DECISION AFTER NON-JURY TRIAL This case involves a dispute among the final three partners of the now defunct architectural and engineering firm Wank Adams Slavin Associates LLP (“WASA”). After a series of lean years, the partners agreed to guarantee a loan and credit facility from Citibank that permitted WASA to refinance an existing loan in a last-ditch attempt to remain in business. Ultimately, however, the two minority-share partners, Plaintiffs-Counterclaim Defendants Jack Esterson and Pamela Jerome, decided to leave WASA and transferred their partnership shares to the majority partner, Defendant-Counterclaim Plaintiff Harry Spring. They contend Spring reneged on an agreement under which the parties were to focus on collecting outstanding receivables to pay off the Citibank loan and wind down the business. Spring, they claim, instead embarked on an expensive and ill-fated effort to resuscitate WASA which ultimately led to bankruptcy and default under the Citibank loan. Upon WASA’s bankruptcy, Citibank sued all three former partners under their respective guarantees of the WASA loan (Citibank N.A. v. Esterson et. al, New York County Index No. 650400/2016 ["Citi Action"]). Spring contends that he arranged (through his entity, Harry Spring Consulting LLC) to pay off the outstanding loan balance, and then (standing in Citibank’s shoes as substituted plaintiff) Harry Spring Consulting (“HSC”) sued Esterson and Jerome based on their respective personal guarantees [Citi Action NYSCEF 22]). In response, Esterson and Jerome filed this action, and Spring and HSC asserted counterclaims. Spring’s legal gambit to shift the Citibank liability to Esterson and Jerome failed. This Court dismissed Spring’s claim to enforce the guarantees and held that Spring’s only viable claim was for contribution (Citi Action NYSCEF 237). The First Department affirmed, holding that: “Spring, as a co-guarantor, may recover against the co-obligor partners only by means of a cause of action for contribution. As a result, Spring will be able to recover from the co-obligor partners only to the extent he can show he paid in excess of his proportionate share of the debt” (Harry Spring Consulting LLC v. Esterson, 199 AD3d 567, 568 [1st Dept 2021] [citations omitted]). Spring’s contribution claim was then pursued as a counterclaim in this action, with Plaintiffs direct claims serving essentially as defenses to having to pay Spring. Following a four-day non-jury trial, the Court finds in favor of Esterson and Jerome. As an initial matter, Spring failed to produce persuasive evidence that he used his own funds to pay the Citibank debt. Although it should have been a simple matter to prove through bank statements, checks, or wire transfers, such proof was not provided. Spring’s belated attempt to introduce at trial an incomplete bank statement that was not produced during discovery was both inappropriate and unpersuasive. Further, given the paucity of WASA business records that survived Spring’s period of sole control over the business, and the admission at trial that such records could and should have been retained by Spring as the sole manager of WASA, the Court is left unsure whether the Citibank loan was repaid from Spring’s own funds (as he contends) or by WASA funds to which Esterson and Jerome contributed, or some combination thereof. Even if Spring did make some or all of the Citibank payment from his own funds, the Court finds that he would not be entitled to the 66.67% contribution he seeks from Esterson and Jerome as “equal” co-obligors. Instead, at most he would have been entitled to 26.99% from Esterson and 3.39% from Jerome, representing their respective ownership shares of WASA at the time of the Citibank loan. And based on the evidence at trial, he would not have been entitled even to that amount. Well before WASA defaulted on its debt to Citibank, Spring had taken sole ownership and control of WASA. The Court finds that Spring accepted Esterson’s and Jerome’s consensual withdrawal and relinquishment of their WASA partnership shares while there were sufficient WASA receivables to repay Citibank and avoid bankruptcy. Having charted his own course to resuscitate WASA rather than simply wind down the business and collect outstanding receivables to pay the Citibank debt as the partners had agreed, Spring stood to receive 100% of the upside of that gamble. The flip side was that he assumed 100% of the risk. As it turned out, the evidence strongly suggests that had Spring followed the partners’ plan to focus on collecting receivables rather than attempting to revive WASA, the partnership would have been able to pay back the loan and avoid bankruptcy. Instead, WASA failed. In those circumstances, the Court finds that Spring is not entitled to contribution from Esterson and Jerome. Accordingly, Spring’s counterclaims for contribution are DISMISSED WITH PREJUDICE and the case is disposed.1 EVIDENCE PRESENTED AT TRIAL The parties submitted a Joint Statement of Undisputed Material Facts (“JSUMF” [NYSCEF 162]) prior to trial. Trial was held from October 25 to October 28, 2022 (NYSCEF 167-169, 175 [Transcripts]). Live testimony was received from the following witnesses: 1. Pamela Jerome (Tr. 20-125, 224-351, 498-530) 2. WASA Chief Financial Officer, Daniel Mulcair (Tr. 126-220) 3. WASA bankruptcy counsel, Sanford Rosen, Esq. (Tr. 352-399) 4. WASA Information Technology (“IT”) Director, Pasquale Tedesco (Tr. 400-44) 5. G.C. Eng IT Consultant, Marino Delzotto (Tr. 446-497) 6. Jack Esterson (Tr. 532-628, 745-770) 7. Harry Spring (Tr. 630-744) FINDINGS OF FACT A. Spring’s Majority Interest Provided Total Control Over WASA WASA was governed by a Partnership Agreement (PX. 14, 15; DX. A).2 As of January 1, 2015, WASA’s three partners were (i) Esterson, an engineer, with a 26.99% interest, (ii) Jerome, an architect, with a 3.39% interest and (iii) Spring, an architect, with a 66.62% interest (JSUMF 2). Spring’s majority interest provided him with the right to make all of WASA’s management and day-to-day decisions (Partnership Agreement 5[c]). B. WASA Secures The Citibank Loan In 2014 Starting in 2005, non-party TD Bank provided a revolving line of credit to WASA which was personally guaranteed by Spring, Esterson and Jerome (JSUMF
4-6). Beginning in 2010, WASA began experiencing severe financial distress (DX. RR [Bankruptcy Petition]). In December 2014, a Citibank loan (“Loan”) was obtained by WASA and Spring, Esterson and Jerome signed guarantees of repayment (“Guarantees”) (JSUMF
