Opinion
16452/09.
June 14, 2010.
The following papers numbered 1 to 12 read on this motion by defendants for an order pursuant to CPLR 2221 to renew and/or reargue defendants' motion for summary judgment made on November 6, 2009, and upon renewal and/or reargument, for an order pursuant to CPLR 3212 dismissing the complaint.
PAPERS NUMBERED Notice of Motion-Affirmation-Exhibits ........................... 1-4 Affirmation in Opposition-Affidavit-Exhibits .................... 5-8 Reply Affirmation-Exhibits ...................................... 9-12Upon the foregoing papers it is ordered that defendants motion for an order pursuant to CPLR 2221 to renew and/or reargue defendants' motion for summary judgment made on November 6, 2009, and upon renewal and/or reargument, for an order pursuant to CPLR 3212 dismissing the complaint upon the grounds that the causes of action are barred by res judicata and/or collateral estoppel, the applicable Statutes of Frauds, and the Statute of Limitations, is decided as follows:
Initially, the present motion seeks relief previously sought in defendants' motion for summary judgment made November 6, 2009 which was denied in an Order dated March 5, 2010, with leave to renew the motion upon submission to the Court of a certification pursuant Court Rule 130.1.1(a). Defendants have annexed to there papers their counsel's "Certification Pursuant to 22 NYCRR § 130-1.1(a). As such, the branch of the motion seeking renewal and/or reargument is granted and this Court shall entertain this motion.
According to the complaint, plaintiff Pang claims that defendants promised to make him a shareholder in Synlyco if he worked for free for more than two years (from about 1992 to1994) and merged his existing refrigeration business with Synlyco. Plaintiff commenced this action on June 22, 2009, and has asserted three causes of action each of which are predicated on Pang's ownership of stock in Synlyco. The First Cause of Action is for defendant's breach of their "promise" to give Pang his stock certificates. The Second Cause of Action consists of two paragraphs and alleges unjust enrichment for Synlyco's failure to give Pang his stock certificates. The third cause of action is for fraud based upon defendants' inducement of Pang to work for Synlyco upon the false promise that he would be permitted to become an owner if he worked for free for "more than two years" and merged his existing refrigerator business into Synlyco. Specifically, Pang alleges that "Wally Poon, and Chak Sing (Jackie) Wai promised that the plaintiff would be a shareholder in consideration of the plaintiff's unpaid full time salary for more than two years." In their Answer, defendants denied these allegations and asserted the affirmative defenses of Res Judicata, collateral estoppel, Statute of Frauds and Statute of Limitations. Defendants now move for summary judgment and plaintiff opposes their motion.
Regarding the branch of the motion seeking dismissal based upon res judicata grounds, this doctrine holds that, as to the parties in a litigation and those in privity with them, a judgment on the merits by a court of competent jurisdiction is conclusive of the issues of fact and questions of law necessarily decided therein in any subsequent action. This principle is necessary to conserve judicial resources since it discourages redundant litigation. It is grounded on the premise that once a party has been afforded a full and fair opportunity to litigate a particular issue, that person may not be permitted to do so again. See,Barbieri v Bridge Funding, 5 AD3d 414 (2d Dept 2004.) The doctrine of res judicata is applicable not only to claims actually litigated and resolved in a prior action but also "claims for different relief against the same party which arise out of the same factual grouping or transaction, and which should have or could have been resolved in the prior proceeding."Mahler v. Campagna, 60 A.D.3d 1009 (2nd Dept. 2009.)
In June, 2006, Pang filed a Notice and Petition in Kings County Supreme Court against Synlyco, Ltd asserting that he was an owner of forty (40) shares of the company, and demanding to inspect its books and records. Synlyco denied Pang's claims in its Verified Answer. Pang moved to compel discovery and Synlyco cross-moved for dismissal. The cross-motion to dismiss Pang's Special Proceeding was granted by the Decision and Order of Judge Larry D. Martin, J.S.C. (Kings County) June 10, 2008. Judge Martin found that Pang was not a shareholder and stated in relevant part:
Petitioner's motion is denied. Petitioner presents no documentary proof of his status as a shareholder. Defendant, by contrast, submits both the original Shareholder's Agreement dated July 10, 1992 and a subsequent agreement dated April 1st, 1998. Neither agreement list Petitioner as a shareholder. (Petitioner alleges that he became a shareholder in 1992 as a result of "Sweat Equity" labor and maintains he contributed to Defendant company, but submits no written agreement or memorandum of in support of his claim.
Pang filed an appeal of the 2008 Decision and Order but did not perfect it.
