DocketNumber: No. 10 Civ. 4506(SAS)
Citation Numbers: 910 F. Supp. 2d 581
Judges: Scheindlin
Filed Date: 11/19/2012
Status: Precedential
Modified Date: 11/26/2022
OPINION AND ORDER
I. INTRODUCTION
Sagi Genger (“Genger”) and TPR Investment Associates, Inc. (“TPR,” together
II. BACKGROUND
This lawsuit arises out of a Canadian real estate venture (“AG Properties”) between Gilad Sharon and Sagi Genger’s father, Arie Genger.
Genger now alleges that Sharon held a fifty percent interest in AG Properties through Omniway, a Cypriot company.
The Omniway Note contained an acceleration clause allowing AG Properties to recover the entire unpaid principal amount and all other amounts payable in an Event of Default:
Upon the occurrence of any Event of Default, the entire unpaid principal balance and all other amounts payable hereunder shall become immediately due and payable, in the case of an Event of Default specified (i) in clause (a) above, at the option of Payee; and (ii) in clauses (b) or (c) above, ipso facto upon occurrence of the Event of Default and without notice, demand, or any further or other action of the payee.13
Clause (a) of the Omniway Note defines an Event of Default as: “Maker’s failure to pay any of the principal of this Note when
In 2003, Arie Genger and Sharon agreed to substitute Lerner Manor, an Israeli company, for Omniway as a fifty percent stockholder of AG Properties for $25,000 consideration.
In 2004 and 2005, AG Properties sold the Lincoln and Durocher properties for a profit.
On October 22, 2007, TPR, AG Properties, Dalia Genger, and D & K Limited Partnership (“D & K”) filed an action in Supreme Court, New York County, against Sharon and Lerner Manor alleging fraud, aiding and abetting breach of fiduciary duty, unjust enrichment, and conversion.
III. LEGAL STANDARD ON A MOTION FOR SUMMARY JUDGMENT
Summary judgment in a defendant’s favor is appropriate only if “there is no genuine dispute as to any material fact and [defendant is] entitled to judgment as a matter of law.”
In deciding these motions, I must “construe the facts in the light most favorable to the non-moving party,” that is, to plaintiffs, “and [] resolve all ambiguities and draw all reasonable inferences against the movant,” that is, against the defendant.
IV. APPLICABLE LAW
A. Claim Preclusion
“When a claim has been fully litigated, the doctrine of claim preclusion generally bars the future litigation both of
New York “has adopted a transactional approach to claim preclusion.”
“The primary purposes of [claim preclusion] are grounded in public policy concerns and are intended to ensure finality, prevent vexatious litigation and promote judicial economy.”
B. Contribution
Contribution provides that one of two or more joint wrongdoers should not be required to pay more than its share of a common burden.
C. Indemnification
Under New York Law, indemnity is a restitution concept permitting shifting the loss to avoid the unjust enrichment of one party at the expense of the other.
Interpreting New York law, the Second Circuit has identified two sets of circumstances in which a right to implied indemnification may exist. First, indemnification can be implied from the special nature of a contractual relationship between two parties; this has been called the “implied contract theory.”
V. DISCUSSION
A. Claim Preclusion
The parties agree that Genger and Sharon were both parties to the 2007 state law claim and that the state court dismissal constituted a final judgment on the merits.
1. The 2007 Lawsuit Does Not Preclude Genger’s Claim for Enforcement of the Omniway Note
Sharon’s investment in AG Properties through the Omniway Note constitutes a distinct transaction from the one at issue in the state court action. The state court action alleged that Sharon defrauded TPR, AG Properties, Dalia Genger, and D & K out of the proceeds from the Canadian real estate venture through a sham transaction.
Moreover, the claims raised in the state court action required different evidence to support them than Genger’s current claim.
2. The Omniway Note’s Acceleration Clause Does Not Bar Genger’s Enforcement Claim
Res judicata bars claims that parties could have raised in prior actions.
