Gross v. Newburger, Loeb & Co., Inc.

• Decision Date: 08 February 1980
• Citation: 103 Misc.2d 417,426 N.Y.S.2d 667
• Parties: Charles GROSS et al., Plaintiffs, v. NEWBURGER, LOEB & CO., INC. et al., Defendants.
• Court: New York Supreme Court

Page 667

426 N.Y.S.2d 667

103 Misc.2d 417

Charles GROSS et al., Plaintiffs, v. NEWBURGER, LOEB & CO., INC. et al., Defendants.

Supreme Court, Special Term, Nassau County, Part I.

Feb. 8, 1980.

Golden, Wienshienk & Mandel, New York City, for plaintiffs.

Max E. Greenberg, Trayman, Cantor, Reiss & Blasky, New York City, for defendants Jerome Tarnoff and Harry B. Frank, as Executors of the Estate of Ned D. Frank.

Leon B. Borstein, New York City, for defendants Fred Kayne, Robert Muh and Charles Sloane.

Finley, Kumble, Wagner, Heine & Underberg, New York City, defendant pro se.

Paul D. Risher, New York City, defendant pro se.

Osmond K. Fraenkel, New York City, for defendants Newburger, Loeb & Co., Inc. et al.

Robert S. Persky, New York City, defendant pro se.

John A. Guzzetta, New York City, for third party defendants Norman Roy Gutman and Jewel Bjork.

BEATRICE S. BURSTEIN, Justice.

Plaintiffs' motion for an order granting leave to reargue and renew, and for reconsideration, and the motion by defendants Newburger, Loeb & Co., Inc. ("the corporation"); Newburger, Loeb & Co. ("the partnership"); Robert L. Newburger; Andrew M. Newburger; John F. Settel; Sanford Roggenburg; Richard D. Stern; Harold J. Richards; Robert L. Stern; and Richard D. Stern, Walter D. Stern and Robert L. Stern, as executors of the Estate of Leo Stern ("the Newburger defendants") for reconsideration, are consolidated for purposes of determination. Leave is granted, and upon renewal, reargument and reconsideration, the Court recalls the whole of its earlier decision of July 27, 1979, and substitutes the following in its place.

On February 17, 1971, the corporation commenced an action in the United States District Court for the Southern District of New York, ¹ against the plaintiffs. The latter asserted nine counterclaims against the corporation and impleaded additional defendants. All defendants in this action were parties, in varying capacities, to the federal action. Two of the counterclaims, which were dismissed for lack of subject matter jurisdiction by the federal courts, were reasserted in this case as plaintiffs' second and third causes of action.

In this action, three pending motions (two of which are essentially cross-motions) have been consolidated for purposes of determination. All seek summary, or partial summary judgment dismissing all or parts of certain of plaintiffs' causes of action.

The principal motion is made by the Newburger defendants who contend that plaintiffs' second and third causes of action are time-barred under CPLR 205(a). The two cross-motions, one by defendants Muh and Sloane, the other by defendant Kayne, were made as motions in chief, but upon less than the notice prescribed by CPLR 2214(b). Nevertheless, since they meet the test of CPLR 2215 for cross-motions, the Court accepts them as such.

All three cross-movants seek dismissal (1) of the first cause of action on the ground it fails to state a cause of action; (2) of the second and third causes of action as time-barred; (3) of the third cause of action on the grounds of collateral estoppel and, alternatively, res judicata. Defendants Muh and Sloane seek dismissal of the second cause of action on the additional ground of collateral estoppel and, alternatively, res judicata.

The Newburger defendants essentially join in the application of defendants Muh and Sloane addressed to the first and third causes of action, but not their claim as to collateral estoppel or res judicata respecting the second cause of action.

Notwithstanding the elementary rule that on a motion to dismiss a complaint for failure to state a cause of action, a liberal construction should be accorded to pleadings, and the Court assumes the truth of, and draws every favorable inference from, well-pleaded allegations, (219 Broadway Corp. v. Alexanders, Inc., 46 N.Y.2d 506, 414 N.Y.S.2d 889, 387 N.E.2d 1205 (1979); Rovello v. Orofino Realty Co., 40 N.Y.2d 633, 389 N.Y.S.2d 314, 357 N.E.2d 970 (1976); Kober v. Kober, 16 N.Y.2d 191, 264 N.Y.S.2d 364, 211 N.E.2d 817 (1965)), the first cause of action fails.

In brief, the critical allegations describe a scheme in the nature of a conspiracy, the purpose of which was to coerce plaintiffs (who were general and limited partners in the defendant partnership) to accede to a takeover of the partnership by the defendant corporation, through a transfer of assets. The nub of the complaint is a statement by plaintiffs that the "malicious and baseless litigation" commenced against them (including the federal action) was resolved in their favor. To bolster this claim, plaintiffs suggest a variety of labels or characterizations to support a cause of action. But there are no plain or cognizable averments relating to the issuance of process capable of being abused, as the term "process" has been defined, nor are there any allegations of interference with plaintiffs' persons or property by legally issued process. Hence, a cause of action for abuse of process will not lie. (See Julian J. Studley, Inc. v. Lefrak, 41 N.Y.2d 881, 884, 393 N.Y.S.2d 980, 982, 362 N.E.2d 611, 613 (1977); see Board of Educ. v. Farmingdale 38 N.Y.2d 397, 403, 380 N.Y.S.2d 635, 641, 343 N.E.2d 278, 282 (1975); see Williams v. Williams, 23 N.Y.2d 592, 298 N.Y.S.2d 473, 246 N.E.2d 333 (1969); see Drago v. Buonagurio, 61 A.D.2d 282, 285, 402 N.Y.S.2d 250, 251, revd. on other grds. 46 N.Y.2d 778, 413 N.Y.S.2d 910, 386 N.E.2d 821 (1978)).