A general prerequisite to invocation of res judicata is the existence of a final judgment, i.e., a final judicial determination which necessarily decided the very cause of action or issue that a party now seeks to litigate in a subsequent action or proceeding. The instant action arises from the same transaction or occurrence as did the 2006 Action. Plaintiff incorrectly argues that the 2006 Pang Petition was neither determined on the merits nor finally determined. The 2006 Pang Special Proceeding sought enforcement of Pang's alleged right as a shareholder to disclosure from Synlyco, Ltd. Thus, proof of shareholder status was a prima facie element of relief Pang sought and Judge Martin denied Pang disclosure upon the ground that he was required to prove that he was one of the shareholders and he had not done so. Thus, the basis for the dismissal of Pang's 2006 Special Proceeding was that Pang was not a shareholder and was based on the merits. Secondly, Judge Martin's Decision and Order was final because it determined all the issues in the Special Proceeding and thereafter, the case was marked "disposed" by the Court. Moreover, Pang made no further attempts to litigate the Special Proceeding after the Decision and Order was issued. Finally, the Decision and Order is procedurally final and binding because Pang served a notice of appeal of the Decision and Order but never perfected it.
Plaintiff's claim that, the case was not decided on the merits since in the prior action he was merely requesting permission to obtain discovery is misplaced. Such disclosure required Pang to be a shareholder and his alleged status as a shareholder was his only basis for obtaining this disclosure. Thus, the entire Special Proceeding was resolved by the Court's decision that Pang was not a shareholder. Accordingly, since the present action involves the same issues as the 2006 Special Proceeding, it is barred by the doctrine of res judicata.
Regarding the branch of the motion seeking dismissal on the grounds of collateral estoppel grounds, this doctrine "is grounded in the facts and realities of a particular litigation, rather than rigid rules. Collateral estoppel precludes a party from relitigating in a subsequent action or proceeding an issue raised in a prior action or proceeding and decided against that party or those in privity. The policies underlying its application are avoiding relitigation of a decided issue and the possibility of an inconsistent result. Two requirements must be met before collateral estoppel can be invoked. There must be an identity of issue which has necessarily been decided in the prior action and is decisive of the present action, and there must have been a full and fair opportunity to contest the decision now said to be controlling The litigant seeking the benefit of collateral estoppel must demonstrate that the decisive issue was necessarily decided in the prior action against a party, or one in privity with a party. The party to be precluded from relitigating the issue bears the burden of demonstrating the absence of a full and fair opportunity to contest the prior determination. Buechel v. Bain, 97 N.Y.2d 295 (2001) (citations omitted.)
Here, the issues of whether Pang owned stock in Synlyco was material in the prior proceeding and this was conclusively determined by Judge Martin in the negative and thereupon dismissed the Special Proceeding expressly because Pang had no proof of ownership. Moreover, Pang, who was represented by the same counsel who represents him in the instant action, fully litigated his ownership interest in Synlyco in the Special Proceeding and opposed Synlyco's motion to dismiss, and attempted to prove his ownership interest in Synlyco with briefs, affidavits and documentary submissions to the Court. As such, the issue of whether Pang is a shareholder in Synlyco is identical to the issue presented in the 2006 Special Proceeding. Plaintiff's attempt to distinguish the present case from the 2006 Special Proceeding is in vain since in the instant case, his claims for compensation depend upon him being a shareholder of Synlyco. Moreover, Plaintiff has already made the arguments that he was promised stock but did not receive it in the 2006 Special Proceeding. Based on the above, plaintiff Pang is barred by the doctrine of collateral estoppel from relitigating his alleged status as a shareholder. Kane v. City of New York, 287 A.D.2d 600 (2d Dep't 2001.)
Regarding the branch of the motion seeking dismissal on the grounds of the Statute of Frauds, NY Gen Ob. Law § 5-701 states that, "Every agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent, if such agreement, promise or undertaking: 1. By its terms is not to be performed within one year from the making thereof . . ."
Here, Pang alleges that "Wally Poon, and Chak Sing (Jackie) Wai promised that the plaintiff would be a shareholder in consideration of the plaintiff's unpaid full time salary for more than two years." Thus, by Pang's own allegations, the alleged contract could not have been performed within one year and falls within the Statute of Frauds (NY Gen Ob. Law § 5-701(1), accordingly, the breach of contract claim falls within the Statute of Frauds, and is barred. Since Pang's unjust enrichment claim is based on an alleged contract that is barred by the Statute of Frauds, this claim is likewise barred. (Tallini v. Business Air, Inc., 148 AD2d 828, 538 NYS2d 664 [3rd Dept. 1989] [plaintiff's claim that he was denied commissions which he was entitled to under a theory of unjust enrichment depends on proof of the oral contract which is barred by the Statute of Frauds and is therefore also barred by the Statute of Frauds.]) Similarly, Pang cannot assert a claim for fraud where the fraud is based on the same unenforceable oral promises which constituted the alleged breach of contract. ( see, Bernbach v. Camp Wah-nee in the Berkshires, 176 AD2d 304 (2nd Dept. 1991.) In this case, misrepresentations alleged by Pang consist of the false promise to give him stock, which is also the basis for his breach of contract claim. The Court notes that contrary to Pang's assertion, the promissory estoppel exception to the Statute of Frauds does not apply since the promise of stock was not "clear and unambiguous promise. (Gurreri v. Associates Ins. Co., 248 AD2d 356 (2nd Dept. 1998) Specifically, it failed to set forth "the duration of plaintiff's employment, the specifics of the plan in which plaintiff is to participate, what plaintiff's "opportunity" entails, or the amount of money plaintiff would receive from the stock." Id. at 743.) Nor does Pang allege the length of time he was required to work nor the terms of the shareholders' agreement he would be receiving. Based on the above, all of plaintiff's claims are barred by the Statute of Frauds.
