Opinion
Index No. 650404/2022
10-16-2023
RevPoint Media, LLC, Plaintiff, v. Plural Marketing Solutions, Inc., Defendant.
Klein Moynihan Turco LLP, New York, NY (Daniel Chin of counsel), for plaintiff. No appearance for defendant.
Unpublished Opinion
Klein Moynihan Turco LLP, New York, NY (Daniel Chin of counsel), for plaintiff.
No appearance for defendant.
GERALD LEBOVITS, J.
The following e-filed documents, listed by NYSCEF document number (Motion 003) 22, 23, 24, 25 were read on this motion for DEFAULT JUDGMENT.
This action arises from a series of contracts to provide telemarketinging "leads"- i.e., information on individuals who would be potentially receptive to sales offers made through telemarketing calls or text messages. Plaintiff, RevPoint Media, LLC, purchased leads from defendant, Plural Marketing Solutions, Inc., and in turn sold the leads on to nonparty QuoteWizard.com, LLC. Plural warranted to RevPoint, and then RevPoint warranted to QuoteWizard, that the leads were compliant with the federal Telephone Consumer Protection Act (TCPA), in that the individuals in question had expressly consented to receiving telemarketing messages.
One of the leads that Plural sold to RevPoint, and which RevPoint sold on to QuoteWizard, pertained to an individual named Joseph Mantha. In 2019, Mantha sued QuoteWizard in the U.S. District Court for the District of Massachusetts on behalf of a potential class (the Mantha Action), alleging that QuoteWizard had violated the TCPA by sending him repeated auto-insurance sales offers by text message without his consent. Neither Plural nor RevPoint is a party to the Mantha Action. In 2021, QuoteWizard sued RevPoint in the U.S. District Court for the Western District of Washington (the QuoteWizard Action), seeking damages for RevPoint's alleged breach of warranty in representing to QuoteWizard that the Mantha lead was TCPA-compliant when it was not. Plural is not a party to the QuoteWizard Action.
RevPoint's counsel represents in an affirmation submitted on the current motion that the Mantha Action is currently in class-certification discovery, and that the QuoteWizard Action is stayed pending resolution of the Mantha Action. (See NYSCEF No. 25 at ¶ 6.)
In 2022, RevPoint brought this action against Plural. RevPoint alleges that it is entitled under the parties' contract to indemnification from Plural for damages (including defense costs) sustained by RevPoint due to Plural's having sold RevPoint the noncompliant Mantha lead. Plural has not appeared. RevPoint previously moved without opposition under CPLR 3215 for default judgment. (NYSCEF No. 17.) This court denied that motion, holding that RevPoint's motion papers had not established that Plural breached its TCPA-compliance warranty, as required under the circumstances to support RevPoint's indemnification claim. (NYSCEF No. 20 at 2.)
The contract between the parties also provides for indemnification in the event that one party's gross negligence or willful misconduct causes the other party to suffer damages, losses, or costs. RevPoint has not contended that Plural acted willfully or with gross negligence.
RevPoint now moves again for default judgment, still without opposition. (NYSCEF No. 22.) The motion is again denied.
DISCUSSION
As before (see NYSCEF No. 20 at 1), the only question on this motion is whether RevPoint has established the facts constituting its claim. In particular, RevPoint must provide admissible evidence that Plural breached its warranty that the leads it was selling RevPoint were TCPA-compliant.
Section 12.2 of the parties' agreement, as applicable here, also requires RevPoint to provide Plural with reasonably prompt notice of claims against RevPoint, and to provide Plural with reasonable information and assistance to help Plural defend those claims. (See NYSCEF No. 19 at 11.) RevPoint's papers on this motion establish for default-judgment purposes that it met its § 12.2 obligations. (See NYSCEF No. 24 at 2-3 ¶¶ 11-18 [party affidavit]; id. at 17-33 [exhibits].)
To meet this requirement, RevPoint relies on a ruling in the Mantha Action. The federal district court granted summary judgment to Mantha on the question whether he consented to the text messages sent by QuoteWizard, holding that Mantha had established as a matter of law that he had not consented. (See Mantha v QuoteWizard.com, LLC, 2022 WL 325722, at *10-11 [D Mass. Feb. 3, 2022].) RevPoint contends that this court may take judicial notice of this ruling-and that the ruling (and its supporting analysis) establishes for purposes of the present action that Plural breached its warranties to RevPoint. (See NYSCEF No. 23 at 4-6.) This court is not persuaded that the district court's ruling in the Mantha Action is entitled here to the effect RevPoint would give it.
