1-8-13 nycdcc funds v. o'dwyer & bernstien: summons + complaint

FILED: KINGS COUNTY CLERK 01/08/2013 INDEX NO. 500098/2013

NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/08/2013

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS

TRUSTEES OF THE NEW YORK CITY DISTRICT COUNCIL OF CARPENTERS PENSION FUND, TRUSTEES OF THE NEW YORK CITY DISTRICT COUNCIL OF CARPENTERS WELFARE FUND, TRUSTEES OF THE NEW YORK CITY DISTRICT COUNCIL OF CARPENTERS ANNUITY FUND, AND TRUSTEES OF THE NEW YORK CITY DISTRICT COUNCIL OF CARPENTERS APPRENTICESHIP, JOURNEYMAN RETRAINING, EDUCATIONAL AND INDUSTRY FUND,

Plaintiffs,

-against-

O'DWYER & BERNSTIEN, LLP, BRIAN O'DWYER, GARY SILVERMAN, AND GARY ROTHMAN,

Defendants.

TO THE ABOVE NAMED DEFENDANTS:

Index No.: _____ _

Date Filed: January 8, 2013

SUMMONS

You are hereby summoned to serve upon plaintiffs' attorneys an answer to the

complaint in this action within 30 days after service of this summons. In case of your

failure to appear or answer, judgment will be taken against you by default for the relief

demanded in the complaint.

The basis of venue is that Defendant Gary Silverman resides in Kings County.

Dated: New York, New York January 8, 2013

VIRGINIA & AMBINDER, LLP

~

By:~~h~ Charles R. Virginia Marc A. Tenenbaum 111 Broadway, Suite 1403 New York, NY 10006 (212) 943-9080

-2-

-and- KAUFF McGUIRE & MARGOLIS LLP Raymond G. McGuire Elizabeth O’Leary 950 Third Avenue, Fourteenth Floor New York, NY 10022 (212) 644-1010 Counsel for Plaintiffs TO: O’Dwyer & Bernstien, LLP

52 Duane Street New York, NY 10007 Brian O’Dwyer 350 Central Park West New York, NY 10025 Gary Silverman 350 4th Street Brooklyn, NY 11215 Gary Rothman 25 Preakness Lane New City, NY 10956

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS

TRUSTEES OF THE NEW YORK CITY DISTRICT COUNCIL OF CARPENTERS PENSION FUND, TRUSTEES OF THE NEW YORK CITY DISTRICT COUNCIL OF CARPENTERS WELFARE FUND, TRUSTEES OF THE NEW YORK CITY DISTRICT COUNCIL OF CARPENTERS ANNUITY FUND, AND TRUSTEES OF THE NEW YORK CITY DISTRICT COUNCIL OF CARPENTERS APPRENTICESHIP, JOURNEYMAN RETRAINING, EDUCATIONAL AND INDUSTRY FUND,

Plaintiffs,

-against-

O’DWYER & BERNSTIEN, LLP, BRIAN O’DWYER, GARY SILVERMAN, AND GARY ROTHMAN,

Defendants.

Index No.: _______________

COMPLAINT

Plaintiffs, by and through their undersigned attorneys, as and for their Complaint

against Defendants, allege as follows:

NATURE OF THE ACTION

1. This is a legal malpractice action against a law firm and certain of its

individual attorneys whose egregious neglect of numerous collection matters caused their

clients – a group of employee benefit plans that provide pension, health, and other

benefits to working carpenters and their families – to lose the ability to collect millions of

dollars in unpaid contributions from the workers’ employers.

PARTIES

2. Plaintiffs Trustees of the New York City District Council of Carpenters

Pension Fund, Trustees of the New York City District Council of Carpenters Welfare

Fund, Trustees of the New York City District Council of Carpenters Annuity Fund, and

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Trustees of the New York City District Council of Carpenters Apprenticeship,

Journeyman Retraining, Educational and Industry Fund are employer and employee

trustees of multiemployer labor-management trust funds (the “Funds”) organized and

operated in accordance with the Employee Retirement Income Security Act of 1974, as

amended (“ERISA”), 29 U.S.C. §§ 1001-1461, and section 302(c) of the Labor

Management Relations Act of 1947, as amended (“LMRA”), 29 U.S.C. § 186(c). The

Funds are administrated at 395 Hudson Street, New York, New York 10014.

3. Defendant O’Dwyer & Bernstien, LLP (“ODB”) is a limited liability

partnership organized under the laws of the State of New York. ODB maintains its

principal office for the practice of law at 52 Duane Street, New York, New York 10007.

4. Defendant Brian O’Dwyer (“O’Dwyer”) is, and at all relevant times was,

an attorney admitted to the practice of law in the State of New York. O’Dwyer is, and at

all relevant times was, a senior partner in ODB. O’Dwyer resides at 350 Central Park

West, New York, New York 10025.

5. Defendant Gary Silverman (“Silverman”) is, and at all relevant times was,

an attorney admitted to the practice of law in the State of New York. Silverman is, and at

all relevant times was, a partner in ODB. Silverman resides at 350 4th Street, Brooklyn,

New York 11215.

6. Defendant Gary Rothman (“Rothman”) is, and at all relevant times was,

an attorney admitted to the practice of law in the State of New York. At all relevant

times, Rothman was a partner in ODB. Rothman resides at 25 Preakness Lane, New

City, New York 10956.

