[*1]
| Pennsy Corp. v Pinter |
| 2007 NY Slip Op 52025(U) [17 Misc 3d 1116(A)] |
| Decided on October 16, 2007 |
| Supreme Court, Kings County |
| Rivera, J. |
| Published by New York State Law Reporting Bureau
pursuant to Judiciary Law § 431. |
| This opinion is uncorrected and will not be
published in the printed Official Reports. |
Supreme Court, Kings County
Pennsy Corp., Plaintiff,
against
Samuel Pinter, Defendant,
|
28440/03
Francois A. Rivera, J.
On August 1, 2003, plaintiff, Pennsy Corp. (hereinafter Pennsy) commenced the instant
action by filing a summons and verified complaint with the Kings County Clerk's office. Issue
was joined by defendant Samuel Pinter's verified answer signed on March 12, 2004. On March
31, 2006, a note of issue was filed.
Plaintiff's verified complaint is an action to enforce a judgment. Plaintiff's complaint
alleges the following facts: It is a mortgagee of certain improved premises located at 123-11
Rockaway Beach Boulevard, Queens, New York (hereinafter the subject property). Plaintiff
brought a foreclosure action against Z & S Realty Co (hereinafter Z & S), et. al in
Queens County Supreme Court under index number 20660/94 and obtained a deficiency
judgment in the amount of $847,222.18. On June 25, 2001, the judgment was entered with the
Queens County Clerk. Samuel Pinter and his wife Fagie Pinter are the general partners of Z
& S.
By order of this court Part 17, dated October 30, 2003, the instant action against
defendant Fagie Pinter was dismissed pursuant to CPLR § 3211(a)(5). By order of this court
Part 17, dated October 20, 2005, plaintiff's motion to strike all five of defendant Samuel Pinter's
verified answers to the complaint was granted.
THE TRIAL
The issues in this
action were tried before Part 52 of this Court without a jury on May 14 and 16, 2007. Daniel
Sciannameo, Alexander J. Varveris and Liborio Lungaro testified for the plaintiff. Defendant
Samuel Pinter and William O'Connell testified for the defendant. Daniel Sciannameo and
William O'Connell both testified as experts in the appraisal of real property and offered
testimony regarding the subject property. Alexander J. Varveris is the principal of plaintiff
Pennsy Corp, the entity which gave a mortgage loan to Z & S. Liborio Lungaro is an
investigator employed by Incognito Investigator. On behalf and at the request of the plaintiff, Mr
Lungaro did an asset investigation on May 15, 2007. He discovered no assets owned by Z &
S Realty and several public record judgments against Z & S.
Plaintiff admitted into evidence, a certified copy of the deficiency judgment against
Z&S; a property appraisal report for the subject property prepared by Daniel Sciannameo; a
mortgage [*2]note, a mortgage modification agreement, and an
attorney certification for fifteen distinct court documents that were part of the foreclosure action
against Z & S, in Queens County Supreme Court under index number 20660/94. Plaintiff
also read from the transcripts of a proceeding conducted in Supreme Court Queens County
Supreme Court matter taken on February 2, 2001, before Justice Levine in which Samuel Pinter
testified. Defendant's prior testimony establishes that he purchased the subject property and
assumed a mortgage on the property held by Pennsy. He paid nine hundred and twenty five
thousand dollars ($925,000.00) for the property and walked away from it not making any
payments on the mortgage.
Z & S answered and defended Pennsy's foreclosure complaint in Queens
County Supreme Court under index number 20660/94. Pennsy prevailed on a motion for
summary judgment on liability against Z & S on the mortgage on the subject property. The
property was thereafter sold at auction. The amount of the successful bid at auction was four
hundred thousand dollars ($400, 000.00). Defendant separately admitted into evidence a page
taken from the plaintiff's appraisal report prepared by Mr. Sciannameo and the property appraisal
report prepared by Mr. O'Connell.
Both plaintiff and the defendant sought a directed verdict in their favor at the close
of plaintiff's direct case. Both applications were denied based on the existence of triable issues of
fact. Plaintiff moved in the alternative for an order entering judgment against Samuel Pinter as a
general partner of Z & S based on the entry of judgment against Z & S. Plaintiff
contends that Samuel Pinter should be collaterally estopped from re-litigating the issue resulting
in the Queens County deficiency judgment.
CPLR § 1502 provides as follows:
Provisional remedies and defenses in subsequent action against co-obligor. A
subsequent action against a co-obligor who was not summoned in the original action must be
maintained in order to procure a judgment enforceable against his individually held property for
the sum remaining unpaid upon the original judgment, and such action shall be regarded as based
upon the same obligation, contract or liability as the original judgment for the purpose of
obtaining any provisional remedy. The complaint in the subsequent action shall be verified. The
defendant in the subsequent action may raise any defenses or counterclaims that he might have
raised in the original action if the summons had been served on him when it was first served on a
co-obligor, and may raise objections to the original judgment, and defenses or counterclaims that
have arisen since it was entered.
CPLR § 1025 confers upon a
partnership the right to sue or be sued in the partnership name. The provision derives from
section 222-a of the Civil Practice Act, which was enacted on the recommendation of the Judicial
Council. Their report (Eleventh Annual Report of NY Judicial Council, 1945, pp 223-227)
indicates clearly that the purposes in the enactment of the statute was purely procedural and was
to create a new technique for subjecting the assets of the partnership to the court's jurisdiction
(Taylor v. Brodt, 90 Misc 2d 793 [NY Sup 1977].
