The motion court correctly concluded that a judgment in a prior action in Delaware between privies of the parties here does not bar plaintiff's action under the doctrine of res judicata. The res judicata effect of a judgment is determined by the law of the rendering jurisdiction (see Bruno v Bruno, 83 A.D.3d 165, 169 [1st Dept 2011], lv denied 18 N.Y.3d 805 [2012]). Under Delaware law, a subsequent action is barred if, among other things, "the original court had jurisdiction over the subject matter and the parties," and "the original cause of action or the issues decided was the same as the case at bar" (LaPoint v AmerisourceBergen Corp., 970 A.2d 185, 192 [Del 2009]).
Here, the motion court correctly found that plaintiff's cause of action is not the same as in the prior action. In the prior action, plaintiff's privies asserted an affirmative defense of fraud,
Further, the Delaware court lacked jurisdiction to hear the instant claim, because the purchase agreement contains a mandatory choice of jurisdiction clause in favor of New York (see Elf Atochem N. Am., Inc. v Jaffari, 727 A.2d 286, 288-289, 292 [Del 1999]).
The motion court correctly determined that plaintiff stated a viable breach of contract claim. Defendants are correct that the dispute over how inventory was accounted for must focus on the specific clauses in the contract dealing with inventory, rather than general representations that the financial statements comply with Generally Accepted Accounting Principles (GAAP) (see Waldman v New Phone Dimensions, 109 A.D.2d 702, 704 [1st Dept 1985], appeal dismissed 65 N.Y.2d 784 [1985]). However, textual ambiguities as to the applicability of certain carveouts from GAAP treatment, and as to whether there were multiple GAAP-compliant methods of accounting for the inventory, preclude dismissal at the pleading stage.
Plaintiff's alleged knowledge of the accounting practices at issue does not effect a waiver of its claims for breach of warranty (see CBS Inc. v Ziff-Davis Publ. Co., 75 N.Y.2d 496, 503-504 [1990]). At most, there is an issue of fact as to whether plaintiff had agreed that the procedures in exhibit B of the purchase agreement limiting the applicability of GAAP were applicable to limit the general warranty of compliance with GAAP (cf. Galli v Metz, 973 F.2d 145, 151 [2d Cir 1992] [matter remanded to determine whether breach of warranty claim was waived]).