Motion for Writ in Sidney E. Anderson v. Riviera Bronze Mfg, Llc| Trellis.Law

On May 11, 2023 a Motion-Secondary was filed involving a dispute between Sidney E. Anderson, and Riviera Bronze Mfg, Llc, for Commercial - Business Entity - Commercial Division in the District Court of New York County.

Preview
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK

SIDNEY E. ANDERSON,

Plaintiff, Index No. 652288/2023

v. Motion Seq. No. 1

RIVIERA BRONZE MFG, LLC, a Delaware
Limited Liability Company,

Defendant.

DEFENDANT RIVIERA BRONZE MFG, LLC’S OPPOSITION
TO PLAINTIFF SIDNEY E. ANDERSON’S FEE APPLICATION

GUHA PLLC
Samidh Guha (No. 2962199)
Terence K. McLaughlin (No. 2787356)
1740 Broadway, 15th Floor
New York, New York 10019
(212) 399-8330
sguha@guhapllc.com
tmclaughlin@guhapllc.com

Attorneys for Defendant Riviera Bronze
MFG, LLC

1 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

TABLE OF CONTENTS

PRELIMINARY STATEMENT .....................................................................................................1

RELEVANT FACTUAL BACKGROUND ....................................................................................6

I. KVARSTAR’S SALE OF A MAJORITY INTEREST IN RIVIERA
BRONZE TO CONTEXT TCM. .............................................................................6

II. CONTEXT TCM’S CLAIMS AGAINST KVARSTAR ........................................7

III. CONTEXT TCM COMMENCES THE WESTCHESTER ACTION ....................8

IV. ANDERSON COMMENCES THIS ADVANCEMENT ACTION .....................12

V. RIVIERA BRONZE MOVES TO DISMISS THE
ADVANCEMENT COMPLAINT AND ANDERSON CROSS-
MOVES FOR SUMMARY JUDGMENT ............................................................12

VI. THE COURT DISMISSES ALL OF ANDERSON’S
ADVANCEMENT CLAIMS EXCEPT FOR LEGAL FEES THAT
HE (NOT KVARSTAR) INCURRED “DEFENDING THE
ORIGINAL
COMPLAINT IN THE WESTCHESTER ACTION”...........................................13

ARGUMENT .................................................................................................................................16

I. ANDERSON’S CLAIM FOR ADVANCEMENT GOES WELL
BEYOND THE LIMITATIONS OF THE COURT’S ORDER ............................16

A. Anderson’s Claim For Fees Incurred Defending The Original
Complaint In The Westchester Action Is Inflated By More Than
$230,000.....................................................................................................16

B. Anderson Is Not Entitled To Advancement Of Any Fees Incurred
In The Westchester Action After The Filing Of The Amended
Complaint...................................................................................................19

C. Anderson Is Not Entitled To “Fees On Fees,” And Even If He
Were,
His Claim Is Grossly Inflated and Disproportional ...................................21

1. The Advancement Order Dismissed Anderson’s Claim For
“Fees On Fees.” .............................................................................21

2. Anderson’s Claim For Fees On Fees Is Grossly Inflated
And
Unreasonable..................................................................................22

2 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

D. Anderson Is Not Entitled To Prejudgment Interest, And Even If
He
Were, The Amount Would Be Dramatically Lower ..................................23

II. RIVIERA BRONZE IS PREPARED TO CONCEDE A
PROPORTIONAL AMOUNT OF “FEES ON FEES” FOR THE
MEASUREMENT CASH ISSUE AS A COMPROMISE ....................................25

CONCLUSION ..............................................................................................................................28

3 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

TABLE OF AUTHORITIES

Cases

Biggio v. Biggio,
110 A.D.3d 654 (2d Dep’t 2013) .......................................................................................20

Dore v. Sweports, Ltd.,
2017 WL 415469 (Del. Ch. Jan. 31, 2017) ........................................................................26

Dreisbach v. Walton,
2014 WL 5426868 (Del. Super Ct. Oct. 27, 2014) ............................................................26

Empire Merchants, LLC v. Merinoff,
2018 WL 4062674 (S.D.N.Y. Aug. 27, 2018) .............................................................25, 26

Fasciana v. Electronic Data Sys. Corp.,
829 A.2d 178 (Del. Ch. 2003)......................................................................................26, 27

Fleming v. Graham,
10 NY3d 296 (2008) ..........................................................................................................20