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BACKGROUND

7. The Funds are employee benefit plans established for the benefit of

participants whose employers are obligated, pursuant to collective bargaining agreements

with the New York City District Council of Carpenters (the “District Council”) or other

written agreements, to make specified contributions to the Funds in connection with

carpentry work and other specified categories of work, and for the benefit of beneficiaries

of such participants. The Funds’ assets are required to be used for the exclusive purpose

of providing pension, health, and other categories of benefits to the Funds’ participants

and their beneficiaries, and defraying the reasonable expenses of administering the

Funds. Half of the Funds’ trustees are appointed by the District Council, and half are

appointed by associations of employers whose members are obligated to contribute to the

Funds, with each side having equal voting power.

8. On or about February 4, 2000, the Funds engaged ODB to perform legal

services for the Funds.

9. At relevant times, ODB’s duties to the Funds included, among other

things, attendance at regular and special meetings of the Funds’ board of trustees and

committees thereof; attendance at meetings with the Funds’ staff (often referred to as the

“Fund Office”), consultants, accountants, and actuaries; preparation and/or review of

agreements including agreements with investment managers, service providers,

consultants, Fund staff, leases, insurance policies, and minutes; review of reports,

memoranda and other work product of service providers, consultants, and Fund staff;

advising trustees on legal requirements and fiduciary duties and responsibilities under

ERISA; representation of the Funds in litigation, administrative proceedings or

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investigations; and advice to and consultation with trustees concerning any other legal

and administrative matters that arose from time to time.

10. At relevant times, ODB’s duties to the Funds included, among other

things, serving as the Funds’ collections counsel. As collections counsel, ODB was

responsible for, among other things, working with the Funds’ trustees, auditors, and staff

to ensure that the Funds were engaging in reasonable, diligent, and systematic efforts to

identify and to collect unpaid employer contributions to the Funds.

11. Certain of ODB’s duties ended on or about September 16, 2010, but it

continued to be responsible for the Funds’ collection matters until at least May 30, 2011.

12. O’Dwyer was in overall charge of ODB’s representation of the Funds, and

Silverman and Rothman were responsible for performing and supervising much of the

day-to-day work.

13. Defendants repeatedly failed to exercise the skill, care, and diligence

commonly possessed and exercised by an attorney engaged to perform collection services

for multiemployer employee benefit plans such as the Funds.

14. For example, as set forth in detail below, Defendants failed to institute

legal proceedings to enforce audit findings in a timely manner; failed to commence

actions to confirm arbitration awards; failed to enforce settlement agreements and pursue

delinquent settlement payments; failed to take steps to collect on and otherwise enforce

judgments; failed to consummate settlement negotiations in a timely manner and obtain

(or maintain) proper enforceable settlement documents; failed to investigate and pursue

claims against the "alter egos" of delinquent employers; failed to follow up on requests

for access to the books and records of delinquent employers; failed to communicate

4816-8031-3362.2 -4-

adequately with the Funds’ trustees concerning the status of collections matters; failed to

provide assistance or information requested by an outside vendor responsible for assisting

the Funds in enforcing judgments; and failed to follow instructions or respond to

inquiries from the Funds concerning audits and other matters.

15. Furthermore, Silverman and/or other ODB attorneys were members of the

District Council’s anti-corruption committee and exercised substantial control over the

Funds’ entire anti-corruption audit program. The purported purpose of the anti-

corruption audit program was to scrutinize employers’ books and records more closely

when there was reason to suspect corruption or fraud. ODB communicated assignments

to the auditors and instructed them to issue their findings directly to ODB. When the

auditors needed guidance regarding an anti-corruption audit, they contacted ODB. In

some instances, ODB responded to the auditors by deciding what categories of findings

to include or exclude. In other instances, ODB failed to answer the auditors’ inquiries at

all, causing the audits to languish. Completed audits were not transmitted to the Fund

Office unless and until ODB authorized the auditors to do so. ODB often neglected to

take timely action not only on audits in progress, but also on completed audits, thereby

rendering the delinquent contributions potentially uncollectible either because the statute

of limitations may have expired or because the company may have become insolvent.

FIRST CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Timely Consummate Settlement With Shirin Construction)

16. Plaintiffs repeat the allegations set forth in paragraphs 1 through 15 above

and incorporate them herein by reference.

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17. An arbitration hearing was scheduled for September 2009 to address the

Funds’ claims against Shirin Construction, Inc. (“Shirin”) for unpaid employer

contributions to the Funds identified by an audit covering January 1, 2006 through June

30, 2007, and for related claims by the District Council. On the day of the scheduled

hearing, the parties verbally agreed to a settlement calling for a lump sum payment of

$300,000.00 within 30 days following execution of a written agreement.

18. ODB failed to fulfill its responsibility to arrange for the timely drafting

and execution of a written settlement agreement. Silverman was the ODB attorney

primarily responsible for this task.

19. On September 30, 2009, the Fund Office sent an email to Silverman

inquiring whether ODB had prepared the settlement agreement. Silverman did not

respond.

20. On that date, Silverman sent an email to Shirin’s counsel asking him to

draft the settlement agreement. The following day, Shirin’s counsel sent Silverman a

draft agreement.

