Mew Equity LLC v. Sutton Land Servs., L.L.C.

• Decision Date: 27 November 2012
• Docket Number: No. 25882/10.,25882/10.
• Citation: 964 N.Y.S.2d 60,2012 N.Y. Slip Op. 52161,37 Misc.3d 1225
• Parties: MEW EQUITY LLC, Martin Wydra, and Edward Wydra, Plaintiffs, v. SUTTON LAND SERVICES, L.L.C. d/b/a Sutton Land Title, Sutton Alliance, LLC d/b/a Sutton Land Title, Mendel Brach, Moshe Roth a/k/a Mozes Roth, 222 Skillman LLC, 652 Park, LLC, 519 Marcy LLC a/k/a 519 Marcy Avenue, LLC, B & R Partners LLC, Shlomo USA LLC, Raizy Moskovits, Martin Silverstein, Marcy Towers LLC, JP Morgan Chase Bank National Association, as successor in interest to Washington Mutual Bank, Defendants. Mendel Brach and Moshe Roth, Counterclaim Plaintiffs, v. Dahill LLC and Hewes LLC, Counterclaim Defendants.
• Court: New York Supreme Court

37 Misc.3d 1225

964 N.Y.S.2d 60

2012 N.Y. Slip Op. 52161

MEW EQUITY LLC, Martin Wydra, and Edward Wydra, Plaintiffs,

v.SUTTON LAND SERVICES, L.L.C. d/b/a Sutton Land Title, Sutton Alliance, LLC d/b/a Sutton Land Title, Mendel Brach, Moshe Roth a/k/a Mozes Roth, 222 Skillman LLC, 652 Park, LLC, 519 Marcy LLC a/k/a 519 Marcy Avenue, LLC, B & R Partners LLC, Shlomo USA LLC, Raizy Moskovits, Martin Silverstein, Marcy Towers LLC, JP Morgan Chase Bank National Association, as successor in interest to Washington Mutual Bank, Defendants.

Mendel Brach and Moshe Roth, Counterclaim Plaintiffs,

v.Dahill LLC and Hewes LLC, Counterclaim Defendants.

No. 25882/10.

Supreme Court, Kings County, New York.

Nov. 27, 2012.

Kenneth J. Pagliughi, Esq. of Scott A. Rosenberg, P.C., and Perry Belagur, Esq., for Plaintiffs, Mew Equity LLC, Martin Wydra, and Edward Wydra, and counterclaim defendants Dahill LLC and Hewes LLC.

J. Michael Gottesman, Esq., for Defendants/counterclaim plaintiffs, Moshe Roth and Mendel Brach.

JACK M. BATTAGLIA, J.

Recitation in accordance with CPLR 2219(a) of the papers submitted on the motion, by order to show cause, of plaintiffs Mew Equity LLC, Martin Wydra, and Edward Wydra and counterclaim defendants Dahill LLC and Hewes LLC for an order amending this Court's prior order dated February 14, 2012 to allow them “to proceed with their motion for the relief set forth therein”; for an order, pursuant to CPLR 3211(a)(5) and (7) and 3016 dismissing the Counterclaim Complaint in its entirety; for an order, pursuant to CPLR §§ 6501 and 6514, canceling or vacating the Notices of Pendency filed by Counterclaim Plaintiffs on December 21, 2010 against real property located at 886–894 Dahill Road (Block 5457, Lot 5–6) and 426–432 South 5th Street and 332 Hewes Street (Block 2465, Lots 1–5, 105); and for an order, pursuant to CPLR 6515(c) and 22 NYCRR 130.1–1, awarding costs and sanctions against Counterclaim Plaintiffs:

—Order to Show Cause

Affirmation of Kenneth J. Pagliughi in Support of Motion to Dismiss Counterclaims and Cancel and Vacate Notices of Pendency

Exhibit 1 (Affirmation)

