Summary
In Massarelli, 167 A.D.3d 1296 (N.Y. App. Div. 2018), New York's Appellate Division considered whether res judicata barred a foreclosure action that was dismissed with prejudice on standing grounds.
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526568
12-20-2018
STATE OF NEW YORK MORTGAGE AGENCY, Respondent, v. Juliane MASSARELLI, Also Known as Juliane O'Brien, Appellant, et al., Defendants.
Timothy R. Shevy, Castleton, for appellant. McCabe Weisberg & Conway PC, New Rochelle (Christopher M. McKniff of counsel), for respondent.
Timothy R. Shevy, Castleton, for appellant.
McCabe Weisberg & Conway PC, New Rochelle (Christopher M. McKniff of counsel), for respondent.
Before: Garry, P.J., McCarthy, Egan Jr., Devine and Clark, JJ.
MEMORANDUM AND ORDER
Devine, J.
Appeal from an order of the Supreme Court (Ryba, J.), entered June 30, 2017 in Albany County, which denied defendant Juliane Massarelli's motion to dismiss the complaint against her.
In 2005, defendant Juliane Massarelli (hereinafter defendant) executed a promissory note and rider that were secured by a mortgage encumbering real property in the City of Albany. The mortgage names HSBC Mortgage Corporation (USA) as the lender. Plaintiff, alleging that defendant had defaulted on her mortgage payments and purporting to be HSBC's assignee, commenced a mortgage foreclosure action in 2012. Defendant raised the affirmative defense of standing in her answer and moved to dismiss the complaint on that ground. The return date of the motion was adjourned twice on consent for about 45 days in total, but plaintiff ultimately failed to submit opposition. Supreme Court (Platkin, J.) accordingly executed an order in 2013, drafted by defendant, that granted the motion and dismissed the complaint "with prejudice."
In 2016, further efforts were made to collect the debt. Defendant alerted plaintiff's new counsel to the dismissal of the 2012 action, but then executed a stipulation that purportedly discontinued the 2012 action "without prejudice." Plaintiff thereafter commenced the present mortgage foreclosure action. Defendant, in lieu of serving an answer, moved to dismiss the complaint as barred by res judicata (see CPLR 3211[a][1], [5] ). Supreme Court (Ryba, J.) denied the motion and directed defendant to serve an answer, and defendant now appeals.
We affirm. " Under the doctrine of res judicata, a party may not litigate a claim where a judgment on the merits exists from a prior action between the same parties involving the same subject matter" ( Matter of Hunter, 4 N.Y.3d 260, 269, 794 N.Y.S.2d 286, 827 N.E.2d 269 [2005] ; see Landau, P.C. v. LaRossa, Mitchell & Ross, 11 N.Y.3d 8, 12, 862 N.Y.S.2d 316, 892 N.E.2d 380 [2008] ). The only one of those elements in dispute here is whether the dismissal of the 2012 action was on the merits, which the use of the term "with prejudice" in the dismissal order would ordinarily indicate (see Yonkers Contr. Co. v. Port Auth. Trans–Hudson Corp., 93 N.Y.2d 375, 380, 690 N.Y.S.2d 512, 712 N.E.2d 678 [1999] ; Jespersen v. Li Sheng Liang, 68 A.D.3d 724, 725, 890 N.Y.S.2d 103 [2009] ; Matter of Coleman v. Coleman, 1 A.D.3d 833, 834, 767 N.Y.S.2d 169 [2003] ). That said, "the circumstances must warrant barring [plaintiff] from further pursuit of [the] claim in order for th[at] phrase[ ] to be given preclusive effect" ( Matter of Stacey O. v. Donald P., 137 A.D.2d 965, 965, 525 N.Y.S.2d 385 [1988] ), which need not occur "if the original determination was actually narrower than would appear from the use of the phrase, or if such construction is otherwise necessary to do justice" (10–5011 Weinstein–Korn–Miller, N.Y. Civ Prac CPLR ¶ 5011.11; see e.g. Jespersen v. Li Sheng Liang, 68 A.D.3d at 725, 890 N.Y.S.2d 103 ).
Defendant used the terms "capacity" and "standing" in her efforts to dismiss the 2012 action (see e.g. Matter of World Trade Ctr. Lower Manhattan Disaster Site Litig., 30 N.Y.3d 377, 384, 89 N.E.3d 1227 [2017] ), but her motion papers reflect that the issue was one of standing (see Aurora Loan Servs., LLC v. Taylor, 25 N.Y.3d 355, 361–362, 34 N.E.3d 363 [2015] ). Regardless of how defendant framed her argument, however, the order of dismissal that resulted from it would not normally be entitled to res judicata effect because it was focused on plaintiff's ability to bring the 2012 action rather than "the merits of the claim" itself ( Landau, P.C. v. LaRossa, Mitchell & Ross, 11 N.Y.3d at 14, 862 N.Y.S.2d 316, 892 N.E.2d 380 ; see Alco Gravure, Inc. v. Knapp Found., 64 N.Y.2d 458, 465, 490 N.Y.S.2d 116, 479 N.E.2d 752 [1985] ; Wells Fargo Bank, N.A. v. Ndiaye, 146 A.D.3d 684, 684, 44 N.Y.S.3d 908 [2017] ; Caliguri v. JPMorgan Chase Bank, N.A., 121 A.D.3d 1030, 1031, 996 N.Y.S.2d 73 [2014], lv denied 25 N.Y.3d 911, 15 N.Y.S.3d 288, 36 N.E.3d 91 [2015] ). To accord res judicata effect to the dismissal order would bar a court from ever addressing the merits of plaintiff's mortgage foreclosure claim, even if plaintiff became able to demonstrate its standing to sue (see Tico, Inc. v. Borrok, 57 A.D.3d 302, 302, 868 N.Y.S.2d 522 [2008] ), and there is nothing in the record to suggest that Supreme Court (Platkin, J.) perceived "exceptional circumstances or an unreasonable neglect to prosecute" that would warrant such an "extreme sanction" ( Matter of Stacey O. v. Donald P., 137 A.D.2d at 965, 525 N.Y.S.2d 385 ; see CPLR 5013 ; Palmer v. Fox, 28 A.D.2d 968, 968, 283 N.Y.S.2d 216 [1967], affd 22 N.Y.2d 667, 291 N.Y.S.2d 361, 238 N.E.2d 751 [1968] ). Moreover, while the subsequent stipulation to discontinue the 2012 action was ineffective as having been entered into after "the case ha[d] been submitted to the court" and dismissed ( CPLR 3217[a][2] ; see CPLR 3217[b] ; Stone Mtn. Holdings, LLC v. Spitzer, 119 A.D.3d 548, 549, 990 N.Y.S.2d 39 [2014] ), it is telling that defendant was willing to disregard the "with prejudice" language in the order of dismissal and instead discontinue the 2012 action "without prejudice." The foregoing circumstances call for a narrow construction of the "with prejudice" language in the order dismissing the 2012 action, and we deem that phrase to "mean no more than that" plaintiff was precluded from commencing a new mortgage foreclosure action until it could establish standing to do so ( Putvin v. Buffalo Elec. Co., 5 N.Y.2d 447, 450, 186 N.Y.S.2d 15, 158 N.E.2d 691 [1959] ). Thus, the dismissal of the 2012 action did not preclude plaintiff from maintaining the present one.
Defendant's remaining argument, to the extent that it is properly before us, has been considered and rejected.
Garry, P.J., McCarthy, Egan Jr. and Clark, JJ., concur.
ORDERED that the order is affirmed, with costs.