Recasting Claims Cannot Evade Res Judicata: Dismissal With Prejudice Bars Later Money‑Had‑and‑Received, Conversion, and Interference Theories; No Fiduciary Duty Owed by Opposing Escrow Agent

Case: Asset Developers Corp. v. Grossman, 2025 NY Slip Op 04078 (App. Div. 2d Dept., July 9, 2025)

Introduction

This Second Department decision affirms the finality of a prior dismissal “with prejudice” and clarifies two practical points of New York law: (1) claim preclusion (res judicata) applies to bar later, re‑styled causes of action that arise from the same transactional nucleus of facts—even when a different label (e.g., money had and received or conversion) is used and even when a successor in interest is the plaintiff; and (2) an escrow agent for one party does not owe a fiduciary duty to an adversary absent a fiduciary relationship or privity.

The litigation stems from a 2006 joint venture between TAJ Holdings, LLC and Yews, Inc. to redevelop property in Nassau County, designation of Jacobson Development Group, LLC (JDG) to act for TAJ, and a subsequent conveyance to JAZ Grand, LLC allegedly in breach of that agreement. A $350,000 loan tied to the venture spurred a 2017 foreclosure action that was dismissed as time‑barred on appeal (Jacobson Dev. Group, LLC v Yews, Inc., 174 AD3d 868). In 2020, JDG launched a new action asserting tortious interference and other claims against JAZ Grand and developer Wilbur Breslin; on an earlier appeal in this action, the Second Department dismissed the complaint against JAZ Grand with prejudice, holding the claims could—and should—have been raised in the earlier proceeding (Jacobson Dev. Group, LLC v Grossman, 198 AD3d 956).

JDG later filed a second amended complaint adding quasi‑contract and conversion theories and naming JAZ Grand’s escrow agent, Weiss Zarett Brofman Sonnenklar & Levy, P.C. (“Weiss Zarett”), for breach of fiduciary duty, with Asset Developers Corp. substituted as plaintiff. The Supreme Court (Nassau County, Driscoll, J.) dismissed as to JAZ Grand and Breslin under CPLR 3211 and granted summary judgment to Weiss Zarett. Asset Developers appealed; the Appellate Division affirmed in full.

Summary of the Judgment

Res judicata against JAZ Grand: The court held that its prior dismissal of claims against JAZ Grand “with prejudice” operated as a disposition on the merits, barring all subsequent claims arising from the same joint venture and $350,000 loan—regardless of the legal theory asserted (money had and received, conversion, etc.).
Tortious interference claims against Breslin: The second amended complaint failed to state claims for tortious interference with contract or with business relations; dismissal under CPLR 3211(a)(7) was proper.
No fiduciary duty by escrow agent to non‑client: Weiss Zarett established that it owed no fiduciary duty to JDG or its successor, Asset Developers. Lacking a fiduciary relationship, the breach of fiduciary duty claim failed as a matter of law; summary judgment was appropriate.
Disposition: Order affirmed with costs.

Analysis

Precedents Cited and Their Influence

Transactional approach to res judicata:

Pine Val. Ctr., LLC v Jacobs, 237 AD3d 1115; Wilmington Sav. Fund Socy., FSB v Sheikh, 237 AD3d 874; Altman v Orseck, 235 AD3d 818 – These Second Department authorities reiterate New York’s transactional approach: a final merits disposition bars relitigation between the same parties or those in privity of any claim “arising out of the same transaction or series of transactions,” whether or not previously raised.
Simmons v Trans Express Inc., 37 NY3d 107, 111; Matter of Josey v Goord, 9 NY3d 386, 389–90; Beneficial Homeowner Serv. Corp. v Francis, 231 AD3d 788, 789 – Once a claim is brought to a final conclusion, all other claims from the same transaction are barred, even if based on different legal theories or seeking different relief.

Effect of dismissal “with prejudice”:

Yonkers Contr. Co. v Port Auth. Trans‑Hudson Corp., 93 NY2d 375, 380; Green Tree Servicing, LLC v Barnes, 215 AD3d 809, 809–10; Kirby v David Fabricators of N.Y., Inc., 236 AD3d 436, 437 – A dismissal with prejudice signifies an intended merits determination and is generally afforded full res judicata effect.

