LAW OFFICES OF
STROOCK & STROOCK & LAVAN LLP 180 MAIDEN LANE, NEW YORK, NEW YORK 10038-4982
212-806-5400
MEMORANDUM
1 NY 76592344v1
DATE: August 23, 2017
RE: RECENT CPLR DECISIONS OF INTEREST
FROM: Burton N. Lipshie
TABLE OF CONTENTS
JURISDICTION ......................................................................................................... 4
CPLR 301 – GENERAL JURISDICTION ................................................... 4
CPLR 302 – LONG ARM JURISDICTION............................................... 13
JURISDICTION BY CONSENT ................................................................ 21
FORUM NON CONVENIENS ...............................................................................22
GENERAL CONSIDERATIONS ............................................................... 22
FORUM SELECTION CLAUSES ............................................................. 23
VENUE ....................................................................................................................26
SUBJECT MATTER JURISDICTION ...................................................................30
COMMENCING THE ACTION .............................................................................31
THE SUMMONS .....................................................................................................37
SERVICE OF PROCESS ........................................................................................38
WHO MAY SERVE PROCESS ................................................................. 39
WHO MUST BE SERVED WITH PROCESS ........................................... 39
SERVICE ON INDIVIDUALS .................................................................. 39
SERVICE PURSUANT TO THE VEHICLE AND TRAFFIC LAW........ 45
SERVICE IN A FOREIGN COUNTRY .................................................... 45
PROOF OF SERVICE ................................................................................ 46
APPEARANCE BY COUNSEL .............................................................................46
DEFENDANT’S RESPONSE TO BEING SERVED .............................................49
STATUTE OF LIMITATIONS ...............................................................................51
PROFESSIONAL MALPRACTICE .......................................................... 51
MEDICAL MALPRACTICE VS. NEGLIGENCE .................................... 53
THE FOREIGN OBJECT RULE ................................................................ 53
CONTINUOUS TREATMENT .................................................................. 55
PRODUCT LIABILITY.............................................................................. 58
FRAUD ....................................................................................................... 61
BREACH OF CONTRACT ........................................................................ 64
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WRONGFUL DEATH ................................................................................ 71
INTENTIONAL TORTS ............................................................................ 71
LIABILITY CREATED BY STATUTE .................................................... 72
BREACH OF FIDUCIARY DUTY ............................................................ 73
ACCRUAL AND LIMITATION PERIODS .............................................. 74
CONTRACTUAL LIMITATIONS PERIODS ........................................... 76
ACKNOWLEDGEMENT AND PART PAYMENT ................................. 76
ESTOPPEL .................................................................................................. 79
THE RELATION BACK DOCTRINE ....................................................... 80
DEFENDANTS “UNITED IN INTEREST” .............................................. 82
TOLLS GENERALLY................................................................................ 84
THE “INSANITY” TOLL........................................................................... 85
THE “DEATH” TOLL ................................................................................ 86
CPLR 205(A) .............................................................................................. 86
THE BORROWING STATUTE ................................................................. 89
CONDITIONS PRECEDENT .................................................................... 90
PARTIES TO AN ACTION ....................................................................................90
JOINDER .................................................................................................... 90
CONSOLIDATION AND SEVERANCE .................................................. 91
ADDITION OF PARTIES .......................................................................... 92
SUBSTITUTION OF PARTIES ................................................................. 93
INTERVENTION ....................................................................................... 95
INTERPLEADER ....................................................................................... 96
CLASS ACTIONS ...................................................................................... 96
UNKNOWN PARTIES ............................................................................... 99
ARTICLE 16 ............................................................................................... 99
INDEMNIFICATION AND CONTRIBUTION ...................................... 101
GENERAL OBLIGATIONS LAW §15-108 ............................................ 104
PLEADINGS .........................................................................................................104
MOTION PRACTICE ...........................................................................................111
MOTION PROCEDURE .......................................................................... 111
RENEWAL, REARGUMENT AND RESETTLEMENT ........................ 116
SEALING THE FILE ............................................................................................120
SANCTIONS .........................................................................................................121
CONTEMPT ............................................................................................. 121
OTHER SANCTIONS .............................................................................. 125
SEALING OF COURT FILES ..............................................................................127
STAYING AN ACTION .......................................................................................127
PROVISIONAL REMEDIES ................................................................................128
ATTACHMENT ....................................................................................... 128
PRELIMINARY INJUNCTION ............................................................... 129
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NOTICE OF PENDENCY ........................................................................ 131
ACCELERATED JUDGMENT ............................................................................132
CPLR 3211 ................................................................................................ 132
TIMING OF MOTIONS FOR SUMMARY JUDGMENT ...................... 141
SUMMARY JUDGMENT ........................................................................ 146
CPLR 3213 ................................................................................................ 150
CPLR 3211(C) CONVERSION ................................................................ 152
DEFAULTS ............................................................................................... 152
OBTAINING A DEFAULT JUDGMENT ..................................................... 152
VACATING A DEFAULT ......................................................................... 155
CPLR 3216 ................................................................................................ 159
JUDGMENT BY CONFESSION ............................................................. 162
OFFER TO COMPROMISE OR LIQUIDATE DAMAGES ................... 162
VOLUNTARY DISCONTINUANCE ...................................................... 163
BILL OF PARTICULARS ....................................................................................164
DISCLOSURE .......................................................................................................164
MOTION PRACTICE ............................................................................... 164
SCOPE OF DISCLOSURE ....................................................................... 164
INFORMAL DISCOVERY ...................................................................... 165
PRE-ACTION DISCLOSURE ................................................................. 166
NON-PARTY DISCLOSURE .................................................................. 167
EXPERT DISCLOSURE .......................................................................... 167
PRIVILEGES ............................................................................................ 170
IN GENERAL ......................................................................................... 170
ATTORNEY-CLIENT PRIVILEGE............................................................. 171
ATTORNEY WORK PRODUCT ................................................................ 172
MATERIAL CREATED FOR LITIGATION ................................................. 174
THE COMMON INTEREST “PRIVILEGE” ................................................. 174
OTHER PRIVILEGES .............................................................................. 177
PRIVILEGE LOGS .................................................................................. 181
DEPOSITIONS ......................................................................................... 181
PRODUCTION OF DOCUMENTS ......................................................... 183
DISCLOSURE OF SOCIAL MEDIA ....................................................... 185
SURVEILLANCE VIDEOS ..................................................................... 186
SPOLIATION ........................................................................................... 187
ELECTRONIC DISCLOSURE ................................................................ 192
MEDICAL RECORDS AND EXAMINATIONS .................................... 196
ENFORCING DISCLOSURE ORDERS.................................................. 201
STIPULATIONS AND SETTLEMENT ...............................................................206
PRE-TRIAL PROCEEDINGS...............................................................................207
TRIAL AND JUDGMENT ....................................................................................209
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JURY ISSUES ........................................................................................... 209
VERDICTS ............................................................................................... 210
INTEREST ................................................................................................ 211
POWERS OF REFEREES ........................................................................ 212
JUDGMENTS ........................................................................................... 213
ARTICLE 78 PROCEEDINGS .............................................................................213
GENERAL CONSIDERATIONS ............................................................. 213
STATUTE OF LIMITATIONS ................................................................ 215
ARBITRATION .....................................................................................................217
ARBITRABILITY .................................................................................... 218
ARBITRATION AGREEMENTS ............................................................ 219
CPLR VS. FEDERAL ARBITRATION ACT .......................................... 219
WAIVER OF ARBITRATION ................................................................. 220
COMPELLING OR CHALLENGING ARBITRATION ......................... 220
CONFIRMING OR VACATING THE AWARD .................................... 222
ENFORCEMENT OF JUDGMENTS ...................................................................225
* * * * *
JURISDICTION
CPLR 301 – GENERAL JURISDICTION
Waldman v. Palestine Liberation Organization, 2016 WL 4537369 (2d Cir. 2016) –A
prior year’s “Update” reported on the Supreme Court’s landmark decision in Daimler AG
v. Bauman, ___ U.S. ___, 134 S.Ct. 746 (2014). In Daimler, almost certainly its most
important jurisdiction decision in some 70 years, an eight-Justice majority of the
Supreme Court essentially rewrote the law of general jurisdiction. The result is that a
corporation will, with narrow exceptions, only be subject to general jurisdiction in the
States in which it is either incorporated or maintains its principal place of business; in the
Court’s language, a State in which the corporation is “at home.” The once familiar
standard for general jurisdiction – corporate “presence” in a State in which it “does
business” both “continuously and systematically” – has been abrogated, except, possibly,
in “exceptional” cases. The Court issued a sweeping opinion on the constitutional limits
of “presence jurisdiction,” and, in the process, swept away decades of New York CPLR
301 jurisprudence. First, the Court rejected the argument, accepted and followed by
many Circuits [see, Gelfand v. Tanner, 385 F.2d 116 (2d Cir. 1967)(regularly cited and
followed by New York courts)], that when a local agent performs services for the foreign
principal that are so important that “if it did not have a representative to perform them,
the corporation’s own officials would undertake to perform substantially similar
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services,” the presence of the agent in the state makes the principal present in that state.
That test, said the Court, “stacks the deck,” because “it will always yield a pro-
jurisdiction answer.” Instead, the Court relied heavily on – and expanded upon – its
decision in Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011),
saying that “Goodyear made clear that only a limited set of affiliations with a forum will
render a defendant amenable to all-purpose jurisdiction there. ‘For an individual, the
paradigm forum for the exercise of general jurisdiction is the individual’s domicile; for a
corporation, it is an equivalent place, one in which the corporation is fairly regarded as at
home’” [emphasis added]. And, for a corporation, “the place of incorporation and
principal place of business are ‘paradigm bases for general jurisdiction.’” The Court
recognized that “Goodyear did not hold that a corporation may be subject to general
jurisdiction only in a forum where it is incorporated or has its principal place of business;
it simply typed those places paradigm all-purpose forums” [emphasis by the Court].
Here, “plaintiffs would have us look beyond the exemplar bases Goodyear identified, and
approve the exercise of general jurisdiction in every State in which a corporation
‘engages in a substantial, continuous, and systematic course of business’ [citation
omitted]. That formulation, we hold, is unacceptably grasping.” This marks a dramatic
change in the law. In New York, the formulation proposed by the Daimler plaintiffs had
been the law since Judge Cardozo’s 1917 opinion in Tauza v. Susquehanna Coal
Company, 220 N Y 259 (1917). The majority opinion cites Tauza, and proclaims that it
was “decided in the era dominated by Pennoyer [v. Neff, 95 U.S. 714 (1878)]’s territorial
thinking,” and “should not attract heavy reliance today.” The new standard articulated by
the Court is that the inquiry “is not whether a foreign corporation’s in-forum contacts can
be said to be in some sense ‘continuous and systematic,’ it is whether that corporation’s
‘affiliations with the State are so “continuous and systematic” as to render it essentially at
home in the forum State.’” The Court acknowledges “the possibility that in an
exceptional case [citation omitted; emphasis added], a corporation’s operations in a
forum other than its formal place of incorporation or principal place of business may be
so substantial and of such a nature as to render the corporation at home in that State. But
this case presents no occasion to explore that question, because Daimler’s activities in
California plainly do not approach that level. It is one thing to hold a corporation
answerable for operations in the forum State [citation omitted], quite another to expose it
to suit on claims having no connection whatever to the forum State.” Finally, the Court
held that “the general jurisdiction inquiry does not ‘focus solely on the magnitude of the
defendant’s in-state contacts’ [citation omitted]. General jurisdiction instead calls for an
appraisal of a corporation’s activities in their entirety, nationwide and worldwide. A
corporation that operates in many places can scarcely be deemed at home in all of them.
Otherwise, ‘at home’ would be synonymous with ‘doing business’ tests framed before
specific jurisdiction evolved in the United States [citation omitted]. Nothing in
International Shoe [Co. v. Washington, 326 U.S. 310 (1945)] and its progeny suggests
that ‘a particular quantum of local activity’ should give a State authority over a ‘far larger
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quantum of activity’ having no connection to any in-state activity.” Here, in Waldman,
American plaintiffs sue the Palestine Liberation Organization, the Palestinian Authority,
and others, on claims under the federal Anti-Terrorism Act, for injury and wrongful death
to them and their decedents resulting from terrorist attacks in Israel. Reversing the
District Court, the Second Circuit rules that the Courts of the United States lack general
jurisdiction over the defendants. “The overwhelming evidence shows that the defendants
are ‘at home’ in Palestine, where they govern. Palestine is the central seat of government
for the PA and PLO. The PA’s authority is limited to the West Bank and Gaza, and it has
no independently operated offices anywhere else. All PA governmental ministries, the
Palestinian president, the Parliament, and the Palestinian security services reside in
Palestine.” Within the United States, “the activities of the defendants’ mission in
Washington, D.C. – which the district court concluded simultaneously served as an office
for the PLO and the PA [citation omitted] – were limited to maintaining an office in
Washington, promoting the Palestinian cause in speeches and media appearances, and
retaining a lobbying firm [citation omitted]. These contacts with the United States do not
render the PA and the PLO ‘essentially at home’ in the United States.” And their
commercial contacts here were such as the Daimler Court held it would be “unacceptably
grasping” to support general jurisdiction. Moreover, “the district court also erred in
placing the burden on the defendants to prove that there exists an alternative forum where
Plaintiffs’ claims could be brought, and where the foreign court could grant a
substantially similar remedy [citation omitted]. Daimler imposes no such burden. In
fact, it is the plaintiff’s burden to establish that the court has personal jurisdiction over the
defendants.”
BNSF Railway Co. v. Tyrrell, ___ U.S. ___, 137 S.Ct. 1549 (2017) – “BNSF has over
2,000 miles of railroad track [6% of its total] and more than 2,000 employees [5% of its
total] in Montana [in which it generates less than 10% of its total revenue]. But, as we
observed in Daimler, ‘the general jurisdiction inquiry does not focus solely on the
magnitude of the defendant’s in-state contacts’ [citation omitted]. Rather, the inquiry
‘calls for an appraisal of a corporation’s activities in their entirety’; ‘a corporation that
operates in many places can scarcely be deemed at home in all of them’ [citation
omitted]. In short, the business BNSF does in Montana is sufficient to subject the
railroad to specific personal jurisdiction in that State on claims related to the business it
does in Montana. But in-state business, we clarified in Daimler and Goodyear, does not
suffice to permit the assertion of general jurisdiction over claims like Nelson’s and
Tyrrell’s that are unrelated to any activity occurring in Montana.” Justice Sotomayor
continued “to disagree with the path the Court struck in Daimler.”
Amtrust North America, Inc. v. Preferred Contractors Insurance Company Risk Retention
Group, LLC, 2016 WL 6208288 (S.D.N.Y. 2016)(McMahon, J.) – “This Court would
likely have personal jurisdiction over [defendant] PCIC under CPLR 301. The
uncontroverted facts asserted in Plaintiffs’ brief are that PCIC has a wide range of
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contacts with New York. PCIC advertises, through its agent Safebuilt, insurance
programs in New York and collects millions of dollars in premiums from New York
insureds [citation omitted]. PCIC is a registered risk retention group under New York
insurance law [citation omitted]. It has designated the Department of Financial Services
as its agent for service of process [citation omitted]. It has previously participated in
litigation before this Court without asserting a personal jurisdiction defense [citations
omitted]. These contacts are sufficiently ‘continuous and systematic’ as to render PCIC
essentially at home in New York [citing Daimler]. PCIC has availed itself of this Court’s
jurisdiction on previous occasions without objection and has again done so here.”
Cragnotti and Partners Capital Investment-Brazil S.A. v. Quintella, N.Y.L.J.,
1202781884008 (Sup.Ct. N.Y.Co. 2017)(Scarpulla, J.) – The Court here rejects, as have
various Federal Courts, the holding in In re Hellas Telecommunications (Luxembourg) II
SCA, 524 B.R. 488 (Bankr. S.D.N.Y. 2015), that “very substantial corporate operations
(regardless of whether measured in money, personnel, space, or time) in a given forum
suffice to make a defendant at home in the forum.”
Fernandez v. DaimlerChrysler, AG, 143 A D 3d 765 (2d Dept. 2016) – “‘A foreign
corporation is amenable to suit in New York courts under CPLR 301 if it has engaged in
such a continuous and systematic course of doing business here that a finding of its
presence in this jurisdiction is warranted’ [citations omitted]. Any exercise of
jurisdiction over a foreign corporation on the basis of state law must comport with the
due process requirement that ‘the corporation’s “affiliations with the State in which suit
is brought are so constant and pervasive as to render it essentially at home in the forum
State”’ [citations omitted]. Here, in opposition to Daimler’s motion to dismiss the
complaint insofar as asserted against it, the plaintiff failed to establish, prima facie, that
the activities of Daimler in New York subjected it to the personal jurisdiction of the
Supreme Court pursuant to CPLR 301.”
Minnie Rose LLC v. Yu, 2016 WL 1049020 (S.D.N.Y. 2016)(Ramos, J.) – As other
Courts have done [see, Beem v. Noble Group Limited, 2015 WL 8781333 (S.D.N.Y.
2015), reported on in last year’s “Update”], the Court here conflates the standards for
general jurisdiction over corporations that existed before Daimler swept them away, with
the new standard enunciated in Daimler. First, the Court applied Daimler to the
individual defendant, finding that, because that defendant is not domiciled in New York,
“there is no basis for the Court to exercise general jurisdiction over her.” Then, turning
to the corporate defendant, the Court held that, “a foreign corporation is subject to a
court’s general jurisdiction when its affiliations with the forum State are ‘so “continuous
and systematic” as to render it essentially at home’ there [citing Daimler]. The classic,
but not exclusive, bases of general jurisdiction are a corporation’s place of incorporation
and principal place of business, which ‘have the virtue of being unique – that is, each
ordinarily indicates only one place – as well as easily ascertainable’ [again citing
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Daimler]. Additional indicia of a corporation’s presence in the forum include whether
the corporation: (1) has employees, agents, offices, bank accounts, or property within the
state; (2) is authorized to do business in the state; (3) has a phone listing in the state; (4)
does public relations work in the state; (5) pays state income or property taxes; and (6)
the volume of business it conducts with state residents [citing a Southern District case
decided 11 years before Daimler].”
Ace Decade Holdings Ltd. v. UBS AG, N.Y.L.J., 1202774437526 (Sup.Ct. N.Y.Co. 2016)
(Bransten, J.) – “Since Daimler, New York courts have recognized that ‘doing business’
in New York is no longer a constitutionally sufficient basis for the exercise of general
jurisdiction over foreign entities.”
Famular v. Whirlpool Corporation, 2017 WL 280821 (S.D.N.Y. 2017)(Briccetti, J.) –
Last year’s “Update” reported on Matter of B&M Kingstone, LLC v. Mega International
Commercial Bank Co., Ltd., 131 A D 3d 259 (1st Dept. 2015). There, in its attempt to
enforce a judgment, petitioner sought information from respondent bank, headquartered
in Taiwan, by service of an information subpoena on its New York branch. The
Appellate Division, First Department, directed enforcement of the subpoena with respect
to accounts held in any of the bank’s branches. “Mega’s New York branch is subject to
jurisdiction requiring it to comply with the appropriate information subpoenas, because it
consented to the necessary regulatory oversight in return for permission to operate in
New York.” But last year’s “Update” also reported on the decision in Brown v. Lockheed
Martin Corp., 2016 WL 641392 (2d Cir. 2016). There, the Second Circuit concluded
that the relevant Connecticut statute for registration of foreign corporations and the
designation of an agent for service of process there – which may be the Secretary of State
– is “ambiguous” and not “clear enough” as to whether such registration constitutes,
under Connecticut law, a “consent” to jurisdiction there. Accordingly, the Court did not
need to “raise constitutional questions prudently avoided absent a clearer statement by the
state legislature or the Connecticut Supreme Court.” However, in pretty powerful dicta,
the Court strongly suggested that it would view a clearer statute, like New York’s, which
“has been definitively construed to accomplish that end,” as violating due process as
interpreted by the Supreme Court in Daimler. For, “the analysis that now governs
general jurisdiction over foreign corporations – the Supreme Court’s analysis having
moved from the ‘minimum contacts’ review described in International Shoe to the more
demanding ‘essentially at home’ test enunciated in Goodyear and Daimler – suggests that
federal due process rights likely constrain an interpretation that transforms a run-of-the-
mill registration and appointment statute into a corporate ‘consent’ – perhaps unwitting –
to the exercise of general jurisdiction by state courts, particularly in circumstances where
the State’s interests seem limited.” And, “it appears that every state in the union – and
the District of Columbia, as well – has enacted a business registration statute [citation
omitted]. States have long endeavored to protect their citizens and levy taxes, among
other goals, through this mechanism. If mere registration and the accompanying
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appointment of an in-state agent – without an express consent to general jurisdiction –
nonetheless sufficed to confer general jurisdiction by implicit consent every corporation
would be subject to general jurisdiction in every state in which it registered, and
Daimler’s ruling would be robbed of meaning by a back-door thief. In Daimler, the
Court rejected the idea that a corporation was subject to general jurisdiction in every state
in which it conducted substantial business. Brown’s interpretation of the Connecticut
statute could justify the exercise of general jurisdiction over a corporation in a state in
which the corporation had done no business at all, so long as it had registered” [emphasis
by the Court]. Here, in Famular, the Court confronted these opposing positions.
“Despite the uncertain status of the law in this area, a foreign defendant is not subject to
the general personal jurisdiction of the forum state merely by registering to do business
with the state, whether that be through a theory of consent by registration or otherwise.
‘After Daimler, with the Second Circuit cautioning against adopting “an overly expansive
view of general jurisdiction,” the mere fact of defendant being registered to do business is
insufficient to confer general jurisdiction in a state that is neither its state of incorporation
nor its principal place of business.’”
Ortiz v. Great Eastern Resort Corp., N.Y.L.J., 1202753684544 (Sup.Ct. Bronx Co. 2016)
(Gonzalez, J.) – “Jurisdiction over a foreign corporation may thus be asserted only where
there is an affiliation with the State that is so ‘continuous and systematic as to render it
essentially at home in the forum State’ [citing Daimler]. This high bar is clearly not
satisfied by Resort Management’s corporate registration with the NY Secretary of State.”
Bonkowski v. HP Hood LLC, 2016 WL 4536868 (S.D.N.Y. 2016)(Mauskopf, J.) –
“While courts have held that a corporation has constructively consented to personal
jurisdiction where it is authorized to do business in New York state [citations omitted],
they have done so prior to Daimler. And cases post-Daimler that have considered the
continued viability of consent to jurisdiction through registration have done so without
analysis, relying on the long-standing, pre-Daimler Appellate Division authority
[citations omitted]. The New York Court of Appeals has not defined the scope of New
York’s business registration statutes and its impact on personal jurisdiction either pre- or
post-Daimler, and this Court declines to so do. In Brown v. Lockheed Martin Corp.
[discussed directly above], the Second Circuit found it ‘prudent – in the absence of a
controlling interpretation by the Connecticut Supreme Court, or a clearer legislative
mandate than Connecticut law now provides – to decline to construe the state’s
registration and agent-appointment statutes as embodying actual consent by every
registered corporation to the state’s exercise of general jurisdiction over it’ [citation
omitted]. Finding neither controlling case law nor a scintilla of discussion on this point
from either party, the Court declines to give New York’s statutory scheme such an
expansive reading.”
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Genuine Parts Company v. Cepec, 2016 WL 1569077 (Del. 2016) – The Supreme Court
of Delaware weighs in on the issue whether registering to do business in a State amounts
to a consent to general jurisdiction there. Overruling one of its pre-Daimler cases, the
Court interprets its statute, which, like New York’s, provides for the designation of a
State official as agent for service of process upon becoming authorized to do business, as
not “a broad consent to personal jurisdiction in any cause of action, however unrelated to
the foreign corporation’s activities in Delaware.” After Daimler, “it is not tenable to read
Delaware’s registration statutes” to constitute such consent. For, “an incentive scheme
where every state can claim general jurisdiction over every business that does any
business within its borders for any claim would reduce the certainty of the law and
subject businesses to capricious litigation treatment as a cost of operating on a national
scale or entering any state’s market. Daimler makes plain that it is inconsistent with
principles of due process to exercise general jurisdiction over a foreign corporation that is
not ‘essentially at home’ in a state for claims having no rational connection to the state.”
In re Foreign Exchange Benchmark Rates Antitrust Litigation, 2016 WL 1268267
(S.D.N.Y. 2016)(Schofield, J.) – “Plaintiffs argue that the New Defendants constructively
consented to personal jurisdiction in this matter pursuant to §200 of the New York
Banking Law, which requires a foreign banking corporation, among other things, to
‘appoint the superintendent [of the New York Department of Financial Services] and his
or her successors its true and lawful attorney, upon whom all process in any action or
proceeding against it on a cause of action arising out of a transaction with its New York
agency or agencies or branch or branches, may be served’ [citation omitted]. This
argument is incorrect. By the terms of the statute, any consent to jurisdiction by virtue of
the New Defendants’ registration with the NYDFS is not general jurisdiction over all
claims, but instead is limited to claims arising out of transactions with the New
Defendants’ New York agencies or branches.”
Serov v. Kerzner International Resorts, Inc., N.Y.L.J., 1202764623785 (Sup.Ct. N.Y.Co.
2016)(Edmead, J.) – “It has been held that ‘a foreign corporation is deemed to have
consented to personal jurisdiction over it when it registers to do business in New York
and appoints the Secretary of State to receive process for it pursuant to Business
Corporation Law §§304 and 1304’ [citations omitted]. This is ‘part of the bargain by
which the foreign corporation enjoys the business freedom of the State of New York’
[citation omitted]. As such, Defendants’ initial contention that the Court lacks general
jurisdiction over them because they were not engaged in a ‘continuous and systematic
course of doing business’ in New York [citation omitted], is misplaced; analysis of the
nature and frequency of a defendant’s business is not required where the defendant has
registered to do business in New York and appointed the Secretary of State, as its
registered agent, to accept service on their behalf. Therefore, as Kerzner North America
and Kerzner NY were both, at the time this action was commenced, authorized to do
business in New York and appointed the Secretary of State as its registered agent to
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accept service on their behalf, they consented to be subject to the general jurisdiction of
New York courts. And, contrary to Defendants’ contention, the due process rights of
Kerzner North America and Kerzner NY are not violated through the exercise of such
jurisdiction. By taking the affirmative step of registering to do business in New York,
those defendants availed themselves of the benefits of being able to do business here.
Those benefits are accompanied by the reasonable expectation that they could be hailed
into New York courts.”
Mischel v. Safe Haven Enterprises, LLC, N.Y.L.J., 1202787244868 (Sup.Ct. N.Y.Co.
2017)(Coin, J.) – The Court here disagrees with the decision in Serov v. Kerzner
International Resorts, discussed directly above. In Serov, “the court, relying on pre-
Daimler case law, found consent to jurisdiction by the defendant’s having registered to
do business in New York. While discussing Daimler generally, the Serov court ‘did not
discuss the impact of Daimler on the viability of predicating general jurisdiction on
consent through the business-registration statutes.’” The Court here concludes that
registration is not sufficient to make a foreign corporation subject to general jurisdiction.
“All 50 states require registration of foreign corporations to do business [citation
omitted]. If, after Daimler, these statutes were deemed to meet due process standards,
foreign corporations seeking to avoid general jurisdiction in a state would be faced with
unenviable choices: (1) not doing business in the state; (2) registering and subjecting
themselves to general jurisdiction; or (3) doing business in the state without registration
and thereby breaking the law.” The Court finds that “the net effect of finding jurisdiction
by registration would be coercive.” Moreover, “the New York registration statute (BCL
§304), while designating the secretary of state as the registrant’s agent for service of
process, is silent on the jurisdictional effect of registering to do business here. In
apparent recognition of this omission, a bill was introduced in the State Assembly to
make plain that registration constituted consent to the general jurisdiction of the courts of
this state [citation omitted]. The proposed statute was not enacted.”
FIA Leveraged Fund Ltd. v. Grant Thornton LLP, 150 A D 3d 492 (1st Dept. 2017) –
Three decades before the Daimler decision, The Second Circuit, in Volkswagenwerk AG
v. Beech Aircraft Corporation, 751 F.2d 117 (2d Cir. 1984), laid out a four-prong test for
determining whether the presence in New York of a subsidiary of a non-New York
corporation sufficed to provide general jurisdiction here over the parent corporation: (1)
common ownership; (2) financial dependence of the subsidiary on the parent; (3)
assignment by the parent of executive personnel of the subsidiary, and failure to observe
corporate formalities; (4) parental control over the subsidiary’s marketing and operational
policies. Post-Daimler, that holding is at least called into question, since the non-New
York parent is not “at home” in New York. But, here, in FIA Leveraged Fund Ltd, the
Court declined jurisdiction over the non-New York parent corporation because “plaintiffs
failed to satisfy the four factors set out in Volkswagenwerk AG v. Beech Aircraft Corp.
[citation omitted], which we have adopted.”
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Singh v. Singh, 2016 WL 3181149 (S.D.N.Y. 2016)(Carter, J.) – Although Daimler dealt
with a state’s general jurisdiction over corporations, the Court stated that “‘for an
individual, the paradigm forum for the exercise of general jurisdiction is the individual’s
domicile.’” A prior year’s “Update” reported on Hardware v. Ardowork Corporation,
117 A D 3d 561 (1st Dept. 2014), where, in a decision dated four months after Daimler,
the Court, without discussing, or even citing, Daimler, held the individual third-party
defendant to be subject to general jurisdiction in New York because he was “‘doing
business’ in New York, through a voluntary, continuous and self-benefitting course of
conduct, sufficient to render him subject to the general jurisdiction of this State’s courts
[citations, including Bryant v. Finnish National Airline, 15 N Y 2d 426 (1965), which re-
affirmed the decision in Tauza, which the Supreme Court apparently overruled in
Daimler, omitted]. The evidence included, among other things, Mr. Hardware’s
testimony concerning his long-term employment as a scientist at an ‘undisclosed
location’ in New York, and documentary evidence presented by third-party plaintiffs
showing that he also had a long-term business relationship with a New York company,
for which he acted as a designated agent.” Similarly, that year’s “Update” reported on
the Second Department’s decision in Pichardo v. Zayas, 122 A D 3d 699 (2d Dept.
2014), where, in a decision issued ten months after Daimler, the Court held that the
individual defendants were not subject to general jurisdiction in New York, not because
of the restrictions imposed by Daimler, which it did not cite, but because of the Second
Department’s prior decisions interpreting CPLR 301 as not including general jurisdiction
over individuals based upon “doing business” in New York. The Court included a “but
see” cite to the Hardware decision. Eventually, in Magdalena v. Lins, 123 A D 3d 600
(1st Dept. 2014), also reported on in that year’s “Update,” the First Department, citing
Daimler, held that there was no basis for general jurisdiction over an individual defendant
because, “while Lins, a Brazilian national, owns an apartment in New York, he is not
domiciled there.” And, again, in Hopeman v. Hopeman, 128 A D 3d 488 (1st Dept.
2015), also in that year’s “Update,” the First Department held that the defendant was not
subject to general jurisdiction in New York because “there was no evidence that he had
established ‘physical presence in the State and an intention to make the State a permanent
home.’” Yet, as reported in last year’s “Update,” the Southern District, in Pinto-Thomaz
v. Cusi, 2015 WL 7571833 (S.D.N.Y. 2015), citing and quoting from Hardware, and
various pre-Daimler cases, and without citing Daimler, stated that, “traditionally, CPLR
301 has allowed New York courts to exercise general personal jurisdiction over
individuals only if they are domiciled in New York, have a physical presence in New
York, or consent to New York’s exercise of jurisdiction [citations omitted]. At times,
however, New York courts have exercised general personal jurisdiction over individuals
‘doing business’ in the state, a mode of analysis historically applied only to foreign
corporations [citations omitted]. Like the New York Court of Appeals in Laufer [v.
Ostrow, 55 N Y 2d 305 (1982)], for the purposes of this motion, this Court assumes,
without deciding, that an individual ‘doing business’ in New York may be subject to
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general jurisdiction. This requires the plaintiff to make a prima facie showing that the
defendant is ‘doing business’ in New York through evidence of ‘a voluntary, continuous
and self-benefitting course of conduct.’” Here, in Singh, the Court described the indicia
of a defendant’s domicile in a forum: “for instance that Defendant holds a New York
State driver’s license, maintains personal and business checking and credit card accounts
at New York banks, files New York State tax returns, lists New York on tax returns as his
home address, or owns any property in New York.”
Reich v. Lopez, 858 F.3d 55 (2d Cir. 2017) – “Owning property in a forum does not alone
establish domicile. ‘One may have more than one residence in different parts of this
country or the world, but a person may have only one domicile’ [citation omitted]. In an
‘exceptional case,’ an individual’s contacts with a forum might be so extensive as to
support general jurisdiction notwithstanding domicile elsewhere [citing Daimler], but the
Second Circuit has yet to find such a case.” And, “this is not a case in which we need to
decide the question of whether it would ever be possible to exercise general jurisdiction
over an individual in a forum other than the one in which he is domiciled, nor do we need
to define the exact contours of what could make such an ‘exceptional case’ [citation
omitted]. Betancourt, a Venezuelan citizen, has relationships with New York banks and
law firms, and owns an apartment in New York; but he spent fewer than 5% of nights in
New York during a 31-month period the district court examined. Trebbau, also a
Venezuelan citizen, does not own or rent any property in New York. In the same 31-
month period, he spent fewer than 3% of nights in New York. The defendants’ contacts
with New York do not approach the point at which general jurisdiction over them would
comport with due process.”
Chen v. Lu, 144 A D 3d 735 (2d Dept. 2016) – Almost three years after Daimler, the
Court does not cite that seminal Supreme Court decision, but, instead, relies upon its own
35 year-old precedent in holding that, under CPLR 301, “‘the bases for jurisdiction [over
individuals] recognized by our common law before the date of the enactment of the
CPLR were physical presence within the State, domicile or consent.’” And, here,
“evidence of the defendant’s ownership of a cooperative apartment in Queens is, on its
own, insufficient to confer personal jurisdiction over him absent evidence of his intent to
make the apartment his ‘fixed and permanent home.’”
CPLR 302 – LONG ARM JURISDICTION
Bristol-Myers Squibb Co. v. Superior Court of California, ___ U.S. ___, 137 S.Ct. 1773
(2017) – Non-California plaintiffs sued, in California, the manufacturer of a drug they
claimed caused them harm in their home states, joining several California residents who
made the same claim. The Supreme Court rejects the “sliding scale approach to specific
jurisdiction.” “Under this approach, ‘the more wide-ranging the defendant’s forum
contacts, the more readily is shown a connection between the forum contacts and the
claim.’” Here, the California Supreme Court “concluded that ‘BMS’s extensive contacts
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with California’ permitted the exercise of specific jurisdiction ‘based on a less direct
connection between BMS’s forum activities and plaintiffs’ claims than might otherwise
be required.’” And, ‘this attenuated requirement was met, the majority found, because
the claims of the nonresidents were similar in several ways to the claims of the California
residents (as to which specific jurisdiction was uncontested).” But, under long arm
jurisdiction, “‘the suit’ must ‘arise out of or relate to the defendant’s contacts with the
forum’ [citations omitted; emphasis by the Court]. In other words, there must be ‘an
affiliation between the forum and the underlying controversy, principally, an activity or
an occurrence that takes place in the forum State and is therefore subject to the State’s
regulation’ [citation omitted]. For this reason, ‘specific jurisdiction is confined to
adjudication of issues deriving from, or connected with, the very controversy that
establishes jurisdiction.” Thus, “the California Supreme Court’s ‘sliding scale approach’
is difficult to square with our precedents. Under the California approach, the strength of
the requisite connection between the forum, and the specific claims at issue is relaxed if
the defendant has extensive forum contacts that are unrelated to those claims. Our cases
provide no support for this approach, which resembles a loose and spurious form of
general jurisdiction. For specific jurisdiction, a defendant’s general connections with the
forum are not enough.” And, “the mere fact that other plaintiffs were prescribed,
obtained, and ingested Plavix in California – and allegedly sustained the same injuries as
did the nonresidents – does not allow the State to assert specific jurisdiction over the
nonresidents’ claims.” Justice Sotomayor dissented. “Three years ago, the Court
imposed substantial curbs on the exercise of general jurisdiction in its decision in
Daimler [citation omitted]. Today, the Court takes its first step toward a similar
contraction of specific jurisdiction by holding that a corporation that engages in a
nationwide course of conduct cannot be held accountable in a state court by a group of
injured people unless all of those people were injured in the forum State. I fear the
consequences of the Court’s decision today will be substantial. The majority’s rule will
make it difficult to aggregate the claims of plaintiffs across the country whose claims
may be worth little alone. It will make it impossible to bring a nationwide mass action in
state court against defendants who are ‘at home’ in different States. And it will result in
piecemeal litigation and the bifurcation of claims. None of this is necessary. A core
concern in this Court’s personal jurisdiction cases is fairness. And there is nothing unfair
about subjecting a massive corporation to suit in a State for a nationwide course of
conduct that injures both forum residents and nonresidents alike.”
Chen v. Lu, 144 A D 3d 735 (2d Dept. 2016) – “Pursuant to CPLR 302(a)(1), the court
may exercise personal jurisdiction over a nondomiciliary who ‘transacts any business
within the state or contracts anywhere to supply goods or services in the state.’ The
transaction of business is established where it is shown that a ‘defendant’s activities here
were purposeful and there is a substantial relationship between the transaction and the
claim asserted.’” And “a single transaction in New York may suffice to invoke
jurisdiction even if the defendant never enters the state, provided that the activity was
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purposeful and ‘there is a substantial relationship between the transaction and the claim
asserted’ [citations omitted]. Indeed, absent ‘some articulable nexus’ between a
defendant’s purposeful business activities in the state and the plaintiff’s claims, personal
jurisdiction pursuant to CPLR 302(a)(1) may not be exercised.”
