Opinion
16825-06.
Decided September 8, 2008.
Levi Lubarsky Feigenbaum, LLP, New York, New York, COUNSEL FOR PLAINTIFF.
Jeffrey Miller Associates, P.C., New York, New York, COUNSEL FOR DEFENDANT.
Plaintiff, Bank of America N.A. ("Bank"), moves to consolidate this action with another action commenced in this Court, captioned Bank of America, N.A. v.Tri-County Motors, Inc., Index 16834-06 ("Tri-County Action"). The Tri-County Action was assigned to Hon. Ira B. Warshawsky. BACKGROUND
On or about August 17, 2004, the Bank and Defendant, Airport Auto Group, Inc. d/b/a Five Towns Mitsubishi ("Five Towns"), entered into an Auto Group Retail Dealer Agreement ("Agreement") pursuant to which the Bank agreed to purchase from Five Towns certain notes, sales contracts and other agreements evidencing retail sales by Five Towns of new and used automobiles. Under the terms of the Agreement, if the Bank reasonably determined that there was a breach of any of Five Town's representations or warranties with respect to the contracts, Five Towns would be required to repurchase the contract and pay the Bank an amount equal to the repurchase price (the unpaid principal balance plus 18% annual interest). Additionally, the terms provided that any party in breach of the agreement would be required to pay the reasonable costs and expenses the other party incurred in enforcing its rights, including attorney's fees.
On or about May 6, 2005, the Bank entered into an Auto Group Retail Dealer Agreement with Tri-County Motors, Inc. ("Tri-County"). The terms were identical to the Five Towns Agreement.
On October 11, 2006, the Bank commenced actions against both Five Towns and Tri-County. In the Five Towns Action, the complaint alleges that Five Towns breached the Agreement by failing to repurchase four loans upon the Bank's demand and that, as a result, the Bank (1) has been damaged in the sum of $128,485.31 plus interest and (2) is entitled to attorney's fees. In the Tri-County Action, the complaint alleges that Tri-County breached the Agreement by failing to repurchase five loans upon the Bank's demand, and that as a result the Bank (1) has been damaged in the sum of $310,485.97 plus interest, and (2) is entitled to attorney's fees.
DISCUSSION
Actions may be consolidated or tried jointly when they involve common questions of fact or law. CPLR 602(a). When the commonality requirement is met, consolidation is favored by the courts, and should be granted "absent showing of substantial prejudice by the party opposing the motion." Beerman v. Morhaim , 17 AD3d 302 , 303 (2nd Dept. 2005). Consolidation avoids unnecessary duplication of trials, unnecessary court costs and the possibility of inconsistent decisions based upon the same facts. Gutman v. Klein , 26 AD3d 464 (2nd Dept. 2006); and 3-6 New York Civil Practice: CPLR § 602.04.
The party seeking consolidation bears the burden of establishing the commonality requirement. Beerman v. Morhaim, supra. The Bank points out that Five Towns and Tri-County have common principals, both are represented by the same counsel and both are in the same procedural posture. Defendant counters by maintaining that Five Towns and Tri-County are entirely different corporations, comprised of different principals. Defendant concedes that the two corporations have two principals in common (Vladimir Zanan and Lester Wu), but argue that because Clara Shvartzer is a principal of Five Towns and not Tri-County, and that Raymond Lahey is a principal of Tri-County but not of Five Towns, that the two actions cannot be consolidated under CPLR 602(a).
Although Five Towns and Tri-County share an address, they are nonetheless two separate corporations. That the two financing agreements were executed by different principals is evidence of such a fact. Additionally, while Five Towns fails to cite any authority suggesting that consolidation of two actions involving corporations requires 100% common ownership, the lack of such common ownership certainly does not support the Bank's argument that the two companies are essentially the same.
The Bank also argues that because the actions arise from breaches of identical financing agreements, issues of contractual interpretation will be the same. Thus, both actions will likely involve the same or similar kinds of evidence, evidentiary showings and witnesses. Five Towns argues that although the financing agreements are identical, the nine purported breaches set forth by the Bank in the respective complaints arise from nine distinct and unique factual circumstances. Thus, because each factual scenario is different, there are no common issues of fact such that would warrant consolidation of the two actions.
The Bank contends that the transactions are factually similar as well. In each instance, the Bank made a "reasonable determination" that either Five Towns or Tri-County breached one of its representations in the Agreement, the Bank demanded that such Defendant meet its contractual obligation to repurchase the loan and such Defendant subsequently failed to do so.
While there are certain characteristics common to all of the transactions, the fact remains that each was an independent event, with its own unique factual scenario. Although the agreements are identical, the alleged breaches will not be decided primarily by interpreting the contract, as the Bank argues, but rather by viewing the facts surrounding the nine purported breaches. Thus, the evidence will depend on the facts and circumstances unique to each transaction. Where evidence with respect to two actions does not overlap, even where the suits arise from the same series of transactions, motions for consolidation are generally denied. See, RCN Const. Corp. v. Fleet Bank, N.A. , 34 AD3d 776, 777 (2nd Dept. 2006); Aluminum Mill Supply Corp. v. Skyview Metals, Inc., 117 AD2d 765, 767 (2nd Dept. 1986); and JM Mechanical Corp v. Washington Federal Savings Loan Assn., 80 AD2d 884, 886 (2nd Dept. 1981).
Furthermore, consolidation of these cases would not advance the underlying purpose of CPLR 602. The ultimate issues of this case depend on the facts of the underlying breaches, not on how the Court interprets the contract between the parties. Therefore, the risk of inconsistent verdicts will be no greater than if the actions were consolidated. Finally, the failure of Five Towns to demonstrate prejudice to a substantial right is irrelevant, because the Bank has failed to sufficiently show that the two actions present common questions of fact and law. Therefore, the commonality requirement of CPLR 602(a) is not satisfied. Consolidation of these matters is not appropriate.
Accordingly, it is,
ORDERED that Plaintiff's motion to consolidate the Five Towns and Tri-County Actions pursuant to CPLR 602 (a) is denied.
This constitutes the decision and Order of this Court.