Gonzales v. Zinner,
100 A.D.3d 557 (1st Dep’t 2012) ......................................................................................20

Levy v. HLI Operating Co., Inc.,
2007 WL 2801383 (Del. Ch. May 16, 2007) .....................................................................26

Meyers v. Quiz-DIA LLC,
2018 WL 1363307 (Del. Ch. Mar. 16, 2018).....................................................................26

Pontone v. Milso Indus. Corp.,
2014 WL 2439973 (Del. Ch. May 29, 2014) .....................................................................25

Schoon v. Troy Corp.,
948 A.2d 1157 (Del. Ch. 2008)..........................................................................................26

Stifel Fin. Corp. v. Cochran,
809 A.2d 555 (Del. 2002) ..................................................................................................25

Washington v. Gorray,
302 A.D.2d 454 (2d Dep’t 2003) .......................................................................................20

Zaman v. Amedeo Hldgs., Inc.,
2008 WL 2168397 (Del. Ch. May 23, 2008) .....................................................................25

iii

4 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

Defendant Riviera Bronze MFG, LLC (“Riviera Bronze”), by and through its undersigned

counsel, respectfully submits this Opposition (“Opposition”) to the Fee Application (“Fee

Application”) filed by Plaintiff Sidney E. Anderson (“Anderson” or “Plaintiff”).

PRELIMINARY STATEMENT

The Fee Application submitted on behalf of Anderson by his current counsel, Stradling

Yocca Carlson & Rauth (the “SYCR Firm”) and Stradley Ronon LLP (the “SR Firm”), chronicles

their strategic churning and disguising of excessive, profligate legal fees in the hope of forcing

Riviera Bronze to pay for the defense of Kvarstar, a non-indemnified litigant. However, Anderson,

Kvarstar, and their common counsel, have miscalculated badly. The Court’s October 25, 2023

advancement decision and order (the “Order”) rejected Plaintiff’s legal theory and instructed him

to formulate with specific parameters a limited Fee Application consistent with the Court’s narrow

judgment.

Plaintiff has elected not only to ignore that guidance, but also the Order entirely, and has

instead pressed forward with his most aggressive demand to date. As a result, his Fee Application

provides no meaningful guidance or analysis from which the Court can craft relief that conforms

to its Order. Anderson’s Fee Application – which essentially reargues his contention that Riviera

Bronze must pay the entirety of the implausible legal spend for Kvarstar and Anderson from the

start of the two litigations to the current date – cannot be harmonized with the Order.

The contrast between the Fee Application and the Order is stark. Order confirms and holds

that Anderson is entitled to only a very narrowly-tailored advancement claim (with the remainder

of his claims and theories “dismissed”):

Accordingly, it is ORDERED that the cross-motions are
GRANTED IN PART only to the extent that: (1) plaintiff is
entitled to advancement of his reasonable attorneys' fees

5 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

incurred defending the claims asserted in the original
complaint in the Westchester Action1; and (2) plaintiff's claim
for further advancement in the Westchester Action is
dismissed; and the cross-motions are otherwise DENIED.

The Court afforded both sides ample opportunity to make extensive submissions prior to its ruling.

The Court also held oral argument that permitted a fulsome discussion of the issues. Accordingly,

the Order was the product of a robust process to address the “unsettled and difficult questions” that

the Court identified prior to ruling.

The Order is also final. Anderson could have appealed or sought reconsideration of the

Order. He elected to do neither. He must now live with the Order and the limitations therein. In a

meaningful way, this simplifies the Court’s task in consideration of his Fee Application. Under the

Order, Anderson is entitled to advancement for only those legal fees related to his personal defense

of the original complaint in the Westchester Action. This appropriately-cabined analysis requires

a calculation, limited to that time period, of the reasonable legal fees that he incurred to defend the

one claim in the original complaint that implicates his service as a former officer of Riviera Bronze.

That claim is the Measurement Cash claim, which the Court ruled is eligible for advancement and

which Riviera Bronze has never contested. The Order is equally clear and explicit as to those

categories of claims for which Anderson is not entitled to advancement. Under the Order,

Anderson is not entitled to any advancement following the amendment of the original complaint,

which removed him as a named defendant and withdrew the Measurement Cash claims. Nor is he

entitled to “advancement” of Kvarstar’s legal fees incurred defending either the original or the

amended complaint in the Westchester Action.

