Opinion
No. 4819.
December 11, 2008.
Judgment, Supreme Court, New York County (Richard B. Lowe, III, J.), entered July 27, 2007, insofar as appealed from as limited by the briefs, dismissing the complaint as against defendants-respondents with prejudice pursuant to an order, same court and Justice, entered June 14, 2007, which, in a derivative action by limited partners of respondent 425 Park Avenue Company alleging breach of fiduciary duty and related business torts, granted respondents' motion to dismiss the complaint, unanimously modified, on the law, to the extent of deleting the provision that the dismissal is with prejudice, and otherwise affirmed, without costs.
Bennett D. Krasner, Atlantic Beach, for appellants.
White Case, LLP, New York (John D. Rue of counsel), for Charles R. Borrok, Andrew S. Borrok and 425 Park Avenue Company, L.P., respondents.
Vedder Price, P.C., New York (Dan L. Goldwasser of counsel), for HJ Behrman Partnership, LLP, respondent.
Before: Friedman, J.P., McGuire, Acosta, DeGrasse and Freedman, JJ.
Although the court properly determined that plaintiff's lacked standing on the basis that they did not make a formal demand on all of the general partners and failed to demonstrate that such a demand would have been futile, dismissal of the complaint with prejudice was improper. A dismissal premised on lack of standing is not a dismissal on the merits for res judicata purposes ( see Alco Gravure, Inc. v Knapp Found., 64 NY2d 458, 465; Pullman Group v Prudential Ins. Co. of Am., 297 AD2d 578, lv dismissed 99 NY2d 610). If given effect, however, the provision of the judgment that the dismissal was "with prejudice" would bar plaintiff's from thereafter filing an amended complaint even if they would have standing at that time. For this reason alone the provision should be deleted from the judgment. Thus, we need not address the question of whether, having concluded that plaintiff's lacked standing to bring this action and thus that dismissal was necessary, Supreme Court properly went on to determine the issue of whether dismissal should be with prejudice.