Court Denies Motion To Dismiss In Family Business Dispute

On September 26, 2024, Justice Joel M. Cohen denied defendant’s motion to dismiss. In Jobar Holding Corp. et. al. v. Halio, Index No. 655689/2017, a family business dispute, Plaintiffs alleged that the Defendant improperly diverted funds from the plaintiff Kobar Holding Corporation to herself and her family. Defendant moved to dismiss the Second Amended Complaint as barred by collateral estoppel and for failure to state a claim pursuant to CPLR § 3211(a)(5) and (7). The court denied the motion, explaining:

Defendant argues that the Second Amended Complaint should be dismissed because it includes causes of action that were dismissed by the Court in the October 7, 2020, order. Defendant further argues that collateral estoppel applies because Plaintiffs withdrew their appeal from the Court's 2020 order. The Court disagrees and denies the motion to dismiss.

First, the Second Amended Complaint - which is based on discovery in this action (NYSCEF 303 - 305) - has been clarified to assert five direct claims and a single derivative claim. The motion to amend was made, in part, in response to comments made by the Court during oral argument on October 7, 2020. Accordingly, the claims are not subject to dismissal as duplicative of the previously dismissed claims.

Second, Plaintiffs did not withdraw an appeal. The letter cited by Defendant provides that Plaintiffs were withdrawing a pending motion to extend the time to perfect an appeal from the October 7, 2020, order because the motion was moot (NYSCEF 302). Contrary to Defendant's assertion, the appeal was perfected and not withdrawn. Moreover, the appeal does not concern Plaintiffs' revised claims which are distinct from those that were dismissed. Accordingly, Defendants' estoppel argument is without merit.

Third, Defendant does not make any new arguments in support of its motion to dismiss for failure to state a claim. Instead, Defendant only cites to the Court's prior dismissal order and other filings. Therefore, Defendant has not established that dismissal is warranted.

The attorneys at Schlam Stone & Dolan frequently handle motions to dismiss. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such motions.