Simpson v Kirkland

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Simpson v Kirkland 2012 NY Slip Op 30923(U) March 28, 2012 Supreme Court, Suffolk County Docket Number: 25540/2008 Judge: William B. Rebolini Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] Shan Form Order SUPREME COURT - STATE OF NEW YORK IAS.PART 7 - SUFFOLK COUNTY PRESENT: WILLIAM B. REBOLlNI Justice Yvonne T. Simpson, Chari sse Simpson, Werner A. Holmes, Johnny Roldan and Diamond Development, PlaintifFs, -againstStephen Kirkland, One World Entel1ainment Inc., Redbook Industries Inc., Nagano Ski Japan, Five Star Inc., Paradise Theater, Mossberg Credit Adjustors Inc., Tego Calderon, Kenya Calderon Rosmio, Hecho En PR Entertainment Inc., American Express, Bank of America, Capital One, Citibank, J PMorgan Chase, Index No.: 2554012008 Motion Sequence No.: Motion Date: 5/11/11 Submitted: 1112111 003; MG Motion Sequence No,: 004; MG Motion Date: 5111111 Submitted: 11/2/11 Attornevs/Parties [See Rider Annexed-' Defendants. Upon the following papers numbered 1 to 31 read upon this motion to dismIss; mOlion to compel/stay arbitration: Notice of Motion and supporting papers, 1 - 10; II - 23: Answeling Affidavits and supporting papers, 24 - 29; Replying Affidavils and SUPP0l1ing papers, 30 - 3!; Other. defendant's memorandum of law and letters exchanged by the pm1ics. Plaintiffs Yvonne Simpson, Charisse Simpson, Werner Holmes, Johnny Roland and Diamond Development commenced this action (Action NO.1) to recover for damages [hey allegedly sustained as a result of an alleged scheme by defendant Stephen Kirkland and hIS corporatc arfiliates, One World Entcttainmcnt, Redbrook Industrics and Nadano Ski Japan, to defraud plaintliTs of their invcstment \Il a proposcd musical concert rearuring the cntertainer Tego Calderon th'll was to be held ~lL the UtopIa Paradise Thcater located 1n Bronx, New York. The complaint aJl~ges, mter alia, that plainliffs were deceived into establishing lmes or credit 10 [* 2] Simpson v. Kirkland. ('t al. Ind('x No.: 255""0/2008 Pag<' 2 provide rundlng for the show. that they were coerced into executing a powcr of attorney in favor ur defcndant Kirkland and that KIrkland uscd such po\vcr or attorney to make unauthonzcd cash witl1cit-awals and credit card transactions. The complaInt further alleges that defendants AmCIK<Ill express. Bank of America. Capiwl One, Citibank and J.P Morgan Chasc breached their fiduciary duties In failing to detect and reject forged documents and an improperly executed ))o\\'cr of aHorney pursu,l11t to General Obl1gations Law ~S-1504:that the hanks negligently Ignored ohvious signs of fraud and failed to make reasonable inquiries based on such conduc!: that the hanks' failure to detect. rCJcct or inquire about such aetivllies eudcd and ahelled thc fraud and conversion or plaintiffs' assets: and that the banks violated Senioll 380 of the fair Credit Rep011ing Act whcn they transmined negative information abOlH plaintiffs that would not have otherwisc heen transm1tled to the consumer reporting agencies. Bank of Amcricajoincd issue on or about March ~O. 2009, asserting general demals, affirmalive defenses and counterclaims based on breach of contract, Cf/Ulllll1l11 JIIemil. unjust enrichment and account stalcd. Bank of America simultaneously filed a separate aeliull under Index number 018161/2009 (Acllon NO.2) seekIng damages for the alleged