First Manhattan Energy Corporation v. Meyer, 150 A D 3d 521 (1st Dept. 2017) –
“Plaintiff made a sufficient showing of jurisdiction pursuant to CPLR 302(a)(1) to
withstand dismissal [citation omitted]. The record establishes prima facie that defendant,
while not a party to the instant escrow agreement, was designated in the escrow
agreement as the ‘Assigned Escrow Agent’ into whose account the funds would be
deposited, and that he accepted the funds pursuant to the agreement. In so doing,
pursuant to his agreement with the New York escrowee, defendant ‘affected local
commerce’ in New York by ‘changing plaintiff’s economic position,’ and in receiving
the funds into his California account via wire transfer, he transacted business here by
availing himself of modern technology to participate in and confer upon himself the
benefit of the transaction while living and physically working elsewhere.”
Nick v. Schneider, 150 A D 3d 1250 (2d Dept. 2017) – In this action for fraud, plaintiffs
adequately demonstrated that their cause of action arises out of the Florida-domiciled
defendant’s transaction of business in New York. “The defendant allegedly utilized
Sommer & Schneider’s New York escrow account to further the alleged fraudulent
investment scheme by directing the plaintiffs to deposit the funds for investment deals
into the escrow account, by acting as the agent for the purported investment deals, and by
using and allowing [his co-defendant] to use the investment money deposited in the
escrow account for personal expenses.”
Cragnotti and Partners Capital Investment-Brazil S.A. v. Quintella, N.Y.L.J.,
1202781884008 (Sup.Ct. N.Y.Co. 2017)(Scarpulla, J.) – “The ‘mere solicitation by
defendant of business within the state does not constitute the transaction of business
within the state unless the solicitation in New York is supplemented by business
transactions occurring in the state’ [citation omitted]. Additionally, the ‘publication of
information on a globally-accessible website does not constitute the “transaction of
business” in New York unless the website specifically targets its activities at New York’
[citation omitted]. In fact, ‘passive websites which merely impart information without
permitting a business transaction, are generally insufficient to establish personal
jurisdiction.’” And, as here, even if a website is interactive, its mere existence is
insufficient for long arm jurisdiction where “there is no allegation that [plaintiff]
specifically used the [defendant’s] website to purchase the Bonds” at issue.
America/International 1994 Venture v. Mau, 146 A D 3d 40 (2d Dept. 2016) – In this
action on an unpaid note issued in connection with an investment agreement, “the
question presented on this appeal is whether New York has jurisdiction over an Illinois
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resident who entered into an agreement to invest in a New York joint venture. As
relevant to this appeal, the agreement appointed a corporation that has its principal office
in New York to act as an agent on behalf of all of the investors with respect to the
business of the joint venture. For the reasons set forth herein, we find that the agreement,
which gave investors no right to control the activities of the corporation appointed as
agent, cannot serve as a basis for the exercise of long-arm jurisdiction.” For, “to be
considered an agent for jurisdictional purposes, the local agent must have ‘engaged in
purposeful activities in the State in relation to a transaction for the benefit of and with the
knowledge and consent of the defendant and that the defendant exercised some control
over the agent in the matter.” Indeed, “the critical factor is the degree of control the
defendant principal exercises over the agent.” And, here, “the critical element of control
is completely lacking.” For, “the Subscription Agreement provided that Kraft [the agent]
had the ‘full power and authority,’ ‘without further consent and without limitation of any
power or authority,’ to act on the defendant’s behalf with regard to the operation of the
joint venture. Moreover, while a principal is ordinarily ‘always free to terminate the
agency relationship’ [citation omitted], here, the Subscription Agreement did not provide
the defendant the right to terminate Kraft as his agent and provided that only a majority
of the investors could revoke Kraft’s power of attorney.” Finally, jurisdiction pursuant to
CPLR 302 requires “the existence of some articulable nexus between the business
transacted and the cause of action sued upon.” Here, “Kraft’s business activities in New
York were related to the operation of the joint venture. The subject cause of action arose
from the defendant’s failure to pay the note [to which Kraft “was a stranger”] when it
came due. The subject claim resulted from the execution of the note in Illinois 20 years
prior to the commencement of this action. This relationship is too remote and indirect to
create an articulable nexus.”
Coast to Coast Energy, Inc. v. Gasarch, 149 A D 3d 485 (1st Dept. 2017) – “To establish
that a defendant acted through an agent, a plaintiff must ‘convince the court that the New
York actors engaged in purposeful activities in this State in relation to the transaction for
the benefit of and with the knowledge and consent of the defendant and that the
defendant exercised some control over the New York actors’ [citation omitted]. ‘To
make a prima facie showing of control, “a plaintiff’s allegations must sufficiently detail
the defendant’s conduct so as to persuade a court that the defendant was a primary actor”
in the specific matter in question; control cannot be shown based merely upon a
defendant’s title or position within the corporation, or upon conclusory allegations that
the defendant controls the corporation.’”
Ace Decade Holdings Ltd. v. UBS AG, N.Y.L.J., 1202774437526 (Sup.Ct. N.Y.Co. 2016)
(Bransten, J.) – Plaintiff “cannot manufacture jurisdiction over UBS by moving its
operations to New York.” The bulk of the transaction between the parties occurred while
plaintiff operated out of Hong Kong. The minimal contacts after its relocation to New
York did not suffice to create CPLR 302(a)(1) jurisdiction over defendant.
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Rushaid v. Pictet & Cie, 28 N Y 3d 316 (2016) – Last year’s “Update” reported on the
Appellate Division decision in this action [127 A D 3d 610 (1st Dept. 2015)]. Plaintiff
claims that defendant Swiss bank assisted faithless employees in a kickback scheme by
effecting wire transfers on their behalf. The Appellate Division held that, “unlike the
Lebanese Canadian Bank (LCD) [over which jurisdiction was sustained in Licci v.
Lebanese Canadian Bank, SAL, 20 N Y 3d 327 (2012)], however, which was alleged to
have ‘deliberately used a New York account again and again to effect its support’ of a
foundation through which money was funneled to a terrorist organization [citation
omitted], defendants are alleged to have been ‘directed’ by plaintiffs’ former employees
‘to wire the bribe/kickback money to Citibank NA, New York, in favor of Pictet & Co.
Bankers Geneva, for the credit of’ an account they controlled. Thus, unlike LCD,
defendants merely carried out their clients’ instructions and have not been shown to have
‘purposefully availed themselves of the privilege of conducting activities in New York.’”
A narrowly-divided Court of Appeals has reversed. The majority concludes that
“defendants’ intentional and repeated use of New York correspondent bank accounts to
launder their customers’ illegally obtained funds constitutes purposeful transaction of
business substantially related to plaintiffs’ claims, thus conferring personal jurisdiction
within the meaning of CPLR 302(a)(1).” The majority relied upon its Licci decision, and
distinguished Amigo Foods Corp. v. Marine Midland Bank-NY, 39 N Y 2d 391 (1976) –
in which it held that the mere existence of a foreign bank’s correspondent account in New
York was, in itself, insufficient to impose jurisdiction over that bank. For, “unintended
and unapproved use of a correspondent bank account, where the non-domiciliary bank is
a passive and unilateral recipient of funds later rejected – as in Amigo Foods – does not
constitute purposeful availment for personal jurisdiction under CPLR 302(a)(1).
Repeated, deliberate use that is approved by the foreign bank on behalf and for the
benefit of a customer – as in Licci – demonstrate volitional activity constituting
transaction of business. In other words, the quantity and quality of a foreign bank’s
contacts with the correspondent bank must demonstrate more than banking by
happenstance.” And, here, the complaint alleged that defendant Pictet’s “Citibank, New
York [correspondent] account was used to wire the bribes to a Pictet account in Geneva,
after which point, the money was divided up and distributed amongst the ‘corrupted
employees’ by deposit to their individual Pictet accounts. [Pictet’s Vice President]
Chambaz knew the large sums of money being wired were proceeds of an illegal scheme
but never questioned them, and continued to aid and abet the fraud.” Thus, “the
Appellate Division erroneously concluded that plaintiffs failed to establish purposeful
availment because defendants ‘merely carried out their clients’ instructions.’ Our cases
do not require that the foreign bank itself direct the deposits, only that the bank
affirmatively act on them.” And, “a foreign bank with a correspondent account,
therefore, that repeatedly approves deposits and the movement of funds through the
account for the benefit of its customer is no less ‘transacting business in New York’
because the customer, or a third party at the customer’s direction, actually deposits or
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transfers the funds to New York.” The dissent argued that “CPLR 302(a)(1) does not
confer personal jurisdiction over a foreign bank when, as in this case, the bank’s only
connection to New York is the maintenance of a New York correspondent account and
the passive receipt of payments into that account, at the unilateral direction of third
parties.” Rather, “a foreign entity must initiate purposeful contact with New York,
beyond the mere maintenance of a correspondent account, in order for its relationship
with a New York bank to form the basis for the exercise of personal jurisdiction.” And,
here, the dissent urged, “defendants’ sole connection to New York was the maintenance
of a correspondent account at Citibank, N.A., into which third party vendors deposited
funds that were alleged to be the proceeds of bribes and kickbacks obtained by foreign
‘corrupt employees’ in connection with a Saudi Arabian construction project,” and
“plaintiffs have not identified any volitional act on the part of defendants that was
directed at New York. Indeed, the only intentional conduct alleged in the complaint that
relates in any way to New York was carried out by the foreign employees – who directed
the vendors to wire the bribes and kickbacks to ‘Citibank, N.A., New York, in favour of
“Pictet and Co. Bankers Geneva,” for the credit of’ the employees’ overseas account –
and the vendors, who followed that direction.”
D&R Global Selections, S.L. v. Bodega Olegario Falcon Pineiro, 29 N Y 3d 292 (2017)
– Defendant, a Spanish winery, entered into a contract, in Spain, with plaintiff, a Spanish
business broker, agreeing that if plaintiff located a distributor to import defendant’s wine
into the United States, defendant would pay commissions on wine sales made to such
distributor. Thereafter, both parties came to New York several times to meet potential
distributors. On one such trip, to attend a showcase of Spanish wines, plaintiff
introduced defendant to a New York wine importer, and defendant began selling wine to
that importer. Thereafter, plaintiff and defendant twice came to New York to events that
featured the importer’s Spanish wine portfolio, including defendant’s wine.
Subsequently, the parties had a dispute about the terms of their agreement, and plaintiff
commenced this action in New York. The Court of Appeals unanimously concludes that
defendant is subject to jurisdiction in New York pursuant to CPLR 302(a)(1). Defendant
transacted business in New York, and, “plaintiff’s claim arises from” that transaction.
The “arises from” inquiry is “‘relatively permissive’ and an articulable nexus or
substantial relationship exists ‘where at least one element arises from the New York
contacts’ rather than ‘every element of the cause of action pleaded’ [citation omitted].
The nexus is insufficient where the relationship between the claim and transaction is ‘too
attenuated’ or ‘merely coincidental.’” And, here, “plaintiff’s claim has a substantial
relationship to defendant’s business activities in New York. Defendant traveled to New
York to attend the Great Match Event where plaintiff introduced defendant to Kobrand.
Defendant then joined plaintiff in attending two promotional events hosted by Kobrand in
New York, which resulted in Kobrand purchasing defendant’s wine and, eventually,
entering an exclusive distribution agreement for defendant’s wine in the United States.
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Those sales to Kobrand – and the unpaid commissions thereon – are at the heart of
plaintiff’s claim.”
People ex rel. Schneiderman v. Orbital Publishing Group, Inc., 50 Misc 3d 811 (Sup.Ct.
N.Y.Co. 2015)(Edmead, J.) – “Respondents argue that all of Pugsley’s contacts with New
York were conducted in her corporate capacity and do not confer jurisdiction over her as
an individual. Additionally, respondents argue that Pugsley owns no property in New
York and she has never been in it. However, New York has rejected the ‘fiduciary shield
doctrine’ [citations omitted]. Thus, Pugsley may not avoid jurisdiction because she was
working as an officer of Adept while accruing contacts with New York. This is
especially true since Pugsley enjoyed almost total control over Adept as its owner,
president and principal laborer [citation omitted]. Since Pugsley herself conducted all of
the activity ascribed to Adept in the petition, and as any benefit that accrued to Adept
also accrued to Pugsley, she is subject to jurisdiction in New York for the same reasons
that Adept is.”
Bloomgarden v. Lanza, 143 A D 3d 850 (2d Dept. 2016) – In this legal malpractice
action, the New York plaintiffs sue California attorneys with regard to defendants’
representation of plaintiffs in a Florida lawsuit. The Court concludes that New York
lacks jurisdiction over defendants. First, as to CPLR 302(a)(1), “defendants
communicated from California with the plaintiffs in New York via mail, telephone and
email because the plaintiffs were New York domiciliaries, not because the defendants
were actively participating in transactions in New York, and the communications with the
plaintiffs in New York concerned the services that the defendants were performing in
Florida.” And, as to CPLR 302(a)(3), “the residence of an injured party in New York is
not sufficient to satisfy the clear statutory requirement of an ‘injury within the state’
[citations omitted]. ‘The situs of the injury is the location of the original event which
caused the injury, not the location where the resultant damages are subsequently felt by
the plaintiff’ [citation omitted]. Here, the alleged legal malpractice occurred in Florida.”
Lantau Holdings, Ltd. v. Orient Equal International Group, 2017 WL 914636 (Sup.Ct.
N.Y.Co. 2017)(Singh, J.) – “CPLR 302(a)(2) has been narrowly construed to apply only
when the defendant’s wrongful conduct is performed in New York” [emphasis by the
Court]. Here, “plaintiff claims that the tortious statements were made to New York by
Haitong’s emails and calls to them. Most of the New York courts have refused to apply
CPLR 302(a)(2) to claims based on tortious statements that made their way to New York
only by mail or telephone.” Moreover, “Haitong does not have its own affiliation with
New York outside of the alleged emails and phone calls made to Lantau. Accordingly, ‘it
would offend “minimum contacts” due process principles to force defendants to litigate
this claim in a New York forum on the basis of telephone calls or virtual emails.’”
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Waldman v. Palestine Liberation Organization, 2016 WL 4537369 (2d Cir. 2016) – A
prior year’s “Update” reported on Walden v. Fiore, ___ U.S. ___, 134 S.Ct. 1115 (2014),
in which a unanimous Supreme Court curtailed the reach of long arm jurisdiction when
the cause of action arises from tortious conduct that has taken place outside of the forum
state. “For a State to exercise jurisdiction consistent with due process, the defendant’s
suit-related conduct must create a substantial connection with the forum State.” Thus,
“the relationship must arise out of contacts that the ‘defendant himself’ creates with the
forum State” [emphasis by the Court]. And, “our ‘minimum contacts’ analysis looks to
the defendant’s contacts with the forum State itself, not the defendant’s contacts with
persons who reside there.” Accordingly, “the plaintiff cannot be the only link between
the defendant and the forum. Rather, it is the defendant’s conduct that must form the
necessary connection with the forum State that is the basis for its jurisdiction over him.”
For “due process requires that a defendant be haled into court in a forum State based on
his own affiliation with the State, not based on the ‘random, fortuitous, or attenuated’
contacts he makes by interacting with other persons affiliated with the State.” The Court
rejected the argument that defendant’s “knowledge” of plaintiffs’ “strong forum
connections” sufficed. For that approach “impermissibly allows a plaintiff’s contacts
with the defendant and forum to drive the jurisdictional analysis. Such reasoning
improperly attributes a plaintiff’s forum connections to the defendant and makes those
connections ‘decisive’ in the jurisdictional analysis.” In sum, “mere injury to a forum
resident is not a sufficient connection to the forum. Regardless of where a plaintiff lives
or works, an injury is jurisdictionally relevant only insofar as it shows that the defendant
has formed a contact with the forum State. The proper question is not where the plaintiff
experienced a particular injury or effect but whether the defendant’s conduct connects
him to the forum in a meaningful way.” The full reach of the Walden decision will
naturally have to await further case law development. But it will certainly have some
impact on the New York Courts’ interpretation of CPLR 302(a)(3)(ii). That statute
provides for long arm jurisdiction over a defendant who commits a tort outside of New
York, causing injury in New York, when the defendant should expect or reasonably
expect the conduct to have consequences here, and when defendant derives substantial
revenue from interstate or international (but not necessarily New York-related)
commerce. If jurisdiction were to be based solely upon a defendant knowing that its out-
of-state conduct might injure a New Yorker, it would, it appears, violate due process as
articulated in Walden. Last year’s “Update” reported on In re LIBOR-Based Financial
Instruments Antitrust Litigation, 2015 WL 4634541 (S.D.N.Y. 2015), in which the Court
held that “there is no basis to infer that issuers of broadly-traded securities such as bonds
and MBS purposely directed those securities into plaintiffs’ home forums. These
securities may arrive in the hands of plaintiffs and other investors anywhere in the world
by the investors’ own trades – not at the direction of the issuers. Such a fortuitous,
plaintiff-driven contact cannot support personal jurisdiction [citing Walden].” Here, in
Waldman, American plaintiffs sue the Palestine Liberation Organization, the Palestinian
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Authority, and others, on claims under the federal Anti-Terrorism Act, for injury and
wrongful death to them and their decedents resulting from terrorist attacks in Israel. The
Court holds that a United States court lacks long arm jurisdiction over defendants. For,
“the defendants were liable for tortious activities that occurred outside the United States
and affected United States citizens only because they were victims of indiscriminate
violence that occurred abroad. The residence or citizenship of the plaintiffs is an
insufficient basis for specific jurisdiction over the defendants. A focus on the
relationship of the defendants, the forum, and the defendants’ suit-related conduct points
to the conclusion that there is no specific personal jurisdiction over the defendants for the
torts in this case.” And, “the mere knowledge that United States citizens might be
wronged in a foreign country goes beyond the jurisdiction limit set forth in Walden.
Delfasco, LLC v. Powell, 52 Misc 3d 689 (Sup.Ct. Kings Co. 2016)(Ash, J.) – The New
York-based plaintiff sues its Tennessee-based employee, claiming he “sabotaged” the
plaintiff’s business and downloaded and stole trade secrets and other confidential
information. That information was housed on plaintiff’s Brooklyn, New York, server.
The Court concludes that “the locus of the tort is in Tennessee, not New York.
Delfasco’s allegations against Powell solely concern his conduct as a Delfasco employee
in Tennessee and the information he was privy to as a high-level manager at Delfasco’s
manufacturing plant.” Thus, “Powell’s alleged misappropriation of information,
technically stored on Delfasco’s New York servers, is insufficient to submit him to New
York’s jurisdiction. Powell’s only connection to New York is through his employment
with Delfasco. This does not satisfy the ‘minimum contacts’ analysis set forth in
International Shoe Co. v. Washington [citation omitted]. ‘A plaintiff cannot be the only
link between the defendant and the forum’ [citing, inter alia, Walden]. ‘Rather, it is the
defendant’s conduct that must form the necessary connection with the forum State that is
the basis for its jurisdiction over him.’”
McBride v. KPMG International, 135 A D 3d 576 (1st Dept. 2016) – “The motion court
correctly found that New York lacks personal jurisdiction over KPMG UK pursuant to
CPLR 302(a)(3)(ii). While plaintiffs allege that KPMG UK committed a tort outside the
state (negligently auditing nonparty Madoff Securities International, Ltd in the United
Kingdom), and their causes of action arise out of that tort, KPMG UK’s act did not cause
injury to a person or property within the state. ‘The situs of commercial injury is where
the original critical events associated with the action or dispute took place, not where any
financial loss or damages occurred.’”
JURISDICTION BY CONSENT
Oak Rock Financial, LLC v. Rodriguez, 148 A D 3d 1036 (2d Dept. 2017) – The law in
New York is that “‘a party may agree by contract to submit to jurisdiction in a given
forum and that such a forum selection clause, when it is part of the contract that forms the
basis of the action, will be enforced, obviating the need for a separate analysis of the
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propriety of exercising personal jurisdiction.’” Here, the underlying agreement provided
that “Borrower consents to the jurisdiction of any State or Federal Court located within
the State of New York.” And, “although the guaranty executed by the defendant does not
contain a similar provision, generally, ‘documents executed at about the same time and
covering the same subject matter are to be interpreted together, even if one does not
incorporate the terms of the other by reference, and even if they are not executed on the
same date, so long as they are “substantially” contemporaneous.’”
Matter of Hereford Insurance Co. v. American Independent Insurance, 136 A D 3d 551
(1st Dept. 2016) – The Appellate Division finds that jurisdiction is lacking over
respondent in this proceeding to confirm an arbitration award. “The motion court erred
in concluding that it had personal jurisdiction over respondent simply because the
arbitration occurred in New York and respondent never contested the arbitrator’s
jurisdiction. Respondent, a Pennsylvania corporation that had insured the offending
vehicle, has no contacts with New York, and the offending vehicle was neither registered
in New York nor owned by a New York resident.”
FORUM NON CONVENIENS
GENERAL CONSIDERATIONS
Cragnotti and Partners Capital Investment-Brazil S.A. v. Quintella, N.Y.L.J.,
1202781884008 (Sup.Ct. N.Y.Co. 2017)(Scarpulla, J.) – “The ‘domicile or residence in
this state of any party to the action shall not preclude the court from staying or dismissing
the action.’ The applicability of the forum non conveniens doctrine ‘is a matter of
discretion to be exercised by the trial court and the Appellate Division’ [citation omitted].
In making a forum non conveniens determination, courts should consider several factors
including the burden on New York courts, any potential hardship to the defendant, the
unavailability of an alternative forum for the plaintiff’s suit, if both parties are
nonresidents and whether the transaction that gave rise to the cause of action primarily
took place in a foreign jurisdiction.”
Landmark Ventures, Inc. v. Birger, 147 A D 3d 497 (1st Dept. 2017) – “Plaintiff contents
that it should be allowed to litigate its breach of contract claim in New York because the
[parties’ agreement] chooses New York law. However, a choice of law clause is different
from a choice of forum clause” [emphasis by the Court].
Johnson v. Vernon, N.Y.L.J., 1202771682765 (Sup.Ct. N.Y.Co. 2016)(Ramirez, J.) – The
action arises out of a bus accident in New Jersey. Plaintiff, a New York resident, was
solicited by defendant, a New Jersey company, for a bus trip to Atlantic City. Defendants
picked up plaintiff, and other New York residents in New York, and the accident
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occurred during the return trip to New York. Defendants’ motion to dismiss on forum
non conveniens grounds is denied, as “defendants did not meet their burden of
demonstrating that the balance of factors favors disturbing plaintiff’s choice of forum.”
First, “although residence of a plaintiff is not the sole determining factor on a motion for
dismissal on grounds of forum non conveniens, it has been held to generally be ‘the most
significant factor in the equation.’” Moreover, “the majority of the passengers on the
bus, who are potential witnesses, are New York residents,” and “the majority of
plaintiff’s medical treatment stemming from the subject accident was done in New York.
Finally, “retention of this case will not pose an unacceptable burden” on defendants or
the Court. Defendants “can seek the deposition and trial testimonies of any potential
witness that resides in New Jersey pursuant to the Uniform Interstate Deposition and
Discovery Act, which is codified in New Jersey under NJ Court Rule 4:11-4 and in New
York under CPLR 3119.”
FORUM SELECTION CLAUSES
Hemlock Semiconductor Pte, Ltd. v. Jinglong Industry and Commerce Group Co., Ltd.,
56 Misc 3d 324 (Sup.Ct. N.Y.Co. 2017)(Oing, J.) – The parties’ agreement provided for
the application of New York law to any dispute, and for the “exclusive jurisdiction” of
New York State or Federal Courts. The Court rejects defendant’s argument that General
Obligations Law §5-1401, which provides that parties “may agree that the law of this
state shall govern their rights and duties in whole or in part, whether or not such * * *
agreement * * * bears a reasonable relation to this state,” violates the Commerce Clause
or the Due Process Clause of the United States Constitution.
Carlyle CIM Agent, L.L.C. v. Trey Resources, Inc., 148 A D 3d 562 (1st Dept. 2017) –
The agreement between the parties had a forum selection clause that was permissive as to
plaintiff, but “required defendants to commence any cause of action against plaintiff
exclusively in the state of federal courts of New York County.” Plaintiff commenced this
action in New York on the notes that were the subject matter of the agreement, and a
separate action in Oklahoma “seeking to preserve its collateral represented in oil and gas
assets and real property” located there. Defendant counterclaimed in the Oklahoma
action, and moved to dismiss this action pursuant to CPLR 3211(a)(4). The Appellate
Division reverses the granting of that motion. “There is no merit to defendants’ argument
that the forum selection clauses did not pertain to counterclaims brought in another
venue. This is because there is no distinction between a claim and a counterclaim, the
latter of which ‘is itself a cause of action.’” Defendants “contractually agreed not to file
any claim outside of New York County, and doing so was a defined breach under the
clear terms of the mandatory forum selection clauses. Thus, absent plaintiff’s consent, it
is therefore improper to dismiss the New York actions pursuant to CPLR 3211(a)(4) so as
to consolidate them with the Oklahoma proceedings.” Dismissal was also improper by
virtue of General Obligations Law §5-1402, “which provides that any party may maintain
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an action in New York State courts where there is a contractual agreement providing for a
choice of New York law and forum, and the case involves at least $1 million, all of which
occur here [citation omitted]. Under this statute, a New York court may not decline
jurisdiction even if ‘the only nexus is the contractual agreement’ [citations omitted]. The
purpose of General Obligations Law §5-1402 is to enhance New York as ‘one of the
world’s major financial and commercial Centers,’ by ‘encouraging the parties to
significant commercial, mercantile or financial contracts to choose New York law’ and
forum.”
Siroy v. Jobson Healthcare Information LLC, N.Y.L.J., 1202759000736 (Sup.Ct.
N.Y.Co. 2016)(Cohen, J.) – Plaintiff’s employment agreement with defendant Jobson
contained an exclusive forum selection clause for any action “arising out of or related to
this agreement” to be brought in the federal or state courts in New Jersey. Plaintiff
commenced this action in New York, claiming unlawful harassment based upon race and
gender, against both Jobson and her supervisor, Levitz. The Court, in granting the
motion to dismiss, holds that Levitz, as well as Jobson, may invoke the forum selection
clause. “It is well established that a nonsignatory may invoke a forum selection clause if
the relationship between the nonparty and the signatory is sufficiently close so that the
nonparty’s enforcement of the forum selection clause is foreseeable by virtue of the
relationship between the nonparty and the party sought to be bound.” And, here, “Levitz
is being sued for an action taken as plaintiff’s supervisor, a position he held while
employed by JHI. The cause of action against Levitz for employment discrimination
cannot be brought against him in his personal capacity but only emanates from his
employment and position as plaintiff’s supervisor. Similarly, JHI’s liability flows from
Levitz’ actions towards plaintiff as JHI’s employee. Levitz is ‘closely related’ to JHI, the
signatory to the agreement.”
Lantau Holdings, Ltd. v. Orient Equal International Group, 2017 WL 914636 (Sup.Ct.
N.Y.Co. 2017)(Singh, J.) – “First, an entity or individual that is a third-party beneficiary
of the agreement may enforce a forum selection clause found within the agreement
[citation omitted]. Second, parties to a global transaction who are not ‘signatories to a
specific agreement within that transaction may nonetheless benefit from a forum
selection clause contained in such agreement if the agreements are executed at the same
time, by the same parties or for the same purpose’ [citation omitted]. Third, a non-
signatory that is closely related to one of the signatories can enforce a forum selection
clause [citation omitted]. A non-signatory is considered closely related to one of the
signatories and can enforce a forum selection clause when the enforcement of the clause
is ‘foreseeable by virtue of the relationship between them’ [citation omitted]. The non-
signatory defendant must have a ‘sufficiently close relationship with the signatory and the
dispute to which the forum selection clause applied.’” But “when a non-signatory has no
relationship to the underlying transaction, they cannot be held to be ‘closely related’ nor
subjected to the forum selection clause.”
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GE Oil & Gas, Inc. v. Turbine Generation Services, L.L.C., N.Y.L.J., 1202759552482
(Sup.Ct. N.Y.Co. 2016)(Kornreich, J.) – “Courts in New York have long recognized the
propriety and importance of issuing antisuit injunctions where a parallel action in a
foreign court is being prosecuted in contravention of a New York forum selection clause
and where such parallel action undermines the integrity of the court’s judgments
[citations omitted]. In the First Department, ‘the use of injunctive relief to enforce a
forum selection clause has been upheld as a proper exercise of discretion.’” And,
“where, as here, ‘once there is a New York judgment on the merits, the courts of this
State are entitled to protect it’ by issuing an anti-suit injunction to prohibit ‘defendant’s
harassing and bad faith foreign litigation.’” For, “the court cannot allow the integrity of
its judgment to be challenged. Litigants, such as the extremely sophisticated parties
(aided by extremely sophisticated counsel) in this action, expressly agreed to litigate in
New York and apply New York law to their complex commercial disputes because this
court is seen as capable of providing a level of certainty not found in other jurisdictions.”
Gautier v. Bay Park Center for Nursing and Rehabilitation LLC, N.Y.L.J.,
1202753627226 (Sup.Ct. Nassau Co. 2016)(Brown, J.) – Defendant moves to change the
venue of this personal injury action, commenced in Bronx County, to Nassau County,
pursuant to a forum selection clause contained in the “Admission Agreement” signed by
plaintiff’s deceased. In opposing the motion, plaintiff asserts that her age and infirmities
preclude her leaving the Bronx, where she resides, for a trial in Nassau. She included an
affirmation from her physician, listing her many disabilities and illness, and opining “that
travel outside the Bronx would cause undue physical and mental stress to Mrs. Gautier
and aggravate her already serious conditions.” The Court noted that “‘a contractual
forum selection clause is prima facie valid and enforceable unless it is shown by the
challenging party to be unreasonable, unjust, in contravention of public policy, invalid
due to fraud or overreaching, or it is shown that a trial in the selected forum would be so
gravely difficult that the challenging party would, for all practical purposes, be deprived
of its day in court.’” Here, “the main issue” is “whether the selected forum would be so
‘gravely difficult’ that the challenging party would, for all practical purposes, be deprived
of its day in court.” The Court concludes that it would not. “It is hard for the court to
accept that plaintiff would be able to travel to a courthouse or any location within Bronx
County but once she crossed over the county line, it would cause undue physical and
mental stress to plaintiff, or that it would be impossible for plaintiff to find alternate
transportation to Nassau County. Any such opinion is speculation on the physician’s
part.”
Prospect Funding Holdings, L.L.C. v. Maslowski, 146 A D 3d 535 (1st Dept. 2017) –
Plaintiff, a New York litigation finance company, with its principal place of business in
Minnesota, seeks to enjoin defendant, its client, and a Minnesota resident, who was
injured in an automobile accident in Minnesota, from litigating her claims against
plaintiff in Minnesota. Plaintiff relies upon a New York choice of forum clause
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contained in the parties’ agreement. The Appellate Division reverses the granting of that
injunction. “‘In the interest of substantial justice,’ the parties’ dispute should be heard in
Minnesota [citations omitted]. Ms. Maslowski demonstrated that the choice of forum
provision in the parties’ agreement is unreasonable and should not be enforced [citations
omitted]. Every aspect of the transaction at issue occurred in Minnesota, the parties,
documents, and witnesses are located in Minnesota, and defending this action in New
York would be a substantial hardship to Ms. Maslowski.”
Merchant Cash & Capital, LLC v. Blueshyft, Inc., N.Y.L.J., 1202784005227 (Sup.Ct.
Nassau Co. 2017)(Feinman, J.) – The agreement between the parties provides that any
lawsuit arising from the agreement “shall be brought in any state court of competent
jurisdiction in the State of New York, or in any federal court of competent jurisdiction in
the State of New York.” The Court rejects defendants’ claim that the clause is an
improper “floating forum selection clause.” The cases dealing with such a “floating”
clause are those in which “the agreement provided that the parties agreed to be sued not
only in any state where the plaintiff had a principal office, but also in any state where any
future unidentified assignee of the agreement had a principal office.” Here, “the forum
selection clause is clear and specific and designates New York courts.”
VENUE
FB v. JL, N.Y.L.J., 1202775607416 (Sup.Ct. N.Y.Co. 2016)(Helewitz, Sp.Ref.) – A
Court may not change venue sua sponte. But, where a Court has done so, the receiving
Court “lacks the authority” to reverse that order and send the matter back to the original
venue. Thus, if both parties are content with the transfer, and none appeals from the
transfer order, the receiving Court must take the case.
Merchant Cash and Capital, L.L.C. v. Laulainen, 55 Misc 3d 349 (Sup.Ct. Nassau Co.
2017)(Diamond, J.) – The agreement between the parties provided that “either the state or
federal courts in New York shall have jurisdiction over any dispute” between them.
Plaintiff is a foreign corporation, authorized to do business in New York, with its
principal place of business in New York County. Defendant is a foreign corporation with
no connections to New York. The Court grants defendant’s motion to change venue from
Nassau County to New York County. The choice of forum clause in the agreement “does
not specify that venue will be placed in Nassau County specifically. Thus, while the
waiver provision of this section addresses such claims that a court in the State of New
York is inconvenient and that such dispute should be brought in a court located in another
state, the parties have not be agreement done away with the requirements of CPLR 503
entirely.” On these facts, Nassau County is not a proper county, and the action is
transferred.
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Merchant Cash and Capital, LLC v. Portland Wholesale Jewelry, LLC, N.Y.L.J.,
1202795385358 (Sup.Ct. Nassau Co. 2017)(McCormack, J.) – The Court here
distinguishes Merchant Cash and Capital, L.L.C. v. Laulainen, reported on directly
above. Here, the agreement between the parties also provided for exclusive jurisdiction
in New York, but further provided that “Seller and Guarantor(s) waive any claim that the
venue of the action is improper.” Thus, the venue chosen by plaintiff is upheld, “absent
proof it was unjust, unreasonable, violated public policy or was ‘gravely’ inconvenient.”
Gleitman v. Silver Gate Owners Corp., 139 A D 3d 671 (2d Dept. 2016) – CPLR 507
provides that “the place of trial of an action in which the judgment demanded would
affect the title to, or the possession, use or enjoyment of, real property shall be in the
county in which any part of the subject of the action is situated.” This is an action “to
recover damages for wrongful eviction, conversion, and trespass, and for a judgment
declaring that the current board of directors of the defendant Silver Gate Owners Corp. is
not legally constituted.” Such an action does not come within CPLR 507, and Supreme
Court erred in changing venue to the county where the property is located.
Crovato v. H&M Hennes & Mauritz, L.P., 140 A D 3d 490 (1st Dept. 2016) – “Although
a person may have more than one residence, for venue purposes, there must be evidence
that the plaintiff actually resided at the claimed residence at the time the action was
commenced [citation omitted]. An ownership interest in property does not alone
demonstrate residence at that property.”
Fish v. Davis, 146 A D 3d 485 (1st Dept. 2017) – “The motion court properly noted that
defendants failed to comply with the procedural requirements of CPLR 511 by moving to
change venue four months after serving an answer that did not request a change of venue
[citations omitted]. When a defendant fails to make a demand to change venue, the court
may still exercise its discretion to change venue, but ‘only in certain limited situations,’
such as when the defendant seeks to enforce a contract provision or when ‘judicial policy
dictates that a case be heard only in a proper county’ [citation omitted]. While CPLR 507
mandates that venue of an action involving title to or possession, use or enjoyment of real
property be the county where the property is located [citation omitted], here, the action
essentially seeks a determination of the individual parties’ rights as shareholders of
defendant corporation, which owns real property in Rockland County.”
Fergile v. Payne, 147 A D 3d 727 (2d Dept. 2017) – “The plaintiff commenced this
action against the County of Nassau, among others, in the Supreme Court, Queens
County. The defendants moved to change the venue of the action from Queens County to
Nassau County pursuant to CPLR 504(1), which provides that the place of trial of all
actions against a county shall be in such county. The Supreme Court properly granted the
motion. Although venue may be placed in a county other than the county mandated by
CPLR 504 upon a showing of special or compelling countervailing circumstances
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[citations omitted], the plaintiff failed to demonstrate the existence of such circumstances
in opposition to the motion.”
Crucen v. Pepsi-Cola Bottling Company of New York, Inc., 139 A D 3d 538 (1st Dept.
2016) – “Defendant’s designation of New York County as its principal place of business
in the application for authority [to do business filed with the Secretary of State] is
controlling for venue purposes [citations omitted]. Contrary to plaintiff’s arguments,
even if defendant does not actually have an office in New York County, and although it
has notified the Department of State to forward process to an address in Bronx County,
the designation made by defendant in its application for authority still controls for venue
purposes.”
Astarita v. ACME Bus Corp., 55 Misc 3d 767 (Sup.Ct. Nassau Co. 2017) (Libert, J.) –
“For nearly 160 years the county designated in certificate of incorporation was the
exclusive determinant of ‘residence’ of that corporation irrespective of any subsequent
physical relocation of corporate offices.” But the Court, relying upon the dissenting
opinion of the closely-divided First Department in Discolo v. River Gas & Wash Corp.,
41 A D 3d 126 (1st Dept. 2007), holds that the enactment of Business Corporation Law
§408 has abrogated that rule. For, under that provision, every New York corporation, and
every foreign corporation authorized to do business in New York, must regularly file “a
statement setting forth: (a) the name and business address of its chief executive officer,
and (b) the street address of its principal executive office.” The Court concludes that the
current address that must be provided under BCL §408 supersedes the address set forth in
the certificate of incorporation, and therefore provides a basis for venue.
Arduino v. Molina-Ovando, 141 A D 3d 622 (2d Dept. 2016) – Plaintiff was injured in an
automobile accident that occurred in Richmond County. She commenced two separate
personal injury actions: first against the owner and driver of the other car in Kings
County, the second against the City of New York in Richmond County. She then sought
to consolidate the actions in Kings County. The City did not oppose, but the other
defendants did. “The general rule that a consolidated action is typically litigated in the
county where the first action was commenced must yield to the venue-specific rule that
an action against the City of New York shall be brought in the county within the city in
which the cause of action arose [citations omitted]. Here, the Supreme Court should have
placed venue of the consolidated action in Kings County, since that is where the first
action was commenced. Even though the plaintiff alleged that the cause of action arose
in Richmond County, the City waived its right to the continuation of venue in Richmond
County upon consolidation of the two actions by its failure to oppose the plaintiff’s
motion [citation omitted]. Furthermore, while the Molina defendants sought placement
of venue in Richmond County under CPLR 504(3), their argument should have been
rejected, since only the City may invoke this statute.”
