Loreley Fin. (Jersey) No. 3, Ltd. v Morgan Stanley & Co. Inc NY Slip Op 32624(U) October 1, 2014 Sup Ct, New York County Docket Number:

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1 Loreley Fn. (Jersey) No. 3, Ltd. v Morgan Stanley & Co. nc NY Slp Op 32624(U) October 1, 2014 Sup Ct, New York County Docket Number: /12 Judge: Jeffrey K. Ong Cases posted wth a "30000" dentfer,.e., 2013 NY Slp Op 30001(U), are republshed from varous state and local government webstes. These nclude the New York State Unfed Court System's E-Courts Servce, and the Bronx County Clerk's offce. Ths opnon s uncorrected and not selected for offcal publcaton.

2 [* 1] SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: COMMERCAL PART L x LORELEY FNANCNG (JERSEY) NO. 3, LTD., and LORELEY FNANCNG (JERSEY) NO. 18, LTD., Plantffs, -aganst- MORGAN STANLEY & CO. NCORPORATED, MORGAN STANLEY & CO. NTERNATONAL LTD., MORGAN STANLEY CAPTAL SERVCES, NC., COUNTRYWDE ALTERNATVE ASSET MANAGEMENT NC., COUNTRYWDE SECURTES CORP., ALPHA MEZZ COO , LTD., and BANK OF AMERCA CORP., ndex No.: /12 Mtn Seq. Nos. 003 & 004 DECSON AND ORDER Defendants x JEFFREY K. ONG, J.: Moton Seq. No. 003 Defendants, Morgan Stanley & Co. nc. ("Morgan Stanley"), Morgan Stanley & Co. nterna tbnal Ltd. ( "MSC"), and Morgan Stanley Captal Servces, nc. J! ( "MSCS") (collectvely the "Morgan 1: Stanley defendants") move, pursuant to CPLR 3211, to dsmss amended complant. Moton Seq. No. 004 Defendants Countrywde Alternatve Asset Management nc. ("Countrywde") and Countrywde Securtes Corp. ("CSC") (collectvely the "Countrywde:defendants"), also move, pursuant to CPLR 3211, to dsmss the amended complant..,

3 [* 2] ndex No /2012 Page 2 of 8 Wth respect to both motons, plantffs, Loreley Fnancng (Jersey) No. 3, Ltd. and No. 18, Ltd., cross-move for an order vacatng the udgment entered n ths acton by the New York County Clerk pursuant to CPLR 5015[a] and 5019[a]. Further, plantffs cross-move, pursuanl to CPLR 602[a], for an order consoldatng ths acton wthlanother dentcal acton (ndex No /2014). Moton sequence nos. 003 and 004 are consoldated for dsposton. Famlarty wthlthe factual background s presumed (6/20/13 Tr., Docket No. 53). ProcedJral Posture At the close of the argumnt n ths case on June 20, 2013, ths Court granted plantffs leave to replead, and stated that they could do so under ths ndex number (6/20/13 Tr. p. 88). Further, ths Court stated that t was dsmssng the complant l and endng the current acton (d.), and marked both short form orders "Case Dsposedu (Orders! Aff. n Opp. of James Rouhandeh, ' 8/15/14, Exs. B-C). Plantff fled a notce of appeal of ths Court's decson and order. Thereafter, the partes entered nto a stpulaton stayng plantffs' tme to move to renew and ' reargue, and defendants' tme to respond to any amended complant untl a party or the Court lfted the stay (Stpulaton, ' Rouhandeh Aff. n Opp., 8/15/14, Ex. F, pg. 2). The stpulaton also provded that the partesreserved all rghts, and

