The following papers numbered 1 to 30 were read on this motion by defendant INES GASSMANN for an order pursuant to CPLR 3212 granting summary judgment and dismissing the plaintiff's first amended verified complaint and all cross claims on the ground of res judicata; and the respective cross-motions of defendants MARTIN A. POLLACK, JACK I. SLEPIAN and POLLACK & SLEPIAN, L.L.P. and defendants MICHAEL O'SULLIVAN and CHARLES PEKNIC for an order granting summary judgment pursuant to CPLR 3212 dismissing the plaintiffs' first amended verified complaint on the ground of res judicata:

Papers Numbered

GASSMANN Notice of Motion-Affidavits-Exhibits..........1 - 5

Plaintiff's Affirmation in Opposition..................6 - 8

GASSMANN Reply Affirmation.............................9 - 12

POLLACK Cross-Motion..................................13 - 17

Plaintiff's Affirmation in Opposition to Cross-Motion.18 - 21

POLLACK Reply Affirmation.............................22 - 24

O'SULLIVAN and PEKNIC Cross-Motion....................25 - 27 [*2]

Plaintiff's Affirmation in Opposition to Cross-Motion.28 - 30

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In this action for conversion, breach of fiduciary duty, legal malpractice, constructive fraud, common law fraud, imposition of a constructive trust, and loss of use of funds related to the purchase and immediate sale of plaintiffs' property in December 2007, defendants MARTIN A. POLLAK, JACK I. SLEPIAN, POLLAK & SLEPIAN, L.L.P. INES GASSMANN, MICHAEL O'SULLIVAN and CHARLES PEKNIC all move prior to the completion of discovery for an order granting summary judgment dismissing the plaintiffs' complaint and all cross-claims asserted against them on the ground that this action is barred by res judicata.

According to the first amended verified complaint dated June 28, 2011, plaintiffs retained the law firm of POLLAK & SLEPIAN L.L.P. to represent them as sellers of real property located at 118-12 19th Avenue, College Point, New York. The closing took place on December 20, 2007 and the property was sold to TATIANA BELL CORP. for the sale price of $758,403.00. Plaintiffs allege that POLLAK was an officer of TATIANA BELL. Plaintiffs also assert that immediately following the closing, a "flip-sale" and second closing took place in the same office in which TATIANA BELL CORP. and POLLAK, as sellers, sold the same premises to MICHAEL O'SULLIVAN for the sum of $950,000. Mr. O'SULLIVAN was represented at the closing by defendant CHARLES PEKNIC, ESQ.

Plaintiffs claim that a fraud was perpetrated by the defendants in that plaintiffs were not told of the existence of the second sale, that they were deprived of the profits of the second sale and that Pollak, Slepian, Gassmann and Damato misappropriated the balance of the funds due and owing to the plaintiffs. Plaintiffs claim that the terms of the flip sale were negotiated prior to the closing date and therefore all of the defendants were aware of the flip sale and failed to disclose to plaintiffs the existence of the second sale.

The defendants' respective motions for summary judgment on the ground of res judicata are based upon a prior action commenced by the plaintiffs in December 2008 filed under Index No. 28896/2008. In the prior action in which MARTIN A. POLLAK, JACK I. SLEPIAN, POLLAK & SLEPIAN, L.L.P.,INES GASSMANN and MICHELE DAMATO were named as defendants. Plaintiffs who were sellers of the subject property along with GASSMANN and DAMATO alleged, inter alia, that defendants breached a contract dated August 29, 2007 in that they failed to receive the full amount of their share of the $758,403.00 sales price. POLLACK and SLEPIAN were the attorneys of record for the sellers. Pursuant to a settlement of that action, plaintiffs CLERICO and MULE executed a [*3]release dated February 15, 2011 pursuant to which the defendants were released from "any and all claims, demands, rights and causes of action for all matters that are the subject of CLERICO v. POLLACK, Supreme Court, Queens County, Index No.28896/08." Plaintiffs received amount of $67,500.00, as consideration for the release.