Moreover, the confusion surrounding Omniway’s role in the Canadian real estate venture calls into question whether any of the plaintiffs in the 2007 lawsuit could have raised the issue of the Omniway Note in that litigation. As recently as 2011, Sharon denied knowledge of the Omniway Note.
3. Res Judicata Does Not Bar Genger’s Claim for Indemnification and/or Contribution
Res judicata does not bar Genger’s claim for indemnification and/or contribution because the claim stems from a 2011 settlement between Genger and Gusinski.
B. Indemnification and/or Contribution
1. Sharon Failed to Challenge Genger’s Indemnification Claim in His Motion for Summary Judgment
Sharon argues in his reply brief that the Third-Party Complaint does not state a claim for indemnification under New York law.
2. Genger States a Claim for Contribution Under New York Law
Sharon also argues that the Third-Party Complaint does not plead a claim for contribution because New York law permits contribution only among joint tortfeasors.
VI. CONCLUSION
For the foregoing reasons, third-party defendant’s motion for summary judgment is denied. The Clerk of the Court is directed to close the motion for summary judgment. (Docket Entry # 130). A conference is scheduled for November 29 at 3:30.
SO ORDERED.
. See Amended Answer and Third Amended Third-Party Complaint (''Compl.”) ¶ 101.
. See id. ¶¶ 95-96.
. See id.
. See id. ¶¶ 96-98.
. See id. ¶ 99.
. See id. ¶ 100.
.See id. ¶ 105.
. See id. ¶ 101.
. See id.
. See Omniway Note, Ex. A to 10/1/12 Declaration of John Dellaportas, third-party plaintiffs’ counsel, in Opposition to Third Party Defendant's Motion for Summary Judgment (“Dellaportas Dec”), at 2.
. Id.
. Id.
. Id. at 3.
. Id. at 2.
. See Compl. ¶ 109.
. See id. ¶ 104.
. See id. ¶ 112.
. See id. ¶ 105.
. See id. ¶ 113.
. See id. ¶ 114.
. See id.
. See Third-Party Defendant's Memorandum of Law in Support of Motion for Summary Judgment ("Def. Mem.”) at 2.
. See Order Dismissing Complaint, Ex. 3 to 10/5/12 Declaration of Elliot Silverman, third-party defendant’s counsel, in further support of Third-Party Defendant’s Motion for Summary Judgment ("10/5/12 Silverman Dec”), at 3.
. See Brief for Plaintiffs-Appellants TPR Investment Associates, Inc., et al., Ex. 1 to 9/17/12 Declaration of Elliot Silverman, third-party defendant’s counsel, in support of Third Party Defendant’s Motion for Summary Judgment ("9/17/12 Silverman Dec”), at 1-2.
. See id. at 9.
. Id.
. TPR Investment Assoc., Inc. v. Fischer, 87 A.D.3d 876, 929 N.Y.S.2d 138 (1st Dep’t 2011).
. See Gusinski v. Genger, No. 10 Civ. 4506, 2010 WL 4877841, at *1 (S.D.N.Y. Nov. 30, 2010).
. See id. at *2.
. See id. at *1.
. See Compl. ¶¶ 87-127.
. See id. ¶ 90.
. Fed.R.Civ.P. 56(a).
. Fincher v. Depository Trust & Clearing Corp., 604 F.3d 712, 720 (2d Cir.2010).
. Zalaski v. City of Bridgeport Police Dep’t, 613 F.3d 336, 340 (2d Cir.2010).
. Brown v. Eli Lilly & Co., 654 F.3d 347, 358 (2d Cir.2011) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).
. Id.
. Brod v. Omya, Inc., 653 F.3d 156, 164 (2d Cir.2011).
. Brod, 653 F.3d at 164.
. Kaytor v. Electric Boat Corp., 609 F.3d 537, 545 (2d Cir.2010) (quoting Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct 2097, 147 L.Ed.2d 105 (2000)) (emphasis removed).