21. On October 23, 2009, Silverman sent proposed revisions to Shirin’s

counsel. On October 29, 2009, Shirin’s counsel told Silverman by email that they needed

to discuss certain issues.

22. On December 10, 2009, the Fund Office sent an email to Silverman

inquiring again about the status of the settlement agreement. On December 13, 2009,

Silverman responded by e-mail: “Still working out details of release. Should be resolved

soon.”

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23. On December 15, 2009, Silverman emailed Shirin’s counsel, apparently in

response to a voice message from Shirin’s counsel, stating: “Where the time went is

beyond me, but it is true that I have not been in Utah the whole time.”

24. On February 18, 2010, Shirin’s counsel emailed a revised settlement

agreement to Silverman and told Shirin to be prepared to write a check for $300,000.00

imminently.

25. On March 18, 2010, Silverman emailed to Shirin’s counsel the final

version of the settlement agreement. In the same email, Silverman falsely claimed that he

was simultaneously sending the agreement to the District Council and the Funds for

execution.

26. On April 28, 2010, Shirin executed the settlement agreement.

27. ODB failed to forward the settlement agreement to the Funds and the

District Council until July 13, 2010. Silverman wrote a letter bearing that date addressed

to the supervisor of the District Council and to the Funds’ Executive Director.

Silverman’s letter stated, “Enclosed please find a memorandum regarding settlement of

the [Shirin] matter.” The enclosed memorandum was dated May 24, 2010 and was

likewise authored by Silverman and addressed to the supervisor of the District Council

and the Executive Director of the Funds. The memorandum stated in part: “Attached for

execution is a settlement agreement (executed by the employer).” The memorandum

described the settlement and the underlying audit. Silverman stated in the memorandum

that “[t]he settlement agreement was approved at the time of the Arbitration in

September, 2009.” Silverman claimed that it “took [the intervening] time to work out

certain language concerning the breadth of the release, and that issue has been resolved.”

4816-8031-3362.2 -7-

Silverman noted that “[t]he employer has executed the settlement document and the

attorney will issue the check upon our execution.”

28. The supervisor of the District Council promptly signed the agreement, but

the Funds’ Executive Director did not, and Silverman failed to follow up with the Funds’

Executive Director for nearly six months thereafter. Even after another member of the

Funds’ staff asked Silverman about the status of the matter on October 4, 2010,

Silverman failed to follow up with the Funds’ Executive Director.

29. Eventually, on January 17, 2011, ODB obtained the signature of the

Funds’ Executive Director. On January 25, 2011, ODB forwarded the fully executed

agreement to Shirin’s counsel.

30. By that time, it was too late. Shirin was unable to pay the settlement

because, in January 2011, Shirin ceased operations as a result of a dispute with its sole

customer, Con Edison, and had no assets or income thereafter.

31. In their handling of the settlement agreement with Shirin, ODB and

Silverman failed to exercise the skill, care, and diligence commonly possessed and

exercised by an attorney.

32. If ODB and Silverman had returned the fully executed agreement to

Shirin’s counsel in May 2010, Shirin would have paid the settlement in full.

SECOND CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Seek Confirmation of Arbitration Award Against Americon)



4816-8031-3362.2 -8-

34. On November 30, 2009 the Funds obtained an arbitration award in the

amount of $66,192.82 against Americon Construction, Inc. (“Americon”).

35. Americon failed to pay the arbitration award.

36. ODB was responsible for filing an action to confirm the arbitration award.

37. ODB failed to file an action to confirm the arbitration award.

38. The one-year statutory period for filing such an action expired.

39. The Funds never collected any part of the $66,192.82 they were entitled to

collect pursuant to the arbitration award.

40. By its inaction, ODB failed to exercise the skill, care, and diligence

commonly possessed and exercised by an attorney.

41. But for ODB’s inaction, the Funds would have recovered from Americon

some or all of the award amount of $66,192.82.

THIRD CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Seek Confirmation of Arbitration Award Against Fabric Installations)



43. On September 23, 2010, the Funds obtained an arbitration award in the

amount of $16,674.16 against Fabric Installations, Ltd. (“Fabric Installations”).

44. Fabric Installations failed to pay the arbitration award.



47. The Funds failed to collect any part of the $16,674.16.

4816-8031-3362.2 -9-

48. When its representation of the Funds ended, ODB provided the Funds’

new collections counsel with a report that purported to list all pending collections

matters. ODB’s report failed to disclose that the Funds had obtained an arbitration award

against Fabric Installations that remained unpaid.

49. The one-year statutory period for filing an action to confirm the arbitration

award expired.



51. But for ODB’s inaction, the Funds would have recovered from Fabric

Installations some or all of the award amount of $16,674.16.

FOURTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Seek Confirmation of Arbitration Award Against Jarlab)



53. On October 17, 2009, the Funds obtained an arbitration award in the

amount of $53,021.92 against Jarlab Enterprises, Inc. (“Jarlab”).

54. Jarlab failed to pay the arbitration award.




award expired.



4816-8031-3362.2 -10-

59. But for ODB’s inaction, the Funds would have recovered from Fabric

Installations some or all of the award amount of $53,021.92.

FIFTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Seek Confirmation of Arbitration Award Against Northeast)



61. On October 28, 2006, the Funds obtained an arbitration award in the

amount of $336,602.75 against Northeast Interiors Contracting, Inc. (“Northeast”).

