FILED. NEW YORK COUNTY CLERK 051-112016 10:00 AM
`FILED: NEW YORK COUNTY CLERK 05/19/2016 10:00 AM
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`_ NYSC3F DOC. NO.
`NYSCEF DOC. NO. 22
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`INDEX $50 652601/2015
`INDEX NO. 652601/2015
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`VYSCIZF: 05/19/2016
`RECEIVED NYSCEF: 05/19/2016
`SUPREME COURT OF THE STATE OF NEWVYDORK
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`NEW YORK COUNTY
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`PRESENT:
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`DONNA M' “MU-9
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`The following papers, numbered 1 to_ , were read on this motion tolfor
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`Notice of Motion/Order to Show Cause —- Affidavits — Exhibits
`Answering Affidavits— Exhibits
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`Replying Affidavits
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`................................................................. El CASE DISPOSED
`1. cnecx ONE:
`2. CHECK As APPROPRIATE: ...........................MOTION IS: [I GRANTED
`E] DENIED
`3. CHECK IF APPROPRIATE: ................................................ EISETTLE ORDER
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`[I NON-PIiIAL DISPOSITION
`mSRANTED IN PART
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`CI FIDUCIARY APPOINTMENT i; E] REFERENCE
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`SUPREME COURT OF THE STATE OF NEW YORK
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`COUNTY OF NEW YORK: IAS PART 58
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`QEEEIXIZEEEES'SEE,"""""""""""""""""""X
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`Plaintiff,
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`-against—
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`Index No. 652601/15
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`WILLIAM PAGAN,
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`Motion Seq. No. 001
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`__________________________________________________________________X
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`Defendant.
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`DONNA M. MILLS, J.:
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`In this action for fraud arising out of a personal injury action, defendant William Pagan
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`(Pagan) moves, pursuant to CPLR 3211, to dismiss the complaint for failure to state a cause of
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`action, and based upon the doctrines of res judicata and collateral estoppel.
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`Background and Procedural History
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`Plaintiff William H. Neilson (Neilson) commenced this action on July 24, 2015, asserting
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`one cause of action for fraud against Pagan arising out of a personal injury action filed by Pagan
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`against Neilson, captioned Pagan v Neilson, Sup Ct, Kings County, index No. 6517/13
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`(hereinafter, the personal injury action).
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`The following facts are taken from the complaint. On March 25, 2013, Pagan was
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`operating an electric motorized bike without any registration or license plates in the vicinity of
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`the intersection of Fourth Avenue and 24th Street in Brooklyn (verified complaint, W 7, 8).
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`According to the complaint, Pagan intentionally, knowingly, and deliberately drove his bike into
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`the passenger side of the automobile owned by Neilson (id. , 11 10).
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`On April 10, 2013, Pagan filed the personal injury action against Neilson, seeking
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`damages for personal injuries, pain and suffering, and property loss as a result of Neilson’s
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`negligence, carelessness, and reckless conduct in the operation of his motor vehicle (id , 1H] 11—
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`14). On December 29, 2014, Pagan agreed to settle the personal injury action for a lump sum
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`payment of $265,000, paid by Neilson’s insurer, Chubb Indemnity Insurance Company (Chubb)
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`(id, W 15—16).
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`Neilson alleges that the complaint in the personal injury action contained the following
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`misrepresentations of material fact: (1) “[o]n March 24, 2013, plaintiff, William Pagan, was
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`lawfully riding a bicycle on Fourth Avenue in the vicinity of its intersection with 24th Street,
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`Brooklyn, County of Kings, City and State of New York” (id, 11 17); (2) “[o]n March 25, 2013,
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`the motor vehicle owned and operated by the defendant, William H. Neilson[,] did violently
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`strike the plaintiff, causing serious personal injury” (id, 11 18); (3) “Defendant [Neilson] was
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`negligent, reckless and careless in the operation, maintenance and control of said motor vehicle .
