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A Southern District of New York judge has sanctioned a Stamford, Conn., law firm and its client for their bad-faith pursuit of litigation against the Metropolitan Opera Association. U.S. District Judge Shira A. Scheindlin wrote that Stamford Computer Group and its counsel from Wofsey, Rosen, Kweskin & Kuriansky “could only recoup the cost of litigation that eventually proved unwinnable by using (and abusing) the judicial system to extract a settlement to which it was not entitled.” She ordered Stamford Computer and Wofsey Rosen to pay the Met the costs of bringing its sanctions motion, including attorney fees. The originating suit, withdrawn by Stamford Computer in April, centered on a computer equipment lease and finance agreement the Met entered into with another company, whose rights Stamford later acquired. When one of the leases, carrying a monthly rent of $36,800, ended in June 2000, Stamford sought an additional 90 days of rent, stating that the lease contained language that automatically extended its term if the Met did not give notice of its intent to terminate the lease. Arguing that such an “Evergreen clause” was unenforceable under New York law, the Met refused to pay the additional rent, and its general counsel, Sharon Grubin, a former Southern District magistrate judge, advised Stamford President Lawrence Goichman in a July 24, 2000, letter against seeking relief in court. “[H]aving served as a federal judge for the last 16 years, I know an enforceable contract and an unenforceable one,” Grubin wrote. “There is little doubt in my mind how the courts would view any lawsuit you might bring.” The situation swiftly deteriorated as Goichman replied that the contract required six months’ notice for termination, thus bringing the Met’s total obligation beyond the original term of the lease to another nine months of rent, or $331,200. Goichman then hired Marshall Goldberg, a partner with Wofsey Rosen, who, in a letter to Grubin, wrote that her position was “without legal merit or factual accuracy.” Goldberg further wrote that Grubin’s letter constituted “an anticipatory breach of the lease” and said he had been authorized to commence legal action if the Met did not provide “reasonable assurances” it would pay the lease through the end of March 2001. Grubin responded that Goldberg’s proposal was “absurd.” She also disputed the equipment listed under the lease, which Goldberg said was worth $1.4 million, and stated that she would seek sanctions for frivolous and bad-faith litigation if Stamford brought suit. Calling Grubin’s letter “an invitation that her client be sued,” Goldberg wrote back, “consider the invitation accepted.” Stamford filed suit in Connecticut state court in November 2000, though parties agreed to transfer the case to the Southern District. In the course of the suit, Stamford asserted further claims for unreturned or missing equipment. At a January 2002 mediation conference, Wofsey Rosen associate Daniel Young claimed the lease could only be terminated by return of all equipment. He added that the Met owed a $3,680 per diem for the 18 months between July 1, 2000, and Dec. 31, 2001, for a total of more than $2 million. Stamford withdrew the suit after it sold some of the equipment in dispute to another company, which scrapped all the equipment. The Met filed for sanctions at roughly the same time. HIGHLY CONTENTIOUS In a 63-page opinion, Judge Scheindlin remarked that both parties had approached the dispute in a highly contentious manner, and said the briefs and affidavits submitted on the sanctions motion “were replete with personal invectives, mudslinging, rumor, gossip, backbiting and bickering.” Scheindlin denied the Met’s motion for sanctions it sought on the grounds that Stamford had brought claims it knew not to be colorable. Though Stamford’s arguments might be “tenuous,” Scheindlin wrote that such arguments could not be characterized as being made in bad faith. But the entirety of Stamford’s conduct did evince bad faith, the judge concluded. “Over more than two years of litigation, Stamford saw that its case was collapsing,” Scheindlin wrote, “but it nevertheless insisted on pursuing litigation, making several attempts to reshape its claims to cover what little wrongdoing it could uncover.” K. Ann McDonald of New York’s Robinson, Murphy & McDonald represented the Met. McDonald declined to estimate the amount the Met would receive, and said the amount and the division of the sanctions would likely be determined through further submissions. Goldberg of Wofsey Rosen did not return a phone call seeking comment.

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