Prior appeals in the same controversy:

Jacobson Dev. Group, LLC v Yews, Inc., 174 AD3d 868 – The Appellate Division reversed the trial court’s denial of a time‑bar dismissal in the 2017 foreclosure action, establishing the time bar of that earlier suit.
Jacobson Dev. Group, LLC v Grossman, 198 AD3d 956 – In this very action, the Appellate Division dismissed the claims against JAZ Grand with prejudice because they could have been brought in the prior action. That earlier merits determination is the cornerstone of the present res judicata ruling.

Tortious interference pleading standards:

Looks Great Servs., Inc. v Roosevelt, 2025 NY Slip Op 03317 – Cited for the insufficiency of the tortious interference pleadings; confirms the need for specific factual allegations of a valid contract, the defendant’s knowledge, intentional procurement of the breach without justification (for interference with contract), and wrongful means or malice for interference with business relations.

Breach of fiduciary duty elements (and escrow agents):

Golobe v Mielnicki, 2025 NY Slip Op 01670, *2 – The Court of Appeals recapitulates the elements: (1) fiduciary relationship, (2) misconduct, (3) damages directly caused. Without the first element, the claim fails. Here, Weiss Zarett, as JAZ Grand’s escrow agent, had no fiduciary relationship with JDG/Asset Developers.

Legal Reasoning

1) Res judicata bars the second amended complaint against JAZ Grand. The court applied New York’s transactional analysis of claim preclusion. The earlier appellate order in this action (198 AD3d 956) dismissed all claims against JAZ Grand “with prejudice,” explicitly concluding that the claims arose from the same transaction(s) as the time‑barred foreclosure proceeding and should have been raised there. A with‑prejudice dismissal is a merits determination with claim‑preclusive effect. Consequently, any later claims against JAZ Grand arising from the 2006 joint venture and the same $350,000 loan—including those styled as money had and received or conversion—are barred. The court emphasized that changing the legal label or remedy cannot circumvent claim preclusion where the factual transaction is the same.

2) Failure to state tortious interference claims against Breslin. The complaint’s allegations against Wilbur Breslin did not satisfy the elements of tortious interference with contract or with business relations. Although specifics are not reiterated in the opinion, the citation to Looks Great Servs. signals classic defects: absence of well‑pleaded facts showing Breslin’s knowledge of a valid, enforceable contract, intentional procurement of breach without justification, “but‑for” causation, and—regarding business relations—use of wrongful means or malice. Conclusory assertions and generalized accusations are insufficient on a CPLR 3211(a)(7) motion.

3) Summary judgment for Weiss Zarett due to no fiduciary relationship. To prevail on breach of fiduciary duty, the plaintiff had to demonstrate a fiduciary relationship. Weiss Zarett, acting as JAZ Grand’s escrow agent, established prima facie that it owed no fiduciary duty to the plaintiff or its predecessor JDG; escrow agents generally owe fiduciary obligations to their own clients or to parties to the escrow arrangement, not to adverse litigants. The plaintiff failed to raise a triable issue of fact, warranting summary judgment under established principles (see Golobe v Mielnicki).

4) Parties and privity. The court’s preclusion analysis incorporates privity: a merits disposition binds the same parties and those in privity. The substitution of Asset Developers for JDG did not alter the preclusive effect; Asset Developers, as successor in interest, stands in JDG’s shoes for these claims.

Impact and Practical Significance

Finality of early appellate dismissals: A CPLR 3211 dismissal “with prejudice” at the pleading stage can conclusively end the dispute as to that defendant. Litigants cannot re‑plead around such an order by appending new labels or seeking different remedies grounded in the same events.
Transactional breadth of preclusion: New York’s transactional approach requires plaintiffs to bring all claims, theories, and remedies tied to the same business transaction in a single proceeding. Splitting claims across successive suits—or successive pleadings within a suit after a with‑prejudice dismissal—risks total preclusion.
Successor plaintiffs are bound: Assignments and substitutions do not refresh claims. Acquirers of claims inherit both rights and disabilities, including preclusion.
Limits on suing escrow agents: This decision underscores that opposing counsel’s escrow agent does not owe fiduciary duties to you absent a defined escrow relationship. Contractual privity or explicit fiduciary undertakings matter; otherwise, breach‑of‑fiduciary‑duty claims will fail at summary judgment.
Higher pleading bar for interference claims: Tortious interference claims remain closely policed at the pleadings stage. Specificity about the contract, knowledge, intentional and unjustified procurement, wrongful means, and but‑for causation is essential.

