Commercial Division Blog

Posted: January 23, 2023 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Categories Commercial, Consolidation

Non-Specific Assertions that Actions Should be Consolidated Held Insufficient to Shift Burden

In a Decision and Order, dated January 9, 2023, in Youyi Chen v. 215 Chrystie Venture, LLC, Index No. 655908/2020, Justice Robert R. Reed of the New York County Commercial Division denied defendants’ motion for consolidation where one action sounded in pre-contractual tort claims and the other actions involved post-contractual breach of contract claims. Rejecting defendants’ argument that plaintiffs had to show prejudice, the Court explained:

CPLR §602(a) authorizes the court to consolidate actions where they involve "a common question of law or fact" (see CPLR §602(a); see also Teitelbaum v. PTR Co., 6 AD3d 254, 255, 774 N.Y.S.2d 699 [1st Dep't 2004] ["Consolidation is mandated by judicial economy where lawsuits are intertwined with common questions of law and fact"]). Thus, a motion to consolidate should be granted where it will "avoid unnecessary duplication of trials, save unnecessary costs and expense and prevent the injustice which would result from divergent decisions based on the same facts" (Chinatown Apartments, Inc. v. New York City Transit Auth., 100 AD2d 824, 825, 474 N.Y.S.2d 763 [1st Dep't 1984]). And while a motion for consolidation is left in the sound discretion of the court, it is the obligation of the party seeking such consolidation to specify common issues of law and fact which justify such consolidation, and in the absence of such showing the court should deny consolidation (RCN Const. Corp. v Fleet Bank, N.A., 34 AD3d 776, 777-78, 825 NYS2d 140 [2nd Dep't 2006]).

Here, defendants do not specify any such common issues of law or fact which might exist between this action, on the one hand, and the MCSDF contract action or the MCSDF guaranty action on the other hand, and instead merely repeat in conclusory fashion that "[i]t cannot be credibly disputed that this action, [and the MCSDF Contract Action and the MCSDF Guaranty Action] are intertwined with common questions of law and fact." Defendants reference a number of cases which hold that, once the moving party has sufficiently established the existence of common questions of law and fact, it is the other party's obligation to demonstrate the existence of prejudice to oppose consolidation. However, in the cases cited by defendants, the party seeking consolidation actually made the requisite showing, while here, defendants have made no more than perfunctory, non-specific assertions which fail to support their motion, and as such, the burden does not shift to plaintiffs (Bank of Am. v Airport Auto Group, 20 Misc. 3d 1144[A], 873 N.Y.S.2d 231, 2008 WL 4212445 at *3 [Sup Ct Nassau Co, 2008] [demonstration of "prejudice to a substantial right is irrelevant, because (moving party) 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"]).

Moreover, plaintiffs' claims herein are direct and personal, sounding in pre-contractual, pre-investment fraudulent inducement and breaches of fiduciary duty stemming from defendants' pre-contractual, pre-investment status as promoters of the project. The claims in the MCSDF contract action and the MCSDF guaranty action all stem from breaches of contract. On that basis, it is appropriate to deny consolidation of the plaintiffs' pre-contractual tort claims, sounding in fraud and breach of fiduciary duty, with the MCSDF's naturally post-contractual breach of contract claims (Screen Gems-Columbia Music, Inc. v Hansen Publications, Inc., 42 AD2d 897, 347 N.Y.S.2d 703 [1st Dep't 1973] ["There are not sufficient mutual issues of law and fact to warrant consolidation. Moreover, one action is in contract, while the other sounds chiefly in tort, and the single fact that they arise out of the same relationship does not warrant consolidation"]). Where, as here, one action sounds in pre-contractual fraud and breaches of duty and the other actions involve breach of contract, there has been no showing of overlapping proof for the claims asserted, and consolidation should properly be denied (Beerman v Morhaim, 17 AD3d 302, 303, 791 N.Y.S.2d 854 [2nd Dep't 2005] ["[E]ven though both actions arise out of the same transaction, there was no showing that the proof with respect to each action overlaps. Thus, the identity of facts is insufficient to merit consolidation of the actions. Accordingly, the Supreme Court providently exercised its discretion in denying the motion"]).

The attorneys at Schlam Stone & Dolan frequently litigate motions for consolidation of actions where there may be common issues of law or fact. Contact our attorneys at if you or a client have questions regarding this motion practice.