Opinion
No. 21387/2011.
11-24-2014
Sam SHERMAN, Plaintiff, v. Alex MULERMAN, Branislava Silver and Randall Rogg, Defendants.
Barry R. Feerst, Esq., Brooklyn, for Plaintiff. Malvina Lin, Esq., Brooklyn, for Defendants Mulerman and Silver. Avrohom Gefen, Esq., Lake Success, for Defendant Rogg.
Barry R. Feerst, Esq., Brooklyn, for Plaintiff.
Malvina Lin, Esq., Brooklyn, for Defendants Mulerman and Silver.
Avrohom Gefen, Esq., Lake Success, for Defendant Rogg.
Opinion
CAROLYN E. DEMAREST, J.
In this action by plaintiff Sam Sherman (Sherman) against defendants Aleksey Mulerman, sued herein as Alex Mulerman (Mulerman), Bronislava Silver, sued herein as Branislava Silver (Silver), and Randall Rogg (Rogg), Mulerman and Silver move, under motion sequence number two, for an order: (1) granting them summary judgment, pursuant to CPLR 3212, dismissing Sherman's complaint and/or each cause of action contained therein as against them, (2) awarding them summary judgment in their favor on their second counterclaim, and (3) upon the granting of summary judgment, directing that there be a further offer of proof by affirmation or a hearing in order to determine the exact sum of damages to which they are entitled to recover from Sherman, which represents the costs, disbursements, and reasonable attorney's fees incurred by them. Rogg cross-moves, under motion sequence number three, for summary judgment dismissing Sherman's complaint as against him, pursuant to CPLR 3212, in its entirety, with prejudice.
BACKGROUND
Sherman was the owner of 50% of the shares of common stock (the shares) of A–Express Limo Inc., Apex Car & Limousine Service, Inc., Apex Limousines Inc., Apex PFR, Inc., Apex International Limousine, Inc., and SAS International Group, Ltd., and he held 33.33% of the membership units (the units) of Apex Coach, LLC (these entities are collectively referred to as the Apex companies), which are limousine businesses offering different categories of black car and limousine transportation services and which all conduct business at the location of 400 Hamilton Avenue, in Brooklyn, New York. Silver and Mulerman are the other shareholders and members of the Apex companies. Rogg was the certified public accountant for the Apex companies.
On January 9, 2009, Sherman commenced an action entitled A–Express Limo Inc. v. Mulerman (Sup Ct, Kings County, index No. 476/09) (the A–Express action), both individually and derivatively on behalf of the Apex companies, seeking to enjoin and restrain Mulerman and Silver from interfering with the operation of these businesses. Thereafter, Silver and Mulerman, as purchasers, entered into a Share Purchase Agreement, dated April 8, 2009 (the April 8, 2009 purchase agreement), with Sherman, as seller, to purchase Sherman's shares and units in the Apex companies upon certain stated terms and conditions, which was executed in order to settle the A–Express action. By a stipulation signed on April 9, 2009, the A–Express action was discontinued.
On July 22, 2009, Mulerman and Silver commenced an action against Sherman entitled Mulerman v. Sherman (Sup Ct, Kings County, index No. 18429/09) (the Mulerman action). Mulerman and Silver's complaint in the Mulerman action alleged that Sherman was unwilling to close on the April 8, 2009 purchase agreement and sought specific performance of that agreement. This court, on December 7, 2009, following the parties' bringing of various orders to show cause for injunctions relating to the Apex companies, referred the parties to retired Justice Herman Cahn to supervise the closing of the April 8, 2009 purchase agreement. After numerous meetings with Justice Cahn, Silver, and Mulerman, as purchasers, entered into a new Share Purchase Agreement, dated February 22, 2010, with Sherman, as seller (the 2010 Share Purchase Agreement). Rogg was not a party to the 2010 Share Purchase Agreement.
The 2010 Share Purchase Agreement, in paragraph 1, listed the purchase price for Sherman's shares in the Apex companies as $582,500 “which sum include [d] [Sherman's] net receivables of $79,924.31 arrived at by the company accountant [i.e., Rogg] by [an] audit of the books and records of [the Apex companies] through March 11, 2009 and giving effect to a $47,434.31 credit to [Silver and Mulerman].” Paragraph 10 of the 2010 Share Purchase Agreement, entitled “Audit Right,” provided that for a period of up to one year following the closing of the purchase of his shares and upon reasonable prior notice and only during regular business hours, Sherman had the right, at his own expense, to have a designated CPA conduct a full audit and review of the Apex companies' financial data and records that relate to the period through March 11, 2009. Specifically, this paragraph set forth that Sherman had “audit rights to independently verify the net receivables calculation through March 11, 2009 contained in the audit report of ... Rogg, dated October 4, 2009.” It further required that, in such an audit, Sherman's accountant would not directly access any Apex computers, but, rather, would “be assisted by ... Rogg or [an]other Apex employee qualified to assist with the data retrieval” and that Mulerman and Silver would “direct [Rogg] to provide supporting documents requested by [Sherman's] designated CPA and direct [Rogg's] cooperation with [Sherman's] designated CPA.”