RevPoint initially suggests that CPLR 4511 (b) requires this court to take judicial notice of the summary-judgment ruling in the Mantha Action. (See NYSCEF No. 23 at 2.) But the terms of CPLR 4511 (b) make clear that this provision requires judicial notice only with respect to matters of lawi.e., state, federal, and foreign legislation, and state and federal administrative actions. RevPoint is asking this court to take judicial notice of a factual determination made by the district court in the Mantha Action, namely that Mantha did not consent to receiving telemarking messages. As RevPoint later acknowledges (see NYSCEF No. 23 at 5), CPLR 4511 (b) therefore permits this court to exercise its discretion in deciding whether to take judicial notice of the district court's determination.
I. Whether This Court Should Take Judicial Notice of the Summary-Judgment Ruling in the Mantha Action
RevPoint is correct that this court may take judicial notice of prior judicial proceedings, including proceedings brought in other courts. (See NYSCEF No. 23 at 9-10, citing Matter of Julian P., 1289 A.D.3d 1222, 1225 [3d Dept 2015].) But accepting that principle does not take RevPoint nearly as far as it wants to go. RevPoint is not asking this court to take judicial notice merely that a prior judicial proceeding was held, that a ruling in that prior proceeding was rendered, or even that particular testimony was given in that proceeding. Rather, RevPoint is requesting that this court take judicial notice of the truth of a prior ruling issued by a different court in a different proceeding, so as to establish in this action the facts found by that ruling. Granting that request would exceed the proper function of judicial notice. (Cf. Carroll v McKinnell, 2008 NY Slip Op 50567[U], at *9 n 1 [Sup Ct, NY County Mar. 17, 2008] [distinguishing between taking judicial notice of the existence of litigation filings in another action and taking judicial notice of those filings for the truth of the matters that they assert], citing Liberty Mut. Ins. Co. v Rotches Pork Packers, Inc., 969 F.2d 1384, 1388 [2d Cir 1992].)
Even the Matter of Julian P. decision on which RevPoint relies did not involve a decision by a trial court to take judicial notice of prior testimony in a different proceeding for its truth. Instead, in that case the trial court did so at the outset of a hearing, without objection, in order to assess for credibility purposes the consistency of that prior testimony with evidence adduced at the hearing. (See 129 A.D.3d at 1225-1226.)
The Appellate Division, Third Department, addressed a similar situation in Sleasman v Sherwood (212 A.D.2d 868 [3d Dept 1995]). The plaintiff in Sleasman was seeking to rescind a sale of real property located within the bounds of Adirondack State Park, on the ground that a rock-crushing operation located near the property caused excessive noise that assertedly precluded the property from being used for its intended recreational purposes. (See id. at 868-869.) The trial court ruled for defendant after a bench trial. (Id. at 869.) On appeal, plaintiff contended that the trial court had erred in "refusing to take judicial notice of the record of [Adirondack Park Agency] proceedings concerning" the owners of the rock-crushing operation. (Id. at 870.) The Third Department rejected this argument. It concluded that plaintiff's judicial- notice request was, "in reality, an attempt to collaterally estop defendants from litigating facts determined in the APA proceedings relating to the extent of the noise and activities at the [rock-crushing operation] before the sale," and that in those circumstances, the court's declining the judicial-notice request was not an abuse of discretion. (Id. at 870.) In reaching that conclusion, the Third Department noted that because "defendants were not parties to the APA proceedings, that agency's factual findings cannot be deemed binding on defendants." (Id.)
As in Sleasman, RevPoint is asking this court to give binding effect to the district court's determination in the Mantha Action that Mantha did not consent to receiving text messages. (See NYSCEF No. 23 at 5 [contending that the "holding in the United States District Court's Mantha Order should suffice to demonstrate Plural's breach" and that if this court conducts a further inquiry, "the Mantha Order offers factual findings in support of [RevPoint's] claims"].) RevPoint's request does not, in substance, implicate the doctrine of judicial notice, but rather that of issue preclusion. And, as discussed further below, the district court's findings in the Mantha Action are not entitled to issue preclusive effect here.
II. Whether This Court Should Grant Issue-Preclusive Effect to the Summary-Judgment Ruling in the Mantha Action
The district court's summary-judgment ruling (and supporting findings) in the Mantha Action cannot be afforded issue-preclusive effect against Plural for the simple reason that-as in Sleasman -Plural is not a party to the Mantha Action.
