Court Opinion

ID: 6068695
Source: CourtListenerOpinion
Date Created: 2022-01-13 16:50:46.749456+00
Date Added: 2024-06-11T08:52:48.699003
License: Public Domain

—Judgment, Supreme Court, New York County (Ira Gammerman, J.), entered February 2, 2000, dismissing the complaint as against defendants-respondents pursuant to an order, same court and Justice, entered January 18, 2000, which granted such defendants’ motions to dismiss the complaint as against them, unanimously affirmed, with costs. Appeal from the aforesaid order, unanimously dismissed, without costs, as subsumed in the appeal from the judgment.
Plaintiff, an administrator for a bankruptcy plan of reorganization, is suing, as here relevant, two law firms that formerly advised the bankrupt, as well as the bank that was formerly its lead lender and, allegedly, a financial adviser. Plaintiffs theory is that such defendants, each of whom filed proofs of claim in the bankruptcy proceeding, breached fiduciary duties to the bankrupt by failing to advise it of the defalcations and other wrongdoing of its management, and by advising it do a refinancing at a time when the only way to save it would have been a voluntary bankruptcy filing. Plaintiff alleges that such misconduct contributed to the worsening of the bankrupt’s insolvency and was part of the cause of its financial ruin. Such claims are integrally related to the basis for the petition of reorganization, and were therefore correctly dismissed under the doctrine of res judicata as barred by the order confirming the reorganization plan (see, Eubanks v Federal Deposit Ins. Corp., 977 F2d 166, 172-173; Sure-Snap Corp. v State St. Bank & Trust Co., 948 F2d 869, 874-875; Evergreen Bank v Dashnaw, 246 AD2d 814, 815-816). Nor are such claims saved by claim-reservation provisions of the plan that do not specifically and expressly identify them (see, D & K Props. Crystal Lake v Mutual Life Ins. Co., 112 F3d 257, 259-261, citing, inter alia, In re Kelley, 199 Bankr 698, 704). We note that the motion court correctly held that jurisdiction over the Ohio law firm that acted as outside general counsel to the bankrupt, which was also based in Ohio, could not be based solely on the firm’s incidental contact with New York in connection with the bankrupt’s business, such as attendance at the closing of the refinancing and phone, mail and facsimile contact with underwriters and their counsel (see, Presidential Realty Corp. v Michael Sq. W., 44 NY2d 672, 673; Weiss v Greenberg, Traurig, Askew, Hoffman, Lipoff, Quentel & Wolff, 85 AD2d 861; Barcelona Hotel v Mahoney Hadlow & Adams, 82 AD2d 790). We also note that, apart from the res judicata effect of the confirmation order in the bankruptcy proceeding, the action is *336barred as against the other law firm defendant by the unambiguous general release that plaintiff warranted it had authority to execute, and filed with the bankruptcy court in connection with the compromise of the firm’s claim in the bankruptcy proceeding. Concur — Rosenberger, J. P., Williams, Tom, Lerner and Buckley, JJ.