Paragraph 20 (l) of the 2010 Share Purchase Agreement, in pertinent part, provided:
“If any legal action ... is brought for the enforcement or interpretation of this Agreement, or because of an alleged dispute, default, misrepresentation, or breach in connection with any of the provisions of this Agreement, the successful or prevailing Party shall be entitled to recover reasonable attorneys' fees, expenses, and other costs incurred in such action or proceeding in addition to any other relief to which such prevailing Party [shall] be entitled. The right to such attorneys' fees, expenses, and other costs shall be deemed to have accrued upon the commencement of such action and shall be enforceable whether such action is prosecuted to judgment or not.”
On March 9, 2010, a stipulation to discontinue the Mulerman action was signed by the parties' respective attorneys and releases were executed by Sherman, Mulerman, and Silver with respect to “all unresolved issues, claims and counterclaims relating to [the Mulerman action].” On March 17, 2010, the court, upon the parties' consent, ordered the release of funds that had been previously held in escrow pending the resolution of the Mulerman action and marked the Mulerman action as settled and discontinued.
On September 14, 2010, Sherman commenced an action against Mulerman, Silver, and Rogg, entitled Sherman v. Mulerman (Sup Ct, Kings County, index No. 22685/10) (the Sherman I action). In the Sherman I action, Sherman set forth five causes of action. In his first cause of action for breach of contract, Sherman alleged that Mulerman and Silver failed to fulfill their obligations under the 2010 Share Purchase Agreement, and that he was, therefore, entitled to recover damages from them. Sherman's second cause of action, which sought damages from Rogg for tortious interference with contract, alleged that on or about August 3, 2010, Mulerman represented to him that Rogg was designated, directed, and retained by him for the purpose of furnishing him with the assistance, data, and documents necessary for him to conduct an audit of Apex records to determine the net receivables due him from the Apex companies on March 11, 2009, that in reliance upon these representations made by Mulerman, he requested that Rogg fulfill the obligations imposed on him by Mulerman, and that, notwithstanding the fact that Rogg had complete access the necessary books and records of the Apex companies, Rogg, motivated by malice, refused to furnish this documentation, assistance, and data, thereby interfering with his right to receive payment of the sums due to him from Mulerman and Silver pursuant to the 2010 Share Purchase Agreement. Sherman's third cause of action alleged that Rogg, at the request of Mulerman and Silver, prepared tax returns for the 2008 and 2009 tax years for the Apex companies, and that the entries contained in these tax returns were materially false in that they provided that funds paid to him by Mulerman and Silver pursuant to the 2010 Share Purchase Agreement were ordinary income to him, causing him to be taxed at a rate greater than the rate on the profit on the sale by him of his Apex shares as provided for in the 2010 Share Purchase Agreement. Sherman's fourth cause of action for fraud alleged that on February 22, 2010, Rogg, Mulerman, and Silver prepared and furnished him with a computation of the net receivables due to the Apex companies on March 11, 2009 which was materially understated by an amount in excess of $700,000, and it sought damages from them based upon their alleged knowledge that the net receivable computation was false and deliberately falsified. Sherman's fifth cause of action for negligence, which sought damages as against Rogg, alleged that Rogg failed to exercise care in the preparation and furnishing of the computation of the net receivables and that Rogg neglected to prepare such computation in accordance with generally accepted principles of accounting, constituting a breach of the duty of due care, which he claimed Rogg owed to him, to furnish accurate and reliable information and data.
