968 F. Supp. 2d 480
E.D.N.Y2013Background
- State Farm seeks damages from defaulting defendants under RICO and fraud claims; Kagan and Mirka appeared, Vetoukh opposed; most defaults carried no objections.
- Judge Gold recommended damages in his Report; plaintiff waived RICO attorneys’ fees; no treble damages requested.
- Court reviews the Report for clear error (unobjected portions) and de novo for timely objections.
- Judge Gold’s analysis included potential set-offs from settlements with non-defaulting defendants; plaintiff submitted settlements and fee information.
- Court ultimately adopts Judge Gold’s recommendations with a modification: no set-offs for Kagan and Mirka, and the case is closed with judgments against defaulting defendants.
- The court discusses the proper timing of set-offs (pre- or post-trebling) and cites McDermott’s proportionate share approach in assessing duplicative recovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defaulting Kagan and Mirka are entitled to set-offs. | State Farm contends settlements may reduce damages only if properly attributable and fees are offset. | Kagan and Mirka argue they should receive set-offs to prevent overcompensation. | No set-offs warranted for Kagan and Mirka. |
| Whether set-offs should be applied before or after trebling damages. | Set-off analysis should occur with respect to the overall damages after trebling. | Oppose timing that would negate potential reductions from settlements. | Court adopts approach consistent with Report; no pre-trebling set-off for these defendants. |
| Whether Judge Gold’s Report should be adopted with modification. | Report accurately applies damages and settlement considerations. | Arguments from defaulting defendants about set-offs warrant modification. | Adopted with modification; no set-offs for Kagan and Mirka and judgments entered as outlined. |
Key Cases Cited
- McDermott, Inc. v. AmClyde, 511 U.S. 202 (U.S. Supreme Court, 1994) (proportionate share approach for set-offs; avoid double recovery where appropriate)
- Singer v. Olympia Brewing Co., 878 F.2d 596 (2d Cir. 1989) (credit against judgment for settlements in joint tortfeasor cases)
- RLI Insurance Co. v. King Sha Group, 598 F.Supp.2d 438 (S.D.N.Y. 2009) (burden on non-settling defendant to show duplicative recovery; defaulting defendants lack this burden)
- Urena v. People of State of New York, 160 F.Supp.2d 606 (S.D.N.Y. 2001) (clear error standard for unobjected magistrate judge findings)
- In re Crazy Eddie Securities Litigation, 948 F.Supp. 1154 (E.D.N.Y. 1996) (distinguishes pro tanto vs. proportionate set-offs in default situations)