Hersko v Hersko

2024 NY Slip Op 32485(U)

July 22, 2024

Supreme Court, Kings County

Docket Number: Index No. 520492/2021

Judge: Wayne P. Saitta

Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York

State and local government sources, including the New

York State Unified Court System's eCourts Service.

This opinion is uncorrected and not selected for official

publication.
At an IAS Term, Part 29 of the Supreme Court 

of the State of New York, held in and for the 

County of Kings, at the Courthouse, at Civic 

Center, Brooklyn, New York, on the 22nd day 

of July 2024.

P R E S E N T:

HON. WAYNE SAITTA, Justice.

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ISAAC HERSKO a/k/a YITZCHOK SHLOMO 

HERSKO, 

Plaintiff, Index No 520492/2021

-againstBARRY HERSKO a/k/a ZEV DOV HERSKO DECISION AND ORDER

a/k/a BEREL HERSKO, BELLA HERSKO, 

WILSON-HINS ASSOCIATES, INC, CLARK MS 34 & 35

WILSON, INC., WILSON PROPERTIES & 

EQUITIES, INC., WILSON FLAT, INC., WILSON 

HAN ASSOCIATES, INC., WILSON-MER 

ASSOCIATES, INC., B. CLARK ASSOCIATES, INC., 

516 KINGSTON, LLC and 

ABRAHAM WEISEL, as escrow agent, 

Defendants.

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The following papers read on this motion:

NYSCEF Doc Nos

Notice of Motion/Order to Show Cause/

Petition/Affidavits (Affirmations) and

Exhibits 724-731

Cross-motions Affidavits (Affirmations) 

and Exhibits 737-748

Answering Affidavit (Affirmation) 760-767

Reply Affidavit (Affirmation) 750-758

Supplemental Affidavit (Affirmation) 

Defendants move to dismiss Plaintiff’s third, fourth, fifth and sixth causes of action 

on the grounds that they are barred by the doctrines of res judicata and collateral estoppel 

based on a recent dismissal of a case brought by Plaintiff in New Jersey.

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Plaintiff cross-moves for sanctions arguing that the motion is frivolous.

The instant case involves a dispute between two brothers over ownership of nine 

properties in Brooklyn (the Properties) and other investments. The Brooklyn properties 

are all in the name of corporations or LLC’s that are owned or controlled by Defendant 

BARRY HERSKO. Plaintiff’s complaint alleges that he is entitled to an equal interest in 

these properties, as well as to 50% of the monies deposited in an attorney escrow account 

of Defendant WEISEL.

Plaintiff ISAAC HERSKO alleges that he and his brother BARRY HERSKO were 

business partners and that they entered into an agreement that they would invest in real 

properties and that separate and distinct entities would be formed to purchase and hold 

title to each Property, and that BARRY HERSKO would be listed as the sole shareholder

of these companies . 

Plaintiff alleges that the agreement provided that ISAAC HERSKO and BARRY

HERSKO were equal partners in their business dealings related to the Properties, 

including, but not limited to, the share of rents received from tenants occupying the 

Properties. 

Plaintiff also alleges that he is entitled to 50% of the monies deposited with 

Defendant WEISEL.

The brothers entered into a written agreement which memorialized their 

agreement which provided that ISSAC HERSKO and BARRY HERSKO were equal 

partners in the properties and that ISAAC was entitled to be added to the corporations 

owning the properties. The written agreement also provides that ISAAC HERSKO is an 

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equal partner in the income from the properties and other joint investments made with 

BARRY HERSKO. The agreement referenced other unspecified investments, the income 

of which was placed in the attorney escrow of Defendant WEISEL.

Plaintiff also commenced an action in New Jersey (the New Jersey action) 

concerning real property in New Jersey. Defendants BARRY HERSKO and BELLA 

HERSKO were named as Defendants in that case. 

The New Jersey action also asserted claims relating to monies alleged to be from 

the brothers investments that were deposited the escrow account of WEISEL. However, 

WEISEL was not named as a defendant in the New Jersey action.

Plaintiff withdrew most of his claims in the New Jersey action shortly before trial 

and the Judge in that case ruled that the withdrawals were with prejudice. Plaintiff’s

remaining claims in the New Jersey case were dismissed at trial. The Judge in the New 

Jersey action found that both brothers had unclean hands in regards to their actions 

related to the New Jersey property.

Defendants now move to dismiss the third, fourth, fifth and sixth causes of action 

in the instant case arguing that the claims dismissed in the New Jersey action were the 

same and thus they no longer be litigated in this action. 

Defendants argue that the claims they seek to dismiss relate to the monies in the 

WEISEL escrow account. Defendants do not seek to dismiss the first and second causes 

of action in the instant action which involve Plaintiff’s interests in the Brooklyn 

properties.

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Claims in the Instant Action

The third cause of action in the instant action is for conversion, and claims that the 

monies in the WEISEL account were jointly owned by Plaintiff and Defendant BARRY 

HERSKO, and that BARRY HERSKO took out more than his 50% share of the monies in 

the account.