1
The “Westchester Action” refers to the action entitled Context TCM Riviera Acquisition, LLC v.
Kvarstar, Inc., Index No. 571752023.

6 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

The Fee Application runs roughshod over these guardrails in the Order. Rather than

identifying which legal fees he (as opposed to Kvarstar) reasonably incurred to defend the

Management Cash claim in the original complaint in the Westchester action, Anderson and his

counsel instead seek advancement of nearly $1 million in legal defense fees and “fees on fees,”

the lion’s share of which were incurred well past the amendment of the original Westchester Action

and which can only represent Kvarstar’s legal defense costs. Included within his claim are legal

fees incurred by Kvarstar in the Westchester Action over many months during which Anderson

was not even a party and faced no claims.

Tellingly, Anderson contends that Kvarstar, the actual defendant in the Westchester

Action, the party at the center of the gravamen of allegations, and the party emmeshed in discovery

over the Summer and Fall in the Westchester Action, incurred only $1,092.50 in legal fees over

nearly one year of litigation. This amount is less than the hourly billing rate of certain of the

partners representing Plaintiff. What is hiding in plain sight is Anderson’s gambit of repackaging

Kvarstar’s non-advanceable legal fees as his own so as to make Riviera Bronze “advance” them.

This demand, especially in light of the Order, is untethered to law or reality.

Anderson has also ignored the Court’s urging to reconsider his “aggressive” legal position

on the advancement issues. Quite to the contrary, in the Fee Application Anderson and his counsel

have doubled down on their unflinching, maximalist approach by seeking to shoot the proverbial

moon. He has refused in the Fee Application to make any effort to identify the legal fees

attributable to his short-lived and narrow defense of the Measurement Cash issue prior to the

amendment of the Complaint. As such, the Fee Application offers the Court no record on which

to assess the appropriate award of any advancement.

7 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

Although it is not Riviera Bronze’s burden to do so (and Anderson’s failure to do so should

be grounds alone to deny him relief altogether), Riviera Bronze has undertaken an analysis of the

underlying billing records accompanying the Fee Application to inventory those legal expenditures

that this Court’s Order upheld as appropriate for advancement. Riviera Bronze has done so to

honor the Court’s request that the parties revisit their most aggressive positions in hopes of

fashioning solutions. The resulting analysis shows that $67,583.47 of Anderson’s legal fees, across

both firms, are advanceable to Anderson in accordance with the narrow allowance given to him

under the Order. As broken down, month by month and firm by firm, in the Appendix at the end

of this opposition memorandum, this is the amount that fairly and reasonably represents

Anderson’s fees incurred defending the Measurement Cash claim in the original complaint in the

Westchester Action. Riviera Bronze is prepared to pay this amount immediately upon ruling by

the Court on the Fee Application and in doing so, would waive any additional scrutiny as to the

reasonableness of those sums. The remainder of the fees incurred in connection with the

Westchester Action are not advanceable under the Order because they represent Kvarstar’s fees

prior to and after the filing of the Amended Complaint.

The Order does not expressly address the issue of “fees on fees” and appears to have

dismissed any such claim. Without waiving that position, Riviera Bronze recognizes that the Court

may entertain a claim for some recovery for Anderson’s legal expenses incurred in this

Advancement Action. Under applicable case law, any award of such “fees on fees” must be

proportional to Plaintiff’s success and lack thereof on the advancement claims he pursued.

Delaware courts have recognized that such a proportionality calculation often involves a

“nonscientific” exercise and is aimed at reaching a reasonable and pragmatic result. Here, apart

from his personal legal fees incurred defending the Measurement Cash issue in the original

8 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

complaint (which, as previously noted, amounts to $67,583.47), the Order otherwise denies and

dismisses all of Anderson’s “further” advancement claims with respect to the Westchester Action.

Rounding to $70,000, this represents approximately 12.2% of the approximately $575,000 in fees

that he claims to have incurred in the Westchester Action. Applying this percentage to the

$358,383.64 of legal fees that he claims to have incurred in this advancement action (the “fees on

fees”) results in an additional award of approximately $43,060.