The intention of the section as enunciated in case law interpreting it and its
predecessor [*3]under the Civil Practice Act, was the treatment of
a partnership as a separate entity for pleading purposes, but to leave intact substantive law and
rules with regard to the service of individual partners (Gatley v. Deters, 128 Misc 2d 209
citing Golia v. Health Ins. Plan of Greater NY, 6 AD2d 884 [2nd Dept 1958]).
Under CPLR §§1025 and 310, service on a partnership by service of a
summons and complaint on one of the partners will subject partnership assets to the claims of the
complaint. However, personal liability of the individual partners may only be had by personal
service on that partner. (Gatley v. Deters, 128 Misc 2d 209 citing Golia v Health Ins.
Plan of Greater NY, supra ; Martinoff v Triboro Roofing Co., 228 NYS2d 139 [1962]).
So far as concerns the substantive liability of the individual partners, the law remains
as it was; without service upon them, no liability accrues (Taylor v.Brodt, 90 Misc 2d
793 , supra ., citing Martinoff v. Triboro Roofing Corp., supra ).
"The equitable doctrine of collateral estoppel is grounded in the facts and realities of
a particular litigation, rather than rigid rules. Collateral estoppel precludes a party from litigating
again in a subsequent action or proceeding an issue raised in a prior action or proceeding and
decided against that party or those in privity (Buechel v Bain, 97 NY2d 295, 303 [2001]).
Two requirements must be met before collateral estoppel can be invoked. There must be an
identity of issue which has necessarily been decided in the prior action and is decisive of the
present action, and there must have been a full and fair opportunity to contest the decision now
said to be controlling (Buechel v Bain, 97 NY2d, supra . at 304 [2001]). The
litigant seeking the benefit of collateral estoppel must demonstrate that the decisive issue was
necessarily decided in the prior action against a party, or one in privity with a party. The party to
be precluded from relitigating the issue bears the burden of demonstrating the absence of a full
and fair opportunity to contest the prior determination (Buechel v Bain, supra .).
The doctrine, however, is a flexible one, and the enumeration of these elements is
intended merely as a framework, not a substitute, for case-by-case analysis of the facts and
realities. 'In the end, the fundamental inquiry is whether relitigation should be permitted in a
particular case in light of ... fairness to the parties, conservation of the resources of the court and
the litigants, and the societal interests in consistent and accurate results. No rigid rules are
possible, because even these factors may vary in relative importance depending on the nature of
the proceedings ..."' (Buechel v Bain, supra .).
The question as to whether a party has had a full and fair opportunity to contest a
prior determination cannot be reduced to a formula. It cannot, for instance, be resolved by a
finding that the party against whom the determination is asserted was accorded due process in the
prior proceeding (Gilbert v. Barbieri, 53 NY2d 285, 292 [1981]). The point of the
inquiry, of course, is not to decide whether the prior determination should be vacated but to
decide whether it should be given conclusive effect beyond the case in which it was made
(Gilbert v. Barbieri, supra . at 292).
There is no dispute that Z & S, the partnership, is fully liable for the Queens
County Supreme Court judgment under index number 20660/94, as is Samuel Pinter to the extent
of his partnership assets. However, inasmuch as Samuel Pinter was not individually served in the
prior action, the judgment entered therein and any deficiency therein is not chargeable against
Samuel [*4]Pinter's personal assets. Plaintiff seeks an order
finding Samuel Pinter, individually liable for the deficiency judgment by applying the principle
of equitable estoppel to the instant action.
The principle is fundamentally premised on promoting judicial economy. However,
the court sees no realization of judicial economy when plaintiff has chosen to assert the principle
for the first time at trial and not in a pre-trial motion for summary judgment. Such a delay if
occasioned by a defendant in the assertion of a defense to the complaint would constitute a
waiver of the right to use the principle. The court does not find that plaintiff has waived his right
to apply the principle here, rather, the court in its discretion declines to do so
Samuel Pinter did not have an incentive to fully and zealously defend the underlying
complaint brought against Z & S, since his personal assets were not implicated and he was
only at risk to the extent of his share of the partnership asset. For the foregoing reason, the court
finds no equity served by precluding litigation of the issue of Samuel Pinter's personal liability to
the plaintiff mortgagee.
The determination of the amount of any deficiency due to the mortgagee plaintiff by
Samuel Pinter must be newly determined. The defendant is due the difference between the
amount due on the defaulted mortgage and the fair market value of the subject property. The
amount due on the defaulted mortgage is one million, thirteen thousand eight hundred and ten
dollars and twenty two cents ($1,013,810.22). In arriving at fair market value, the court
considered the appraisal report and testimony of Daniel Sciannameo and William O'Connell.
Neither appraiser used the cost replacement method in arriving at market value. The court found
that the income producing appraisal methodology utilized by Mr. Sciannameo was more accurate
and reasonably related to the properties condition at the time rather than the comparable sales
method. The court did not agree with his adjustments for repair cost but did agree with his
adjustment for tax liens in at arriving at fair market value. Taking into consideration the
following, the court finds that the fair market value of the subject property is six hundred and
twenty three thousand five hundred and fifty nine dollars ($623,559.00). The court therefore
finds that the deficiency due to the plaintiff is three hundred and ninety thousand two hundred
and fifty one dollars and twenty two cents ($390,251.22) with interest retroactive to September
30, 1996.
The parties are directed to settle a judgment.
__________________________________X
J.S.C.