Affinity Elmwood Gateway Properties, LLC v. Stark Truss Company, Inc.

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
AFFINITY ELMWOOD GATEWAY
PROPERTIES, LLC,
Plaintiff,
v.
STARK TRUSS COMPANY, INC.,
Defendant.
REPORT AND
RECOMMENDATION
1:25-cv-737-JLS-JJM
Plaintiff Affinity Elmwood Gateway Properties, LLC commenced this action in
State of New York Supreme Court, County of Erie on July 24, 2025, seeking to recover damages
from defendant Stark Truss Company, Inc. for certain additional defects relating to a
construction project involving luxury condominiums at 1111 Elmwood Avenue in the City of
Buffalo, which were dismissed in a separate action between the parties entitled Stark Truss
Company, Inc. v. Affinity Elmwood Gateway Properties, LLC, et al., 22-cv-979 (hereafter
referred to as the “Stark Truss action”). Complaint [1-4].1
Stark Truss removed this action to this court on August 11, 2025 [1] based on
diversity of citizenship, and now moves to dismiss the Complaint pursuant to Fed. R. Civ. P.
(“Rule”) 12(b)(6). The motion has been referred to me by District Judge John L. Sinatra, Jr. for
initial consideration [2]. Having reviewed the parties’ submissions [8, 11, 13] and heard oral
1 	Bracketed references are to CM/ECF docket entries, and page references are to CM/ECF
pagination.
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argument on October 16, 2025 [14], for the following reasons I recommend that the motion be
granted.
BACKGROUND
Stark Truss’s Complaint in the Stark Truss action alleged, inter alia, breach of
contract by Affinity Elmwood relative to the construction project. 22-979, [1]. Affinity
Elmwood’s Second Counterclaim in that action sought “[j]udgment . . . in an amount to be
determined at trial based on [Stark Truss’s] breach of the Contract between the parties”. 22-979
[29] at 15. Affinity Elmwood admits that its claim for the additional defects was part of that
Counterclaim. Affinity Elmwood’s Memorandum of Law [11] at 3. My Case Management Order
in that action (22-979 [59]) set deadlines of March 29, 2024 for completion of fact discovery,
June 28, 2024 for completion of expert discovery, and July 29, 2024 for pretrial dispositive
motions.
On July 29, 2024 Stark Truss moved in that action for partial summary judgment
dismissing Affinity Elmwood’s Second Counterclaim. 22-979 [80]. Among the documents
submitted by Affinity Elmwood in opposition to that motion was an August 30, 2024 Affidavit
of William Maloney (22-979 [89]) disclosing the additional defects for the first time - five
months after the deadline for completion of fact discovery. Stark Truss argued that because
neither Maloney nor the claim for the additional defects were disclosed in Affinity Elmwood’s
Rule 26 mandatory disclosures or elsewhere in discovery, that claim should be precluded. Stark
Truss’s Reply Memorandum, 22-cv-979 [91], Point I, citing Rules 26 and 37(c)(1).2
2 	Rule 37(c)(1) states that “[i]f a party fails to provide information or identify a witness as required
by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a
motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless”.
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On March 31, 2025 I issued a Report and Recommendation in the Stark Truss
action, recommending inter alia “that summary judgment regarding the subsequent charges
alleged in the Maloney Affidavit be granted, and that those charges be dismissed” because “it
would be prejudicial to Stark Truss to consider this evidence, as it was unable to question the
corporate representative about these charges or seek to depose Mr. Maloney”. 22-cv-979, [92] at
25, 27.
In objecting to that recommendation, Affinity Elmwood argued at length why that
claim should not be dismissed (22-cv-979, Objections [93], Point I; Reply [96]). It argued that it
“was not in a position to disclose Mr. Maloney as a witness until he was called into duty to
expedite the report of his investigation when Stark filed its motion for partial summary
judgment. Any delay in disclosure was justified and harmless.” 22-979, [93] at 15. It also
submitted a second Affidavit from Maloney, updating its claim for the additional defects. 22-
979, [93-4].
In its Reply to Affinity Elmwood’s Objections, Stark Truss pointed out that
“Affinity filed its counterclaims on February 15, 2023 . . . . Nevertheless, Affinity did not assign
Mr. Maloney to investigate Stark Truss’s work at that time. Affinity certainly could have, but
apparently chose not to. Thus, the problem about which Affinity now complains is of its own
making. Because Affinity has no one but itself to blame for its discovery failures, it cannot
provide the ‘substantial justification’ required to overcome exclusion”. 22-979, [95] at 11.
On June 18, 2025, after having “carefully reviewed [the] R&R, the parties’
objections and related submissions, and the relevant record”, Judge Sinatra adopted my Report
and Recommend in full, granting and denying partial summary judgment “as set forth
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specifically in [the] R&R”. 22-cv-979, Decision and Order [104] at 2, 3. A bench trial in that
action has been scheduled to commence before Judge Sinatra on January 5, 2026.