Riviera Bronze respectfully submits that an award of $67,583.47 of fees and $43,060 of

“fees on fees,” for a total advancement award of $110,643.47 for Anderson would be, and is,

faithful to the Court’s Order. Mindful of the Court’s encouragement to abandon “aggressive

litigation positions,” Riviera Bronze is prepared to waive its right to further challenge the

reasonableness of the foregoing figures. This is no small concession – the idea that Kvarstar and

Anderson have incurred nearly $1 million in legal fees across numerous law firms involving

multiple partners for but a few months of work with no depositions or other evidentiary litigation

activity would normally invite greater scrutiny, to be charitable. 2 12.2% may seem like a small

percentage, but it is being applied against a massively inflated figure. Nonetheless, Riviera Bronze

agrees to forego further reasonableness reduction in the interest of finality.

Adopting this proposal would, as this Court has rightfully suggested, allow the parties to

“focus on their real disputes in the Westchester Action.” We agree with the Court that

reasonableness and pragmatism are warranted and hope that our suggested resolution reflects that

worldview.

2
It bears noting that Kvarstar is well-positioned to pay the balance of its own legal fees that it (and
Anderson, in his capacity as Kvarstar’s President) have incurred in its defense of this litigation.
Kvarstar received approximately $16 million as a result of its representations to Context TCM in
the transaction and is of course free to manage its legal spend as it chooses.

9 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

RELEVANT FACTUAL BACKGROUND

Riviera Bronze respectfully submits that the Court is already well familiar with the salient

factual backdrop, much of which is set forth in the Court’s October 25, 2023 Decision and Order

(the “Advancement Order”) and the parties’ prior motions on the advancement issues.

Accordingly, Riviera Bronze will not burden the Court with unnecessarily duplicative factual

explication and will, instead, provide only a brief recap here.

I. KVARSTAR’S SALE OF A MAJORITY INTEREST IN RIVIERA BRONZE TO
CONTEXT TCM.

On December 10, 2020, Non-Party Context TCM Riviera Acquisition LLC (“Context

TCM”) purchased a controlling majority membership interest in defendant Riviera Bronze from

non-party Kvarstar, Inc. (“Kvarstar”) for approximately $16 million pursuant to an Equity

Purchase Agreement (the “Purchase Agreement”). (See Amended Complaint in the Westchester

Action at ¶ 25 (the “Amended Complaint”), a copy of which is annexed to the Affirmation of

Samidh Guha, dated November 29, 2023 (“Guha Affirmation”) as Exhibit 1.) Following the

transaction, Kvarstar retained a minority membership interest. (Id.) Anderson’s puzzling claim in

the Fee Application that he personally “sold majority control to the Company in December 2020,

but [ ] was persuaded to maintain a 45% interest in the Company” is factually inaccurate – Kvarstar

was the entity which sold to Context TCM and the entity which retained and continues to hold a

minority interest in the Company.

Both prior to and in the Purchase Agreement, Kvarstar (as Seller) made certain

representations to Context TCM (as Buyer) and/or concealed material information regarding

various aspects of Riviera Bronze’s business and operations. (Id. ¶¶ 26-30.) By way of illustration

(but not limitation), prior to the closing, and again in the Purchase Agreement:

 Kvarstar misrepresented and/or concealed that Riviera Bronze had no undisclosed
liabilities when, in reality, Kvarstar knew but concealed that Riviera Bronze utilized

10 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

a defective glass spacer product that subjected Riviera Bronze to millions of dollars
in undisclosed liabilities; (see, generally, Guha Affirmation Exhibit 1, Amended
Complaint);

 Kvarstar misrepresented and/or concealed that it was unaware of any claims that
could be brought in litigation against Riviera Bronze when, in reality, Kvarstar
knew of but concealed existing disputes with at least two customers (one in the
Northeast and the other in the Southwest) that could form the basis for (and in fact
did become) litigation claims against Riviera Bronze; (Id.); and

 Kvarstar misrepresented and/or concealed that it was unaware of any unlawful or
non-compliant employment practices at Riviera Bronze when in reality, Kvarstar
knew of but concealed at least two employment-related practices (one involving the
hiring of employees without proper identification verification documentation, and
the other involving employment practices in violation of applicable California
statues). (Id.)

This is precisely why Kvarstar – not Anderson – is the defendant in the Westchester Action

and has been with respect to all issues arising out of the transaction representations at issue.