62. Northeast failed to pay the arbitration award.




award expired.

66. The Funds failed to collect any part of the $336,602.75.



68. But for ODB’s inaction, the Funds would have recovered from Northeast


SIXTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Seek Confirmation of Arbitration Award Against Pinnacle)



4816-8031-3362.2 -11-

70. On April 1, 2011, the Funds obtained an arbitration award in the amount

of $69,454.49 against Pinnacle Woodworking Installations, Inc. (“Pinnacle”).

71. Pinnacle failed to pay the arbitration award.



74. When its representation of the Funds ended, ODB provided the Funds’

new collections counsel with a report that purported to list all pending collections

matters. ODB’s report failed to disclose that the Funds had obtained an arbitration award

against Pinnacle that remained unpaid.


award expired.

76. The Funds failed to collect ant part of the $69,454.49.



78. But for ODB’s inaction, the Funds would have recovered from Pinnacle


SEVENTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Obtain Enforceable Affidavits of Confession of Judgment from

Metropolitan Architectural, Darken Architectural, and Their Principal)



80. On October 15, 2010, in settlement of outstanding claims by the Funds

against Metropolitan Architectural Woodwork, Inc. (“Metropolitan”) and Darken

Architectural Woodwork, Inc. (“Darken”), the Funds entered into separate payment plan

4816-8031-3362.2 -12-

agreements with Metropolitan and Darken pursuant to which each of these employers

agreed to make a series of payments to the Funds over a period of five years. Darren

Commander (“Commander”), a principal of both Metropolitan and Darken, personally

guaranteed the obligations of both companies.

81. The payment plan agreements provided that, in the event of a default in

payment that was not cured within three days, all obligations under the agreements were

to be accelerated. Metropolitan, Darken, and Commander were required to execute

affidavits of confession of judgment for all obligations under the payment plans, which

could be filed with the county clerk in the event of an uncured default, resulting in the

prompt issuance of enforceable judgments against them.

82. ODB negotiated the payment plan agreements on behalf of the Funds and

was responsible for ensuring that they were properly documented. Rothman was the

ODB attorney primarily responsible for this task.

83. ODB and Rothman failed to obtain original affidavits of confession of

judgment from Metropolitan, Darken, and Commander.

84. ODB and Rothman thereby failed to exercise the skill, care, and diligence


85. In early 2011, both Metropolitan and Darken defaulted on the payment

plan agreements and failed to timely cure the defaults.

86. Because of the failure of ODB and Rothman to obtain original affidavits

of confession of judgment, the Funds were unable to enter judgment against

Metropolitan, Darken, and Commander.

4816-8031-3362.2 -13-

87. Because of the failure of ODB and Rothman to obtain original affidavits

of confession of judgment, the Funds still do not have judgments against Metropolitan,

Darken, and Commander, and have been unable to collect anything from them.

88. If ODB and Rothman had obtained original affidavits of confession of

judgment, the Funds would have obtained, in early 2011, a judgment against

Metropolitan and Commander, jointly and severally, for $708,927.92, and a judgment

against Darken and Commander, jointly and severally, for $429,729.72, and would have

collected some or all of these amounts.

EIGHTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Obtain Enforceable Affidavit of Confession of Judgment From Principal of Prestige)



90. In August 2010, in settlement of a claim by the Funds for unpaid employer

contributions, Prestige Construction Services, Inc. (“Prestige”) entered into a payment

plan agreement pursuant to which it agreed to pay $626,633.32 to the Funds by way of an

initial payment of $15,000.00 followed by 23 monthly payments of $26,592.75 each.

One of Prestige’s principals, Gerry Kane (“Kane”), personally guaranteed these

obligations, as well as the obligation to pay additional amounts as liquidated damages in

the event of a default.

91. Both Prestige and Kane signed affidavits of confession of judgment. After

making the first two payments, Prestige defaulted. In October 2010, ODB entered

judgment against Prestige for $696,651.15. ODB referred the judgment to D&B

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Receivable Management Services, Inc. (“RMS”) for collection. RMS collected nothing

and closed its file.

92. In October 2010, ODB also attempted to enter judgment against Kane but

was unable to do so because the New York County Clerk found formal defects in the

papers submitted, including that the affidavit of confession of judgment did not name the

Funds in the same way that the payment plan agreement named the Funds. In addition,

the papers did not adequately document a change in the prescribed fax number for giving

notice of default.

93. ODB made no further effort to obtain a judgment against Kane.

94. ODB thereby failed to exercise the skill, care, and diligence commonly

possessed and exercised by an attorney.

95. After ODB’s representation of the Funds ended, the Funds filed a lawsuit

and obtained a judgment against Kane. In the meantime, Kane moved to Florida, which

has very strict laws protecting judgment debtors. As a result, the Funds have collected

nothing from Kane.

96. If ODB had exercised the skill, care, and diligence commonly possessed

and exercised by an attorney, the Funds would have recovered some or all of Kane’s

obligation to the Funds in amount of $696,651.15.

NINTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Act on Audit of 160 Broadway Construction)



4816-8031-3362.2 -15-

98. In April 2007, the Funds’ auditors issued an anti-corruption audit report of

employer 160 Broadway Construction Corp. (“160 Broadway”) covering January 12,

2005 through December 27, 2005. The report indicated that 160 Broadway owed the

Funds $347,512.55.