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`. .” (id, 11 20); and (4) “[s]olely as a result of the defendant’s negligence, plaintiff, William
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`Pagan, was caused to suffer severe and serious personal injuries to mind and body, and further
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`the plaintiff was subject to great physical pain and mental anguish. Solely as a result of the
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`defendant’s negligence, plaintiff sustained a property loss” (id. , 11 22). Neilson alleges, contrary
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`to these allegations, that Pagan intentionally drove his bike into the passenger side of Neilson’s
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`vehicle; Pagan did not have a valid driver’s license, insurance or registration for his bike; Pagan
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`was not wearing a helmet and was not traveling in a designated bike lane at the time of the
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`accident; and Pagan was not in significant pain after the accident and the bike was not
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`significantly damaged as a result of the accident (id , 1111 17, 18, 20, 22).
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`Additionally, Neilson alleges that Pagan made the following misrepresentations of
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`material fact at his deposition in the personal injury action on February 21, 2014: (1) Pagan
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`testified that his bike was “wrecked” and “totaled” (id , 1] 23); (2) he admitted that he had been
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`convicted of assault but could not recall any other convictions (id. , 1] 24); (3) he “[t]umbled in the
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`air a good five, or ten feet, and landed on [his] back. On [his] shoulder” (id, 1] 25); (4) the EMS
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`workers “cut all of [his] clothes. [He] was naked in the street” (id, 1] 26); and (5) he “thought
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`[he] was paralyzed” (id. , 1] 27). Neilson claims that, as a result of Pagan’s fraud, he has incurred
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`increased insurance premiums, legal fees in defending the personal injury action, legal fees in
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`prosecuting the instant action, and property damage to his automobile, and requests a money
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`judgment in the amount of $50,000 against Pagan (id, 1]] 29, 30, 31, wherefore clause).
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`Arguments
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`Pagan now moves to dismiss the complaint, arguing that the complaint fails to state a
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`cause of action for fraud. Pagan contends that Neilson cites a series of allegations in the
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`complaint in the personal injury action, but does not allege any of the elements of fraud, much
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`less in sufficient detail. According to Pagan, Neilson simply seeks to relitigate the car accident
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`case which has been settled. In addition, Pagan asserts that Neilson has suffered no injury caused
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`by Pagan.
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`In addition, Pagan contends that the instant action is barred under the doctrines of res
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`judicata and collateral estoppel, relying on a stipulation of discontinuance with prejudice in the
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`personal injury action.l Pagan maintains that, as a matter of policy, allowing a defendant to
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`relitigate the same issues would have a chilling effect on settlements.
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`In opposition to Pagan’s motion, Neilson served and filed an amended verified
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`. is
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`1The stipulation of discontinuance provides that “the above-entitled action .
`discontinued with regards to defendant WILLIAM NELSON [sic] with prejudice” (Villar
`affirmation in support, exhibit C).
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`complaint,2 and argues that he has adequately stated a cause of action for fraud against Pagan.
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`Additionally, Neilson contends that this action should not be barred under the res judicata and
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`collateral estoppel doctrines. As support, Neilson submits an affidavit, indicating that the
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`attorney assigned to represent him by Chubb did not advise him that the case was going to be
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`settled for $265,000, that he wanted the case to be decided through a verdict because he was not
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`negligent, and that he never advised his attorney from Chubb to settle the case (Neilson aff, W 9—
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`11).3 Neilson also contends that the issue of Pagan’s fraud was not decided against him. Neilson
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`also provides a copy of a general release dated December 29, 2014, which provides as follows:
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`“WILLIAM PAGAN as RELEASOR, in consideration of the sum of Two Hundred
`Sixty Five Thousand Dollars ($265,000) received from CHUBB INDEMNITY
`INSURANCE COMPANY on behalf of William H. Neilson (hereinafter
`‘RELEASEES’),
`[releases and discharges] RELEASEES’ heirs, executors,
`administrators, agents, successors, officers, shareholders, members, partners,
`subsidiaries, affiliates, insurers and assigns from all actions, causes of actions, suits,
`debts, liens, dues, sums of money, accounts, reckonings, bonds, bills, specialities,
`covenants, contracts, controversies, agreements, promises, variances, trespasses,
`damages, judgments, extents, executions, claims, and demands whatsoever, in law,
`admiralty or
`equity, which against
`the RELEASEES,
`the RELEASOR,
`RELEASOR’S heirs, executors, administrators, successors and assigns ever had, by
`reason of any matter, cause or thing whatsoever from the beginning of the world to
`the date of this Release, including any and all claims arising out of RELEASOR’S
`incident on March 25, 2013”
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`(id, exhibit B).