II. CONTEXT TCM’S CLAIMS AGAINST KVARSTAR.

Following the closing of the transaction between Kvarstar and Context TCM under the

Purchase Agreement, the truth inevitably began to leak out, leading to Context TCM’s discovery

for the first time that Kvarstar had concealed at the time of the closing that Riviera Bronze: (i)

utilized defective glass that would expose it to substantial undisclosed liabilities; (ii) was the

subject of disputes that could (and did) give rise to litigation claims against it; and, (iii) engaged

in employment practices that could (and did) expose it to liabilities. (Id. ¶¶ 39-69.) Upon learning

of these matters, Context TCM provided Kvarstar with notice of claims against Kvarstar and

Anderson in his capacity as Kvarstar’s President for fraud and for breach of the Purchase

Agreement and demanded indemnification under certain provisions of the Purchase Agreement.

(Id. ¶¶ 70-77.)

11 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

III. CONTEXT TCM COMMENCES THE WESTCHESTER ACTION.

After Kvarstar failed to honor its indemnification obligations to Context TCM under the

Purchase Agreement, Context TCM commenced the Westchester Action to pursue its rights. (See

Anderson’s Complaint (“Advancement Complaint”) Exhibit I (N.Y.S.C.E.F. Docket No. 10).)

Context TCM filed the original complaint in the Westchester Action on February 27, 203. (Id.)

Context TCM’s original complaint in the Westchester Action asserted claims against

Kvarstar and Anderson in his capacity as Kvarstar’s President for breach of contract and for

fraudulent inducement. (Id. ¶¶ 74-84 and 85-101.) Each of those claims had four discrete

components: (a) a claim for breach of Section 4.06 of the Purchase Agreement and for fraud related

to Kvarstar’s concealment of undisclosed Riviera Bronze liabilities; (b) a claim for breach of

Section 4.15 of the Purchase Agreement and for fraud related to Kvarstar’s concealment of

disputes that could form the basis of legal proceedings against Riviera Bronze; (c) a claim for

breach of Section 4.19 of the Purchase Agreement and for fraud related to Kvarstar’s concealment

of undisclosed employment practices at Riviera Bronze; and (d) a claim for breach of Section 6.09

of the Purchase Agreement related to the “Measurement Cash.” (Id.) The first three claims are

pointedly directed at only Kvarstar as the counter-party to Context TCM in the transaction. 3

In March 2023, Anderson’s original counsel, the law firm Glenn Agre Bergman & Fuentes

LLP (the “Glenn Agre Firm”), requested and received additional time to respond to the original

complaint. (See Stipulation – Time to Answer (N.Y.S.C.E.F. Docket No. 4.). The Glenn Agre Firm

3
The Measurement Cash is a claim for breach of one the terms in the Equity Purchase Agreement
governing Riviera Bronze’s post-closing cash balance as of a specific date after the closing (the
“Measurement Cash”). Riviera Bronze acknowledges that Anderson is entitled to advancement of
the reasonable legal fees he incurred to defend the Measurement Cash claim specifically. However,
none of the other claims in the original complaint is or was advanceable because none of those
claims was asserted against Anderson in his capacity as a director or officer of Riviera Bronze.
Rather, the claims were asserted against Kvarstar (seller) and its President (Anderson).

12 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

raised the prospect of advancement and indemnification with Riviera Bronze, to which Riviera

Bronze objected. The Glen Agre Firm elected not to pursue Anderson’s theories on his behalf and,

soon after, was replaced by the SYCR Firm, having either withdrawn or been fired by Kvarstar

and Anderson. On May 3, 2023, Defendants, now represented by the SYCR Firm, filed the opening

papers in support of a joint motion on behalf of both Kvarstar and Anderson to dismiss the original

complaint. (See, e.g., Affirmation of Marc Schneider dated November 15, 2022 in Support of Fee

Application (“Fee App. Affirmation”) Exhibit 4.) A few days thereafter, Anderson’s third firm,

the SR Firm, also entered its appearance in the Westchester Action. (See Fee App. Affirmation

Exhibit 22.)

On or about May 11, 2023, the SYCR and SR Firms, on behalf of Anderson, commenced

this action (the “Advancement Action”), seeking advancement in anticipation of indemnification

from Riviera Bronze, a non-party in the Westchester Action. (See N.Y.S.C.E.F. Docket No. 1.)