99. The auditors subsequently reduced the total amount of their findings to

$338,592.37.

100. Some of the unpaid contributions identified by the auditors were based on

extra payments to members of the District Council that the auditors treated as wages for

hours worked, but that the employer characterized as bonuses. The employer’s

accountant claimed that the anti-corruption committee interviewed every member

appearing in the audit report who received an extra payment, and that the committee

verified that the payments were bonuses.

101. The Fund Office repeatedly asked ODB whether it was true that the anti-

corruption committee verified that the payments were bonuses. ODB never responded.

102. By ignoring the Fund Office’s repeated inquiries, ODB failed to exercise

the skill, care, and diligence commonly possessed and exercised by an attorney.

103. As a result, when ODB’s representation of the Funds ended, the Funds’

claims against 160 Broadway remained unadjudicated.

104. Consequently, the Funds have collected nothing from 160 Broadway.

105. But for ODB’s inaction, the Funds would have pursued legal proceedings

against 160 Broadway and collected some or all of its unpaid obligations to the Funds of

$338,592.37.

4816-8031-3362.2 -16-

TENTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Act on Audit of AOF Installation Services)

106. Plaintiffs repeat the allegations set forth in paragraphs 1 through 105

above and incorporate them herein by reference.

107. An anti-corruption audit of AOF Installation Services, Inc. (“AOF”)

covering July 1, 2002 through December 31, 2005 indicated that AOF owed the Funds

$370,934.45. The audit report was issued in 2008 and revised in 2009 based on

documentation received from AOF. The auditor charged AOF for all payments made to

AOF’s parent company, Aronson Office Furnishings. AOF objected to those findings.

108. The Fund Office and the auditors repeatedly asked ODB for guidance.

ODB failed to respond.

109. By ignoring these repeated inquiries, ODB failed to exercise the skill,

care, and diligence commonly possessed and exercised by an attorney.

110. As a result, when ODB’s representation of the Funds ended, the Funds’

claims against AOF remained unadjudicated.

111. Consequently, the Funds have collected nothing from AOF.


against AOF and collected some or all of its unpaid obligations to the Funds of

$370,934.45.

ELEVENTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Act on Audit of Centre Interiors Woodworking)



4816-8031-3362.2 -17-

114. An anti-corruption audit report covering January 1, 2003 through

December 31, 2007, which the Funds’ auditors completed and forwarded to ODB in

January 2009, found that Centre Interiors Woodworking, Inc. (“Centre Interiors”) owed

unpaid contributions to the Funds in the principal amount of $125,556.62.

115. The six-year statute of limitations may have begun to expire at or about

the time ODB received the audit report.

116. ODB failed to forward the audit report to the Fund Office.

117. ODB failed to take any action to collect the unpaid contributions or to

prevent the statute of limitations from running.

118. ODB thereby failed to exercise the skill, care, and diligence commonly

possessed and exercised by an attorney.


against Centre Interiors and collected some or all of its unpaid obligations to the Funds of

$125,556.62 plus interest and other statutory charges.

TWELFTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Act on Audit of D.J.W. Commercial Flooring)



121. An anti-corruption audit of D.J.W. Commercial Flooring Installations,

LLC (“D.J.W.”) covering July 28, 2006 through December 31, 2008 found that the

employer owed $1,335,388.84 to the Funds.

122. The audit findings were based almost entirely on the payroll and

disbursements of D.J.W.’s non-union affiliate S.D.C.F. Flooring Inc. (“S.D.C.F.”).

4816-8031-3362.2 -18-

123. Warren Hall (“Hall”) owned both D.J.W. and S.D.C.F., both of which

were located at the same address. Hall was listed in New Jersey corporate records as

president of one of the entities and controlling partner of the other. Hall admitted to the

auditor that S.D.C.F. was D.J.W.’s sole source of income.

124. In 2007, D.J.W. ceased operations. S.D.C.F. continued operating until

Hall’s death in 2011, and subsequently filed a voluntary petition for relief under Chapter

7 of the Bankruptcy Code.

125. At relevant times, ODB was aware of the relationship between S.D.C.F.

and D.J.W.

126. ODB knew or should have known that S.D.C.F. was an “alter ego” of

D.J.W. and that, consequently, S.D.C.F. was liable to the Funds for the unpaid

obligations identified by the Funds’ auditors.

127. ODB knew or should have known that, inasmuch as D.J.W. was defunct,

S.D.C.F. was the only entity from which the Funds could recover.

128. ODB failed to take any action to prosecute or protect the Funds’ claim

against S.D.C.F.

129. As a result of ODB’s inaction, the Funds were not in a position to institute

arbitration proceedings until approximately the time of Hall’s death. By that time,

S.D.C.F. was on the verge of bankruptcy and it was too late for the Funds to achieve any

meaningful recoveries.



4816-8031-3362.2 -19-

131. But for ODB’s inaction, the Funds would have recovered from S.D.C.F.

some or all of the obligations to the Funds in the amount of $1,335,388.84.

THIRTEENTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Act on Audit of Halcyon Construction)



133. In or about March 2007, the Funds’ auditors reported that an audit of

Halcyon Construction Corp. (“Halcyon”) covering portions of the years 2002 through

2004 showed that the employer owed $448,323.33 to the Funds.

