Highbridge Dev. BR, LLC v. Nisky Kilt, Inc.

172 A.D.3d 1590

100 N.Y.S.3d 398

HIGHBRIDGE DEVELOPMENT BR, LLC, Respondent,

v.NISKY KILT, INC., et al., Appellants.

527262

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

Calendar Date: February 13, 2019

Decided and Entered: May 9, 2019

Longstreet & Berry, LLP, Fayetteville (Michael Longstreet of counsel), for appellants.

Law Offices of John R. Seebold, PLLC, Schenectady (John R. Seebold of counsel, Schenectady), for respondent.

Before: Garry, P.J., Egan Jr., Lynch, Devine and Rumsey, JJ.

MEMORANDUM AND ORDER

Rumsey, J.

In March 2015, defendant Nisky Kilt, Inc. (hereinafter Nisky) leased commercial space from plaintiff for a 10–year term for the purpose of operating a restaurant. Defendants Hasmukhakumar Patel, Sandip Patel, Senhal Patel, Hemant Patel and Bhupen Patel (hereinafter collectively referred to as the Patels) guaranteed Nisky's obligations under the written lease agreement. Nisky made no required monthly rental payments after September 2016 and the restaurant ceased business operations in January 2017. Plaintiff changed the locks on all doors to the premises on February 17, 2017 without Nisky's knowledge or consent and did not provide Nisky with a key to the new locks or initially allow a third-party vendor to have access to remove two dishwashers from the premises. Plaintiff thereafter commenced a summary eviction proceeding against Nisky pursuant to RPAPL article 7 in the Town of Niskayuna Justice Court seeking judgment awarding possession of the premises and unpaid rent. Following a May 2017 evidentiary hearing, Justice Court issued a written decision dismissing the petition without prejudice based on its determination that it lacked subject matter jurisdiction to adjudicate the matter because Nisky had not been in possession or control of the leased premises when the summary proceeding was commenced.

In June 2017, plaintiff commenced this action against defendants seeking, as relevant here, damages in excess of $ 2,100,000. Defendants answered and asserted, as an affirmative defense, that issue preclusion barred plaintiff from contesting certain issues in this action that they alleged had been decided in the summary proceeding. Plaintiff subsequently moved for summary judgment, asserting that Nisky had freely vacated the premises and had not been evicted. Defendants opposed the motion. Supreme Court partially granted plaintiff's motion to the extent of dismissing the affirmative defense of issue preclusion on the basis that Justice Court had not made a "finding on the merits" but, rather, had determined only that it lacked subject matter jurisdiction. Defendants appeal.

"Collateral estoppel, or issue preclusion, precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party, whether or not the tribunals or causes of action are the same. The doctrine applies if the issue in the second action [or proceeding] is identical to an issue which was raised, necessarily decided and material in the first action [or proceeding], and the plaintiff had a full and fair opportunity to litigate the issue in the earlier action [or proceeding]. This rule applies to claims actually litigated or that could have been litigated, and despite the fact that the claims are based on a different theory or seek a different remedy" ( Corvetti v. Town of Lake Pleasant, 146 A.D.3d 1118, 1120, 46 N.Y.S.3d 679 [2017] [internal quotation marks and citations omitted] ). In accordance with the foregoing principles, "issues legitimately determined in a summary proceeding are entitled to issue preclusion effect" ( Tymar Mgt. Co. v. A.V. Mirizio, Inc., 185 A.D.2d 879, 880, 586 N.Y.S.2d 1006 [1992] ; see Siegel & Connors, N.Y. Prac § 469 at 897 [6th ed 2018] ).

We find unpersuasive plaintiff's argument that the order dismissing the summary proceeding was void ab initio and, therefore, is not entitled to preclusive effect because Justice Court determined that it lacked subject matter jurisdiction. It is axiomatic that an order or judgment that purports to decide an issue that is beyond the scope of a court's jurisdiction, or power to act, is void (see Burke v. Aspland, 56 A.D.3d 1001, 1002, 867 N.Y.S.2d 759 [2008], lv denied 12 N.Y.3d 709, 2009 WL 1210649 [2009] ). However, Justice Court did not exceed the scope of its authority in this case – it was empowered to decide whether it had subject matter jurisdiction (see e.g. Pinnacle Consultants v. Leucadia Natl. Corp. , 94 N.Y.2d 426, 432–433, 706 N.Y.S.2d 46, 727 N.E.2d 543 [2000] ; Burrowes v. Combs, 25 A.D.3d 370, 372, 808 N.Y.S.2d 50 [2006], lv denied 7 N.Y.3d 704, 819 N.Y.S.2d 870, 853 N.E.2d 241 [2006] ). Thus, any issue that was raised and necessarily decided in the summary proceeding that was material to Justice Court's determination that it lacked subject matter jurisdiction has been settled and may not be relitigated in this action.

In the summary proceeding, Justice Court properly recognized that it would have subject matter jurisdiction only if Nisky had been in possession of the premises when the summary proceeding was...