Kvarstar did not join in the Advancement Action, presumably because it has no right, contractual

or otherwise, to seek advancement or indemnification from Riviera Bronze for its legal fees arising

out of its defense of the Westchester Action. Riviera Bronze disputed the claims in the

Advancement Action, emphasizing that the claims in the Westchester Action almost entirely

focused on Kvarstar’s alleged misrepresentations at the closing of the transaction and implicated

Anderson only in his limited capacity as Kvarstar’s President. (See, e.g., Riviera Bronze’s motion

to dismiss at N.Y.S.C.E.F Docket Nos. 17-35 and 75.) Riviera Bronze has conceded that the very

limited Measurement Cash claim could necessitate Anderson’s defense of his conduct as Riviera

Bronze’s President and therefore warrant narrow advancement for his personal defense of that

allegation. (See, e.g., Fee App. Affirmation Exhibit 11 at 11:3-8.)

13 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

In late May, 2023, shortly after the filing of Kvarstar’s and Anderson’s joint motion to

dismiss, Context TCM sought leave to amend the complaint in the Westchester Action to remove

Anderson as a party entirely and thereby eliminate any ambiguity that the focus of the Westchester

Action was on Kvarstar alone. (Id. ¶ 4.) In doing so, Context TCM withdrew any claims against

Anderson personally (including his potential personal exposure as Kvarstar’s President).

Inexplicably, Anderson opposed that and effectively took the position that he should remain as a

defendant in the Westchester Action. (Id. ¶ 4-5.)

Justice Walsh granted Context TCM leave to amend and the Amended Complaint was filed

on June 23, 2023. (See Guha Affirmation Exhibit 1.) The Amended Complaint eliminates the

Measurement Cash claim and eliminates Anderson as a defendant altogether. (Id.).

In the four months between February 27, 2023 and June 23, 2023 when the Amended

Complaint was filed, the only substantive activity in the Westchester Action undertaken by

Kvarstar and Anderson was the filing of their motion to dismiss, the service of a first set of

document requests and interrogatories by Defendants on Context TCM and Anderson’s

inexplicable opposition to Context TCM’s motion to dismiss him from the litigation. (Guha

Affirmation ¶ 6.) The motion to dismiss centered almost entirely on the allegations regarding

Kvarstar’s representations at the time of the closing of the transaction, a fact confirmed by

Kvarstar’s refiling of a near-identical motion to dismiss after Context TCM later amended the

complaint and dropped Anderson as a defendant. (See Fee App. Affirmation Exhibit 4.) For this

period, Anderson now claims a right to advancement of nearly $300,000 ($299,774.74 to be

precise) and states implausibly that virtually no legal fees were incurred on behalf of Kvarstar.

During various points in this time period, Kvarstar had no fewer than six senior-level (i.e.,

Partner or Managing Counsel) lawyers actively working across three law firms: Messrs. Skibell

14 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

and Bergman (both Partners at the Glenn Agre Firm), Messrs. Schneider and Ram (both Partners

at the SYCR Firm and Schneider serving as a member of the SYCR Firm’s Executive Committee),

and Messrs. Feldman and Porter (Feldman serving as a Partner and the SR Firm’s Co-Chair of the

White Collar Defense, Internal Investigations & Corporate Compliance practice area and Porter

serving as Managing Counsel). (See, generally, billing statements annexed as Exhibits 12-31 to

Fee App. Affirmation.) The Glenn Agre Partners’ billing rates ranged from $1,375 per hour

(Bergman) to $1,000 per hour (Skibell). (Id. Exhibits 20, 21) The SYCR Partners’ billing rates

ranged from $980 per hour (Schneider) to $895 per hour (Ram). (Id. Exhibits 12-19.) The SR

attorneys’ billing rates ranged from $1,030 per hour (Feldman) to $585 per hour (Porter). (Id.

Exhibits 22-27.) Kvarstar and Anderson also had at least two additional associates working during

this time as well, bringing the total number of attorneys working to no fewer than eight. (Id.

Exhibits 12-31.)

Anderson would have this Court believe that all of these attorneys were necessary merely

to secure an extension of time, to write and file a motion to dismiss, and propound two garden-

variety discovery demands, in addition to opposing (unsuccessfully) Context TCM’s efforts to

remove Anderson from the action. He would also have this Court believe that none of those eight

attorneys performed any work for Kvarstar, except to the extent of a mere $1,092.50. 4 This simply

cannot be true and instead is a transparent effort to impose Kvarstar’s excessive legal fees on third-

party Riviera Bronze.

4
See Anderson Memorandum at 15 n.6 (claiming that the only fees incurred by Kvarstar prior to
the Amendment of the Complaint was a single $1,092.50 entry related to research on “bulk
pleading” issues).