default or the line (11' creuit it extended to Dwmond Development ,lI1d the alleged breach of an agreement by Yvonne SImpson personally guaranteclng the loan. On August 10, 1009, a default judgmcnl was entered against Diamond Development and Yvonne Simpson 111 ActIon NO.2 based on their failure to answer or appear in thaI maUer. Bank or America then informed plaintiffs or cmry of the default Judgment at a conference held on Deccmber 15.2010 and the pm1ies entered negotiations concell1lllg whether pla111tirfs would voluntarily withdraw their actIOn as against Bank or America_ By leiter dalcd January ~S.:2011, counsel for Bank of Amelica requested that plaintiffs voluntari ly discontinuc their chums against iL asscl1ing thai entry of a default judgment in Action No. :2 halTcd continuation or those clall11s. The letter, which included a copy of the judgmellt cnlCred against plaintills, also asserted that plaintllTs failed to seck vacature oflhe default judgment within the Ollc-yc;lr PCl"IOU prescnbcd hy CPLR ~5015. The parties to the actlllll ~Igrceu \ll pl;l1l1tifls' rcqucstlO the adjourn thcir 11ext conference un\il March ~ I. ~Oll, to pCrllll! plaintJlTs 10 consider the rcspective defenses as:-;crleu by ddendants and to (l1sconlillue. where plal1ltilfs dce11lcu appropri<lte. their action agalllst said defendants. Notwithswnding. lhe adjournment, plaimi frs decl incd to discontinue thclr action agi.linSI any of the defcndants, including 8ank of Amenca. Bank of Amcrlca now moves for summary judgment disnllsslllg the complalllt against it on the grounds that entry of Ihe dcfauhjudgment 111 Acl10n NO.2 precludes plailllifrs' from relitigatlllg the ISSUCof thcir liahility for the debt and bars the instant lawsuit under the doctrinc llf n:s/I/{/IC%. Citihank movcs, pursuant to CPLR *7503, for an order permanently staymg pl,llntllls' action agalIlst It on the asserted hasis that its loan agrecmcnt w1th plaintilTs Included a hro;ld arhitr,ltlon provision reqUIring any disputc hetween the partlcs concerning plaintiffs' credIt aCUlllnt with thc hank he resulved by binding ilrbitratlon. Citlhank also seeks dISI1lISS;dur the claims asserted ag<'llllsi it by Wcrner Holmes ,uld Johnny Roldan. arguIng that 11Ilelther slwred any husilless relationshIp nur entered any credit agreement with thesc plaintiffs. Plaintiffs opposc Ihe motion hy Bank of America cOnlcnding thaI Bank of America wi.l1ved the defenscs of [* 3] Simpson v. Kirkland. et al. Index No.: 255~0/2008 Pagl' _~ and collateral cstuppel by failing to amend its pleadings to include t!lese defenses despitc knuwlcdgc of thc existence of the dcfcllsl:s for almost one year prior tll making the instant lllotiUIl. Concllmltantly, pl,llnlitls argue thaltl1cy are lJrcJucliced by Bank of America's f:l1lun.:-tll ,lsscrl the defellses in a l110re timely manner sillce they havc expended tinK :HH.I esources in r preparatlOll of the case as a result of such failure. Plallltiff:-; further aver that neither defense serves as a bar to their action where, as here, the final judgment was based upon default and the undcrlyltlg issues were not fully litigated. The mol ion by CitihanK IS unopposed. res)lIdlC(//a Contrary to plUlllllffs' assertion that Bank of Amel;ca waived the defenses of resjlulica/a and collaterul estoppel hy failing to include them in its answer or asserting the defenses in a preanswcr motion (see CPLR §30 18 [b I), the