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`2The court notes that the allegations in the amended verified complaint are identical to the
`those in the verified complaint, except that the amended verified complaint alleges that Pagan’s
`misrepresentations were made with the intent to induce reliance by Neilson, Neilson’s counsel,
`and Chubb (see amended verified complaint, 1} 32).
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`3Neilson indicates that he also hired James W. Neilson, Esq. to represent him in the
`personal injury action in order to protect his personal assets (Neilson aff, 1] 10).
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`Discussion
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`Pursuant to CPLR 3211 (a) (5), a cause of action may be dismissed “because of .
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`collateral estoppel .
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`. payment, release, [and/or] res judicata. .
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`. .” “Under res judicata, or claim
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`preclusion, a valid final judgment bars future actions between the same parties on the same cause
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`of action” (Parker v Blauvelt Volunteer Fire Co, 93 NY2d 343, 347 [1999]). “Generally, a
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`stipulation of discontinuance ‘with prejudice’ will be given res judicata effect and will bar
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`litigation of the same cause action” (Mosello v First Union Bank, 258 AD2d 631, 632 [2d Dept
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`1999]). “However, the language ‘with prejudice’ is narrowly interpreted when the interest of
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`justice or the equities of the case warrant such an approach” (id).
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`Here, the stipulation of discontinuance with prejudice in Pagan’s personal injury action
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`against Neilson (Villar affirmation in support, exhibit C), has no relevance to Neilson’s action for
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`fraud against Pagan. Thus, contrary to Pagan’s contention, it cannot be said that the stipulation
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`of discontinuance serves as a res judicata bar to the instant action.
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`Collateral estoppel “precludes a party from relitigating in a subsequent action or
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`proceeding an issue clearly raised in a prior action or proceeding and decided against that party or
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`those in privity, whether or not the tribunals or causes of action are the same” (Ryan v New York
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`Tel. C0,, 62 NY2d 494, 500 [1984]). In other words, “collateral estoppel effect will only be
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`given to matters actually litigated and determined in a prior action” (Kaufman v Eli Lilly & Co. ,
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`65 NY2d 449, 456 [1985] [internal quotation marks and citation omitted]). “An issue is not
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`actually litigated if, for example, there has been a default, a confession of liability, a failure to
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`place a matter in issue by proper pleading or even because of a stipulation” (id. at 456—457
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`[emphasis added]).
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`In this case, the issue of Pagan’s fraud was not decided in the personal injury action.
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`Moreover, even if Neilson participated in the settlement and discontinuance of Pagan’s personal
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`injury action, Neilson’s participation cannot be construed to be the kind of determination,
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`following a full and fair opportunity to litigate the issue, that would be necessary to collaterally
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`estop Neilson from establishing fraud against Pagan (see Singleton Mgt. v Compere, 243 AD2d
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`213, 218 [1st Dept 1998] [settlement and stipulation of discontinuance entered in personal
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`manager’s breach of contract action against singing group did not have collateral estoppel effect
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`in manager’s tortious interference with contract action against competitor]).
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`On a motion to dismiss pursuant to CPLR 3211 (a) (7), the court must “accept the facts as
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`alleged in the complaint as true, accord plaintiff[] the benefit of every possible favorable
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`inference, and determine only whether the facts as alleged fit within any cognizable legal theory”
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`(Leon v Martinez, 84 NY2d 83, 87-88 [1994]; see also Chapman, Spira & Carson, LLC v Helix
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`BioPlzarma Corp, 115 AD3d 526, 527 [1st Dept 2014]). However, “‘factual allegations .
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`. that
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`consist of bare legal conclusions, or that are inherently incredible .
