Commercial Division Blog
Posted: December 5, 2015 / Categories Commercial, Contracts, Res Judicata/Collateral Estoppel/Entire Controversy Doctrine
Action Barred by Release in Prior Dispute
On November 24, 2015, the First Department issued a decision in Matter of Empire State Building Associates, L.L.C., 2015 NY Slip Op. 08630, holding that a plaintiff's claims were barred by a release in a prior dispute.
In Matter of Empire State Building Associate, the defendant moved to dismiss based on a release granted in settling a prior action. The First Department affirmed the IAS court's decision granting the motion to dismiss, explaining:
The motion court correctly found that the release and the covenant not to sue in the agreement settling a prior lawsuit were broad enough to bar plaintiffs' current claim that defendants breached their fiduciary duty by failing to consider offers for sale of the Empire State Building and proceeding instead with their earlier plan to place the building in a real estate trust for public offering. Although the offers for purchase were received after the settlement in the first action was finalized, the settlement encompassed plaintiffs' allegations in that action that defendants beached their fiduciary duty by failing to proceed with any reasonable alternatives to the transaction at issue, such as marketing the building for sale. The covenant not to sue is circumscribed by the released claims and therefore also bars this action. In addition, this action is barred by the doctrine of res judicata, since the court dismissed the first action with prejudice following the settlement.
(Internal quotations and citations omitted).