Kolel Damsek Eliezer, Inc. v. Schlesinger

• Decision Date: 20 December 2011
• Citation: Kolel Damsek Eliezer, Inc. v. Schlesinger, 90 A.D.3d 851, 935 N.Y.S.2d 83, 2011 N.Y. Slip Op. 9279 (N.Y. App. Div. 2011)
• Parties: KOLEL DAMSEK ELIEZER, INC., appellant, v. Victor SCHLESINGER, etc., et al., respondents, et al., defendants.
• Court: New York Supreme Court — Appellate Division

2011 N.Y. Slip Op. 09279

90 A.D.3d 851

935 N.Y.S.2d 83

KOLEL DAMSEK ELIEZER, INC., appellant,

v.Victor SCHLESINGER, etc., et al., respondents, et al., defendants.

Supreme Court, Appellate Division, Second Department, New York.

Dec. 20, 2011.

Alston & Bird LLP, New York, N.Y. (Betty Weinberg Ellerin, Tiffany A. Buxton, and Gary D. Adamson of counsel), for appellant.

Goldberg & Rimberg PLLC (Mischel & Horn, P.C., New York, N.Y. [Scott T. Horn], of counsel), for respondents.

DANIEL D. ANGIOLILLO, J.P., L. PRISCILLA HALL, LEONARD B. AUSTIN, and ROBERT J. MILLER, JJ.

In an action for a judgment declaring the rights of the parties to certain real property, the plaintiff appeals (1), as limited by its brief, from so much of an order of the Supreme Court, Kings County (F.Rivera, J.), dated March 15, 2010, as granted those branches of the motion of the defendants Victor Schlesinger and Eva Schlesinger which were, in effect, for summary judgment on their third, fourth, and fifth affirmative defenses alleging that it is collaterally estopped from asserting an ownership interest in the subject real property and had actual and constructive notice of those defendants' claims in and to the subject real property, and on their first counterclaim to the extent of declaring that the defendant Eva Schlesinger owns an undivided one-half interest in the subject real property, and directed the recording of a deed reflecting that one-half interest, and (2), as limited by its notice of appeal and brief, from so much of an order of the same court dated April 13, 2010, as, upon granting its motion pursuant to CPLR 5519(c) for a stay, pending appeal, of the enforcement of the order dated March 15, 2010, directed that it deposit an appropriate deed to the subject real property with the Kings County Clerk pursuant to CPLR 5519(a)(5).

ORDERED that the order dated March 15, 2010, is reversed insofar as appealed from, on the law, those branches of the motion of the defendants Victor Schlesinger and Eva Schlesinger which were, in effect, for summary judgment on their third, fourth, and fifth affirmative defenses alleging that the plaintiff is collaterally estopped from asserting an ownership interest in the subject real property and had actual and constructive notice of the claims of the defendants Victor Schlesinger and Eva Schlesinger in and to the subject real property, and on the first counterclaim of those defendants to the extent of declaring that the defendant Eva Schlesinger owns an undivided one-half interest in the subject real property are denied, so much of the order as directed the recording of a deed reflecting that one-half interest is vacated, and, upon searching the record, summary judgment is awarded to the plaintiff dismissing the fifth affirmative defense asserted by the defendants Victor Schlesinger and Eva Schlesinger; and it is further,

ORDERED that on the Court's own motion, the deed deposited pursuant to the order dated April 13, 2010, shall be null and void and an undertaking posted pursuant to that order shall be cancelled; and it is further,

ORDERED that the appeal from the order dated April 13, 2010, is dismissed as academic; and it is further,

ORDERED that one bill of costs is awarded to the plaintiff.

The plaintiff commenced this action for a judgment declaring the rights of the parties to certain real property located in Brooklyn (hereinafter the subject property). The defendants Victor Schlesinger and Eva Schlesinger (hereinafter together the respondents) asserted, among other things, various cross claims and counterclaims sounding in fraud, and a multitude of affirmative defenses. As relevant here, the respondents' third affirmative defense alleged, inter alia, that the plaintiff was barred from asserting an ownership interest in the subject property by virtue of the doctrine of collateral estoppel. The respondents' fourth and fifth affirmative defenses alleged, respectively, that the plaintiff took title to the real property with actual and constructive knowledge of the respondents' claims to the subject property.

