Court Opinion

ID: 5833270
Source: CourtListenerOpinion
Date Created: 2022-01-12 22:31:03.683244+00
Date Added: 2024-06-11T08:43:31.086995
License: Public Domain

Murphy, P. J.,
dissents in a memorandum, as follows: A prior action for this same relief involving these same parties was dismissed by the United States Court of Appeals on the ground that diversity jurisdiction was lacking (546 F2d 469). That court found that the plaintiff’s Delaware parent had assigned the subject claim to the plaintiff for the sole purpose of prosecuting that claim. Since that court found that there was no legitimate business reason for the assignment, it refused to entertain diversity jurisdiction under section 1359 of title 28 of the United States Code. Simply stated, collateral estoppel means that, when an issue of ultimate fact has once been determined by a valid and final judgment, that issue cannot be litigated between the same parties in any future lawsuit (Matter of McGrath v Gold, 36 NY2d 406, 411). Since the United States Court of Appeals has previously determined that the assignment to plaintiff was made for the exclusive reason of bringing suit, that fact may not be relitigated in this action. In any event, the independent evidence presented in this record establishes the uncontroverted fact that this assignment was made for the exclusive purpose of collection. The defendant in this proceeding moved to dismiss the second amended complaint on the ground that it violated the champerty prohibition embodied in section 489 of the Judiciary Law. To fall within that statutory prohibition, an assignment from one corporation to another must be made for the very purpose of bringing suit to the exclusion of any other purpose. (Fairchild Hiller Corp. v McDonnell Douglas Corp., 28 NY2d 325, 330.) Thus, the New York State Court of Appeals has already dismissed a suit brought by a subsidiary which was being used as an exclusive collecting vehicle by its parent (Bennett v Supreme Enforcement Corp., 250 App Div 265, affd 275 NY 502). In view of the fact that the second amended complaint is founded on an assignment made for the express purpose of bringing suit, it is violative of the champerty statute (Bennett v Supreme Enforcement Corp., supra). While the assignment occurred during the parent’s corporate reorganization, it was not made for any legitimate corporate purpose as is evidenced by the fact that this claim is the sole asset of the plaintiff. Therefore, the order of the Supreme Court, New York County, entered June 22, 1978, should be reversed and the motion to dismiss should be granted. The appeal and cross appeal from the order of the Supreme Court, New York County, entered September 16, 1977, should be dismissed as academic.