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Schwartz v. Walter, 141 A D 3d 641 (2d Dept. 2016) – Citing, inter alia, its seminal
decision in O’Brien v. Vassar Brothers Hospital, 207 A D 2d 169 (2d Dept. 1995), the
Court holds that “a party moving to change the venue pursuant to CPLR 510(3) must
provide information about the prospective witnesses, including, but not limited to, their
names and addresses, disclose the facts about which the proposed witnesses will testify at
the trial, represent that the prospective witnesses are willing to testify, and state that the
witnesses would be inconvenienced if the venue is not changed [citations omitted].
However, these criteria should not be applied with ‘absolute rigidity or inexorability.’”
And, while in prior decisions, the First Department had adopted the reasoning and
holding of the Second Department’s decision in O’Brien, which had rejected a line of
cases holding that, “all things being equal,” a transitory cause of action should be tried
where the cause of action arose, and, instead, interpreted CPLR 510 as imposing a burden
on defendant to demonstrate the four elements described above, last year’s “Update”
reported on Wickman v. Pyramid Crossgates Company, 127 A D 3d 530 (1st Dept. 2015),
where, citing cases that pre-date O’Brien, and its own adoption of the O’Brien standards
[see, for example, Argano v. Scuderi, 2 A D 3d 177 (1st Dept. 2003); Jacobs v. Banks
Shapiro Gettlinger & Brennan, LLP, 9 A D 3d 299 (1st Dept. 2004); Rosen v. Uptown
General Contracting, Inc., 72 A D 3d 619 (1st Dept. 2010)], the First Department held
that “the situs of plaintiff’s injury provides a basis for a discretionary change of venue to
Albany County [citation omitted] in that, ‘things being equal, a transitory action should
be tried in the county where the cause of action arose.’” It then, however, proceeds to
discuss the proof of convenience shown by defendants.
Great American Insurance Company of New York v. CNY Excavating and Concrete,
LLC, N.Y.L.J., 1202770540895 (Sup.Ct. N.Y.Co. 2016)(Mendez, J.) – Citing O’Brien v.
Vassar Brothers Hospital, discussed directly above, the Court holds that “in order to
demonstrate its entitlement to relief pursuant to CPLR 510(3), the movant must provide
an affidavit in support establishing: (1) the names, addresses, and occupations of the
prospective witnesses; (2) the facts to which the proposed witnesses will testify at trial,
allowing the court to determine whether the proposed witness is necessary and material;
(3) that the proposed witnesses are in fact willing to testify; and (4) how the witnesses
would in fact be inconvenienced if a change of venue were not granted.” Here,
“defendant has not established a basis for change of venue. Defendant fails to set forth
how the witnesses would be inconvenienced if venue was not changed. Defendant only
provides the conclusory assertion that it is a four hour drive into New York County [from
Oneida County, where the conduct regarding this litigation occurred and some witnesses
reside] and that it would necessitate an overnight stay. Further, Defendant has not stated
whether the proposed witnesses are in fact willing to testify, and only asserts that the
police officer and Defendant’s appraiser are ‘expected’ to testify. A failure of the
Defendant to show that the witnesses have been contacted, how they would be
inconvenienced, and whether they are even willing to testify warrants denial of a change
of venue motion [citation omitted]. Lastly, the Defendant’s and the dump truck driver’s
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convenience is not a deciding factor as a party or a party’s employee’s location is not a
‘weighty factor’ in considering a motion for a discretionary change of venue.”
Palma v. Burgos, 147 A D 3d 426 (1st Dept. 2017) – “Plaintiff is a member of the New
York City Council and is Secretary of the Bronx Democratic Committee. These positions
held by plaintiff, however, do not justify an inference that a fair trial cannot be held in
Bronx County. As in Midonick [v. Peppertree Hill Development Corp., 49 A D 2d 721
(1st Dept. 1975)], the subject motion was based merely upon defendant’s belief that an
impartial trial could not be held ‘without any showing of facts and circumstances
demonstrating that the belief was well-founded’ [citation omitted]. Defendant’s reliance
on cases involving motions for a change of venue where judges were involved with a
case in the jurisdiction where he or she presided [citations omitted], is misplaced.
Plaintiff is not a judge in Bronx County, nor is she closely related to one.”
SUBJECT MATTER JURISDICTION
Caputo v. Koenig, 147 A D 3d 649 (1st Dept. 2017) – The Appellate Division here
reverses Supreme Court’s dismissal of plaintiffs’ claim under the federal Fair Debt
Collection Practices Act [15 USC §1692 et seq.], on the ground that the Court lacked
subject matter jurisdiction over the federal claim. “Given the presumption of concurrent
state court jurisdiction over federal claims [citation omitted], the FDCP’s expansive
expression of jurisdiction to include not only the Federal District courts, but ‘any other
court of competent jurisdiction’ [citation omitted], and the lack of any explicit statutory
directive to the contrary, an unmistakable implication from legislative history, or clear
incompatibility between State court jurisdiction and Federal interests [citation omitted],
the court improperly dismissed plaintiffs’ FDCPA claim.”
Jackson v. State of New York, 139 A D 3d 1293 (3d Dept. 2016) – “‘While jurisdiction
reposes in the Court of Claims where the essential nature of the claim against defendant
is to recover money, it does not lie where monetary relief is incidental to the primary
claim’ [citations omitted]. Here, we agree with the Court of Claims that it lacks subject
matter jurisdiction on claimant’s false imprisonment claim, inasmuch as his primary
argument is that he is currently being confined unlawfully due to errors in resentencing
and that any claim for related damages is incidental to this primary argument.”
Cocchi v. State of New York, 52 Misc 3d 561 (Ct. of Claims 2016)(Marin, J.) – Plaintiff
has commenced two separate actions arising out of an automobile accident: one against
the State in the Court of Claims, and one against the driver of the other car, and the City
of New York, in Supreme Court. The Court denies the motion of the Supreme Court
defendants to consolidate the actions. “The motivation to do so is understandable: it is
essentially what underlies the long-standing calls in this state for the merger of its trial
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courts – which would require amendment to the State Constitution.” And, “the NY
Constitution prevails over statutes referencing consolidation, or some form thereof.” The
Court noted that “there are practices to deal with the reality of multiple forums.
Discovery can be coordinated. All parties can be invited to the depositions, and
transcripts made available. The process of coordination can have its own limitations;
thus, it was only recently that counsel for a non-party could actively participate in a
deposition.”
S&R Medical, P.C. v. Allstate Property & Casualty Insurance Company, N.Y.L.J.,
1202785146334 (App.Term 2d Dept. 2017) – Civil Court properly denied plaintiff’s
motion for a default judgment. “Plaintiff’s affidavit of service demonstrates that service
was made in Hauppauge, which is in Suffolk County, outside the City of New York.
Section 403 of the New York City Civil Court Act provides that service ‘shall be made
only within the city of New York unless service beyond the city be authorized by this act
or by such other provision of law, other than the CPLR, as expressly applies to courts of
limited jurisdiction or to all courts of the state.’ Plaintiff appears to be arguing that
defendant is not a resident of the City and, thus, to be implicitly arguing that the service
was valid pursuant to CCA 404, which provides for service outside the City upon
nonresidents in certain enumerated instances. However, defendant’s position is that it is
a resident of the City of New York, in which case, pursuant to CCA 403, service was
invalid. As neither plaintiff’s complaint nor its motion papers set forth any facts allowing
for jurisdiction to be acquired over defendant by service outside the City of New York
pursuant to CCA 404 [citations omitted] plaintiff has failed to show that service had been
validly effectuated, and, thus, plaintiff ailed to establish its entitlement to a default
judgment.”
811 Walton Rescue, LLC v. 811 Walton Tenants Corp., N.Y.L.J., 1202794949290
(Sup.Ct. Bronx Co. 2017)(Tapia, J.) – The Court declines to remove to itself a Civil
Court Landlord/Tenant action between the parties for purposes of consolidation with this
action. “Civil Court is the preferred forum for resolving landlord-tenant issues because it
has the unique ability to resolve such issues [citations omitted]. In the absence that Civil
Court is unable to afford complete relief to the plaintiffs, there is no basis for an
application to Supreme Court.” And, here, “plaintiff/tenant is entitled to not only assert
its causes of action in this instant case as defenses to the civil court matter, but it is also
entitled to conduct discovery in civil court regarding the issue of the validity of the
Default Notice and Notice to Terminate. Availability of discovery in a summary
proceeding has been widely recognized [citation omitted]. Thus, this Court agrees with
Defendant/co-op’s attorney that Plaintiff/tenant’s causes of action can be asserted as
defenses in civil court.”
COMMENCING THE ACTION
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Matter of Pidot v. Macedo, 140 A D 3d 991 (2d Dept. 2016) – CPLR 304(a) provides,
inter alia, “that ‘where a court finds that circumstances prevent immediate filing, the
signing of an order requiring the subsequent filing at a specific time and date not later
than five days thereafter shall commence the action.’ Here, the Supreme Court erred in
making a determination regarding whether or not circumstances prevented immediate
filing were present [citation omitted]. That issue was determined upon the signing of the
order to show cause on May 6, 2016, and the Supreme Court did not have authority to
review the determination of a justice of coordinate jurisdiction.”
Wesco Insurance Company v. Vinson, 137 A D 3d 1114 (2d Dept. 2016) – A prior year’s
“Update” reported on Grskovic v. Holmes, 111 A D 3d 234 (2d Dept. 2013). There,
shortly before the running of the statute of limitations, plaintiff’s counsel established a
temporary e-filing user account, and “using what it believed to be a valid and operational
e-filing account, then electronically purchased an index number using credit card
information and ‘filed’ the summons and complaint. The filing was confirmed in an
email message from the court,” which “contained the word ‘confirmation’ in large bold
typeface and further stated that ‘the NYSCEF web site has received document(s) from the
filing user for case/claim number not assigned,’ and instructed counsel to ‘please print
this as a confirmation of your filing(s).’ The filed documents were specifically identified
in the confirmatory email message as a ‘summons and complaint.’” Counsel thereafter
searched in vain for the assignment of an index number. It was only after the statute of
limitations had run that counsel discovered that the e-filing “had been within NYSCEF’s
‘practice/training’ system and not in its ‘live’ system and, therefore, the plaintiff’s
summons and complaint were never actually filed.” Under the circumstances, the Court
concluded that plaintiff’s counsel “could reasonably be viewed” as having been misled.
But, “that said, the question remains, under these discrete circumstances, whether the
Supreme Court should have granted the plaintiff’s motion pursuant to CPLR 2001 to
deem the summons and complaint filed” nunc pro tunc. For, “legislative history makes
clear that although the purpose of the 2007 amendment [to CPLR 2001] was to ‘fully
foreclose dismissal of actions for technical, non-prejudicial defects,’ it was not intended
to ‘excuse a complete failure to file within the statute of limitations’ [citation omitted].
The measure affords the court the discretion to correct ‘a mistake in the method of filing,
as opposed to a mistake in what is filed.’” And here, “contrary to the defendant’s
contention and the Supreme Court’s determination, the plaintiff’s mistake constitutes a
mistake in the method that was used in filing in a ‘practice’ system instead of in a ‘live’
system” [emphasis by the Court]. The Court also rejected defendant’s argument “that the
plaintiff’s e-filing error cannot be corrected, as doing so would prejudice the defendant
by depriving her of a viable statute of limitations defense.” Properly construed, the Court
holds, CPLR 2001 does not require a showing of lack of prejudice in order to correct a
mistake. “CPLR 2001 recognizes two separate forms of potential relief to address
mistakes, omissions, defects, or irregularities in the filing of papers. The statute
distinguishes between the ‘correction’ of mistakes and the ‘disregarding’ of mistakes, and
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each invokes a different test. Courts may ‘correct’ mistakes ‘upon such terms as may be
just’ (CPLR 2001). The statute then says, set off by an ‘or,’ that mistakes may be
‘disregarded’ if a substantial right of a party is not prejudiced (id.). Thus, a ‘correction’
of a mistake appears to be subject to a broader degree of judicial discretion without
necessary regard to prejudice, whereas a complete ‘disregarding’ of a mistake must not
prejudice an opposing party.” This distinction “makes sense, as a party seeking to wholly
disregard a filing mistake may understandably be expected to bear a higher burden than a
party seeking a mere correction.” Here, granting relief to plaintiff involves the
“‘correction’ of the ‘practice’ filing that had, in fact, been timely undertaken by the
plaintiff’s counsel.” That “‘filing’ was performed in a mistaken manner and method,
which courts are permitted to correct on terms that may be just [citation omitted;
emphasis by the Court]. Therefore, the plaintiff was under no burden to demonstrate an
absence of prejudice to the defendant. In contrast, excusing a clearly untimely filing
would constitute the disregarding of an error, which could not be permitted because it
would be prejudicial to a defendant to deprive it of a legitimate statute of limitations
defense. That, however, is a circumstance that we find not to exist here.” Last year’s
“Update” reported on Fox v. City of Utica, 133 A D 3d 1229 (4th Dept. 2015). There,
“plaintiff filed a verified claim in this action and, before answering, defendants filed a
CPLR 3211 motion to dismiss, contending that plaintiff had ‘yet to file a Summons or a
Complaint’ and that ‘a complete failure to file is a jurisdictional defect.’ Relying upon
CPLR 2001, Supreme Court deemed the claim to be a complaint and excused the failure
to file a summons as ‘an irregularity that shall be disregarded in this case.’ That was
error. We agree with defendant that CPLR 2001 does not permit a court to disregard the
complete failure to file a summons, i.e., an initial paper necessary to commence an action
[citations omitted]. As recognized by the Court of Appeals, in quoting from the Senate
Introducer’s Memorandum in support of the bill that amended CPLR 2001, the statute
may be invoked as a basis to correct or clarify ‘a mistake in the method of filing, AS
OPPOSED TO A MISTAKE IN WHAT IS FILED’” [block capitals by the Court]. Here
in Wesco, the Second Department held that, “in the Supreme Court, pursuant to CPLR
304, an action is ordinarily commenced ‘by filing a summons and complaint or summons
with notice,’ and a special proceeding is ordinarily commenced ‘by filing a petition’
[citation omitted]. The failure to file the papers necessary to institute an action or a
proceeding constitutes a nonwaivable, jurisdictional defect, rendering the action or
proceeding a nullity [citations omitted]. Although Wesco obtained an index number and
moved to fix the amount of its workers’ compensation lien pursuant to Workers’
Compensation Law §29, Wesco did not file or serve a summons, a complaint, or a
petition. In light of this failure to file, the jurisdiction of the Supreme Court was never
invoked and the purported action or proceeding was a nullity [citations omitted].
Furthermore, Wesco’s complete failure to file the initial papers necessary to commence
an action or a proceeding is not the type of error that falls within the court’s discretion to
correct under CPLR 2001.”
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Maddux v. Schur, 139 A D 3d 1281 (3d Dept. 2016) – “‘An action is commenced by
filing a summons and complaint or summons with notice in accordance with CPLR 2102’
[citation omitted]. The failure to file the papers required to commence an action
constitutes a nonwaivable, jurisdictional defect [citations omitted], and such a defect is
not subject to correction under CPLR 2001 [citations omitted]. Here, although plaintiff
purchased an index number and filed a complaint, she never filed a summons or
summons with notice. Given plaintiff’s failure, the purported action was a nullity, and
Supreme Court properly dismissed it for want of subject matter jurisdiction.”
DiSilvio v. Romanelli, 150 A D 3d 1078 (2d Dept. 2017) – “Under CPLR 304(a), an
action in Supreme Court is ordinarily commenced ‘by filing a summons and complaint or
summons with notice.’ The failure to file the initial papers necessary to commence an
action constitutes a nonwaivable, jurisdictional defect, rendering the action a nullity
[citation omitted]. Here, the appellant undertook no steps to commence a third-party
action, despite his unilateral amendment of the caption of the action in his motion papers
to include the nonparty respondents as ‘third-party defendants.’ Consequently, the
jurisdiction of the court was never invoked and the purported third-party action was a
nullity [citation omitted]. As a result, all relief sought by the appellant against the
nonparty-respondents was properly denied.”
Zegelstein v. Faust, 146 A D 3d 499 (1st Dept. 2017) – The court erroneously concluded
that it lacked jurisdiction to entertain plaintiffs’ cross motion for leave to extend the time
for service and to amend the complaint as a result of plaintiffs’ failure to serve the
summons with notice within 120 days of commencement, in violation of CPLR 306-b.
The court was required to exercise its discretion to decide whether an extension of time
for service was warranted upon good cause shown or in the interest of justice.”
Gabbar v. Flatlands Commons, LLC, 150 A D 3d 1084 (2d Dept. 2017) – “The Supreme
Court providently exercised its discretion in granting the plaintiffs’ cross motion pursuant
to CPLR 306-b to extend their time to serve the summons and complaint upon the
appellant in the interest of justice [citation omitted]. The plaintiffs’ time to effect service
of process was properly extended since the verified complaint demonstrated a potentially
meritorious cause of action, the statute of limitations had expired, the action was
commenced within the 3-year statutory period, service of the summons and complaint
which was timely made within the 120-day period [citation omitted] was subsequently
found to have been defective, and there is no demonstrable prejudice to the appellant that
would militate against granting the extension of time to serve it [citations omitted]. In the
absence of prejudice to the appellant, it would be unjust to deprive the plaintiffs of the
opportunity to prove their causes of action against both defendants.”
Jhang v. Nassau University Medical Center, 140 A D 3d 1018 (2d Dept. 2016) –
“Supreme Court improvidently exercised its discretion in denying that branch of the
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plaintiff’s motion which was pursuant to CPLR 306-b for leave to extend the time within
which to serve the summons and complaint by 120 days [citations omitted]. Here, while
the action was timely commenced, the statute of limitations had expired when the
plaintiff moved for such relief, the timely service of process was subsequently found to
have been defective, and the defendant had actual notice of the action within 120 days of
commencement of the action [citations omitted]. Furthermore, the plaintiff demonstrated
that he had a potentially meritorious cause of action, and there was no prejudice to the
defendant attributable to the delay in service.”
Navarrete v. Metro PCS, 137 A D 3d 1230 (2d Dept. 2016) – “It is undisputed that the
plaintiff made no attempt to effect service within 120 days after filing the summons and
complaint, which was necessary to establish good cause under CPLR 306-b [citations
omitted]. Moreover, the plaintiff failed to demonstrate that an extension of time was
warranted in the interest of justice, since she exhibited an extreme lack of diligence in
commencing the action, which was not commenced until the day of the expiration of the
statute of limitations, failed to seek an extension of time until more than 2 1/2 months
after the respondent moved to dismiss for lack of timely service, and did not show the
existence of a potentially meritorious cause of action through any competent evidence.”
Komanicky v. Contractor, 146 A D 3d 1042 (3d Dept. 2017) – “To the extent plaintiff’s
papers in opposition to the motions [to dismiss] can be read as requesting an extension of
time to serve defendants pursuant to CPLR 306-b, such affirmative relief should have
been sought by way of a cross motion on notice [citations omitted]. In any event,
plaintiff did not demonstrate the existence of facts that would support the granting of
such relief. Supreme Court properly found that plaintiff had not shown good cause for an
extension of time [citations omitted] and, upon our careful consideration of the
appropriate factors [citation omitted], we are unpersuaded that the time for service should
have been extended ‘in the interest of justice’ [citation omitted]. In addition to plaintiff’s
lack of diligence in attempting to effectuate service within the time period prescribed by
CPLR 306-b [citations omitted], his purported ‘request’ for an extension of time for
service, even if it may be deemed as such, was made more than 15 months after the 120-
day period had expired and only after defendants had moved for dismissal [citations
omitted]. Moreover, the existence of a meritorious cause of action has not been
established.”
Krasa v. Dial 7 Car & Limousine Service, Inc., 147 A D 3d 744 (2d Dept. 2017) – “The
plaintiff’s cross motion pursuant to CPLR 306-b to extend the time to serve the summons
and complaint upon the defendants should have been denied. The plaintiff failed to show
good cause for her failure to serve the defendants, since she admittedly made no attempt
to serve them within 120 days after the filing of the summons and complaint [citations
omitted]. Furthermore, the plaintiff failed to establish that an extension of time was
warranted in the interest of justice. The plaintiff exhibited an extreme lack of diligence in
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commencing the action, which was not commenced until one day before the expiration of
the statute of limitations, made a single attempt to effect service two months after the
expiration of the 120-day period set forth in CPLR 306-b, failed to seek an extension of
time until after the defendants moved to dismiss the complaint for lack of personal
jurisdiction, failed to offer any excuse for the delay in serving the defendants, and failed
to demonstrate a potentially meritorious cause of action.”
Bovee v. Champlain Valley Physicians Hospital Medical Center, N.Y.L.J.,
1202759318868 (Sup.Ct. Warren Co. 2016)(Muller, J.) – In this medical malpractice
action, defendant “contends that plaintiffs are not entitled to an extension [of time to
complete service] in the interest of justice because they failed to submit an expert
affidavit in support of the contention that the action is meritorious. This contention is
without merit.” First, “one need not have a medical degree to conclude that claimant
should have been told what the radiologist determined when he reviewed her x-ray.”
Moreover, “the meritorious nature of the action is but one of the many factors to be
considered by the Court in evaluating whether plaintiffs are entitled to an extension of
time in the interest of justice.”
Matter of Rimler v. City of New York, N.Y.L.J., 1202762401324 (Sup.Ct. Kings Co.
2016)(Jimenez-Salta, J.) – “CPLR 306-b prescribes that in an action or proceeding when
the applicable Statute of Limitations is four months or less, service shall be made not
later than fifteen (15) days after the expiration date of the applicable Statute of
Limitations. Challenges to government action under SEQRA must be resolved in a
special proceeding under CPLR Article 78, which provides for a four (4) month Statute
of Limitations. When a government action is subject to review under both SEQRA and
ULURP, the Statute of Limitations for any SEQRA claims begins to commence upon the
completion of the ULURP process which in this case was the City Council approval date
of December 16, 2015.” Thus, “this Court finds that the four (4) month Statute of
Limitations expired on April 16, 2016 and the fifteen (15) day service deadline under
CPLR 306-b expired on May 2, 2016.” However, “Petitioners did not serve any of the
Respondents on or prior to May 2, 2016.” Thus, “none of the Respondents were timely
served.” The Court found no basis for a good cause or interest of justice extension of
petitioners’ time to serve, and dismissed the proceeding. Good cause was lacking
because of a lack of “reasonable diligence” to timely serve, since “Respondents are
public and private entities which can be readily served during business hours at their
known addresses.” And, as to interest of justice extension, “Petitioners did not complete
service until thirty-seven (37) days after the expiration of the Statute of Limitations
which is more than twice the fifteen (15) days provided pursuant to CPLR 306-b. As a
result, this Court finds that this delay is both significant and prejudicial in the context of
an Article 78 proceeding which is subject to an abbreviated four (4) month Statute of
Limitations in recognition of the strong public policy that the operation of governmental
agencies should not be unnecessarily clouded by potential litigation.”
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J.A.P. v. A.J.P., N.Y.L.J., 55 Misc 3d 608 (Sup.Ct. Monroe Co. 2017)(Dollinger, J.) –
Presumably to take advantage of the increase in value of the husband’s assets since this
matrimonial action was commenced some 5 years ago, plaintiff/wife seeks to dismiss this
action, and commence a new one, claiming that she failed to serve defendant within 120
days of commencing the action and that such failure “strips this court of jurisdiction.”
The Court rejects that argument. The failure to timely serve “is exclusively an
affirmative defense available solely to the defendant. Moreover, defendant’s answer, and
participation in the litigation of this matter, acts as an “informal appearance,” which
would have waived any challenge by him to the Court’s jurisdiction.
THE SUMMONS
Fentrez v. Nachla Associates, LLC, N.Y.L.J., 1202771559482 (Sup.Ct. Kings Co. 2016)
(Rivera, J.) – The summons filed in this action was unaccompanied by a complaint, and
failed to provide the “notice” required by CPLR 305(b). That failure is a jurisdictional
defect, which may not be remedied by amendment. “Although the description in a notice
need not be absolutely precise, the complete absence of any notice is a jurisdictional
defect [citations omitted], and that defect renders the summons insufficient not only for
the purposes of taking a default judgment, but also to obtain jurisdiction over a
defendant.” And, having raised the defense of lack of jurisdiction in its answer,
defendant preserved its objection, notwithstanding that it thereafter participated in
discovery.
New Foundation, LLC v. Ademi, 140 A D 3d 1038 (2d Dept. 2016) – “The plaintiff
commenced this action against, among others, David Ademi, doing business as York
Plumbing, to recover damages for breach of contract. Contending that David Ademi was
a nonexistent person and an alias for Avdyl Ademi, the plaintiff moved, in effect,
pursuant to CPLR 305(c) for leave to amend the caption to name Avdyl Ademi, doing
business as York Plumbing, as a defendant instead of the named defendant,” after the
running of the statute of limitations. The Appellate Division reverses the granting of that
motion, because “plaintiff failed to offer any evidence that the proposed defendant was
properly served with process [citations omitted]. Having failed to establish that the
proposed defendant was properly served, plaintiff was not entitled to relief pursuant to
CPLR 305(c).”
West v. City of New York, 143 A D 3d 810 (2d Dept. 2016) – Plaintiff was injured at
LaGuardia Community College when a desk chair he was sitting on collapsed. The
premises is owned by the Dormitory Authority, and leased to City University. Plaintiff
commenced this action against the City of New York and the Dormitory Authority.
When, after the running of the statute of limitations, those defendants sought summary
judgment, asserting that they were not proper parties to this action, plaintiff cross-moved
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to amend the caption to substitute City University “and to deem the summons and
complaint served upon CUNY nunc pro tunc.” The Appellate Division affirms the denial
of that cross-motion. “Here, CUNY would be prejudiced by the amendment because the
plaintiff failed to timely serve it with a notice of claim, which is a condition precedent to
the commencement of a tort action against a community college of CUNY [citations
omitted]. While the plaintiff’s initial service of a notice of claim naming the wrong
municipal entity might have constituted a reasonable excuse to support a motion for leave
to serve a late notice of claim made within the available one-year-and-90-day statute of
limitations [citation omitted], the plaintiff never made such a timely motion. To the
extent that the plaintiff’s cross motion can be deemed an application to serve a late notice
of claim against CUNY, as the one-year-and-90-day statute of limitations has expired, the
Supreme Court lacked the authority to extend the time to file a notice of claim beyond the
statutory time limit for the asserted claim.”
Gil v. Reyes, 143 A D 3d 572 (1st Dept. 2016) – Plaintiffs “filed a complaint naming only
New York City Department of Parks and Recreation (Parks), which it served only on
Parks. Movants contend that they should be permitted to amend the summons and
complaint to add the City as a defendant because Parks was a misnomer. However, the
misnomer exception is inapplicable because the proper party, the City, was not served
[citations omitted]. Moreover, CPLR 306-b may not be used to extend the statute of
limitations.”
Konner v. New York City Transit Authority, 143 A D 3d 774 (2d Dept. 2016) – Although
this case arises in the context of a notice of claim, it raises issues often seen in summons
“misnomer” cases. Plaintiff claims to have been injured in a subway accident. The
notice of claim was addressed to the Metropolitan Transportation Authority and served
on that Authority. Plaintiff then received a letter, without letterhead, or other indication
as to which Authority sent it, but with a “TA” claim number. It stated that “‘by virtue of
the power conferred on the New York City Transit Authority by Public Authorities Law
§1200 et seq., as amended, the claimant is hereby required to appear and be sworn at the
office of the Authority” to give testimony [emphasis by the Court]. The hearing was then
conducted. When plaintiff commenced this action, the Transit Authority moved for
summary judgment on the ground that it had not been served with a notice of claim. The
Court was “mindful that the doctrine of equitable estoppel should be invoked against
governmental entities sparingly and only under exceptional circumstances,” but found
this case to present such circumstances. For, “plaintiff’s submissions demonstrated that
the NYCTA wrongfully or negligently engaged in conduct that misled the plaintiff to
justifiably believe that service of the notice of claim upon the MTA was of no
consequence, and lulled her into sleeping on her rights to her detriment.”
SERVICE OF PROCESS
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WHO MAY SERVE PROCESS
Neroni v. Follender, 137 A D 3d 1336 (3d Dept. 2016) – “Although CPLR 2103(a)
requires service to be made by a person who is not a party to the action, a violation of this
provision ‘is a mere irregularity which does not vitiate service’ where, as here, no
resulting prejudice is shown.”
WHO MUST BE SERVED WITH PROCESS
Friedberg v. Pena, 52 Misc 3d 339 (Sup.Ct. Westchester Co. 2016)(Giacomo, J.) –
Plaintiff served a summons and complaint on an individual defendant and a bank.
Thereafter, before the individual appeared, plaintiff amended the complaint to correct the
caption with respect to the name of the bank. Only the bank was served with the
amended complaint. The ensuing default judgment against the individual defendant is
vacated. “Contrary to plaintiff’s arguments, pursuant to CPLR 3012(a) when he amended
his complaint he was required to serve Pena with the amended complaint in the manner
provided for service of a summons or, at the very least, ‘serve her in the manner provided
for service of papers generally.’”
SERVICE ON INDIVIDUALS
FV-1, Inc. v. Reid, 138 A D 3d 922 (2d Dept. 2016) – “Service of process upon a natural
person must be made in strict compliance with the statutory methods of service set forth
in CPLR 308 [citations omitted]. ‘A defendant’s eventual awareness of pending
litigation will not affect the absence of jurisdiction over him or her where service of
process is not effectuated in compliance with CPLR 308’ [citation omitted]. Thus, ‘a
defect in service is not cured by the defendant’s subsequent receipt of actual notice of the
commencement of the action.’”
Fields v. The County of Westchester, N.Y.L.J., 1202777814154 (Sup.Ct. Westchester Co.
2016)(Giacomo, J.) – For jurisdiction to obtain pursuant to CPLR 308(2) or 308(4) the
leaving (or affixing) and mailing must be accomplished within 20 days of each other.
The failure “to meet the strict requirements” of the statute mandates dismissal.
Deutsche Bank National Trust Company v. O’King, 148 A D 3d 776 (2d Dept. 2017) –
Where service is effected pursuant to CPLR 308(4), the affix and mail method, the
plaintiff must demonstrate that the summons was affixed to the door of the dwelling place
or usual place of abode of the person to be served and mailed to such person’s last known
residence [citation omitted]. The ‘dwelling place’ is one at which the defendant is
actually residing at the time of delivery [citation omitted]. The ‘usual place of abode’ is a
place at which the defendant lives with a degree of permanence and stability and to which
he intends to return.” The same definitions apply to the “leave and mail” provision,
CPLR 308(2).
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Citibank, N.A. v. Balsamo, 144 A D 3d 964 (2d Dept. 2016) – “The plaintiff’s process
server averred that he was denied entry to the defendants’ condominium complex ‘by the
defendants,’ and that he, therefore, left the summons and complaint with ‘JOHN DOE
(NAME REFUSED), SECURITY GUARD.’ ‘If a process server is not permitted to
proceed to the actual apartment by the doorman or some other employee, the outer
bounds of the actual dwelling place must be deemed to extend to the location at which the
process server’s progress is arrested’ [citations omitted]. However, the defendants
rebutted the process server’s affidavit of service through their specific and detailed
averments that they never received the summons and complaint, that they never denied
access to a delivery person or received a call to authorize a delivery on the date in
question or on any other day, and that the security guards are not authorized to receive
packages or deliveries [citation omitted]. Under these circumstances, the Supreme Court
should have conducted a hearing to determine whether the security guard was a person of
suitable age and discretion within the contemplation of CPLR 308(2), and if the outer
bounds of the defendants’ dwelling place extended to the security office.”
JP Morgan Chase Bank, N.A. v. Peters, 55 Misc 3d 849 (Sup.Ct. N.Y.Co. 2017)(Bluth,
J.) – Defendant is in prison. Plaintiff caused service to be made, pursuant to CPLR
308(2), at the address where he lived prior to incarceration. Distinguishing Montes v.
Seda, 157 Misc 2d 895 (Sup.Ct. N.Y.Co. 1993), the Court holds that service was not
made at defendant’s “usual place of abode.” “Unlike the defendant in Montes [who was
serving an 18-month sentence], Peters faces a 40-years-to-life sentence, which clearly
approaches the degree of permanence and stability implied in the term ‘usual place of
abode.” Moreover, “plaintiff presented no evidence in the affidavit of service that the
process server attempted to gain access to the fifth floor so he could serve defendant
Peters at his former apartment or that the doorman refused to grant the process server
permission to enter the building. Plaintiff only claims the doorman confirmed that the
defendant lived at the building. Under these facts, the court is unable to find that delivery
to a doorman in the lobby of defendant’s former residence satisfied due process.”
Thacker v. Malloy, 148 A D 3d 857 (2d Dept. 2017) – At the traverse hearing in this
action, the “evidence showed that the process server walked up to the window of the
defendant’s mother’s ground-floor apartment to give her the summons and complaint as
he stood on the sidewalk and she stood inside her apartment. Although the defendant
resided in the same multiple-dwelling building as his mother, his apartment was on a
higher floor, and it was separate and distinct from his mother’s apartment. Hence, in
serving the defendant’s mother with the summons and complaint while she was inside her
own apartment, service was not made at the defendant’s actual dwelling.”
Cornhill LLC v. Sposato, 56 Misc 3d 364 (City Ct. Rochester 2017)(Yacknin, J.) – “New
York appellate courts require that personal service attempts prior to resort to conspicuous
service [pursuant to CPLR 308(4)] must comply with at least two key prerequisites to
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satisfy the due diligence test. First, a minimum of three personal service attempts are
required, with at least two attempts on dates and times when it can reasonably be
expected that the person to be served will not be at work or in transit.” Second, “before
resorting to conspicuous service, a process server must make ‘genuine inquiries’ to
ascertain the party’s place of work so that the party can be served at work, and must
attempt to talk to neighbors or find out where the party might be found [citations
omitted]. Where the party seeking a default money judgment following conspicuous
service of process fails to demonstrate such inquiries, due diligence is not satisfied.”
Deutsche Bank National Trust Co. v. Calviello, 55 Misc 3d 714 (Sup.Ct. Westchester Co.
2017)(Giacomo, J.) – CPLR 308(4) permits service by “affixing” and mailing only when
attempts have been made with “due diligence” to serve by personal delivery or by “leave
and mail.” Here, although plaintiff’s process server attempted to serve defendant at home
on 8 different occasions, weekdays and weekends, at various times of day and evening,
“due diligence” was not shown. Defendant’s “social media and professional profiles are
open to public search” and “she could have been easily located in her professional
capacity through an online search.” Defendant herself “attempted an online search and in
less than two minutes she states that she was able to locate her professional social media
profiles, the business listing of her employer and her work phone number.” All of this
“was on the first page of the search engine results.” Thus, the process server’s failure to
attempt to serve her at her place of business defeated any claim of “due diligence”
permitting “nail and mail” service under CPLR 308(4).
Sinay v. Schwartzman, 148 A D 3d 1068 (2d Dept. 2017) – “The defendants raised issues
of fact as to whether ‘affix and mail’ service was properly made, i.e., whether the
summons and complaint were affixed to the door of their condominium unit, rather than
the exterior door of the condominium complex [citation omitted]. Under the
circumstances, a hearing to determine the validity of service upon the defendants was
warranted.”
Greene Major Holdings, LLC v. Trailside and Hunter, LLC, 148 A D 3d 1317 (3d Dept.
2017) – “While the precise manner in which due diligence is to be accomplished [in order
to permit service pursuant to CPLR 308(4)] is ‘not rigidly prescribed’ [citation omitted],
the requirement that due diligence be exercised ‘must be strictly observed, given the
reduced likelihood that a summons served pursuant to CPLR 308(4) will be received’
[citations omitted]. What constitutes due diligence is determined on a case-by-case basis,
focusing not on the quantity of the attempts at personal delivery, but on their quality’
[citations omitted], and the plaintiff, who bears the burden of establishing that personal
jurisdiction over the defendant was acquired [citation omitted], must show ‘that the
process server made genuine inquiries about the defendant’s whereabouts and place of
employment.’” Here, the process server “attempted to serve defendant at a particular
residence in Evanston, Illinois on three occasions – on December 10, 2013 at 8:59 p.m.,
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on December 11, 2013 at 5:17 p.m., and on December 13, 2013 at 4:19 p.m.” The
Appellate Division agrees with Supreme Court that the underlying service attempts – all
of which occurred on weekdays and two of which occurred during hours that Rem
reasonably could be expected to be either at or in transit from work – fall short of
establishing due diligence.”
Niagara Mohawk Power Corp. v. Wheeler, N.Y.L.J., 1202759880779 (City Ct. Albany
2016)(Marcelle, J.) – While the so-called “rule of three” – that three attempts at service
on different days and different times suffices for “due diligence” pursuant to CPLR
308(4) – is “enticing,” the Court holds “that due diligence refers to the quality of the
effort to effect personal service, not the frequency of attempts.” Here, plaintiff has made
no showing of “some type of independent verification by a third party source of the
defendant’s address,” and thus there is no showing of steps “to ensure that it was
attempting to serve the defendants at their correct residences.” Accordingly, the Court
cannot find due diligence, and denies plaintiff’s motion for a default judgment.
Brown v. A 1998 Dodge, Vin No. 1B7GG22X1WS701157, N.Y.L.J., 1202770424964
(Sup.Ct. Suffolk Co. 2016)(Mayer, J.) – “The due diligence requirement of CPLR 308(4)
must be strictly observed, given the reduced likelihood that a summons served pursuant
to that section will be received [citations omitted]. A defendant’s eventual awareness or
actual awareness of pending litigation will not affect the absence of jurisdiction over him
or her where service of process is not effectuated in compliance with CPLR 308 [citations
omitted]. What constitutes due diligence is determined on a case-by-case basis, focusing
not on the quantity of the attempts at personal delivery, but on their quality [citations
omitted]. Attempting to serve a defendant at his or her residence without showing that
there was a genuine inquiry about the defendant’s whereabouts and place of employment
is fatal to a finding of due diligence as required by CPLR 308(4) [citations omitted].
