Crum v Robinson, Brog, Leinwand, Greene, Genovese & Gluck, P.C.
Annotate this CaseDecided on February 18, 2005
Supreme Court, New York County
Rosa Marie Crum,
against
Robinson, Brog, Leinwand, Greene, Genovese & Gluck, P.C.,
0107074/04
Leland DeGrasse, J.
Upon the foregoing papers, it is ordered that this motion by defendant Robinson, Brog, Leinwand, Greene, Genovese & Gluck, P.C. ("Robinson") for an order dismissing the complaint pursuant to CPLR 3211 (a) (5) is denied.
This action stems from a prior action entitled Pryor & Mandelup, L. L. P. v Albert Crum and Rosa Crum, Supreme Court, Nassau County, Index No. 6980/02. On January 9, 2002 plaintiff and her husband, Albert Crum (hereinafter "the Crums") entered into a retainer agreement with the law firm of Pryor & Mandelup, L. L. P. ("P&M") to represent plaintiff in a bankruptcy proceeding. Subsequently, at a hearing held on March 26, 2002, the bankruptcy proceeding was dismissed. The dismissal order was noticed for settlement on April 23, 2002, signed on April 29, 2002, and entered on April 30, 2002. On April 24, 2002, prior to signing the order of dismissal, P&M commenced the above action against the Crums for legal fees incurred in representing them. Thereafter, Robinson, who represented plaintiff in the sale of her home, negotiated and secured a conditional extension of time for the Crums to answer P&M's complaint. The agreement, dated June 6, 2002, provided that in exchange for extending the Crums' time to answer until July 18, 2002, Robinson would hold in escrow from the closing proceeds, the sum of $36,893.09 (the amount sought in P&M's action), pending a subsequent agreement between the parties or an order by the court. Robinson failed to hold plaintiff's funds in escrow in accordance with said agreement. As a result, P&M rejected the Crums' time to [*2]answer and moved for a default judgment against them. By decision and order dated November 12, 2003, Justice Joseph A. De Maro granted P&M's motion with respect to Albert Crum and directed the parties to appear for an inquest on damages. Upon searching the record, the court dismissed the action, without prejudice, as against plaintiff, on the ground that the action was commenced prior to the signing of the order lifting the automatic bankruptcy stay which was created by the filing of plaintiff's bankruptcy petition.
On December 3, 2003, the Crums commenced a third-party action against Robinson asserting six causes of action sounding in breach of contract, legal malpractice, negligent misrepresentation, breach of common law duty of good faith and fair dealing, indemnification, and breach of fiduciary duty. On February 2, 2004, prior to the inquest on damages, P&M settled its action against the Crums. Thereafter, the Crums filed an amended third-party complaint. Robinson moved to dismiss the complaint, and by decision and order dated July 1, 2004, Justice Thomas Feinman granted the motion, without opposition, finding that "[a]s the main action has been settled before the pendency of the instant motion, the third-party complaint should be dismissed."
Plaintiff now brings the present action against Robinson. The complaint alleges that Robinson failed to represent plaintiff in a competent and professional manner in the sale and refinance of her home, and asserts seven causes of action sounding in breach of contract, legal malpractice, negligent misrepresentation, breach of common law duty of good faith and fair dealing, indemnification, breach of fiduciary duty, and fraudulent concealment. Based upon Justice Feinman's decision in the Nassau County action, Robinson moves to dismiss the complaint on the grounds that it is barred by the doctrines of res judicata and collateral estoppel.
As a general rule, a judgment on the merits by a court of competent jurisdiction is res judicata and forecloses a party from relitigating a cause of action which was the subject matter of a former lawsuit or from raising issues or defenses that might have been litigated in the first suit (see Chisholm-Ryder Co. v Sommer & Sommer, 78 AD2d 143, 144 [1980]). For purposes of collateral estoppel, a party is precluded from relitigating in a subsequent action an issue clearly raised in a prior action and decided against that party or those in privity, whether or not the causes of action are the same, provided the party has been afforded a full and fair opportunity to litigate the issue (see Ryan v New York Tel. Co., 62 NY2d 494, 500-501 [1984]).
It is Robinson's contention that by failing to sever and preserve the third-party action from the main action in Nassau County, prior to settlement, plaintiff is now collaterally estopped or barred by res judicata from bringing the present claims arising out of the same transaction and occurrence. The court disagrees. A dismissal which is not on the merits does not present a res judicata bar to a subsequent action (Hodge v Hotel Empls. and Rest. Empls. Union, 269 AD2d 330 [2000]). CPLR 1007 permits a defendant to proceed by third-party complaint against a person not a party "who is or may be liable to him for all or part of the plaintiff's claim against him" (see BBIG Realty Corp. v Ginsberg, 111 AD2d 91, 93 [1985]). Inasmuch as the Nassau County action was dismissed as against plaintiff on November 12, 2003, she was not entitled to proceed by third-party complaint against Robinson on December 3, 2003. Nor did plaintiff have the authority, as Robinson claims, to sever and preserve the third-party action prior to settlement of the main action on February 2, 2004.
As to the Stipulation of Settlement, it was executed by P&M and the Crums, and did not dispose of the claims that are the subject of this action. It is well settled that "[l]ike a final [*3]judgment on the merits, the res judicata effect of a stipulation of discontinuance can effect only claims, raised and potential, between the parties signing the stipulation" (Allianz Ins. Co. v Lerner, 296 FSupp2d 417, 422 [2003]). Accordingly, as plaintiff's claims were not litigated and determined in the Nassau County action, neither res judicata nor collateral estoppel may be invoked to preclude plaintiff from commencing the present action. A preliminary conference shall be conducted on March 21, 2005 at 2:00 p. m.
Dated: February 18, 2005 J.S.C.
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