintiffs has caused Theodore P. Smith to suffer health
problems.
34. By virtue of the foregoing misconduct and misuse of judicial process, Plaintiffs
have (i) engaged in extreme and outrageous conduct; (ii) with intent to cause, or disregard of a
substantial probability of causing, severe emotional distress.
35. As a result of Plaintiffs’ conduct, Theodore P. Smith and his family have suffered
extreme emotional distress with physical manifestations.
36. As a result of Plaintiffs’ conduct, Ace of Diamonds has suffered extreme damage
to its relationship with its customers.
37. Accordingly, Plaintiffs are liable to Defendant and Theodore P. Smith for all
compensatory damage caused by Plaintiffs’ tortious conduct toward them together with an award
of punitive damages.
FIFTH COUNTERCLAIM
AN AWARD OF DAMAGES CAUSED TO DEFENDANT BY PLAINTIFFS’
OBTAINING A TRO THROUGH FALSE AND UNLAWFUL PRETENSES. WITHOUT
HAVING POSTED THE UNDERTAKING REQUESTED BY DEFENDANT
38. Defendant repeats and realleges the allegations contained in paragraphs 1 through
37, above, as if set forth herein.
39. Defendant has suffered significant financial and reputational injury on account of
the TRO which has caused a virtually complete closedown of the Ace of Diamonds business.
40. Plaintiffs obtained this TRO through demonstrably false and unlawful pretenses.
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41. The Court is authorized to require an undertaking before issue a TRO for this very
purpose, and Defendant requested that an undertaking be so posted.
42. Pursuant to New York common law, Plaintiffs have no right to prevent their co-
tenant from engaging in mining activities at the Property. See Cosgriff v. Dewey, 47 N.Y.S. 255
(NY Int. App. Ct. 1897).
43. Plaintiffs have no right under RPAPL, Article 9, to a partition by “private” sale,
as sought in paragraph c of the wherefore clause of their Verified Complaint.
44. Accordingly, Plaintiffs have not demonstrated that Defendant is committing an
“act in violation of the plaintiff's rights respecting the subject of the action and tending to render
the judgment ineffectual.” See CPLR 6312(a).
45. Pursuant to CPLR 6312(b), Plaintiffs are required to post an undertaking before
obtaining a preliminary injunction, and they have not done so despite Defendant’s demand
therefore.
46. As a direct result of the TRO obtained through Plaintiffs’ false allegations in the
Verified Complaint, guests of Ace of Diamonds have been canceling their summer camping
reservations at an alarming rate, and sales of previously mined or purchased minerals at the gift
shop or through internet channels have been disrupted.
47. Accordingly, with no undertaking having been posted by Plaintiffs, they are now
directly liable to Defendant for all damages incurred by Defendant due to the TRO, including
loss of earnings and damage to goodwill.
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WHEREFORE, Defendant demands judgment in its favor as follows:
(1) Denying the relief sought by Plaintiffs in the Verified Complaint (Docket No. 1),
in the Order to Show Cause (Docket No. 6), and the Affirmation of Brody Smith
(Docket No. 9), in their entirety.
(2) Granting judgment in favor of Defendant on the First Counterclaim ordering that
if a partition in kind is ordered, Defendant be entitled to an accounting and a
credit for capital improvements made to the Property.
(3) Granting judgment in favor of Defendant on the Second Counterclaim ordering
that, if an accounting is ordered in this case, Defendant be given a credit for
Defendant’s share of profits derived from the warehouse parcel located at 200
King Street, Herkimer, New York.
(4) Granting judgment in favor of Defendant on the Third Counterclaim ordering that
the Property constitutes “heirs property” in accordance with RPAPL § 993, and
administering this action in accordance with said section 993 from here forward.
(5) Vacating the TRO previously issued in this action, and awarding damages to
Defendant for all lost revenues and harm to goodwill caused thereby.