The respondents moved, inter alia, in effect, for summary judgment on their third, fourth, and fifth affirmative defenses alleging that the plaintiff was collaterally estopped from asserting an ownership interest in the subject property and that it had actual and constructive notice of the respondents' interest in the subject property. They contended that ownership of the subject property had already been determined in a prior action entitled Schlesinger v. Schlesinger, commenced in the Supreme Court, Kings County, under Index No. 27246/00 (hereinafter the prior action) by the defendant Nathan Schlesinger against the estate of his brother, Jack Schlesinger. The respondents asserted that Nathan Schlesinger and the estate of Jack Schlesinger had agreed to resolve ownership of the subject property by resort to binding arbitration, and that the arbitrator determined that the defendant Eva Schlesinger owned an undivided one-half interest in the subject property—a determination that was ultimately confirmed ( see Schlesinger v. Schlesinger, 21 A.D.3d 942, 801 N.Y.S.2d 615). In support of their motion for summary judgment in this action, the respondents argued that the plaintiff took title to the subject property from the defendant Nathan Schlesinger by quitclaim deed (hereinafter the quitclaim deed) while the ownership of the subject property was still in dispute in the prior action. Accordingly, the respondents maintained that the plaintiff was bound by the arbitrator's determination.

The plaintiff opposed the respondents' motion for summary judgment and urged the Supreme Court to search the record and award summary judgment in its favor. The plaintiff contended that it was neither a party to the prior action nor was it in privity with any of the parties to that action or the binding arbitration. Furthermore, it argued that it did not have constructive notice of the dispute because the subject property was not at issue in the prior action at the time it took title to the subject property, and that the parties agreed to arbitrate the issue only after title to the subject property had been transferred to it. The plaintiff also disputed the respondents' contention that it obtained an interest in the subject property by quitclaim deed, asserting that Nathan Schlesinger had no interest in the subject property at the time that he executed the quitclaim deed, and that it actually obtained its title from a different source or sources.

In an order dated March 15, 2010, the Supreme Court granted those branches of the respondents' motion, which were, in effect, for summary judgment on the third, fourth, and fifth affirmative defenses alleging that the plaintiff was collaterally estopped from asserting an ownership interest in the subject real property and had actual and constructive notice of their claims to the subject real property, and on their first counterclaim to the extent of declaring that the defendant Eva Schlesinger owned an undivided one-half interest in the subject property, and directed the recording of a deed reflecting that one-half interest. Thereafter, the plaintiff moved to stay the enforcement of the order dated March 15, 2010, pending appeal. In an order dated April 13, 2010, the Supreme Court granted the plaintiff's motion on condition that it, among other things, deposit the required deed with the Kings County Clerk pursuant to CPLR 5519(a)(5) and post an undertaking in the amount of $108,000. The plaintiff appeals from stated portions of the orders dated March 15, 2010, and April 13, 2010.

The doctrine of collateral estoppel bars a party from “relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party” ( Ryan v. New York Tel. Co., 62 N.Y.2d 494, 500, 478 N.Y.S.2d 823, 467 N.E.2d 487; see Tydings v. Greenfield, Stein & Senior, LLP, 11 N.Y.3d 195, 199, 868 N.Y.S.2d 563, 897 N.E.2d 1044). “As the consequences of a determination that a party is collaterally estopped from litigating a particular issue are great, strict requirements for application of the doctrine must be satisfied to insure that a party not be precluded from obtaining at least one full hearing on his or her claim” ( Gramatan Home Invs. Corp. v. Lopez, 46 N.Y.2d 481, 485, 414 N.Y.S.2d 308, 386 N.E.2d 1328).

Collateral estoppel may serve to bar “not only parties from a previous action from litigating an issue decided therein, but those in privity with them as well” ( id. at 486, 414 N.Y.S.2d 308, 386 N.E.2d 1328). The term privity has been applied to “denote a mutually successive relationship of the same rights to the same property” ( id.; see Downey v. Seib, 185 N.Y. 427, 433, 78 N.E. 66). As a general matter, collateral estoppel “applies only to a privity arising after the event out of which the estoppel arises and the person in privity is bound by ... the estoppel because he comes in after the fact creating the estoppel by succession ... to the original title or interest” ( Masten v. Olcott, 101 N.Y. 152, 161, 4 N.E. 274; see Gramatan Home Invs. Corp. v. Lopez, 46 N.Y.2d at 486, 414 N.Y.S.2d 308, 386 N.E.2d 1328).

Here, the Supreme Court concluded that the plaintiff was bound by the arbitrator's determination that Eva Schlesinger owned an undivided one-half interest in the subject property. The Supreme Court's conclusion was based on its determination that since ownership of the subject property was a disputed issue in the prior action at the time the plaintiff acquired the subject property, it had actual and constructive notice of the dispute and was in privity with Nathan Schlesinger. We disagree, and conclude that the respondents failed to establish that the plaintiff took title to the subject property with actual or constructive knowledge of their claims to the property and, thus, the respondents failed to establish...