The fourth cause of action in the instant action is for money had and received, and 

claims that BARRY HERSKO wrongly received money generated from the Brooklyn 

properties as well as monies from the WEISEL escrow account that belonged to Plaintiff.

The fifth cause of action in the instant action is for an accounting of the profits and 

rents from the Brooklyn properties.

The sixth cause of action in the instant action is for a judgment declaring the 

Plaintiff is 50% owner of all funds held in the WEISEL escrow account, as well as any 

income derived from those monies, and declaring that Plaintiff is entitled to an 

accounting of all the monies from the brothers financial investments.

In the instant action Justice Rothenberg granted ISSAC HESKO’s motions to enter

default judgments against Defendant BARRY HESRKO and the Defendant Corporations,

by order dated April 21, 2022.

Claims in the New Jersey Action

The first two counts of the New Jersey action relate to ownership of a New Jersey 

property and are not relevant to this motion.

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Count III of the New Jersey action is for conversion and claims that the monies in 

the WEISEL account were jointly owned by Plaintiff and Defendant BARRY HERSKO, 

and that BARRY HERSKO took out more than his 50% share of the monies in the account.

Count IV of the New Jersey action is for money had and received and claims that 

BARRY HERSKO wrongly received money from the WEISEL escrow account that 

belonged to Plaintiff.

Count V of the New Jersey action is for an accounting of all profits revenues and 

expenses from the New Jersey property.

Plaintiff withdrew his claims relating to an imposition of constructive trust on the 

New Jersey property and monies from the New Jersey property. The Court in New Jersey 

dismissed the withdrawn claims with prejudice.

The claims which proceeded to trial in the New Jersey action were a claim for 

money had and received based on payments alleged to have been made by We Care Inc.,

and a claim for a declaratory judgment that Plaintiff had a 50% interest in two mortgages 

on the New Jersey property. These claims were dismissed with prejudice after Plaintiff’s 

case.

The dismissals with prejudice in the New Jersey action constitute final judgments 

and are entitled to preclusive effect, In re Est. of Gabrellian, 372 N.J. Super. 432 (App. 

Div. 2004). The two issues presented by this motion are whether the dismissals in the 

New Jersey case are a basis to vacate an earlier order granting leave to enter a default 

judgment entered in the instant action, and upheld on appeal, and whether the two cases 

involved them same subject monies.

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Retroactive application

The order in the instant case granting leaving to enter a default judgement was 

entered on April 27, 2022, and is a final order as to the traversable facts alleged in the

complaint. (Rely on Us Inc. v Torres, 165 A.D.3d 719 [2d Dept 2018]; Eagle Insurance 

Co., v Facey, 272 AD2d 399 [2d Dept 2000]; Martins v Wood, 251 AD2d 465 [2d Dept 

1998]).

An order issued in a declaratory judgment action granting the motion of the for 

leave to enter a default judgment is conclusive for res judicata purposes as to any matters 

actually litigated or that might have been litigated in that action. (Albanez v Charles, 134 

AD3d 657 [2d Dept 2015]; Beresford v Waheed, 302 AD2d 342 [2d Dept 2003]).

In this case Plaintiff was granted leave to enter a default judgment against 

Defendants but a default judgment has not yet been entered. Enforcement of the order 

granting leave to enter a default judgment was stayed pending appeal The appeal was 

denied February 21, 2024.

The doctrines of res judicata and collateral estoppel bar subsequent litigation of a 

matter that has already been litigated, but are not a basis to vacate a prior order that had 

been previously decided. 

Defendants cite the case of Heulitt v West Michigan Plumbing and Heating Inc.,

271 NJ Super 112 [App Div 1994], for the proposition that an earlier final judgment has 

preclusive effect even if the case in which it was entered was commenced later.

However, the Court in Heulitt, did not hold that a later final judgment could be a 

basis for vacating an earlier entered order. It did not involve a situation, as in the instant

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case, where an order was entered in one case before the judgment sought to be applied 

as res judicata was issued.

The Plaintiff in Heulitt commenced an action in New Jersey and shortly thereafter 

the Defendant commenced an action in Michigan for a judgment declaring that the 

dispute must be arbitrated. The New Jersey action was subsequently dismissed for lack

of jurisdiction. Subsequent to the dismissal of the New Jersey action, the Michigan Court 

issued a judgment declaring that the dispute must be arbitrated. 

The Court hearing the appeal of the dismissal of the New Jersey action dismissed 

the appeal on the ground that the Michigan decision that the dispute must be arbitrated 

precluded further litigation of the New Jersey action. The Court, in Heulitt, did not vacate 

any orders previously entered in the New Jersey action.

The Court, in Heulitt, held that the fact that the Michigan case was started after the 

New Jersey case did not deprive the declaration of its preclusive effect. However, the court

also held that it is “required that rendition of the final judgment shall antedate its 

application as res judicata in the pending action” Id. at 116. That is, a judgment can only 

be given preclusive effect prospectively not retroactively.

Defendant further argues that the New Jersey dismissal requires the vacatur of the 

order granting leave to enter a default judgment because leave to enter a default on a claim 

for a declaratory judgment is not a final judgment and that a declaratory judgment cannot 

be based solely upon the default and the pleadings citing JBBNY LLC v Dedvukaj 171 

AD3d 898 [2d Dept 2019].

