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March 14, 2003


The opinion of the court was delivered by: Norman A. Mordue, United States District Judge.



Defendants move to dismiss this contract action under Fed.R.Civ.P. 12(b)(1) on the ground that the claims before this Court are, in effect, a challenge to a state court judgment and are therefore barred by the Rooker-Feldman doctrine. For the reasons set forth below, the motion is denied.


In his complaint, filed June 21, 2002, plaintiff Dale R. Brodeur, Sr. ("Brodeur, Sr.") alleges that defendants William Brodeur and Sean McNamee are or were shareholders, officers and/or employees of defendant Northeast Fabricators, LLC. The complaint further states:

Plaintiff and defendants entered into a valid and enforceable written agreement dated July 24, 1997.
Defendants, at ¶ 8 of the parties' written agreement "agree[d] to hold Dale R. Brodeur, Sr. and IMF harmless from any liability in connection with all indebtedness secured by mortgages upon the premises at 35 William Street, Walton, New York[.]"
Defendant McNamee signed the agreement dated July 24, 1997 as a representative of defendant Northeast Fabricators LLC [and] also signed said agreement in his individual capacity.
Defendant McNamee in the year 2002 breached the agreement of July [24], 1997 by obtaining a judgment against plaintiff for a liability allegedly arising from a purported personal guarantee of a mortgage on the real property 35 William Street, Walton, New York, granted by Fabricated Metals for Electronics, Inc. (a discharged Bankrupt) to the New York State Jobs Development Authority (JDA).
Defendant McNamee, in continuing breach of the parties' agreement of July [24], 199[7], is pursuing collections activity against plaintiff in the State of North Carolina.
Defendants Northeast Fabricators LLC and defendant William Brodeur have not satisfied McNamee's judgment as they are bound to do under the agreement of July [24], 1997.
Defendants Northeast Fabricators LLC and William Brodeur have not defended plaintiff (and are not defending plaintiff) nor have they acted to hold him harmless from the claims of defendant McNamee as they are bound to do under the agreement of July [24], 1997.
(Paragraph numbering and references to exhibits omitted.) Brodeur, Sr. seeks to recover $750,000 plus interest, costs, and attorney's fees. He states that the Court has diversity jurisdiction. See 28 U.S.C. § 1332(a)(1).


In July 2000, Brodeur, Sr. and others commenced an action in New York Supreme Court arising out of business transactions involving the parties herein and others.*fn1 McNamee, who held a promissory note guaranteed by Brodeur, Sr., interposed a counterclaim seeking judgment on the guarantee and subsequently moved for summary judgment on the counterclaim. In opposition to the motion, Brodeur, Sr. sought to interpose a release set forth in a contract dated July 24, 1997, signed by McNamee, Brodeur, Sr. and others. In a decision dated January 18, 2002, Hon. Patrick D. Monserrate, J.S.C. held that Brodeur, Sr. had waived the affirmative defense of release by failing to plead it. Judge Monserrate granted summary judgment to McNamee on the counterclaim, stating:

The motion of McNamee for summary judgment on its counterclaim will be granted. Release is . . . a defense which is waived if the defending party does not either raise it in a pre-answer motion or in the responsive pleading [CPLR 3211(a)(5) and 3211(e)]. Plaintiff Brodeur, Sr. did neither.
The instant case presents the very situation which the statute is designed to prevent. The statute requires a responsive pleading to "plead all matters which if not pleaded would be likely to take the adverse party by surprise or would raise issues of fact not appearing on the face of a prior pleading such as . . . release" [CPLR 3018(b)]. The release alleged here is part of a July 24, 1997 agreement which, defendants assert, was proffered to plaintiffs but rejected. Defendants' attorneys submitted to plaintiffs' then-attorney, Frederick Griffen, a copy of such proposed agreement which had been signed by defendants. However, by letter dated July 29th and copied to Brodeur, Sr., Mr. Griffen represented that Mr. Brodeur, Sr. and IMF refused to sign such agreement. Again on November 13th plaintiffs' substituted counsel sent a letter to William Brodeur and copied to Brodeur, Sr. advising that plaintiffs would not agree to the release proposed in that agreement. Plaintiffs apparently sometime later decided to execute the proposed agreement, without notifying defendants of same. Consequently, Brodeur, Sr.'s assertion of the release as a defense to the guarantee constitutes the sort of surprise which the statute requires be pleaded in the first instance or be waived.

In arguing that this Court lacks subject-matter jurisdiction, McNamee relies on the Rooker-Feldman doctrine, which holds that federal district courts lack subject matter jurisdiction over claims that "effectively challenge state court judgments." Kropelnicki v. Siegel, 290 F.3d 118, 128 (2d Cir. 2002); see D.C. Court of Appeals v. Feldman, 460 U.S. 462, 482; Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923). The doctrine covers matters directly decided in state court as well as matters "inextricably intertwined" with state court determinations. See id.; Hachamovitch v. DeBuono, 159 F.3d 687, 694 (2d Cir. 1998).

The Second Circuit has interpreted the term "inextricably intertwined" to mean "at a minimum, that where a federal plaintiff had an opportunity to litigate a claim in a state proceeding . . . subsequent litigation of the claim will be barred under the Rooker-Feldman doctrine if it would be barred under the principles of preclusion."*fn2 Moccio v. New York State Office of Court Admin., 95 F.3d 195, 199-200 (2d Cir. 1996). In assessing the preclusive effect of a state court judgment, federal courts apply state law. See West v. Ruff, 961 F.2d 1064, 1065 (2d Cir. 1992). New York's law of preclusion comprises two concepts: res judicata (claim preclusion) and collateral estoppel (issue preclusion). See Moccio, 95 F.3d at 200. In New York, collateral estoppel applies when the issue is identical to one which "has necessarily been decided in the prior action and is decisive of the present action," and the party to be estopped had a "full and fair opportunity to contest the decision now said to be controlling." Schwartz v. Public Admin., 24 N.Y.2d 65, 71 (1969). With respect to res judicata, New York has adopted the "transactional analysis" approach, that is, "once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy." O'Brien v. City of Syracuse, 54 N.Y.2d 353, 357 (1981).

On this motion, McNamee contends that the issue presented here — whether the July 24, 1997 agreement protects Brodeur, Sr. from liability upon the guarantee — has already been decided against Brodeur, Sr. in the state court action. Therefore, McNamee urges, under the Rooker-Feldman ...

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