Dolitsky's Dry Cleaners, Inc. v. Y L Jericho Dry Cleaners, Inc.

• Decision Date: 11 April 1994
• Citation: 203 A.D.2d 322,610 N.Y.S.2d 302
• Parties: DOLITSKY'S DRY CLEANERS, INC., Respondent, v. Y L JERICHO DRY CLEANERS, INC., et al., Appellants.
• Court: New York Supreme Court — Appellate Division

Page 302

610 N.Y.S.2d 302

203 A.D.2d 322

DOLITSKY'S DRY CLEANERS, INC., Respondent, v. Y L JERICHO DRY CLEANERS, INC., et al., Appellants.

Supreme Court, Appellate Division,

Second Department.

April 11, 1994.

Leibowitz, Kane & Bennett, Jericho (Terrence M. Bennett, of counsel), for appellants.

Conway & Ceriello, Melville (Darrell J. Conway, of counsel), for respondent.

Before MANGANO, P.J., and PIZZUTO, FRIEDMANN and GOLDSTEIN, JJ.

MEMORANDUM BY THE COURT.

In an action to recover under certain promissory notes, the defendants appeal from an order of the Supreme Court, Suffolk County (Cannavo, J.), dated May 4, 1992, which denied their motion pursuant to CPLR 3211(a)(5) to dismiss the action on the grounds of res judicata.

ORDERED that the order is affirmed, with costs.

In August 1989 the parties entered into an agreement for the purchase of the plaintiff's business. The defendant, Y L Jericho Dry Cleaners Inc. (hereinafter Y L Jericho) delivered a series of promissory notes in which it promised to pay, commencing in September 1989, 120 monthly installments at $2,609.53 a month. The defendant Lee guaranteed payment of the notes.

After the defendant Y L Jericho failed to pay the third, fourth, and fifth installment, the plaintiff served a default notice. On or about February 14, 1990, the plaintiff commenced a prior action against the defendants, asserting, inter alia, that in view of the default by the defendant Y L Jericho, all 120 payments were to be accelerated pursuant to the terms of the notes. This prior action terminated with the execution by the parties of a stipulation of discontinuance "with prejudice", on October 22, 1990.

The instant action was commenced by the plaintiff in April 1991. The plaintiff alleged that the defendants had defaulted on the fifteenth note, which was due in November 1990, and demanded acceleration and full payment of remaining notes. The defendants moved to dismiss this action on the grounds of res judicata. The Supreme Court denied the defendants' motion, holding:

"The first litigation concerns a default in payment that occurred in 1989, and the action arising from that default was subsequently settled by stipulation. The second action concerns a separate default in payment which occurred after the discontinuance of the first action.

"Therefore, this action will not be dismissed on res judicata or collateral estoppel grounds".

We affirm.

It is well settled that "[a] stipulation [of discontinuance] with prejudice does carry res judicata authority" with respect to the same cause (Rossi v. Twinbogo Co., 193 A.D.2d 481, 483, 597 N.Y.S.2d 390; 7A Carmody-Wait 2d, NY Prac, § 47:46, at 48; 4 Weinstein-Korn-Miller, NY Civ Prac p 3217.10; Forte v. Kaneka Am. Corp., 110 A.D.2d 81, 85, 493 N.Y.S.2d 180; see also, Siegel, Practice Commentaries, McKinney's Cons.Laws of N.Y., Book 7B, CPLR C3217:15, at 735-736). However, the language "with prejudice" is narrowly interpreted when the interests of justice, or the particular equities involved, warrant such an approach (see, 7A Carmody-Wait 2d NY Prac § 47:46, supra, at 48; 4...