Plaintiff, HSBC Bank USA, N.A., brought this action in 2010 on a commercial loan, made by HSBC to defendant Pacific Jin An Trading, Inc., and guaranteed by defendant Sharon Tang. Although plaintiff prevailed in the action no later than 2012, plaintiff did not enter judgment against defendants until 2024. (See Elkin affirmation, exhibit G [entered judgment].)

Defendant Sharon Tang now moves to vacate the 2024 judgment on the ground that plaintiff's claims against her are barred on claim-preclusion principles due to a 2013 settlement of a related action in Supreme Court, Erie County. (See Elkin affirmation at ¶¶ 2-4.) Tang also seeks interim relief barring enforcement of the judgment pending the court's resolution of the motion. Plaintiff's assignee, Hamilton Equity Group, LLC, has submitted a letter opposing vacatur and the requested interim stay of judgment enforcement. Tang's motion is denied.

As noted above, HSBC brought this action in 2010. This court (Louis B. York, J.) granted HSBC summary judgment on default against defendant Tang in 2011. (See Elkin affirmation, exhibit C [decision and order].) Hamilton Equity indicates in its letter, albeit without providing the supporting documents, that the court then granted leave to reargue and vacated the summary-judgment order; but, following reargument, granted HSBC summary judgment again in 2012. (See Bargnesi letter dated September 16, 2024, at 1.) Regardless whether the operative [*2]summary-judgment order is from 2011 or 2012, though, HSBC did not enter judgment on the court's order.^[FN1]

In 2013, Hamilton Equity, acting as HSBC's assignee, brought an action in Supreme Court, Erie County, on the same loan and guarantee, against the same defendants—apparently unaware of this action. (See Elkin affirmation, exhibit D.) Defendants' answer in the Erie Supreme action, filed in September 2013, asserted a claim-preclusion defense based on Justice York's order granting summary judgment in this action. (See Elkin affirmation, exhibit E, at 2.) In March 2014, Hamilton Equity's counsel wrote to Tang's counsel to notify him that "in light of th[e] order" that was "previously granted to [HSBC]," Hamilton Equity had decided to discontinue the Erie Supreme action. (See Bargnesi letter, exhibit 2.) In March 2014, Hamilton Equity, Pacific Jin An Trading, and Tang executed a stipulation of discontinuance of the Erie Supreme action "on the merits, with prejudice." (Elkin affirmation, exhibit F.)

Ten years went by. In February 2024, Hamilton Equity obtained a restraint on a bank account held by Tang, apparently in the belief that judgment had been entered against her in this action. (See Tang affidavit at ¶ 2.) Her counsel wrote to counsel for Hamilton Equity to raise the absence of a judgment and request release of the restraint. (See Elkin affirmation at ¶ 7.) Hamilton Equity's counsel promptly directed the bank to release the restraint. (See Elkin affirmation, exhibit I.)

Two weeks later, in March 2024, HSBC filed a proposed judgment in this action based on the original grant of summary judgment. (See Elkin affirmation, exhibit G, at 3.) The County Clerk entered judgment for HSBC against both defendants on April 3, 2024. (See id. at 1.) In May 2024, HSBC assigned the judgment to Hamilton Equity. On this motion, Tang seeks vacatur of the judgment.

Tang's argument for vacatur is simple: The claims against her that underlie the current judgment were previously asserted against her in the Erie Supreme Court action, and then discontinued with prejudice, before entry of the New York County judgment. And New York affords claim-preclusive effect to with-prejudice stipulations of discontinuance. (See Moore v County of Clinton, 219 AD2d 131, 133 [3d Dept 1996]; defendant's mem of law at 2-3.) Thus, she argues, 2013 Erie County stipulation of discontinuance precluded any further pursuit of HSBC or Hamilton Equity's claims against her, such as the entry of judgment in this action.

In opposing vacatur, Hamilton Equity does not dispute that it executed a stipulation stating that its claims against Tang in the Erie Supreme action were discontinued on the merits and with prejudice; or that with-prejudice stipulations are generally entitled to claim-preclusive effect.^[FN2] Instead, Hamilton Equity argues, in effect, that under the circumstances of this case, the court should decline to afford claim-preclusive effect to the discontinuance of the Erie Supreme action as without prejudice, rather than with prejudice. This court agrees.

It is true that a stipulation of discontinuance's "use of such terms as 'with prejudice' or 'on the merits' raises a presumption that the stipulation is to be given res judicata effect in a subsequent action on the same cause of action." (Singleton Mgt., Inc. v Compere, 243 AD2d 213, 216 n 1 [1st Dept 1998].) But a court "may always consider evidence that the parties intended otherwise." (Id., citing Dolitsky's Dry Cleaners v YL Jericho Dry Cleaners, 203 AD2d 322, 323 [2d Dept 1994].) When the record suggests that a with-prejudice discontinuance was "not intended to encompass" the claims at issue, the court may properly decline to dismiss those claims "based on the doctrine of res judicata."^[FN3] (Frenk v Solomon, 123 AD3d 416, 416 [1st Dept 2014].)

Here, Tang does not represent (or provide evidence) that the parties in executing the Erie Supreme stipulation of discontinuance intended thereby to preclude Hamilton Equity (or HSBC) from prosecuting its claims, or obtaining entry of judgment, in this action. To the contrary, Tang herself contended, in her answer in the Erie Supreme action, that Hamilton Equity's claims in that action should be dismissed as precluded by the summary-judgment order in this action. (See Elkin affirmation, exhibit E, at ¶ 4.) And, as noted above, Hamilton Equity told Tang's then-counsel that its decision to discontinue the Erie Supreme action was based on the order HSBC had obtained in this action—presumably the order granting HSBC summary judgment. (See Bargnesi letter, exhibit 2.)

The record does not reflect whether Hamilton Equity executed the Erie Supreme stipulation of discontinuance out of a mistaken belief that judgment had already been entered in this action; whether Hamilton Equity's counsel at that time had not accounted for potential claim-preclusive effects in this action of the Erie Supreme discontinuance; or whether some other factor accounted for the decision to phrase the stipulation as a discontinuance with prejudice. Regardless, this court sees no basis in the record to conclude that the parties intended that stipulation to preclude plaintiff's claims in this action.

Moreover, it is undisputed that the motion court in this action determined more than a decade ago that HSBC was entitled to judgment against Tang—and that she nonetheless has never had to pay anything to HSBC (or its assignee). This court declines to render the prior [*3]summary-judgment order in this action, and HSBC's right to enter judgment on that order, entirely without effect, based on what appears to have been no more than an oversight of counsel. New York's application of the claim-preclusion doctrine "seeks to prevent litigants from taking two bites at the apple." (Simmons v Trans Express Inc., 37 NY3d 107, 112 [2021].) But in "properly seeking to deny [litigants] two days in court, [we] must be careful not to deprive [them] of one." (Id. [internal quotation marks omitted; alterations in original].)

Accordingly, it is

ORDERED that defendant Tang's motion to vacate the April 3, 2024, judgment in this action is denied; and it is further

ORDERED that Hamilton Equity serve a copy of this order with notice of its entry on all parties by email (if available) and by certified mail, return receipt requested.