Further, absent any evidence that the process server attempted to determine that the
address where service was attempted was, in fact, the actual dwelling or usual place of
abode of the defendant, such as by searching telephone listings or making inquiries of
neighbors, the requirement of CPLR 308(4), that service under CPLR 308(1) and (2) first
be attempted with ‘due diligence,’ is not met.”
Koiv-Urban v. Mekies, 53 Misc 3d 691 (Sup.Ct. N.Y.Co. 2016)(Bluth, J.) – The
complaint in this action describes defendant as a “Moroccan-French citizen” who is a
“‘missing person’ who has not lived in the United States for 20 years.” Particularly under
these circumstances, plaintiff has failed to demonstrate sufficient due diligence to permit
service pursuant to CPLR 308(4) “at a 30 year old address.” Moreover, service at a “last
known address” is insufficient under the statute, and, in any event, “three visits by the
process server, all during normal business hours, does not constitute due diligence.”
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Oglesby v. Barragan, 135 A D 3d 1215 (3d Dept. 2016) – “‘A court is without power to
direct service pursuant to CPLR 308(5) absent a showing by the moving party that
service under CPLR 308(1), (2) or (4) is impracticable’ [citations omitted]. Although
impracticality does not require a showing of actual attempts to serve parties under every
method in the aforementioned provisions of CPLR 308, the movant is required to make
competent showings as to actual efforts made to effect service.” Here, “the record
reveals that plaintiffs made merely one respective attempt to serve defendants via
certified mail at the addresses listed on the police report related to the accident. When
plaintiffs relied on that police report for such addresses, the report was approximately
three years old. Plaintiffs offer no explanation as to any further attempts to ascertain
defendants’ current addresses other than the conclusory assertion that they have
investigated the whereabouts of Bryan Cuff and Kathi Cuff and concluded that they did
not live in New York. Such conclusory statements and proof of a single failed attempt to
locate defendants based upon three-year outdated records does not establish that service
pursuant to CPLR 308(1), (2) or (4) was impracticable.”
Bovee v. Champlain Valley Physicians Hospital Medical Center, N.Y.L.J.,
1202759318868 (Sup.Ct. Warren Co. 2016)(Muller, J.) – After being given conflicting
information about the whereabouts of defendant Menoscal, plaintiff sought an order,
pursuant to CPLR 308(5), permitting service upon Menoscal’s attorney. In response, the
attorney produced an affidavit from Menoscal, “indicating that he ‘resides in Guttenberg,
New Jersey,’” and that he “has ‘been employed at Metropolitan Hospital in New York
City since July of 2013 as well as continuing to work part time at [defendant] CVPH.’
He is also an attending physician at Astoria Urgent Care Medical Center in Queens. In
view of this information, plaintiffs cannot demonstrate it is impracticable to personally
serve Menoscal under CPLR 308 (1), (2) and (4).” The motion was denied, but without
prejudice. “Inasmuch as Menoscal has declined to provide his actual residence address
and, further, appears to have several places of employment, service upon him may prove
impracticable under CPLR 308(1), (2) and (4) notwithstanding the additional information
provided. Under these circumstances, plaintiffs may file a further motion for permission
to serve Menoscal by service upon his counsel.”
Born To Build LLC v. Saleh, 139 A D 3d 654 (2d Dept. 2016) – After several attempts to
serve defendant, each of which resulted in a motion to dismiss for lack of proper service,
plaintiff sought permission, pursuant to CPLR 308(5), to serve process on defendant’s
attorney. Generally, “‘an attorney is not automatically considered the agent of his or her
client for the purposes of the service of process’ and, absent proof that a defendant has
designated his or her attorney as an agent for the acceptance of process, an attorney lacks
the authority to accept service on the defendant’s behalf.” But, here, “plaintiff
demonstrated that it had been unable to serve the defendant at the addresses available to
it. The defendant stated that she lived and worked in China, but did not disclose either her
business or residence address in that country, thereby preventing the plaintiff from
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attempting international service pursuant to the Hague convention [citations omitted].
Furthermore, the extensive motion practice in this case demonstrates that service of
process on her attorney will be adequate to apprise her of the action.” Accordingly, the
order granting plaintiff’s motion was affirmed.
Matter of J.T., 53 Misc 3d 888 (Fam.Ct. Onondaga Co. 2016)(Hanuszczak, J.) – “With
the common utilization of e-mail as a means of communication Courts have been inclined
to entertain and grant requests to allow for service by e-mail [citation omitted]. Upon
proper application, both New York Courts and Federal Courts have granted e-mail
service of process as an appropriate method when statutory methods have proven to be
ineffective or impossible. Although not directly set forth in the CPLR as a means of
service there is no prohibition provided appropriate circumstances exist.” Here, “the
Court finds that the father was deported from the United States to Jordan prior to the
child being removed from the mother’s care and his exact whereabouts are unknown.
Furthermore, upon the child being removed from the mother’s care the caseworker
maintained communication with the father through electronic mail and the father
requested additional information pertaining to the Court proceedings in e-mail
transmissions. At no time did the father provide any further information as to his
physical address to the caseworker. Based upon these findings the County has
sufficiently demonstrated that it is impractical for personal service of process to be
effectuated.” Accordingly, the Court concludes that the instant termination of parental
rights summons and petition may be served by e-mail upon the father.
Matter of Kevin B. v. Lorena B., N.Y.L.J., 1202778231573 (Fam.Ct. Suffolk Co. 2017)
(Loguercio, J.) – The Court here denies petitioner/father’s application to compel the
Suffolk County Child Support Enforcement Bureau to divulge the address of
respondent/mother so that he might serve process in this proceeding to modify a
judgment. For Social Services Law §111-v imposes strict confidentiality rules for the
prevention of domestic violence. However, exercising its discretion pursuant to CPLR
308(5), the Court permits service by e-mail, regardless whether respondent currently
resides in another country which is a party to the Hague Convention. Petitioner is not
required to demonstrate physical attempts to make service, where, as here, due to lack of
knowledge, such service is “impracticable.”
Qaza v. Alshalabi, 54 Misc 3d 691 (Sup.Ct. Kings Co. 2016)(Sunshine, J.) – The Court
here denies an application pursuant to CPLR 308(5) for service via Facebook. “Plaintiff
has failed to sufficiently authenticate the Facebook profile as being that of defendant and
has not shown that, assuming arguendo that it is defendant’s Facebook profile, that
defendant actually uses this Facebook page for communicating.” For, the profile
suggested by plaintiff “has not been updated since April 27, 2014.” And, “while
plaintiff’s counsel contends that plaintiff has communicated with defendant through
Facebook the plaintiff’s affidavit is entirely silent regarding any alleged communication
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with defendant through Facebook including any representation regarding dates when she
communicated with defendant or that she communicated with defendant through this
Facebook page. The Court notes that plaintiff did not annex copies of any of the alleged
Facebook correspondence with defendant that she contends link him to this Facebook
profile.” Allowing service via Facebook on these facts “would be akin to the Court
permitting service by nail and mail to a building that no longer exists.”
SERVICE PURSUANT TO THE VEHICLE AND TRAFFIC LAW
Ocean v. Gustave, N.Y.L.J., 1202768914711 (Sup.Ct. Kings Co. 2016)(Martin, J.) –
Vehicle and Traffic Law §253 provides an alternative method of service of process when
the cause of action arises from a non-resident’s use of an automobile in New York. But,
as the Court here holds, the provisions of that statute must be strictly complied with.
Where, as here, the required registered mail of the summons and complaint is returned as
“unclaimed,” plaintiff must file the original envelope and an affidavit within 30 days of
receipt of the return of the envelope from the postal authorities. Here, while plaintiff
averred that he complied with the statute, “he fails to offer any proof of when he actually
received notice that the initial mailing was ‘unclaimed.’ Indeed, the USPS printout
indicates that the initial mailing was returned over two months earlier.” Therefore,
plaintiff failed to demonstrate compliance with the statute.
SERVICE IN A FOREIGN COUNTRY
Mutual Benefits Offshore Fund v. Zeltser, 140 A D 3d 444 (1st Dept. 2016) – Back in
2001, the First Department, in Sardanis v. Sumitomo Corporation, 279 A D 2d 225 (1st
Dept. 2001), held that Article 10(a) of the Hague Convention, which provides that the
Convention “shall not interfere with” the “freedom to send judicial documents by postal
channels, directly to persons abroad” [emphasis added], does not permit service of
process by such “postal channels.” Relying upon a Third Department decision that that
Court would later overrule [Reynolds v. Koh, 109 A D 2d 97 (3d Dept. 1985)], the Court
concluded that “service” is a “term of art,” and not encompassed by the word “send.”
Sardanis remained the law in the First Department even though all of the other
Departments held to the contrary [Fernandez v. Univan Leasing, 15 A D 3d 343 (2d
Dept. 2005); New York State Thruway Authority v. French, 94 A D 3d 17 (3d Dept.
2012)(overruling Reynolds); Rissew v. Yamaha Motor Company, 129 A D 2d 94 (4th
Dept. 1987)]. Here, in Mutual Benefits, the First Department joins the other
Departments, overruling Sardanis. “We now join our sister Departments and hold that
service of process by mail ‘directly to persons abroad’ is authorized by article 10(a) of
the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in
Civil or Commercial Matters (20 UST 361, TIAS No. 5568 [1969][Hague Convention]),
so long as the destination state does not object to such service.”
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PROOF OF SERVICE
South Point, Inc. v. John, 140 A D 3d 1150 (2d Dept. 2016) – “While a process server’s
affidavit ordinarily constitutes a prima facie showing of proper service [citation omitted],
the document denominated by the plaintiff as an affidavit of service does not demonstrate
on its face that it was executed before a notary public, as the alleged notary’s illegible
signature was not accompanied by any of the information mandated by Executive Law
§137.” Accordingly, “the plaintiff failed to demonstrate the defendant’s default.”
APPEARANCE BY COUNSEL
Schoenefeld v. Schneiderman, 821 F.3d 273 (2d Cir. 2016) – The Second Circuit Court of
Appeals here reverses the judgment of the United States District Court for the Northern
District of New York [907 F.Supp.2d 252 (N.D.N.Y. 2011)] reported on in a prior year’s
“Update,” which had declared Judiciary Law §470 unconstitutional. The statute requires
that, to appear as counsel in New York, a nonresident of the State, who is a member of
the New York bar, must maintain an “office for the transaction of law business” within
the State. Last year’s “Update” reported on a decision of the New York Court of
Appeals, upon a certified question from the Second Circuit, interpreting that statute
[Schoenefeld v. State of New York, 25 N Y 3d 22 (2015)]. The Second Circuit asked the
New York Court of Appeals what are “the minimum requirements necessary to satisfy
the statutory directive that nonresident attorneys maintain an office within the State ‘for
the transaction of law business.’” The Court responded “that the statute requires
nonresident attorneys to maintain a physical office in New York.” The defendant State of
New York, “recognizing that there may be a constitutional flaw if the statute is
interpreted as written,” had urged the Court “to construe the statute narrowly in
accordance with the doctrine of constitutional avoidance [citations omitted]. In
particular, they suggest that the provision can be read merely to require nonresident
attorneys to have some type of physical presence for the receipt of service – either an
address or the appointment of an agent within the State. They maintain that interpreting
the statute in this way would generally fulfill the legislative purpose and would ultimately
withstand constitutional scrutiny.” However, the language and legislative history of the
statute make it “difficult to interpret the office requirement as defendants suggest. As the
Second Circuit pointed out, even if one wanted to interpret the term ‘office’ loosely to
mean someplace that an attorney can receive service, the additional phrase ‘for the
transaction of law business’ makes this interpretation much less plausible.” Now, armed
with the definitive interpretation of the demands of the statute, a divided Second Circuit
concludes “that §470 does not violate the Privileges and Immunities Clause because it
was not enacted for the protectionist purposes of favoring New York residents in their
ability to practice law. To the contrary, the statute was enacted to ensure that nonresident
members of the New York bar could practice in the state by providing a means, i.e., a
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New York office, for them to establish a physical presence in the state on a par with that
of resident attorneys, thereby eliminating a service-of-process concern. We identify no
protectionist intent in that action. Indeed, it is Schoenefeld who, in seeking to practice
law in New York without a physical presence in the state, is looking to be treated
differently from, not the same as, New York resident attorneys. Such differential
treatment is not required by the Privileges and Immunities Clause.”
Stegemann v. Rensselaer County Sheriff’s Office, ___ A D 3d ___, 2017 WL 3441312
(3d Dept. 2017) – The Court denies applications for “nunc pro tunc waivers of the law
office requirement of Judiciary Law §470 to enable [applicant attorneys] to practice
before this Court.” For “the Court of Appeals [has] held that, ‘by its plain terms,
Judiciary Law §470 requires nonresident attorneys practicing in New York to maintain a
physical law office here.’” And the requests for a waiver of the rule “‘finds no support in
the wording of the provision and would require us to take the impermissible step of
rewriting the statute’ [citation omitted]. In addition to holding that no statutory authority
exists for granting the waivers, we also find that creating an avenue for nonresident
attorneys to obtain a waiver of the law office requirement would amount to the type of
rulemaking reserved for the Court of Appeals.” However, “we reject plaintiff’s
contention that all of the work performed by [the out-of-state attorneys] in this action
should be declared void from the beginning. In reaching this conclusion, we adopt the
Second Department’s reasoning in Elm Mgt. Corp. v. Sprung (33 A D 3d 753 [2006]) the
‘the fact that a party has been represented by a person who was not authorized or
admitted to practice law under the Judiciary Law does not create a “nullity” or render all
prior proceedings void per se.’ [citations omitted], and we note our disagreement with the
First Department’s cases holding to the contrary.”
Arrowhead Capital Finance, Ltd v. Cheyne Specialty Finance Fund L.P., N.Y.L.J.,
1202764119157 (Sup.Ct. N.Y.Co. 2016)(Kornreich, J.) – Goldin, plaintiff’s attorney,
“lists what he refers to as his ‘main office’ in Pennsylvania (PA Office). When he filed
the summons and complaint in this action, on June 27, 2014, he listed his PA Office and
its telephone and fax numbers, as well as an address at 240 Madison Avenue, 3rd Floor,
NY, NY 10016 (240 Madison).” Defendant’s attorney avers that at 240 Madison
Avenue, there is “no visible sign for Goldin” outside or inside, or on the 3rd floor. Also,
“Goldin’s stationery letterhead” only lists the PA Office. The Madison Avenue address
is apparently the office of one of Goldin’s clients, that he “had use of” to receive
“documents, packages and boxes.” The Court notes that “numerous cases in the First
Department have held, before the recent Schoenefeld rulings [discussed directly above],
that a court should strike a pleading, without prejudice, where it is filed by an attorney
who fails to maintain a local office, as required by [Judiciary Law] §470.” And,
“receiving mail and documents is insufficient to constitute maintenance of an office.”
The action was therefore dismissed without prejudice.
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DeMartino v. Golden, 150 A D 3d 1200 (2d Dept. 2017) – “A corporation and limited
liability company must be represented by an attorney and cannot proceed pro se [citations
omitted]. Here, DeMartino Building Co., Inc. and 150 Centreville, LLC, did not appear
by an attorney when the summons and complaint were filed and served. Accordingly, the
complaint, insofar as asserted by them, was a nullity, and the action as to them was
improperly commenced.”
Jefferies, LLC v. A&R Trading Group, LLC, N.Y.L.J., 1202766487802 (Sup.Ct. N.Y.Co.
2016)(Bannon, J.) – The attorneys of record for the parties in this breach of contract
action agreed to electronic filing of all documents, and then stipulated to arbitrate the
dispute before the Financial Industry Regulatory Authority. Thereafter, while
defendants’ attorney of record “e-mailed FINRA and plaintiff’s counsel in August 2014
to inform them that she was withdrawing as the defendants’ attorney, she never moved
for leave to withdraw as attorney of record in this action, and the defendants never
executed or filed a substitution of attorney in this action.” Defendants appeared, by
different counsel, in the arbitration. After the arbitrators ruled in plaintiff’s favor,
“plaintiff moved pursuant to CPLR 7510 to confirm the arbitration award, and the
defendants’ attorney of record did not oppose the motion.” Now, seeking to vacate the
ensuing judgment, defendants “argue that the plaintiff’s failure to physically serve their
arbitration attorney with the papers constituting the motion to confirm the award
constituted a reasonable excuse for their default in opposing the motion.” The Court
disagrees. “‘From the standpoint of adverse parties, counsel’s authority as an attorney of
record in a civil action continues unabated until the withdrawal, substitution, or discharge
is formalized in a manner provided by CPLR 321’ [citations omitted]. This rule protects
adverse parties from the uncertainty of when or whether the authority of an opposing
attorney has been terminated [citations omitted], even when the adverse party is
informally aware that a discharge or substitution of an opposing counsel is pending or
imminent [citations omitted]. An attorney may not simply withdraw as attorney of record
without leave of court.” Thus, “since, here, the defendants’ litigation counsel never
obtained leave of court to withdraw as attorney of record, and was never formally
substituted, she remained attorney of record for the purposes of this litigation, and only
she, on behalf of the defendants, was entitled to notice of the plaintiff’s motion.”
Moreover, since the parties had consented to electronic filing, they were subject to 22
NYCRR 202.5-b(f)(2)(ii), which, as relevant, provides that “where parties to an action
have consented to e-filing, a party causes service of an interlocutory document to be
made upon another party participating in e-filing by filing the document electronically.”
And, “upon receipt of an interlocutory document, the NYSCEF site shall automatically
transmit electronic notification to all e-mail service addresses in such action.” Upon such
transmission, “each party receiving the notification shall be responsible for accessing the
NYSCEF site to obtain a copy of the document received.” The transmission of the
notification “shall constitute service of the document on the e-mail service addresses
identified therein.” Thus, “the failure of an attorney of record to check for or respond to
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papers that were properly e-filed” cannot “give rise to a reasonable excuse for the
defendants’ failure to oppose the plaintiff’s motion.”
DEFENDANT’S RESPONSE TO BEING SERVED
Wimbledon Financing Master Fund, Ltd. v. Weston Capital Management LLC, 150 A D
3d 427 (1st Dept. 2017) – The case law is well-settled that a defendant may not appear
and demand a complaint prior to being served. Here, the individual defendant was served
by substituted service pursuant to CPLR 308(2). Defendant served a demand for a
complaint after the summons was “left” and “mailed,” but before proof of service was
filed. “We agree with the motion court that under CPLR 3012(b), defendant was
permitted to serve a demand for a complaint after being served, notwithstanding that
service was not technically ‘complete.’ The time frames applicable to defendants set
forth in CPLR 3012(b) are deadlines, not mandatory start dates.”
Matter of Williams v. Ponte, 145 A D 3d 1022 (2d Dept. 2016) – “Contrary to the
petitioner’s contention, the respondents’ attempts to procure an adjournment of the return
date of the petition did not constitute a formal appearance in the proceeding, nor amount
to a waiver of any objection to personal jurisdiction.”
Scanomat A/S v. Boies, Schiller & Flexner, N.Y.L.J., 1202779528329 (Sup.Ct. N.Y.Co.
2017)(Freed, J.) – The nonresident petitioner’s commencement of this proceeding to stay
arbitration invoked the Court’s jurisdiction, and gave it the power to consider
respondent’s counterclaims, upon sua sponte converting the special proceeding into a
plenary action.
Clement v. Durban, 147 A D 3d 39 (2d Dept. 2017) – “This appeal raises a constitutional
issue of first impression in the appellate courts. CPLR 8501(a) and 8503 require
nonresident plaintiffs maintaining lawsuits in New York courts to post security for the
costs for which they would be liable if their lawsuits were unsuccessful. On this appeal,
we are asked to determine whether this requirement violates the Privileges and
Immunities Clause of the United States Constitution (US Const, art IV, §2). We hold that
the statutes, insofar as they are challenged, do not deprive nonresident plaintiffs of
reasonable and adequate access to New York courts, and thus, do not violate the
Privileges and Immunities Clause.” That clause does not mandate “that state citizenship
or residency may never be used by a State to distinguish among persons [citations
omitted]. ‘Nor must a State always apply all its laws or all its services equally to anyone,
resident or nonresident, who may request it so to do’ [citations omitted]. ‘Rather, the
Privileges and Immunities Clause protects only those privileges and immunities that are
“fundamental.”’” And, here, “the challenged statutory provisions do not deprive
noncitizens of New York of reasonable and adequate access to New York courts. The
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requirement that a nonresident plaintiff who has not been granted permission to proceed
as a poor person post the modest sum of $500 as security for costs is reasonable to deter
frivolous or harassing lawsuits and to prevent a defendant from having to resort to a
foreign jurisdiction to enforce a costs judgment.”
Capital One Bank, N.A. v. Faracco, 149 A D 3d 590 (1st Dept. 2017) – “The filing of a
notice of appearance by counsel on defendant’s behalf, after the time to answer had
expired, and without making any objection to personal jurisdiction, waived defendant’s
challenge to such jurisdiction. Accordingly, the court properly denied defendant’s
motion, made four months after such appearance.” The Court cited Matter of Nicola v.
Board of Assessors of the Town of North Elba, 46 A D 3d 1161 (3d Dept. 2007). But that
case involved an RPTL Article 7 proceeding, in which the failure to answer results
automatically in deeming the allegations of the petition denied. And, more importantly,
while the Nicola Court quoted that “‘service of process can be waived by respondent
simply by appearing in the proceeding and submitting to the court’s jurisdiction,’” the
Court went on to accurately recite the law: “Such an appearance will operate to waive
objections to the court’s personal jurisdiction ‘unless an objection to jurisdiction under
CPLR 3211(a)(8) is asserted by motion or in the answer as provided in rule 3211’”
[emphasis added].
American Home Mortgage Servicing, Inc. v. Arklis, 150 A D 3d 1180 (2d Dept. 2017) –
After Supreme Court directed entry of a default judgment for defendant’s failure to
appear, “defendant’s attorney appeared at a foreclosure settlement conference and
executed a form notice of appearance, bearing the caption and index number of the
action, and stating the name, address, and contact information of the attorney’s firm.”
Almost two years later, plaintiff’s assignee moved for leave to enter a judgment of
foreclosure and sale, and defendant, represented by the same attorney, “cross-moved
pursuant to CPLR 3211(a)(8) to dismiss the complaint insofar as asserted against her for
lack of personal jurisdiction, arguing that she did not live at the subject property at the
time that service was purportedly made upon her at that address and, therefore, service
was not properly made upon her.” The Court holds that “the defendant waived any claim
that the Supreme Court lacked jurisdiction over her. Pursuant to CPLR 320(a), ‘the
defendant appears by serving an answer or a notice of appearance, or by making a motion
which has the effect of extending the time to answer.’ Subject to certain exceptions not
applicable here [citation omitted], ‘an appearance of the defendant is equivalent to
personal service of the summons upon him, unless an objection to jurisdiction under
CPLR 3211(a)(8) is asserted by motion or in the answer as provided in CPLR 3211’
[citation omitted]. ‘By statute, a party may appear in an action by attorney [citation
omitted], and such an appearance constitutes an appearance by the party for purposes of
conferring jurisdiction [citations omitted]. Here, the defendant’s attorney appeared in the
action on her behalf by filing a notice of appearance on July 25, 2012, and neither the
defendant nor her attorney moved to dismiss the complaint on the ground of lack of
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personal jurisdiction at that time or asserted lack of personal jurisdiction in a responsive
pleading [citations omitted]. Accordingly, the defendant waived any claim that the
Supreme Court lacked personal jurisdiction over her in this action [citations omitted]. To
the extent that prior decisions of this Court could be interpreted to require a different
result [citations omitted], they should no longer be followed.”
JP Morgan Chase Bank, National Association v. Venture, 148 A D 3d 1269 (3d Dept.
2017) – “Defendant waived his affirmative defense of lack of personal jurisdiction on the
basis of improper service of process, as he failed to move to dismiss the complaint on that
ground within 60 days after serving his answer [citations omitted]. This defense was
likewise by defendant’s assertion of a counterclaim unrelated to this action.”
STATUTE OF LIMITATIONS
PROFESSIONAL MALPRACTICE
Hahn v. Dewey & LeBoeuf Liquidation Trust, 143 A D 3d 547 (1st Dept. 2016) –
“Defendants established that the causes of action alleging legal malpractice accrued in
2000-2001, when they issued opinion letters and rendered advice that plaintiffs were not
required to register a tax shelter [citations omitted]. Although plaintiffs claim not to have
discovered that this advice was incorrect until years later, ‘what is important is when the
malpractice was committed, not when the client discovered it.’” And, “contrary to
plaintiffs’ argument, the special facts doctrine is inapplicable. The doctrine generally
applies to claims of fraud in sales transactions [citation omitted]. Further, at the time
defendants rendered erroneous tax advice, neither the applicable statute of limitations nor
precedent establishing the accrual date of malpractice claims [citation omitted] were
peculiarly within defendants’ knowledge [citation omitted], and that same information
could have been discovered by plaintiffs through the exercise of ordinary intelligence.”
Bronstein v. Omega Construction Group, Inc., 138 A D 3d 906 (2d Dept. 2016) –
“Regardless whether they are framed as claims sounding in contract or tort, allegations of
professional malpractice, are governed by a three-year statute of limitations [citations
omitted]. Accrual of a claim to recover for professional malpractice occurs upon the
completion of performance and the resulting termination of the professional
relationship.” Here, continuous representation extended the running of the limitations
period, because of “evidence of continuing communications between the parties, and of
efforts by [defendant] Cetera to remedy the alleged errors or deficiencies in the filed
plans.”
Brown v. Hampton Deck, N.Y.L.J., 1202753684483 (Sup.Ct. N.Y.Co. 2016)(Kern, J.) –
Plaintiff hired defendants to construct a deck at plaintiff’s residence, which was
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completed in 2005. “On or about July 10, 2012, Mr. Brown leaned against a portion of
the deck rail, the rail collapsed and he fell approximately fifteen feet to the ground,
sustaining injuries.” This action for personal injuries was commenced on March 5, 2015.
The Court rejects defendants’ claim that this action is time-barred pursuant to CPLR
214(6). First, defendants “failed to make a prima facie showing that they were an
architect or other professional to whom CPLR 214(6) would apply.” The shortened
professional malpractice statute does not apply to contractors. In any event, “the rule that
a cause of action for negligent design accrues upon completion of the construction is only
applicable where the cause of action is for damages to property which has its genesis in
the contractual relationship between the parties and it does not apply to actions for
personal injury. It is well established that a cause of action for personal injury, which is
what plaintiff is asserting in this action, has a three year statute of limitations which
accrues when the plaintiff is injured.” Hence, this action is timely.
Neuberger Berman Trust Co., N.A. v. Schlesinger, N.Y.L.J., 1202761664352 (Surr. Ct.
N.Y.Co. 2016)(Anderson, J.) – In this legal malpractice action, the claim is premised
upon an error in an estate tax return prepared by defendants which cost the estate almost
$3 million. The return was filed in 2003. However, defendants “continued to provide
legal services to the estate through April 2012.” The continuous representation doctrine
“tolls the limitations period ‘only where there is a mutual understanding of the need for
further representation on the specific subject matter underlying the malpractice claim,’”
and defendant urges that “the ‘specific legal matter’ was the preparation of the estate tax
return,” and that, therefore, the statute of limitations began to run when it was filed in
2003. The Court, however, holds that “when an estate fiduciary retains counsel in
connection with estate administration, it is reasonable for both the lawyer and the
client/fiduciary to contemplate that the lawyer’s responsibilities will continue until the
client’s fiduciary role has been completed. In the context of such a lawyer-client
relationship, the preparation of a tax return is but one point on a continuum, rather than a
separate matter that is distinct from any other service that the lawyer may be asked to
perform for the client.” Hence, the motion to dismiss the claim is denied.
Aaron v. Deloitte Tax LLP, 149 AD 3d 580 (1st Dept. 2017) – In this accountant’s
malpractice action, the engagement letter provided “that any action brought relating to
the engagement must be commenced within one year of the accrual of the cause of action.
The accrual of plaintiff’s accounting malpractice claim was on January 21, 2009, the date
decedent signed the last document that was part of the estate tax plan formulated by
defendant.” And, “plaintiffs may not avail themselves of the continuous representation
tolling doctrine because the limitations period was contractual, not statutory, and was
reasonable.”
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MEDICAL MALPRACTICE VS. NEGLIGENCE
Koster v. Davenport, 142 A D 3d 966 (2d Dept. 2016) – Plaintiff claims that defendant
doctor “was negligent because he unknowingly used Monocryl Plus to close plaintiff’s
surgical incision, rather than Monocryl, which he allegedly intended to use. The plaintiff
further alleged that the hospital was negligent for failing to comply with an order by
Davenport to provide Monocryl.” Contrary to plaintiff’s contention, the action sounds in
malpractice rather than negligence, notwithstanding that “the distinction between medical
malpractice and negligence is a subtle one.” For, “here the crux of the plaintiff’s case
concerns the defendants’ alleged failure to use and/or provide the correct suture material,
which is an allegation of medical malpractice. Indeed, a claim based upon the allegation
that the wrong suture material was used in suturing a surgical wound concerns the
‘performance of functions that are an integral part of the process of rendering medical
treatment to a patient.’”
THE FOREIGN OBJECT RULE
Knox v. St. Luke’s Hospital, 140 A D 3d 501 (1st Dept. 2016) – Last year’s “Update”
reported on Walton v. Strong Memorial Hospital, 25 N Y 3d 554 (2015). There, in its
first significant application of the foreign object rule in almost 20 years, the Court of
Appeals has, if not reversed its prior course with respect to that rule, at least significantly
shifted its emphasis. In 1986, at the age of three, plaintiff underwent surgical repair of
his heart. During the surgery, catheters and drainage tubes were placed in his body, to be
removed days later. When they were removed, a “nursing progress note” recorded that
the left atrial line “possibly broke off with a portion remaining” in plaintiff’s body. Some
17 years later, plaintiff suffered symptoms that ultimately led doctors to discover the
piece of catheter that had been left in his body. Supreme Court rejected defendants’
argument that the piece of catheter was a “fixation device,” and hence an exception to the
“foreign object” extension of the statute of limitations. For, “defendants make no
argument that the catheter provided any securing function.” Indeed, “it served no fixative
or fixation purpose. Its nature is not one which closes or fixates anything within a
patient’s body.” However, the Court agreed with defendants that the piece of catheter is
not a “foreign object,” although “the Court of Appeals has defined the term ‘foreign
object’ without any legislative guidance or any reference to a technical or commonly
understood meaning of the term. The court instead appears to speculate as to what the
Legislature intended and it did so with very scant evidence of legislative intent.”
Nevertheless, in LaBarbera v. New York Eye and Ear Infirmary, 91 N Y 2d 207 (1998),
the Court of Appeals held that an object initially left in the patient’s body for a continuing
medical purpose cannot become a “foreign object” by being negligently left behind when
it was later supposed to be removed. And “the Court is required to follow its
understanding of the holding” of the Court of Appeals. The Appellate Division affirmed,
“but our reasoning differs from that of the court [below].” The Appellate Division
concluded that the catheter was a “fixation device.” For, “fixation devices are ‘placed in
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the patient with the intention that they will remain to serve some continuing treatment
purpose’ [citation omitted], while foreign objects are ‘negligently left in the patient’s
body without any intended continuing treatment purpose.’” Here, the catheter “was a
fixation device and was not a foreign object because it was intentionally placed inside
plaintiff’s body to monitor atrial pressure for a few days after the surgery, i.e., it was
placed for a continuing treatment purpose.” The Court of Appeals reversed. The Court
agreed with nisi prius that the catheter was not a “fixation device.” For, it “performed no
securing or supporting role during or after surgery.” The catheter “functioned like a
sentinel, allowing medical personnel to monitor atrial pressure so that they might take
corrective measures as required; the catheters were, in the words of plaintiff’s expert, ‘a
conduit for information from plaintiff’s cardiovascular system.’” Thus, like clamps or
“other surgical paraphernalia,” the catheter was “introduced into a patient’s body solely
to carry out or facilitate a surgical procedure.” Since, therefore, the catheter was not a
fixation device, it was “not categorically excluded from the foreign object exception in
CPLR 214-a.” What remained was for the Court to distinguish this case from its prior
holding in LaBarbera. There, at the end of nasal surgery, the patient left the operating
room with a plastic stent and packing in his nose, which was supposed to be removed
some days later. By mistake, the stent was not removed. The Court held in LaBarbera
that, because the stent was intended to have a continuing function during the several days
after surgery, it was not initially left in the body inadvertently, and was therefore not a
foreign object. Now, the Court says that the stent in LaBarbera was “undeniably” a
fixation device, and leaving it in the body did not convert “a fixation device into a foreign
body.” And, here, “leaving the catheter in plaintiff’s body post-surgery did not convert a
surgical device into a fixation device.” Here, in Knox, “plaintiff acknowledges that the
catheter cuff, which was inserted into his chest to facilitate hemodialysis, was a fixation
device, but argues that when it was inadvertently left in his chest after the catheter tube
was removed, it became a ‘foreign object.’” That argument “is unavailing because only
objects temporarily used in the course of surgery qualify as foreign objects [citations
omitted]. ‘A fixation device cannot be transformed into a foreign object merely because
the continued presence of the fixation device is inadvertent.’”
Livsey v. Nyack Hospital and Rockland Thoracic and Vascular Associates, P.C., 54 Misc
3d 214 (Sup.Ct. Rockland Co. 2016)(Berliner, J.) – The malpractice claim in this action
is that, after surgery, defendants left a ureteral catheter/stent in plaintiff’s body.
Defendant’s expert averred that such a catheter/stent “is placed and left inside of the body
for up to six months in order to bypass an obstruction caused by strictures, stones or
tumors.” Plaintiff’s expert stated that this catheter/stent “was used as a surgical drain to
aid in the draining of fluids from the kidney while the ureteral repair healed and did not
serve a fixative purpose.” Based upon these statements, the Court concludes that the
catheter/stent here “performed no securing or supporting role during or after surgery and
thus does not constitute a fixation device. Its primary purpose was to drain fluids and
would have been introduced solely to facilitate a surgical procedure.” Thus, it was a
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“‘foreign object’ within the ambit of ‘other surgical paraphernalia’ identified in Walton,”
discussed above.
CONTINUOUS TREATMENT
Murray v. Charap, 150 A D 3d 752 (2d Dept. 2017) – According to defendant, during the
relevant period “he prescribed and refilled the plaintiff’s prescriptions for cholesterol-
lowering medications, told the plaintiff to resume his diet, explained to the plaintiff that
he had elevated cholesterol and that it was a risk for heart disease, and had a conversation
with the plaintiff to make sure he was taking his medication. ‘The continuous treatment
rule applies to the period if prescriptions are being issued by the doctor where there is a
“continuing relationship” with the patient.’”
Flaherty v. Kantrowich, 144 A D 3d 542 (1st Dept. 2016) – Plaintiff presented to
defendant optometrist once each year from 2005 to 2012 for an eye examination and
prescription for contact lenses. Every year, defendant “noted the continued existence of
nerve pallor and optic neuropathy. Finally, in 2012, plaintiff saw a neuro-
ophthalmologist who diagnosed him with a meningioma, which caused him to lose sight
in one eye. Plaintiff does not get the benefit of the continuous treatment doctrine in his
malpractice action against defendant based on defendant’s failure to properly diagnose
his condition. “The continuous treatment doctrine does not operate to toll the statute of
limitations because Dr. Kantrowich was not engaged in treatment of plaintiff’s optic
neuropathy, but performed only ‘routine or diagnostic examinations,’ which, even when
conducted repeatedly over a period of time, are not ‘a course of treatment’ [citation
omitted]. The measurement of plaintiff’s nerve pallor annually did not itself amount to
continuous treatment [citation omitted], or reflect any agreement to monitor the
condition, but was part of the routine examination.”
Nisanov v. Khulpateea, 137 A D 3d 1091 (2d Dept. 2016) – In September 2004,
plaintiff’s deceased was referred by her gynecologist to defendant gynecological
oncologist. Defendant removed a polyp from the uterine cavity, which tested as benign,
and told her to return to her gynecologist for regular follow-up care. When plaintiff’s
deceased continued to experience pain, her gynecologist again referred her to defendant
for ultrasound, which revealed fluid in the endometrial cavity. In September 2005,
defendant performed an endometrial biopsy, and an examination which he found to be
“unremarkable.” The deceased was later diagnosed with, and died from, fallopian tube
cancer. This action was commenced in May 2007, claiming that defendant failed to
timely diagnose and treat the cancer. “‘Continuity of treatment is often found to exist
“when further treatment is explicitly anticipated by both physician and patient as
manifested in the form of a regularly scheduled appointment for the near future, agreed
upon during the last visit, in conformance with the periodic appointments which
characterized the treatment in the immediate past”’ [citations omitted]. Here, the plaintiff
failed to show that there was a continuous course of treatment. The diagnostic services
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performed by Khulpateea were discrete and complete, and not part of a course of
treatment [citations omitted]. Moreover, the plaintiff failed to submit evidence showing
that the decedent and Khulpateea contemplated further treatment after the follow-up visit
on September 24, 2004. The decedent did not schedule another appointment with
Khulpateea until she returned to see him in 2005, and she only did so then because [her
gynecologist] referred her to him.”