waiver of an unpleaded defense may be relracted and serve as a hasis for an atTinnative grant of relief 1Ilthe absence of suqmsc and prejudice (sec. Ro\!.orr v. San Juan Racing Assn" 54 NY1d 883 11981]: Kuhl v, Piatell], 31 AD3d IO::;R [3nl Dept., 10061: Shetls v, Count v of Fulton, 14 AD3d 919 [3,·J DepL, 1005J: lenNIe" v. Kelsey, 14 AD3d 918 [3,'<1 ept.. 200.:'1[). Further, pl~lrntiffs can hardly claim surpnsc or pre.iudicc where. CIS D here, they concede thalthe defenses were nol inItially available, lh,Jt they were serveu timely noLJce of the comnlencement of Action No, 2, and that the issuance of the uef~ILllljudgment In ActIOn NO.2 was the subject of ongoing negotiations between the parties wherein pJuinuffs were urged tll voluntarily WIthdraw their claim. Indeed, the mere ex penditure of tl me and resources in preparation or a case will not constitute prejudice unless the pany elaimmg such prejudice can show that it was hllldered in the preparation of its case or was prevented from taking some measure in SUpp011 of their position (see, Whalen v, Kawasaki Motors Com., U,S.A.. 91 NY2d 288,191 [19981: Loomis v, Civella Corinno Conslr. COl]?, 54 NY2d 18 [1981 I), A defauJt.ludgment which has not heen vacated is conclusive for resjl/{/ica/a purposes (set:, 83-17 Broadway Corp v, Dcbeon Financi,11 Services, 39 AD3d 583 [1"J Dept, 2007[: MaLler of E:lglc Ins. Co v. racey, 172 AD2d 199 r2"d Dept., 2(001). The prinCIples ur res jllilil'(I/(f require that "oncc ,I elaon IS hrought to a final concluslOll, all other claims arisrng (lid (li' the same transactIon or :-;cries of transactions ,Ire harred, even II' based upon dJiTercnt theories or If seeking different remedy" (O'Brien v. City llf Svracuse, 54 NY2J 3.:'13,:'.:'1711981 D. Moreover, resjf/{bcara extends the har of a former Judgmelll nOl only to maHers actually litigated, hut also (0 malleI'S that might have heen Ilti!wted hut were not (see, Walentas v. lohnes, 126 AD2d -1-17 ~ ~ ---[[" Dc-p!" 1987], h't!cn;et!9l NY1d 958 [1999]: see also. Matter of A.D,C. COlltr., Inc, v, Town of Southampton, 50 AD3d 102.:'1.1026 [2'"j Depl..l00S]: 13arbieri v. Brid!!e FundilH?, IllC-. 5 AD3d41!1 [1'kl Dept., 201J4]). llen.:-, Ban k of ;\ me rica c.'Habl]shed I Lsprima fac;e en tj t lemcnt lO sUllllllary judgment as a mat leI' or law (see, Alv'lre/. v. PI'OSpcct Hosll., ()8 NY:2d ~20 [1986): Wine'!rad v. New York ll.Div. Mcd. ('cnlt:r, 64 NY1J 851 Il(51). Spccific:t1ly, Bank 01' Americ,l suhmitted eVidence that ,I dcL.lull.i udgmcllt \V~IS entered ,lg,IJllst pldi nti tls est,lhllsill ng Lhat they IW\.:'Clchedhe crcdi l 1 :lgreemcl1l and personal gUdwntec for the underlying. deht ,llld that they railed 10 seck V~lcatLiruf 1he.ludgmelll. InaslllllcJl :IS plalnlllTs' claims against BanK of America, ]nl~ILJdingLhose hased on different legallheories or seeking alternate remedics. arose out of the samc lrans:Jction or scncs [* 4] Simpson v. Kirkland. l't al. Index No.: 25540/2008 Page 4 ur transactions underlYlllg bUlh actions. they are barred under the doctTlne or rcsjlltiiU/fd (sec. Maller of Hunter..:1- NY3d 260 [20(5); O'Brien v. City or Syracuse, 54 NY2d :153 ! 19811: Richter v. Sportsmans Props .. Inc .. 82 AD3rJ 7J3 ['2nJ Dept .. 