Posted by: Patricia Salkin | March 1, 2015

NY Appellate Court Holds Collateral Estoppel did not Apply to Issues Resulting from a 1930 Ruling Involving Regulation of Lake’s Water Level

Following a bench trial conducted in 1930, Supreme Court executed a judgment (hereinafter the Borst judgment) in action No. 1 which, among other things, perpetually enjoined defendant, International Paper Company (hereinafter IPC), and its officers, employees or agents from closing a dam at the outlet of Piseco Lake that was located on its real property from June 25 to October 1 each year, as the usage of the dam caused the water levels of the lake to rise, thereby impairing the right of plaintiff, Harry V. Borst, to access all parts of the beach on his property. Nearly 80 years after the Borst judgment was executed, petitioners commenced a hybrid CPLR article 78 proceeding and declaratory judgment action (proceeding No. 1) seeking, among other things, a judicial declaration that the manner in which respondents regulated the water level of the lake caused damage to petitioners’ properties and was in violation of the injunctive relief provided in the Borst judgment. Petitioners now appeal from an order of the Supreme Court entered March 22, 2013 in Hamilton County, which, in action No. 1, denied a motion by Sandy Knolls, LLC to vacate a prior judgment of the court.

The court first addressed the Supreme Court’s denial of the respective intervenor motions of the PLA and Sandy Knolls, who now argue that Supreme Court’s denial of said motions constituted an abuse of the court’s discretion and, further, that the court erred in failing to join them as necessary parties to both proceedings. The court found that as the motions to intervene were filed in the months after Supreme Court issued its order in proceeding No. 1, but before the final judgment was rendered in that proceeding more than a year and one half later, and approximately two years before judgment was entered in proceeding No. 2, it agreed that denial of the motions on untimeliness grounds was necessitated. Moreover, although petitioners had made a minimal showing that there was an identity of issues considered in the Borst action and in proceeding No. 1, that the maintenance and usage of a dam to control water levels by IPC and respondents affected petitioners’ rights to use and enjoy their lakefront properties, respondents were never given “a full and fair opportunity to contest the decision now said to be controlling” in action No. 1, nor were their interests properly represented by IPC, as defendant in the Borst action, so as to warrant the application of collateral estoppel.

Despite the evidence that, in the decades following the execution of the Borst judgment, Sandy Knolls, as partial successor to the Borst property, and a majority of lakefront property owners had expressed a clear interest in the continued operation of the dam in order to stabilize water levels, Supreme Court found that the importance of ensuring that the Borst judgment maintained its “element of finality” was a prevailing concern. This court disagreed, and found that vacatur of the Borst judgment in the interest of justice was warranted under the facts and circumstances. The Supreme Court’s holding was therefore reversed.

Borst v International Paper Company, 121 A.D. 3d 1343 (3 Dept. 10/23/2014)

The opinion can be accessed at:

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