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Harry Spring Consulting LLC v. Esterson
Citation: 2021 NY Slip Op 06543Docket: Index No. 650400/16, 654911/16 Appeal No. 14677 Case No. 2021-00127, 2021-01031
Court: Appellate Division of the Supreme Court of the State of New York; November 22, 2021; New York; State Appellate Court
Original Court Document: View Document
In the case of Harry Spring Consulting LLC v. Esterson, the Appellate Division of the New York Supreme Court affirmed the lower court's decision regarding motions for summary judgment. The court denied Harry Spring Consulting LLC (HSC) and Harry Spring's motion to hold defendants Jack Esterson and Pamela Jerome liable under personal guarantees related to a loan from Citibank. Conversely, the court granted the co-obligor partners’ cross motion to dismiss the enforcement claims against them but denied their request to sanction HSC for spoliation of evidence. The background involves Spring, the co-obligor partners, and a nonparty firm, Wank Adams Slavin Associates LLP (WASA), which filed for Chapter 11 bankruptcy after defaulting on a loan. Following this, Citibank sued Spring and the co-obligor partners to enforce the personal guarantees. HSC, created by Spring, paid the loan and received an assignment from Citibank, later substituting itself in the lawsuit. The court clarified that Spring could only recover from the co-obligor partners through a contribution claim, which requires proof of payment exceeding his share of the debt. It ruled that Spring's use of personal funds to purchase the debt did not alter the legal analysis. The guarantees were governed by New York law, which includes contribution rules. The bankruptcy court’s approval of the assignment did not establish the nature of the relationship between HSC/Spring and the co-obligor partners, thus not affecting the case's outcome. The court also found no conclusive evidence of deceit to justify striking Spring's counterclaim due to spoliation, stating that both parties were equally impacted by the lack of financial records. The decision allows for future motions on spoliation without prejudice. The final ruling confirms that the appeal affirmed the lower court's determinations, maintaining the status quo in the litigation.