20Il1: 83-17 Br()~ldwClY Corp v. Dehcon Financial Scrvlce's, 39 AD3rJ 58:; [2,,<1DepL, 20(7). Rosendale v. Otibank. N.A" 2()2 AD2d 628 12nJ Dept., 1999]: Se Dac Ynung v. Korea First Bank. 247 AD2d 2':)711" Depr. 1998]). The defaultjurJgmel1tlssued 111 ActIon No, 2 is also binding upon plaintiffs Charisse Simpson. Werner Hllimes and Johnny Roland, as theIr alleged partnershIp 111 the lllldcrIYJ1lg.)llint busllless vetHure places them 111 privity with Diamllnd Development and Yvonne Simpson and, thercforc, thclr mtereslS. d' any, In disclallnll1g the underlymg dcbt could huve been iJtigated in the pnor proceedlllg (sec. Green Y. Santa Fe Industnes.lnc., 70 NY2d 244 [19871: Walls v, S\VISS Bank Corp., 27 NY2d 170 1970]; Barbieri v. Brid>!e P\mdln>!. Inc., 5 AD3d 414 [2 Dept., 2004]). Pla1l1tIl'ts falled, In OPPOSItIon. to r~l1seany tnable Issues warranting denIal oflhc motion (sec. Alvarcl: v. Prospcct Hosp., ()8 NYld J20 [1986], Wineurad v. New York lJJllv. Meet Center, 64 NY2d 851 [1985]). Accordingly. the Illotion by Bank of America for summury Judgment dismiSSing the compla11lt agalIlst It is granted. r J1d As ror the mOlJUn by Citibank seeking an order permanently staymg plaintiffs' actHln and compellIng them to arhitrate based on an arbitration provision contal1led III the credit agreement cn!l:red hy the parties, section 8 of the agreement slales. in pertinent part, as follows: The CorporatlOn :lgrces that by opening any deposit account, Busl11cSS Credll Account or BUSlllCSScheckll1g Plus Accllunt wllh Bank or acceplmg allY or the serVIces connected with such accounls. either Bank or the corporatIon may clcct to require allY ulspute hetween us concerning the aforemenlloneu accounts or any other Bank deposit account, Business Creuit Account, or Business ('heck11lg Plus Account be resolved by arbitration. In the event or any litigation in which the Bank and the CorporatIon arc ~ldversc parties. the nghtto a tnal by Jury and to Interpose allY dcl'ense based upon Statute or L11TliwllOnsor any chums of laches. ,lIld any orfset or counlCrclall1l or any nature or descnption IS hereby waived by tile Corporation The Corporation agrees thatll' an allorney is used by the Bank to enforce. declare or adjudicate ,-my or the pl"ovisions herein or allY oj" the rights herem gran led to the Bank or to ohtalll payment or :lIlYohllgatlons owed to the Bank. reasnnahle atlorney's rees hen:undcr unless such W~llver he III Wrllillg. Signed hy the B~lIlk, and thcn only to the extent therein set forlh party aggrieved by lhe fuilure 01' another to arbllrate may apply for an order compelling :lrbltratIOIl. \Vilere there IS IlO substanllal question whelher a valid agreement WelSmade or complied With and the Clclllll sought to he arhltrated IS not barred by ItI1l11atioll under subdivislllll (h) ()I'SCc!lllil 7502. the court slwll direct the parties to arbItrate" (CPLR ~75m [~I)) On rnollOns to stay or to compel arhltration there arc three threshold questions 1'0 be resolved by the COlll1S: whether the p:lrties made a vabd agreement to arbitrate, whether II' such all agreement was rnade ][ has been compiled \vilh. and whether the claim is tImely (see, Mauer of Rockland (Primianu ('un,>t!". Cn .. 51 NY2d I 11980): Jet Bille Alrwavs Cop. v. Stephensoll. 