(6) If not otherwise denied, holding Plaintiffs’ motion for a preliminary injunction in
abeyance in accordance with RPAPL § 993(5)(g) pending the outcome of the
proceedings contemplated by RPAPL § 993, and in any event, before any further
consideration of Plaintiffs’ request for a preliminary injunction is given,
(i) requiring Plaintiffs to post the undertaking required by CPLR 6312(b), and
(ii) affording Defendant an evidentiary hearing to allow Defendant the
opportunity to refute the many misrepresentations made by Plaintiffs in the
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Verified Complaint.
(7) Granting judgment in favor of Defendant on the Fourth Counterclaim and
awarding Defendant compensatory and punitive damages in an amount to be
proven at trial, together with all costs and disbursements.
(8) Granting judgment in favor of Defendant on the Fifth Counterclaim and awarding
Defendant compensatory damages for all lost earnings and damages to goodwill
caused by the TRO sought and unlawfully obtained by Plaintiffs in this action
through false pretenses, together with all costs and disbursements.
(9) Granting Defendant all taxable costs and disbursements in connection with this
action as provided in the RPAPL and CPLR.
(10) granting Defendant such other relief as this Court deems just and proper.
DATED: Albany, New York
May 20, 2020
RIVKIN RADLER LLP
By:
Richard A. Frankel, Esq.
James P. Lagios, Esq.
Attorneys for Defendant
66 South Pearl Street, 11th Floor
Albany, New York 12207
(518) 462-3000
TO: Brody D. Smith, Esq.
BOND, SCHOENECK & KING, PLLC
Attorneys for Plaintiffs
One Lincoln Center
Syracuse, NY 13202
(315) 218-8225
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Preview
FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 STATE OF NEW YORK SUPREME COURT COUNTY OF HERKIMER ---------------------------------------------------------------------X CHRISTOPHER SMITH AND MICHAEL SMITH AS TRUSTEES OF THE JAY AND PATRICIA SMITH IRREVOCABLE TRUST, VERIFIED ANSWER WITH AFFIRMATIVE DEFENSES Plaintiffs, AND COUNTERCLAIMS v. Index No. EF2021-108166 THEODORE P. SMITH INCOME ONLY IRREVOCABLE TRUST, Defendant. ---------------------------------------------------------------------X Defendant, Anna Smith, as Trustee for the Theodore P. Smith Income Only Irrevocable Trust (incorrectly captioned as simply THEODORE P. SMITH INCOME ONLY IRREVOCABLE TRUST) (“Defendant”), by its attorneys, RIVKIN RADLER LLP, states for its answer to Plaintiffs’ Verified Complaint, dated April 26. 2021 (the “Verified Complaint”), as follows: PRELIMINARY STATEMENT All of the allegations in the Verified Complaint are denied unless specifically admitted, and any factual averment admitted is admitted only as to the specific facts and not to any inferences which may be contained in the allegation or in the Verified Complaint as a whole. Responses are numbered to correlate with corresponding numbered paragraphs of the Verified Complaint. Capitalize terms not otherwise defined in this Answer shall have the meanings ascribed to them in the Verified Complaint. To the extent the Verified Complaint contains headings, they are incorporated in this Answer for ease of reference only and are denied to the extent, if any, that they are deemed to contain factual averments. 1 1 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 RESPONSE TO THE ALLEGATIONS IN VERIFIED COMPLAINT 1. Defendant presently lacks knowledge or information sufficient to form a belief as to the truth of the allegations in this paragraph of the Verified Complaint, and, therefore, Defendant denies them (this response is hereafter referred to as: “DKI”). 2. Admitted. 3. Admitted. 4. Denied. Defendant is misnamed in the Complaint. The proper name of Defendant is Anna Smith, as Trustee of the Theodore P. Smith Income Only Irrevocable Trust, dated May 21, 2020. Theodore P. Smith has a life estate in his undivided one-third interest in the Property (as defined in the Verified Complaint) as a co-tenant, and Anna Smith, as Trustee of the Theodore P. Smith Income Only Irrevocable Trust, holds the reminder interest. Finally, paragraph 4 of the Complaint fails to include an additional parcel identified as tax map parcel 100.4-2-3. 5. DKI. 6. Admitted. 7. Denied. 8. Admitted. The Verified Complaint fails to include the parcel identified on the tax as 100.4-2-3. 