As stated above, the instant complaint commenced in June, 2011, is an action for conversion, breach of fiduciary duty, legal malpractice, constructive fraud, common law fraud, imposition of a constructive trust, and loss of use of funds based upon a flip sale of the plaintiffs' property from Tatiana Bell Corp. (a company in which Pollack allegedly held an interest) to Charles O'Sullivan, which took place the same day (November 16, 2007) and for which the sellers received $950,000.00 which was approximately $191,000 more than the property sold for that same day. Plaintiffs, in their first amended complaint verified by the Giuseppe Mule, allege that they were not allowed in the room during either transaction, that they were not made aware of the second or flip-sale transaction and that the defendants in the instant action who include additional defendants, TATIANA BELL CORP., JACK ANGELOU, CHARLES PEKNIC and MICHAEL O'SULLIVAN perpetrated a fraud on the plaintiffs by failing to inform them of the existence of the second sale and deprived them of the profits of the second sale.

Ms. Gassmann, who is a defendant in both actions alleges that under the doctrine of res judicata, the settlement agreement signed by the parties in favor of Ms. Gassmann is broad enough to cover the claims that plaintiffs have brought in the instant action and therefore serve to bar this action. Ms. Gassmann claims that this action is based upon the same real estate transaction that was the subject of the 2008 action which was settled. Counsel claims that as the causes of action asserted in this lawsuit, arise of the same transaction as the 2008 action, plaintiffs cannot proceed with this action under the doctrine of res judicata. Counsel contends that both actions contain the identical claim against Ms. Gassmann to wit, that she engaged in a scheme to defraud the plaintiffs in regard to the sale of the property located at 118-12 19th Avenue College Point, New York. In addition, with regard to the allegation contained in the instant action asserting that on the same day of the closing December 20, 2007, a second closing took place in regards to the property, Ms. Gassmann asserts that plaintiffs had this information available to them at the time they commenced the 2008 action and therefore unnecessarily split their causes of action into two separate lawsuits so as to recover twice based upon the same transaction.

Similarly, in his cross-motion, Martin Pollack, who was also a named defendant in the prior action, submits an affidavit stating that he joins in Ms. Gassmann's application for summary judgment dismissing the plaintiffs' complaint and asserts that he is also entitled to summary judgment on the ground of res judicata. Mr. Pollack contends that the general release executed by the plaintiffs in settlement of the prior action, released the claims asserted in this action. Mr. Pollack contends that plaintiffs assert no different causes of action or basis for claims in this action which differ from those included in the prior settled action. He states that all of the present claims are encompassed in the causes of action asserted in the first action. Mr. Pollack also contends that the motion must be granted as neither plaintiff submitted a personal affidavit in support of the motion. He claims that the plaintiffs have failed to come forward with an affidavit stating that they had no knowledge either actual or constructive of the second transaction at the time they settled the first action. Mr. Pollack asserts that the settlement proceeds in the first action included plaintiffs' share of the proceeds from the "flip transaction" as they each received more that the 25% share agreed upon in the 2007 contract. He states that this indicates that the plaintiffs were aware that the property had been re-sold and therefore they sought and received collectively fifty percent of the profit from the flip transaction to Mr. Sullivan. Pollack also states that Ms. Gassmann was the primary party to the transaction and he obtained no personal gain from the transaction other than earning a legal fee as Ms. Gassman's counsel.

Mr. Sullivan and Mr. Peknic, who were not parties to the original action, also cross-move for summary judgment dismissing the complaint, adopting the arguments of Gassmann and Pollack and stating that without an affidavit from the plaintiffs there is no admissible evidence opposing the motion. In addition, Peknic submits his own affirmation stating that based upon his personal knowledge both plaintiffs were present at the law office when Mr. O'Sullivan purchased the property in the second transaction. He also argues that it is unreasonable for the plaintiffs to argue that they only recently became aware of the second flip transaction when they were present in the office at the closing.

In opposition, plaintiffs claim that this action is not barred by res judicata because the first action dealt with the refusal of the defendants to distribute the funds from the first sale for $725,000 pursuant to the August 2007 contract, whereas this action deals with a fraudulent scheme to flip the house in a second transaction for almost $200,000 more than the plaintiffs [*4]realized from the first sale and to deny the plaintiffs their profits from the second sale. The plaintiffs contend that they did not execute a general release, but rather, the release in question was limited in scope by its terms which state that the settlement was executed with regard to all matters under Index No. 28896/09. Secondly, plaintiffs submit affidavits stating that as they were not allowed in the room where the closing was taking place, they only recently discovered that there was a second transaction immediately following the first closing wherein the property was sold to Mr. Sullivan.

