Clerico v. Pollack

148 A.D.3d 769

48 N.Y.S.3d 738

Adolfo CLERICO, et al., appellants,

v.Martin A. POLLACK, et al., respondents, et al., defendants.

Supreme Court, Appellate Division, Second Department, New York.

March 8, 2017.

Pardalis & Nohavicka, LLP, Astoria, NY (Joseph D. Nohavicka and Ashley Serrano of counsel), for appellants.

Trivella & Forte, LLP, White Plains, NY (Jonathan Bardavid of counsel), for respondent Ines Gassmann.

Martin A. Pollack, Bayside, NY, respondent pro se, and for respondents Jack I. Slepian and Pollack & Slepian, LLP (adopting the brief filed by the respondent Ines Gassmann).

RUTH C. BALKIN, J.P., L. PRISCILLA HALL, HECTOR D. LaSALLE, and BETSY BARROS, JJ.

In an action, inter alia, to recover damages for breach of fiduciary duty, legal malpractice, and fraud, the plaintiffs appeal from an order of the Supreme Court, Queens County (Nahman, J.), dated October 14, 2015, which denied their motion pursuant to CPLR 4404(b) to set aside a decision and order of the same court dated May 20, 2015, made after a nonjury trial on the issue of res judicata, which directed the dismissal of the complaint as barred by the doctrine of res judicata.

ORDERED that the order dated October 14, 2015, is reversed, on the law, with one bill of costs payable by the respondents appearing separately, the plaintiffs' motion pursuant to CPLR 4404(b) to set aside the decision and order dated May 20, 2015, is granted, and the matter is remitted to the Supreme Court, Queens County, for a trial on the merits in accordance herewith.

In 2008, the plaintiffs commenced an action (hereinafter the 2008 action) against the defendants Martin A. Pollack, Jack I. Slepian, Pollack & Slepian, LLP, Ines Gassmann, and Michele Damato (hereinafter collectively the defendants). In that action, the plaintiffs alleged that in December 2007, Pollack & Slepian, LLP (hereinafter the defendant law firm) represented them as sellers in a real estate transaction. The plaintiffs alleged that the proceeds of the transaction were to be disbursed between themselves, Gassmann, and Damato pursuant to the terms of a contract dated August 29, 2007. They alleged that the sale of the property closed on December 20, 2007, but that the defendants, inter alia, breached the contract by failing to properly disburse to them their share of the proceeds of the sale. In February 2011, the plaintiffs and the defendants settled the 2008 action, and the plaintiffs executed a release which, for certain consideration, released the defendants from any and all claims "that are the subject of [the 2008 action]."

In June 2011, the plaintiffs commenced the instant action against the defendants, among others. They asserted, inter alia, causes of action to recover damages for legal malpractice and breach of fiduciary duty against Pollack, Slepian, and the defendant law firm, and fraud against all of the defendants. They alleged that the purchaser of the subject property at the 2007 closing, Tatiana Bell Corp., had been formed by the defendant law firm "for the purpose of buying the premises at a lower price and selling it on the same day for more money." They alleged that, within an hour of their sale of the subject property to Tatiana Bell Corp., the property had been resold to another purchaser for more money. They asserted that the defendants had fraudulently concealed the existence and terms of the second transaction, thereby depriving them of the opportunity to recover their shares of the proceeds from that second transaction.

Following a nonjury trial on the issue of whether the instant action was barred by the doctrine of res judicata, the Supreme Court determined, in a decision and order dated May 20, 2015, that the instant action was so barred, and directed dismissal of the complaint. Thereafter, the plaintiffs moved pursuant to CPLR 4404(b) to set aside the court's decision and order. The court denied the motion, and the plaintiffs appeal.

" ‘Under the doctrine of res judicata, a disposition on the merits bars litigation between the same parties, or those in privity with them, of a cause of action arising out of the same transaction or series of transactions as a cause of action that either was raised or could have been raised in the prior proceeding’ " (Bayer v. City of New York, 115 A.D.3d 897, 898, 983 N.Y.S.2d 61, quoting Abraham v. Hermitage Ins. Co., 47 A.D.3d 855, 855, 851 N.Y.S.2d 608 ). "Pursuant to the doctrine of res judicata, a valid final judgment, or a stipulation of settlement withdrawing a cause of action ‘with prejudice,’ bars future actions between the same parties on the same cause of action" (Matter of Chiantella v. Vishnick, 84 A.D.3d 797, 798, 922 N.Y.S.2d 525 [internal citations omitted]; seeCPLR 3217[a] [2] ; North Shore–Long Is. Jewish Health Sys., Inc. v. Aetna U.S. Healthcare, Inc., 27 A.D.3d 439, 440, 811...