9. DKI. 10. Denied. Theodore P. Smith has a life estate in his undivided one-third interest in the Property as a co-tenant. 11. DKI. 12. Admitted. 2 2 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 13. Admitted. 14. Admitted. 15. Admitted. 16. Denied. The extraction of minerals on the Property represents only a component of the revenues earned by Ace of Diamonds. 17. Denied. 18. Denied. 19. Denied. 20. DKI. 21. Denied. 22. Denied. 23. Denied, except admits only that $21,000 in annual rent payments has been made, 50% to Jay Smith and 50% to Peter Smith, in exchange for permission to operate the Ace of Diamonds on the Property. 24. Denied. 25. Denied, except admits that the Trust (as defined in the Verified Complaint) has made demands for increased payments, and negotiations have taken place. 26. Denied. 27. Denied. 28. Denied. 29. Denied. 30. DKI. 3 3 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 31. Denied. Defendant was ready, willing, and able to make payments to the Trust pursuant to the agreement in principle that had been reached, and the Trust disavowed and refused to sign the agreement. 32. Denied. 33. Denied. 34. Denied. 35. Denied. 36. Denied. 37. Denied. 38. Denied. 39. Denied. 40. DKI. 41. Denied. See response to paragraph 4. WHEREFORE CLAUSE Plaintiffs are not entitled to the relief set forth in the Wherefore Clause of the Verified Complaint. AFFIRMATIVE DEFENSES Without assuming any burden of proof that it would not otherwise bear, Defendant asserts the following affirmative defenses: FIRST AFFIRMATIVE DEFENSE The Verified Complaint fails to state a cause of action. 4 4 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 SECOND AFFIRMATIVE DEFENSE The Verified Complaint fails to name necessary parties, namely, Theodore P. Smith and Ace of Diamonds Mine and Campground, LLC. THIRD AFFIRMATIVE DEFENSE Defendant is not identified properly in the captain of the Verified Complaint. FOURTH AFFIRMATIVE DEFENSE The Property described in the Verified Complaint is “heirs property” and this action must be administered in accordance with RPAPL § 993. FIFTH AFFIRMATIVE DEFENSE Plaintiffs’ claims are barred by the doctrines of waiver, laches, unclean hands, and similar equitable doctrines. SIXTH AFFIRMATIVE DEFENSE Plaintiffs have failed to post the necessary undertaking required by the CPLR before a preliminary injunction can be granted. SEVENTH AFFIRMATIVE DEFENSES Some or all of Plaintiffs’ claims are barred by the statute of limitations and/or the statute of frauds. EIGHTH AFFIRMATIVE DEFENSE Defendant objects to the method of service of the Verified Complaint and the Order to Show Cause and the amount of notice that was given to respond to the Order to Show Cause. Accordingly, the Court lacked personal jurisdiction over Defendant and other necessary parties (Theodore P. Smith and Ace of Diamonds) at the time it granted the TRO. 5 5 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 NINTH AFFIRMATIVE DEFENSE The granting of the TRO in this case has violated Defendant’s rights to equal protection and substantive and procedural due process under the United States and New York State constitutions. TENTH AFFIRMATIVE DEFENSE The Verified Complaint fails to meet the requirements of RPAPL § 905 because it does not identify several other lands held in common by Plaintiffs and Defendant. The Ace of Diamonds tract includes tax map parcel 100.4-2-3, which is not identified in the Verified Complaint. The parties also own other lands in common that are used by Plaintiffs and not used by Ace of Diamonds. ELEVENTH AFFIRMATIVE DEFENSE To avoid the unnecessarily harsh and inequitable consequences to Defendant that would be caused by a partition by sale, the Court should award an owelty payment, in either direction, as necessary, to achieve equity pursuant to RPAPL § 943 and avoid the need for partition by sale. TWELFTH AFFIRMATIVE DEFENSE Under no circumstance are Plaintiffs entitled to a partition by “private” sale as demanded in the Verified Complaint. RPAPL § 915 requires that a sale be held at a public auction only if a partition thereof in kind cannot be made without great prejudice to the owners. The Property can be partitioned in kind and it need not be sold. 6 6 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 