. Acosta-Pelle v. New Century Fin. Serv., Inc., No. 09 Civ. 2631, 2009 WL 4927634, at *2 (S.D.N.Y. Dec. 17, 2009).
. O’Connor v. Pierson, 568 F.3d 64, 69 (2d Cir.2009).
. McKithen v. Brown, 481 F.3d 89, 104 (2d Cir.2007) (citations and quotation marks omitted).
. O’Brien v. City of Syracuse, 54 N.Y.2d 353, 445 N.Y.S.2d 687, 429 N.E.2d 1158 (1981).
. Xiao Yang Chen v. Fischer, 6 N.Y.3d 94, 810 N.Y.S.2d 96, 843 N.E.2d 723 (2005) (quotation marks and citations omitted).
. /¿. (Citations omitted).
. Id. (quoting Reilly v. Reid, 45 N.Y.2d 24, 28, 407 N.Y.S.2d 645, 379 N.E.2d 172 (1978)).
. See Epstein v. Haas Sec. Corp., 731 F.Supp. 1166 (S.D.N.Y.1990).
. See Fromer v. Yogel, 50 F.Supp.2d 227, 234 (S.D.N.Y. 1999).
. Id.
. See id.
. See Mas v. Two Bridges Assoc., 75 N.Y.2d 680, 555 N.Y.S.2d 669, 554 N.E.2d 1257 (1990)
. See Knight v. H.E. Yerkes & Assoc., Inc., 675 F.Supp. 139, 143 (S.D.N.Y.1987).
. See Trustees of Columbia Univ. in the City of New York v. Mitchell/Giurgola Assoc., 109 A.D.2d 449, 492 N.Y.S.2d 371 (1st Dep't 1985).
. Matter of Poling Transp. Corp., 784 F.Supp. 1045, 1048 (S.D.N.Y.1992) (quoting McDermott v. City of New York, 50 N.Y.2d 211, 428 N.Y.S.2d 643, 406 N.E.2d 460 (1980)).
. Peoples’ Democratic Republic of Yemen v. Goodpasture, Inc., 782 F.2d 346, 351 (2d Cir.1986).
. See id.
. See Third-Party Defendant's Reply Memorandum in Further Support of Motion for Summary Judgment ("Reply Mem.”), at 2.
. See Def. Mem. at 13.
. See id. at 14; Omniway Note at 2.
. See 10/22/07 Complaint, Ex. 1 to 10/5/12 Silverman Dec, at 23.
. See Compl. ¶ 104.
. Sure-Snap Corp. v. State Street Bank & Trust Co., 948 F.2d 869, 874 (2d Cir.1991) (quoting Herendeen v. Champion Int'l Corp., 525 F.2d 130, 133 (2d Cir.1975)).
. See Storey v. Cello Holdings L.L.C., 347 F.3d 370, 383 (2d Cir.2003) ("That both suits involved ‘essentially the same course of wrongful conduct’ is not decisive.") (quoting Lawlor v. National Screen Serv. Corp., 349 U.S. 322, 327-28, 75 S.Ct. 865, 99 L.Ed. 1122 (1955)).
. See American Stock Exchange v. Mopex, Inc., 215 F.R.D. 87, 91 (S.D.N.Y.2002) ("It is well established, under the doctrine of "claim splitting," that a party cannot avoid the effects of res judicata by splitting her cause of action into separate grounds of recovery and then raising the separate grounds in successive lawsuits. Rather, a party must bring in one action all legal theories arising out of the same transaction or series of transactions.") (citations omitted).
. See Interoceanica Corp. v. Sound Pilots Inc., 107 F.3d 86, 91 (2d Cir.1997) ("The fact that both suits involved essentially the same course of wrongful conduct is not decisive; nor is it dispositive that the two proceedings involved the same parties, similar or overlapping facts, and similar legal issues. A first judgment will generally have preclusive effect only where the transaction or connected series of transactions at issue in both suits is the same, that is where the same evidence is needed to support both claims, and where the facts essential to the second were present in the first.”). See also N.L.R.B. v. United Techs. Corp., 706 F.2d 1254, 1260 (2d Cir.1983) ("Whether or not the first judgment will have preclusive effect depends in part on whether the same transaction or connected series of transactions is at issue, whether the same evidence is needed to support both claims, and whether the facts essential to the second were present in the first.”).
