In Fierro v Yellen 2022 NY Slip Op 32959(U) August 31, 2022 Supreme Court, Kings County Docket Number: Index No. 523796/2021 Judge: Ingrid Joseph, a case that wended its way through Kings Supreme, and on to the Second Department, everyone in the proceedings take fluid positions on whether there was fraud, whether there was a good class action and on Judiciary Law 487.
The facts are way too long to excerpt here. Here are a portion:
“On August 2, 2000, Cyber-Struct, Inc. (“Cyberstruct”)2, as general contractor, entered into a Standard Form of Agreement (“the contract”) with Dean Boerum Owners, Inc. (“DBO”), as the owner, to construct a new, three-story building containing 21 apartments at 119-125 Boerum Place, 42 Dean Street,· in Brooklyn, New York (“the property”). Pursuant to the contract, Cyberstruct was responsible for the coordination of the construction of the project, and its responsibilities included retaining subcontractors and material suppliers, as necessary,· and paying them for their work and the materials provided by them. Cyberstruct alone (not DBO) was to compensate its subcontractors and material suppliers by using funds paid to Cyberstruct by DBO. Cyberstruct’s contract with DBO required Cyberstruct to complete an American Institute of Architects Application and Certificate for payment at the end of each pay period in order to be paid by DBO. Once Cyberstruct received its funds from DBO, it was obligated, pursuant to the contract and the Lien Law, to forward the appropriate payment to each subcontractor or materialman who applied for payment.
DBO terminated the contract with Cyberstruct in April 2002. According to plaintiffs, at that time, DBO owed Cyberstruct $328,286.49 on the contract. Approximately $160,000 of said sum was retainage, i.e., money earned by the general contractor, but held by the owner, pending job completion. At a meeting held in April 2002 between DBO and Cyberstruct, Cyberstruct presented Philip Mendlow (“Mendlow”), the president of DBO, with a spreadsheet dated April 25, 2002, which indicated that 19 of its subcontractors, suppliers, and/or vendors were owed $353,566.93. Cyberstruct, however, alleges that this amount was the amount owed only if the contract had been fully performed.
Plaintiffs allege that Mendlow entered into a series of executed assignments with
not less than eight of Cyberstruct’s subcontractors and suppliers, one of whom was J.C.
Ryan, a supplier of architectural doors, frames, and finish hardware. The assignment between J.C. Ryan and DBO was dated May 2, 2002 (NYSCEF Doc No. 89), and was executed by Schnipper, who was J.C. Ryan’s President and Chief Executive Officer.
There was also an assignment dated May 2, 2002 by A&A Cibco Construction Inc., an
assignment dated May 2, 2002 by Alta Recycling, an assignment dated May 2, 2002 by
Bay Ridge Mechanical Corp., an assignment dated May 7, 2002 by Express Contracting
Corp., an assignment dated May 6, 2002 by Kamco Supply Co., an assignment dated May 2002 by Empire Restoration Corp., and an assignment dated June 21, 2002 by
Professional Tile Contracting Corp.”
Similarly, since plaintiffs’ first cause of action pursuant to Judiciary Law§ 487 is predicated on the same transactions and could have be~n raised in the class action, this
cause of action is also barred bythe doctrine ·of res judicata. In this regard, it is noted that plaintiffs’ Judiciary Law § 487 claim was specifically raised by them in the bankruptcy proceeding, and the bankruptcy court, in a decision and order dated March 31, 2020, ruled that plaintiffs should have sought their remed[y] in the case in which -the wrongdoing allegedly was committed (NYSCEF Doc No. 24 at 15, In re Fierro, 616 BR 596, 608 [Bankr ED NY 2020], quoting Alliance Network, LLC v Sidley Austin LLP, 43 Misc 3d 848, 858 [Sup Ct, NY County 2014 ]). It is binding precedent that the rules of res judicata apply to the decisions of a bankruptcy court” (Winkler v Weiss, 294 AD2d 428, 429 [2d Dept 2002]).”