THIRTEENTH AFFIRMATIVE DEFENSE AND FIRST COUNTERCLAIM (By way of alternative pleading) In the event this case culminates in the Court ordering a partition in kind, or a partition in sale, Defendant is entitled to a credit for all capital improvements made to the Property by Defendant, Theodore P. Smith, and/or Ace of Diamonds. FOURTEENTH AFFIRMATIVE DEFENSE AND SECOND COUNTERCLAIM Plaintiffs earn revenues on a warehouse parcel located at 200 King Street, Herkimer, New York, and owned with Defendant without accounting to Defendant. In the event of any accounting by Defendant for Ace of Diamonds’ use of the Property, a credit will be due to Defendant for Defendant’s share of profits derived by Plaintiffs on said property. FIFTEENTH AFFIRMATIVE DEFENSE AND THIRD COUNTERCLAIM THIS ACTION MUST BE ADMINISTERED PURSUANT TO RPAPL § 993 1. The Property is held in tenancy in common. 2. There is no agreement in this record binding the co-tenants which governs the partition of the Property. 3. Theodore P. Smith acquired his interest in the Property from his mother. 4. Anna Smith, as Trustee of the Theodore P. Smith Income Only Irrevocable Trust, acquired her interest in the Property from her father, Theodore P. Smith. 5. Theodore P. Smith and Anna Smith, as Trustee of the Theodore P. Smith Income Only Irrevocable Trust, each acquired their title to the Property from a relative. 6. More than twenty percent of the interests in the Property are held by co-tenants who are relatives (or relatives serving in fiduciary capacities to other relatives). 7 7 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 7. More than twenty percent of the interests in the Property are hold by an individual who acquired title from a relative. 8. More than twenty percent of the co-tenants are relatives of each other. 9. Accordingly, this property must be partitioned in accordance with the provisions of RPAPL § 993. 10. Pursuant to paragraph 5(g) of RPAPL § 993, Plaintiffs’ motion for a TRO and preliminary injunction should be held in abeyance while the settlement process contemplated by section 993 is ongoing, and the current TRO should be vacated immediately. FOURTH COUNTERCLAIM INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS AND INTERFERENCE WITH BUSINESS RELATIONS 11. Defendant repeats and realleges the allegations contained in paragraphs 1 through 10, above, as if set forth herein. 12. Theodore P. Smith ran the Ace of Diamonds business with his mother and father (Don and Helen Smith) for many years prior to their retirement. 13. Upon the retirement of Don Smith and Helen Smith in 1996, Theodore P. Smith and his wife, Anita Smith, took over the Ace of Diamonds business and have run it ever since. 14. Theodore P. Smith’s daughter, Anna Smith, has assisted her mother and father in running the Ace of Diamonds for her entire life. 15. Anna Smith’s boyfriend, Dan Sabastian, assists Theodore P. Smith with mining operations as an independent contractor. 16. At no point prior to 2020 did Jay Smith, Christopher Smith, and/or Michael Smith ever express interest in running the Ace of Diamonds business. 8 8 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 17. In late 2020, for the first time, Jay Smith and Michael Smith, attempted to usurp ownership of Ace of Diamonds by engaging in a course of extreme and outrageous misconduct. 18. Among other things, Jay Smith and Michael Smith initially attempted to displace Theodore Smith and his team from operating the Ace of Diamonds. 19. Subsequently, Jay Smith and Michael Smith demanded increased payments from Ace of Diamonds and when an agreement in principle was reached with respect to a co-tenancy agreement that would have acceded to their demands, they balked and refused to sign the agreement. 20. During this period in late 2020 and continuing into 2021, Jay Smith and Michael Smith repeatedly stated an intention to commence their own mining operations, and Theodore P. Smith never objected to said plans. 21. Theodore P. Smith simply asked that Jay Smith and Michael Smith conduct their mining operations in a manner as to not interfere with Ace of Diamonds. 22. At no point, however, did Jay Smith and Michael Smith follow through with their stated intentions to commence their own mining activities. 