On December 29, 2010, Mulerman and Silver moved to dismiss Sherman's complaint, pursuant to CPLR 3211(a)(1), (5), and (7), and CPLR 3016, and for sanctions, pursuant to 22 NYCRR 130–1.1, in the Sherman I action, and, on January 11, 2011, Rogg cross-moved to dismiss Sherman's complaint, pursuant to CPLR 3211(a)(1), (5), and (7), and CPLR 3016, as against him in the Sherman I action. In their respective motion and cross motion, Mulerman, Silver, and Rogg contended that the documentary evidence established that Sherman did not timely avail himself of the right to audit the Apex companies' financial data and records pursuant to paragraph 10 of the 2010 Share Purchase Agreement, and that Sherman's complaint, therefore, failed to state a viable cause of action as against them. On February 10, 2011, Sherman cross-moved for a default judgment, pursuant to CPLR 3215(a), as against Rogg, and opposed both the motion and cross motion to dismiss.
By a decision and order dated June 9, 2011, the court granted Mulerman and Silver's motion and Rogg's cross motion in the Sherman I action to the extent that it: (1) dismissed Sherman's first, second, and third causes of action, with prejudice, (2) dismissed Sherman's fourth cause of action without prejudice and with leave to replead it in accordance with its decision following Sherman's promptly obtaining the audit to which he was entitled under the terms of the 2010 Share Purchase Agreement, within 30 days of the service of notice of entry of that decision, (3) granted Mulerman and Silver's request for sanctions pursuant to 22 NYCRR 130–1.1(a), and directed Sherman, pursuant to 22 NYCRR 130–1.3, to deposit $500 with the Lawyers' Fund for Client Protection on or before July 29, 2011, or, in the event of his failure to do so, directed that the Fund would be entitled to enter a judgment for this sum against him. The court denied Rogg's cross motion insofar as it sought to dismiss Sherman's fifth cause of action. The court also denied Sherman's cross motion for a default judgment against Rogg since his time to answer had been extended.
The court, in making its rulings in its June 9, 2011 decision and order in the Sherman I action, held that Sherman's first cause of action for the alleged breach of the 2010 Share Purchase Agreement by Mulerman and Silver by their failure to pay him the net receivables due to the Apex companies, as defined in that agreement as $582,500 arrived at by Rogg by his audit of the books and records through March 11, 2009, was definitively belied by the documentary evidence of Sherman's receipt of checks and the release of escrow funds, showing that he received these funds in accordance with the 2010 Share Purchase Agreement, and that Mulerman and Silver complied with its terms. The court found that Sherman's second cause of action as against Rogg for tortious interference with contract was wholly contradicted by documentary evidence of Rogg's efforts to facilitate performance of the 2010 Share Purchase Agreement, which demonstrated that he did not procure any breach of the 2010 Share Purchase Agreement by Mulerman and Silver. Specifically, the court noted that Rogg, in a September 2010 letter, had notified Sherman's CPA, Raphael Grossman (Grossman), of a retainer requirement to be provided by Sherman prior to the audit, offered Grossman four potential dates in September and October 2010 for the audit, and requested that Grossman contact him if those dates were insufficient, but Sherman failed to provide any evidence that either he or Grossman requested alternative dates for the audit, acknowledged Rogg's request for a retainer, or provided any response to Rogg's correspondence. The court further noted that while Sherman's right to audit the records did not expire for more than five months after Rogg's September 2010 letter, which gave Sherman ample opportunity to schedule and complete an audit, Sherman, instead, preemptively commenced this action. The court found that Sherman's third cause of action as against Rogg was also conclusively contradicted by the documentary evidence and that Sherman could not have sustained any damages as a consequence of Rogg's characterization of his income.
As to Sherman's fourth cause of action, the court found that it failed to allege that Sherman reasonably relied upon Rogg's findings as to the Apex companies' financial status in the February 22, 2010 computation by Rogg, Mulerman, and Silver, and an October 4, 2009 audit report (the Report) prepared by Rogg that was referenced in the 2010 Share Purchase Agreement, and that since such reliance was a necessary element to allege a viable claim of fraud, dismissal of that claim was warranted. As to Sherman's fifth cause of action against Rogg for negligence, the court found that despite the lack of privity between Rogg and Sherman, Rogg was aware that the Report was to be used for settlement purposes, and this permitted Sherman to sustain this claim at that juncture.
In directing that sanctions be granted, the court, in its June 9, 2011 decision and order, found that Sherman had commenced the Sherman I action, including his frivolous claim for tortious interference with contract, well before his right to audit the books and records of the Apex companies had expired and before making a good faith attempt to schedule an audit on a date mutually acceptable to the respective parties. It held that Sherman's premature commencement of the Sherman I action constituted frivolous conduct and demonstrated his bad faith and purpose to harass Mulerman, Silver, and Rogg. It further held that Sherman's cross motion was frivolous as it was completely lacking in any meritorious basis and primarily undertaken to harass Rogg.