15 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

Riviera Bronze has no obligation to advance or indemnify Kvarstar (a fact that is

uncontested) and to the extent that these fees were related to Anderson and the Measurement Cash

issue, only reasonable expenses are required to be advanced. 5

IV. ANDERSON COMMENCES THIS ADVANCEMENT ACTION.

Within about one week of the filing of the joint motion to dismiss in the Westchester

Action, on or about May 11, 2023, Anderson commenced this action against Riviera Bronze by

filing the Advancement Complaint in this action. (See N.Y.S.C.E.F Docket No. 1.) The

Advancement Complaint asserts two causes of action: one for advancement of Anderson’s legal

fees “incurred and to be incurred” in connection with the Westchester Action, (id. ¶¶ 77-83), and

the other for advancement of Anderson’s legal fees in connection with this advancement

proceeding itself (i.e., a claim for “fees on fees”). (Id. ¶¶ 84-86.) The Prayer for relief in the

Advancement Complaint also seeks prejudgment interest. (See id. at Prayer for Relief C.)

V. RIVIERA BRONZE MOVES TO DISMISS THE ADVANCEMENT COMPLAINT
AND ANDERSON CROSS-MOVES FOR SUMMARY JUDGMENT.

On or about July 5, 2023, Riviera Bronze filed its motion to dismiss all of Anderson’s

claims in this action. (See, e.g., N.Y.S.C.E.F Docket Nos. 17-35, 75.) On July 17, 2023, Anderson

opposed the motion to dismiss and cross-moved for summary judgment on all of his claims in this

action (i.e., both his claim for advancement of fees related to the Westchester Action and those

associated with this advancement action as well, together with his claim for prejudgment interest).

(See, e.g., N.Y.S.C.E.F. Docket Nos. 37-43, 44-70, 78-81.) The Court heard argument on the cross-

motions on October 4. (See Fee App. Affirmation Exhibit 11.)

5
See, e.g., Section 6.09 of Riviera Bronze’s Amended and Restated Limited Liability Company
Agreement, a copy of which is annexed as Exhibit C to the Complaint in this action (“. . . Company
shall pay or reimburse reasonable expenses (including reasonable attorneys’ fees) . . .”)
(N.Y.S.C.E.F. Docket No. 4.)

16 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

But for the briefing and argument on these cross-motions (and a pro-forma and unopposed

pro hac vice motion), there has been no discovery, no other motion practice, an no other activity

whatsoever in this Advancement Action.

VI. THE COURT DISMISSES ALL OF ANDERSON’S ADVANCEMENT CLAIMS
EXCEPT FOR LEGAL FEES THAT HE (NOT KVARSTAR) INCURRED
“DEFENDING THE ORIGINAL COMPLAINT IN THE WESTCHESTER
ACTION”.

Following briefing and argument, this Court issued its Order on October 25, 2023.

(N.Y.S.C.E.F. Docket No. 86.) Far from holding that he “is entitled to advancement” as Anderson

misleadingly contends,6 the Order largely denies his request for advancement except for a carefully

defined and circumscribed claim. Specifically, the Advancement Order expressly and

unambiguously states:

Accordingly, it is ORDERED that the cross-motions are
GRANTED IN PART only to the extent that: (1) plaintiff is entitled
to advancement of his reasonable attorneys' fees incurred defending
the claims asserted in the original complaint in the Westchester
Action; and (2) plaintiff's claim for further advancement in the
Westchester Action is dismissed; and the cross-motions are
otherwise DENIED.

(Order at 3 (emphasis added).) To be clear, Anderson’s cross-motion for summary judgment was

denied, Riviera Bronze’s motion to dismiss was granted, and Anderson’s advancement claims in

this action were all dismissed, with the sole exception of the reasonable legal fees that Anderson

(not Kvarstar) incurred “defending the claims asserted in the original complaint in the Westchester

Action.” (Id.)

The advancement claims dismissed by the Order include many of the claims that Anderson

now tries to slip back into his Fee Application. Without limitation, he attempts to recover the

6
See Anderson Memorandum of Law in Support of Fee Application (“Anderson Memo”) at 5.
This false assertion that he somehow secured a total victory on the competing cross motions is
repeated throughout his Fee Application papers.

17 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

following categories of fees that the Court disallowed: (a) all legal fees that Kvarstar (as distinct

from Anderson) incurred “defending the claims asserted [against Kvarstar] in the original

complaint in the Westchester action,” (b) all legal fees incurred in the Westchester Action after

the date on which Context TCM filed the Amended Complaint removing Anderson as a party; (c)

Anderson’s claim for “fees on fees” incurred in this advancement action; and (d) Anderson’s claim

for prejudgment interest on his advancement claim.

