The trial court improvidently exercised its discretion in denying plaintiff an award of sanctions despite noting that defendant knowingly asserted a meritless position for the purpose of delaying and prolonging the litigation. The record established that defendant prolonged the litigation based on largely meritless claims to avoid payment of the Notes and that its founder and Chief Executive Officer made false statements of material fact, rendering the conduct frivolous.
Defendant provided no support in the record for the CEO's statements in his affidavit that: (1) plaintiff represented that the Notes would be consolidated; (2) the repayment date would be extended to December 31, 2024; (3) defendant's Chief Financial Officer acted as an agent for plaintiff in breach of his fiduciary duty to defendant; and (4) the CFO presented unauthorized financial projections to plaintiff. These claims were denied by the Chief Administration Officer of plaintiff's general partner and the CFO, and documents in the record demonstrate that they are false. Moreover, defendant's CEO's June 19, 2024 email demonstrated that he intended to prolong the litigation by asserting baseless claims to delay payment of the Notes.
While sanctions should not be imposed so as to restrict ultimately unpersuasive, good-faith arguments requiring a review of the law, there is no good faith here. Presenting knowingly false affidavits to a court is a proper basis for the imposition of sanctions.
Remanded for a determination of appropriate sanctions to be imposed upon defendant, pursuant to 22 NYCRR 130-1.1[a].
Mendon Ventures Fintech Fund, LP v. Equitus Corp., NY Slip Op 04040 (1st Dep't June 25, 2026)