Following the court's June 9, 2011 decision and order in the Sherman I action, notice of entry was served on July 19, 2011 and July 20, 2011. Sherman, however, failed to exercise his right to an audit of Rogg's net accounts receivable calculation pursuant to paragraph 10 of the 2010 Share Purchase Agreement within 30 days of the service of notice of entry of that decision and order, as required by the court in such decision and order, thereby waiving his right to further assert his fourth cause of action and rendering the court's dismissal of that cause of action to be with prejudice. Instead, Sherman served an amended verified complaint dated August 8, 2011, which contained two causes of action, which reasserted the fourth and fifth causes of action of his original complaint. By a letter to Rogg dated August 26, 2011, Grossman stated that no fax or letter was received as of August 22, 2011, “although a response to [his] request for an audit was promised on August 12, 2011. Rogg's attorney responded that his client was unaware of any response that was “promised” on August 12, 2011, and that in any event, based upon the time frame in the 2010 Share Purchase Agreement and the June 9, 2011 decision and order, Sherman was no longer entitled to an audit. On August 30, 2011, Sherman filed a notice of discontinuance, dated August 16, 2011, signed by his attorney, which (although filed after Rogg had filed his motion to dismiss) purported to be a discontinuance as of right pursuant to CPLR 3217(a)(1), in which he discontinued his remaining fifth cause of action as against Rogg in the Sherman I action.
On September 21, 2011, Sherman commenced the instant action against Mulerman, Silver, and Rogg. Sherman's complaint in this action sets forth seven causes of action. Sherman's first cause of action for breach of contract alleges that Mulerman and Silver failed to pay him the amount due under the 2010 Share Purchase Agreement. Sherman's second cause of action alleges a breach of fiduciary duty by Rogg, Mulerman, and Silver in their preparation of a computation of $79,924.31 as being a sum equal to 50% of the difference between the accounts receivable and accounts payable of the Apex companies. Sherman's third cause of action alleges negligence by Rogg in calculating the accounts receivable. Sherman's fourth cause of action alleges fraud in the inducement by Rogg, Mulerman, and Silver, asserting that they induced him to transfer his interest in the Apex companies for less consideration than he would have if an accurate computation had been furnished. Sherman's fifth cause of action seeks the imposition of a constructive trust on the monies due to him based upon his sale of his interest in the Apex companies at an allegedly undervalued price. Sherman's sixth cause of action purports to assert a violation of General Business Law § 349 due to allegedly deceptive acts by Rogg as a certified public accountant. Sherman's seventh cause of action seeks a declaratory judgment that Mulerman and Silver have been unjustly enriched if it is true that his contractual right to the sums due based on the calculation of the net receivables has lapsed or has been waived by him.
Mulerman and Silver interposed their answer, dated January 13, 2012, which contains denials and affirmative defenses, including a seventh affirmative defense alleging that this action is barred by the doctrine of res judicata. Mulerman and Silver's answer also interposes a second counterclaim, in which they seek to recover attorneys' fees, expenses, and other costs, pursuant to paragraph 20(l) of the 2010 Share Purchase Agreement, as the prevailing parties in the Sherman I action due to its dismissal by the court's June 9, 2011 decision and order. This counterclaim by Mulerman and Silver also seeks to recover attorneys' fees, expenses, and costs in the present action to the extent that they prevail herein. Rogg interposed his answer, dated January 16, 2012, which contains denials and affirmative defenses, including a fourth affirmative defense which alleges that Sherman's action is barred by the doctrine of res judicata. On June 3, 2014, Mulerman and Silver filed their motion, and, on July 16, 2014, Rogg filed his cross motion.
DISCUSSION
In addressing Mulerman and Silver's motion and Rogg's cross motion, it is noted that “[u]nder 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' “ (Douglas Elliman, LLC v. Bergere, 98 AD3d 642, 642–643 [2d Dept 2012], quoting Abraham v. Hermitage Ins. Co., 47 AD3d 855, 855 [2d Dept 2008] ; see also Matter of Hunter, 4 NY3d 260, 269 [2005] ; O'Brien v. City of Syracuse, 54 N.Y.2d 353, 357 [1981] ; Pondview Corp. v. Blatt, 95 AD3d 980, 980 [2d Dept 2012] ; Matter of ADC Contr. & Constr., Inc. v. Town of Southampton, 50 AD3d 1025, 1026 [2d Dept 2008] ). “Res judicata thus operates to preclude the renewal of issues actually litigated and resolved in a prior proceeding as well as claims for different relief which arise out of the same factual grouping or transaction and which should have or could have been resolved in the prior proceeding' “ (Douglas Elliman, LLC, 98 AD3d at 643, quoting Union St. Tower, LLC v. Richmond, 84 AD3d 784, 785 [2d Dept 2011], lv dismissed 18 NY3d 946 [2012] ; see also Luscher v. Arrua, 21 AD3d 1005, 1006–1007 [2d Dept 2005] ).
