Sapphire Inv. Ventures, LLC v. Mark Hotel Sponsor LLC
| Decision Date | 17 July 2013 |
| Docket Number | Index No. 600905/2010 |
| Citation | 2013 NY Slip Op 31564 |
| Parties | SAPPHIRE INVESTMENT VENTURES, LLC, and RUBY INVESTMENT VENTURES, INC., Plaintiffs v. MARK HOTEL SPONSOR LLC, MARK HOTEL OWNERS CORP., and ALEXICO GROUP LLC, Defendants |
| Court | New York Supreme Court |
For Plaintiffs
Jerome Tarnoff Esq. and Y. David Scharf Esq.
Morrison Cohen LLP
Jeffrey L. Braun Esq.
Kramer Levin Naftalis & Frankel LLP
I. BACKGROUND
This action concerns the renovation by defendant developer Alexico Group LLC of the historic landmark Mark Hotel at 25 East 77th Street, New York County, owned by defendant Mark Hotel Owners Corp., to convert the hotel into luxury hotel units on the lower eight floors and residential cooperative units on the upper floors. The cooperative offering plan listed defendant Mark Hotel Sponsor LLC as the sponsor.
Plaintiffs seek rescission of a purchase agreement between them and defendant Mark Hotel Sponsor LLC for one of theresidential cooperative units defendant Sponsor offered for sale pursuant to the cooperative offering plan, N.Y. Gen. Bus. Law § 352-e, and declaratory relief nullifying the Sponsor's notice of plaintiffs' default in refusing to proceed with closing of the sale. Plaintiffs seek further equitable relief of specific performance requiring the Sponsor to file an amended offering plan with the New York State Attorney General and return of plaintiffs' downpayment. Plaintiffs also seek damages covering losses beyond the downpayment, due to the Sponsor's breach of contract and breach of the covenant of good faith and fair dealing, and due to all defendants' fraudulent inducement, negligent misrepresentation, and deceptive trade practices. N.Y. Gen. Bus. Law § 349.
Defendants move to dismiss the amended complaint based on documentary evidence and on res judicata or collateral estoppel, C.P.L.R. § 3211(a)(1) and (5), claiming the Attorney General's ruling dated January 15, 2010, bars plaintiffs' action. The Attorney General determined that the Sponsor's nondisclosure of more than $23,000,000 in mortgages encumbering the hotel property did not constitute an omission materially adverse to plaintiffs, entitling them to rescind their contract. For the reasons explained below, the court denies defendants' motion.
II. DOCUMENTARY EVIDENCE
Upon defendants' motion to dismiss plaintiffs' claims pursuant to C.P.L.R.§ 3211(a)(1), the court may not rely on facts alleged by defendants to defeat the claims unless the evidence isin admissible documentary form, demonstrates the absence of any significant dispute regarding those facts, and completely negates the allegations against defendants. Lawrence v. Graubard Miller, 11 N.Y.3d 588, 595 (2008); Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326 (2002); Leon v. Martinez, 84 N.Y.2d 83, 87-88 (1994); Greenapple v. Capital One, N.A., 92 A.D.3d 548, 550 (1st Dep't 2012). Defendants rely primarily on the Attorney General's January 2010 ruling. The uncertified copy of the Attorney General's determination is inadmissible. C.P.L.R. §§ 4520, 4540(a) and (b); Consolidated Edison Co. of N.Y. v. Allstate Ins. Co., 283 A.D.2d 322, 323 (1st Dep't 2001), aff'd, 98 N.Y.2d 208 (2002); People v. Sikorski, 280 A.D.2d 414 (1st Dep't 2001); People v. James, 4 A.D.3d 774, 775 (4th Dep't 2004); People v. Smith, 258 A.D.2d 245, 249-50 (4th Dep't 1999). See People v. Casey, 95 N.Y.2d 354, 362 (2000); People v. Brown, 221 A.D.2d 270, 271 (1st Dep't 1995); People v. Dockery, 98 A.D.3d 1308, 1309 (4th Dep't 2012); Fiorentino v. TEC Holdings, LLC, 78 A.D.3d 766, 767 (2d Dep't 2010).
Defendants also present the offering plan and purchase agreement in support of the motion, but these documents also are unauthenticated and thus inadmissible. The offering plan, insofar as it may have been filed with the Attorney General, for example, is uncertified by that office. Nor does any witness authenticate the offering plan or, assuming defendants present it for the truth of its contents, lay a foundation for its admissibility as an exception to the rule against hearsay.Insofar as defendants offer the purchase agreement to bind plaintiffs, no witness attests to plaintiffs' signature or to circumstantial authentication. Colbourn v. ISS Intl. Serv. Sys., 304 A.D.2d 369, 370 (1st Dep't 2003); Acevedo v. Audubon Mgt., 280 A.D.2d 91, 95 (1st Dep't 2001); Fields v. S & W Realty Assoc., 301 A.D.2d 625 (2d Dep't 2003); Bank of New York v. Dell-Webster, 23 Misc. 3d 1107 (Sup. Ct. Bronx Co. 2008). See Yonkers Ave. Dodge. Inc. v. BZ Results, LLC, 95 A.D.3d 774 (1st Dep't 2012); 225 Fifth Ave. Retail LLC v. 225 5th, LLC, 78 A.D.3d 440, 441-42 (1st Dep't 2010); Singer Asset Fin. Co., LLC v. Melvin, 33 A.D.3d 355, 357-58 (1st Dep't 2006); Bell Atl. Yellow Pages Co. v. Padded Wagon, 292 A.D.2d 317, 318 (1st Dep't 2002).