. See 10/22/07 Complaint, Ex. 1 to 10/5/12 Silverman Dec, at 23.
. See id. at 25.
. See Compl. ¶ 101.
. See 10/22/07 Complaint, Ex. 1 to 10/5/12 Silverman Dec, at 25. See also Thyroff v. Nationwide Mut. Ins. Co., 460 F.3d 400, 403-04 (2d Cir.2006) ("According to New York law, [cjonversion is the unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner’s rights.’ ”) (quoting Vigilant Ins. Co. of Am. v. Housing Auth. of City of El Paso, Tex., 87 N.Y.2d 36, 637 N.Y.S.2d 342, 660 N.E.2d 1121 (1995)).
. See 10/22/07 Complaint, Ex. 1 to 10/5/12 Silverman Dec, £t 24.
. See Berman v. Sugo LLC, 580 F.Supp.2d 191, 204 (S.D.N.Y.2008) (listing elements of a claim for breach of fiduciary duty).
. See Bank of N.Y. v. First Millennium, Inc., 607 F.3d 905, 918 (2d Cir.2010) ("The doctrine of ... claim preclusion[ ] holds that a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.”) (quoting Monahan v. New York City Dep’t of Corr., 214 F.3d 275, 284 (2d Cir.2000)).
. See Storey, 347 F.3d at 383 ("Claims arising subsequent to a prior action need not, and often perhaps could not, have been brought in that prior action; accordingly, they are not barred by res judicata.”); Sannon Stamm Assocs., Inc. v. Keefe, Bruyette & Woods, Inc., 68 A.D.3d 678, 890 N.Y.S.2d 828 (1st Dep’t 2009) ("since the issues relating to the nonpayment of the subsequent installments of the placement fee had not matured when the Civil Court action was brought for nonpayment of the first installment of the referral fee, and consequently had nevér been litigated, this action is not barred by res judicata”); Southold Sav. Bank v. Fisher, 269 A.D. 748, 749, 54 N.Y.S.2d 269 (2d Dep’t 1945) (bondholder's prior claim for accrued interest and principal did not bar subsequent claims for later interest installments).
. See Omniway Note at 2.
. See 12/14/11 Deposition of Gilad Sharon ("Sharon Dep.”) at 53:10, 144:5-10 (claiming that he “never used Omniway to transact any business”).
. See Genger v. Sharon, No. 10 Civ. 4506, 2012 WL 3854883, at *6 (S.D.N.Y. Sept. 5, 2012).
. See Reilly, 45 N.Y.2d at 28, 407 N.Y.S.2d 645, 379 N.E.2d 172 ("These strong policy bases [underlying res judicata], however, if applied too rigidly, could work considerable injustice.").
. See Compl. ¶ 90.
. See First Millennium, Inc., 607 F.3d at 918 (“Claim preclusion does not bar claims, even between identical parties, that arise after the commencement of the prior action.”).
. See Reply Mem. at 6.
. See Broder v. Cablevision Systs. Corp., 418 F.3d 187, 202 (2d Cir.2005) (arguments first raised in reply brief not properly before court). Accord Emigra Group, LLC v. Fragomen, Del Rey, Bemsen & Loewy, LLP, 612 F.Supp.2d 330, 345 (S.D.N.Y.2009) ("a moving party will not be heard to advance a new argument for the first time in its reply brief.").
. Def. Mem. at 18 n. 6.
. See Shelly v. Doe, 249 A.D.2d 756, 757, 671 N.Y.S.2d 803 (3d Dep't 1998) (discussing the nature of fraudulent conveyance claims under New York law).