CPLR 3011, collateral estoppel and res judicata.

Plaintiffs alleged legal malpractice stemming from defendants' representation of them in a real estate transaction in which plaintiffs were the purchasers, and the First Department reinstated their complaint, in Kahn v. Taub, which was decided on January 15, 2008.

The court said that, although plaintiffs could have interposed their claims as cross claims in a prior action in which they and defendants were co-defendants, they were not required to do so either by CPLR 3011 or by the doctrines of collateral estoppel and res judicata.

The only issue litigated in that prior action was whether the tenants of the premises purchased by plaintiffs herein had a valid right of first refusal to purchase the premises themselves. While plaintiffs' claims of legal malpractice arose from the sale of the premises, they relate solely to the legal representation plaintiffs received and whether their attorney and his law firm were negligent or unethical in the handling of the matter due to an alleged conflict of interest. There is no identity of issue which was necessarily decided in the prior action and which would be dispositive of the instant action, as is required to invoke collateral estoppel; nor do plaintiffs' claims arise solely from the single transaction that was at issue in the prior litigation, as is required to bar the instant litigation on the basis of res judicata.