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

Citation445 N.Y.S.2d 830,85 A.D.2d 709
CourtNew York Supreme Court Appellate Division
Decision Date31 December 1981
PartiesCharles GROSS et al., Appellants-Respondents, v. NEWBURGER, LOEB & CO., INC. et al., Respondents-Respondents; Robert Muh et al., Respondents-Appellants.

Golden, Wienshienk & Mandel, New York City (Philip Mandel, Bernard Rothman and Marc Owen Mandel, New York City, of counsel), for appellants-respondents.

Leon B. Borstein, New York City, for respondents-appellants and for respondent-respondent Kayne.

Osmond K. Fraenkel, New York City, for respondents-respondents, Newburger, Loeb & Co., Inc., Newburger, Loeb & Co., Andrew M. Newburger, Robert L. Newburger, Richard D. Stern, Walter D. Stern and Robert L. Stern, as Executors of the Estate of Leo Stern, Robert L. Stern, Richard D. Stern, John F. Settel, Harold J. Richards and Sanford Roggenburg.

Before HOPKINS, J. P., and MANGANO, RABIN and COHALAN, JJ.

MEMORANDUM BY THE COURT.

In an action, inter alia, to recover damages for conversion, plaintiffs appeal, and defendants Muh and Sloane cross-appeal, from stated portions of an order of the Supreme Court, Nassau County, dated April 30, 1980, which, inter alia, dismissed the second and third causes of action as to certain defendants.

Order modified by deleting paragraphs numbered "2", "3" and "6", and substituting therefor a provision denying the motions for summary judgment as to the second and third causes of action. As so modified, order affirmed insofar as appealed from, with one bill of $50 costs and disbursements to plaintiffs payable jointly by defendants appearing separately and filing separate briefs.

Plaintiffs commenced this action alleging, inter alia, the conversion of certain stock warrants and securities (the second cause of action) and malicious interference with an employment opportunity (the third cause of action). The present lawsuit had its genesis in a prior Federal action (Newburger, Loeb & Co., Inc. v. Gross, 71 Civ. 685), commenced in February, 1971 by the stockbrokerage firm of Newburger, Loeb & Co., Inc. (the corporation) against Charles Gross, Mabel Bleich, Jeanne Donoghue and Gross & Co. (the Federal defendants). In the Federal action, the corporation, as assignee of David and Mary Buckley, charged that the defendants therein were guilty of "churning" the account the Buckleys had with Gross & Co. The Federal defendants counterclaimed against the corporation and brought into the Federal action as counterclaim defendants Newburger, Loeb & Co. (the partnership) and all the other defendants named in the present action. Thus, the present plaintiffs were defendants in the Federal action and the present defendants are the corporation (plaintiff in the Federal action) and all the additional counterclaim defendants (except for three not of concern here).

The corporation's "churning" claim and the six other claims it interposed against the Federal defendants were dismissed on the merits by the District Court, at the close of a seven-week trial. That dismissal was affirmed on appeal on August 24, 1977 (563 F.2d 1057, affg. in part and revg. and remanding in part 71 Civ. 685, SDNY, July 7, 1976). Of the nine counterclaims interposed by the Federal defendants, judgment in their favor on three was affirmed and, as here relevant, dismissal of the eighth counterclaim was also affirmed. A decision in favor of Gross on the third counterclaim was reversed with instructions to dismiss it upon the remand. The purpose of the remand was to re-evaluate damages on the three counterclaims decided in favor of the Federal defendants. Dismissal of both the third and eighth counterclaims was based on lack of subject matter jurisdiction. (We note that, in fact, the judgment of the District Court had dismissed the third counterclaim, but damages were awarded on the claim nonetheless.)

Gross' third Federal counterclaim is the present second cause of action for conversion, although, as will be discussed below, the subject matter underlying this claim was also considered by the Federal courts as an element of the damages assessed for the three counterclaims upon which the Federal defendants had judgment in their favor. The eighth Federal counterclaim, asserted on behalf of Gross, is the present third cause of action.

Following joinder of issue in the present action, various defendants moved for summary judgment on the second and third causes of action on the ground that the actions were time-barred. Defendants Muh and Sloane asserted, in addition, that, as to them, the second cause of action was also barred by the doctrines of res judicata and collateral estoppel. No issue is before this court with respect to the branches of the motions which sought dismissal of the first cause of action. The motions for summary judgment that were brought by separate groups of defendants are treated as though they were one motion.

On the third cause of action, Special Term granted summary judgment on Statute of Limitations grounds to all defendants (except two who had defaulted, defendants Tarnoff and Frank, as executors of the Estate of Ned B. Frank). On the second cause of action, summary judgment on the same ground was granted to certain of the defendants and denied as to others, depending upon whether a defendant had been served within six months of the date of the denial of plaintiffs' writ of certiorari to the United States Supreme Court (434 U.S. 1035, 98 S.Ct. 769, 54 L.Ed.2d 782). Special Term rejected the res judicata and collateral estoppel argument of defendants Muh and Sloane (Gross v. Newburger, Loeb & Co., 103 Misc.2d 417, 426 N.Y.S.2d 667).

Plaintiffs contend on appeal that both causes of action are timely as to all defendants. First, they argue that CPLR 203 (subd. ) is the applicable provision by which to measure the time...

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    ...present action on an essentially identical complaint, well within the six-month period allowed by CPLR 205(a) (Gross v. Newburger Loeb & Co., 85 A.D.2d 709, 445 N.Y.S.2d 830; 1 Weinstein-Korn-Miller, N.Y.Civ.Prac. p 205.09) and promptly thereafter recorded a lis pendens as to it. On Novembe......
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