Pichichero v. Falcon, 142 A D 3d 981 (2d Dept. 2016) – Plaintiff’s dermatologist
referred him to defendant Spinowitz for surgery whenever he diagnosed plaintiff with a
basal cell or squamous cell carcinoma on plaintiff’s head or neck. Defendant
“demonstrated, prima facie, that the continuous treatment doctrine was inapplicable to
the plaintiff’s claims against him because his treatment of the plaintiff was not
continuous. Spinowitz rendered a discrete course of treatment in connection with each
Mohs surgery he performed on the plaintiff,” and “there was no mutual anticipation of
further treatment between them inasmuch as he discharged the plaintiff to [his
dermatologist] each time with no instructions to return.” And plaintiff did not return
except when specifically referred by his dermatologist. However, plaintiff raised an issue
of fact, sufficient to defeat Spinowitz’s motion for summary judgment, “as to whether
there was continuity of treatment because, during certain return visits to Spinowitz
between 2000 and 2009, he complained about and sought treatment for a matter relating
to an earlier scalp surgery.”
Lohnas v. Luzi, 140 A D 3d 1717 (4th Dept. 2016) – The majority of this divided Court
holds that “although the record contains evidence of a gap in treatment that exceeds the
2 1/2 year period of limitations, we conclude that there are issues of fact whether plaintiff
and defendant ‘reasonably intended plaintiff’s uninterrupted reliance upon defendant’s
observation, directions, concern, and responsibility for overseeing plaintiff’s progress.’”
The majority concluded that application of the continuous treatment doctrine was not
precluded by defendant’s understanding that plaintiff would return only “on an as needed
basis.” For, “the determination whether continuous treatment exists ‘must focus on the
patient’ [citation omitted] and, ‘in determining whether plaintiff raised an issue of fact
concerning the applicability of the continuous treatment doctrine, her version of the facts
must be accepted as true.’” And, here, “there is support in the record for a finding that
plaintiff ‘intended uninterrupted reliance’” on defendant. For, over the course of seven
years, “plaintiff underwent two surgeries, saw no other physician regarding her shoulder,
and returned to him for further treatment.” The dissent argued that continuity was
lacking, for, during a “gap of more than 2 1/2 years,” plaintiff “had no scheduled return
appointments, sought no patient-initiated appointments, received no treatment of any kind
from defendant, and no medications were prescribed or renewed by defendant on
plaintiff’s behalf. Plaintiff testified at her examination before trial that the reason for
such a long time between these appointments was that she ‘had gotten discouraged with
defendant. It was kind of learn to live with it, you’re going to have problems, kind of
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deal with it type of thing. It was like why keep going back to him, he’s going to keep
telling me the same thing.”
Freely v. Donnenfeld, 150 A D 3d 697 (2d Dept. 2017) – Defendant doctor “testified at
his deposition that when he discussed treatment options with the plaintiff, he advised the
plaintiff that a new treatment process was available outside the United States and that he
was cautiously optimistic that, at some time in the foreseeable future, he could offer it to
the plaintiff in New York. The plaintiff, who was aware that the treatment process was
the subject of a study aimed at obtaining FDA approval, testified at his deposition that he
was waiting for the new treatment process to become available. After being told, in
November 2008, that his only options were to wait for the new treatment or seek
treatment outside the country, the plaintiff returned to the defendants for treatment of the
same condition on March 9, 2011, and, in fact, received treatment for the same condition
from the defendants continuing until December 2012. Under these circumstances, there
are questions of fact as to whether further treatment was explicitly anticipated by both the
defendants and the plaintiff after 2008, and whether, under the particular circumstances
of this case, the March 9, 2011 visit constituted a timely return visit.”
Caesar v. Brookman, 51 Misc 3d 743 (Sup.Ct. N.Y.Co. 2016)(Schlesinger, J.) – On
September 28, 2012, plaintiff presented to defendant physician with complaints “of a
possible foreign body in the bottom of his right heel.” Defendant removed a small shard
of glass, dressed the wound, and “instructed plaintiff to apply an antibiotic cream and
change the dressing every day.” On September 30, plaintiff sent an e-mail to defendant,
along with a photograph of the foot, detailing the condition of his foot, and relating that
he was also suffering from a sore throat, aching joints, numbness and weakness.
Defendant responded to the e-mail that same day, saying that the wound “looks good,”
that it was unlikely that the other symptoms were related, that plaintiff should take
antibiotics, and “let me know how you feel tomorrow.” On October 2, plaintiff was
admitted to the hospital as a result of a MRSA infection in the right heel. This
malpractice action was commenced on March 30, 2015. Thus, if the statute began to run
on September 28, 2012, it is time-barred, but if it began to run on September 30, it is
timely. The Court concludes that the continuous treatment doctrine postponed the
running of the statute of limitations until September 30. “The nature of the emails shows
that plaintiff considered defendant to be his doctor treating his foot injury even after his
September 28 visit. Defendant’s September 30 email to plaintiff further evidence such a
relationship, specifically defendant’s advice to ‘take the antibiotics just in case’ the fever
and chills are from the wound, and his request that plaintiff ‘Let me know how you feel
tomorrow.’” This was “‘a continuing effort by Dr. Brookman to treat plaintiff’s
particular right heel condition.’”
Matthews v. Barrau, 150 A D 3d 836 (2d Dept. 2017) – “With respect to failure-to-
diagnose cases, a physician ‘cannot escape liability under the continuous treatment
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doctrine merely because of a failure to make a correct diagnosis as to the underlying
condition, where he or she treated the patient continuously over the relevant time period
for symptoms that are ultimately traced to that condition.’” Moreover, “the continuous
treatment doctrine may be applied to a physician who has left a medical practice by
imputing to him or her the continued treatment provided by subsequent treating
physicians in that practice.”
Clifford v. Kates, N.Y.L.J., 1202784909482 (Sup.Ct. Monroe Co. 2017)(Doyle, J.) –
“Courts have held that when a plaintiff informs the defendant doctor that she is intending
on initiating legal process, the continuous treatment toll ends.”
PRODUCT LIABILITY
Via v. New York City Housing Authority, 137 A D 3d 465 (1st Dept. 2016) – “Plaintiff’s
bedbug claims are not governed by CPLR 214-c(3) because her injuries were not caused
by a ‘substance.’”
All Craft Fabricators, Inc. v. Syska Hennessy Group, Inc., 144 A D 3d 435 (1st Dept.
2016) – “Plaintiffs allege that they were harmed by defendant’s failure to advise them
that there was asbestos in wood panels and doors delivered to their facility for
refurbishment.” The Court rejects “defendant’s position that the date of injury was in
January 2012 when the asbestos-laden doors and panels were delivered to the facility.
Until plaintiffs’ personnel actually unsealed the wooden crates that the doors and panels
were encased in and cut into the material, any contamination of plaintiff’s facility had not
yet occurred.” But the Court also rejects plaintiffs’ argument “that the date of injury was,
at the earliest, May 29, 2012, exactly three years before they commenced the action,
when they first noticed what they believed to be asbestos.” For, “‘the damage that
plaintiffs are seeking to “undo” is not the fact that they discovered asbestos, but the fact
of its incorporation in their buildings.’” And, the discovery rule of CPLR 214-c “does
not avail plaintiffs. As they claim no additional damage to their facility since the
asbestos was introduced, it cannot be said that the injury they sustained resulted from the
latent effects of exposure to asbestos.”
Vasilatos v. Dzamba, 148 A D 3d 1275 (3d Dept. 2017) – “The key dispute between the
parties is whether the claimed injuries arising out of exposure to lead paint are patent, in
which the three-year limitations applies, or latent, within the embrace of CPLR 214-c(2).
We have previously recognized that ‘lead poisoning itself is an actionable injury’
[citation omitted], and, to that extent, a patent injury for purposes of the statute of
limitations. That said, we reach a different conclusion with respect to the claimed
cognitive impairments allegedly caused by the lead poisoning, which we agree are latent,
while fully recognizing that such deficits may evolve over a short period of time [citation
omitted]. Consequently, we conclude that CPLR 214-c(2) applies to plaintiff’s cognitive
impairment claim.”
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Wells v. 3M Company, 137 A D 3d 1556 (3d Dept. 2016) – For purposes of CPLR 214-c,
“‘discovery of the injury’ occurs ‘when the injured party discovers the primary condition
on which the claim is based’ [citations omitted], which ‘necessarily contemplates
something less than full awareness that one has been damaged as a result of exposure to a
particular toxic substance’ [citation omitted]. ‘A plaintiff must be considered to have
discovered such an injury when he or she is actually diagnosed as suffering from a
particular disease, even though unaware of its cause’ [citations omitted]. Finally,
‘separate and distinct diseases may constitute different injuries, each with its own time of
discovery.’”
Matter of New York City Asbestos Litigation (Feinberg v. Colgate-Palmolive Co.),
53 Misc 3d 579 (Sup.Ct. N.Y.Co. 2016)(Moulton, J.) – Determining “the date of
discovery of the injury” for purposes of CPLR 214-c can often be a knotty problem. In
the seminal case, Matter of New York County DES Litigation (Wetherill v. Eli Lilly &
Company), 89 N Y 2d 506 (1997), the Court of Appeals, having determined that the
proper test was the discovery of symptoms of the injury, rather than discovery that the
injury was the result of a tort, had no difficulty deciding the case before it. Plaintiff’s
claim was time-barred even if measured from when she was diagnosed with a T-shaped
uterus [a typical symptom of in utero DES exposure], and learned from her sister that she
was likely a DES daughter, rather than her earlier “symptoms” of dysplasia, miscarriages,
and an incompetent cervix. However, looking to potential future cases, the Court, in the
course of its Wetherill decision, stated that: “we recognize that there may be situations in
which the claimant may experience early symptoms that are too isolated or
inconsequential to trigger the running of the Statute of Limitations under CPLR 214-
c(2).” As the Court here in Feinberg aptly quotes, “‘Ay, there’s the rub.’” When do
“isolated or inconsequential” symptoms rise to “discovery of the injury”? How – since
this is a statute of limitations issue, and precision is critical – does a Court determine the
date of “discovery”? In Wetherill, the Court of Appeals did not “elaborate on the factors
which should be considered in determining” those questions. Synthesizing the relevant
case law, the Court here concludes that “the First Department looks to whether a plaintiff
sought regular medical treatment; whether a plaintiff is limited in physical activity or
misses time from work; and whether a plaintiff files a workers’ compensation claim.”
Similarly, “the Third Department and Fourth Department look to these factors,” while
“Second Department cases do not discuss the factors which are helpful in deciding where
the threshold lies.” Here, weighing the evidence adduced by both sides on defendant’s
motion for summary judgment, the Court concludes that “the issue of whether Mrs.
Feinberg’s symptoms were early symptoms which were too isolated or inconsequential
for her to have discovered the injury before February 28, 2008 [three years before this
action was commenced] must be decided by a jury. The evidence does not permit me to
decide the issue as a matter of law. While Mrs. Feinberg experienced many of the
symptoms that one would experience with mesothelioma, those symptoms may have been
attributable to other causes (like pneumonia or cardiomegaly). Therefore, there is an
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issue of fact as to whether the pain and effusions that she experienced prior to February
28, 2008 were in fact symptoms of malignant mesothelioma or, whether the symptoms
related to another illness. Additionally, even assuming that the symptoms were
attributable to mesothelioma, there is an issue of fact as to whether they were early
symptoms which were too isolated or inconsequential to trigger the statute of limitations.
While the CT scans reflected pleural thickening and effusion, the reports describe the
conditions a minimal, small, tiny, mild and/or without significant change.” Moreover,
“prior to February 28, 2008, there is no evidence that Mrs. Feinberg’s physical activity
was limited (in fact the evidence is to the contrary), no evidence that she missed time
from work through 2007 or filed a workers’ compensation claim, and there is no evidence
that she ceased working in 2008 (when she was 76) because of her health.” Finally, and
“most importantly, Dr. Marcoux testified that mesothelioma has a premalignant to a
malignant process, and that it is difficult to pinpoint when the malignant transformation
occurs.”
Malone v. Court West Developers, Inc., 139 A D 3d 1154 (3d Dept. 2016) – Plaintiff was
exposed to mold at his job site between January 2002 and June 2003. He sued for the
injuries he suffered in September 2005. “In order to establish its entitlement to summary
judgment dismissing the complaint on the basis of statute of limitations, defendant was
required to show, at a minimum, that plaintiff’s alleged exposure to a toxic substance did
not occur within three years of the commencement of the action [citation omitted]. If
defendant exposed or continued to expose plaintiff to a toxic substance within three years
of the commencement of the action, plaintiff could not have discovered any resulting
injuries from such exposure at a time that would be barred by CPLR 214-c(2). Given that
a plaintiff cannot discover the injurious effects of exposure to a toxic substance prior to
that exposure occurring, and considering defendant’s concession that plaintiff continued
to be exposed to the mold at a time less than three years prior to the commencement of
the action, defendant is not entitled to summary judgment dismissing the complaint on
statute of limitations grounds. Turning to the allegedly injurious exposure taking place
more than three years prior to the commencement of the action, we find that defendant
did not prove as a matter of law that plaintiff should have discovered his allergy and
asthma conditions at a time that is barred by CPLR 214-c(2). Although plaintiff
exhibited some symptoms, including skin and eye irritation and tightness in the throat, in
the spring and summer of 2002, plaintiff also explained that such symptoms ceased when
he would leave the building at the end of his shifts. Further, plaintiff averred that he did
not seek medical treatment for these symptoms, miss work as a result of the symptoms or
file a workers’ compensation claim until late October 2002. Viewing the evidence in the
light most favorable to plaintiff, the symptoms that plaintiff exhibited more than three
years prior to the commencement of the action were too intermittent and inconsequential
to trigger the running of the statute of limitations pursuant to CPLR 214-c(2).”
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Gordon v. ROL Realty Company, 150 A D 3d 466 (1st Dept. 2017) – “The motion court
erred in dismissing plaintiff’s claim for personal injury due to toxic mold. Plaintiff
sufficiently pleaded that, after August 2010 (within three years of commencing this
action), he suffered from ‘new’ symptoms and injuries, including, among other things,
eczema and significant fungal growth on his tongue and throat. Accordingly, defendants
failed to make a prima facie showing that this claim is time-barred [citation omitted].
While there are factual questions as to whether the sinus infections and related symptoms
suffered prior to August 2010 were ‘qualitatively different’ from plaintiff’s injuries after
August 2010 [citation omitted], at this procedural juncture it would be improper to
dismiss the claim.”
FRAUD
NYAHSA Services, Inc. Self-Insurance Trust v. Recco Home Care Services, Inc., 141
A D 3d 792 (3d Dept. 2016) – The Court here emphasizes that the statute of limitations
for fraud is the greater of 6 years from the fraud or 2 years from reasonably diligent
discovery. “Defendant alleges that Cool committed fraud and that all third-party
defendants committed fraudulent inducement between 1997 and 2009 by, among other
things, failing to disclose the true financial condition of the trust and misrepresenting
Cool’s ability to administer the trust. Defendant concedes in its brief that it discovered
the alleged fraud upon receipt of the first disputed adjustment on March 5, 2010, but it
did not commence this third-party action until July 2013. As defendant did not file the
third-party action within two years of discovery, the causes of action based in fraud are
time-barred under the discovery exception [citations omitted]. However, because the
greater of the two statutes of limitations applies, Supreme Court properly concluded that
certain of defendant’s fraud and fraudulent inducement claims are timely, but only those
that accrued within six years from the commencement of its third-party action.”
Aozora Bank, Ltd. v. Deutsche Bank Securities Inc., 137 A D 3d 685 (1st Dept. 2016) –
Plaintiff invested in “complex financial products backed by mortgages, including
collateralized debt obligations (CDO’s),” structured and sold by defendant. Plaintiff’s
fraud claims are untimely, unless the two year “discovery” rule of CPLR 213(8) applies.
The Court holds that the two year period expired before this action was commenced.
“‘Where the circumstances are such as to suggest to a person of ordinary intelligence the
probability that he has been defrauded, a duty of inquiry arises, and if he omits that
inquiry when it would have developed the truth, and shuts his eyes to the facts which call
for investigation, knowledge of the fraud will be imputed to him.’” Here, “one of the
most significant sources of public information putting plaintiff on notice of its fraud
claims is the Senate Report and its associated emails, which actually form the centerpiece
of plaintiff’s complaint. In fact, the Senate Report contains a 45-page section on
Deutsche Bank entitled ‘Running the CDO Machine: Case Study of Deutsche Bank.”
Taken with all the other information available in the public domain, the Senate Report is
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more than sufficient to have placed Aozora on inquiry notice of possible fraud by April
2011 at the latest.”
Norddeutsche Landesbank Girozentrale v. Tilton, 149 A D 3d 152 (1st Dept. 2017) –
This narrowly-divided Court affirms the denial of defendants’ motion to dismiss
plaintiffs’ fraudulent misrepresentation claim as barred by the statute of limitations,
rejecting defendants’ argument that, as a matter of law, plaintiffs were on sufficient
notice to commence the two year discovery period under CPLR 213(8). “‘The inquiry as
to whether a plaintiff could, with reasonable diligence, have discovered the fraud turns on
whether the plaintiff was possessed of knowledge of facts from which the fraud could be
reasonably inferred. Generally, knowledge of the fraudulent act is required and mere
suspicion will not constitute a sufficient substitute. Where it does not conclusively
appear that a plaintiff had knowledge of facts from which the fraud could reasonably be
inferred, a complaint should not be dismissed on motion, and the question should be left
to the trier of the facts’ [citation omitted]. At the same time, ‘it is well settled that if a
party omits an inquiry when it would have developed the truth, and shuts his eyes to the
facts which call for investigation, knowledge of the fraud will be imputed to him’
[citation omitted]. Loss alone, however, cannot give rise to such a duty to inquire.”
Here, “we make no conclusive finding that plaintiffs were blind to the scheme they
accuse defendants of perpetrating. We merely determine, at this early stage of the
litigation, that the evidence presented by defendants can be interpreted in a myriad of
ways and does not facially clash with plaintiffs’ position that, even having some
knowledge that the Funds had an equity component to them, they could not have known
before the SEC proceeding that extent to which defendants used plaintiffs’ investment to
acquire and control to Portfolio Companies, or otherwise had an obligation, based on the
evidence, to investigate. Thus, Supreme Court properly declined to dismiss the
fraudulent misrepresentation complaint on statute of limitations grounds, and the viability
of the defense must await a fully developed factual record, at which point it can be either
decided as a matter of law on a motion for summary judgment, or at a trial.” The
dissenters argued that “viewing the wealth of information disclosed and available to
plaintiffs, a person of ordinary intelligence would have been aware that the Funds were
not being operated as typical CDOs and that they were acquiring substantial equity
interests in the portfolio companies, not incidental interests in limited circumstances. As
the wrongful acquisition of equity interests is the basis of plaintiffs’ fraud claim, a duty of
inquiry on this topic arose more than two years before the commencement of this action,
which plaintiffs did not satisfy.”
Cannariato v. Cannariato, 136 A D 3d 627 (2d Dept. 2016) – “Where a plaintiff relies
upon the two-year discovery exception to the six-year limitations period, ‘the burden of
establishing that the fraud could not have been discovered prior to the two-year period
before the commencement of the action rests on the plaintiff who seeks the benefit of the
exception’ [citations omitted]. Although the question of when a plaintiff could ‘with
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reasonable diligence have discovered the alleged fraud’ is ordinarily ‘a mixed question of
law and fact,’ summary dismissal is appropriate ‘where it conclusively appears that the
plaintiff has knowledge of facts which should have caused him or her to inquire and
discover the alleged fraud’ [citations omitted]. Thus, although ‘mere suspicion’ will not
substitute for knowledge of the fraudulent act [citation omitted], a plaintiff may not ‘shut
his or her eyes to facts which call for investigation.’”
Frattarola v. Swartz, N.Y.L.J., 1202773784452 (Sup.Ct. Westchester Co. 2016)
(Ruderman, J.) – “A fraud cause of action must be commenced within six years of the
fraud, or within two years from the time the plaintiff discovered the fraud, or could with
reasonable diligence have discovered it, whichever is later [citation omitted]. ‘The test as
to when a plaintiff should have discovered an alleged fraud is an objective one’ [citation
omitted]. A plaintiff will be held to have discovered the fraud when it is established that
plaintiff was possessed of knowledge of facts from which the fraud could be reasonably
inferred [citations omitted]. Here, dismissal is not warranted in view of the fact that the
plaintiff was a minor, or had just turned 18, when the operative notices were given to him
concerning the commencement of the structured settlement payments directly to him.
Given plaintiff’s alleged reliance on his aunt [a defendant in this action] for financial
advice and guidance, and plaintiff’s sworn statement that it would not have been unusual
to sign documents presented to him by his aunt, issues of fact exist as to whether he had
sufficient notice of the events so as to have discovered the fraud earlier than he did
[citation omitted]. Moreover, given ‘Aunt Jane’s’ alleged ‘cover story’ that she was
paying for plaintiff’s tuition with her own funds, issues of fact exist as to whether the fact
that plaintiff received account statements would have lead him to discover the fraud.”
CIFG Assurance North America, Inc. v. J.P. Morgan Securities LLC, 146 A D 3d 60 (1st
Dept. 2016) – “The statute of limitations for misrepresentation is six years, rendering the
claim timely [citations omitted]. Although Colon v. Banco Popular N. Am. (59 A D 3d
300, 300-301 [1st Dept. 2009]) applied a three-year statute of limitations to a
misrepresentation cause of action, that case recognized that if a misrepresentation claim
alleges fraud, as CIFG’s claim here does, a six-year period applies.”
Gerber v. Empire Scale, 147 A D 3d 1434 (4th Dept. 2017) – “‘It is axiomatic that a
cause of action for fraud does not arise where the fraud alleged relates to a breach of
contract’ [citations omitted], and ‘a fraud claim is not sufficiently stated where it alleges
that a defendant did not intend to perform a contract with a plaintiff when he made it’
[citation omitted]. Here, plaintiff’s cause of action for fraud is based upon allegations
that defendant made false representations that it was interested in purchasing plaintiff’s
business in order to gain plaintiff’s confidential information. Thus, that cause of action
fails because ‘the supporting allegations do not concern representations which are
collateral or extraneous to the terms of the parties’ agreement.’”
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Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., N.Y.L.J., 1202781793571 (Sup.Ct. N.Y.Co.
2017)(Singh, J.) – “It is well-settled that ‘a claim for fraudulent inducement of contract
can be predicated upon an insincere promise of future performance only where the
alleged false promise is collateral to the contract the parties executed; if the promise
concerned the performance of the contract itself, the fraud claim is subject to dismissal as
duplicative of the claim for breach of contract’ [citation omitted]. The First Department
has held ‘collateral’ means not ‘directly related to a specific provision of the contract’”
[emphasis by the Court]. The case law from the Court of Appeals “only permit a fraud
claim where there is a misrepresentation of present material fact that is collateral to the
contract.”
BREACH OF CONTRACT
Kyer v. Ravena-Coeymans-Selkirk Central School District, 144 A D 3d 1260 (3d Dept.
2016) – “A breach of contract cause of action accrues and begins to run when the plaintiff
possesses a legal right to demand payment [citations omitted], and not when a plaintiff
actually bills a defendant.”
Elia v. Perla, 150 A D 3d 962 (2d Dept. 2017) – “‘Where, as here, the claim is for
payment of a sum of money allegedly owed pursuant to a contract, the cause of action
accrues when the plaintiff ‘possesses a legal right to demand payment’ [citations
omitted]. Since a lender who has made a loan which is repayable on demand has the
immediate legal right to demand payment upon the issuance of the loan [citations
omitted], courts have consistently held that ‘a cause of action to recover on a note which
is payable on demand accrues at the time of its execution’ [citations omitted]. Notably,
‘the statute of limitations in such cases is triggered when the party that was owed money
had the right to demand payment, not when it actually made the demand.’”
Bank of America, N.A. v. Fachlaev, N.Y.L.J., 1202754690793 (Sup.Ct. Queens Co. 2016)
(Pineda-Kirwan, J.) – “With respect to a mortgage payable in installments, separate
causes of action accrue for each installment that is not paid and the statute of limitations
begins to run on the date each installment becomes due [citations omitted]. The default
date was only the start of the statute of limitations as to the installment payment that
became due on that date. However, once a mortgage debt is accelerated the entire
amount is due and the statute of limitations begins to run on the entire debt [citations
omitted]. Where, as here, the acceleration of the debt is made optional to the holder of
the note and mortgage, some affirmative act must be taken in order to evidence the
holder’s election to accelerate the debt. Thus, the statute of limitations for the entire debt
did not begin to run until the plaintiff elected to accelerate under the acceleration clause
of the mortgage. It is undisputed that the plaintiff elected to accelerate the loan in the
complaint of the first action, which was filed on June 16, 2009. This action was not
commenced until July 16, 2015, which is more than six years after the acceleration in the
complaint and, thus, without any further action by the lender this complaint would be
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barred by the statute of limitations. A lender, however, may revoke its election to
accelerate all sums due under an optional acceleration clause in a mortgage provided that
there is no change in borrower’s position in reliance thereon. This must be done by an
affirmative act occurring within the statute of limitations period [citation omitted]. Here,
the plaintiff lender has submitted evidence that it sent a de-acceleration letter to the
borrower on April 21, 2015. This letter is sufficient on a motion to dismiss to constitute
proof raising an issue of fact as to an affirmative act of revocation.”
Bank of New York Mellon v. Smith, 54 Misc 3d 311 (Sup.Ct. Rensselaer Co. 2016)
(Zwack, J.) – “‘Although a lender may revoke its election to accelerate all sums due
under an optional acceleration clause provided there is no change in the borrower’s
position in reliance thereon’ [citation omitted], the revocation should be clear,
unequivocal, and give actual notice to the borrower of the lender's election to revoke in
sum, akin to the manner plaintiff gave notice to exercise the option to accelerate [citation
omitted] particularly where, as here, the ‘prior foreclosure action was never withdrawn by
the lender, but rather, dismissed sua sponte by the court and rather than seeking to revoke
its election to accelerate, the plaintiff made a failed attempt to revive the prior foreclosure
action.’” Here, “there is simply no merit to plaintiff’s claim that a failed 2009 trial
modification plan acted to revoke the 2006 acceleration of the subject debt. ‘The mere
acceptance of a partial payment of the accelerated debt is not an affirmative act revoking
the acceleration and thereby halting the running of the statute of limitations.’”
Goldman Sachs Mortgage Company v. Mares, 135 A D 3d 1121 (3d Dept. 2016) – “The
June 2007 default letter sent to defendants stated, in relevant part, that ‘failure to pay the
total amount past due, plus all other installments and other amounts becoming due
hereafter on or before the 30th day after the date of this letter may result in acceleration
of the sums secured by the mortgage’ [emphasis by the Court]. While the letter does
demand payment for all past due amounts, if falls far short of providing clear and
unequivocal notice to defendants that the entire mortgage debt was being accelerated
[citations omitted]. Indeed, with respect to acceleration, it is nothing more than a ‘letter
discussing a possible future event,’ which ‘does not constitute an exercise of the
mortgage’s optional acceleration clause’ [citation omitted]. Accordingly, we agree with
Supreme Court’s determination that the June 2007 letter did not commence the running
of the statute of limitations and, thus, plaintiff’s March 2014 foreclosure action is not
time-barred.”
Deutsche Bank National Trust Company v. Unknown Heirs of the Estate of Serge Souto,
N.Y.L.J., 1202763458396 (Sup.Ct. N.Y.Co. 2016)(Bluth, J.), aff’d sub nom, Deutsche
Bank National Trust Company v. Royal Blue Realty Holdings, Inc., 148 A D 3d 529 (1st
Dept. 2017) – Plaintiff claims that Souto breached the terms of a mortgage agreement by
failing to pay a June 1, 2008 installment, and subsequent installments. Plaintiff sent a
notice of default on January 15, 2009, and commenced a foreclosure action on March 17,
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2009, which was thereafter discontinued without prejudice. This foreclosure action was
commenced on March 16, 2015. Supreme Court holds that the six-year limitations period
for such an action “begins to run when the lender first has the right to foreclosure on the
mortgage, that is, the day after the maturity date of the underlying debt unless the
mortgage debt is accelerated in which case the entire amount is due and the statute of
limitations begins to run on the entire mortgage debt.” This case turns on whether the
January 15, 2009 default letter constituted such an acceleration. It stated: “If American
Home Mortgage Servicing, Inc. is not in possession of the amount that is necessary to
cure the default within 30 days of the date of this notice, American Home Mortgage
Serving, Inc. will accelerate the Loan balance and proceed with foreclosure” [emphasis
added]. “This,” says Supreme Court, “is not a wishy-washy notice.” There is “no
indication that there will be any other notices between the letter in the borrower’s hands
and the commencement of the foreclosure case. The thirty days is the last chance to
cure.” Thus, “this court finds that the January 15, 2009 notice was sufficient and the
statute of limitations began to run on the 31st day after the notice if payment was not
received. Therefore, the loan accelerated and the statute started to run on the 31st day,
February 15, 2009.” The Appellate Division has affirmed. “The motion court properly
determined that the actions are time-barred since they were commenced more than six
years from the date that all of the debt on the mortgages was accelerated [citation
omitted]. The letters from plaintiff’s predecessor-in-interest provided clear and
unequivocal notice that it ‘will’ accelerate the load balance and proceed with a
foreclosure sale, unless the borrower cured his defaults within 30 days of the letter.
When the borrower did not cure his defaults within 30 days, all sums became
immediately due and payable and plaintiff had the right to foreclose on the mortgages
pursuant to the letters. At that point, the statute of limitations began to run on the entire
mortgage debt.”
Puzzuoli v. JPMorgan Chase Bank, N.A., 55 Misc 3d 417 (Sup.Ct. Dutchess Co. 2017)
(Forman, J.) – “A mortgage is accelerated when the lender elects to exercise its right of
acceleration, not when the borrower receives notice of that election [citation omitted].
For instance, when a verified complaint contains an acceleration clause, the ‘unequivocal
act’ of filing that document in the courthouse constitutes a valid election of the right to
accelerate.” The Court rejects the lender’s argument here that “‘it is the filing and
service of the Complaint which accelerates the loan’” [emphasis by the Court]. For, “‘to
elect is to choose. The fact of election should not be confused with the notice or
manifestation of such election.’” The Court thus concludes that the acceleration occurred
when the complaint was verified, rather than the later dates when it was filed and served.
Nationstar Mortgage, LLC v. MacPherson, 56 Misc 3d 339 (Sup.Ct. Suffolk Co. 2017
(Whelan, J.) – The “notice to the borrower to accelerate the entire amount of the
mortgage debt must be ‘clear and unequivocal.’” Here, “the parties did not choose to use
the statutory form of acceleration set forth in Real Property Law §258, schedule M or N.”
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Instead, “the lender bargained away its right to demand payment in full simply upon a
default in an installment payment or the commencement of an action and has afforded the
borrower greater protections that that set forth in the statutory form of an acceleration
clause.” For, “under the express wording of the mortgage document, plaintiff has no
right to reject the borrower’s payment of arrears in order to reinstate the mortgage, until a
judgment is entered.” Thus, “under the contract terms at issue, plaintiff does not have a
legal right to require payment in full with the simple filing of a foreclosure action. The
borrower could pay the unpaid installments and the payment of same would destroy the
option to accelerate.” It is “a judgment that triggers the acceleration in full of the entire
mortgage debt.” Thus, the commencement of a prior foreclosure action did not amount to
an acceleration commencing the statute of limitations on the entire debt, and plaintiff may
have recovery of “those unpaid installments which accrued after September 17, 2008, that
is, the six-year period immediately preceding the commencement of this action.”
Lebedev v. Blavatnik, 144 A D 3d 24 (1st Dept. 2016) – When defendant had a “recurring
obligation to pay plaintiff his share of the profits generated by the joint venture,” the
failure to pay was a continuing wrong, and each failure generated its own statute of
limitations.
Affordable Housing Associates, Inc. v. Town of Brookhaven, 150 A D 3d 800 (2d Dept.
2017) – “The continuing wrong doctrine ‘is usually employed where there is a series of
continuing wrongs and serves to toll the running of a period of limitations to the date of
the commission of the last wrongful act’ [citation omitted]. The doctrine ‘may only be
predicated on continuing unlawful acts and not on the continuing effects of earlier
unlawful conduct [citations omitted]. ‘In contract actions, the doctrine is applied to
extend the statute of limitations when the contract imposes a continuing duty on the
breaching party’ [citations omitted]. Here, the alleged wrong was the Town entering into
contracts with Mid-Atlantic and, contrary to the court’s finding, there was no breach of a
recurring duty imposed on the Town under the Agreement.”
Henry v. Bank of America, 147 A D 3d 599 (1st Dept. 2017) – “The continuous wrong
doctrine is the exception to the general rule that the statute of limitations ‘runs from the
time of the breach [of contract] though no damage occurs until later’ [citation omitted].
The doctrine ‘is usually employed where there is a series of continuing wrongs and serves
to toll the running of a period of limitations to the date of the commission of the last
wrongful act’ [citation omitted]. Where applicable, the doctrine will save all claims for
recovery of damages but only to the extent of wrongs committed within the applicable
statute of limitations [citations omitted]. The doctrine ‘may only be predicated on
continuing unlawful acts and not on the continuing effects of earlier unlawful conduct.
The distinction is between a single wrong that has continuing effects and a series of
independent, distinct wrongs’ [citations omitted]. The doctrine is inapplicable where
there is one tortious act complained of since the cause of action accrues in those cases at
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the time that the wrongful act first injured plaintiff and it does not change as a result of
‘continuing consequential damages’ [citations omitted]. In contract actions, the doctrine
is applied to extend the statute of limitations when the contract imposes a continuing duty
on the breaching party [citations omitted]. Thus, where a plaintiff asserts a single breach
– with damages increasing as the breach continued – the continuing wrong theory does
not apply.”
Deutsche Bank National Trust Company v. Flagstar Capital Markets Corporation,
143 A D 3d 15 (1st Dept. 2016) – Last year’s “Update” reported on ACE Securities
Corporation v. DB Structured Products, Inc., 25 N Y 3d 581 (2015), an action for breach
of a contractual obligation “to repurchase certain non-conforming loans that were pooled,
deposited into a trust, securitized, and sold to investors.” The parties’ agreement
contained many warranties and representations by defendant, and provided that defendant
would cure any breach of a representation within 60 days of notice, or repurchase the
affected loan. Supreme Court rejected defendant’s argument that the statute of
limitations on plaintiff’s claim ran from the execution of the contract, as the
representations were false as of that moment. Instead, Supreme Court held that defendant
only breached the contract when it failed to repurchase in accordance with its obligation.
The Appellate Division reversed, holding that “the claims accrued on the closing date of
the [contract], on March 28, 2006, when any breach of the representations and warranties
contained therein occurred.” The Court of Appeals affirmed the Appellate Division.
“Where, as in this case, representations and warranties concern the characteristics of their
subject as of the date they are made, they are breached, if at all, on that date; DBSP’s
refusal to repurchase the allegedly defective mortgages did not give rise to a separate
cause of action.” For, defendant “represented and warranted certain facts about the
loans’ characteristics as of March 28, 2006, when the MLPA and PSA were executed,
and expressly stated that those representations and warranties did not survive the closing
date. DBSP’s cure or repurchase obligation was the Trust’s remedy for a breach of those
representations and warranties, not a promise of the loans’ future performance”
[emphasis by the Court]. Here, in Deutsche Bank, the facts are similar to those in ACE
Securities Corporation, except that the agreement between the parties further “included a
provision that purported to delay the accrual of a breach of contract claim until three
conditions were met. The accrual provision specified that any cause of action against
defendant relating to a breach of representations and warranties ‘shall accrue as to any
Mortgage Loan upon (i) discovery of such breach by the Purchaser or notice thereof by
the Seller to the Purchaser, (ii) failure by the Seller to cure, repurchase or substitute and
(iii) demand upon the Seller by the Purchaser for compliance with this Agreement.’” The
Court finds this provision unenforceable. “‘Statutes of limitation not only save litigants
from defending stale claims, but also “express a societal interest or public policy of
giving repose to human affairs”’ [citations omitted]. ‘Because of the combined private
and public interests involved, individual parties are not entirely free to waive or modify
the statutory defense’ [citation omitted]. Although parties may agree after a cause of
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action has accrued to extend the statute of limitations, an ‘agreement to extend the Statute
of Limitations that is made at the inception of liability will be unenforceable because a
party cannot “in advance, make a valid promise that a statute founded in public policy
shall be inoperative.”’” Moreover, enforcing this provision “would contravene the
principle that ‘New York does not apply the “discovery” rule to statutes of limitations in
contract actions [citation omitted; emphasis by the Court]. The accrual provision’s set of
conditions creates an imprecisely ascertainable accrual date – possibly occurring decades
in the future, since some of the loans extend for 30 years – which the Court of Appeals
has ‘repeatedly rejected in favor of a bright line approach.’” Finally, “the accrual
provision’s requirement that plaintiff make a demand on defendant for performance of
the agreement does not constitute a substantive condition precedent that could delay
accrual of the breach of contract action. As in ACE, plaintiff overlooks the significant
distinction between substantive and procedural demand requirements [citation omitted].
A demand ‘that is a condition to a party’s performance’ is a substantive condition
precedent, which can delay accrual of a claim, whereas ‘a demand that seeks a remedy
for a preexisting wrong’ is a procedural prerequisite to suit, which cannot” [emphasis by
the Court].
The Bank of N.Y. Mellon v. WMC Mortgage, LLC, 151 A D 3d 72 (1st Dept. 2017) – Last
year’s “Update” reported on the Supreme Court’s decision in this action [50 Misc 3d 229
(Sup.Ct. N.Y.Co. 2015)]. Supreme Court held that the date of accrual of the cause of
action provided for in ACE Securities Corporation v. DB Structured Products, Inc.,
discussed directly above, applies even in the face of a different accrual date contained in
the parties’ agreement. “There is much intuitive appeal to plaintiff’s position. Plaintiff is
basically arguing that the court should respect sophisticated parties’ express contractual
decisions with respect to accrual of their claims with the same level of deference courts
ordinarily provide to all other unambiguous contractual provisions.” However,
“intuition, as we know, does not always carry the day. The Court of Appeals has
reaffirmed this state’s longstanding public policy of providing for statute of limitations
rules that take precedence over competing contractual and equitable considerations.” The
Appellate Division, re-affirming its decision in Deutsche Bank National Trust Company
v. Flagstar Capital Markets Corporation, discussed directly above, has, as here relevant,
affirmed. “Statutes of limitations ‘express a societal interest or public policy “of giving
repose to human affairs”’ [citations omitted]. Parties may therefore agree to shorten the
time period within which to commence an action, but are not entirely free to waive or
modify the statutory defense. Thus, agreements made at the inception of liability to
waive or extent the statute of limitations are ‘unenforceable because a party cannot “in
advance, make a valid promise that a statute founded in public policy shall be
inoperative.”’”