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The Court in JBBNY held “[a] default judgment in a declaratory judgment action 

will not be granted on the default and pleadings alone for it is necessary that [the party 

seeking default] establish a right to a declaration” (Id. at 902).

As a preliminary matter, this argument relates solely to the sixth cause of action, 

in the instant action, which is the only cause of action that is the subject of this motion,

which seeks declaratory relief. The sixth cause of action seeks a declaratory judgment that 

Plaintiff is entitled to a 50% share of all funds in the WEISEL account and seeks an 

accounting of all monies from the brother financial investment holdings.

The third and fourth causes of action in the instant action, for conversion and for 

money had and received, do not seek declaratory judgments. Thus, as to those two causes 

of action there is no heightened burden to entitlement to a default judgment. Plaintiff is 

entitled to a judgment on his conversion claim and his claim for monies had and received, 

subject only to proving his damages at inquest, 

As the sixth cause of action seeks a declaratory judgment, to obtain a default 

judgment Plaintiff had the burden of establishing their right to a declaration that he is 

50% owner of the monies in the WEISEL account. 

In this case Justice Rothenberg has already found that Plaintiff has established his 

right to relief. Specifically in the order granting leave to enter a default judgment Justice

Rothenberg held that Plaintiff submitted “proof of the facts constituting the claims in a 

factually detailed affidavit.”

Justice Rothenberg made a deliberate examination of the merits of Plaintiff’s 

claim. While she granted the motion as to Defendant BARRY HERSKO and the corporate 

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defendants, she denied the motion as Defendant BELLA HERSKO as she found that the 

proof submitted “was insufficient to support the entry of a default judgment against her.”

Justice Rothenberg further found that Defendants failed to establish a potentially 

meritorious defense and that BARRY HERSKO’s affidavit did not “dispute the allegations 

contained in the complaint or provide any factual support to establish a defense to the 

claims.”

The Appellate Division affirmed Justice Rothenberg’s order holding that “[t]he 

court also properly determined that the defaulting defendants failed to establish a 

potentially meritorious defense to the action”.

Differences between the claims in the two actions

An additional and independent ground to deny the motion to renew, as to Plaintiffs 

fifth and sixth causes of action in the instant action, is that despite the similarities in the 

pleadings, those causes of action did not involve the same claims as those in the New 

Jersey action.

The fifth cause of action in the instant action sought an accounting of all the profits 

and rents from the Brooklyn properties, while Count V in the New Jersey action sought 

an accounting of the property rents and expenses of the New Jersey property.

The fifth cause of action in the instant action did include language that “Plaintiff 

requests a full accounting with respect to the finances and affairs related to the Properties, 

including but not limited to, an accounting as to the amounts Plaintiff was entitled to 

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receive from WEISEL’s Escrow Account for distribution.” However, the phrase “including 

and not limited to” in that sentence merely identified the WEISEL account as location 

where monies from the operation of the New York properties might be located. 

The fifth cause of action did not seek an accounting of all the monies in the WEISEL 

escrow account. It seeks an accounting of the income, expenses and profits of the 

Brooklyn properties whether those monies are in the WEISEL escrow account or 

elsewhere. 

An accounting of the monies in the WEISEL account was part of the sixth cause of 

action.

While Plaintiff seeks an accounting of the monies in the WEISEL account in the 

instant action, in the New Jersey action, Plaintiff sought an accounting of the profits, 

revenue and expenses derived from the New Jersey properties . 

Count V in the New Jersey action requested “a full accounting with respect to the 

finances and affairs related to Roseville and/or the Property, including but not limited to, 

an accounting as to the amounts Plaintiff was entitled to receive from Weisel’s Escrow 

Account for distribution.” 

Again, the phrase “including and not limited to” in that Count merely identified 

the WEISEL account as one location where it alleged that monies from the operation of 

the New Jersey properties might be located.

Further, Defendants represented in a Statement of Material Facts submitted in 

support of its motion to dismiss the New Jersey case (and submitted as an exhibit, 

NYSCEF doc 753, in support of their present motion) that “[t]he only funds related to real 

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estate partnership interests that were deposited in the Weisel Account by the “partners in 

the abovementioned partnership” are limited to funds derived from the New York 

Properties.” 

It follows therefore, that the sixth cause of action for a declaration of 50% 

ownership in the monies in the WEISEL account was limited to New York derived funds 

and was not a matter litigated or that could have been litigated in the New Jersey action.

For the above reasons, the judgment in the New Jersey case is not a basis to vacate 

the prior order of Justice Rothenberg granting Plaintiff leave to enter a default judgment.

Plaintiff’s cross-motion for sanctions

Defendants’ motion though mistaken was not so beyond the pale as to be 

frivolous or merely dilatory therefore Plaintiff’s cross motion for sanctions is denied.

WHEREFORE, it is ORDERED that Defendants’ motion to renew is denied; and it 

is further,

ORDERED that Plaintiff’s cross-motion for sanctions is denied.

This constitutes the Decision and Order of the Court

E N T E R:

JSC

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