Pardalis & Nohavicka, LLP, Astoria, NY (Joseph D.
Nohavicka and Ashley Serrano of counsel), for appellants.
Trivella & Forte, LLP, White Plains, NY (Jonathan
Bardavid of counsel), for respondent Ines Gassmann.
A. Pollack, Bayside, NY, respondent pro se, and for
respondents Jack I. Slepian and Pollack & Slepian, LLP
(adopting the brief filed by the respondent Ines Gassmann).
C. BALKIN, J.P., L. PRISCILLA HALL, HECTOR D. LASALLE, BETSY
DECISION & ORDER
action, inter alia, to recover damages for breach of
fiduciary duty, legal malpractice, and fraud, the plaintiffs
appeal from an order of the Supreme Court, Queens County
(Nahman, J.), dated October 14, 2015, which denied their
motion pursuant to CPLR 4404(b) to set aside a decision and
order of the same court dated May 20, 2015, made after a
nonjury trial on the issue of res judicata, which directed
the dismissal of the complaint as barred by the doctrine of
that the order dated October 14, 2015, is reversed, on the
law, with one bill of costs payable by the respondents
appearing separately, the plaintiffs' motion pursuant to
CPLR 4404(b) to set aside the decision and order dated May
20, 2015, is granted, and the matter is remitted to the
Supreme Court, Queens County, for a trial on the merits in
2008, the plaintiffs commenced an action (hereinafter the
2008 action) against the defendants Martin A. Pollack, Jack
I. Slepian, Pollack & Slepian, LLP, Ines Gassmann, and
Michele Damato (hereinafter collectively the defendants). In
that action, the plaintiffs alleged that in December 2007,
Pollack & Slepian, LLP (hereinafter the defendant law
firm) represented them as sellers in a real estate
transaction. The plaintiffs alleged that the proceeds of the
transaction were to be disbursed between themselves,
Gassmann, and Damato pursuant to the terms of a contract
dated August 29, 2007. They alleged that the sale of the
property closed on December 20, 2007, but that the
defendants, inter alia, breached the contract by failing to
properly disburse to them their share of the proceeds of the
sale. In February 2011, the plaintiffs and the defendants
settled the 2008 action, and the plaintiffs executed a
release which, for certain consideration, released the
defendants from any and all claims "that are the subject
of [the 2008 action]."
2011, the plaintiffs commenced the instant action against the
defendants, among others. They asserted, inter alia, causes
of action to recover damages for legal malpractice and breach
of fiduciary duty against Pollack, Slepian, and the defendant
law firm, and fraud against all of the defendants. They
alleged that the purchaser of the subject property at the
2007 closing, Tatiana Bell Corp., had been formed by the
defendant law firm "for the purpose of buying the
premises at a lower price and selling it on the same day for
more money." They alleged that, within an hour of their
sale of the subject property to Tatiana Bell Corp., the
property had been resold to another purchaser for more money.
They asserted that the defendants had fraudulently concealed
the existence and terms of the second transaction, thereby
depriving them of the opportunity to recover their shares of
the proceeds from that second transaction.
a nonjury trial on the issue of whether the instant action
was barred by the doctrine of res judicata, the Supreme Court
determined, in a decision and order dated May 20, 2015, that
the instant action was so barred, and directed dismissal of
the complaint. Thereafter, the plaintiffs moved pursuant to
CPLR 4404(b) to set aside the court's decision and order.
The court denied the motion, and the plaintiffs appeal.
the doctrine of res judicata, a disposition on the merits
bars litigation between the same parties, or those in privity
with them, of a cause of action arising out of the same
transaction or series of transactions as a cause of action
that either was raised or could have been raised in the prior
proceeding'" (Bayer v City of New York, 115
A.D.3d 897, 898, quoting Abraham v Hermitage Ins.
Co., 47 A.D.3d 855, 855). "Pursuant to the doctrine
of res judicata, a valid final judgment, or a stipulation of
settlement withdrawing a cause of action with prejudice,
' bars future actions between the same parties on the
same cause of action" (Matter of Chiantella v
Vishnick, 84 A.D.3d 797, 798 [internal citations
omitted]; see CPLR 3217[a]; North Shore-Long
Is. Jewish Health Sys., Inc. v Aetna U.S. Healthcare,
Inc., 27 A.D.3d 439, 440; Matter of State of New
York v Seaport Manor A.C.F., 19 A.D.3d 609, 610).
the Supreme Court erred when it determined that the instant
action was barred by the doctrine of res judicata. At trial,
the defendants did not proffer a stipulation of settlement or
discontinuance showing that the plaintiffs withdrew the
causes of action in the 2008 action "with
prejudice" (see Maurischat v County of Nassau,
81 A.D.3d 793, 794; Maurischat v County of Nassau,
305 A.D.2d 470, 471). An action is not automatically
terminated with prejudice merely because the parties reached
a settlement (see Teitelbaum Holdings v Gold, 48
N.Y.2d 51; Incorporated Vil. of Hewlett Harbor v
Bouzalglo, 131 A.D.3d 512, 513; Salvador v Town of
Lake George Zoning Bd., 130 A.D.3d 1334, 1335).
a valid release constitutes a complete bar to an action on a
claim that is the subject of the release" (Nucci v
Nucci, 118 A.D.3d 762, 763). " However, a release
may not be read to cover matters which the parties did not
intend to cover'" (id. at 763, quoting
Desiderio v Geico Gen. Ins. Co., 107 A.D.3d 662,
663). "[I]ts meaning and coverage necessarily depend, as
in the case of contracts generally, upon the controversy
being settled and upon the purpose for which the release was
actually given" (Cahill v Regan, 5 N.Y.2d 292,
299; see Matter of Mercer, 141 A.D.3d 594, 597).
Here, as the plaintiffs correctly contend, the subject
release only covered the causes of action alleged in the
plaintiffs' 2008 complaint, which sought to recover sums
allegedly owed in the first sale of the property, and did not
encompass the causes of action set forth in the instant
action, which seek, inter alia, to recover sums resulting
from a second sale of the property by Tatiana Bell Corp.
the Supreme Court should have granted the plaintiffs'
motion pursuant to CPLR 4404(b) to set aside the decision and
order dated May 20, 2015, which directed the dismissal of the
action based upon the doctrine of res judicata. The matter
must be remitted to the ...