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The former client of an attorney who allegedly failed to record his client’s security interest in a now-bankrupt electronics company has won summary judgment in a New York state court against the law firm, which itself has lost a bid for indemnification from the company’s buyers. Nassau County Supreme Court Justice Ute Lally determined that a former client of Neil Parsoff, an attorney with the Melville, N.Y., firm of Spanton Parsoff & Siegel, was entitled to summary judgment after the firm could not produce documents showing that it had filed a UCC-1 statement, which would have secured his former client an interest in Craftsman Sound and Security System. NO INDEMNIFICATION In addition, Justice Lally, in Lory v. Parsoff, 1250-99, rejected the firm’s argument that the subsequent purchasers of the company were required to indemnify the law firm. Lory originally hired Parsoff to represent him in the sale of his Craftsman stock to the third-party defendants, who included Toni Ann Amerigo, Paul Pettorino, Tri-State Sound & Video and Globe Sound & Video. The sales agreement called for the buyers, who were the third-party defendants in the lawsuit, to deposit all shares of Craftsman with Parsoff. The attorney was to act as an escrow agent and return the shares to Lory if the buyers breached any of their obligations. The agreement also entitled Lory to a lien on all of Craftsman’s assets if the contract was breached. After the buyers defaulted, Lory regained complete ownership of the company. However, he was unable to invoke the lien due to the alleged failure of Parsoff to record Lory’s security interest. In the meantime, the buyers sought relief from the agreement by filing a bankruptcy action, the June 7 decision stated. During the bankruptcy action, according to the decision, Parsoff accused the buyers of looting office equipment, records and logs. He also filed an action for civil and criminal contempt, which was later withdrawn, to strip the buyers of the Crafstman corporate offices. Lory claimed that because of the law firm’s failure to record his interest in Craftsman, he was relegated to filing an unsecured claim against the company in its bankruptcy proceeding. He argued that filing the appropriate documents would have entitled him to attach an interest to properties that the company possessed at the time. In granting summary judgment to Lory on eight causes of action, Justice Lally determined that he presented prima facie evidence that the law firm never filed the UCC-1 statement after it acknowledged that it had no documents in its case file to indicate the statement was ever recorded in Albany or Suffolk counties. The judge also found that the law firm’s “shadowy semblance of an issue” relating to the alleged looting and a “bald conclusory allegation” was insufficient to defeat a motion to dismiss filed by the company’s buyers. However, Judge Lally dismissed Lory’s claims for punitive damages, finding that he did not demonstrate that the law firm’s conduct rose to the level of moral turpitude and wanton dishonesty. Parsoff did not return a telephone call. Jeffrey Rosenblum, of Great Neck, N.Y., represented Lory. L’Abbatte, Balkin, Colavita & Contini, in Garden City, N.Y., represented Parsoff and the law firm.

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