Since defendants fail to support their motion with evidence in admissible form, the court denies dismissal on the grounds of documentary evidence. Greenapple v. Capital One, N.A., 92 A.D.3d at 550; Advanced Global Tech., LLC v. Sirius Satellite Radio, Inc., 44 A.D.3d 317, 318 (1st Dep't 2007); 1911 Richmond Ave. Assoc., LLC v. G.L.G. Capital, LLC, 60 A.D.3d 1021, 1022 (2d Dep't 2009). See Muhlhahn v. Goldman, 93 A.D.3d 418, 419 (1st Dep't 2012). Even considering the document on which defendants primarily rely, the Attorney General's ruling, it does not negate plaintiffs' claims, as discussed below.
III. RES JUDICATA AND COLLATERAL ESTOPPEL
Under the doctrine of res judicata or claim preclusion, a final judgment on a claim bars future actions between the sameparties based on the same claim or other claims arising from the same transactions between the parties. Landau v. LaRossa, Mitchell & Ross, 11 N.Y.3d 8, 12 (2008); Josey v. Goord, 9 N.Y.3d 386, 389-90 (2007); Matter of Hunter, 4 N.Y.3d 260, 269 (2005); Parker v. Blauvelt Volunteer Fire Co., 93 N.Y.2d 343, 347 (1999). The judgment must be on the merits to give it preclusive effect. Landau v. LaRossa, Mitchell & Ross, 11 N.Y. 3d at 13; Kalisch v. Maple Trade Fin. Corp., 35 A.D.3d 291 (1st Dep't 2006); Espinoza v. Concordia Intl. Forwarding Corp., 32 A.D.3d 326, 328 (1st Dep't 2006). Under New York's transactional approach, the final judgment on the merits also bars all other claims arising from the transaction, even if based on different theories or seeking different relief. Josey v. Goord, 9 N.Y.3d at 389-90; Parker v. Blauvelt Volunteer Fire Co., 93 N.Y.2d at 347; U.S. Bank N.A. v. GreenPoint Mtge. Funding, Inc., 105 A.D.3d 639, 640 (1st Dep't 2 013); Grezinsky v. Mount Hebron Cemetery, 52 A.D.3d 202 (1st Dep't 2008). Res judicata also bars claims against a nonparty to a prior proceeding whose liability depends on the liability of a party found not liable in that proceeding, Simmons v. New York City Health & Hosps. Corp., 71 A.D.3d 410 (1st Dep't 2010); Marinelli Assoc. v. Helmsley-Noyes Co., 265 A.D.2d 1, 7 (1st Dep't 2000); Fuentes v. Brookhaven Mem. Hosp., 10 A.D.3d 384, 385-86 (2d Dep't 2004), or whose interests otherwise were represented by the party in the prior proceeding, such the nonparty was in privity with the party. Green v. Santa Fe Indus., 70 N.Y.2d 244, 253 (1987); Fabiano v. Philip Morris Inc.,54 A.D.3d 146, 149 (1st Dep't 2008).
Collateral estoppel bars a party from pursuing a claim necessarily decided in a previous action where there was a full and fair opportunity to litigate the issue, and the party pursuing the claim is the same. Tydings v. Greenfield, Stein & Senior, LLP, 11 N.Y.3d 195, 199 (2008); City of New York v. Welsbach Elec. Corp., 9 N.Y.3d 124, 128 (2007); Buechel v. Bain, 97 N.Y.2d 295, 303-304 (2001); Martin v. Safeco Ins. Co. of Am., 19 A.D.3d 221 (1st Dep't 2005). For res judicata or collateral estoppel to apply, the claim or issue must have been resolved against the party now seeking to raise the issue or against another party in privity with the current claimant. Buechel v. Bain, 97 N.Y.2d at 3 03; BDO Seidman LLP v. Strategic Resources Corp., 70 A.D.3d 556, 560 (1st Dep't 2010); Green v. Santa Fe Indus., 70 N.Y.2d at 253; Kinberg v. Kinberg, 59 A.D.3d 236, 237 (1st Dep't 2009).
Res judicata and collateral estoppel apply to prior administrative agency determinations, as long as the agency employed "procedures substantially similar to those used in a court of law." ABN AMRO Bank, N.V. v. MBIA Inc., 17 N.Y.3d 208, 226 (2011); Staatsburg Water Co. v. Staatsburg Fire Dist., 72 N.Y.2d 147, 153 (1988); Ryan v. New York Tel. Co., 62 N.Y.2d 494, 499 (1984); Metro-North Commuter R.R. Co. v. New York State Exec. Dept. Div. of Human Rights, 271 A.D.2d 256, 257 (1st Dep't 2000). The preclusive effect of an administrative decision depends on four criteria. (1) The agency's adjudication was within itsauthority. (2) The agency's procedures ensured adequate testing of evidence, finding of facts, and consideration of issues. (3) The parties expected to be finally bound by the adjudication. (4) Preclusive effect is consistent with the agency's administrative need for flexibility in modifying prior decisions to adapt policy to changing conditions. Allied Chem. v. Niagara Mohawk Power Corp., 72 N.Y.2d 271, 276-77 (1988).
New York General Business Law § 352-e and its implementing regulations authorize the Attorney General to determine disputes regarding downpayments toward purchases of cooperative units that have required the filing of an offering plan with the Attorney General. 13 N.Y.C.R.R. § 21.3(1)(3)(viii)(a). See Madison Park Owner LLC v. Schneiderman, 93 A.D.3d 555 (1st Dep't 2012); Dunlop Dev. Corp. v. Spitzer, 26 A.D.3d 180 (1st Dep't 2006). The Attorney General's procedures in making that determination, however, are not sufficiently judicial to apply the preclusion doctrine. ABN AMRO Bank, N.V. v....
To continue reading
Request your trial