134. ODB instructed the Fund Office not to seek payment from Halcyon

because the audit was based on incomplete information supplied by Halcyon.

135. Halcyon claimed that the missing records, including cash disbursement

records and invoices pertaining to seven companies that appeared in Halcyon’s cash

disbursement journal, had been destroyed in a flood.

136. ODB agreed to file a lawsuit against Halcyon to facilitate a more complete

audit, but never did so.

137. As a result of ODB’s inaction, the Funds’ claim against Halcyon may have

become barred by the six-year statute of limitations.



139. But for ODB’s inaction, the Funds would have recovered from Halcyon

some or all of the obligations in the amount of $448,323.33.

4816-8031-3362.2 -20-

FOURTEENTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Act on Audits of Klepp Wood Flooring)



141. Three anti-corruption audit reports that together spanned July 1, 1999

through June 30, 2006 indicated that Klepp Wood Flooring Corp. (“Klepp”) owed the

Funds a total of $2,619,750.48.

142. The first audit covered July 1, 1999 through December 31, 2002. In April

2005, the auditors issued a report finding that Klepp owed the Funds $1,128,655.65. In

May 2005, the Fund Office initiated arbitration. Arbitrator Roger Maher scheduled a

hearing for June 10, 2005. On that date, the hearing was adjourned. On July 19, 2005,

the arbitration was withdrawn. ODB took no action to prevent the six-year statute of

limitations from possibly beginning to run in July 2005.

143. On July 29, 2005, Rothman and other representatives of the Funds met

with Klepp and its counsel to discuss the first audit.

144. One and one-half years later, in January 2007, the auditors issued a revised

report covering July 1, 1999 through December 31, 2002. The revised report indicated

that Klepp owed the Funds $938,696.08. By letter dated February 20, 2007, the Fund

Office demanded payment of the revised audit findings. Klepp failed to pay. No further

enforcement action was taken.

145. The second audit covered January 1, 2003 through April 26, 2005. In

February 2006, the auditors issued a report indicating that Klepp owed $1,049,640.74. In

December 2006, the auditors issued a revised report indicating that Klepp owed the

4816-8031-3362.2 -21-

Funds $891,897.66. The auditors noted that, in accordance with ODB’s instructions, the

revised report removed findings derived from subcontractor invoices for certain

categories of work. By letter dated December 14, 2006, the Fund Office demanded

payment of the revised audit findings. Klepp failed to pay. No further enforcement

action was taken.

146. The third audit covered April 27, 2005 through June 30, 2006. In

November 2008, the auditors issued a report indicating that Klepp owed the Funds

$789,156.74. By letter dated November 17, 2008, the Fund Office demanded payment of

the audit findings. Klepp failed to pay. No further enforcement action was taken.

147. Whenever any of these audits were scheduled for arbitration, the employer

met with the District Council and ODB, and the arbitration was withdrawn.

148. The statute of limitations for collection of the findings for the first audit

period began to run no later than April 2005, when the Funds received the audit report,

and expired in April 2011. ODB allowed the statute of limitations to expire without

taking action.

149. ODB likewise took no action to collect the findings of the second or third

audit, and the statute of limitations on portions of these claims may have expired while

ODB was the Funds’ collections counsel.

150. By the time ODB ceased to be the Funds’ collections counsel, Klepp’s

business had deteriorated and it was financially unable to pay the Funds’ claims.



4816-8031-3362.2 -22-

152. But for ODB’s inaction, the Funds would have recovered from Klepp

some or all of its obligations in the amount of $2,619,750.48.

FIFTEENTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Act on Audit of Manhattan Partition)



154. An anti-corruption audit covering January 1, 2005 through September 30,

2008 indicated that Manhattan Partition Associates, Inc. (“Manhattan Partition”) owed

the Funds $1,711,073.90. The audit was issued in November 2009, and the findings were

later adjusted downward to $1,685,653.76. Arbitration hearings were scheduled several

times, but adjourned at ODB’s instruction.

155. Manhattan Partition offered $100,000.00 to settle the matter. In March

2010, ODB recommended that the Funds reject this offer. The Funds followed ODB’s

advice and rejected the offer. ODB took no enforcement action thereafter.

156. Even in January 2011, when the statute of limitations may have begun to

expire, ODB took no action.

157. In March 2011, when the Fund Office requested advice on how to

proceed, ODB failed to respond.

158. By the time ODB ceased to be the Funds’ collections counsel, Manhattan

Partition was no longer in business and was financially unable to pay the Funds’ claims.



4816-8031-3362.2 -23-

160. But for ODB’s inaction, the Funds would have recovered from Manhattan

Partition some or all of its obligations in the amount of $1,685,653.76.

SIXTEENTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Act on Audit of MI Installers)



162. An anti-corruption audit of MI Installers & Furniture Services, Inc. (“MI”)

covering January 10, 2004 through December 25, 2005 indicated that the employer owed

the Funds $683,097.72. On June 19, 2006, the Fund Office initiated arbitration. On

November 17, 2006, following several adjournments of the arbitration, the employer filed

a complaint in federal court seeking an injunction forbidding the Funds from proceeding

with the arbitration. ODB represented the Funds in that proceeding. On February 26,

2007, the court ruled that the Funds were not entitled to arbitrate because they were not

parties to the collective bargaining agreement and the District Council was not party to

the arbitration.

