FUSCHI v. Highpoint on Hudson Owners, Inc., et al., Defendants. (2024)

Order, Supreme Court, Bronx County (Paul L. Alpert, J.), entered on or about August 17, 2022, which, insofar as appealed from, granted the motion of defendants JP Morgan Chase Bank, N.A. (Chase) and The Bank of New York Mellon Trust Company, N.A. as Trustee for Chase Flex Trust Series 2007–2 (the Trust, and together with Chase, defendants) to dismiss the complaint as against them, unanimously affirmed, with costs.

Supreme Court correctly dismissed the complaint on res judicata (claim preclusion) grounds (see Simmons v. Trans Express, Inc., 37 N.Y.3d 107, 111, 148 N.Y.S.3d 178, 170 N.E.3d 733 [2021];  O'Brien v. City of Syracuse, 54 N.Y.2d 353, 357, 445 N.Y.S.2d 687, 429 N.E.2d 1158 [1981]).  This action, like the prior adversary proceedings brought by plaintiff in Federal Bankruptcy Court, challenges the validity of defendants’ security interest in shares of stock in a cooperative apartment and a proprietary lease, as well as the enforceability of the mortgage loan or loan security agreement.  Even assuming that plaintiff now seeks somewhat different relief than that sought in the bankruptcy action, plaintiff's current claim arises out of the same series of transactions as the ones underlying her adversary proceedings and could have been raised in her third and fourth bankruptcy proceedings (see Chapman v. Faustin, 150 A.D.3d 647, 647, 55 N.Y.S.3d 219 [1st Dept. 2017]).

Furthermore, because a dismissal with prejudice is a determination on the merits for res judicata purposes, the Federal Bankruptcy Court's dismissal of the prior bankruptcy proceeding with prejudice precludes this action (see Yonkers Contr. Co. v. Port Auth. Trans–Hudson Corp., 93 N.Y.2d 375, 380, 690 N.Y.S.2d 512, 712 N.E.2d 678 [1999]).  Despite plaintiff's position otherwise, res judicata principles apply “with full force to matters decided by the bankruptcy courts” (Insurance Co. of State of Pa. v. HSBC Bank USA, 10 N.Y.3d 32, 38, 852 N.Y.S.2d 812, 882 N.E.2d 381 [2008] [internal quotation marks omitted]).

Plaintiff's contentions that the Bankruptcy Court lacked jurisdiction to enter a final decision on the merits and that the claims raised in the adversary proceedings were not determined to be core proceedings are not purely legal arguments that are clear from the record, are raised for the first time on appeal and are therefore unpreserved for our review (see U.S. Bank N.A. v. DLJ Mtge. Capital, Inc., 146 A.D.3d 603, 603, 44 N.Y.S.3d 747 [1st Dept. 2017]).

We have considered plaintiff's remaining contentions and find them unavailing.