4 [* 3] ndex No /2012 Page 3 of 8 defendants dd not consent to an amended complant by sgnng the stpulaton (d. at p. 3). Whle the stpulaton was n effect, defendants collectvely soughtll and obtaned a udgment dsmssng the acton from the County Clek's Offce (Judgment, Affrmaton of Adam Hakk, 6/27/14, Ex. C). At the tme, although contestng entry of udgment, plantffs dd not seek udcal nterventon to vacate the udgment once the County Clerk entered t on August 22, Plantffs fled ther amended complant on Aprl 3, Three weeks later, plantffs wthdrew ther appeal. They dd not perfect ther appeal pror to ther wthdrawal of the appeal (Hakk Affrm., 6/27/14; Memorandum, 8/18/14, p. 6). 5; Plantffs' Reply On May 12, 2014, plantffs gave notce termnatng the pror stpulaton and stay (Stpulaton, Affrmaton of James Rouhandeh 6/27/14, Ex. X). Followng a conference wth ths Court, pllntffs fled a new, dentcal acton under ndex No /2014. Dscusson Defendants collectvely argue that ths Court lacks subectmatter ursdcton over ths acton because the Clerk entered udgment dsmssng t. As such, the amended complant should be declared a nullty. The record demonstrates that the udgment of dsmssal entered by the Clerk! properly asposed of ths acton n accordance wth ths Court's Jlne 20, 2013 rulng dsmssng.! := ths

5 [* 4] ndex No /2012 Page 4 of 8 J acton and the markng "Case Dsposedu on the two short form 1 orders. Nothng n ths Courtls pror rulng as set forth on the record precluded defendants from exercsng ther rghts, ncludng havng a udgment entered dsmssng the acton. Thus, defendants correctly pont out that post dsmssal flngs, such as plantffs' Aprl 3, 2014 amended ' complant, are nulltes because there s no longer an actve case (Floyd v Salamon Bros., 249 AD2d 139, 140 [1st Dept 1998]). ndeed, nothng n ths Court's decson to grant platffs leave to fle an amended t complant can be deemed to countermand the provsons of the CPLR regardng termnated actons and subsequent flngs (see, ' CPLR 205), or defendants' rght to seek entry of a udgment of dsmssal. n fact, the parts' stpulaton provded that the partes reserved all rghts, aad defendants dd not consent to an amended complant by executnglthe stpulaton. The queston that remans s whether plantffs are able to take refuge n the safe harbor provsons of CPLR 5019 and CPLR 5019 CPLR 5019(a) provdes that "a udgment... shall not be stayed, mpared or affected by any mstake, defect or rregularty... not affectnga substantal rght of a party.u "Where the alleged error s substantve, other than one that s clearly nconsstent wth the ntentons of the court and the partes as demonstrated by the, record, relef should be obtaned

6 [* 5] ndex No /2012 Page 5 of 8 ether through an appeal from the udgment, or, f grounds for 11 vacatur exst, through a motoh to vacate pursuant to CPLR 5015(a)" (Johnson v Socete Generale S.A., 94 AD3d 663, 664 [1st Dept2012]). 1:,1 Here, dsmssal, plantffs seek vacatur of the entre udgment of ; a planly substante relef (cf. Kker v Nassau County, 85 NY2d 879, 881 [1995]). Contrary to plantffs' argument, the excluson of language preservng ther rght to fle an amended complant s not "clearly nconsstent" wth ths ; Court's ntentons (Johnson, 94 AD3d at 664):,. THE COURT: Everythng s dsmssed wthout preudce. You have the appellate court's decson. You don't know what's go0g to happen next, but you may be able to go back conferfand fgure out what next needs to be done. MR. RNGER: undertand from your comments should we decde there are thngs that wed could or should do, we do have leave to amend. THE COURT: Yes, wll gve you the opportunty for leave to amend. You tould brng t under ths ndex number. You do whatever you want to do. don't want to tell you whch ndex number. You have an opportunty to amend the omplant however you want to see ft. You have that rght. MR. HAKK: Wthout flng a moton, your Honor?. THE COURT: Yes, becuse 'm dsmssng ths case. So t's done. t's over wth n that regard. 'll leave that as s n that pont. don't want to dsclose too much on my end. 'm dsmssng that acton so t's clear thatlths acton s done. What they do next s up to them and how they want to proceed. 'm not here to tell them what they want to

