On June 3, 2026, Justice Reed of the New York County Commercial Division issued a decision in Cortlandt St. Recovery Corp. v. TPG Capital Mgt., L.P., 2026 NY Slip Op. 50868(U), sanctioning a party for bringing frivolous claims based on dismissal of similar claims in an earlier action, explaining:
Pursuant to 22 NYCRR 130—1.1(a), a court in its discretion, may award to any party in any civil action or proceeding before the court costs resulting from frivolous conduct and, the court, in its discretion may impose financial sanctions upon any party who engages in frivolous conduct. Conduct is defined as frivolous, under 22 NYCRR 130—1.1(c), if it asserts material factual statements that are false, is completely without merit in law, is undertaken primarily to delay or prolong the resolution of litigation, harasses or maliciously injures another, or constitutes conduct that cannot be supported by a reasonable argument for an extension, modification or reversal of existing law. In determining whether conduct is frivolous, the court shall consider, among other issues, (1) the circumstances under which the conduct took place, including the time available for investigating the legal or factual basis of the conduct; and (2) whether or not the conduct was continued when its lack of legal or factual basis was apparent, should have been apparent, or was brought to the attention of counsel or the party.
Apax seeks recovery of its fees incurred for the entirety of this action, asserting that plaintiff knew that the claims against Apax were baseless at the outset, and because Courtlandt purportedly had multiple opportunities to discontinue its claims against Apax, but refused to do so.
This case involves the same transaction and theories of liability asserted in a related action titled Courtlandt St. Recovery Corp. v Bonderman, filed under index 653357/2011. Apax obtained summary judgment in the related action in March of 2023, in an award that became final following appeal to the Appellate Division in March of 2024.
Plaintiff was aware that its claims, as against Apax, potentially lacked merit as early as March of 2023, when Apax obtained summary judgment. At the latest, following the Appellate Division’s affirmation of dismissal of the claims in March of 2024, plaintiff was on notice that its claims against Apax would not withstand judicial scrutiny.
The lack of legal basis to assert claims against Apax became apparent following dismissal of virtually identical claims in the related action. Apax properly brought these facts to the attention of plaintiff’s counsel and requested voluntary dismissal. The court has considered and determined that counsel for Apax properly brought the matter to the attention of plaintiff and sufficient time was available for the plaintiff to investigate the identical nature of the claims asserted against Apax. Plaintiff’s failure to withdraw its claims, following notice of dismissal of virtually identical claims in the related action, constitutes frivolous conduct (id.). Plaintiff failed to oppose this motion and provided no basis to explain why it waited until April of 2026 to voluntarily seek dismissal of the claims against Apax. Conduct undertaken primarily to delay or prolong the resolution of the litigation is defined as frivolous under 22 NYCRR 130—1.1(c) and may be subject to sanctions. Sanctions are warranted here.
Now, therefore, the court, having determined that plaintiff has engaged in frivolous conduct in maintaining this action against Apax, as defined in Section 130-1.1 (c) of the Rules of the Chief Administrator, and having set out above the reasons why the conduct has been found frivolous and that costs should be awarded . . . .
(Internal quotations and citations omitted).