Upon review and consideration of the respective motions and cross-motions to dismiss the plaintiffs' complaint, plaintiffs' affirmation in opposition, and defendants' reply thereto, this court finds as follows:

A party seeking summary judgment has the burden of tendering evidence in admissible form demonstrating the absence of any triable issues of fact (see Alvarez v Prospect Hosp., 68 NY2d 320 [1986]; Seidman v Industrial Recycling Props., Inc., 52 AD3d 678[2d Dept. 2010]). Here, the moving defendants seek summary judgment based upon the plaintiffs' settlement of a prior claim involving the sale of same property involved in the instant action. In this regard the courts have held that "[U]nder the transactional approach adopted by New York in res judicata jurisprudence, 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" (see Keselman v City of New York, 944 NYS2d 763 [2d Dept. 2012] quoting Grossman v New York Life Ins. Co., 90 AD3d 990 [2d Dept. 2011]).

A court deciding a motion for summary judgment is required to view the evidence presented in the light most favorable to the party opposing the motion and to draw every reasonable inference from the pleadings and proof submitted by the parties in favor of the opponent to the motion (see Myers v Fir Cab Corp., 64 NY2d 806 [1985]). Here, viewing the evidence submitted in support of the defendants' motions in the light most favorable to the nonmoving party, this Court finds that the movants have failed to demonstrate, prima facie, that there are no triable issues as to whether the claims asserted in the within action arose out of the same transaction as the causes of action which were settled in the prior action.

In this regard based upon the plaintiffs' verified complaint (see CPLR 105(U); Sanchez v. National R.R. Passenger Corp., 92 AD3d 600 [1st Dept. 2012][a verified pleading is the statutory [*5]equivalent of a responsive affidavit for purposes of a motion for summary judgment]; Vollaro v Bevilacqua, 33 AD3d 910 [2d Dept. 2006]; Matter of Dellagatta v. McGillicuddy, 31 AD3d 549 [2d Dept. 2006]), and the affidavits of the plaintiffs submitted in opposition to the motion, this Court finds that there are several questions of fact raised by the papers including whether the plaintiffs were aware of the second sale prior to entering into the settlement; whether the settlement was only intended to cover the contract action asserted in the prior action or was meant to encompass the second sale as well; and whether the funds disbursed to the plaintiff at the closing were only in settlement of the contract action or were also intended to compensate the plaintiffs for their share of the sales proceeds realized from the sale to Mr. Sullivan.

In addition, the third cause of action in the instant complaint alleges fraud against all defendants and states that "defendants severally and jointly, engaged in fraud designed to deceive the plaintiffs by misappropriating funds duly owed to them by acting as purchasers in transaction 1 and immediately reselling the premises in transaction 2." The complaint states that all of the defendants failed to disclose the existence of the second sale to the plaintiffs. Such failure to disclose, it is alleged, was designed to deceive plaintiffs and to misappropriate funds which were due to them.

In this regard, "although a general release bars recovery on any cause of action arising prior to its execution, this is true only in the absence of fraud, duress, illegality or mistake" (see Lambert v Sklar, 61 AD2d 939 [2d Dept. 2009]). Here, as the instant action is based upon a fraudulent scheme, the doctrine of res judicata would not bar plaintiffs from seeking to recover damages in this action (see Lambert v Sklar, 61 AD3d 939 [2d Dept. 2009]).

Accordingly, for all the above stated reasons it is hereby

ORDERED, that the motion of INES GASSMANN and the cross-motions of MICHAEL O'SULLIVAN, CHARLES PEKNIC, MARTIN A. POLLAK, JACK I. SLEPIAN and POLLAK & SLEPIAN, L.L.P. for summary judgment dismissing the plaintiffs' complaint are denied.

Dated: June 26, 2012

Long Island City, NY

______________________________

ROBERT J. MCDONALD

J.S.C.