In metaphorical terms it is said that in order to maintain a cause of action for prima facie tort, a plaintiff must allege that the acts complained of were done without justification, or in other words, with a "disinterested malevolence". (ATI, Inc. v. Ruder & Finn, 42 N.Y.2d 454, 398 N.Y.S.2d 864, 368 N.E.2d 1230 (1977); United Pickle Co., Inc. v. Omanoff, 63 A.D.2d 892, 405 N.Y.S.2d 727 (1st Dept. 1978)). Ergo, a showing of motives such as self-interest, profit, or business advantage negate the implication of malice. (Reinforce, Inc. v. Birney, 308 N.Y. 164, 124 N.E.2d 104 (1964); Beardsley v. Kilmer, 236 N.Y. 80, 140 N.E. 203 (1923); Squire Records v. Vanguard Recording Society, 25 A.D.2d 190, 268 N.Y.S.2d 251 affd. 19 N.Y.2d 797, 279 N.Y.S.2d 737, 226 N.E.2d 542 (1967); Penn-Ohio Steel v. Allis-Chalmers Mfg., 7 A.D.2d 441, 184 N.Y.S.2d 58 (1st Dept. 1959); Benton v. Kentucky-Van Saun Mfg. Corp., 2 A.D.2d 27, 152 N.Y.S.2d 955 (1st Dept. 1956); Hecht v. Air Reduction Co., 41 Misc.2d 463, 245 N.Y.S.2d 935 (Sup.Ct.1963)). In this case, it is repeatedly asserted that precisely such motives prompted defendants' acts. It is manifest that a prima facie tort cause of action has not been stated.

If any cause of action does lie, it sounds in malicious prosecution. Since specific allegations of interference with plaintiffs' persons or property by use of an incidental remedy are an essential element of malicious prosecution (Burt v. Smith, 181 N.Y. 1, 73 N.E. 495 (1905); Hoppenstein v. Zemek, 62 A.D.2d 979, 403 N.Y.S.2d 542 (2d Dept. 1978)), and these are absent here, plaintiffs have failed to state this cause of action. Additionally, plaintiffs' allegations of civil conspiracy are equally exigious. A claim of conspiracy must be bottomed on an independent tort, and one has not been adequately pleaded. (Satin v. Satin, 69 A.D.2d 761, 414 N.Y.S.2d 570 (1st Dept. 1979)). Accordingly, the Court finds the first alleged cause of action insufficient.

Plaintiffs seek leave to replead their first cause of action, claiming defendants obtained an injunction which would constitute the interference sufficient to sustain a cause of action for malicious prosecution. Leave hereby is granted (CPLR 3211(c)), provided plaintiffs serve a copy of the repleaded claim (which is to contain all operative dates) upon defendants within thirty days following service upon them of a copy of the order to be entered here. If plaintiffs failed to replead within the time permitted, summary judgment dismissing the first cause of action will be granted.

The second and third causes of action reassert plaintiffs' third and eighth counterclaims pleaded in the federal action. These were dismissed by the federal court for lack of subject matter jurisdiction, and movants contend these causes of action now are time-barred, relying upon CPLR 205(a) to establish the date when the dismissed claims had to be reasserted. CPLR 205(a) provides:

"If an action is timely commenced and is terminated in any other manner than by a voluntary discontinuance, a dismissal of the complaint for neglect to prosecute the action, or a final judgment upon the merits, the plaintiff . . . may commence a new action upon the same transaction or occurrence or series of transactions or occurrences within six months after the termination . . . ."

CPLR 205(a) is operative in cases "in which the prior action was defective and so had to be dismissed". (George v. Mt. Sinai Hosp., 47 N.Y.2d 170, 180, 417 N.Y.S.2d 231, 237, 390 N.E.2d 1156, 1161 (1979)). Lack of subject matter jurisdiction is such a quintessential defect. (Id., at 178, 417 N.Y.S.2d at 236, 390 N.E.2d at 1160). CPLR 205(a) is an error-correcting procedural tool for a complaining party, and despite the absence of any reference to a defendant, CPLR 205(a) can be, and has been, applied to a defendant's counterclaims. (See CPLR 3019(d); see Russo v. Iacono, App.Div., 423 N.Y.S.2d 252 (2d Dept.); see Cohoes Housing Authority v. Ippolito-Lutz, Inc., 65 A.D.2d 666, 409 N.Y.S.2d 811 (3d Dept. 1978); see Lebrecht v. Orefice, 199 Misc. 1025, 105 N.Y.S.2d 318 (App. Term, 1st Dept. 1951). ²) This is supported by CPLR 3019(d):

"(a) cause of action contained in a counterclaim . . . shall be treated, as far as practicable, as if it were contained in a complaint . . . ."

Plaintiffs claim CPLR 203(d) controls. It provides:

"Where a defendant has served an answer containing a defense or counterclaim and the action is terminated because of the plaintiff's death or by...