Olsen v. The Sherry Netherland, Inc.

Background

Rey Olsen, proceeding without a lawyer, sued The Sherry Netherland, Inc., its shareholders, lessees, residents, and directors, as well as Curtis C. Mechling and Gabriel Sasson, attorneys who represented the Sherry in the apartment sale. Olsen alleged that he had received an assignment from Roque De La Fuente of part of De La Fuente’s interest in claims related to a cooperative apartment. De La Fuente’s application to purchase the apartment had been rejected, and De La Fuente had previously litigated related discrimination claims in an earlier related proceeding.

Olsen’s complaint repeated seven claims asserted in the earlier related proceeding, including claims under the Fair Housing Act, the Civil Rights Act of 1866, Title II of the Civil Rights Act of 1964, the New York State Human Rights Law, and the New York City Human Rights Law. He also asserted claims against the law-firm defendants for fraudulent inducement and breach of the implied covenant of good faith and fair dealing. Finally, he sought a ruling that a report prepared for the Sherry’s board was pretextual.

In a September 30, 2022 order, the court adopted a magistrate judge’s recommendation and dismissed the complaint. The court concluded that claim preclusion, also called res judicata, barred Olsen’s claims against the Sherry defendants because Olsen and De La Fuente were in privity. Privity means that a person’s interests are sufficiently closely aligned with a party to earlier litigation that the earlier judgment can bind that person. The court also concluded that issue preclusion, also called collateral estoppel, barred Olsen’s claims against the law-firm defendants because the relevant issues had already been litigated and decided. The court additionally noted that the breach-of-contract claim failed to state a claim because De La Fuente had not alleged a contract with the law-firm defendants.

Motion for Reconsideration

Olsen moved under Federal Rule of Civil Procedure 59(e) to vacate the 2022 dismissal order. He argued that the court had misunderstood whether his assignment occurred before De La Fuente filed the earlier lawsuit, incorrectly applied precedent concerning assignments, wrongly treated Olsen as bound by De La Fuente’s litigation, and improperly relied on an allegedly inadmissible report in evaluating the earlier case.

The court explained that reconsideration is an extraordinary remedy. It is generally available only for an intervening change in controlling law, newly available evidence, or a clear error or manifest injustice. It is not a means to repeat arguments previously rejected or present a new theory.

Court’s Analysis

The court rejected Olsen’s argument that it had ruled that all assignors and assignees are automatically in privity. The court said it had instead decided that the timing of Olsen’s assignment did not change the result because Olsen’s interest derived from De La Fuente’s claims.

The court found that the record showed a sufficiently close relationship between Olsen and De La Fuente. According to the opinion, Olsen consulted with De La Fuente about the apartment deposit, helped De La Fuente with paperwork related to the bankruptcy sale, attended two bankruptcy hearings, received information about the alleged discrimination, and obtained the assignment in connection with having standing and participating in the litigation. The court concluded that their interests in the earlier and current lawsuits were virtually identical.

The court therefore found no basis to change its conclusion that claim preclusion barred Olsen’s claims against the Sherry defendants. It also stated that Olsen did not appear to challenge the dismissal of Counts Eight, Nine, and Ten against the law-firm defendants based on issue preclusion. The court reiterated that the earlier litigation had decided the central issues underlying those claims, including whether the Sherry had imposed discriminatory conditions and whether its reasons for rejecting De La Fuente’s application were legitimate.

The court also rejected Olsen’s argument that an earlier judge had authorized him to bring a separate lawsuit. According to the court, that earlier ruling merely held that Olsen was not a required party to De La Fuente’s lawsuit; it did not give Olsen permission to pursue claims that were otherwise precluded.

Finally, the court rejected Olsen’s challenge to the admissibility of the report used in the earlier litigation. It noted that the issue had already been considered and rejected in the earlier related proceeding, in a magistrate judge’s recommendation, and in the 2022 dismissal order. Olsen therefore could not relitigate it through a reconsideration motion.

Disposition

The court denied Olsen’s motion for reconsideration. The clerk was directed to terminate the motion, mail Olsen a copy of the order, and close the case.