In the Matter of Empire State Building Associates, L.L.C. Participant Litigation. Marc Postelnek, as Trustee of the Mabel Abramson Irrevocable Trust #2, et al., Appellants, v Anthony E. Malkin et al., Respondents.
Supreme Court, Appellate Division, First Department, New York
July 21, 2014
21 N.Y.S.3d 31
O. Peter Sherwood, J.
Prior Case History: 2014 NY Slip Op 31900(U)
The motion court correctly found that the release and the covenant not to sue in the agreement settling a prior lawsuit were broad enough to bar plaintiffs’ current claim that defendants breached their fiduciary duty by failing to consider offers for sale of the Empire State Building and proceeding instead with their earlier plan to place the building in a real estate trust for public offering. Although the offers for purchase were received after the settlement in the first action was finalized, the settlement encompassed plaintiffs’ allegations in that action that defendants breached their fiduciary duty by failing to proceed with any reasonable alternatives to the transaction at issue, such as marketing the building for sale (see e.g. Edelman v Emigrant Bank Fine Art Fin., LLC, 89 AD3d 632 [1st Dept 2011]). The covenant not to sue is circumscribed by the released claims and therefore also bars this action (see McMahan & Co. v Bass, 250 AD2d 460 [1st Dept 1998], lv dismissed in part, denied in part 92 NY2d 1013 [1998]). In addition, this action is barred by the doctrine of res judicata, since the court dismissed the first action with prejudice following the settlement (Matter of Hunter, 4 NY3d 260 [2005]).
We have considered plaintiffs’ remaining arguments and find them unavailing. Concur—Gonzalez, P.J., Tom, Mazzarelli and Manzanet-Daniels, JJ. [Prior Case History: 2014 NY Slip Op 31900(U).]