163. ODB took no further collection action, nor did it take any steps to prevent

the statute of limitations from possibly expiring on part or all of the Funds’ claims.

164. By its actions and inaction, ODB failed to exercise the skill, care, and

diligence commonly possessed and exercised by an attorney.

165. After ODB ceased to be the Funds’ collections counsel, the Funds filed a

lawsuit against MI and its alter ego, Professional Furniture Finishing Company, Inc.

(“PFF”), to collect the audit findings. MI and PFF have asserted that the Funds’ claims

are barred by, among other things, the statute of limitations, res judicata, and collateral

4816-8031-3362.2 -24-

estoppel. If these defenses are determined to be valid, then ODB’s failure to exercise the

skill, care, and diligence commonly possessed and exercised by an attorney will have

caused the Funds to lose the ability to recover from MI and PFF their obligations in the

amount of $683,097.72.

SEVENTEENTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Seek Correction and Enforcement of Judgment Against Quantum and Its Principal)



167. On November 13, 2006, ODB filed on behalf of the Funds an action

seeking to collect unpaid contributions and related amounts identified by an audit of

Quantum Contracting Corp. d/b/a Quantum Construction (“Quantum”). Quantum’s

principal, Noel Griffin, was also a defendant in the case.

168. On September 4, 2008, the magistrate judge recommended that “judgment

be entered in favor of the plaintiffs and against Quantum and Noel Griffin jointly and

severally in the principal amount of $81,900.18, with prejudgment interest to be

calculated from January 1, 2004 to the date of judgment at the Citibank prime rate plus

two percent.” In addition, the magistrate judge recommended that “judgment be entered

in favor of the plaintiffs and against Quantum for $16,380.04 in liquidated damages,

$22,876.25 in attorneys’ fees, $2,505.50 in costs, and $9,022.50 in auditor’s fees, for a

total of $50,784.29.”

169. By opinion and order dated December 9, 2008, the presiding district judge

adopted the magistrate judge’s report and recommendation “except to the extent that the

principal amount of the judgment shall be $82,222.69, and that defendant Griffin shall be

4816-8031-3362.2 -25-

jointly and severally liable for the liquidated damages, attorneys’ fees, and costs awarded

by the [report and recommendation].” The district judge directed the clerk of the court to

enter judgment for the Funds.

170. On December 16, 2008, the clerk of the district court entered judgment in

favor of the Funds against Quantum and Griffin, jointly and severally, in the amount of

$82,222.69.

171. The judgment entered by the clerk was inconsistent with the district

judge’s instructions to enter judgment for not only the principal amount of $82,222.69,

but also interest of approximately $26,208.00, liquidated damages of $16,380.04,

attorneys’ fees of $22,876.25, and costs of $2,505.50, for a total of $150,192.48.

172. ODB took no action to seek to correct the clerk’s error in entering

judgment for an amount that was at least $67,969.79 less than the district judge intended.

173. Furthermore, ODB took no action to enforce the judgment, and failed to

inform the Funds’ judgment collection service, RMS, of its existence.



175. But for ODB’s inaction, the Funds would have recovered from Quantum

or Griffin some or all of their obligations in the amount of $150,192.48.

EIGHTEENTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Enforce Judgments Against Principals of Gateway)



4816-8031-3362.2 -26-

177. James B. Murphy (“Murphy”), Fernando J. Alvarez (“Alvarez”), and

Robert J. Conti (“Conti”) were principals of Gateway Acoustics Corp. (“Gateway”), and

personally guaranteed Gateway’s obligations to the Funds under a payment plan. In

December 2008 and January 2009, after Gateway defaulted on the payment plan, ODB

entered judgment on the Funds’ behalf against Murphy, Alvarez, and Conti in the amount

of $1,674,688.09.

178. ODB took no action to enforce the judgments other than to issue

deposition subpoenas in early 2009 and to register the judgment against Murphy in New

Jersey.

179. ODB failed to inform RMS of these judgments.

180. When ODB’s representation of the Funds ended, ODB failed to notify the

Funds’ new collections counsel of these judgments.



182. But for ODB’s inaction, the Funds would have recovered from Murphy,

Alvarez, or Conti some or all of their obligations in the amount of $1,674,688.09.

NINETEENTH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Seek Records Needed for Completion of Audit of Clerk Contracting)



184. In 2007, the Funds’ auditors conducted an anti-corruption audit of Clerk

Contracting Corp. (“Clerk”) covering February 22, 2006 through January 9, 2007.

4816-8031-3362.2 -27-

185. In or about 2007, ODB knew that Janton Industries, Inc. (“Janton”) and

Designcore, Ltd. (“Designcore”) were possible "alter egos" of Clerk. The auditors did

not have access to the books and records of Janton or Designcore.

186. On or about January 8, 2008, during a telephonic conference with the

auditors and the Fund Office, ODB agreed to subpoena Janton’s books and records.

187. ODB failed to subpoena Janton’s books and records.

188. On or about April 20, 2010, ODB met in person with the auditors and the

Fund Office. In that meeting, ODB agreed to evaluate whether the Funds should take

further action to obtain the books and records of Janton and Designcore.

189. Neither the auditors nor the Fund Office heard anything further from

ODB.