DISCUSSION
A. Is the Doctrine of Res Judicata Applicable?
In moving to dismiss the Complaint, Stark Truss argues that Affinity Elmwood’s
claim for the additional defects is barred by the doctrine of res judicata. Stark Truss’s
Memorandum of Law [8], Point II. In opposition, Affinity Elmwood argues that the because the
dismissal of this claim in the Stark Truss action was on “procedural” grounds, it does not bar a
subsequent state court action. Affinity Elmwood’s Memorandum of Law [11] at 7-10, citing
Semtek International, Inc. v. Lockheed Martin Corp, 531 U.S. 497 (2001) and Paramount
Pictures Corp. v. Allianz Risk Transfer AG, 31 N.Y.3d 64 (2018).
Semtek holds that “federal common law governs the claim-preclusive effect of a
dismissal by a federal court sitting in diversity”, and that “as the federally prescribed rule of
decision”, the court should apply “the law that would be applied by state courts in the State in
which the federal diversity court sits”, unless “the state law is incompatible with federal
interests”. 531 U.S. at 508, 509. Therefore, I will focus on New York law in deciding this
motion.
Under New York law, “[t]he preclusive effect of a judgment is determined by two
related but distinct concepts - issue preclusion and claim preclusion - which collectively
comprise the doctrine of ‘res judicata’”. Paramount Pictures, 31 N.Y.3d at 72. “While issue
preclusion applies only to issues actually litigated, claim preclusion (sometimes used
interchangeably with ‘res judicata’) more broadly bars the parties or their privies from
relitigating issues that were or could have been raised in that action.” Id. (emphasis in original).
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“[I]t precludes the relitigation of all claims falling within the scope of the judgment, regardless of
whether or not those claims were in fact litigated . . . . In other words, claim preclusion may
foreclose litigation of a matter that never has been litigated, because of a determination that it
should have been advanced in an earlier suit.” Id. at 72-73.
Affinity Elmwood argues that “pursuant to settled Federal and New York State
law . . . the dismissal, in part, of Affinity’s second counterclaim in Stark’s Federal Court Action,
on procedural grounds, does not preclude Affinity from asserting the claims alleged in Affinity’s
removed state court action”. Affinity Elmwood’s Memorandum of Law [11] at 6. I disagree -
neither federal nor state law permits the splitting of that Counterclaim between different courts.
See Baltimore S.S. Co. v. Phillips, 274 U.S. 316, 320 (1927) (“[a] party seeking to enforce a
claim . . . must present to the court . . . all the grounds upon which he expects a judgment in his
favor. He is not at liberty to split up his demand and prosecute it by piecemeal, or present only a
portion of the grounds upon which special relief is sought, and leave the rest to be presented in a
second suit, if the first fail”); Stoner v. Culligan, Inc., 32 A.D.2d 170, 172 (3d Dept. 1969) (“an
entire claim, arising upon a contract or from a wrong, cannot be divided and made the subject of
several suits and, if two or more suits are brought for different parts of such a claim, a judgment
upon the merits in any one will be available as a bar in the others”).
Since Affinity Elmwood admits that its claim for the additional defects was a part
of its Second Counterclaim in the Stark Truss action, it had to seek recovery for those defects in
that action or not at all. In order to do so, it was obligated to comply with the procedural
requirements applicable to all federal court litigants, such as by listing the damages due to those
defects and identifying Maloney as a witness in it Rule 21 mandatory disclosures. Its failure to
do so led to the preclusion of that claim. Notwithstanding Affinity Elmwood’s suggestion that a
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dismissal on procedural grounds is not preclusive, it is well settled that “[p]rocedural
requirements frequently have substantive consequences”, Thomas v. Bowen, 791 F.2d 730, 736,
n. 5 (9th Cir. 1986), which “may result from the failure to abide by procedural rules”. Marcello
v. Maine, 489 F. Supp. 2d 70, 78 (D. Me. 2007). In this case, the substantive consequence of
Affinity Elmwood’s failure to timely disclose its claim for the additional defects was the
preclusion of evidence in support of that claim, necessitating its dismissal. See Celotex Corp. v.
Catrett, 477 U.S. 317, 325 (1986) (“the burden on the moving party may be discharged by
showing . . . that there is an absence of evidence to support the nonmoving party’s case”).
Under New York law, “[t]o establish claim preclusion, a party must show: (1) a
final judgment on the merits, (2) identity or privity of parties, and (3) identity of claims in the
two actions.” Paramount Pictures, 31 N.Y.3d at 73. Since it is undisputed that the parties and
claims in this action and the Stark Truss action are identical, the only remaining issue is whether
Judge Sinatra’s grant of partial summary judgment dismissing the claim for additional defects is
a “final judgment on the merits”.