“[U]nder New York's transactional analysis approach to res judicata, 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' “ (Matter of Hunter, 4 NY3d at 269, quoting O'Brien, 54 N.Y.2d at 357 ; see also Matter of Reilly v. Reid, 45 N.Y.2d 24, 29–30 [1978] ). “Res judicata is designed to provide finality in the resolution of disputes,' recognizing that [c]onsiderations of judicial economy as well as fairness to the parties mandate, at some point, an end to litigation' “ (Matter of Hunter, 4 NY3d at 269–270, quoting Matter of Reilly, 45 N.Y.2d at 28 ).
This action involves the identical parties as the Sherman I action and relates to the same nucleus of operative facts as set forth in Sherman's complaint in the Sherman I action, i.e., Mulerman and Silver's obligation to pay Sherman the purchase price under the 2010 Share Purchase Agreement. The complaint herein, as in the complaint in the Sherman I action, contain allegations which stem from Mulerman and Silver's purported breach of the 2010 Share Purchase Agreement and Mulerman, Silver, and Rogg's alleged fraud and negligence in producing inaccurate financial documents when entering into the 2010 Share Purchase Agreement. Indeed, Sherman's first cause of action for breach of contract is duplicative of his first cause of action for breach of contract in the Sherman action, which was dismissed, with prejudice, based upon the documentary evidence. As such, it is barred by the doctrine of res judicata (see O'Brien, 54 N.Y.2d at 357 ).
Sherman's second cause of action for breach of fiduciary duty alleges that Rogg, Mulerman, and Silver owed him a fiduciary duty to honestly and accurately prepare the computation of $79,924.31, which they represented as being a sum equal to 50% of the difference between the accounts receivable and accounts payable of the Apex companies, and to disclose all information and data, that he relied upon the truth and honesty of Rogg, Mulerman, and Silver relating to this computation, and that Rogg, Mulerman, and Silver concealed and misrepresented information concerning the sums due to him, and understated the computation by over $700,000 in breach of their fiduciary duty to him. This cause of action for breach of fiduciary duty is barred by the doctrine of res judicata since it is based on the same operative facts and, although framed differently and couched in a different legal theory, is essentially duplicative of Sherman's breach of contract cause of action (see Jones v. Riese Org., 93 AD3d 598, 599 [1st Dept 2012] ; Ventura v. M.A.F. Estates, 247 A.D.2d 378, 378–379 [2d Dept 1998] ). Furthermore, dismissal of this claim for breach of fiduciary duty would, in any event, be required as a matter of law. As to Rogg, the duty owed by an accountant to a client is generally not fiduciary in nature, and Sherman has not pleaded any of the limited circumstances in which such a duty may arise (see Able Energy, Inc. v. Marcum & Kliegman LLP, 69 AD3d 442, 444 [1st Dept 2010]; DG Liquidation v. Anchin, Block & Anchin, 300 A.D.2d 70, 70–71 [1st Dept 2002] ). Indeed, Sherman could not have relied upon Rogg's net accounts receivable calculation since in the 2010 Share Purchase Agreement, he specifically reserved the right to independently verify such calculation. As to Mulerman and Silver, they had been involved in litigation with Sherman since January 9, 2009, and, thus, as adversaries in litigation, they could not have owed any fiduciary duty to Sherman at the time the computation was rendered (see Carr v. Neilson, 77 AD3d 877, 878 [2d Dept 2010], lv denied 16 NY3d 706,[2011] ).