Expected downstream effects: Within the Second Department (and persuasively elsewhere in New York), courts are likely to cite this case to summarily dispose of re‑packaged quasi‑contract and tort claims that follow a prior with‑prejudice dismissal tied to the same underlying transaction. Transactional lawyers should expect heightened judicial sensitivity to claim‑splitting and strategic re‑pleading.

Complex Concepts Simplified

Res judicata (claim preclusion): A rule that prevents a party from re‑litigating any claim arising from the same transaction once a court has entered a final merits decision. It applies to the same parties and those in privity with them. New York uses a broad “transactional” test—if it springs from the same set of facts, it’s likely barred.
Dismissal “with prejudice”: A court’s way of saying the dismissal is final on the merits. You cannot refile or re‑plead those claims against that defendant.
Privity: A close relationship between a party and a non‑party (e.g., successor in interest, assignee) such that the non‑party is bound by the judgment as if it were a party.
Money had and received: A quasi‑contract claim seeking restitution of money the defendant received that, in equity and good conscience, belongs to the plaintiff. It cannot be used to evade res judicata if the receipt of money arises from the same transaction already adjudicated.
Conversion: The wrongful exercise of dominion over another’s property. When the asserted “property” derives from contractual rights involved in a prior merits disposition, conversion cannot be a backdoor to re‑litigate.
Tortious interference:
- With contract: Requires a valid contract, defendant’s knowledge, intentional and unjustified procurement of a breach, causation, and damages.
- With business relations: Requires interference with prospective economic relations through wrongful means or malice and a showing that, but for the defendant’s conduct, the relationship would have matured.
Fiduciary duty (escrow agents): An escrow agent owes fiduciary duties to the parties to the escrow arrangement. Generally, it does not owe such duties to third parties or adversaries absent a special relationship or contractual undertaking.
CPLR 3211 vs. Summary Judgment:
- CPLR 3211(a)(5)/(7): Dismissal at the pleadings stage for preclusion (e.g., res judicata) or failure to state a claim.
- Summary judgment: Granted when the movant shows there’s no triable issue of fact, entitling it to judgment as a matter of law.

Procedural Timeline (Concise)

2006: Joint venture agreement between TAJ Holdings and Yews; JDG designated to act for TAJ; alleged conveyance to JAZ Grand.
2017: JDG sues to foreclose mortgage in Nassau County; trial court denies time‑bar dismissal.
2019 (reported at 174 AD3d 868): Appellate Division reverses; foreclosure action time‑barred.
2020: JDG files new action asserting, among other claims, tortious interference.
2021 (reported at 198 AD3d 956): Appellate Division dismisses claims against JAZ Grand with prejudice (could have been raised earlier).
2024: JDG files second amended complaint adding money had and received, conversion, and breach of fiduciary duty against escrow agent; Supreme Court dismisses as to JAZ Grand and Breslin, and grants summary judgment to Weiss Zarett.
2025: Appellate Division affirms (this decision).

Practical Guidance for Practitioners

Front‑load all theories: When litigating a business dispute (e.g., joint venture, loan), include all contract, tort, and quasi‑contract theories in the earliest viable action. Assume that a later with‑prejudice dismissal will bar any re‑packaging.
Mind privity in assignments: A successor or assignee inherits both the preclusion benefits and burdens. Conduct pre‑acquisition litigation audits.
Draft escrow instructions carefully: If you need duties owed by an escrow agent, ensure the escrow agreement identifies your client as a party or third‑party beneficiary with explicit obligations owed to it.
Plead interference with specificity: Name the contract(s), allege the defendant’s knowledge, specify acts of procurement, address justification/privilege, and plead “but for” causation and wrongful means (for business relations).
Use 3211 strategically: Where there is a prior with‑prejudice dismissal, move under CPLR 3211(a)(5) for res judicata early; it can short‑circuit expansive discovery and re‑pleading.

Conclusion

Asset Developers Corp. v. Grossman fortifies three pillars of New York civil practice: (1) a dismissal “with prejudice” is a merits adjudication with full res judicata bite; (2) New York’s transactional approach to preclusion bars later claims arising from the same business dealings, no matter how artfully re‑styled; and (3) fiduciary duties, particularly for escrow agents, are relationship‑dependent and will not be inferred in favor of a non‑client adversary. The ruling underscores that litigants must bring all related theories at once and that efforts to sidestep earlier defeats through quasi‑contract or conversion labels will fail. It also reaffirms the stringent pleading requirements for tortious interference. In the broader legal landscape, the decision advances finality, discourages claim‑splitting, and delineates the boundary lines of fiduciary duty in escrow settings.