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`. , are not entitled to such
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`consideration’” (Mamoon v Dot Net Inc, 135 AD3d 656, 658 [1st Dept 2016], quoting Leder v
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`Spiegel, 31 AD3d 266, 267 [lst Dept 2006], afld 9 NY3d 836 [2007], cert denied 552 US 1257
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`[2008]). On a CPLR 3211 (a) (7) motion, “affidavits may be used freely to preserve inartfully
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`pleaded, but potentially meritorious, claims” (Rovello v Orofino Realty Co., 40 NY2d 633, 635
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`[1 976]).
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`In order to state a cause of action for fraudulent misrepresentation, “a plaintiff must allege
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`‘a misrepresentation or a material omission of fact which was false and known to be false by
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`defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of
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`the other party on the misrepresentation or material omission, and injury
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`(Mandarin Trading
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`9”
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`Ltd. v Wildenstein, 16 NY3d 173, 178 [2011], quoting Lama Holding Co. v Smith Barney, 88
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`NY2d 413, 421 [1996]). Fraudulent concealment requires a duty to disclose material
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`information, which arises where a fiduciary or confidential relationship exists between the parties
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`(Dembeck v 220 Cent. Park S., LLC, 33 AD3d 491, 492 [lst Dept 2006]; Kaufman v Cohen, 307
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`AD2d 113, 119—120 [1st Dept 2003]). Moreover, CPLR 3016 (b) requires that “the
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`circumstances constituting the wrong shall be stated in detail.” Stated otherwise, the plaintiff
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`must “‘set forth specific and detailed factual allegations that the defendant personally participated
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`in, or had knowledge of any alleged fraud’” (Friedman v Anderson, 23 AD3d 163, 166 [lst Dept
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`2005], quoting Handel v Bruder, 209 AD2d 282, 282-283 [lst Dept 1994]).
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`Justifiable reliance is a required element to establish a fraud claim (PJI .3 :20). “[I]n order
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`to be actually deceived by a false representation, a party must not only believe that the
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`representation is true, but must also be justified in taking action in reliance thereon” (Verschell v
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`Pike, 85 AD2d 690, 691 [2d Dept 1981], citing Lanzi v Brooks, 54 AD2d 1057, 1058 [3d Dept
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`1976], afld 43 NY2d 778 [1977], rearg denied 44 NY2d 733 [1978]). Courts have held
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`justifiable reliance to be lacking where the statements were made in the course of adversarial
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`proceedings (see Nineteen N. Y. Props. Ltd Partnership v 535 5” Operating, 211 AD2d 411, 412-
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`413 [lst Dept 1995] [“The only fraud alleged is with respect to statements made in the complaint
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`and in support of plaintiff’ s motion; there could be no detrimental reliance on such statements”];
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`Lazich v Vittoria & Parker, 189 AD2d 753, 754 [2d Dept 1993], appeal dismissed 81 NY2d
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`1006 [1993] [“All the statements and actions complained of were undertaken in the course of
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`adversarial proceedings and were fully controverted. Therefore, the plaintiff cannot and has not
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`asserted the requisite reliance required for fraud”]).
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`Neilson alleges that Pagan made fraudulent misrepresentations in the complaint and at his
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`deposition in the personal injury action in which they were adversaries (amended verified
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`complaint, W 17, 18, 20, 22, 23, 24, 25, 26, 27, 32; Neilson aff, W 5-8). Based upon the above
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`authority, Neilson could not have justifiably relied on any such statements by Pagan as a matter
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`of law. Therefore, the complaint fails to state a cause of action for fraud and must be dismissed.
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`Consequently, Pagan’s motion to dismiss is granted.
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`Conclusion
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`Accordingly, it is hereby
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`ORDERED that defendant William Pagan’s motion to dismiss (motion sequence number
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`001) is granted and the amended verified complaint is dismissed with costs and disbursements to
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`defendant as taxed by the Clerk upon the submission of an appropriate bill of costs; and it is
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`further
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`ORDERED that the Clerk is directed to enter judgment accordingly.
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`Dated:
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`(g M:
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