Sherman's third cause of action for negligence against Rogg alleges essentially the same claim against him as was alleged in his fifth cause of action in the Sherman I action. While that claim was not dismissed in the court's June 9, 2011 decision and order, it was discontinued by Sherman's August 16, 2011 discontinuance. Although this discontinuance did not state that it was with prejudice, it was without reservation of right with respect to Sherman's negligence claim against Rogg, and was not served within the time period prescribed by CPLR 3217(a)(1) since a motion to dismiss under CPLR 3211 is the equivalent of an answer under CPLR 3217(a)(1), and it, therefore, terminated Sherman's right to discontinue by notice (see Citidress II Corp. v. Hinshaw & Culbertson LLP, 59 AD3d 210, 211 [1st Dept 2009] ; David D. Siegel, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR C3217:8, at 741). Consequently, this discontinuance is entitled to preclusive effect under the doctrine of res judicata, and Sherman cannot reassert this claim in this action (see Town of Huntington v. Beechwood Carmen Bldg. Corp., 82 AD3d 1203, 1206 [2d Dept 2011] ). Moreover, Sherman has failed to raise an triable issue of fact that any negligence by Rogg proximately caused his damages since the cause of any claimed damages would have been Sherman's own failure to independently verify the calculation by the audit that he was afforded under the 2010 Share Purchase Agreement.
Sherman's fourth cause of action for fraud in the inducement reiterates and is duplicative of his fourth cause of action for fraud in the Sherman I action, which the court dismissed, without prejudice to Sherman's repleading it following promptly obtaining the audit under the 2010 Share Purchase Agreement within 30 days of the service of notice of entry of the decision and order. It is undisputed that Sherman never obtained this audit.
Sherman, in opposition to Mulerman and Silver's motion and Rogg's cross motion, asserts that “it made no sense” for him to pursue his contractual right to an audit under the 2010 Share Purchase Agreement because, he claims, that right was illusory “given the issues impeding [his] auditor's [i.e., Grossman's] efforts.” He contends that the audit right under paragraph 10 of the 2010 Share Purchase Agreement does not provide that it is his exclusive remedy or that it must be the only grounds for an action by him against Rogg, Silver, or Mulerman. He submits an affirmation by Grossman, in which Grossman asserts that based on his examination of records furnished by Sherman, there is a discrepancy between Rogg's computation of the 50% of the net receivables as $79,934.91 and his computation of 50% of the net receivables as at least $255,454, with the difference being in excess of $175,519, and that this is the minimum sum that he believes is due to Sherman. Sherman states that this amount calculated by Grossman is not based on an audit or a review of the Apex companies' data, but on a reading of the Report which Rogg furnished to him before entering into the 2010 Share Purchase Agreement, and which he claims to have relied upon in signing it and in selling his shares thereunder. He argues that whether he waived his audit right is irrelevant and that he should still be allowed to sue for damages in this action without availing himself of that right.
Sherman's argument must be rejected. The 2010 Share Purchase Agreement defined and delineated Sherman's rights with respect to the Apex companies' shares, and the court, in its June 9, 2011 decision and order in the Sherman I action, dismissed Sherman's fraud claim, and only granted him leave to replead it upon the express condition that he first obtain the audit, pursuant to paragraph 10 of the 2010 Share Purchase Agreement, within 30 days of the service of notice of entry of that decision and order. Sherman cannot ignore the court's June 9, 2011 decision and order and circumvent the terms upon which he was permitted to reassert this claim by electing not to obtain an audit in compliance with the court's direction, and then seek to again allege this fraud claim in the present action. Since Sherman failed to comply with the court's June 9, 2011 decision and order with respect to his fraud claim, its dismissal became a dismissal with prejudice and is entitled to preclusive effect. Therefore, Sherman's fourth cause of action is barred by the doctrine of res judicata (see Matter of Hunter, 4 NY3d at 269 ; O'Brien, 54 N.Y.2d at 357 ).
Sherman's fifth cause of action for the imposition of a constructive trust alleges that the money that he was underpaid should be the subject of a constructive trust held by Mulerman and Silver for his benefit. This claim, therefore, necessarily arises out of the same transaction as it was the subject of the Sherman I action and merely purports to allege a different theory by seeking a different remedy. As such, it is barred by the doctrine of res judicata (see O'Brien, 54 N.Y.2d at 357 ). Furthermore, this cause of action does not state a viable claim since no facts exist which meet the requisite elements for the imposition of a constructive trust (see Sharp v. Kosmalski, 40 N.Y.2d 119, 121 [1976] ).