Exhibits A–H

—Defendant and Counterclaim Plaintiff Moshe Roth's Affirmation in Opposition to Order to Show Cause

—Exhibits A–D

—Exhibits E–Q

In their Verified Complaint, plaintiffs Mew Equity LLC, Martin Wydra, and Edward Wydra allege eight causes of action against 13 named defendants, including Mendel Brach, Moshe Roth a/k/a Mozes Roth, Sutton Land Services, L.L.C. d/b/a Sutton Land Title, and Sutton Alliance, LLC d/b/a Sutton Land Title. As alleged, “[t]his action arises from a sophisticated fraud upon Plaintiff [ sic ] orchestrated by Brach, Roth and their title company of choice, Sutton.” (Verified Complaint ¶ 18.)

Plaintiffs Edward Wydra and Martin Wydra, and defendants Mendel Brach and Moshe Roth a/k/a Mozes Roth, together with some number of juridical entities controlled by at least one of them, were parties to an arbitration before The Beth Din Kollel HaRabbonim Rabbinical Court (“the Rabbinical Court”), commenced prior to this action. The arbitration yielded a Decision of the Rabbinical Court “dated as of September 22, 2010” (the “First Award”) that was the subject of a special proceeding pursuant to CPLR Article 75 commenced by Plaintiffs and 10 juridical entities, against defendants Brach, Roth and 21 juridical entities, including defendants 519 Marcy LLC a/k/a 519 Marcy Avenue, LLC, 222 Skillman LLC, and 652 Park, LLC.

With a Decision, Order and Judgment dated September 21, 2011, this Court vacated the First Award, and remitted the matter to the Rabbinical Court for rehearing on issues, including clarification as to which disputes and juridical entities were subject to the Rabbinical Court's determinations. ( See Matter of Wydra [Brach], 34 Misc.3d 1241[A], 2011 N.Y. Slip Op 51664[U] [Sup Ct, Kings County 2011].)

By Decision and Order dated February 14, 2012, this Court denied, pending final resolution of the arbitration proceeding before the Rabbinical Court, a motion of Plaintiffs seeking, among other things, dismissal of defendants/counterclaim plaintiffs Mendel Brach's and Moshe Roth's counterclaims as against them, and stayed any resolution of Brach's and Roth's counterclaims, as well as Martin and Edward Wydra's First, Second, Seventh, and Eighth Causes of Action, pending final resolution of the arbitration proceedings before the Rabbinical Court and further order of this Court. ( SeeCPLR 2201.)

In August 2012, the Rabbinical Court issued a Decision, Ruling and Award (the “Second Award”), which sets forth in 13 pages all of its findings. Unlike the First Award, the Rabbinical Court specified the disputes and juridical entities subject to its determinations. Among these findings, the Rabbinical Court determined that, among other entities, plaintiffs Edward and Martin Wydra, counterclaim defendants Dahill LLC and Hewes LLC, defendants/counterclaim plaintiffs Mendel Brach and Moshe Roth a/k/a Mozes Roth, and defendant entities 222 Skillman LLC, 652 Park LLC, and 519 Marcy LLC a/k/a 519 Marcy Avenue, LLC, were parties to the Master Agreement, and therefore subject to the arbitration agreement. Notably, the Rabbinical Court did not list plaintiff Mew Equity LLC, nor any of the other defendants, as parties to the arbitration.

Initially, because the Rabbinical Court has issued the Second Award, the stay that was imposed by this Court's Decision and Order dated February 14, 2012 expired. As such, Brach's and Roth's contention that the instant motion is stayed is without merit.

In their motion, plaintiffs Mew Equity LLC, Martin Wydra, and Edward Wydra, as well as counterclaim defendants Dahill LLC and Hewes LLC, seek dismissal of defendants/ counterclaim plaintiffs Mendel Brach's and Moshe Roth's Counterclaim Complaint and of the counterclaims asserted by Brach and Roth in their Verified Answer on grounds that, among other things, all of the counterclaims are barred by the doctrines of res judicata and collateral estoppel since the issues were addressed and resolved against Mendel Brach and Moshe Roth in the Second Award.

