Knopf v. Esposito

Background

Norma Knopf, individually and as a distributee and the executor named in Michael Knopf’s will, brought a claim under 42 U.S.C. § 1983 alleging a conspiracy to violate her due-process rights. She alleged that Frank M. Esposito, Edward S. Feldman, and others conspired with Melissa Ringel, identified as Esposito’s wife and a state court employee, to deprive her of due process and of a property interest in condominium unit Penthouse C at 44 East 67th Street.

Knopf alleged that Ringel gave advice during a January 12, 2016 telephone call that made it possible for the Penthouse sale to proceed on February 1, 2016. Knopf contended that she was unaware of the call and therefore could not stop the sale, obtain a lien that would give her priority over unsecured creditors, or negotiate the distribution of the sale proceeds. She argued that, with notice, she could have asserted a constructive-trust claim to establish the priority of her lien.

Motions and damages issue

Knopf moved for summary judgment on her conspiracy claim and moved to dismiss Esposito’s affirmative defenses. Esposito and Feldman filed cross-motions for summary judgment. The opinion states that a separate opinion addressed Feldman’s motion. In this opinion, the court addressed Knopf’s claims against Esposito and the amount of damages Knopf could potentially recover.

Knopf sought $2,228,772.68 in actual damages. That figure represented the $3 million in Penthouse-sale proceeds minus $771,227.32 that she had already collected. The court determined that Knopf had not shown entitlement to certain categories of the proceeds, including taxes and closing costs totaling $352,012.20. The court also considered an additional $250,000 that Knopf had already recovered in a settlement with Dorsey & Whitney, LLP and Nathaniel Akerman; the opinion states that Knopf did not dispute subtracting that amount.

After those deductions, the court calculated potential damages of $1,626,460.48. The court further ruled that Knopf had not shown that a lien obtained after the January 12 call would have priority over the $650,000 Meister Seelig mortgage, which had been filed in 2015. Applying the principle that an earlier lien generally has priority over a later one, the court deducted the mortgage and reduced the potential damages to $976,460.48.

The court stated that Knopf might still be able to establish damages based on the condominium liens, the payment to Esposito, and the payment to the seller, Pursuit. The condominium liens were filed in 2009 and 2014. Unless Knopf could show that those liens were unenforceable, they would have priority over a lien she could have obtained in January 2016. The parties were permitted to file motions before trial addressing Knopf’s argument that the condominium liens were unenforceable.

Ruling

The court denied Knopf’s motion for summary judgment against Esposito and denied Esposito’s motion for summary judgment on liability. It found that material factual disputes remained about the alleged agreement among Esposito, Sanford, and a state court employee to deprive Knopf of her due-process rights and property interest in the Penthouse.

The court granted Esposito’s motion for summary judgment to the extent that Knopf could recover no more than $976,460.48 in actual damages. This was a limit on the amount she could potentially recover, not a final determination that she was entitled to that amount. The court stated that Knopf would have to prove her entitlement to actual damages at trial. The court also granted Knopf’s unopposed motion to dismiss Esposito’s affirmative defenses.