88 AD3d 5G7 [I" Dept.. "i\. [* 5] Simvsoll v. Kirkland. ct al. Ind<,s No.: 155-f012008 I'ag:c 5 10 III). Ari)Ilration is favored in the Siale of New York as a means of resolving disputes and lhe COUltSwill n0l111terferc witha valid agreement [0 arbitrate where the thresholds have been mel (scc. Maller of Smith l3arnev Shcarson v. Sacharow, 9 I NY~d 39 [9971: DaZC(l Ileatin!! & Air Condilionill" Corp. v. C.S.C Indus .. ~25 AD2d 578 [2'1\1 Dept.. (9961). r The branch of Citihunk's unopposed illatIOn for an order staYing the litigation against it and compelllng pl,-untills to arbmate their clal!ns is granted. The record reveals that on October 6.2008. Citihank served plaintiffs \vith notice Dr its intention to arbitrate all c!cums relating to the alleged debt lllcurrcd by pla11ltiffs under the parties' credit account agreemellt. On October 22. 1008. Citibank served plaintl1Ts with an amended notice of mtent to arbitrate which specifically Informed plaintiffs that they would be precluded from objecting to arbitration if they failed to seck a stay witilin the 20 day period required by CPLR *7503(c) (see, Maller of Allstate Ins .. Co. v. Dullv.:=; AD3d 476 [:2,,,J Dept.. 2004J; Maller of Crawford v. FeldmJn, 199 AD2d 265 1:2,,,1 Dept.. 1993J; Matter of Aetna Casualty & Surety Co. v. Jones. 188 AD1d 597 [2nd Dcpt . 1991]). I)esplte such notice. plaintiffs failed to seck the stay of the proposed arhitnllion or otherwise object to Citibank' s request. The branch of Citlhank 's motion seeking dismissal of Ihe claims hy WClller Holmes and Johnny Roland also is gramcd. as neither plainliff shared any contractual rclatumslllp with the bank (see, Dcmber CanstI'.. COl]). v. Staten Island Mall, 56 AD:2d 768 [1>1 Dept.. 1977])_ The action is severed and continued against the remaining defendants. Based on the foregoing, it IS ORDERED that Lhe motion (#003) hy defenuant Bank of America and the motion (#OO-+) by defendant Citihank arc (;unsolldated for the purposes of thiS determination: and It IS ORDERED that the motion by defendant 13ank of America for summary JlIdgm~nl dlsllllssing plaintiff"s' complaint against It IS granted: and illS ORDERED lh,lt the ullopposed motion hy defendant Citlhank for. ill!er {I/W. a.ludgl1lCllt dismissing the CI<IlI11Sy plaintills Werner I-Iolrnes and Johnny Roland and compelling plall1lills b DIamond Development. Yvonne Simpson e11lU Chari sse Simpson to arbitrate their claims and perm;11lently stay litigation is granted. Dated: ---- :,... ¢. I HON. WILLIAM ___ FINAL DISPOSITION Il. REIIOLINI. NON-FINAl. DISPOSITION ./.S.l:. [* 6] RIDER for PlaitllilTs: A.tl(ll"ilCV BnIC": L. Roistacl1cr. Esq . ..j.()OEast ()6,h Stro.:et. SLlllt: 20-;\ New York. NY WO()) Attorn..:\' for Dt:r~ndants Stephen Kirkland. OrlL' World El1tertainmctH 1m:. Na";lllo Ski Japan alld Redbook Industries: I ,;JW Orrice of ('csaf Fernandez :2:29:-;Firsl Avenue. ~''" FllXH New York. NY 100.15 ;\Uorncv for ])dl.:ndal1l Five Slar Inc.: Rivkin Radler LLP 92() RcxCorp Plazil l/niundalc. NY 11556 ;\(10rllCV for ])cf~:ndanl Amcricm Express: Tile CharI well Law OfTiccs. LLP 17"1 Floor .11)Broadway. Nl'w Ynr\.:. NY IOOO() WiISOI1, Elser. Moskowitz. 3 Drive Plains. NY Edelman & DickeL LLP (',11111('11 Willie Allmllev 1()(lOcl I'lli' Defendant C:lpilal One: ("nllill1dll Ibkll. Adler & lIY'll;lll. LLP Merri ¢.. AVl.:llliL', ()'h FI()or :k East Ml'aduw. NY 1[55-1- l)(J Allol"Jlcv for ((,llz & IkkmbnL ( Ry..:ilik. ltlballk: [l(' ] [() John Sll''':~'t. 7'1>FinoI' NL'w York. NY I()03S Allnrn~'Y I'llI' Ddl.:llUalH JPMUr!..',lll Stagg. T~·rL'nJ'j. COllfuSlllllL' -l-O] Franklill/\vl.:nue. (iarucil & W<.lhnik. LLP SUltl.: 3()O City. NY 11530 (,h<.ls~' Bank N.A.:

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