Issue preclusion "can be asserted only against a party to the first lawsuit, or one in privity to a party." (Rojas v Romanoff, 186 A.D.3d 103, 108 [1st Dept 2011].) This requirement is one of constitutional dimension: "'Due process of course, would not permit a litigant to be bound by an adverse determination made in a prior proceeding to which he was not a party or in privity with a party.'" (ABN AMRO Bank, N.V. v MBIA Inc., 17 N.Y.3d 208, 227 [2011], quoting Gilberg v Barbieri, 53 N.Y.2d 285, 291 [1981].) Because Plural is not part of the Mantha Action, it did not have an opportunity to be heard on whether Mantha consented to receiving text messages-although Plural was the entity that originated the Mantha telemarketing "lead" and is now exposed to liability for selling that lead.
Nor is Plural in privity with a party to the Mantha Action, such that it is consistent with due process to bind Plural now to findings made in that action.
Privity is admittedly "an amorphous concept not easy of application." (Juan C. v Cortines, 89 N.Y.2d 659, 667 [1997] [internal quotation marks omitted].) But it requires a sufficient legal or practical connection between two parties that one party's opportunity to be heard on the issue being litigated will protect the due-process rights of the other party. In this context, privity encompasses, among others, "those who are successors to a property interest, those who control an action although not formal parties to it, those whose interests are represented by a party to the action, and possibly coparties to a prior action." (Id. [internal quotation marks omitted].)
Representation of interests, in the preclusion context, does not merely mean that the two parties' interests are aligned. Thus, in Gramatan Home Investors Corp. v Lopez, the Court of Appeals held that when Party A to a contract with Consumer C assigned A's interest in the contract to Party B, a ruling against A in a later-filed consumer-fraud action related to that contract did not bind B-notwithstanding the obvious interest shared by A and B in defending the validity of the contract. (46 N.Y.2d 481, 486-487 [1979]; accord Green v Santa Fe Indus., 70 N.Y.2d 244, 252-254 [1987] [holding for claim-preclusion purposes that a judgment in an action brought by one set of minority shareholders challenging a corporate merger did not preclude a later action brought by a different set of minority shareholders on the same legal theory].)
Instead, representation is used in this context in a more formal sense. It applies to the relationship between a union and its members (Saiti v 316 E. 68th St. Corp., 193 A.D.3d 663, 663 [1st Dept 2021]; between insurer and insured (Green, 70 N.Y.2d at 253), or subrogor and subrogee (D'Arata v New York Cent. Mut. Fire Ins. Co., 76 N.Y.2d 659, 664-665 [1990]); between a bankruptcy trustee and a secured creditor in that bankruptcy proceeding (Stissing Natl. Bank v Kaplan, 28 A.D.2d 1159, 1160 [3d Dept 1967]; or between a shareholder bringing a derivative action and other shareholders (Parkoff v General Tel. & Elecs. Corp., 53 N.Y.2d 412, 420 [1981]).
The current action does not involve a representational relationship of this kind. The only connection between Plural and the defendant in the Mantha Action, QuoteWizard, is that QuoteWizard bought the Mantha telemarketing lead from RevPoint, which bought it from Plural. That Plural and QuoteWizard are two links apart in a chain of sale, and have the same interest in the legal validity of the item being sold, does not place them in privity for preclusion purposes. (See Mallick v Farfan, 33 A.D.3d 762, 726-763 [2d Dept 2006] [holding that the putative purchaser of real property is not in privity for claim-preclusion purposes with the putative seller of the property, when the sale is alleged to have occurred before any litigation involving the property].)
Plural is not a party to the Mantha Action and, on this record, has no connections to the parties to that action. RevPoint cannot rely on rulings rendered in the Mantha Action to establish the facts constituting RevPoint's claims against Plural. It must do so instead through other means. RevPoint could, for example, obtain and provide the documentary and testimonial evidence that persuaded the district court in the Mantha Action that Mantha had not consented to receiving the telemarketing texts at issue; or other evidence of similar import. But RevPoint may not merely point to the rulings in the Mantha Action, standing alone.
Accordingly, it is
ORDERED that RevPoint's default-judgment motion is denied; and it is further
ORDERED that if RevPoint does not bring a renewed default-judgment motion, with appropriate factual support, within 120 days of entry of this order, the action will be dismissed.