Case Name: Blue Sky, LLC, Respondent, v. Jerry's Self Storage, LLC, Appellant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 2016-12-28
Citations: 145 A.D.3d 945
Docket Number: 
Parties: Blue Sky, LLC, Respondent, v Jerry’s Self Storage, LLC, Appellant.
Judges: Chambers, J.P., Dickerson and Brathwaite Nelson, JJ., concur.
Reporter: Appellate Division Reports
Volume: 145
Pages: 945–952

Head Matter:
Blue Sky, LLC, Respondent, v Jerry’s Self Storage, LLC, Appellant.
[44 NYS3d 173]

Opinion:
In an action to recover damages for breach of contract, conversion, unjust enrichment, and tortious interference with contract, the defendant appeals, as limited by its brief, from so much of an order of the Supreme Court, Rockland County (Berliner, J.), dated May 28, 2014, as denied that branch of its motion which was for summary judgment dismissing the complaint on the grounds of res judicata and collateral estop-pel.
Ordered that the order is affirmed insofar as appealed from, with costs.
The plaintiff, Blue Sky, LLC (hereinafter Blue Sky), alleges that it loaned $1,690,000 to an entity known as FKF3, LLC (hereinafter FKF), which, in turn, loaned that amount to the defendant, Jerry's Self Storage, LLC (hereinafter Jerry's). Blue Sky further alleged that as collateral for the loans, Jerry's assigned to FKF a mortgage on certain real property. FKF made a partial assignment of the mortgage to Blue Sky. Mitchell Klein, John F. Magee, and Burton I. Dorfman were the three principals of FKF, and they also cumulatively held an 80% membership interest in Jerry's. As majority interest holders of Jerry's, they arranged for a refinancing of the mortgaged property, discharged the FKF mortgage lien, and did not repay the loans that Blue Sky had made to FKF. Based on these allegations, Blue Sky commenced this action against Jerry's to recover damages for breach of contract, conversion, unjust enrichment, and tortious interference with contract.
Jerry's moved, inter alia, for summary judgment dismissing the complaint on the grounds of res judicata and collateral estoppel. In support of its motion, Jerry's submitted proof that Blue Sky and others had commenced a separate action against, among others, FKF, Klein, Magee, and Dorfman (hereinafter the FKF action), and that the complaint in that action included the same allegations of wrongdoing against the three individuals as the instant complaint alleges against Jerry's. Jerry's also submitted a jury verdict sheet from the FKF action, which found that Klein was liable to the plaintiffs based on a finding of fraud, but Magee was not. The Supreme Court denied that branch of Jerry's motion which was for summary judgment dismissing the complaint, finding that the defendant failed to demonstrate that either doctrine barred the instant action. We affirm.
Under the doctrine of res judicata, a disposition on the merits bars litigation between the same parties, or those in privity with them, of a cause of action arising out of the same transaction or series of transactions as a cause of action that either was raised or could have been raised in the prior proceeding (see Matter of Josey v Goord, 9 NY3d 386, 389 [2007]; Matter of Hunter, 4 NY3d 260, 269 [2005]; O'Brien v City of Syracuse, 54 NY2d 353, 357 [1981]; Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481, 485 [1979]). "One linchpin of res judicata is an identity of parties actually litigating successive actions against each other: the doctrine applies only when a claim between the parties has been previously 'brought to a final conclusion' " (City of New York v Welsbach Elec. Corp., 9 NY3d 124, 127 [2007] [emphasis omitted], quoting Parker v Blauvelt Volunteer Fire Co., 93 NY2d 343, 347 [1999]). Here, it is undisputed that Jerry's was not a party to the FKF action. Furthermore, Jerry's failed to demonstrate, as a matter of law, that it was in privity with the defendants in the FKF action (cf. Green v Santa Fe Indus., 70 NY2d 244, 253 [1987]; Matter of Shea, 309 NY 605, 616 [1956]).
We disagree with our dissenting colleague that the issue of privity is not in dispute. As the proponent of the summary judgment motion, Jerry's had the initial burden of establishing its prima facie entitlement to judgment as a matter of law (see Winegrad v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]). The moving papers did not address the issue of privity at all. While we agree with our dissenting colleague that the underlying factual allegations in the instant action were part of the underlying factual allegations in the FKF action, we disagree that Jerry's has established that the issues of fact and questions of law relating to its alleged liability in the instant action were necessarily decided in the FKF action (see Gramatan Home Invs. Corp. v Lopez, 46 NY2d at 485). In this regard, we note that the breach of contract cause of action in the FKF action was asserted against FKF and not the individual defendants. "When causes of action exist against several persons, the commencement of an action against one or more individuals does not constitute an election of remedies which bars an action against other potential defendants" (Abbott v Otis El. Co., 166 AD2d 470, 470 [1990]; see CPLR 3002 [a]). Here, while the plaintiffs in the FKF action, which included Blue Sky, could have asserted a direct claim against Jerry's in that action, res judicata is inapplicable "for the basic reason that the plaintiff never asserted any claim against this defendant. The fact that the plaintiff sued one tort-feasor does not automatically preclude him from suing another tort-feasor later" (Seaman v Fichet-Bauche N. Am., 176 AD2d 793, 794-795 [1991]; see Ackman v Haberer, 111 AD3d 1378, 1379 [2013]; Farren v Lisogorsky, 87 AD3d 713, 714 [2011]; Gillespie v Flight Line Pub, 2 AD3d 1014, 1015 [2003]). We disagree that the denial of the instant motion allows for inconsistent verdicts. Jerry's is the only defendant in the instant action and it is undisputed that there is no determination on the merits as to its liability, if any. The doctrine of res judicata does not serve as a bar to the instant action.
Similarly, Jerry's failed to establish that the action is barred by collateral estoppel. This doctrine applies only "if the issue in the second action is identical to an issue which was raised, necessarily decided and material in the first action, and the plaintiff had a full and fair opportunity to litigate the issue in the earlier action" (Parker v Blauvelt Volunteer Fire Co., 93 NY2d at 349; see City of New York v Welsbach Elec. Corp., 9 NY3d at 128; Ryan v New York Tel. Co., 62 NY2d 494, 500-501 [1984]). Since Jerry's was not a party to the prior litigation, its liability was not decided therein. Accordingly, the Supreme Court properly denied that branch of Jerry's motion which was for summary judgment dismissing the complaint on the grounds of res judicata and collateral estoppel.
Chambers, J.P., Dickerson and Brathwaite Nelson, JJ., concur.