U.S. Bank N.A. v Greenpoint Mtge. Funding, Inc.Annotate this Case
Decided on February 24, 2012
Supreme Court, New York County
U.S. Bank National Association, as Indenture Trustee for the Benefit of the Insurers and Noteholders of GreenPoint Mortgage Funding Trust 2006-HE1, Home Equity Loan Asset-Backed Notes, Series 2006-HE1; SYNCORA GUARANTEE INC., formerly known as XL CAPITAL ASSURANCE INC., as Controlling Insurer, Note Controlling Party and Class Ax Insurer; and CIFG ASSURANCE NORTH AMERICA, INC., as Class Ac Insurer, Plaintiffs,
Greenpoint Mortgage Funding, Inc., Defendant.
For Plaintiff Syncora Guarantee Inc. and CIFG Assurance North America, Inc.:
Allegaert Berger & Vogel, LLP
111 Broadway, 20th Floor
New York, NY 10006
Michael S. Vogel, Esq.
David A. Berger, Esq.
Priscilla Djirackor, Esq.
Kevin L. MacMillan, Esq.
For Plaintiff U.S. Bank National Association as Indenture Trustee:
Nixon Peabody LLP
437 Madison Avenue
New York, NY 10022
Constance M. Boland, Esq.
For Defendant GreenPoint Mortgage Funding, Inc.: Murphy & McGonigle, P.C.
4870 Sadler Road, Suite 301
Glen Allen, Va 23060
James A. Murphy, Esq
Cameron S. Matheson, Esq.
1250 24th Street NW, Suite 700
Washington, DC 20037
Benjamin B. Klubes, Esq.
Matthew P. Previn, Esq.
LeClair, a Professional Corporation,
840 Third Avenue, Fifth Floor
New York, NY 10022
Michael T. Conway, Esq.
Bernard J. Fried, J.
This action has been the subject of a detailed decision and order of this court, dated March 3, 2010 (Order), and, as such, knowledge of the facts of the underlying suit, and of its procedural history, is presumed.
In the Order, this court dismissed the action against defendant Greenpoint Mortgage Funding, Inc. (Greenpoint) as to the claims brought by plaintiffs Syncora Guarantee Inc. (Syncora) and CIFG Assurance North America, Inc. (CIFG) (together, plaintiffs). Plaintiffs alleged that they were damaged by Greenpoint by misrepresentations it had made in certain Sales Agreements, to which they claimed to be third-party beneficiaries. This court found that Syncora and CIFG were not third-party beneficiaries to those documents, nor had they any other rights thereunder, and so, the action was dismissed in its entirety as to these plaintiffs.
Plaintiffs now move to amend their complaint to allege wholly new claims against Greenpoint, based on other documents previously before the court, and alleging fraud as well. Greenpoint cross-moves to strike certain portions of plaintiff's evidentiary submissions presented on this motion. Plaintiffs' motion is denied, as is Greenpoint's.
Plaintiffs are barred by the doctrine of res judicata from bringing what is essentially a new action against Greenpoint.
Under the doctrine of res judicata, a party may not litigate a claim where a judgment on the merits exists from a prior action between the same parties involving the same subject matter. The rule applies not only to claims actually litigated but also to claims that could have been raised in the prior litigation. The rationale underlying [*2]this principle is that a party who has been given a full and fair opportunity to litigate a claim should not be allowed to do so again (citations omitted). Additionally, under New York's transactional analysis approach to res judicata, "once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy." O'Brien v City of Syracuse, 54 NY2d 353, 357 (1981), citing Matter of Reilly v Reid, 45 NY2d 24, 29-30 (1978).
Matter of Hunter, 4 NY3d 260, 269 (2005); see also Grossman v New York Life Insurance Company, 90 AD3d 990 (2d Dept 2011).
The case of UBS Securities LLC v Highland Capital Management, L.P. (86 AD3d 469 [1st Dept 2011]) is instructive. In UBS Securities, a plaintiff whose complaint had been completely dismissed on the merits, sought to replead to allege what the Court found to be essentially a new action against the defendant, relying on a new theory of law. The Court noted that the new claims "implicate events alleged to have taken place before the filing of the original complaint," calling for the application of res judicata. Id. at 474.
In explaining its reasoning for the application of res judicata, the Court held that the allegations of fact presented on the new complaint, being based on the same underlying transaction, "form[ed] a single factual grouping" which comprised a "convenient trial unit." Id. at 474-475. As such, "the proper inquiry for res judicata purposes is when [plaintiff] could have raised a cause of action, not when it had enough evidence to prove the claim at trial." Id. at 476. The Court found that UBS had the requisite knowledge sufficient to bring all its claims in the original complaint, and so should be barred from an attempt to circumvent the prior order by bringing an amended complaint.
The UBS Securities Court noted that part of the action remained, as the defendant was bringing counterclaims against the plaintiff, but found that the existence of further claims keeping the action alive were irrelevant to the plaintiff's right to bring new claims against the defendant. Similarly, in the case at hand, the fact that there is an action remaining between U.S. Bank National Association and Greenpoint does not affect the preclusive effect of res judicata on plaintiffs' proposed amended complaint.
In this light, also, cases cited by plaintiffs for the proposition that res judicata cannot apply in the same action as the original decision (see e.g. Wisell v Indo-Med Commodities, Inc., 74 AD3d 1059 [2d Dept 2010]), are inapplicable, as the UBS Securities Court recognized that the original action had been dismissed, and no action remained as to the movants. See also Feigan v Advance Capital Management Corp., 146 AD2d 556 (1st Dept 1989)(res judicata barred dismissed plaintiffs from bringing new action after original action dismissed, when based on same transactions).
It is irrelevant that the matter was not explicitly cited as being "on the merits" for the application of res judicata. See Feigen v Advance Capital Management Corp., 146 AD2d 556, supra. The Order herein was clearly on the merits. Further, the fact that the Order has not yet been reduced to a judgment does not take away from the finality of the merits of the Order, and give plaintiffs a free pass to circumvent the court's clear instructions . The entry of judgment is, under [*3]the present circumstances, a "procedural refinement," which can be effected at any time.[FN1] See Slater v American Mineral Spirits Company, 33 NY2d 443, 446 (1974).
Lastly, it is not conclusive that this court gave plaintiffs permission to bring the within motion. Such was not a finding on the law that permission to replead was assured.
In conclusion, plaintiffs may not replead to strategically change their approach to this action by reference to allegations and theories of recovery which were available to them from the onset of this litigation. Their motion must be denied. As a result, Greenpoint's cross motion is denied as moot.
Accordingly, it is
ORDERED that the motion brought by plaintiffs U.S. Bank National Association, Syncora Guarantee Inc. and CIFG Assurance North America, Inc. is denied; and it is further
ORDERED that the cross motion brought by defendant Greenpoint Mortgage Funding, Inc. is denied.
Footnote 1:Greenpoint should present the Order to the Clerk of the Court for the entry of judgment, as it could have done from the onset.