7 [* 6] ndex No /2012 Page 6 of 8 do next. That's for you guys to fgure out. that up awhle ago. have (6/20/13 Tr. at pp ) Thus, whle ths Court noted that plantffs have a rght to fl1 an amended complant, ths Court dd not state that such rght 0ould be absolute, and that t would not have to yeld to othr provsons of the CPLR. Plantffs' optons were to appeal, or move to vacate the udgment pursuant to CPLR 5015! Here, plantffs took an appeal, but wthdrew t pror to perfebtng t. Gven that plantffs fled an amended complant, raher than pursue ther appeal, the ssue then s whether CPLR 5015 provdes a bass to vacate the udgment so as to permt the alended complant to go forward. CPLR 5015 CPLR 5015(a) provdes that a court may releve a party from a udgment on the grounds of evdence after tral, fraud, excusable default, msrepresentaton, newly-dscovered or other msconduct, lack of ursdcton to render the ntal udgment, or reversal, modfcaton, or tacatur of the ntal udgment J (CPLR 5015 [a]). Ths lst s not ex h austve,. an d a court re t ans. the nherent power to vacate ts own udgment "for suffcent reason and n the nterests ofjsubstantal ustce" (Woodson v Mendon Leasng Corp., 100 NY2dl62, 68 [2003]). Ths authorty, however, s not plenary, and should only be used n cases of "fraud, mstake, nadvertence, surprse or excusable neglect"

8 [* 7] ndex No /2012 Page 7 of 8 (Long s. Lght. Co. v Century ndem. Co., 52 AD3d 383, 384 [1st! Dept 2008]). ndeed, "[a] moon to vacate an order pursuant to! CPLR 5015 cannot serve as a substtute for an appeal, or remedy an error of law that could have been addressed on a pror appeal" (Angela P. v Floyd S., 103 AD3 439, 440 [1st Dept 2013]). Here, the record clearly does not reflect the exstence of any of the enumerated bases td warrant vacatur of the nstant udgment pursuant to CPLR 5015[a]. ndeed, there was no fraud, and the Clerk dd not enter Jdgment of dsmssal nadvertently or by mstake. Nor can planffs clam surprse or neglect, as they fled an opposton to etry entered the udgment (Rnger ffrm. Aff. n Opp., 8/15/14, Ex. G) of udgement before the Clerk n Opposton, Rouhandeh ndeed, although permtted to do so, plantffs dd not submt.a proposed counter-udgment that could have ncluded language P,reservng ther rght to fle an amended complant. As such, any purported error n not ncludng such language s not chargeable to the Clerk. There has been no default, no reversal of ths Court's pror decson and order, no challenge to ths Court's ursdcton to render ts pror l decson and order, and no msconduct by defendants. Lastly, ':; plantffs do not assert thatthe udgment should be vacated due to newly-dscovered evdence. : Under these crcumstances, vacatur of the udgment s not warranted.

9 [* 8] ndex No /2012 Accordngly, those Page 8 of branches of the Morgan Stanley and Countrywde defendants' moton to dsmss the amended complant for lack of subect matter usdcton are granted, and the amended complant s dsmssed. Accordngly, t s ORDERED those branches of the Morgan Stanley and Countrywde defendants' motons to dsmsj the amended complant for lack of subect matter ursdcton are granted, and the amended complant s dsmssed; and t s f urt h er, ORDERED that plantffs' lcross-moton to vacate the udgment and consoldate ths acton wth No /2014 s dened. Ths memorandum opnon of the Court. ther acton fled under ndex, consttutes the decson and order HON. JEFFREY K. ONG, J.S.C. 8 JEFFREY K. ONQ J.s.c.