Yarbro v. Wells Fargo Bank, N.A., 140 A D 3d 668 (1st Dept. 2016) – “Contrary to
plaintiff’s contention, the breach of contract causes of action accrued at the time of the
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breach, not on the date of discovery of the breach [citation omitted], and the six-year
statute of limitations applicable thereto had run before plaintiffs commenced this action.
The negligence claims, which allege a failure to properly record certain mortgages, are
governed by CPLR 214(4), a three-year statute of limitations [citations omitted].
‘Accrual time is measured from the day the actionable injury occurred, even though the
aggrieved party was then ignorant of the wrong or injury.’”
Nomura Asset Acceptance Corporation Alternative Loan Trust v. Nomura Credit &
Capital, Inc., 139 A D 3d 519 (1st Dept. 2016) – “The motion court erred to the extent it
found that the claims for breach of the loan representations accrued on May 1, 2006, the
date of the mortgage loan purchase agreements (MLPA) containing those representations.
While such claims typically accrue at the time the contract containing the representations
is executed [citation omitted], as the MLPA here specifically provides that defendant
made its loan representations ‘as of the Closing Date,’ which was May 25, 2006, the
claims accrued on that date and not earlier.”
Hagman v. Swenson, 149 A D 3d 1 (1st Dept. 2017) – “The primary question on appeal is
whether plaintiff’s breach of contract claim is governed by the four-year statute of
limitations set forth in UCC 2-725 for breach of a sale-of-goods contract or the six-year
statute of limitations in CPLR 213 for breach of a services contract.” Here, “the issue is
raised in the context of a contract that provides for interior design services, including the
procurement of furniture and other items required for achieving the desired design.” The
Court concludes that “the transaction in this case is predominantly one for services
[citation omitted], and the sale of goods is merely incidental to the services provided.”
The contract “states that plaintiff will provide advice and design suggestions regarding
construction, cabinetry, painting and using the clients’ existing items. Plaintiff stated that
she designed most of the rooms throughout defendants’ Tuxedo Park house, and the
contract provides that she will select products and materials, show them to Ms. Swenson,
and then purchase them on her behalf. In addition, the contract provides that defendants
will be charged ‘List price,’ which plaintiff states is understood in the industry to include
both the cost of the materials as well as a percentage service fee. Moreover, the contract
acknowledges that certain ‘custom work’ will be done by ‘interior designers work
people,’ and a number of the invoices referenced such ‘custom made’ items. Finally,
plaintiff and Ms. Swenson also agreed that plaintiff could use and publish photographs of
the items to show off plaintiff’s work, which demonstrates that plaintiff’s value is
attributed to the selection of the various items and putting them together for a particular
scheme, not merely to her acting as a retailer.” Nor did it matter that the particular
unpaid invoices at issue in this action were mostly for goods purchased by plaintiff for
defendants. What matters is “the nature of the transaction.”
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WRONGFUL DEATH
Saintime v. Visiting Nurse Service of New York, N.Y.L.J., 1202771682877 (Sup.Ct. Kings
Co. 2016)(Silber, J.) – “‘As a general rule, pursuant to the provisions of EPTL 5-4.1, a
wrongful death action must be commenced within two years of the decedent’s death. In
addition to commencing the action within two years of decedent’s death, the decedent
must have had a viable cause of action against the defendant on the day he died. That is,
if the statute for personal injury had run at the time of decedent’s death, there is no cause
of action for wrongful death since the decedent himself would have been time-barred
from prosecuting an action had he lived. If the statute for personal injury had not run at
decedent’s death, but runs out prior to the timely commencement of a wrongful death
action, recovery can be for wrongful death only, and not personal injury. The limitations
period specifically provided for in wrongful death actions applies no matter what the
cause of death and no matter what the theory of liability.’”
INTENTIONAL TORTS
Kerzhner v. G4S Government Solutions, Inc., 138 A D 3d 564 (1st Dept. 2016) –
“Plaintiff alleges that, while visiting a Social Security Administration office concerning
his benefits, he was assaulted and thrown to the ground by a security guard, defendant
Eliot Ray, who was employed by defendants G4S and Wackenhut (the employer
defendants). On appeal, plaintiff does not challenge the dismissal of his intentional tort
and vicarious liability claims as barred by the one-year statute of limitations, but asserts
that he adequately pleaded claims sounding in negligence. Plaintiff cannot avoid the
statute of limitations by reframing his intentional tort claims as a claim based on breach
of the duty to keep the premises safe [citation omitted], especially in this case, in which
the employer defendants did not own or lease the premises. The motion court also
properly dismissed the negligent infliction of emotional distress claim, since it does not
differ from the intentional emotional distress claim, and did not adequately allege
extreme and outrageous conduct.”
Walker v. Lorch, 136 A D 3d 805 (2d Dept. 2016) – CPLR 215(8)(a) provides that
“whenever it is shown that a criminal action against the same defendant has been
commenced with respect to the event or occurrence from which a claim governed by this
section arises, the plaintiff shall have at least one year from the termination of the
criminal action as defined in section 1.20 of the criminal procedure law in which to
commence the civil action, notwithstanding that the time in which to commence such
action has already expired or has less than a year remaining.” Here, defendant’s deceased
was indicted in Massachusetts for a sexual assault upon plaintiff, but died before the
matter could be tried, leading to dismissal of the indictment. The Court rejects
defendant’s argument that CPLR 215(8) is applicable only to criminal charges brought in
New York. “The statute does not require that the underlying ‘criminal action’ be one that
was prosecuted in New York.” However, plaintiff’s claim for breach of fiduciary duty is
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not governed by CPLR 215, which only applies to intentional torts, and is therefore not
saved by CPLR 215(8).
Elliott v. Grant, 150 A D 3d 1080 (2d Dept. 2017) – CPLR 213-b provides that,
notwithstanding other time limitations, a “crime victim” may commence an action for
damages against the defendant “convicted of a crime which is the subject of such action”
up to 7 years from the commission of the crime. Here, defendant “established that she
was convicted of the violations of harassment and disorderly conduct in connection with
the incidents at issue. Pursuant to Penal Law §10.00(6), ‘“crime” means a misdemeanor
or a felony.’ Where the defendant was not convicted of any crime in connection with the
subject of the action, ‘CPLR 213-b, by its plain terms, does not apply’ [citation omitted].
Here, since the defendant was convicted of violations, which are not crimes, the Supreme
Court properly declined to apply the seven-year statute of limitations as provided in
CPLR 213-b.”
LIABILITY CREATED BY STATUTE
CIFG Assurance North America, Inc. v. J.P. Morgan Securities LLC, 146 A D 3d 60 (1st
Dept. 2016) – “There is no merit to defendant’s argument that CIFG’s Insurance Law
§3105 claim is time-barred under CPLR 214(2), which imposes a three-year statute of
limitations for ‘actions to recover upon a liability created or imposed by statute.’ CPLR
214(2) applies ‘only where liability would not exist but for a statute,’ and ‘does not apply
to liabilities existing at common law which have been recognized or implemented by
statute’ [citation omitted]. Insurance Law §3105 does not, by its terms, create a cause of
action, but merely codifies common-law principles [citation omitted]. Thus, CPLR
214(2) does not bar the misrepresentation claim.”
People ex rel. Schneiderman v. Credit Suisse Securities (USA) LLC, 145 A D 3d 533 (1st
Dept. 2016) – Last year’s “Update” reported on the Supreme Court decision in this action
[N.Y.L.J., 1202717344324 (Sup.Ct. N.Y.Co. 2014)]. This is an action seeking injunctive
relief and damages on a claim that defendant violated the Martin Act [General Business
Law §352 et seq.] by having “committed fraudulent and deceptive acts in connection with
the creation and sale of residential mortgage-backed securities.” Defendant claims that
the 3-year statute of limitations provided by CPLR 214(2) governs, as the action seeks to
recover on a liability created by statute. Plaintiff argues that the 6-year fraud statute of
limitations, provided by CPLR 213(8) applies. Supreme Court held that, “it is well
settled that ‘CPLR 214(2) does not automatically apply to all causes of action in which a
statutory remedy is sought, but only where liability “would not exist but for a statute”’
[citations omitted]. Where the statute codifies or implements liabilities existing at
common law, ‘the Statute of Limitations for the statutory claim is that for the common-
law cause of action.’” And, “as the Court of Appeals has made clear, where a statute
does not ‘make unlawful the alleged fraudulent practices, but only provides standing in
the Attorney-General to seek redress and additional remedies for recognized wrongs
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which pre-existed the statute,’ such a statute does ‘not create or impose new
obligations.’” Defendant argues that, here, the Martin Act claims are “substantially
different from claims cognizable at common-law,” since, under the statute, plaintiff “need
not plead two of the ‘hallmark’ elements of common-law fraud – namely, scienter and
reliance.” But “the cases do not hold that liability is imposed by statute, and that
application of CPLR 214(2) is required, whenever there is a divergence between the
elements of a common-law claim and the elements of the statutory claim.” Instead, “a
court must look to the essence of the claim, and not to the form in which it is pleaded, to
determine whether a liability was recognized by the common-law or is imposed by
statute.” Here, “the essence of plaintiff’s claims” is “that defendants made false
representations in order to induce investors to purchase their securities. These claims
thus seek to impose liability on defendants based on the classic, longstanding common-
law tort of investor fraud.” Supreme Court accordingly held that, “even in the absence of
allegations of scienter, the claims are subject to the six year statute of limitations.” A
narrowly-divided Appellate Division has affirmed. The majority holds that the statutes at
issue do not “encompass a significantly wider range of fraudulent activities than were
legally cognizable before the section’s enactment,” and that “the conduct at issue in this
action was, in fact, always subject to granting of relief under the courts’ equitable
powers.” For, the statutes “target wrongs that existed before the statutes’ enactment, as
opposed to targeting wrongs that were not legally cognizable before enactment.”
Moreover, “contrary to the dissent’s conclusion, the complaint sets forth the elements of
common-law fraud, including scienter or intent, reliance, and damages. The allegations
in the complaint describe a specific scheme whereby Credit Suisse ‘benefited itself at the
expense of investors.’ As the trial court correctly found, ‘these claims seek to impose
liability on Credit Suisse based on the classic, longstanding common-law tort of investor
fraud,’ thus invoking a six-year statute of limitations.” The dissenters argued that the
claims “as pleaded, fall within the category of claims that would not exist but for the
statutes, creating a new basis for liability, not a new remedy, and the three year statute of
limitations of CPLR 214(2) applies.” For, “none of the allegations of the complaint
accuses defendants of knowingly or recklessly misrepresenting a fact to an investor in
order to deceive that investor.” Thus, “the claim would not exist at common-law because
it makes ‘actionable conduct that does not necessarily rise to the level of fraud.’”
BREACH OF FIDUCIARY DUTY
Matter of Argondizza v. Argondizza, 137 A D 3d 670 (1st Dept. 2016) – A prior year’s
“Update” reported on DiRaimondo v. Calhoun, 131 A D 3d 1194 (2d Dept. 2015), in
which the Second Department reiterated that “‘New York law does not provide a single
statute of limitations for breach of fiduciary duty claims. Rather, the choice of the
applicable limitations period depends on the substantive remedy that the plaintiff seeks.
Where the remedy sought is purely monetary in nature, courts construe the suit as
alleging ‘injury to property’ within the meaning of CPLR 214(4), which has a three-year
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limitations period. Where, however, the relief sought is equitable in nature, the six-year
limitations period of CPLR 213(1) applies’ [citation omitted]. ‘Where an allegation of
fraud is essential to a breach of fiduciary duty claim, courts have applied a six-year
statute of limitations under CPLR 213(8)’ [citations omitted]. ‘An exception to this rule
is that “courts will not apply the fraud Statute of Limitations if the fraud allegation is only
incidental to the claim asserted; otherwise, fraud would be used as a means to litigate
stale claims”’ [citations omitted]. ‘Thus, where an allegation of fraud is not essential to
the cause of action pleaded except as an answer to an anticipated defense of Statute of
Limitations, courts look for the reality, and the essence of the action and not its mere
name.’” Here in Argondizza, the First Department concluded that, “the motion court
correctly concluded that the amended petition stated a claim for breach of fiduciary duty
that sought an equitable remedy – namely, a constructive trust and a return of decedent’s
interest in the apartment [citation omitted], and that the claim was timely under the
applicable six-year statute of limitations [citations omitted]. The statute of limitations did
not begin to run until respondent allegedly openly repudiated his fiduciary obligations by
transferring decedent’s interest in the apartment to himself.”
Cusimano v. Schnurr, 137 A D 3d 527 (1st Dept. 2016) – “‘A cause of action for breach
of fiduciary duty based on allegations of actual fraud is subject to a six-year limitations
period’ [citations omitted]. An exception to this rule exists ‘if the fraud allegation is only
incidental to the claim asserted’ [citations omitted]. Thus, ‘where an allegation of fraud
is not essential to the cause of action pleaded except as an answer to an anticipated
defense of Statute of Limitations, courts look for the reality, and the essence of the action
and not its mere name.’”
ACCRUAL AND LIMITATION PERIODS
Swain v. Brown, 135 A D 3d 629 (1st Dept. 2016) – “Under CPLR 214(3), the statutory
period of limitations for conversion and replevin claims is three years from the date of
accrual. The date of accrual depends on whether the current possessor is a good faith
purchaser or bad faith possessor. An action against a good faith purchaser accrues once
the true owner makes a demand and is refused [citation omitted]. This is ‘because a
good-faith purchaser of stolen property commits no wrong, as a matter of substantive
law, until he has first been advised of the plaintiff’s claim to possession and given an
opportunity to return the chattel’ [citation omitted]. By contrast, an action against a bad
faith possessor begins to run immediately from the time of wrongful possession, and does
not require a demand and refusal [citations omitted]. Thus, ‘where replevin is sought
against the party who converted the property, the action accrues on the date of
conversion.’”
Beck v. Christie’s Inc., 141 A D 3d 442 (1st Dept. 2016) – “Generally, a cause of action
accrues, thereby triggering the statute of limitations, ‘when all of the factual
circumstances necessary to establish a right of action have occurred, so that the plaintiff
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would be entitled to relief’ [citation omitted]. New York courts have applied CPLR
214(2)’s three-year period of limitations for statutory causes of action to General
Business Law §349 claims [citation omitted]. ‘The statute runs from the time when the
plaintiff was injured.’”
Setters v. AI Properties and Developments (USA) Corp., 139 A D 3d 492 (1st Dept.
2016) – “The three-year limitation period imposed by LLCL §508(c) does not override
the six-year statute of limitations for fraudulent conveyance claims brought under the
D[ebtor and] C[reditor] L[aw], since the plain language of section 508 indicates that the
statute applies to members of an LLC, holding them ‘liable to the limited liability
company’ for wrongful distributions’ [citations omitted]. The statute does not address
the claims of outside creditors.”
461 Broadway, LLC v. Village of Monticello, 144 A D 3d 1464 (3d Dept. 2016) – “To the
extent that plaintiff’s claim alleges that defendant negligently constructed and installed
the water and sewer main – work which was fully complete by December 2009 – we
agree with Supreme Court that it cannot be maintained.” For, “although plaintiff alleges
ongoing injury to its property as a result of defendant’s actions, the alleged tortious
conduct in that regard consisted of discrete acts of negligence that ceased upon
completion of the water and sewer main construction.” However, “we reach a different
conclusion with respect to plaintiff’s alternative claim that defendant failed to properly
maintain and/or repair its sewer and water mains. It is settled that a municipality is under
a continuing duty to maintain and repair its sewage and water systems [citations omitted],
and this duty is independent of the duty not to create a dangerous or defective condition.”
Thus, “defendant’s negligence, if any, in failing to maintain or repair its water and/or
sewage system constitutes a continuing wrong that gives rise to a new cause of action for
each injury that occurred.”
Mogul Media, LLC v. Ramsburgh, 150 A D 3d 487 (1st Dept. 2017) – “‘In cases against
architects or contractors, the accrual date for Statute of Limitations purposes is
completion of performance. No matter how a claim is characterized in the complaint –
negligence, malpractice, breach of contract – an owner’s claim arising out of defective
construction accrues on date of completion, since all liability has its genesis in the
contractual relationship of the parties.’”
Cahill v. State of New York Stony Brook University Hospital, 139 A D 3d 779 (2d Dept.
2016) – “Causes of action alleging violations of Executive Law §296 are governed by a
three-year statute of limitations [citations omitted]. While a cause of action alleging
discrimination on the basis of discrete adverse employment actions is timely only to the
extent that the adverse employment actions took place within the statute of limitations
period, a cause of action alleging hostile work environment is timely so long as one act
contributing to the cause of action occurred within the statute of limitations period.”
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Cruz v. City of New York, 148 A D 3d 617 (1st Dept. 2017) – “The three-year limitations
period on a [42 USC] section 1983 claim based on false arrest begins to run ‘when the
alleged false imprisonment ends’ – that is, when the arrestee becomes subject to the legal
process such as being ‘bound over by a magistrate or arraigned on charges.”
Matter of the City of New York (South Richmond Blue Belt, Phase 3), 141 A D 3d 672 (2d
Dept. 2016) – “A de facto taking claim is governed by the three-year statute of limitations
applicable to claims to recover damages for injury to property set forth in CPLR 214(4)
[citations omitted]. Such a claim accrues at the time of the taking or, at the latest, when
the taking becomes apparent, regardless of the time of discovery.”
CONTRACTUAL LIMITATIONS PERIODS
D&S Restoration, Inc. v. Wenger Construction Co., Inc., 54 Misc 3d 763 (Sup.Ct. Nassau
Co. 2016)(Maron, J.) – Plaintiff was a subcontractor, and defendant the general
contractor, on a construction project for the New York City School Construction
Authority (“SCA”). The contract between the parties provides that “no action or
proceeding shall lie or shall be maintained by Subcontractor against Contractor, CM or
Owner unless such action shall be commenced within one (1) year after Substantial
Completion of Subcontractor’s work herein.” Plaintiff last furnished labor or material on
June 11, 2012. The SCA certified the project as substantially complete as of October 5,
2012. The SCA signed off on the completed work in December 2012. But it did not sign
off on the credits until June 24, 2016. Thus, payment did not become due to plaintiff
until that date. The Court rejects plaintiff’s argument that, under the circumstances, the
contractual statute of limitations was unreasonable and unenforceable. For, “what is
dispositive is that plaintiff was aware, or should have been aware, meaning it was
foreseeable, that final negotiations in public projects such as the one at issue here, can
and typically do take an extended period of time after the certification of substantial
completion.” Since these conditions “were simply not unforeseeable or unanticipated,”
the “doctrine of impossibility simply cannot be applied here.”
ACKNOWLEDGEMENT AND PART PAYMENT
PSP-NC, LLC v. Raudkivi, 138 A D 3d 709 (2d Dept. 2016) – “Raudkivi contends that
this mortgage foreclosure action is barred by the applicable six-year statute of limitations
[citation omitted]. He notes that the statute of limitations began to run in October 2001,
when Greenpoint accelerated the debt and commenced the first action to foreclose the
mortgage [citations omitted], and that the limitations period was tolled by the automatic
bankruptcy stay when he filed his bankruptcy petition in October 2002 [citations
omitted]. He contends that the limitations period began to run again when he was granted
his discharge in bankruptcy in October of 2006 [citation omitted], and ended in October
2011, by virtue of the one-year period between accrual of the claim in 2001 and the
beginning of the bankruptcy stay in 2002. However, Raudkivi’s Chapter 13 bankruptcy
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plan, in which he acknowledged the mortgage debt and promised to repay it, renewed the
limitations period [citations omitted]. The automatic bankruptcy stay, which was in
effect when Raudkivi executed his Chapter 13 bankruptcy plan, tolled the renewed
limitations period [citations omitted], so the renewed limitations period did not begin to
run until Raudkivi was granted his discharge in bankruptcy in October of 2006 [citation
omitted]. Since this action was commenced less than six years later, in July of 2012, this
action is not time-barred.”
U.S. Bank National Association v. Martin, 144 A D 3d 891 (2d Dept. 2016) – “In order to
demonstrate that the statute of limitations has been renewed by a partial payment, it must
be shown that the payment was ‘accompanied by circumstances amounting to an absolute
and unqualified acknowledgment by the debtor of more being due, from which a promise
may be inferred to pay the remainder’ [citations omitted]. Here, because the plaintiff
asserts that the payment was made as a condition to receiving an extension of a
bankruptcy stay, the payment did not constitute an unqualified acknowledgment of the
debt or manifest a promise to pay the remainder [citations omitted]. Moreover, the
payment history did not show by whom the payment was made, and thus, did not prove
that it was made by the debtor.”
The Bank of New York Mellon v. Bissessar, N.Y.L.J., 1202771804024 (Sup.Ct. Queens
Co. 2016)(Elliot, J.) – In this mortgage foreclosure action, plaintiff had accelerated the
debt by the commencement of an earlier action – later voluntarily discontinued – in 2008.
This action was commenced more than 6 years later. Plaintiff opposes defendant’s
motion to dismiss on grounds of statute of limitations by first urging that defendant made
a payment during the running of the limitations period, which caused the statute to run
anew. “In support, plaintiff annexes a paper to which its counsel refers as a copy of ‘the
business record, which makes evident that the “last pmt” made by Defendant was
received for this loan account was June 21, 2010 [sic].’ The exhibit consists of an
apparent photocopy of a computer screen shot entitled ‘Customer /Loan Inquiry’ which
indicates, inter alia, defendant as the borrower, the property address, and a ‘Last Pmt’ of
‘06/21/10.’ First, this document cannot be properly authenticated by counsel, and does
not qualify as competent evidence of any payment. But, in any event, even if competent,
it would not establish a “part payment” exception to the statute of limitations. “‘In order
that a part payment shall have the effect of tolling a time-limitation period, under the
statute or pursuant to a contract, it must be shown that there was a payment of a portion
of an admitted debt, made and accepted as such, accompanied by circumstances
amounting to an absolute and unqualified acknowledgment by the debtor of more being
due, from which a promise may be inferred to pay the remainder.’” And, here, “plaintiff
has provided nothing further to establish these additional requisite facts in opposition to
defendant’s motion, particularly those facts which would suggest defendant’s ‘absolute
and unqualified acknowledgment’ that more was due under the loan such that the
limitations period would have been renewed as of that date.” The Court also rejects
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plaintiff’s second argument, that defendant “re-acknowledged” the debt by sending a
“hardship letter” to plaintiff’s loan servicer, requesting a reduction in interest rate. The
letter does not “expressly and unconditionally” promise to pay the debt. It simply asked
for a loan modification. Thus while the letter may have, “arguably, acknowledged the
existing mortgage debt,” it was “accompanied by a condition precedent, to wit: the
preparation and execution of a modification agreement.” Accordingly, “any promise to
pay was conditional and, therefore, ineffectual to run the limitations period anew.”
U.S. Bank National Association v. Martinez, 2016 WL 7381807 (Sup.Ct. Kings Co.
2016)(Jimenez-Salta, J.) – To avoid the bar of the statute of limitations, plaintiff-
mortgagee argues that payments made by defendant-borrower as the result of a federal
Home Affordable Modification Program (HAMP) trial, constituted an acknowledgment
of the debt or partial payment, sufficient to re-start the running of the statute of
limitations. The Court disagrees. Such an acknowledgment requires “an express promise
to pay the mortgage debt.” And “a HAMP modification trial is ‘not an agreement for the
binding obligation of the parties going forward’ because it is ‘merely a trial
arrangement.’” And, here, the HAMP trial “does not contain Martinez’s express
acknowledgement of his indebtedness under the Freemont Mortgage and Note or
Martinez’s express promise to pay any of the outstanding debt. Instead, Martinez made a
conditional promise to make three payments” based on the servicer’s agreement “to
‘suspend any scheduled foreclosure sale’ during the three-month 2009 HAMP Trial
period during which it promised to review Martinez’s documented income to determine
whether Martinez qualified for a final HAMP modification.” And, “equally unavailing is
US Bank Trustee’s theory that the Statute of Limitations was tolled and/or renewed by
partial payments that were made under the 2009 Forbearance Plan. US Bank Trustee has
utterly failed to satisfy its burden of proving that Martinez made partial payments under
the 2009 Forbearance Plan ‘accompanied by circumstances amounting to an absolute and
unqualified acknowledgment by the debtor of more being due’”[emphasis by the Court].
Maidman Family Parking, LP v. Wallace Industries, Inc., 145 A D 3d 1165 (3d Dept.
2016) – “‘In order to meet the requirements of General Obligations Law §17-101, a
writing must be signed, recognize an existing debt and contain nothing inconsistent with
an intention on the debtor’s part to pay it’ [citations omitted]. Here, Wallace signed an
August 26, 2010 letter in which he acknowledged the principal amount and maturity date
for each loan and, indeed, agreed to waive any statute of limitations defense available to
defendants against ‘any claim by plaintiff to enforce collection of any monies due it
arising out of the’ loans. This language ‘clearly conveys and is consistent with an
intention to pay, which is all that need be shown in order to satisfy’ the statute, even if the
phrasing implies that the sums owed by defendants might vary from the original principal
amounts [citations omitted]. A renewed statute of limitations for plaintiff’s claims
accordingly began to run no earlier than August 26, 2010 and, thus, the commencement
of this action on July 2, 2015 was timely.”
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ESTOPPEL
Picard v. Fish, 139 A D 3d 1331 (3d Dept. 2016) – “The doctrine of equitable estoppel
applies where a defendant’s fraudulent or deceptive conduct induces a plaintiff to refrain
from filing a timely action [citations omitted]. Here, plaintiffs’ only allegation that
defendant dissuaded them from bringing a timely action by affirmatively misrepresenting
her status as sole owner of the property is that, in 2010, plaintiff David Picard questioned
defendant about a ‘For Sale’ sign on a portion of the property. Defendant is alleged to
have responded that she was attempting to sell it because ‘we don’t use it and if we sell it
the three of us would be able to benefit financially.’ Even assuming the truth of this
allegation, the interaction occurred 22 years after defendant took title to the property,
making it irrelevant to plaintiffs’ failure to commence a timely action challenging the
validity of the 1988 conveyance.” The Court recognized that “‘concealment without
actual misrepresentation may form the basis for invocation of the doctrine of equitable
estoppel if there was a fiduciary relationship which gave the defendant an obligation to
inform the plaintiff of facts underlying the claim.’” But the majority of this closely-
divided Court found a lack of evidence of such a relationship, noting that “the evidence
of a familial relationship does not equate to a fiduciary relationship for equitable estoppel
purposes.” The dissenters agreed that a familial relationship, by itself, was insufficient to
create a fiduciary relationship, but argued that “plaintiff has averred facts sufficient to
support an alternate grounds for potentially finding a fiduciary relationship, arising from
the parties’ operation of a family business located upon the subject real property.”
Bacon v. Nygard, 140 A D 3d 577 (1st Dept. 2016) – “Plaintiff failed to establish that the
doctrine of equitable estoppel bars defendants from asserting a statute of limitations
defense to his time-barred defamation claims. He contends that defendants’ fraud and
misrepresentations prevented him from discovering defendants’ identity – not that he
‘was lulled into inaction by defendants in order to allow the statute of limitations to
lapse.’”
Beck v. Christie’s Inc., 141 A D 3d 442 (1st Dept. 2016) – “A defendant is estopped from
raising a statute of limitations defense to a cause of action under General Business Law
§349, where the plaintiff has alleged ‘both the tort that was the basis of the action and
later acts of deception’ that prevented the plaintiff from bringing a timely lawsuit
[citation omitted]. ‘The later fraudulent misrepresentation must be for the purpose of
concealing the former tort’ [citation omitted]. It is ‘fundamental to the application of
equitable estoppel for plaintiffs to establish that subsequent and specific actions by
defendant somehow kept them from timely bringing a suit.’” That defendant refused to
release, or concealed, information relevant to plaintiffs’ claim does not create an estoppel
when that conduct did not prevent them from commencing an action.
Botach Management Group v. Gurash, 138 A D 3d 771 (2d Dept. 2016) – “‘Evidence of
communications or settlement negotiations between an insured and its insurer either
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before or after expiration of a limitations period contained in a policy is not, without
more, sufficient to prove waiver or estoppel.’”
Cusimano v. Schnurr, 137 A D 3d 527 (1st Dept. 2016) – “Where the same alleged
wrongdoing that underlines the plaintiffs’ equitable estoppel argument is also the basis of
their tort claims, equitable estoppel will not lie [citation omitted]. Here, equitable
estoppel is inapplicable because the alleged fraudulent concealment forms the basis of
both plaintiff’s estoppel argument and the underlying claims.”
State of New York Workers’ Compensation Board v. Wang, 147 A D 3d 104 (3d Dept.
2017) – “Equitable estoppel may be invoked to defeat a statute of limitations defense so
long as the plaintiff establishes that it ‘was induced by fraud, misrepresentations or
deception to refrain from filing a timely action’ [citation omitted], and ‘that it was
diligent in commencing the action “within a reasonable time after the facts giving rise to
the estoppel have ceased to be operational”’ [citations omitted]. However, ‘equitable
estoppel does not apply where the misrepresentation or act of concealment underlying the
estoppel claim is the same act which forms the basis of the plaintiff’s underlying
substantive causes of action.’”
THE RELATION BACK DOCTRINE
Moezinia v. Ashkenazi, 136 A D 3d 990 (2d Dept. 2016) – “The relation-back doctrine
permits a plaintiff to interpose a claim or cause of action which would otherwise be time-
barred, where the allegations of the original complaint gave notice of the transactions or
occurrences to be proven and the cause of action would have been timely interposed if
asserted in the original complaint [citations omitted]. The relation-back doctrine is
inapplicable where the original allegations did not provide the defendant notice of the
need to defend against the allegations of the amended complaint [citation omitted]. Here,
the plaintiff’s causes of action, as alleged in his initial complaint, were based on a written
agreement between Ashkenazi and the plaintiff, which was entered into on February 16,
2006, while the plaintiff’s causes of action, as alleged in the amended complaint, were
based on an alleged oral agreement entered into between the plaintiff and ABS at the
closing held on June 29, 2006. As the allegations contained in the initial complaint did
not provide ABS with notice of the need to defend against the allegations of the amended
complaint, the relation-back doctrine was inapplicable.”
Cady v. Springbrook NY, Inc., 145 A D 3d 846 (2d Dept. 2016) – Plaintiff’s original
complaint alleged that defendant facility negligently failed to supervise the person on
whose behalf the action was brought, resulting “in A.M.’s ingestion of multiple foreign
objects.” Now, after the running of the statute of limitations, plaintiff seeks to amend the
complaint to plead “intimidation by other residents; physical and psychological abuse
from staff members; failure to properly administer medication; causing A.M. to undergo
unauthorized and inappropriate medical treatment without informed consent; negligently
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administering an unauthorized influenza vaccination; and failure to implement A.M.’s
Individualized Education Plan.” The original complaint did not give adequate notice of
the claims sought to be added by the amendment. Therefore, they “did not relate back to
the original complaint and were, therefore, time-barred.”
Philadelphia Indemnity Insurance Company v. Citadel Services, Inc., N.Y.L.J.,
1202759880893 (Sup.Ct. Chautauqua Co. 2016)(Sedita, J.) – In this action against a
plumbing contractor for property damage resulting from allegedly negligent installation
of a steam pipe, plaintiff has insisted throughout the litigation that its claim is for
negligence, not breach of contract. Now, in the face of a motion to dismiss on statute of
limitations grounds, plaintiff cross-moves to amend the complaint to assert a breach of
contract cause of action. Plaintiff argues that the relation back doctrine should apply
because “the ‘same essential facts underpin’ both the original complaint’s negligence
claim and the proposed amended complaint’s breach of contract claim. Such an
argument overlooks the fact that plaintiff affirmatively and repeatedly advised the
defendant that it was pursuing a negligence claim only. Moreover, plaintiff did not
merely neglect to mention its breach of contract theory; to the contrary, it represented that
there was no contract between the parties. Clearly, the allegations of the original
complaint, as well as its companion pleadings, did not provide defendant with notice of
the need to defend against the allegations of the proposed amended complaint.”
Balanoff v. Doscher, 140 A D 3d 995 (2d Dept. 2016) – CPLR 203(d) “allows a
defendant to assert an otherwise untimely claim which arose out of the same transactions
alleged in the complaint, but only as a shield for recoupment purposes, and does not
permit the defendant to obtain affirmative relief [citations omitted]. The defendant’s
counterclaim alleging legal malpractice relates to the plaintiff’s performance under the
same retainer agreement pursuant to which the plaintiff would recover, and therefore this
counterclaim falls within the permissive ambit of CPLR 203(d) [citations omitted].
However, the counterclaim is permitted only to the extent that it seeks to offset any award
of legal fees to the plaintiff and not to the extent that it seeks affirmative relief.”
Kim v. Sim, N.Y.L.J., 1202773437858 (Sup.Ct. N.Y.Co. 2016)(Rakower, J.) – “‘Under
New York law, counterclaims are deemed timely if they were timely when the complaint
was initially brought [citation omitted], and are said to “relate back” to the original claim’
[citation omitted]. However, where a counterclaim is raised for the first time in an
amended answer, the relation back doctrine does not apply and the statute of limitations
is not tolled, unless the claim arises from the same transaction on which the plaintiff’s
claim is based.”
Beach v. Touradji Capital Management LLC, 142 A D 3d 442 (1st Dept. 2016) – CPLR
203(f) also applies to amendments of counterclaims. The amendment “relates back to the
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original counterclaims” so long as those original counterclaims gave adequate “notice” of
the claims asserted in the amendments.
Mitchell v. Olar, 138 A D 3d 1490 (4th Dept. 2016) – “CPLR 203(d) provides that ‘a
defense or counterclaim is not barred if it was not barred at the time the claims asserted in
the complaint were interposed.’ That section applies to cross claims as well as to
counterclaims [citation omitted]. Thus, although [defendant] Crisafulli did not answer
the complaint until after the limitations period had expired, we conclude that ‘the cross
claim was not barred by the statute of limitations as that claim was viable at the time the
underlying action was commenced’ [citations omitted]. Moreover, because Crisafulli’s
cross claim was viable at the time the underlying action was commenced, there is no need
to consider whether the cross claim arose out of the same transaction or occurrence as the
claim asserted in the complaint [citations omitted]. Indeed, the cross claim is
‘recoverable in full regardless of whether it is related to the transaction or occurrence
underlying plaintiff’s claim.’”
Town of North Hempstead v. County of Nassau, 149 A D 3d 1134 (2d Dept. 2017) –
“Pursuant to CPLR 203(d), a time-barred [counter] claim may be used to set off another
claim only to the extent that the two claims arise from the same incident or transaction
[citations omitted]. Here, however, the chargebacks sought by the County are unrelated
to the sales tax revenue owed by the County to the Town, and therefore, the County is
barred from asserting a right of setoff as a defense.”
DEFENDANTS “UNITED IN INTEREST”
Moran v. JRM Contracting, Inc., 145 A D 3d 1584 (4th Dept. 2016) – The Courts have
established a three-part test to determine if defendants are “united in interest,” thereby
permitting timely commencement of an action against one to be timely against the other
pursuant to CPLR 203(c). The test was first enunciated in Brock v. Bua, 83 A D 2d 61
(2d Dept. 1981), and adopted by the Court of Appeals in Mondello v. New York Blood
Center, 80 N Y 2d 219 (1992). To be united in interest, the parties’ liability must arise
out of the same conduct, the relationship between them must be such that neither has a
defense the other lacks [in Mondello, the Court appeared to hold that this branch of the
test is only met when the liability of one of the parties is vicarious], and, as modified by
the Court of Appeals in Buran v. Coupal, 87 N Y 2d 173 (1995), the third test is that the
late sued defendant knew or should have known that plaintiff only failed to timely sue it
by “mistake.” Here, in Moran, plaintiff initially commenced a breach of contract action
against “James Madalena, d/b/a JRM Construction.” However, JRM is a corporate entity,
and Madalena’s motion to dismiss on the ground that he was not a party to the contract
was granted. Three months later, but after the statute of limitations had run, plaintiff re-
commenced the action against the proper defendant. “Contrary to plaintiff’s contention,
the relation back doctrine does not apply herein [citation omitted]. ‘The relation back
doctrine allows a claim asserted against a defendant in an amended filing to relate back to
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claims previously asserted against a codefendant for statute of limitations purposes where
the two defendants are “united in interest”’ [citations omitted]. Here, inasmuch as the
prior action was dismissed, there was no amended pleading [citations omitted], and,
moreover, Madalena was not a codefendant [citations omitted]. Contrary to plaintiff’s
further contention, CPLR 205(a) also does not apply herein inasmuch as the prior action
was dismissed on the merits [citations omitted]. Contrary to the determination of the
court [below], the relation back doctrine cannot be ‘bootstrapped onto CPLR 205(a).’”
Mileski v. MSC Industrial Direct Co., Inc., 138 A D 3d 797 (2d Dept. 2016) – “‘In a
negligence action, “the defenses available to two defendants will be identical, and thus
their interests will be united, only where one is vicariously liable for the acts of the
other”’ [citations omitted]. ‘The fact that two defendants may share resources such as
office space and employees is not dispositive. They must also share exactly the same
jural relationship in the subject action.’”