190. As a result of ODB’s inaction, the audit was not completed.



192. But for ODB’s inaction, the audit would have been completed, and the

Funds would have recovered from Clerk, Janton, or Designcore a currently unknown

amount to be determined at trial.

TWENTIETH CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Seek Records Needed for Completion of Audit of CLJ Carpentry)



194. On or about September 26, 2006, the Funds’ auditors notified ODB that,

in conducting an anti-corruption audit of CLJ Carpentry Corp. for January 1, 2003

4816-8031-3362.2 -28-

through December 31, 2005, the auditors found a possible "alter ego," CLJ Building

Enterprises, Inc. The auditors notified ODB that they were unable to obtain access to the

books and records of CLJ Building Enterprises, Inc.

195. ODB failed to take any action to obtain access to the books and records of

CLJ Building Enterprises, Inc.





Funds would have recovered from CLJ Carpentry Corp. or CLJ Building Enterprises, Inc.

a currently unknown amount to be determined at trial.

TWENTY-FIRST CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Seek Records Needed for Completion of Audit of Marine Maintenance & Construction)



200. On or about June 23, 2009, the Funds’ auditors notified ODB that Marine

Maintenance & Construction, Inc. (“Marine Maintenance”) failed to provide many of the

records they requested in connection with an anti-corruption audit covering June 18, 2007

through April 30, 2008. The auditors asked ODB whether they should prepare an audit

report based on the limited information that Marine Maintenance provided.

201. Despite repeated references to this outstanding inquiry in the auditors’

periodic reports, ODB neither responded to the auditors nor took steps to obtain the

missing records.

4816-8031-3362.2 -29-





Funds would have recovered from Marine Maintenance a currently unknown amount to

be determined at trial.

TWENTY-SECOND CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Provide Assistance Required to Complete Audit of Whitestone)



206. In 2008, 2009, and 2010, in the course of conducting an anti-corruption

audit of Whitestone Construction Corp. (“Whitestone”) covering August 5, 2005 through

June 30, 2006, the Funds’ auditors sought guidance from ODB concerning whether

certain categories of work were covered by the applicable collective bargaining

agreement.

207. Despite repeated reminders, ODB never responded to the auditors’

questions.





Funds would have recovered from Whitestone a currently unknown amount to be

determined at trial.

4816-8031-3362.2 -30-

TWENTY-THIRD CLAIM FOR RELIEF

(For Legal Malpractice For Failure to Enforce Judgments)



212. ODB frequently boasted to the Funds’ trustees about its success in

obtaining judgments against delinquent employers, but ODB rarely if ever made any

effort to enforce the judgments, other than to eventually refer them to RMS.

213. ODB frequently failed to provide RMS with the assistance it needed to

collect judgments on behalf of the Funds.

214. ODB frequently failed to refer judgments to RMS in a timely manner.

Sometimes, as in the Perimeter, Quantum, and Gateway cases, ODB failed to refer

judgments to RMS at all.

215. When RMS received settlement offers from judgment debtors, RMS

sought guidance from ODB, which typically failed to respond. As a result, RMS was

unable to achieve settlements for the Funds.

216. Furthermore, ODB failed to utilize the banking information obtained by

the Funds whenever an employer entered into a payment plan. At least as early as 2009,

the Fund Office required the employer to provide a cancelled company check upon

signing a payment plan. In addition, each payment plan contained a statement to be

completed by the principal of the employer wherein he/she identified the banking

institutions that the company and the principal personally utilized. Thus, as soon as a

defaulted payment plan was reduced to judgment, ODB easily could have served

restraining notices on the judgment debtors’ banks, and then executed on their bank

4816-8031-3362.2 -31-

4816-8031-3362.2 -32-

accounts. ODB inexplicably failed to use this readily available banking information for

that purpose.



218. But for ODB’s inaction, the Funds would have achieved recoveries from

numerous judgment debtors in currently unknown amounts to be determined at trial.

WHEREFORE, Plaintiffs respectfully request that this Court:

(1) Award Plaintiffs judgment against Defendants, jointly and severally, for

$12,109,433.07 plus additional currently unknown amounts to be determined at trial;

(2) Award Plaintiffs pre-judgment interest at the annual rate of 9% as

prescribed by CPLR § 5004;

(3) Award Plaintiffs all reasonable attorneys’ fees, expenses, and costs they

incur in prosecuting this action; and

( 4) A ward Plaintiffs such further legal, equitable, or other relief as this Court

deems just and proper.

Dated: New York, New York January 8, 2013

4816·8031·3362.2

KAUFF McGUIRE & MARGOLIS LLP

'

By: (~ vueif, 1 ~LtAP Ra:4lwn<l McGuire Elizabeth O'Leary 950 Third Avenue, Fourteenth Floor NewYork,NY 10022 (212) 644-1010

-and-

VIRGINIA & AMBINDER, LLP

Mru·c A. Tenen aum 111 Broadway, Suite 1403 New York, NY 10006 (212) 943-9080

Counsel for Plaintiffs

-33-

1-8-13 nycdcc funds v. o'dwyer & bernstien: summons + complaint

Documents

magistrate judge recommended

clj building enterprises

clj carpentry corp

centre interiors woodworking

year statutory period

obtain original affidavits

pending collections matters

carpenters annuity fund