Finally, the Court shall address the branch of the motion seeking dismissal of the plaintiff's causes of action on the grounds of the Statute of Limitations. Pang's first cause of action is for breach of contract. The statute of limitations for a breach of contract action is six years. See, CPLR § 213(2). The statute of limitations begins to run when the cause of action accrues (see, CPLR § 203(a)) which for a breach of contract cause of action is upon the breach. (Ely-Cruikshank Co., Inc. v. Bank of Montreal 81 NY2d 399 501 (1993.) Here, Pang alleges that "In or about 1992. . . .Wally Poon, and Chak Sing (Jackie) Wai promised that the defendant, Synlyco, Ltd. would give the plaintiff twenty (20) percent ownership of the defendant Synlyco, Ltd." Pang further alleges the promise of ownership was based on "the plaintiff's merging his refrigerator repair service, including equipment and parts, along with the plaintiff's complete office supplies, to the defendant, Synlyco, Ltd." and "in consideration of the plaintiff's unpaid full time salary for more than two years". Finally, Pang has acknowledged that he joined his business with Synlyco in 1992 and stopped working for Synlyco in 1994 but did not receive his stock. Thus, by Pang's own allegations, Synlyco was obligated to give him his stock in 1994 and the breach occurred in 1994 when Synlyco did not give Pang his stock. Because the breach occurred fifteen years ago, Pang's present breach of contract claim is not timely. Pang's argument that defendants made oral misrepresentations a couple times, in 1992, 1993, 1994 and 2005 and this extended the Statute of Limitations is misplaced. According to the General Obligations Law, the evidence of a "renewed promise" to perform a contract must be in writing and Pang does not claim such exists. Gen. Ob. Law § 17-101.
Pang's Second Cause of Action is for "unjust enrichment" and the applicable Statute of Limitations is three years. CPLR § 214(3) See, also,Ingrami v. Rovner, 45 AD3d 806 (2nd Dept. 2007.]. The statute of limitations for an unjust enrichment claim begins to run upon the occurrence of the wrongful act giving rise to the duty of restitution Id. at 135. Here, the only wrongful act alleged in the Second Cause of Action is the "refusal to give a stock certificate to the plaintiff" which occurred in 1994, about fifteen years ago, and as a result, his unjust enrichment claim is not timely.
Pang's Third Cause of Action for Fraud and is governed by the six year Statute of Limitations. See, CPLR § 213(8). A fraud claim accrues at the time that plaintiff possesses knowledge of facts from which fraud could have been discovered with reasonable diligence. (Town of Poughkeepsie v. Espie, 41 AD3d 701 (2nd Dept. 2007.) Here, Pang alleges he was fraudulently induced by false promises of stock to merge his refrigerator business into Synlyco and work for free for two years. Pang alleges that he stopped working for Synlyco in 1994 but did not receive his stock. As such, the fraud claim accrued fifteen years ago in 1994 when he was entitled to his stock, but did not receive it. Accordingly, Pang's fraud claim is not timely and should be dismissed.
Pang's allegations that additional misrepresentations took place in 1992, 1993, 1994, and 2005 do not prevent this bar. First, this claim lacks specificity and is not alleged clearly or even cryptically in the complaint. Second, his fraud claims which accrued between 1992, 1993, 1994 would still be untimely. Regarding the 2005 claim, this took place nine years after Plaintiff claims that he was entitled to his stock and did not receive such. Finally, Plaintiff does not make out the elements of a fraud claim in 2005 since he does not set forth the fraudulent statements that induced him to refrain from commencing a timely action.Jones v. Safi, 58 AD3d 603 (2nd Dept., 2009.)
To summarize, for the reasons set forth above, the defendants' motion for an order pursuant to CPLR 2221 to renew and/or reargue defendants' motion for summary judgment made on November 6, 2009 is granted
Upon renewal and/or reargument, this Court grants defendants' motion for an order pursuant to CPLR 3212 dismissing the complaint upon the grounds that the causes of action are barred by res judicata, and/or collateral estoppel, and the applicable Statutes of Frauds, and the Statute of Limitations.