As to Sherman's sixth cause of action for a violation of General Business Law § 349, General Business Law § 349 “was intended [as] a consumer protection statute” (Teller v. Bill Hayes, Ltd., 213 A.D.2d 141, 145 [2d Dept 1995], lv dismissed in part, denied in part 87 N.Y.2d 937 [1996] ). “Private contract disputes, unique to the parties ... [do] not fall within the ambit of the statute” (Oswego Laborers' Local 214 Pension Fund v. Marine Midland Bank, 85 N.Y.2d 20, 25 [1995] ). Rather, in order to constitute a violation of General Business Law § 349, the alleged conduct must be “consumer oriented,” which has “a broad impact on consumers at large” (New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 320 [1995] ). “Private transactions without ramifications for the public at large are not the proper subject of [such] a claim” (Canario v. Gunn, 300 A.D.2d 332, 333 [2d Dept 2002] ). Here, the conduct in which Rogg allegedly engaged was that he committed deceptive acts in carrying out his line of business as a certified public accountant by misrepresenting the amounts actually due to Sherman, and were allegedly perpetrated solely against Sherman. Thus, such conduct was a private transaction between Rogg and Sherman, and cannot be construed as having a broad impact on consumers at large so as to fall within the ambit of General Business Law § 349, and there is no indication of any actual damage to the public as a result. Consequently, this cause of action must be dismissed as a matter of law (see CPLR 3212[b] ). In addition, such a claim would, in any event, be barred by the doctrine of res judicata since it arises out of the same operative facts as asserted in the Sherman I action (see O'Brien, 54 N.Y.2d at 357 ).
Sherman's seventh cause of action for a declaratory judgment that Mulerman and Silver have been unjustly enriched by their retention of the sum due to him merely claims that Sherman was not paid all of the consideration owed to him under the 2010 Share Purchase Agreement. The existence of a valid and enforceable written contract, i.e., the 2010 Share Purchase Agreement, precludes recovery under a cause of action for unjust enrichment, which arises out of the same subject matter (see Goldman v. Metropolitan Life Ins. Co., 5 NY3d 561, 572 [2005] ; Grossman v. New York Life Ins. Co., 90 AD3d 990, 991–992 [2d Dept 2011], lv dismissed 19 NY3d 991 [2012], rearg. denied 20 NY3d 965 [2012] ). Furthermore, since this claim arises out of the same transaction and is duplicative of Sherman's breach of contract claim, Sherman, by merely recasting it as a claim for unjust enrichment, cannot serve to avoid its being barred by the doctrine of res judicata (see O'Brien, 54 N.Y.2d at 357 ; Grossman, 90 AD3d at 991 ; Greaves v.. Oritiz, 65 AD3d 1085, 1085–1086 [2d Dept 2009] ).
Since all of Sherman's claims in this action must be dismissed and Mulerman and Silver have, therefore, prevailed in this action, they are also entitled to an award of their attorneys' fees and litigation expenses which they incurred in prosecuting this action pursuant to the express terms of paragraph 20(l) of the 2010 Share Purchase Agreement (see Nestor v. McDowell, 81 N.Y.2d 410, 415 [1993], rearg. denied 82 N.Y.2d 750 [1993] ; Hooper Assoc. v. AGS Computers, 74 N.Y.2d 487, 491 [1989] ; ProHealth Care Assoc., LLP v.. Prince, 101 AD3d 699, 701 [2d Dept 2012] ; 8109 Pizzeria of NY, Inc. v. Polo Pizza One Corp., 67 AD3d 627, 629 [2d Dept 2009] ; Luis Lopez & Son's, Inc. v. Dannie's Auto Care, 61 AD3d 643, 643 [2d Dept 2009] ; Mancheski v. GGCP, Inc., 41 AD3d 790, 791 [2d Dept 2007] ; Village of Hempstead v. Taliercio, 8 AD3d 476, 476 [2d Dept 2004] ). Thus, summary judgment in Mulerman and Silver's favor on their second counterclaim as pertains to the present action must be granted (see CPLR 3212[b] ).
Mulerman and Silver, in their motion, further seek to recover the attorneys' fees, costs, and expenses incurred by them in the Sherman I action. As discussed above, the court, in its June 9, 2011 decision and order, dismissed all of the causes of action in the Sherman I action except the fifth cause of action which was asserted solely against Rogg, and the fourth cause of action which it permitted Sherman to replead following an audit. However, since no audit was obtained and no claim remains pending in the Sherman I action, Mulerman and Silver's request for relief as the prevailing parties in that action is not premature (compare Salvador v. Uncle Sam's Auctions & Realty, 307 A.D.2d 609, 611 [3d Dept 2003], lv dismissed 1 NY3d 566, [2003] ). Furthermore, the court notes that since Mulerman and Silver prevailed in the Sherman I action on their CPLR 3211 motion to dismiss before any answer by them was interposed, they could not have interposed their claim for counsel fees in an answer, and, thus, their request for attorneys' fees and costs is appropriately raised at this time (see M.W. Realty Assoc. v. 805 Third Ave. Co., 125 Misc.2d 1077, 1081 [Sup Ct, N.Y. County 1984] ). Therefore, the court finds that Mulerman and Silver, as the prevailing parties in the Sherman I action, are entitled to an award of their attorneys' fees and litigation expenses which they incurred in prosecuting that action pursuant to the express terms of paragraph 20(l) of the 2010 Share Purchase Agreement, and summary judgment in their favor on their second counterclaim must also be granted with respect to the Sherman I action (see CPLR 3212[b] ).