Plaintiffs have not commenced a proceeding to confirm the Second Award ( seeCPLR 7510), and Defendants/Counterclaim Plaintiffs have not commenced a proceeding to vacate the Second Award ( seeCPLR 7511). An application to confirm an award may be made by a party “within one year after its delivery to him” ( seeCPLR 7510), but an application to vacate or modify an award must be made by a party “within 90 days after its delivery to him” ( seeCPLR 7511 [a].)

“Res judicata serves to preclude the renewal of issues actually litigated and resolved in a prior proceeding as well as claims for different relief which arise out of the same factual grouping' or transaction', and which should have or could have been resolved in the prior proceeding”. (Braunstein v. Braunstein, 114 A.D.2d 46, 53 [2d Dept 1985]; see also Breslin Realty Development Corp. v. Shaw, 72 AD3d 258, 263 [2d Dept 2010].)

“The doctrine of collateral estoppel, a narrower species of res judicata, precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in the prior action or proceeding, and decided against that party or those in privity, whether or not the tribunals or causes of action are the same.” (Breslin Realty Development Corp. v. Shaw, 72 AD3d at 263.) For collateral estoppel to apply, “three criteria must be met: (1) the issue must actually have been litigated and determined by a valid and final judgment in a separate action, (2) that determination must have been essential to the judgment and (3) either the party to be precluded had a full and fair opportunity to litigate the issue in the prior proceeding or other circumstances do not justify affording him an opportunity to relitigate it”. ( See Cudar v. Cudar, 98 AD3d 27, 31 [2d Dept 2012] [quoting Braunstein v. Braunstein, 114 A.D.2d at 52–53];Ippolito v. TJC Development, LLC, 83 AD3d 57, 71 [2d Dept 2011].)

“The doctrines of res judicata and collateral estoppel apply to arbitration awards with the same force and effect as they apply to judgments of a court.” ( Id. at 72 [quoting Mahler v. Campagna, 60 AD3d 1009, 1011 [2d Dept 2009]; see also Matter of Falzone [New York Cent. Mut. Fire Ins. Co.], 15 NY3d 530, 534–535 [2010].) “Where there has been a final determination on the merits, an arbitration award, even one never confirmed, may serve as the basis for the defense of collateral estoppel in a subsequent action.” (Acevedo v. Holton, 239 A.D.2d 194, 195 [1st Dept 1997]; see also Pinnacle Environment Systems, Inc. v. Cannon Building of Troy Associates, 305 A.D.2d 897, 898 [3d Dept 2003]; McMenemy v. Goord, 273 A.D.2d 665, 667 fn. * [3d Dept 2000]; County of Rockland v. Aetna Casualty & Surety Company, 129 A.D.2d 606, 607 [2d Dept 1987] [“The fact that the prior determination was an unconfirmed arbitration award and not a judicial determination does not lessen its collateral estoppel effect”].)

“Where, however, an issue not passed upon by the arbitrators is the subject of a later action, obviously the award is not a bar to that action.” (Rembrandt Industries, Inc. v. Hodges International, Inc., 38 N.Y.2d 502, 504 [1976].) “The scope of the award and, therefore, its res judicata effect, is an issue properly determinable by the court and not the arbitrators.” ( Id .) “The burden of establishing the identity of the issue or issues is upon the proponent of collateral estoppel, whereas the burden of establishing the absence of a full and fair opportunity to litigate the issue or issues in the prior proceeding is upon the opponent.” (Dimacopoulos v. Consort Development Corp., 158 A.D.2d 658, 659 [2d Dept 1990]; see also QDR Consultants & Development Corp., 251 A.D.2d 641, 643 [2d Dept 1998].)

A determination of a beth din is “in the nature of a common-law award in arbitration ... and acts as a bar to relitigating the same issue that was decided...