The narrow scope of the Court’s Order on its face makes perfect sense and aligns entirely

with applicable law. As Riviera Bronze demonstrated in its motion to dismiss (but will not repeat

here at length), with the sole exception of claims related to the so-called “Management Cash,”

none of the claims in the original complaint in the Westchester Action was brought against

Anderson “by reason of” his capacity as a former officer and director of Riviera Bronze. Rather,

the claims (other than the “Measurement Cash” claim) were brought against Kvarstar and its

president (Anderson in his capacity as such). Kvarstar’s President is not entitled to advancement

from Riviera Bronze for actions he took (or failed to take) on behalf of Kvarstar, as seller. At any

rate, the Order properly recognizes that, after Anderson was removed from the Westchester Action

with the filing of the amended complaint, he was no longer defending against any claims (whether

for Riviera Bronze or for Kvarstar). And finally, because he was predominately unsuccessful in

this advancement action, the Court understandably declined in the Order to award him “fees on

fees” or prejudgment interest.

Anderson neither sought reargument of the Order nor appealed from it and the deadline to

have taken any such steps has passed. Given the sophistication (let alone the numerosity) of his

legal team, this undoubtedly was a considered decision that reflects their assessment that the Order

18 of 35
FILED: NEW YORK COUNTY CLERK 12/01/2023 09:35 PM INDEX NO. 652288/2023
NYSCEF DOC. NO. 124 RECEIVED NYSCEF: 12/01/2023

is correct and would not likely be modified by an appellate court. Accordingly, the Order is final

and governs the scope of his advancement rights.

In the final analysis, after removing those portions of Anderson’s claim that the Court has

already dismissed, Anderson’s total allowable advancement claim for his reasonable defense costs

incurred defending the lone Measurement Cash claim in the original complaint until it was

amended and dismissed in June 2023 is no more than $67,583.46. 7 Furthermore, as set forth in

Point II of the Argument below, although Riviera Bronze believes that the Order did not expressly

award any “fees on fees,” it respectfully submits that if the Court were to award any such fees, the

proper amount should be no more than $43,060 (which represents 12.2% of the total “fees on

fees”) as required by the “proportionality” rule under Delaware Law. Riviera Bronze objects to

any advancement award beyond these two amounts, both of which comport with the express terms

and spirit of the Court’s carefully-limited Order.

7
To aid the Court in its review of Riviera Bronze’s opposition to the Fee Application, Riviera
Bronze respectfully submits marked copies of the underlying billing statements of the three law
firms on which the Fee Application is based. (See Guha Affirmation Exhibits 2-19.) Green
highlighting in those Exhibits represents items related to the Westchester Action, after the filing
of the Amended Complaint, which this Court’s Order makes clear are not advanceable. Blue
highlighting represents those items related to Anderson’s claim for “fees on fees” which (without
waiving its argument that no such fees on fees were awarded in the Order) Riviera Bronze contends
are unreasonable or otherwise improper. Finally, pink highlighting represents items related to the
Westchester Act

Case Info

Judge

Jennifer G. Schecter Track Judge’s New Case

Case No.

(Subscribe to View)

Document Filed Date

December 01, 2023

Case Filing Date

May 11, 2023

County

Parties

GUHA, SAMIDH Attorney for the Defendant
MCLAUGHLIN, TERENCE KEVIN Attorney for the Defendant
PORTER, ERIC BRENT Attorney for the Plaintiff
Riviera Bronze MFG, LLC Defendant
SCHNEIDER, MARC JEFFREY Attorney for the Plaintiff
Sidney E. Anderson Plaintiff
NICHOLAS DAYAN Attorney
STEVEN FELDMAN Attorneys for Plaintiffs
ALFONSO VILABOA Attorney
MATTHEW QUINN Attorneys for Plaintiffs
WENDY CHAVEZ Attorneys for Plaintiffs
JOHN SCHNEIDER Attorneys for Defendants
STEPHEN REINEKE Attorneys for Plaintiffs

For full print and download access, please subscribe at https://www.trellis.law/.

Motion-Secondary: Sidney E. Anderson v. Riviera Bronze Mfg, Llc

Preview

Related Topics

Case Info

Parties