The court, however, cannot determine the amount of such reasonable attorneys' fees, expenses, and other costs on the papers submitted. Rather, a hearing must be held to determine the amount of the reasonable attorneys' fees, expenses, and other costs incurred by Mulerman and Silver in this action and in the Sherman I action (see CIT Group/Equip. Fin., Inc. v. Riddle, 31 AD3d 477, 478 [2d Dept 2006] ; MBNA Am. Bank v. Paradise, 285 A.D.2d 586, 586 [2d Dept 2001] ).
Furthermore, it appears that sanctions are warranted under 22 NYCRR 130–1.1. Pursuant to 22 NYCRR 130–1.1, the court, in its discretion, may award a party to an action “costs in the form of reimbursement for actual expenses reasonably incurred and reasonable attorney's fees, resulting from frivolous conduct as defined in this Part,” and, in addition to awarding such costs, may impose financial sanctions upon a party. Conduct constitutes “frivolous conduct” under this section where it “is completely without merit in law and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law,” or where “it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another.”
Here, Sherman commenced this third action by him, continuing to assert the same issues and claims which were the subject of the A–Express action, the Mulerman action, and the Sherman I action, and which were already adjudicated and dismissed in the Sherman I action. At the time Sherman commenced the present action, the lack of any legal or factual basis for his claims asserted in it should have been apparent by the court's June 9, 2011 decision and order in the Sherman I action. Moreover, it appears that Sherman's commencement of this action was undertaken primarily to continue to prolong his dispute with Mulerman, Silver, and Rogg by continuing to litigate already resolved claims and to harass them in bad faith. Notably (as discussed above), the court, in its June 9, 2011 decision and order, previously imposed financial sanctions in the amount of $500 payable to the Lawyers' Fund or Client Protection based upon Sherman's frivolous conduct.
While Mulerman and Silver are already entitled to reimbursement of their reasonable attorneys' fees, costs, and expenses, pursuant to paragraph 20(l) of the 2010 Share Purchase Agreement, Rogg was not a party to the 2010 Share Purchase Agreement, and it appears that he is entitled to recover his attorneys' fees and costs, pursuant to 22 NYCRR 130–1.1, as a result of the frivolous conduct engaged in by Sherman in commencing this action against him. In addition, a further financial sanction payable to the Lawyers' Fund for Client Protection may be warranted. However, since Mulerman, Silver, and Rogg have not moved for sanctions, the court must provide Sherman with a reasonably opportunity to be heard before imposing such sanctions (see Hester v. Hester, 121 AD3d 645 [2d Dept 2014] ; Hines v. RAP Realty Corp., 254 A.D.2d 330, 331 [2d Dept 1998] ; Landes v. Landes, 248 A.D.2d 268, 269 [1st Dept 1998] ; Deeb v. Tougher Indus., 216 A.D.2d 667, 668 [3d Dept 1995] ). Thus, at the hearing to determine Mulerman and Silver's reasonable attorneys' fees, expenses, and other costs, the court will also determine the issue of the amount of sanctions to be awarded.
CONCLUSION
Accordingly, Mulerman and Silver's motion for summary judgment dismissing Sherman's complaint as against them in its entirety, with prejudice, and for summary judgment in their favor on their second counterclaim is granted. Rogg's cross motion for summary judgment dismissing Sherman's complaint as against him in its entirety, with prejudice, is granted. A hearing shall be scheduled and held in order to determine the amount of the reasonable attorneys' fees, expenses, and other costs incurred by Mulerman and Silver in this action and the Sherman I action, and to determine the amount of sanctions, if any, to be imposed upon Sherman pursuant to 22 NYCRR 130–1.1. In advance of such hearing, counsel for all defendants shall submit affidavits, and proper supporting documentation, indicating the reasonable attorney's fees charged to their clients in this action and in Sherman I, by January 6, 2015. Plaintiff may respond to such submissions, in writing on notice, by January 23, 2015.
This constitutes the decision, order, and judgment of the court.