| Pawling Lake Prop. Owners Assn., Inc. v Greiner |
| 2010 NY Slip Op 02936 [72 AD3d 665] |
| April 6, 2010 |
| Appellate Division, Second Department |
| Pawling Lake Property Owners Association, Inc.,Appellant, v William Greiner et al., Respondents. |
—[*1] Miranda, Sambursky, Slone, Sklarin Verveniotis, LLP, Elmsford, N.Y. (Richard S. Sklarinof counsel), for respondents.
In an action, inter alia, pursuant to Not-For-Profit Corporation Law § 720 to compelthe defendants to account for certain alleged misconduct, the plaintiffs appeal from an order ofthe Supreme Court, Dutchess County (Sproat, J.), dated October 10, 2008, which granted thedefendants' motion for summary judgment dismissing the complaint on the ground of resjudicata.
Ordered that the order is modified, on the law, by deleting the provision thereof granting thatbranch of the motion which was for summary judgment dismissing the second cause of actionand substituting therefor a provision granting that branch of the motion only to the extent that itseeks to recover damages allegedly incurred by the plaintiff, Pawling Lake Property OwnersAssociation, Inc., on or before September 25, 2005, and otherwise denying that branch of themotion; as so modified, the order is affirmed insofar as appealed from, without costs ordisbursements.
In 2000 a members' derivative action (hereinafter the 2000 action) was commenced pursuantto N-PCL 623 and 720 (b) (3), on behalf of the plaintiff Pawling Lake Property OwnersAssociation, Inc. (hereinafter the corporation), by members of the corporation against thecorporation's directors and officers. The amended complaint in that action alleged, among otherthings, that the corporation sustained financial loss as a result of the improper transfer of certainreal property, and because membership dues had been improperly assessed.
The parties to the 2000 action agreed to a stipulation of settlement in open court, pursuant towhich the defendants in that action undertook to pay the sum of $90,000 to the plaintiffs in thataction "in full settlement of all claims against the individual defendants arising in and out of thelawsuit." In return, the plaintiffs in the 2000 action agreed to "allow the case to be dismissedwith prejudice," and promised "to no longer pursue any of the causes of action in any otherlawsuits that [were] spelled out in the amend[ed] complaint." The Supreme Court "so-ordered"the stipulation on September 25, 2005.
The instant action was commenced, on behalf of the corporation, by Debra Colabatistto(hereinafter the trustee), in her capacity as one of the corporation's directors or officers(see N-PCL 720 [b] [1]; see also 102 [a] [6]). The complaint asserted two causesof action against certain other named officers and directors of the corporation. The trusteealleged that the corporation sustained financial loss due to the improper transfer of the same realproperty at issue in the 2000 [*2]action. The trustee also allegedthat the corporation incurred damages every year because the membership dues were improperlyassessed.
The defendants moved for summary judgment dismissing the complaint on the ground thatthe causes of action asserted therein were barred by the doctrine of res judicata. The SupremeCourt granted the motion. We modify.
"Under res judicata, or claim preclusion, a valid final judgment bars future actions betweenthe same parties on the same cause of action" (Parker v Blauvelt Volunteer Fire Co., 93NY2d 343, 347 [1999]; see Employers'Fire Ins. Co. v Brookner, 47 AD3d 754, 756 [2008]). "One linchpin of res judicata is anidentity of parties actually litigating successive actions against each other" (City of New York v Welsbach Elec.Corp., 9 NY3d 124, 127 [2007]).
Contrary to the plaintiff's contention, in this case the identity requirement has been satisfied.Inasmuch as the relevant causes of action asserted in the 2000 action belonged to and wereasserted on behalf of the corporation, the stipulation of settlement which discontinued that actionwith prejudice is binding on both the corporation and the trustee for purposes of res judicataanalysis (see Matter of People vApplied Card Sys., Inc., 11 NY3d 105, 122-123 [2008], cert denied sub nom. CrossCountry Bank, Inc. v New York, 555 US —, 129 S Ct 999 [2009]; Parkoff vGeneral Tel. & Elecs. Corp., 53 NY2d 412, 420 [1981]; Avco Sec. Sys., Inc. v Beigel, 29 AD3d 837, 837 [2006]; ShireRealty Corp. v Schorr, 55 AD2d 356, 361 [1977]; see also 15 NY Jur 2d, BusinessRelationships § 1274, at 467-468; Restatement [Second] of Judgments § 59 [2];cf. Green v Santa Fe Indus., 70 NY2d 244, 253 [1987]).
"A stipulation of settlement is a contract subject to principles of contract interpretation" (JP Morgan Chase Bank, N.A. v CellpointInc., 54 AD3d 366, 367 [2008]). "The general rule is that a stipulation of discontinuance'with prejudice' is afforded res judicata effect and will bar litigation of the discontinued causes ofaction" (Van Hof v Town of Warwick, 249 AD2d 382, 382 [1998]; see CPLR3217). "However, the language 'with prejudice' is narrowly interpreted when the interests ofjustice, or the particular equities involved, warrant such an approach" (Dolitsky's DryCleaners v YL Jericho Dry Cleaners, 203 AD2d 322, 323 [1994]; see Mosello v FirstUnion Bank, 258 AD2d 631, 632 [1999]).
In the instant action, the first cause of action alleges that the corporation sustained damagesas a result of the transfer of certain real property. The defendants demonstrated that this cause ofaction was asserted in the 2000 action and, in response, the plaintiff failed to raise a triable issueof fact. Thus, the Supreme Court properly awarded summary judgment to the defendantsdismissing the first cause of action as barred by the doctrine of res judicata (see Smith vRussell Sage Coll., 54 NY2d 185, 192-193 [1981]; Southampton Acres HomeownersAssn. v Riddle, 299 AD2d 334, 335 [2002]; CRK Contr. of Suffolk v Brown &Assoc., 260 AD2d 530, 530 [1999]).
The second cause of action in the instant action alleges damages arising out of certainassessment methods utilized by the defendants to determine members' dues. The evidencesubmitted by the defendants established that the plaintiffs in the 2000 action also asserted causesof action premised on this same allegation. Although the issue of improper assessment ofmembership dues was raised in the 2000 action, any losses occasioned by assessments madeafter the discontinuance of that action constitute separate injuries for which recovery could nothave been obtained in the 2000 action (see Matter of People v Applied Card Sys., Inc., 11 NY3d 105,122-123 [2008]; O'Brien v City of Syracuse, 54 NY2d 353, 357 [1981]; BreslinRealty Dev. Corp. v Shaw, 72 AD3d 258, 265 [2010]; Matter of State of New York v Seaport Manor A.C.F., 19 AD3d609, 610 [2005]; People v Court Reporting Inst., 245 AD2d 564, 565 [1997]). Thepromise made by the plaintiffs in the 2000 action to "no longer pursue any of the causes of action. . . that are spelled out in the amend[ed] complaint" does not operate to prevent theplaintiff here from asserting causes of action that accrued after the stipulation came into effect(see Dolitsky's Dry Cleaners v YL Jericho Dry Cleaners, 203 AD2d 322, 323 [1994])."Moreover, the doctrine of collateral estoppel is not applicable since the issues resolved by thestipulation of settlement were never actually litigated" (1829 Caton Realty v Caton BMTAssoc., 225 AD2d 599 [1996]). Accordingly, the Supreme Court properly awarded summaryjudgment to the defendants dismissing the second cause of action, but only to the extent that thesecond [*3]cause of action seeks to recover damages incurred bythe corporation on or before September 25, 2005. Mastro, J.P., Skelos, Eng and Roman, JJ.,concur.