23. In the Spring of 2021, on the evening of Good Friday, Jay Smith and Michael Smith took yet another abrupt turn, and Michael Smith told Theodore P. Smith that Jay Smith intended to interrupt opening weekend at Ace of Diamonds, which has always been a busy weekend, by placing himself at the entrance of the facility and harassing tourists as they arrive by attempting to collect his own fees from them. 24. Theodore P. Smith was required to issue a cease a desist notice to Jay Smith out of concern for his guests and the reputational injury that would be caused to the Ace of Diamonds if Jay Smith had followed through with his stated threats. 9 9 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 25. Jay Smith has also yet to follow through with his stated intention to commence his own mining operations. 26. Jay and Michael Smith did, however, remove Ace of Diamonds signage from various locations where it had previously been located with permission. 27. Most recently, however, in April of 2021, Jay Smith and Michael Smith informed Theodore Smith through their counsel that they intended to share a proposal to partition the Property, and then within a few days of their attorney making this announcement, they switched attorneys at their law firm and suddenly commenced this action and sought a TRO on approximately 30 minutes notice to Defendant’s counsel, delivered only by email. 28. Plaintiffs attempted to justify their unlawfully and unconstitutionally short notice by claiming that counsel to the Defendant had been involved in prior negotiations with Plaintiffs. 29. Within minutes of receiving the email, Defendant’s counsel telephoned Plaintiffs’ new counsel, explained the statues of negotiations that had taken place thus far, and requested Plaintiffs’ counsel to remove the TRO from the Order to Show Cause to allow the action to proceed in any orderly and thoughtful manner without causing unnecessary and unlawful disruption and damage to the Ace of Diamonds business. 30. Upon information and belief, Plaintiffs’ new counsel stated that he had no authority to alter his course of action, but he remained open to continuing settlement negotiations that were already underway. 31. Upon information and belief, Plaintiffs have commenced this action and sought a TRO under false and misleading pretenses for the purpose of obtaining unlawful disruption and harm to the business of Ace of Diamonds and to the health of Theodore P. Smith. 10 10 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 32. Upon information and belief, Plaintiffs are attempting to use the emotional distress caused by their misconduct and abuse of process to create negotiating leverage over Defendant and Theodore P. Smith to pressure them to accede to their demands. 33. The stress caused by Plaintiffs has caused Theodore P. Smith to suffer health problems. 34. By virtue of the foregoing misconduct and misuse of judicial process, Plaintiffs have (i) engaged in extreme and outrageous conduct; (ii) with intent to cause, or disregard of a substantial probability of causing, severe emotional distress. 35. As a result of Plaintiffs’ conduct, Theodore P. Smith and his family have suffered extreme emotional distress with physical manifestations. 36. As a result of Plaintiffs’ conduct, Ace of Diamonds has suffered extreme damage to its relationship with its customers. 37. Accordingly, Plaintiffs are liable to Defendant and Theodore P. Smith for all compensatory damage caused by Plaintiffs’ tortious conduct toward them together with an award of punitive damages. FIFTH COUNTERCLAIM AN AWARD OF DAMAGES CAUSED TO DEFENDANT BY PLAINTIFFS’ OBTAINING A TRO THROUGH FALSE AND UNLAWFUL PRETENSES. WITHOUT HAVING POSTED THE UNDERTAKING REQUESTED BY DEFENDANT 38. Defendant repeats and realleges the allegations contained in paragraphs 1 through 37, above, as if set forth herein. 39. Defendant has suffered significant financial and reputational injury on account of the TRO which has caused a virtually complete closedown of the Ace of Diamonds business. 40. Plaintiffs obtained this TRO through demonstrably false and unlawful pretenses. 11 11 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 41. The Court is authorized to require an undertaking before issue a TRO for this very purpose, and Defendant requested that an undertaking be so posted. 