Higgins v. City of New York, 144 A D 3d 511 (1st Dept. 2016) – In this action pursuant to
42 U.S.C. §1983, arising out of an alleged false arrest and use of excessive force by
defendant’s police officer employees, plaintiff seeks, after the running of the 3-year
statute of limitations applicable to such actions, to amend the complaint to add the
involved police officers as defendants. The Court denies the application. “The
requirement of unity of interest is ‘more than a notice provision’ [citation omitted]. The
test is whether ‘the interest of the parties in the subject-matter is such that they stand or
fall together and that judgment against one will similarly affect the other’ [citation
omitted]. Thus, unity of interest will not be found unless there is some relationship
between the parties giving rise to the vicarious liability of one for the conduct of the other
[citations omitted]. Unity of interest fails if there is a possibility that the new defendants
may have a defense unavailable to the original defendants.” Here, “the City cannot be
held vicariously liable for its employees’ violations of 42 U.S.C. §1983. Rather, the City
can be held liable under 42 U.S.C. §1983 only for violating that statute through an
unconstitutional official policy or custom [citations omitted]. Thus, it simply cannot be
said that the fortunes in this action of the City and of either Office Crocitto or Officer
Palmerini ‘stand or fall together and that judgment against one will similarly affect the
other’ [citation omitted]. Because the City has no vicarious liability for Officers
Crocitto’s and Palmerini’s alleged misconduct under 42 U.S.C. §1983, the two officers
are not united in interest with the City with respect to the federal false arrest and
excessive force claims against them, and the interposition of those claims against the
officers does not relate back to the commencement of the action against the City for
purposes of the statute of limitations.”
Branch v. Community College of the County of Sullivan, 148 A D 3d 1410 (3d Dept.
2017) – “It is not clear that the relation back doctrine, which ‘allows a claim asserted
against a defendant in an amended filing to relate back to claims previously asserted
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against a codefendant for statute of limitations purposes where the two defendants are
“united in interest,”’ applies to claims asserted in a new and independent action.” In any
event, here, plaintiff failed to timely sue the current defendant because of a mistake of
law – a “belief that defendant ‘was a department of the [timely-sued] county.’” A
mistake of law is “not the type of mistake contemplated by the relation back doctrine.”
Gil v. City of New York, 143 A D 3d 572 (1st Dept. 2016) – The third prong of the test for
united in interest is only applicable when the failure to timely name the late-sued
defendant is the result of a “mistake.” And, “a mistake of law is not the type of mistake
contemplated by the doctrine.” Here, plaintiff named and served only the New York City
Department of Parks and Recreation, and now seeks to add the City of New York as a
defendant. But plaintiff’s mistaken belief “that Parks was an entity subject to suit” is a
mistake of law, and plaintiff cannot get the benefit of the united in interest relation back
doctrine.
Berkeley v. 89th Jamaica Realty Company, L.P., 138 A D 3d 656 (2d Dept. 2016) – “The
plaintiff failed to satisfy the third condition [for united in interest], which required proof
that the new party knew or should have known that, but for an excusable mistake by the
plaintiff as to the identify or the proper parties, the action would have been brought
against it as well’” [emphasis added]. The Court cited Buran v. Coupal, 87 N Y 2d 173
(1995), which specifically held that the mistake need not be excusable.
TOLLS GENERALLY
Billiard Balls Management, LLC v. Mintzer Sarowitz Zeris, 54 Misc 3d 936 (Sup.Ct.
N.Y.Co. 2016)(Edmead, J.) – “While it is well established that a court may not extend a
Statute of Limitations or invent tolling principles, some tolling provisions are based upon
common-law, equitable doctrines [citations omitted]. Whenever some paramount
authority prevents a person from exercising his legal remedy, the time during which he is
thus prevented is not to be counted against him in determining whether the statute of
limitations has barred his right, even though the statute makes no specific exception in his
favor in such cases.” In this legal malpractice action, plaintiff claims that defendant law
firm permitted a default to be taken against plaintiff in an earlier action. That default was
then vacated by nisi prius, but was restored by the Appellate Division’s reversal. The
Court recognizes that a cause of action for malpractice accrues at the moment of the
malpractice, and that “accrual ‘is not delayed until the damages develop or become
quantifiable or certain.’” But, “contrary to the Firm’s contention, the Statute of
Limitations may be tolled as against a person unable to bring an action based on a prior
ruling.” Here, when the Trial Court vacated the default, plaintiff was “foreclosed from
exercising any legal remedy” against defendant. “Such order excused Billiard’s default,
thereby eliminating any actionable injury suffered by Billiard, and suspended the statute
of limitations until such injury was revived” by the Appellate Division reversal. “In other
words, Billiard no longer had a claim for malpractice upon the date of the Trial Court
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order. The Trial Court compelled [the] plaintiff [in the underlying action] to accept
Billiard’s answer, thereby nullifying Billiard’s default, and Billiard was restored to its
pre-default position in the underlying action. At such time, and notwithstanding that the
malpractice claim had already accrued, Billiard no longer had a complete cause of action.
As the statute of limitations was tolled” from the Trial Court’s order to the Appellate
Division reversal, the instant action was timely filed.
Britt v. Nestor, 145 A D 3d 544 (1st Dept. 2016) – CPLR 203(e) provides that “where a
defendant has served an answer containing a defense or counterclaim and the action is
terminated because of the plaintiff’s death or by dismissal or voluntary discontinuance,
the time which elapsed between the commencement and termination of the action is not a
part of the time within which an action must be commenced to recover upon the claim in
the defense or counterclaim or the time within which the defense or counterclaim may be
interposed in another action brought by the plaintiff or his successor in interest”
[emphasis added]. Here, “resolution of this appeal turns on the meaning of ‘termination
of the action’ as used in CPLR 203(e). We hold that a prior action terminates for
purposes of CPLR 203(e) when a nondiscretionary appeal, or an appeal taken as of right,
is exhausted. This is consistent with how the Court of Appeals has interpreted analogous
tolling statutes.”
THE “INSANITY” TOLL
Liberatore v. Greuner, 55 Misc 3d 361 (Sup.Ct. N.Y.Co. 2016)(Schlesinger, J.) – The
complaint alleges that defendant doctor committed malpractice by deliberately causing
plaintiff to become addicted to Demerol, in effect becoming her “drug dealer.” Her claim
is time-barred, unless saved by the “insanity” toll provided by CPLR 208. She provided
various affidavits attesting to her mental capacity during that period. But “against all of
this testimony is the fact that plaintiff was able to file for and navigate, however
inexpertly, a bankruptcy proceeding during the period for which she seeks a toll. In fact,
the bankruptcy judge found that Liberatore had the capacity to testify at a trial in the
bankruptcy proceedings in 2013. The bankruptcy judge noted, in her memorandum
opinion denying Liberatore a discharge of her debts, that ‘when she testified, she was
coherent and articulate.’” Courts have “long narrowly interpreted the toll for insanity
under CPLR 208.” And this “is not a good case to stretch the toll for insanity in CPLR
208 past its traditionally narrow construction.”
Vasilatos v. Dzamba, 148 A D 3d 1275 (3d Dept. 2017) – In this lead-paint ingestion
action, plaintiff simultaneously argued that she had legal capacity to sue, and that she was
entitled to the “insanity” toll under CPLR 208. The Court found that she had standing,
and rejected application of the insanity toll. “It is significant that at no point did
plaintiff’s counsel seek the appointment of a guardian ad litem pursuant to CPLR 1201,
which mandates such appointment for ‘an adult incapable of adequately prosecuting or
defendant his or her rights.’ Moreover, by her own submission, plaintiff has
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affirmatively demonstrated her ability to participate in this action. Plaintiff submitted her
two sworn affidavits – asserting in one that she ‘had never been adjudicated incompetent’
– and she never asserted that she lacks the capacity to function in society [citation
omitted]. In effect, plaintiff maintained that she has the legal capacity to pursue this
action, but was otherwise insane for purposes of tolling the statute of limitations. Simply
put, plaintiff cannot have it both ways, and we conclude that plaintiff’s reliance on the
toll provided by CPLR 208 is baseless.”
THE “DEATH” TOLL
Saintime v. Visiting Norse Service of New York, 1202771682877 (Sup.Ct. Kings Co.
2016)(Silber, J.) – CPLR 210(a) provides that “where a person entitled to commence an
action dies before the expiration of the time within which the action must be commenced
and the cause of action survives, an action may be commenced by his representative
within one year after his death.” The correct interpretation of this provision is that the
toll runs one year from the date of death “unless the decedent would have had a longer
period of time to sue, had she not died. The statutory toll cannot shorten the statute of
limitations. It is only applicable in situations where the claimant dies with less than one
year remaining for the relevant period of limitations.” Here, plaintiff’s claim sounds
either in negligence or medical malpractice. Plaintiff was last seen by defendant on May
1, 2013, and died on February 3, 2015. “Thus, with the toll in CPLR 210(a), the statute
ran on February 3, 2016, one year after the date of death, for medical malpractice claims,
and May 1, 2016 for negligence claims, as the three year statute is longer than the one
year toll.” This action was commenced on February 15, 2016. Accordingly, an action
sounding in malpractice is time-barred, but one for negligence (and wrongful death) is
timely.
CPLR 205(A)
ACE Securities Corporation v. DB Structured Products, Inc., 52 Misc 3d 343 (Sup.Ct.
N.Y.Co. 2016)(Friedman, J.) – CPLR 205(a) provides that when an action is dismissed
for any reason other than on the merits, for lack of personal jurisdiction, for want of
prosecution, or upon voluntary discontinuance, “the plaintiff, or, if the plaintiff dies, and
the cause of action survives, his or her executor or administrator, may commence a new
action upon the same transaction or occurrence” within six months of termination of the
first action, notwithstanding the running of the statute of limitations [emphasis added].
Here, the original, dismissed, action was brought by investment funds that held 25% of
the voting rights in a Residential Mortgage-Based Securities Trust. This new action has
been commenced by the Trustee of the Trust. The Court finds that CPLR 205(a) is
inapplicable. “‘The common thread running through cases applying CPLR 205 in cases
where the error in the dismissed action lies only in the identity of the plaintiff, is the fact
that it is the same person or entity whose rights are sought to be vindicated in both
actions. The plaintiff in the new lawsuit may appear in a different capacity, such as a
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duly appointed administrator, but the identity of the individual on whose behalf redress is
sought, must remain the same.’” Here, “the certificateholders cannot be found to have
possessed a cause of action against defendant Sponsor to which the Trustee succeeded.
As the Trustee does not merely succeed to the certificateholders’ cause of action, it does
not act, for purposes of this litigation, in a representative capacity akin to that of an
administrator who succeeds to the decedent’s own cause of action.” The purpose of
CPLR 205(a) “‘is to provide a second opportunity to the claimant who has failed the first
time around because of some error pertaining neither to the claimant’s willingness to
prosecute in a timely fashion nor to the merits of the underlying claim’ [citations
omitted]. CPLR 205(a) serves the important remedial purpose of ‘ameliorating the
potentially harsh effect of the Statute of Limitations’ [citation omitted]. Nevertheless, the
statute does not afford relief to a plaintiff, like the Trustee, that declined to bring the
action within the limitations period.”
Ciafone v. Jofs for NY, Inc., N.Y.L.J., 1202767926225 (Sup.Ct. Queens Co. 2016)
(Livote, J.) – The six-month period in which to recommence an action pursuant to CPLR
205(a) begins to run after “the termination” of the initial action. And “termination of the
prior action occurs when appeals as of right are exhausted.” Here, the appeal of the
dismissal of the initial action is still pending. “As a result of the continued viability of
the 2013 lawsuit, the instant action, brought under CPLR 205(a), was commenced
prematurely and must be dismissed.”
Arty v. New York City Health and Hospitals Corporation, 148 A D 3d 407 (1st Dept.
2017) – Plaintiff’s original action was commenced in the United States District Court for
the Southern District of New York, stating discrimination claims, and defamation. In
December 2013, the Court dismissed the discrimination claims, and declined to exercise
supplemental jurisdiction over the defamation claim, dismissing it without prejudice.
Plaintiff then moved, under the Federal Rules of Civil Procedure and the Court’s local
rules, for reconsideration. That motion was granted in August 2014 to the extent only of
making one of the other dismissals without prejudice. This action, restating the
defamation claim, was commenced in December 2014. “The broad remedial purpose of
CPLR 205(a) mandates a finding that plaintiff’s defamation claim was timely filed.
Under Federal Rules of Appellate Procedure rule 4(a)(4)(A)(iv), plaintiff’s motion for
reconsideration extended the time for him to file a nondiscretionary appeal as of right to
the United States Court of Appeals for the Second Circuit until 30 days after the Federal
Rules of Civil Procedure rule 59(c) motion was decided – that is, until 30 days after the
August 18, 2014 order granting plaintiff’s Federal Rules of Civil Procedure rule 59(c)
motion.” Thus, since plaintiff did not thereafter appeal to the Second Circuit, the 6-
month period to recommence, pursuant to CPLR 205(a), began on August 18, 2014, and
this action is timely.
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Weksler v. Weksler, 140 A D 3d 491 (1st Dept. 2016) – The Court rejects respondents’
claim that CPLR 205(a) does not here apply because the original dismissed action was “a
nullity.” For, “‘resolution of questions involving CPLR 205 (subd [a]) is not aided by
use of the word nullity’ [citation omitted]. ‘Indeed, the statute by its very nature is
applicable in those instances in which the prior action was properly dismissed because of
some fatal flaw; thus to suggest that it should not be applied simply because there was a
deadly defect in the prior action seems nonsensical’ [citation omitted]. Respondents
complain that the 2014 order effectively gave petitioner an 11-year statute of limitations.
However, the Court of Appeals has ‘declined to subordinate CPLR 205(a) and the policy
preference it embodies even where the effect of the court’s declination was to toll for a
substantial period a designedly brief limitations period’ [citation omitted]. We note that
‘at least one of the fundamental purposes of the Statute of Limitations has in fact been
served, and respondents have been given timely notice of the claim being asserted by
petitioner.’”
Wells Fargo Bank, N.A. v. Eitani, 148 A D 3d 193 (2d Dept. 2017) – The issue before
this narrowly-divided Court is “whether the plaintiff in this mortgage foreclosure action,
which was assigned the note and mortgage during the pendency of the prior foreclosure
action, is entitled to the savings provision – or grace period – of CPLR 205(a) even
though the prior action was commenced by a prior holder of the note.” The majority
holds that plaintiff “is entitled to the benefit of CPLR 205(a) where, as here, it is the
successor in interest as the current holder of the note.” The statute limits its benefits to
“the plaintiff.” But, since the assignment took place while the original action was
pending, Wells Fargo, as assignee, “had a statutory right, pursuant to CPLR 1018, to
continue the prior action in [plaintiff] Argent’s place, even in the absence of a formal
substitution [citations omitted]. Since, by virtue of CPLR 1018, the prior action could
have been continued by Argent’s successor in interest, Wells Fargo was, in actuality, the
true party plaintiff in the prior action, and is entitled to the benefit of CPLR 205(a).” The
dissenters argued that “in the case at bar, the identity of the entity on whose behalf
redress is sought has not remained the same. Wells Fargo is not Argent in a different
capacity.” Thus, “while Wells Fargo seeks the same relief that Argent sought, namely, to
foreclose on the mortgage, Wells Fargo seeks not to vindicate Argent’s rights but to
vindicate Wells Fargo’s rights.”
Pecker Iron Works, LLC v. Beys Specialty, Inc., N.Y.L.J., 1202774632823 (Sup.Ct.
N.Y.Co. 2016)(Rakower, J.) – After plaintiff’s counsel was permitted to withdraw, the
Court directed that a new attorney file a notice of appearance within 30 days, and
scheduled a conference for a date thereafter. No one appeared for plaintiff at that
conference, and the Court dismissed the action pursuant to 22 NYCRR 202.27. Plaintiff
recommenced within six months of the dismissal. The Court denies defendant’s motion
to dismiss, rejecting the argument that CPLR 205(a) is inapplicable. First, a Rule 202.27
dismissal is not a dismissal on the merits. Nor does the exception for “neglect to
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prosecute” apply. “While the November 16, 2015 Order dismissing the 2011 Action
noted that plaintiff had ‘failed to appear before the Court for a scheduled conference’ and
that plaintiff’s attorney had withdrawn two months earlier, the Supreme Court did not ‘set
forth on the record the specific conduct constituting the neglect’ which would
‘demonstrate a general pattern of delay in proceeding with the litigation.’” And, “absent
such record indicating a general pattern of delay, this court cannot conclude that the prior
action was dismissed for ‘neglect to prosecute’ in light of the 2008 amendment to CPLR
205(a).”
Matter of Westchester Joint Water Works v. Assessor of the City of Rye, 27 N Y 3d 566
(2016) – “This appeal presents the question whether a proceeding dismissed for an
unexcused failure to comply with the mailing requirements of Real Property Tax Law
§708(3) may be recommenced pursuant to CPLR 205(a). We conclude that it may not.”
Petitioner here failed to comply with the statute’s direction that, “within 10 days of the
service of the notice of petition and petition on a municipality, a petitioner must mail a
copy of the same documents to the superintendent of schools of ‘any school district
within which any part of the real property on which the assessment to be reviewed is
located.’” The initial petition was therefore dismissed. The Court of Appeals, resolving
a split in the Appellate Divisions – indeed, a split within the Second Department –
concludes that “RPTL 708(3) does not permit resort to the recommencement largess of
the CPLR.” First, because the RPTL “comprehensively addresses the result where a
proceeding is dismissed for failure to comply with the mailing requirements of that
section, a petitioner may not reach outside of the RPTL to recommence such a
proceeding.” For, the statute itself provides that “the dismissal for failure to comply with
the mailing provisions of that statute shall be excused only ‘for good cause shown.’”
And the CPLR governs “the procedure in civil judicial proceedings in all courts of the
state and before all judges, except where the procedure is regulated by inconsistent
statute.” Second, the Court’s conclusion “is consistent with the rule of statutory
construction requiring that ‘effect and meaning must, if possible, be given to all parts of a
statute.’” For, if CPLR 205(a) were to apply, the RPTL language requiring “good cause
shown” would be superfluous. Finally, the Court’s interpretation of RPTL 708(3) is
“consistent with the legislative intent of that statute.”
THE BORROWING STATUTE
2138747 Ontario, Inc. v. Samsung C&T Corporation, 144 A D 3d 122 (1st Dept. 2016) –
“On this appeal, we are called upon to decide whether a broadly drawn contractual
choice-of-law provision, that provides for the agreement to be ‘governed by, construed
and enforced’ in accordance with New York law, precludes the application of New
York’s borrowing statute (CPLR 202). We find that it does not. Where, as here, the
plaintiff is a nonresident, alleging an economic claim that took place outside of New
York, the time limitations provisions in the borrowing statute apply, regardless of
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whether the parties’ contractual choice of law agreement can be broadly construed to
include the application of New York’s procedural, as well as its substantive law.” For,
“the borrowing statute is itself a part of New York’s procedural law and is a statute of
limitations in its own right, existing as a separate procedural rule within the rules of our
domestic civil practice, addressing limitations of time.” Thus, “applying the borrowing
statute is perfectly consistent with a broad choice-of-law contract clause that requires
New York procedural rules to apply to the parties’ disputes.” The Court noted that the
agreement’s choice-of-law provision “does not expressly provide that the parties agree
only to apply New York’s six-year statute of limitations to their contract-based disputes.
In this regard, there is no need to resolve whether such a provision would be an
unenforceable extension of the otherwise applicable statute of limitations.” Finally, the
Court rejected application of the esoteric (indeed, perhaps metaphysical) concept of
renvoi. Thus, “we also reject plaintiff’s alternative argument, that even if the New York
borrowing statute applies, requiring application of Ontario law, Ontario law mandates
application of New York’s six-year statute of limitations because the parties have chosen
New York law. It does not require that we apply the borrowing statute of a foreign
jurisdiction [citation omitted]. CPLR 202 only concerns statutes of limitations, it does
not require that we consider the foreign jurisdiction’s borrowing law.”
CONDITIONS PRECEDENT
Bayne v. City of New York, 137 A D 3d 428 (1st Dept. 2016) – “Assuming, without
deciding, that the statute of limitations was tolled during the pendency of plaintiff’s
petition [for leave to serve a late notice of claim] [citation omitted], it began running
anew on September 13, 2013, when Supreme Court granted plaintiff leave to serve a late
notice of claim [citation omitted]. Accordingly, plaintiff was required to commence an
action against the City within 13 days, on or before September 26, 2013, which he failed
to do [citation omitted]. The order granting plaintiff leave to serve a late notice of claim
within 30 days of the order could not extend the statute of limitations.”
PARTIES TO AN ACTION
JOINDER
NYCTL, 2012-A Trust v. Philip, 145 A D 3d 684 (2d Dept. 2016) – “‘Pursuant to RPAPL
1311, the plaintiff in a mortgage foreclosure action is required to join, as a party
defendant, any person “whose interest is claimed to be subject and subordinate to the
plaintiff’s lien,” including “every person having an estate or interest in possession in the
property as tenant in fee.” Accordingly, tenants are necessary parties to a foreclosure
action” [citations omitted], including a foreclosure action based on a tax lien [citations
omitted]. Although CPLR 1001 provides that the nonjoinder of a necessary party may be
excused by the court under certain circumstances [citation omitted], the plaintiffs here
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failed to make any showing as to why the tenants (the John Doe defendants) could not be
joined, or why their nonjoinder should be excused. Moreover, the principles of judicial
efficiency and economy are best served when piecemeal litigation can be avoided at the
outset.”
Jennings v. Chase Home Finance, LLC, 136 A D 3d 444 (1st Dept. 2016) – “Plaintiff, a
feeholder of the residential property at issue, seeks, among other things, a declaratory
judgment as to the rights of the parties with regard to a loan and a mortgage on the
property. Third-party defendant Maryrose Mlayi, a feeholder and mortgagor of the
property, is a necessary party to this action [citations omitted]. Since plaintiff never
sought to have Mlayi added as a defendant, Supreme Court properly dismissed the action
[citations omitted]. Mlayi, who is allegedly absent from the state, could have been served
by publication, if necessary [citations omitted], and is therefore subject to Supreme
Court’s jurisdiction. Accordingly, there is no basis for permitting the action to proceed
without her.”
CONSOLIDATION AND SEVERANCE
McGinty v. Structure-Tone, 140 A D 3d 465 (1st Dept. 2016) – The two actions sought to
be consolidated, i.e., a personal injury action and an insurance coverage action, do not
involve common questions of law or fact [citation omitted]; they involve different
contracts, different parties, and different factual issues [citation omitted]. Moreover,
litigating an insurance coverage claim together with the underlying liability issues is
inherently prejudicial to the insurer.” For, unlike the cases relied on by plaintiff,
“consolidation in this case would result in a single action involving the insured, the
insurance policy, and the construction of that policy.”
Fontana v. The TJX Companies, Inc., N.Y.L.J., 1202778704179 (Sup.Ct. Queens Co.
2017)(Modica, J.) – Plaintiff sued, in one action, a storeowner in whose establishment
she slipped and fell in October 2013, and the driver of a vehicle that caused her injuries in
May 2014. The Court denies the storeowner’s motion for severance. “While it is true
that plaintiff was involved in two separate accidents, seven months apart, plaintiff
complains of similar injuries to the same body parts in each accident. Significantly,
[driver] Balfus alleged in his answer a cross claim that plaintiff’s injuries were caused by
the negligence of [storeowners] USM, TJ Maxx, and Millenium, and Millenium alleged
in its answer a cross claim that plaintiff’s injuries were caused by the negligence of
Balfus. A claim by the defendant in one of the actions that the plaintiff’s injuries were
caused by the negligence of the defendant in the other action mandates that the two
actions should be tried together, absent a particularized showing pf prejudice [citations
omitted]. Furthermore, USM, TJ Maxx, and Millenium have not sufficiently
demonstrated that prejudice would result in the absence of severance.”
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Longo v. Fogg, 150 A D 3d 724 (2d Dept. 2017) – “In view of the plaintiff’s allegations
in his bill of particulars that certain injuries which he sustained in the first automobile
accident were exacerbated by the second automobile accident, in the interest of justice
and judicial economy, and to avoid inconsistent verdicts, the two actions should be tried
jointly [citations omitted]. The respondents failed to demonstrate prejudice to a
substantial right if this action is tried jointly [citations omitted]. Although the plaintiff
moved to consolidate the two actions, the appropriate procedure is a joint trial,
particularly since each action contains a defendant not present in the other [citations
omitted]. Furthermore, in the absence of special circumstances, where the actions have
been commenced in different counties, the place of trial should be in the county where
venue of the first action was placed.”
M.T. Packaging, Inc. v. Hoo, N.Y.L.J., 1202771905606 (Sup.Ct. N.Y.Co. 2016)(Kern, J.)
– Plaintiff sues its suppliers for fraud, and its suppliers’ lawyer, for alleged violations of
Judiciary Law §487 in an earlier action between the parties. The Court grants the
lawyer’s motion for severance. First, the two claims do not involve common questions of
law or fact. “The facts underlying plaintiff’s fraud claims against Hoo and VN K’s relate
to the sale of packaging and bags in 2008 and 2009, while the facts underlying plaintiff’s
Judiciary Law §487(1) claim against Maidenbaum relate to its representation of its
codefendants in the related action, which was commenced in 2012, and the instant action,
which was commenced in 2014.” Moreover, the fraud defendants would be prejudiced in
the absence of severance. “A defendant has the right to be represented by counsel of its
choice and thus a court should avoid disqualifying a defendant’s counsel unless necessary
[citations omitted]. It is a near certainty that Maidenbaum, Hoo’s and VN K’s counsel,
will be called as a witness with regard to plaintiff’s Judiciary Law §487(1) claim against
it and thus will likely be disqualified from representing Hoo and VN K’s at trial under the
advocate-witness rule in the absence of severance.” Finally, “Hoo and VN K’s may be
prejudiced in the absence of severance for the additional reasons that trying plaintiff’s
unrelated claim against Maidenbaum premised on the alleged misconduct of Hoo’s and
VN K’s counsel alongside plaintiff’s claims against Hoo and VN K’s may cause jurors to
become confused or form a negative impression of Hoo and VN K’s.”
ADDITION OF PARTIES
Warner v. Kain, N.Y.L.J., 1202763336921 (Sup.Ct. St. Lawrence Co. 2016)(Muller, J.) –
“Plaintiffs’ failure to follow the procedural mandates of CPLR 1003 prior to the filing
and service of its amended summons and verified complaint, constitutes a fatal
procedural defect and, as such, plaintiffs’ amended pleading must be dismissed. The
joinder of an additional defendant by the filing of a supplemental summons and amended
complaint may be accomplished [if done after expiration of the time to so amend as of
right] only with prior judicial permission, and noncompliance renders the pleadings
jurisdictionally defective [citations omitted]. Plaintiffs’ counsel’s belief and reliance that
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an insurer or their legal counsel consented to the supplemental pleadings is of no avail.
Although a defendant may waive the ‘jurisdictional defect’ of improper joinder where the
defendant answers the amended complaint without raising an objection to the improper
joinder, and then delays until after the limitations period has run before moving to
dismiss [citations omitted], NC Pizza raised the improper joinder in its first affirmative
defense.”
SUBSTITUTION OF PARTIES
Aurora Bank FSB v. Albright, 137 A D 3d 1177 (2d Dept. 2016) – “‘Generally, the death
of a party divests a court of jurisdiction to act, and automatically stays proceedings in the
action pending the substitution of a legal representative for the decedent pursuant to
CPLR 1015(a)’ [citations omitted]. ‘Any determination rendered without such
substitution will generally be deemed a nullity’ [citations omitted]. Furthermore, ‘the
death of a party terminates the authority of the attorney for that person to act on his or her
behalf’ [citations omitted]. Here, the deceased defendant died before the plaintiff’s
motion was made and before the order appealed from was issued. The attorney who had
represented the deceased defendant prior to his death purportedly took this appeal on
behalf of, among others, the deceased defendant. However, since a substitution of parties
had not been effected prior to the filing of the notice of appeal, counsel lacked the
authority to act for the deceased defendant, and the purported appeal taken on behalf of
the deceased defendant must be dismissed [citations omitted]. Furthermore, since no
substitution was made prior to the entry of the order appealed from, the order appealed
from is a nullity to the extent that it pertains to the deceased defendant, and we vacate so
much of the order as granted that branch of the plaintiff’s motion which was for summary
judgment on the complaint insofar as asserted against the deceased defendant [citations
omitted]. Similarly, in this case, since a proper substitution had not been made, the
Supreme Court should not have determined the merits of the plaintiff’s motion, even to
the extent that the plaintiff sought relief against the other defendants.”
Velez v. New York Presbyterian Hospital, 145 A D 3d 632 (1st Dept. 2016) – The
surviving plaintiff was delayed in getting appointed as administrator of the estate of the
deceased plaintiff, and moved for substitution some 21 months after decedent’s death.
Supreme Court denied that motion, and granted defendants’ motion to dismiss the action
for timely substitution. “The court lacked jurisdiction to grant defendants’ motions to
dismiss the action, since, ‘before proceeding further,’ and ‘upon such notice as it may in
its discretion direct,’ the court was required to ‘order the persons interested in the
decedent’s estate to show cause why the action should not be dismissed’ [citations
omitted]. The persons interested in Velez’s estate who were entitled to notice included
Velez’s two adult children. In any event, in the absence of any prejudice to defendants,
and in light of the strong public policy of deciding cases on the merits, the motion to
substitute, made less than two years after Velez’s death, should have been granted
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[citations omitted]. Defendants failed to show that the delay in seeking substitution
resulted in undue prejudice, since this medical malpractice action ‘will likely rely on
medical records and other documentary evidence and not the testimony of
eyewitnesses.’”
Rosenblatt v. Doe, N.Y.L.J., 1202781108149 (App.Term 2d Dept. 2017) – The majority
affirms the grant of a motion for substitution made four years after the death of the
plaintiff. “Upon a review of the record, we are of the opinion that, under the
circumstances of this case, the Civil Court did not abuse its discretion in granting
plaintiff’s motion. The only issue raised by defendant on this appeal is a claim of
prejudice because ‘the evidence has gone cold.’ However, defendant fails to identify any
evidence that became unavailable as a result of the delay and therefore fails to show
prejudice.” The dissenter argued that “CPLR 1021 requires that a motion for substitution
be made within a reasonable time after the event requiring substitution occurs.” And,
“the determination of reasonableness requires consideration of several factors, including
the diligence of the party seeking substitution, the prejudice to the other parties, and
whether the party to be substituted has shown that the action or the defense has potential
merit.” Here, “in light of the more than 41-month delay in obtaining preliminary letters
testamentary, the further 7-month delay in seeking substitution, the failure to demonstrate
a reasonable excuse for the delays, the absence of an affidavit of merit, and the potential
prejudice to defendant,” the dissent would have reversed Civil Court and denied the
substitution motion.
Howlader v. Lucky Star Grocery, Inc., ___ A D 3d ___, 2017 WL 3401134 (2d Dept.
2017) – “‘CPLR 1021 requires a motion for substitution to be made within a reasonable
time’ [citations omitted]. ‘The determination of reasonableness requires consideration of
several factors, including the diligence of the party seeking substitution, the prejudice to
the other parties, and whether the party to be substituted has shown that the action or the
defense has potential merit’ [citations omitted]. Here, the plaintiff’s counsel failed to
demonstrate that he made any diligent efforts to substitute a representative for the
deceased plaintiff. Additionally, the plaintiff’s counsel did not demonstrate a reasonable
excuse for failing to seek a substitution. Further, the plaintiff’s counsel failed to submit
an affidavit of merit, and did not rebut the contention of the defendant 2100 White Plains
Road Corp. (hereinafter 2100), joined by the defendant City of New York, that they were
prejudiced in their ability to defend the case.” The Appellate Division affirms the
dismissal of the action.
Kastrataj v. Blades, 136 A D 3d 756 (2d Dept. 2016) – “‘The Supreme Court is a court of
general jurisdiction with the power to appoint a temporary administrator, and may do so
to avoid delay and prejudice in a pending action’ [citations omitted]. ‘The determination
of whether to exercise its authority to appoint a temporary administrator is committed to
the sound discretion of the Supreme Court.’” But when, as here, plaintiff failed to
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demonstrate any effort to obtain such appointment from Surrogate’s Court, or to contact
the readily identifiable son of the deceased, Supreme Court properly denied the
application to make an appointment.
Krysa v. Estate of Qyra, 136 A D 3d 760 (2d Dept. 2016) – “In this action to recover
damages for alleged injuries arising from a vehicular accident, the plaintiff did not
commence this action against the operator of the offending vehicle until several months
after the operator died. Since ‘a party may not commence a legal action or proceeding
against a dead person’ [citation omitted], the action was a nullity from its inception, and
the plaintiff was instead required to commence an action against the personal
representative of the decedent’s estate [citations omitted]. Moreover, the plaintiff’s
attempt to amend the caption of the void complaint to designate the decedent’s estate as
the defendant was invalid [citations omitted]. The plaintiff never properly commenced
an action against the decedent’s personal representative, and the time within which to do
so had expired prior to the defendant’s motion for summary judgment.”
US Bank National Association v. Cadeumag, 147 A D 3d 881 (2d Dept. 2017) – “Since a
party may not commence a legal action or proceeding against a dead person, the 2009
action was a nullity from its inception, and the plaintiff was instead required to
commence an action against the personal representative of the decedent’s estate [citations
omitted]. Accordingly, the order [denying a motion “purportedly made by the defendant”
to dismiss the complaint] appealed from is a nullity, and this Court has no jurisdiction to
hear and determine the appeal purportedly taken by the deceased defendant.”
Vello v. Liga Chilean de Futbol, 148 A D 3d 593 (1st Dept. 2017) – “The motion to
substitute the Public Administrator as a defendant was properly denied because no action
was ever brought against Tagle before his death [citation omitted]. Plaintiffs argue that
the action against Liga Chilean should be treated as one against Tagle, but any action
commenced against Tagle after his death would be a ‘nullity’ since ‘the dead cannot be
sued’ [citation omitted]. Instead, plaintiffs were required to commence a legal action
naming the personal representative of the decedent’s estate.”
INTERVENTION
Reif v. Nagy, 149 A D 3d 532 (1st Dept. 2017) – “This action arises from two pieces by
the artist Egon Schiele alleged to have been looted by the Nazis during World War II
from cabaret artist Fritz Grunbaum, who, along with his wife Elisabeth, was executed
during the Holocaust. The pieces came into the possession of art dealer Nagy sometime
after 2013.” ARIS Title Insurance Company, which has insured Nagy’s title, seeks to
intervene. The Court affirms the denial of that motion. While intervention is liberally
granted, ARIS’s interest as the title insurer to ‘Woman Hiding Her Face’ is purely
derivative, no different from that of any insurer. And since it is entitled to approve of
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counsel selected by Nagy, with whom its interests are aligned, its position is well
protected.”
Castle Peak 2012-1 Loan Trust v. Sattar, 140 A D 3d 1107 (2d Dept. 2016) –
“Intervention under CPLR 1012 and 1013 requires a timely motion [citations omitted].
Here, Shelepers purchased the subject property with the knowledge that this foreclosure
action was pending, and yet it waited over four months before seeking leave to intervene.
Under the circumstances of this case, Shelepers’ motion for leave to intervene in the
action was untimely.”
INTERPLEADER
Aetna Life Insurance Co. v. Andacky, N.Y.L.J., 1202784574440 (Sup.Ct. Suffolk Co.
2017)(Mayer, J.) – In this classic case for interpleader, plaintiff insurance company seeks
to “pay into Court, pursuant to CPLR 1006, life insurance proceeds pursuant to a life
insurance policy Aetna issued to Mel J. Faust,” because “a dispute exists between the
decedent’s widow” and “the decedent’s son” and mother. Because Aetna “is a mere
stakeholder with no interest in the policy proceeds,” which faces the potential of multiple
liability, the Court permits it to deposit the funds into Court, and to recover its fees and
disbursements in this action.
Zahavi v. JS Barkats PLLC, 138 A D 3d 618 (1st Dept. 2016) – The ultimately successful
claimant is entitled to interest from the “stakeholder” “from the date on which plaintiff
established that defendants lacked any good faith basis for retaining the principal sum in
escrow.” For, as of that date, defendants “could not be considered stakeholders within
the meaning of CPLR 1006(f).” And, “it is of no consequence that defendants received
no benefit from the money because it was held in their IOLA account.”
CLASS ACTIONS
Gerard v. Clermont York Associates, LLC, 143 A D 3d 478 (1st Dept. 2016) – “The
motion court providently exercised its discretion in deeming the motion for class
certification, which was filed 17 days after the stipulated deadline, timely filed. A court
may in its discretion deem a late-filed class certification motion timely upon a showing of
good cause.”
Vasquez v. National Securities Corp., 139 A D 3d 503 (1st Dept. 2016) – Last year’s
“Update” reported on the Supreme Court decision in this action [48 Misc 3d 597 (Sup.Ct.
N.Y.Co. 2015)]. Supreme Court held that, “New York law requires notice to the class
where, as here, an individual settlement is reached prior to a decision on the merits of a
motion to dismiss or a motion for class certification.” While “the wisdom of this rule has
been questioned by many, including the CPLR commentary,” and defendants “urge the
court to follow modern federal case law,” since, “as defendants correctly observe, it is
well established that our state courts look to Rule 23 of the Federal Rules of Civil
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Procedure to inform New York’s class action law,” nonetheless, “this action is brought
under Article 9, and this court must follow the Appellate Division’s clear precedent.”
However, “in light of the early posture of this case and the relatively small size of the
purported class, the court will only approve a cost effective, electronic notice, such as the
emails plaintiff recently sent to the purposed class via LinkedIn (albeit without prior
court approval). Most importantly, the costs shall be incurred by plaintiff’s counsel. The
public policy underlying the significant class notice expense a defendant is usually
compelled to pay, such as upon certification, or after a class settlement is reached, is
inapplicable in this case where only plaintiff and his counsel benefit.” The Appellate
Division has affirmed. “The motion court correctly required notice of the impending
dismissal of the putative class action even though the class had not been certified.” For,
“the legislature has not amended CPLR 908 to conform to the federal statute. Although
defendant-appellant raises policy arguments in support of its position, its remedy lies
with the legislature and not with this Court.”
