Matter of Empire State Bldg. Assoc., L.L.C.

Matter of Empire State Bldg. Assoc., L.L.C. 2015 NY Slip Op 08630 Decided on November 24, 2015 Appellate Division, First Department Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and subject to revision before publication in the Official Reports.

Decided on November 24, 2015
Gonzalez, P.J., Tom, Mazzarelli, Manzanet-Daniels, JJ.
16211 654456/13

[*1] In re Empire State Building Associates, L.L.C. Participant Litigation

Marc Postelnek, as Trustee of the Mabel Abramson Irrevocable Trust #2, et al., Plaintiffs-Appellants,

v

Anthony E. Malkin, et al., Defendants-Respondents.

Bernstein Litowitz Berger & Grossmann, New York (John J. Rizio-Hamilton and Edward G. Timlin of counsel), for appellants.

Dewey Pegno & Kramarsky LLP, New York (Thomas E.L. Dewey of counsel), for respondents.

Order, Supreme Court, New York County (O. Peter Sherwood, J.), entered July 21, 2014, which, to the extent appealed from as limited by the briefs, granted defendants' motion to dismiss the cause of action for breach of fiduciary duty, unanimously affirmed, with costs.

The motion court correctly found that the release and the covenant not to sue in the agreement settling a prior lawsuit were broad enough to bar plaintiffs' current claim that defendants breached their fiduciary duty by failing to consider offers for sale of the Empire State Building and proceeding instead with their earlier plan to place the building in a real estate trust for public offering. Although the offers for purchase were received after the settlement in the first action was finalized, the settlement encompassed plaintiffs' allegations in that action that defendants beached their fiduciary duty by failing to proceed with any reasonable alternatives to the transaction at issue, such as marketing the building for sale (see e.g. Edelman v Emigrant Bank Fine Art Fin., LLC, 89 AD3d 632 [1st Dept 2011]). The covenant not to sue is circumscribed by the released claims and therefore also bars this action (see McMahan & Co. v Bass, 250 AD2d 460 [1st Dept 1998], lv dismissed in part, denied in part 92 NY2d 1013 [1998]). In addition, this action is barred by the doctrine of res judicata, since the court dismissed the first action with prejudice following the settlement (Matter of Hunter, 4 NY3d 260 [2005]).

We have considered plaintiffs' remaining arguments and find them unavailing.

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: NOVEMBER 24, 2015

CLERK