The Appellate Division unanimously affirmed, with costs, the Order granting defendants' motion to dismiss plaintiffs' legal malpractice claim, in light of the prior findings in a related bankruptcy proceeding. The doctrine of collateral estoppel precludes a party from relitigating, in a subsequent action or proceeding, an issue that was clearly raised in a prior action or proceeding and decided against that party or those in privity. The motion court properly concluded that plaintiffs were in privity with the debtors in the prior proceeding, where the issue was the validity of the same loan transactions that underly the claim here. The Appellate Division rejected plaintiffs' argument that collateral estoppel does not apply because defendants were not parties to the prior proceeding. The law is clear that a party seeking to invoke the doctrine need not have been a party to the prior action. The Appellate Division also rejected plaintiffs' argument that their claims are not barred because there was no malpractice claim in the prior proceeding. As the motion court found, collateral estoppel precludes the relitigation of already decided factual issues, regardless of whether the causes of action are the same.
Bauhouse Group I, Inc. v. Kalikow, NY Slip Op. 00001 (1st Dep't January 5, 2021)
