| Tico, Inc. v Borrok |
| 2008 NY Slip Op 09729 [57 AD3d 302] |
| December 11, 2008 |
| Appellate Division, First Department |
| Tico, Inc., et al., Appellants, v Charles R. Borrok et al.,Respondents. |
—[*1] White & Case, LLP, New York (John D. Rue of counsel), for Charles R. Borrok, Andrew S.Borrok and 425 Park Avenue Company, L.P., respondents. Vedder Price, P.C., New York (Dan L. Goldwasser of counsel), for HJ Behrman &Partnership, LLP, respondent.
Judgment, Supreme Court, New York County (Richard B. Lowe, III, J.), entered July 27,2007, insofar as appealed from as limited by the briefs, dismissing the complaint as againstdefendants-respondents with prejudice pursuant to an order, same court and Justice, entered June14, 2007, which, in a derivative action by limited partners of respondent 425 Park AvenueCompany alleging breach of fiduciary duty and related business torts, granted respondents'motion to dismiss the complaint, unanimously modified, on the law, to the extent of deleting theprovision that the dismissal is with prejudice, and otherwise affirmed, without costs.
Although the court properly determined that plaintiffs lacked standing on the basis that theydid not make a formal demand on all of the general partners and failed to demonstrate that such ademand would have been futile, dismissal of the complaint with prejudice was improper. Adismissal premised on lack of standing is not a dismissal on the merits for res judicata purposes(see Alco Gravure, Inc. v Knapp Found., 64 NY2d 458, 465 [1985]; Pullman Group vPrudential Ins. Co. of Am., 297 AD2d 578 [2002], lv dismissed 99 NY2d 610[2003]). If given effect, however, the provision of the judgment that the dismissal was "withprejudice" would bar plaintiffs from thereafter filing an amended complaint even if they wouldhave standing at that time. For this reason alone the provision should be deleted from thejudgment. Thus, we need not address the question of whether, having concluded that plaintiffslacked standing to bring this [*2]action and thus that dismissalwas necessary, Supreme Court properly went on to determine the issue of whether dismissalshould be with prejudice. Concur—Friedman, J.P., McGuire, Acosta, DeGrasse andFreedman, JJ.