“It has often been suggested that finality for appellate review is the same as
finality for purposes of res judicata, but that has probably never been quite true . . . . Thus when
res judicata is in question a judgment will ordinarily be considered final in respect to a claim . . .
if it is not tentative, provisional, or contingent and represents the completion of all steps in the
adjudication of the claim by the court.” Restatement (Second) of Judgments, §13 (1982). New
York courts adhere to this view. See Moore v. Aegon Reinsurance Co. of America, 196 A.D.2d
250, 258 (1st Dept.1994) (“the requirement of finality [should] be given a practical rather than a
technical construction”); Walter v. White-Bonn, Inc., 8 A.D.3d 715, 716 (3d Dept. 2004)
(“although the . . . liability judgment was interlocutory only, it was sufficiently final to have
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preclusive effect on all issues fully litigated”); Allstate Insurance Co. v. American Home
Assurance Co., 43 A.D.3d 113, 123 (1st Dept. 2007) (“[a]n interlocutory decision . . . may
nevertheless be final in the preclusive sense”), citing Lummus Co. v. Commonwealth Oil
Refining Co., 297 F.2d 80, 89 (2d Cir. 1961). For the reasons discussed, no further steps were
contemplated or necessary with respect to this court’s dismissal of Affinity Elmwood’s claim for
the additional defects. Therefore, it was sufficiently final to have preclusive effect.
The dismissal is likewise “on the merits”. See Collins v. Bertram Yacht Corp., 53
A.D.2d 527 (1st Dept.1976), aff’d, 42 N.Y.2d 1033 (1977) (“[s]ummary judgment, being the
procedural equivalent of a trial . . . is on the merits”); Jung Hee Lee v. Viera, 145 A.D.3d 674,
675 (2d Dept. 2016) (“[a] dismissal is on the merits where a plaintiff attempts to circumvent an
order of preclusion or summary judgment, the function of which is to effectively foreclose the
proponent’s offer of proof”); Vinci v. Northside Partnership, 250 A.D.2d 965, 965 (3d Dept.
1998) (“[a]n award of summary judgment . . . is generally deemed a resolution on the merits”).
The doctrine of claim preclusion “precludes the relitigation of all claims falling
within the scope of the judgment, regardless of whether or not those claims were in fact
litigated.” Paramount Pictures, 31 N.Y.3d at 72. Therefore, while Affinity Elmwood may
eventually attempt to convince the Second Circuit that the dismissal of its claim for the
additional defects was erroneous, it may not again challenge that dismissal at this time in this
action. See Reilly v. Reid, 45 N.Y.2d 24, 28 (1978) (“[t]he policy against relitigation of
adjudicated disputes is strong enough generally to bar a second action even where . . . the
controversy has been erroneously decided”).
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B. 	Stark Truss’s Alternative Arguments
Stark Truss argues that Affinity Elmwood’s claim for the additional defects is
barred for two additional reasons: Rule 13’s “compulsory counterclaim” rule and the “law of the
case” doctrine. Stark Truss’s Memorandum of Law [8], Points III and IV. Neither argument is
persuasive. It is undisputed that Affinity Elmwood did assert a Counterclaim for these damages,
and the “law of the case” doctrine applies only to “subsequent stages in the same case”. Johnson
v. Holder, 564 F.3d 95, 99 (2d Cir. 2009). This is not the same case as the Stark Truss action.
CONCLUSION
For these reasons, I recommend that Stark Truss’s motion to dismiss [8] be
granted, and that Affinity Elmwood’s Complaint [1-4] be dismissed, on the merits. Unless
otherwise ordered by Judge Sinatra, any objections to this Report and Recommendation must be
filed with the clerk of this court by November 21, 2025. Any requests for extension of this
deadline must be made to Judge Sinatra.
A party who “fails to object timely . . . waives any right to further judicial review
of [this] decision.” Wesolek v. Canadair Ltd., 838 F.2d 55, 58 (2d Cir. 1988); Thomas v. Arn,
474 U.S. 140, 155 (1985). Moreover, the district judge will ordinarily refuse to consider de novo
arguments, case law, or evidentiary material which could have been, but were not, presented to
the magistrate judge in the first instance. Patterson-Leitch Co. v. Massachusetts Municipal
Wholesale Electric Co., 840 F.2d 985, 990-91 (1st Cir. 1988).
The parties are reminded that, pursuant to Rule 72(b) and (c) of this Court’s Local
Rules of Civil Procedure, written objections shall “specifically identify the portions of the
proposed findings and recommendations to which objection is made and the basis for each
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objection . . . supported by legal authority”, and must include “a written statement either
certifying that the objections do not raise new legal [or] factual arguments, or identifying the new
arguments and explaining why they were not raised to the Magistrate Judge.” Failure to comply
with these provisions may result in the district judge's refusal to consider the objections.
Dated: November 7, 2025
/s/ Jeremiah J. McCarthy
JEREMIAH J. MCCARTHY
United States Magistrate Judge
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