On March 26, 2026, the Third Department issued a decision in Sabre Oxidation Tech., Inc. v. Superior Plus Corp., 2026 NY Slip Op. 01835, holding that the law of the case doctrine only applies to holdings that are essential to a matter’s determination, explaining:
To begin, the respective parties both contend that Supreme Court improperly considered issues that had been previously resolved in prior rulings. Holdco contends that plaintiffs’ defense that Superior breached an implied duty to negotiate in good faith toward the closing of the proposed transaction was previously determined by Supreme Court in its prior order that, in part, dismissed plaintiffs’ cause of action predicated on that duty. Meanwhile, plaintiffs similarly contend that Supreme Court improperly decided that the language of section 8 was unambiguous. Plaintiffs contend that the question of ambiguity and the circumstances under which the ERF would be due were previously litigated and decided in their favor in the court’s December 2021 decision. We find no merit to either contention.
Initially, although Holdco contends that Supreme Court’s prior ruling is entitled to collateral estoppel effect, the argument it advances, like that of plaintiffs, is premised on the doctrine of law of the case, which is a judicially crafted policy that expresses the practice of courts generally to refuse to reopen what has been decided. The doctrine is sometimes referred to as a kind of intra-action res judicata; its purpose is to avoid the retrial of issues already determined in the same case. However, the doctrine applies only when the prior ruling directly passed upon a question of law that is essential to the determination of the matter.
We note that plaintiffs’ cause of action for breach of good faith and fair dealing was predicated on numerous assertions with respect to what they deemed necessary actions in the LOI, several of which have no connection to the ERF. The part of plaintiffs’ cause of action that does relate to the ERF is predicated on the allegation that Superior and Holdco failed to negotiate in good faith toward a closing. On that, Supreme Court’s decision on the motion to dismiss assessed the claim as a failure to adhere to an implied duty of good faith and fair dealing in failing to enter into a binding contractual agreement as contemplated by the LOI and potential damages that would flow from that specific failure. That meaningfully differs from whether such a duty existed with respect to the binding provisions in the LOI, particularly those addressing plaintiffs’ obligation to pay the ERF and their corresponding defense under the premise that Superior had materially breached its own obligations under the LOI. Accordingly, the law of the case doctrine did not preclude plaintiffs from raising such a defense in opposition to Holdco’s motion for summary judgment.
As to plaintiffs’ argument, although Supreme Court previously concluded that the LOI appears to suffer from an ambiguity, that language fails to establish that it directly passed on that question in a way that would give it preclusive effect. Rather, the court’s holding was limited to determining whether plaintiff’s allegations withstood a motion to dismiss. On that, we note that the doctrine is inapplicable where, as here, a motion for summary judgment follows a motion to dismiss that was not converted to a motion for summary judgment pursuant to CPLR 3212 (c). Accordingly, Supreme Court was not required to give preclusive effect to its prior determination on the potential ambiguity of the language with respect to the ERF.
(Internal quotations and citations omitted).