42. Pursuant to New York common law, Plaintiffs have no right to prevent their co- tenant from engaging in mining activities at the Property. See Cosgriff v. Dewey, 47 N.Y.S. 255 (NY Int. App. Ct. 1897). 43. Plaintiffs have no right under RPAPL, Article 9, to a partition by “private” sale, as sought in paragraph c of the wherefore clause of their Verified Complaint. 44. Accordingly, Plaintiffs have not demonstrated that Defendant is committing an “act in violation of the plaintiff's rights respecting the subject of the action and tending to render the judgment ineffectual.” See CPLR 6312(a). 45. Pursuant to CPLR 6312(b), Plaintiffs are required to post an undertaking before obtaining a preliminary injunction, and they have not done so despite Defendant’s demand therefore. 46. As a direct result of the TRO obtained through Plaintiffs’ false allegations in the Verified Complaint, guests of Ace of Diamonds have been canceling their summer camping reservations at an alarming rate, and sales of previously mined or purchased minerals at the gift shop or through internet channels have been disrupted. 47. Accordingly, with no undertaking having been posted by Plaintiffs, they are now directly liable to Defendant for all damages incurred by Defendant due to the TRO, including loss of earnings and damage to goodwill. 12 12 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 WHEREFORE, Defendant demands judgment in its favor as follows: (1) Denying the relief sought by Plaintiffs in the Verified Complaint (Docket No. 1), in the Order to Show Cause (Docket No. 6), and the Affirmation of Brody Smith (Docket No. 9), in their entirety. (2) Granting judgment in favor of Defendant on the First Counterclaim ordering that if a partition in kind is ordered, Defendant be entitled to an accounting and a credit for capital improvements made to the Property. (3) Granting judgment in favor of Defendant on the Second Counterclaim ordering that, if an accounting is ordered in this case, Defendant be given a credit for Defendant’s share of profits derived from the warehouse parcel located at 200 King Street, Herkimer, New York. (4) Granting judgment in favor of Defendant on the Third Counterclaim ordering that the Property constitutes “heirs property” in accordance with RPAPL § 993, and administering this action in accordance with said section 993 from here forward. (5) Vacating the TRO previously issued in this action, and awarding damages to Defendant for all lost revenues and harm to goodwill caused thereby. (6) If not otherwise denied, holding Plaintiffs’ motion for a preliminary injunction in abeyance in accordance with RPAPL § 993(5)(g) pending the outcome of the proceedings contemplated by RPAPL § 993, and in any event, before any further consideration of Plaintiffs’ request for a preliminary injunction is given, (i) requiring Plaintiffs to post the undertaking required by CPLR 6312(b), and (ii) affording Defendant an evidentiary hearing to allow Defendant the opportunity to refute the many misrepresentations made by Plaintiffs in the 13 13 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 Verified Complaint. (7) Granting judgment in favor of Defendant on the Fourth Counterclaim and awarding Defendant compensatory and punitive damages in an amount to be proven at trial, together with all costs and disbursements. (8) Granting judgment in favor of Defendant on the Fifth Counterclaim and awarding Defendant compensatory damages for all lost earnings and damages to goodwill caused by the TRO sought and unlawfully obtained by Plaintiffs in this action through false pretenses, together with all costs and disbursements. (9) Granting Defendant all taxable costs and disbursements in connection with this action as provided in the RPAPL and CPLR. (10) granting Defendant such other relief as this Court deems just and proper. DATED: Albany, New York May 20, 2020 RIVKIN RADLER LLP By: Richard A. Frankel, Esq. James P. Lagios, Esq. Attorneys for Defendant 66 South Pearl Street, 11th Floor Albany, New York 12207 (518) 462-3000 TO: Brody D. Smith, Esq. BOND, SCHOENECK & KING, PLLC Attorneys for Plaintiffs One Lincoln Center Syracuse, NY 13202 (315) 218-8225 14 14 of 15 FILED: HERKIMER COUNTY CLERK 05/20/2021 01:50 PM INDEX NO. EF2021-108166 NYSCEF DOC. NO. 23 RECEIVED NYSCEF: 05/20/2021 15 of 15