DALTON v. Nanette A. Dalton, Respondent. (2019)

DECISION & ORDER

ORDERED that the order is reversed, on the law, with costs, and the motion of the defendant Nanette A. Dalton pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against her is denied.

The plaintiffs are the parents of the defendant Jack Bradford Dalton.  The defendant Nanette A. Dalton (hereinafter the defendant) is the former spouse of Jack Bradford Dalton.  The plaintiffs commenced this action to impose a constructive trust upon the proceeds from the sale of certain real property, which were, in part, disbursed to Jack Bradford Dalton and the defendant in a prior divorce action.  The plaintiffs alleged that the plaintiff Archie C. Dalton, the defendant's former father-in-law, advanced certain funds in connection with the acquisition and improvement of the subject property, with the understanding that the advances were loans which would be repaid.

The defendant moved pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against her, arguing that the plaintiffs were collaterally estopped from seeking to impose a constructive trust on the proceeds from the sale of the subject property because they failed to intervene in the divorce action, in which the sale proceeds were subjected to equitable distribution.  In an order dated May 25, 2018, the Supreme Court granted the defendant's motion.  The plaintiffs appeal.

“The doctrine of collateral estoppel ‘precludes a party from relitigating in a subsequent action or proceeding an issue clearly raised in a prior action or proceeding and decided against that party or those in privity, whether or not the tribunals or causes of action are the same’ ” (Bank of N.Y. Mellon v. Chamoula, 170 A.D.3d 788, 790, 96 N.Y.S.3d 148, quoting Ryan v. New York Tel. Co., 62 N.Y.2d 494, 500, 478 N.Y.S.2d 823, 467 N.E.2d 487).  “The doctrine of collateral estoppel applies when: ‘(1) the issues in both proceedings are identical, (2) the issue in the prior proceeding was actually litigated and decided, (3) there was a full and fair opportunity to litigate in the prior proceeding, and (4) the issue previously litigated was necessary to support a valid and final judgment on the merits’ ” (Bank of N.Y. Mellon v. Chamoula, 170 A.D.3d at 790, 96 N.Y.S.3d 148, quoting Conason v. Megan Holding, LLC, 25 N.Y.3d 1, 17, 6 N.Y.S.3d 206, 29 N.E.3d 215 [internal quotation marks omitted] ).  “The party seeking to invoke collateral estoppel has the burden to show the identity of the issues” (Matter of Dunn, 24 N.Y.3d 699, 704, 3 N.Y.S.3d 751, 27 N.E.3d 465).

The doctrine of collateral estoppel can only be applied to those who, unlike the plaintiffs, were either parties or in privity with a party to the prior action or proceeding (see Colella v. GEICO Gen. Ins. Co., 164 A.D.3d 745, 746–747, 83 N.Y.S.3d 157; Russell v. New York Cent. Mut. Fire Ins. Co., 11 A.D.3d 668, 669, 783 N.Y.S.2d 404; Searles v. Main Tavern, 28 A.D.2d 1136, 284 N.Y.S.2d 652).  Contrary to the defendant's contention, that the plaintiffs did not seek to intervene in the prior divorce action involving their son and the defendant does not collaterally estop them from maintaining this action to impose a constructive trust on real estate sale proceeds (see Colella v. GEICO Gen. Ins. Co., 164 A.D.3d at 746–747, 83 N.Y.S.3d 157; Russell v. New York Cent. Mut. Fire Ins. Co., 11 A.D.3d at 669, 783 N.Y.S.2d 404; Searles v. Main Tavern, 28 A.D.2d 1136, 284 N.Y.S.2d 652).  Moreover, the defendant failed to demonstrate that the issue of whether the plaintiffs were entitled to impose a constructive trust upon the sale proceeds due to alleged loans made by the plaintiff Archie C. Dalton was actually litigated and necessarily decided in the prior divorce action (see Ricci v. Redfern, 17 A.D.3d 559, 560, 793 N.Y.S.2d 178).

Accordingly, the Supreme Court should have denied the defendant's motion pursuant to CPLR 3211(a)(5) to dismiss the complaint insofar as asserted against her.

MASTRO, J.P., MILLER, BARROS and CHRISTOPHER, JJ., concur.