SUPREME COURT OF THE STATE OF NEW YORK

Appellate Division, Fourth Judicial Department

497 

CA 10-02234 

PRESENT: SCUDDER, P.J., FAHEY, CARNI, SCONIERS, AND MARTOCHE, JJ. 

 

TERRY JOHNSON, RICHARD JOHNSON AND 

PITTSFORD VISION, PLAINTIFFS-RESPONDENTS, 

V MEMORANDUM AND ORDER

OPTOMETRIX, INC., DEFENDANT-APPELLANT. 

------------------------------------------ 

IN THE MATTER OF TERRY JOHNSON, RICHARD 

JOHNSON AND PITTSFORD VISION, 

PETITIONERS-RESPONDENTS,

V

 

MONROE COUNTY TREASURER AND MONROE COUNTY 

CLERK, RESPONDENTS-RESPONDENTS. 

 

WOODS OVIATT GILMAN LLP, ROCHESTER (ANDREW J. RYAN OF COUNSEL), FOR

DEFENDANT-APPELLANT.

KAMAN, BERLOVE, MARAFIOTI, JACOBSTEIN & GOLDMAN, LLP, ROCHESTER

(RICHARD GLEN CURTIS OF COUNSEL), FOR PLAINTIFFS-RESPONDENTS AND

PETITIONERS-RESPONDENTS. 

 

Appeal from an order of the Supreme Court, Monroe County (Kenneth

R. Fisher, J.), entered August 20, 2010 in a breach of contract

action. The order denied the motion of defendant to release certain

escrow funds to it. 

It is hereby ORDERED that the order so appealed from is affirmed

without costs. 

Memorandum: Plaintiffs commenced this breach of contract action

seeking, inter alia, immediate possession of a retail eyewear store

that defendant was operating pursuant to an agreement with plaintiffs.

By order entered August 28, 2009, Supreme Court denied that part of

plaintiffs’ motion to direct the payment of $100,000 in escrow funds

into the court and granted that part of defendant’s cross motion to

release those funds to its counsel (Johnson v Optometrix, Inc., 75

AD3d 1073). The escrow funds were held by plaintiffs’ counsel as a

deposit for a corporate purchase transaction that subsequently failed

(id.). Plaintiffs obtained a stay of the order pending their appeal

therefrom by depositing those escrow funds with the Monroe County

Clerk as an undertaking pursuant to CPLR 5519 (a) (2). After

defendant objected to the use of the escrow funds for the undertaking
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CA 10-02234 

and following a conference with the court that resulted in a

stipulation between the parties, the court communicated to the parties

by e-mail that it had “assumed” that the escrow funds would be used to

satisfy “the preconditions of [CPLR] 5519 (a) (2).” Defendant

subsequently moved in this Court for an order vacating the stay on the

ground that, inter alia, it was improper for plaintiffs to use the

escrow funds as an undertaking to effectuate an automatic stay. By

order entered September 15, 2009, this Court granted defendant’s

motion “to the extent that the automatic stay . . . is vacated

effective November 13, 2009 unless [plaintiffs] perfect the appeal

[from the August 28, 2009 order] on or before November 12, 2009 . . .

.” Plaintiffs thereafter timely perfected their appeal and, by order

entered July 2, 2010, we affirmed (Johnson, 75 AD3d 1073). 

While that appeal was pending, however, the court granted

plaintiffs’ motion for summary judgment on the complaint, and judgment

was entered against defendant in the sum of $78,940.51. Judgment was

also entered against defendant in the sum of $26,548.75 for reasonable

attorneys’ fees and costs recoverable pursuant to the written

agreement of the parties. By order to show cause in February 2010,

plaintiffs commenced a special proceeding pursuant to CPLR 5225 (b)

seeking an order directing the Monroe County Treasurer to pay over to

plaintiffs the $100,000 undertaking in the event that, inter alia, the

August 28, 2009 order was affirmed. By order entered May 3, 2010, the

court granted plaintiffs’ motion.

On July 30, 2010, shortly after we affirmed the August 28, 2009

order, defendant moved for an order directing the Monroe County

Treasurer to pay the $100,000 undertaking to defendant. Defendant

appeals from an order denying that motion. We affirm.

We reject defendant’s contention that this Court should reexamine

the propriety of plaintiffs’ use of the escrow funds for the

undertaking. We agree with the court that the issue was previously

raised by defendant when it moved to vacate the automatic stay pending

plaintiffs’ appeal from the August 28, 2009 order and that the issue

was determined by this Court’s order entered September 15, 2009. The

doctrine of law of the case “precludes this Court from reexamining an

issue [that] has been decided against a party on a prior appeal where

that party had a full and fair opportunity to address the issue”

(Frankson v Brown & Williamson Tobacco Corp., 67 AD3d 213, 217), and

that is the case here.

In light of our determination, we need not address defendant’s

remaining contentions.

All concur except FAHEY, J., who dissents and votes to reverse in

accordance with the following Memorandum: I respectfully dissent. On

the prior appeal, a majority of this Court determined that, pursuant

to the escrow agreement between the parties, the $100,000 in escrow

funds (funds) “were intended to be a deposit by defendant pending the

negotiation of terms for the purchase of the corporation owned by

plaintiffs” and, in view of the inability of the parties “to reach an

agreement on the terms of the sale, defendant [was] entitled to the
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CA 10-02234 

return of the [funds]” (Johnson v Optometrix, Inc., 75 AD3d 1073,

1074). I conclude that plaintiffs’ attorney, as escrowee of the

funds, did not comply with his “ ‘duty not to deliver the escrow

[funds] to [anyone] except upon strict compliance with the conditions

imposed’ by the escrow agreement” (Great Am. Ins. Co. v Canandaigua

Natl. Bank & Trust Co., 23 AD3d 1025, 1027-1028, lv dismissed 7 NY3d

741, quoting Farago v Burke, 262 NY 229, 233), and plaintiffs should

not have used the funds to give the undertaking essential to the stay

of the order from which the prior appeal was taken (see CPLR 5519 [a]

[2]). That stay allowed the funds to be withheld from defendant long

enough for plaintiffs to commence the special proceeding pursuant to

CPLR 5225 (b) in which this appeal had its genesis. 

Even assuming, arguendo, that we considered and determined the

propriety of plaintiffs’ deposit of the funds with the Monroe County

Clerk in the prior appeal (Johnson, 75 AD3d 1073), we are not

precluded from reexamining the issue here. Indeed, “[e]very court

retains a continuing jurisdiction generally to reconsider any prior

intermediate determination it has made” (Aridas v Caserta, 41 NY2d

1059, 1061; see Faricelli v TSS Seedman’s, 94 NY2d 772, 774). 

In my view, under the circumstances of this case, it would be

inequitable to withhold the funds from defendant, and plaintiffs

should not benefit from their attorney’s breach of his obligation not

to deliver the funds upon a condition other than one contemplated by

the escrow agreement. Consequently, I would reverse the order and

grant the motion for an order directing the Monroe County Treasurer to

pay the funds to defendant. 

Entered: June 10, 2011 Patricia L. Morgan

Clerk of the Court