Desrosiers v. Perry Ellis Menswear, LLC, 139 A D 3d 473 (1st Dept. 2016) – “Although
the time in which to seek class certification had expired pursuant to CPLR 902 by the
time defendants sought discontinuance of this case based on the settlement, the court
improperly denied plaintiff’s application to send CPLR 908 notice to the putative class
members.” For, “CPLR 908 is not rendered inoperable simply because the time for the
individual plaintiff to move for class certification has expired. Notice to the putative
class members of the compromise in the instant case is particularly important under the
present circumstances, where the limitations period could run on the putative class
members’ cases following discontinuance of the individual plaintiff’s action.”
Jiannaris v. Alfant, 27 N Y 3d 349 (2016) – A prior year’s “Update” reported on the
Appellate Division decision in this action. [124 A D 3d 582 (2d Dept. 2015)]. In this
action seeking essentially to undo a merger, a majority of the divided Appellate Division
affirmed the denial of approval of a settlement “because it did not afford nonresident
class members the opportunity to opt out of the settlement in order to preserve their right
to assert claims for damages.” The majority relied upon the Court of Appeals decision in
Matter of Colt Industries Shareholder Litigation, 77 N Y 2d 185 (1991), which held that
in a class action solely for equitable relief, a Court may bind nonresident members of the
class even without an opportunity to opt out, but that, in a class action including a
damages component, the Court may not bind nonresident members of the class without
an opt-out provision. The dissenting Justice argued that, here, the damages at issue “are
merely incidental to the equitable relief sought,” and that, therefore “the court was not
required to afford any class members the opportunity to opt out.” Moreover, the dissenter
“disagree[d] with the practice of affording only out-of-state class members the
opportunity to opt out, while denying that opportunity to in-state class members.” The
Court of Appeals has affirmed. “At issue on this appeal is a proposed settlement of class
action litigation arising out of the merger of defendants On2 Technologies and Google,
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Inc. The proposed settlement would release and extinguish any and all damage claims
relating to the merger without affording class members an opportunity to ‘opt out,’
thereby prohibiting class members from pursuing any individual claims that are separate
and apart from the class settlement. We hold that because the proposed settlement in this
instance would deprive out-of-state class members of a cognizable property interest, the
courts below properly refused to approve the settlement.” For, “while the complaint
seeks predominately equitable relief, the settlement would also release any damage
claims relating to the merger by out-of-state class members. The broad release
encompassed in the agreement bars the right of those class members to pursue claims not
equitable in nature, which under [Phillips Petroleum Co. v.] Shutts [472 U.S. 797 (1985)]
and Colt, are constitutionally protected property rights.” The Court rejected the argument
that “incidental damages” should be treated differently from “individualized damage
claims.”
Onadia v. City of New York, 56 Misc 3d 309 (Sup.Ct. Bronx Co. 2017)(Danziger, J.) –
Plaintiff seeks to certify a class of those “unlawfully detained” more than 48 hours after
conditions for release have been satisfied, because of a “detainer” requested by United
States Immigration and Customs Enforcement. The Court, applying the conditions
specified in CPLR 902, grants certification. The numerosity standard is met by the
conclusion of an IT consultant that upwards of 9,000 persons fall in this category. The
claims of those potential class members are essentially the same, as it is limited to “those
individuals who were held beyond their release date based solely on a detainer that either
(1) specifically indicated than an investigation had been commenced or was pending by
ICE, or (2) failed to indicate a reason for the continued detention.” The proposed class
does not include “those individuals whose detainers indicated that the individual should
be held based on a warrant of arrest, notice to appear, or a deportation/removal order.”
The named plaintiff’s claim is typical of the class. “Typicality is a question of the nature
of the claim and not of the damages suffered.” Plaintiff is also an adequate representative
of the class. And, finally, a class action is “superior to other available methods for the
fair and efficient adjudication of the controversy.”
Weinstein v. Jenny Craig Operations, Inc., 138 A D 3d 546 (1st Dept. 2016) – “Where, as
here, ‘the same types of subterfuge were allegedly employed to pay lower wages,’
commonality of the claims will be found to predominate, even though the putative class
members have ‘different levels of damages’ [citations omitted]. Class action is an
appropriate method of adjudicating wage claims arising from an employer’s alleged
practice of underpaying employees, given that ‘the damages allegedly suffered by an
individual class member are likely to be insignificant, and the costs of prosecuting
individual actions would result in the class members having no realistic day in court.’”
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UNKNOWN PARTIES
Hormann Flexon, LLC v. Rytec Corporation, ___ A D 3d ___, 2017 WL 3297258 (3d
Dept. 2017) – “The statutory provision allowing commencement of an action against
unknown parties does not toll the statute of limitations [citations omitted]. As Supreme
Court held, plaintiff was required to serve all parties within 120 days of filing, or seek
leave to extend the time for service ‘upon good cause shown or in the interest of justice’
[citations omitted]. Here, plaintiff failed to seek leave to extend the time for service prior
to expiration of the statutory limitations period. Further, a party seeking to apply the
relation-back doctrine under CPLR 1024 carries the burden ‘of establishing that diligent
efforts were made to ascertain the unknown party’s identity prior to the expiration of the
statute of limitations.’” This plaintiff failed to do.
ARTICLE 16
Artibee v. Home Place Corporation, 28 N Y 3d 739 (2017) – Last year’s “Update”
reported on the Appellate Division decision in this action [132 A D 3d 96 (3d Dept.
2015). CPLR 1601(1) provides, inter alia, that “the culpable conduct of any person not a
party to the action shall not be considered in determining any equitable share herein if the
claimant proves that with due diligence he or she was unable to obtain jurisdiction over
such person in said action (or in a claim against the state, in a court of this state)”
[emphasis added]. Thus, for the calculation of percentage of fault, to determine whether
any defendant has gone over the magic 50% level, and is therefore jointly and severally
liable for non-economic loss, the jury may be instructed to ascribe a percentage of fault to
a non-party unless plaintiff shows that, despite due diligence, the plaintiff was unable to
obtain jurisdiction over that non-party. Here, the non-party is the State of New York.
Plaintiff cannot sue the State in this action, not because of lack of personal jurisdiction,
but because of the Court’s lack of subject matter jurisdiction. A divided Appellate
Division held that the exception is limited to situations where there is an absence of
personal jurisdiction, and that the jury should be permitted to ascribe responsibility to the
State for purposes of Article 16 calculations. “Although we recognize the possibility of
inconsistent verdicts as to the apportionment of fault in Supreme Court and in the Court
of Claims, we note that this risk arises regardless of whether or not the jury is entitled to
apportion liability between defendant and the State [citation omitted]. Given the
statutory purpose of CPLR 1601(1) to ‘limit a joint tortfeasor’s liability for noneconomic
losses to its proportionate share, provided that it is 50% or less at fault’ [citation omitted],
we find that juries in this scenario should be given the option to, if appropriate, apportion
fault between defendant and the State.” The dissenter argued that the apportionment, in
light of the “constitutionally-mandated empty chair,” will result in an “unfair – or, at
least, skewed – result.” A divided Court of Appeals has reversed. First, the Court
focused on the parenthetical language in CPLR 1601 quoted above, which was
“specifically requested by the office of the Attorney General.” And, “pursuant to that
language, as long as a claimant in the Court of Claims could have commenced an action
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against a private tortfeasor in any court in the State of New York, then the tortfeasor’s
culpable conduct can be considered by the Court of Claims in determining the State’s
equitable share of the total liability [citation omitted]. The statute does not, however,
contain similar, express enabling language to allow apportionment against the state in a
Supreme Court action” [emphasis by the Court]. Second, “inasmuch as no claimant can
obtain jurisdiction over the State in Supreme Court and the statute does not, by its terms,
otherwise authorize the apportionment of liability against the State in that court, we agree
with plaintiff that defendant was not entitled to a jury charge on apportionment in this
action. Initially, we reject any argument that plaintiff did not face a jurisdictional
limitation in impleading the State as a codefendant in this action.” For, “the doctrine of
sovereign immunity is jurisdictional in nature.” For, “‘jurisdiction is a word of elastic,
diverse, and disparate meanings’ [citation omitted]. It can refer to both subject matter
jurisdiction, relating to ‘a court’s competence to entertain an action,’ as well as to the
court’s ‘power to render a judgment on the merits,’ which does not relate to subject
matter jurisdiction [citation omitted]. ‘The rationale for the jurisdictional restriction in
CPLR 1601 is that if a diligent claimant were able to sue all tortfeasors but neglected to
do so, then it would not be unfair for the culpability of a nonparty to be considered even
though the claimant’s recovery might not be as complete as that provided by the
common-law rule of joint and several liability’ [citation omitted]. As a practical matter,
it makes no difference to the parties what type of jurisdiction is absent – regardless of
whether a defendant is not subject to long-arm jurisdiction or Supreme Court lacks
subject matter jurisdiction, the ‘claimant cannot with due diligence obtain jurisdiction
over such person in said action’ [citation omitted]. To read the word ‘personal’ into the
statute, as dissenters and defendant would have us do, results in an interpretation broader
than that required by the statutory language itself, which simply uses ‘the catchall word
“jurisdiction”’ [citation omitted]. Because CPLR 1601 is a statute in derogation of the
common law, it must be strictly construed [citations omitted]. By its terms, the statute
does not specify that the inability to obtain jurisdiction must have a particular cause. ‘If
the legislature intended that the term “jurisdiction” mean only “personal jurisdiction,” it
could have easily done so with the addition of that one word to the statute” [emphasis by
the Court]. The dissent argued that “the majority’s interpretation of CPLR 1601 is a
strained reading of the statutory language and contravenes the legislative goal of limiting
the liability of any and all tortfeasors who are responsible for 50% or less of the total
liability. The majority’s analysis gives the State a preferred status over other tortfeasors,
despite no indication that the legislature intended such a result, and notwithstanding that
the plain reading of the text indicates the legislature simply wanted to create parallel
rights of apportionment for state tortfeasors and non-state tortfeasors.” Indeed, “the
statute’s requirement that the plaintiff exercise due diligence to obtain jurisdiction over a
tortfeasor cannot possibly refer to a court’s subject matter jurisdiction, where the
plaintiff’s due diligence has no bearing because a plaintiff can do nothing to affect a
court’s subject matter jurisdiction over the parties’ claims. Instead, the phrase ‘due
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diligence’ only makes sense in relation to personal jurisdiction, where a plaintiff may or
may not exercise due diligence [citation omitted]. Similarly, the phrase ‘over such
person’ makes sense when ‘jurisdiction’ is read as ‘personal jurisdiction,’ as the phrase is
meaningless in the context of subject matter jurisdiction, which refers to the authority of
a court to hear particular claims. Hence, the reference to jurisdiction in the statute
logically refers only to personal jurisdiction” [emphasis by the Court]. Finally, “there is
no reason why the State should be permitted to demonstrate the culpability of non-parties
in the Court of Claims but defendants in Supreme Court should not have the parallel right
to demonstrate the State’s culpability.”
INDEMNIFICATION AND CONTRIBUTION
Eisman v. Village of East Hills, 149 A D 3d 806 (2d Dept. 2017) – Plaintiff sues the
Village of East Hills claiming that his property was damaged by flooding caused by
development of land near his property, which development was approved by the Village.
The Village asserted claims for indemnification and contribution against plaintiff’s
architect, contractor and landscaper. First, the Court dismisses the indemnification claim.
“‘“Where one is held liable solely on account of the negligence of another,
indemnification, not contribution, principles apply to shift the entre liability to the one
who was negligent.” Conversely, where a party is held liable at least partially because of
its own negligence, contribution against other culpable tortfeasors is the only available
remedy’ [citations omitted]. ‘Whether indemnity or contribution applies depends not
upon the parties’ designation but upon a “careful analysis of the theory of recovery
against each tort-feasor”’ [citations omitted] Here, since the evidence showed that the
Village may not be held vicariously or statutorily liable for any negligence of any of the
third-party defendants, the Supreme Court should have granted that branch of the third-
party defendants’ motion which was to dismiss the indemnification cause of action in the
third-party complaint.” As to contribution, “‘purely economic loss resulting from a
breach of contract does not constitute “injury to property” within the meaning of New
York’s contribution statute CPLR 1401’ [citations omitted]. ‘Accordingly, under the so-
called “economic loss doctrine,” “contribution under CPLR 1401 is not available where
the damages sought are exclusively for breach of contract”’ [citations omitted]. ‘The
existence of some form of tort liability is a prerequisite to application of CPLR 1401’
[citations omitted]. Here, the third-party defendants claim that the only duties they owed
to the plaintiffs in the main action were purely contractual. However, the plaintiffs seek
to recover damages from the Village based on causes of action sounding in tort, and the
Village, in its third-party complaint, alleges that the third-party defendants breached a
duty of care independent of any contractual duties they owed to the plaintiffs. Even
though the third-party defendants may not ultimately be held liable in tort, the Supreme
Court properly denied that branch of the third-party defendants’ motion which was to
dismiss the contribution cause of action.”
RECENT CPLR DECISIONS OF INTEREST
Burton N. Lipshie
Stroock & Stroock & Lavan LLP
102 NY 76592344v1
Board of Managers of the A Building Condominium v. 13th & 14th Street Realty LLC,
137 A D 3d 505 (1st Dept. 2016) – Defendant’s cross-claims for contribution “are barred,
because plaintiffs’ complaint seeks to recover only economic losses resulting from breach
of contract.”
Martin v. New York City Health and Hospitals Corporation, 145 A D 3d 484 (1st Dept.
2016) – Plaintiff was injured in an automobile accident, and was taken to defendant’s
hospital where, the complaint alleges, he was the victim of malpractice. The Court
denies the hospital’s motion “to place the driver of the vehicle that struck plaintiff, who
settled prior to institution of the instant action, on the verdict sheet. Defendants are
subsequent tortfeasors, and the jury was correctly charged that its award was to be limited
to the exacerbation of the original injury caused by malpractice [citations omitted].
Defendants’ argument that plaintiff’s original injury and subsequent amputation were
indivisible is without merit, in that the experts testified as to what the condition of the leg
would have been if it had been saved.”
Brion v. Moreira, N.Y.L.J., 1202770237552 (Sup.Ct. N.Y.Co. 2016)(Cohen, J.) – In this
legal malpractice action, based upon defendant’s failure to obtain revocation of a will,
defendant seeks to implead, for contribution purposes, the lawyer who succeeded him in
representing plaintiff, claiming that successor counsel improperly advised plaintiff to
settle the probate matter, failed to seek the testimony of defendant in the probate matter,
and filed unnecessary motions in that matter, causing excessive fees. “It is well-settled
law that an attorney sued for malpractice may assert a claim for contribution against
another lawyer who advised the plaintiff on the same matter.” For, “the relevant question
under CPLR 1401 is not whether the third-party defendant owed a duty to defendant but
whether they each owed a duty to plaintiff and by breaching their respective duties each
contributed to the ultimate injuries.” Here, “if defendants are successful in their defense
of this matter, the claim for contribution will be academic as defendants will not be liable
for malpractice. If plaintiff is successful in this matter and defendants are found to be
liable for malpractice for its failure to revoke the 2010 will and reinstate the 2004 will,
defendants’ first two theories for contribution could not have had a part in causing,
exacerbating or augmenting plaintiff’s injuries.” For, “the malpractice injury solely
stems from defendants’ alleged (in)actions. There is no allegation that [subsequent
counsel] DeLaurentis augmented the injury by also failing to revoke-reinstate the wills in
question. In fact, based upon the facts presented, DeLaurentis’ involvement began with
the representation of plaintiff after the death of Miguel Brion and, thus, could not have
revoked the will and stopped the injury.” To the extent that defendants contend that
DeLaurentis’ advice was faulty and had DeLaurentis litigated the probate matter the
result would have been different, if that contention is correct then, defendants would not
be liable for malpractice. Plaintiff’s entire action for damages hinges on that very
question and plaintiff can only be successful if they prove otherwise, i.e., that the 2010
will was not revoked.” However, contribution is permissible upon plaintiff’s claims for
RECENT CPLR DECISIONS OF INTEREST
Burton N. Lipshie
Stroock & Stroock & Lavan LLP
103 NY 76592344v1
legal fees relating to the probate matter. “Defendants’ contention that a portion of those
legal fees are higher than they should be because of wrongful motion practice, poor
advice and failure to seek defendants’ testimony all could have exacerbated the total legal
fees and thus, defendants have properly stated a cause of action for contribution.”
Lederer v. Daily News, L.P., N.Y.L.J., 1202763984447 (Sup.Ct. N.Y.Co. 2016)(Bannon,
J.) – This is a defamation action in which plaintiff alleges that defendant newspaper
published photographs of him mis-identifying him as a registered sex offender.
Defendant seeks contribution and indemnification against the photographer and
distributor of the photographs. Contribution “will lie whether or not the culpable parties
are allegedly liable for the injury under the same or different theories [citation omitted],
and ‘whether or not the party from whom contribution is sought is allegedly responsible
for the injury as a concurrent, successive, independent, alternative, or even intentional
tort-feasor [citation omitted]. Moreover, a cause of action for contribution may also be
stated where it is alleged a contributor breached a duty owed to the defendant whom the
plaintiff seeks to hold liable, even if no duty exists between the contributor and the
injured plaintiff [citations omitted]. Accordingly, a valid cause of action for contribution
exists here if the third-party defendants owed and breached a duty either to the plaintiff or
to the News defendants to properly verify the identity of individuals depicted in the
photographs they either took or made available for use by the media.” And, here, “the
Court need not determine at this juncture whether the third-party defendants owed a
common-law duty of care to the News defendants, since they owed a duty directly to the
plaintiff. The relationship between a commercial freelance news photographer and a
photographic licensing agency, on the one hand, and the subject of a photograph taken or
licensed by them, on the other, is such that the miscaptioning of a photograph to depict an
individual as a sex offender would result in foreseeable harm to the person so depicted.”
Defendant’s indemnification claim, however, lacks merit. “‘In the classic common-law
indemnification case, the one entitled to indemnity from another committed no wrong,
but by virtue of some relationship with the tortfeasor or obligation imposed by law, was
nevertheless held liable to the injured party’ [citation omitted]. Common-law, or implied,
indemnification ‘permits shifting the loss because to fail to do so would result in the
unjust enrichment of one party at the expense of another’ [citation omitted]. Here, the
News defendants repeatedly published photos of the plaintiff, identifying him as Epstein,
to accompany articles implying that he engaged in illegal and immoral conduct, which
reached thousands of readers. Since the standard for common-law indemnification
requires that the party claiming entitlement to indemnity be without fault, the News
defendants have not pleaded facts sufficient to make out such a cause of action, since
they do not and cannot allege that they are entirely without fault.”
RECENT CPLR DECISIONS OF INTEREST
Burton N. Lipshie
Stroock & Stroock & Lavan LLP
104 NY 76592344v1
GENERAL OBLIGATIONS LAW §15-108
Bloostein v. Morrison Cohen LLP, 2017 WL 2482942 (Sup.Ct. N.Y.Co. 2017)(Singh, J.)
– The main action here is a claim for legal malpractice alleging that plaintiff’s lawyers,
defendant Morrison Cohen, failed to properly advise plaintiff concerning the relevant
transaction, resulting in “significant capital gains taxes.” Morrison Cohen impleaded
Stonebridge, which designed the transaction, and Brown Rudnick, one of Stonebridge’s
lawyers. The third-party claim against Brown Rudnick sought, inter alia, contribution on
the grounds that Brown Rudnick had been the principal drafter of the transaction, and had
issued a tax opinion letter. The claims against Stonebridge were subsequently dismissed,
but the contribution claim against Brown Rudnick remained extant. Brown Rudnick then
commenced a fourth-party action against Stroock, Stonebridge’s other counsel with
respect to the transaction, seeking contribution. Stonebridge, meanwhile, had
commenced an arbitration against Stroock, alleging legal malpractice with respect to the
same transaction. That arbitration was resolved by a settlement agreement. By the
present motion, Stroock sought dismissal of Brown Rudnick’s fourth-party action for
contribution, as barred by General Obligations Law §15-108. That motion is granted, the
Court rejecting Brown Rudnick’s claim that the injury in this action is not, in the
language of the statute for “the same injury” as that resolved by the arbitration settlement.
For, “the contribution claim brought in this action by Brown Rudnick against Stroock
stems from the same Transaction, Opinion Letter and losses as those addressed in the
Arbitration. This action and the Arbitration is predicated upon legal malpractice. Both
Brown Rudnick and Stroock may be held jointly or severally culpable to the plaintiff
investors for the same injury. Accordingly, GOL §15-108 and the release bars Brown
Rudnick from seeking contribution from Stroock.”
PLEADINGS
CIFG Assurance North America, Inc. v. J.P. Morgan Securities LLC, 146 A D 3d 60 (1st
Dept. 2016) – “It is well settled that a misrepresentation claim must be pleaded with
particularity [citations omitted]. CPLR 3016(b) ‘imposes a more stringent standard of
pleading’ than otherwise applicable [citation omitted]. The purpose of this strict pleading
requirement is to clearly inform a defendant as to the complained-of incidents [citation
omitted]. Thus, ‘conclusory allegations are insufficient.’”
Hirsch v. Stellar Management, 148 A D 3d 588 (1st Dept. 2017) – “The motion court
correctly determined that plaintiff failed to plead a fraud claim with the requisite
specificity [citation omitted]. Although plaintiff alleged that defendants committed a
material misrepresentation of fact, plaintiff failed to allege specific details to demonstrate
that he justifiably relied on the misrepresentation to his detriment.”
RECENT CPLR DECISIONS OF INTEREST
Burton N. Lipshie
Stroock & Stroock & Lavan LLP
105 NY 76592344v1
Parker Waichman LLP v. Squier, Knapp & Dunn Communications, Inc., 138 A D 3d 570
(1st Dept. 2016) – “The complaint’s boilerplate allegations that defendants disclosed
confidential information, thereby causing harm, are too vague and conclusory to sustain a
breach of contract cause of action [citation omitted]. Moreover, the complaint failed to
allege how the alleged breach caused any injury [citation omitted]. Dismissal of the
cause of action alleging breach of fiduciary duty was also warranted since plaintiff failed
to plead it with particularity, as required by CPLR 3016(b) [citation omitted], and the
claim was duplicative of the breach of contract claim [citation omitted]. The court
properly denied plaintiff’s request for leave to replead, as plaintiff failed to submit a
proposed amended pleading accompanied by an affidavit of merit.”
Lemieux v. Fox, 135 A D 3d 713 (2d Dept. 2016) – “CPLR 3016(a) requires that ‘in an
action for libel or slander, the particular words complained of shall be set forth in the
complaint’ [citation omitted]. ‘Compliance with CPLR 3016(a) is strictly enforced’
[citation omitted]. Therefore, ‘a cause of action sounding in defamation which fails to
comply with these special pleading requirements must be dismissed’ [citation omitted].
Here, the cause of action alleging defamation did not set forth the particular words
complained of and alleged only that the defendants made ‘defamatory statements to the
plaintiff, William Lemieux’s employer and others calling into question his character and
professionalism.’” Dismissal of the complaint was affirmed.
Skanska USA Building, Inc. v. Atlantic Yards B2 Owner, LLC, 145 A D 3d 1 (1st Dept.
2016) – “The CPLR does not require a party asserting a contract claim to plead
compliance with a condition precedent [citation omitted]. Instead, it is incumbent upon
the party resisting the contract claim to plead the failure to comply with the condition
precedent.”
High Definition MRI, P.C. v. Travelers Companies, Inc., 137 A D 3d 602 (1st Dept.
2016) – “Here, the complaint standing alone failed to apprise defendant insurance
companies of basic pertinent information to put them on notice of the claims against
them, such as the patients treated and the insurance policies issued by defendant, under
which plaintiff submitted claims, for treatment rendered. However, in opposition to
defendant insurance companies’ motion to dismiss, plaintiff submitted an affidavit from
its principal with an exhibit attached providing such information. Thus, the complaint
and affidavit submitted in opposition sufficiently apprise defendant insurance companies
of the ‘transactions, occurrences, or series of transactions’ that form the basis of the
complaint.”
Rudzinski v. Glashow, N.Y.L.J., 1202788193790 (Sup.Ct. Kings Co. 2017)(Rivera, J.) –
“CPLR 3024(b) permits a party to make a motion to strike a scandalous or prejudicial
matter unnecessarily inserted in a pleading [citation omitted]. In reviewing a motion to
strike scandalous or prejudicial matter unnecessarily inserted in a pleading, the inquiry is
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Stroock & Stroock & Lavan LLP
106 NY 76592344v1
whether the purportedly scandalous or prejudicial allegations are relevant to a cause of
action [citation omitted]. Striking of the entire pleading is not an available remedy under
CPLR 3024(b). The movant may only strike that portion of the pleading that contains the
unnecessarily scandalous and prejudicial matter. As [defendant] Carter sought only to
strike the entire complaint and did not specify which paragraphs were scandalous or
prejudicial the motion is denied on the merits.”
Deluca v. Clockman, N.Y.L.J., 1202775025829 (Sup.Ct. Nassau Co. 2016)(Diamond, J.)
– “Defendant’s ninth affirmative defense appears to be a reservation of rights to assert
further defenses during the course of discovery. Such a defense, in the opinion of this
Court, is not a recognized affirmative defense in the State of New York; moreover, it is
implicit in CPLR 3025 that no such reservation of rights is a necessary prerequisite for a
party to move to amend his answer to assert additional defenses.”
East 10th Street Associates, LLC v. Ritter Antik, Inc., N.Y.L.J., 1202767685718 (Civ.Ct.
N.Y.Co. 2016)(Goetz, J.) – In this commercial non-payment proceeding, respondent-
tenant has counterclaimed for damages resulting from “constructive eviction.” The lease
agreement forbids counterclaims. “However, a no counterclaim provision in a
commercial lease will not operate as a bar to a tenant’s asserting counterclaims in a
summary proceeding when the counterclaims are ‘inextricably intertwined’ with the
landlord’s claim.” Here, however, the tenant’s claims with respect to conditions in the
building resulting in its counterclaims “relate to periods prior to the period of time for
which Petitioner seeks rent arrears. Since the allegations in support of Respondent’s
counterclaims are not temporally related to the petition, the Court holds that
Respondent’s counterclaims are not inextricably intertwined with Petitioner’s claim for
rent.” Accordingly, the counterclaims were dismissed.
Paramount Pictures Corporation v. Allianz Risk Transfer AG, 141 A D 3d 464 (1st Dept.
2016) – In 2008, despite a contractual covenant not to sue, the defendants in this action
sued the plaintiff in this action for fraud, in Federal Court, seeking to recoup losses on an
investment. That Court dismissed the action, finding that fraud had not been proved.
Neither side raised the covenant not to sue. In this action, plaintiff seeks damages for
defendants’ breach of the covenant not to sue. Defendants move to dismiss, claiming that
the claim was waived by plaintiff’s failure to assert it as a counterclaim in the Federal
action. “New York is a permissive counterclaim jurisdiction [citation omitted]. ‘Our
permissive counterclaim rule may save from the bar of res judicata those claims for
separate or different relief that could have been, but were not interposed in the parties’
prior action. It does not, however, permit a party to remain silent in the first action and
then bring a second one on the basis of a preexisting claim for relief that would impair
the rights or interests established in the first action.’” Here, “while we agree with
plaintiff that the relief it seeks in this action (i.e., attorneys’ fees incurred in the federal
action) would not ‘impair the rights or interests established’ in the federal action,
RECENT CPLR DECISIONS OF INTEREST
Burton N. Lipshie
Stroock & Stroock & Lavan LLP
107 NY 76592344v1
meaning that New York’s permissive counterclaim rule would save it from the traditional
bar of res judicata, the inquiry does not end there where the prior action was adjudicated
in a compulsory counterclaim jurisdiction.” The Court concluded that, under the Federal
Rules of Civil Procedure, Rule 13(a), plaintiff’s claim would have been a compulsory
counterclaim in Federal Court. While noting that “there is no binding precedent which
holds that state courts must apply Federal Rules of Civil Procedure rule 13(a),” the Court
quoted from a Southern District opinion that “‘when the forum in which the prior
litigation occurred was a compulsory counterclaim jurisdiction, notions of judicial
economy and fairness require that a party be precluded from bringing all claims that it
earlier had the opportunity – exercised or not – to assert as counterclaims.” It also cited
dicta from the Court of Appeals decision in Gargiulo v. Oppenheim, 63 N Y 2d 843
(1984), in which the Court assumed “without deciding, that under the procedural
compulsory counterclaim rule in the Federal Courts [citation omitted] claim and issue
preclusion would extend to bar the later assertion in the present State court action of a
contention which could have been raised by way of a counterclaim.” Thus, the Court
concludes “that the later assertion in a state court action of a contention that constituted a
compulsory counterclaim [citation omitted] in a prior federal action between the same
parties is barred under the doctrine of res judicata.”
Mutual Benefits Offshore Fund v. Zeltser, 140 A D 3d 444 (1st Dept. 2016) – “A
counterclaim must assert a cause of action against the plaintiff [citations omitted].
Although the original counterclaims in this action named plaintiff as a counterclaim
defendant, the amended counterclaims, which are the operative pleadings [citation
omitted], do not. While a counterclaim may be made against ‘a person whom a plaintiff
represents’ [citation omitted], plaintiff is not a representative, executor, or administrator
of any of the counterclaim defendants [citation omitted]. Accordingly, the motion court
correctly dismissed the counterclaims with prejudice. Given the procedural requirements
for a third-party action (see CPLR 1007), the motion court properly declined to convert
the amended counterclaims into third-party claims. As the motion court noted, however,
dismissal of the counterclaims does not preclude defendants/counterclaim plaintiffs from
bringing a third-party action.”
Larke v. Moore, 150 A D 3d 1620 (4th Dept. 2017) – “Plaintiffs waived any objection to
the lack of verification by waiting nearly two months to reject the answer [citations
omitted]. We therefore conclude that plaintiffs failed to act with ‘due diligence’ as
required by CPLR 3022.”
Velasquez v. The Donado Law Firm PC, N.Y.L.J., 1202764214766 (Sup.Ct. Nassau Co.
2016)(Diamond, J.) – “Where a complaint charges allegations of what would be a crime,
a Defendant need not verify his pleading if doing so might incriminate him.”
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Burton N. Lipshie
Stroock & Stroock & Lavan LLP
108 NY 76592344v1
Putrelo Construction Company v. Town of Marcy, 137 A D 3d 1591 (4th Dept. 2016) –
Last year’s “Update” reported on Medina v. City of New York, 134 A D 3d 433 (1st Dept.
2015), in which the First Department held that, “since the limited proposed amendments
were clearly described in the moving papers, plaintiff’s failure to submit proposed
amended pleadings with his original moving papers (CPLR 3025[b]), was a technical
defect, which the court should have overlooked [citation omitted], particularly after
plaintiff provided those documents with his reply.” Here, in Putrelo, the Fourth
Department applies a similar standard: “Plaintiff failed to include an amended pleading
with its motion, as required by CPLR 3025(b). Under the circumstances of this case,
however, we conclude that the error was merely a technical defect that the court should
have disregarded [citation omitted], inasmuch as ‘the limited proposed amendment was
clearly described in the moving papers’ and did not prejudice defendant or third-party
defendant [citations omitted]. We further conclude that defendant and third-party
defendant failed to show that they would be prejudiced by the amendment. ‘In the
absence of prejudice, a motion to amend the ad damnum clause, whether made before or
after the trial, should generally be granted’ [citation omitted]. We reject the contention of
defendant and third-party defendant that the amendment was ‘palpably insufficient or
patently devoid of merit’ [citation omitted]. Defendant and third-party defendant rely
upon documents submitted by them in opposition to the motion, but ‘a court should not
examine the merits or legal sufficiency of the proposed amendment unless the proposed
pleading is clearly and patently insufficient on its face’ [citations omitted]. Finally, while
the delay in moving to amend was extensive and plaintiff provided no excuse for it, ‘mere
lateness is not a barrier to the amendment. It must be lateness coupled with significant
prejudice to the other side’ [citation omitted], which, as we previously concluded,
defendant and third-party defendant did not show.”
U.S. Bank National Association v. Shereshevsky, N.Y.L.J., 1202773822309 (Sup.Ct.
Kings Co. 2016)(Rivera, J.) – “An amended pleading, once served, supersedes the initial
pleading and becomes the only pleading in the case as though the initial pleading was
never served [citations omitted]. By amending the complaint and serving it upon
[defendant] Crockett, USBNA replaced the original complaint as if the original complaint
never existed. It was then USBNA’s obligation to serve the amended complaint on all
the defendants to trigger their respective obligation to answer the amended complaint.”
Thus, a co-defendant, who never responded to the original complaint served on her, was
not subject to a default, since plaintiff did not serve her with the amended complaint.
Moezinia v. Ashkenazi, 136 A D 3d 990 (2d Dept. 2016) – “Generally, a defense based
upon the statute of limitations is waived unless raised by pre-answer motion or in the
defendant’s answer [citation omitted]. A defendant, however, may assert a statute of
limitations defense for the first time in an answer served in response to a plaintiff’s
amended complaint [citation omitted]. Moreover, a party may amend its pleading once
without leave of court, among other circumstances, within 20 days after service of that
RECENT CPLR DECISIONS OF INTEREST
Burton N. Lipshie
Stroock & Stroock & Lavan LLP
109 NY 76592344v1
pleading [citation omitted]. An amended answer, made as a matter of right pursuant to
CPLR 3025(a), may include a statute of limitations defense previously omitted.”
Commonwealth Land Title Insurance Company v. Sienna Abstract, LLC, 136 A D 3d 965
(2d Dept. 2016) – “Where ‘no prejudice or surprise results from the delay in seeking
leave to amend a pleading, such applications are to be freely granted unless the proposed
amendment is palpably insufficient or patently devoid of merit’ [citations omitted].
Lateness alone is not a barrier to an amendment [citation omitted]. Rather, lateness must
be coupled with significant prejudice to the other side, the very elements of the laches
doctrine.”
Makris v. Quartz Associates, N.Y.L.J., 1202763223476 (Sup.Ct. N.Y.Co. 2016)(Bluth,
J.) – Defendants’ motion to amend their answer to assert a statute of limitations defense
to some of the causes of action, made four years after their original answer, is denied.
For, “plaintiff has demonstrated that she would suffer substantial prejudice if this
amendment was permitted.” While “delay is not sufficient, by itself, to deny a request to
amend,” plaintiff “has demonstrated that she would have explored the united in interest
issue as a possible defense to the statute of limitations claim if it had been timely raised.
Further, plaintiff was prejudiced by expending more resources on discovery [citation
omitted]. If ABO had timely raised the statute of limitations defense, and was successful,
plaintiff would have focused only on the remaining causes of action. Instead, plaintiff
conducted discovery with all defendants on all causes of action and took 19 depositions.
Surely plaintiff may have taken some of these depositions anyway, but plaintiff’s
litigation strategy for the past several years would have changed dramatically had ABO
raised the statute of limitations in a timely manner.”
Civil Service Employees Association, A.F.S.C.M.E., Local 1000, A.F.L.-C.I.O. v. County
of Nassau, 144 A D 3d 1075 (2d Dept. 2016) – “We agree with the plaintiffs that the
Supreme Court improvidently exercised its discretion in granting the County’s motion for
leave to amend its answer to assert the statute of limitations as a defense and for summary
judgment dismissing the complaint as time-barred [citation omitted]. The County’s
motion was not made until approximately six years after service of its answer, after the
parties had completed discovery, and after the note of issue had been filed. Under these
circumstances, the plaintiffs have suffered significant prejudice from the County’s delay
in asserting the statute of limitations as a defense [citations omitted]. Moreover, the facts
set forth by the County in support of the proposed defense were known to the County at
the time that it served its answer, and no excuse has been offered for the delay.”
Harris v. Finster, Inc., N.Y.L.J., 1202754585220 (Sup.Ct. Greene Co. 2016)(Fisher, J.) –
Plaintiff belatedly seeks to amend his complaint to add new items of damage. But “there
is prejudice to defendants.” For, “it is without question that Defendants have not had an
opportunity to conduct disclosure regarding the newly alleged monetary damages, as well
RECENT CPLR DECISIONS OF INTEREST
Burton N. Lipshie
Stroock & Stroock & Lavan LLP
110 NY 76592344v1
as Plaintiff’s loss of ‘use and enjoyment’ of his property now alleged in the amended
Complaint.” However, “given the extensive case law granting amendments, the Court is
permitting Plaintiff to amend his Complaint. However, the Court may award ‘costs and
continuances’ as ‘may be just’ in permitting such amendment, and elects to do so here
because of the prejudice on Defendants and the temporal delay by Plaintiff which could
have alleviated at least some of the prejudice. Therefore, Plaintiff shall pay for the costs
of all disclosure to occur due to this amendment, including the full cost of a further
deposition(s), transcript reproductions, any further paper disclosure, and other related
costs due to Plaintiff’s delayed amendment [citations omitted]. Additionally,
Defendants’ counsel may submit an affidavit of counsel fees and receive reasonable
compensation for the extra time expended on the matter due to the late amendment,
which includes counsel fees for further deposition(s), drafting/responding disclosure
demands or supplemental bill of particulars, and other related costs endured due to the
amendment only.”
Bleakley Platt & Schmidt, LLP v. Barbera, 136 A D 3d 725 (2d Dept. 2016) – After
plaintiff commenced this action for legal fees, defendant Barbera commenced a separate
action for legal malpractice. In her answer in the fee action, Barbera asserted as an
affirmative defense that the claims were barred by acts of professional negligence.
Thereafter, Barbera moved to consolidate the two actions. That motion was denied, “due
to the defendant’s record of delay with respect to discovery in this action and due to her
prior violation of a discovery order. The court also noted that this action and the legal
malpractice action were at completely different stages of discovery and that it had already
directed that there be no further delay in this action.” Now, Barbera moves to amend her
answer in this action to assert, as a counterclaim, everything she alleges in the
malpractice action. The Appellate Division affirms the denial of that motion.
Red Zone LLC v. Cadwalader, Wickersham & Taft LLP, 27 N Y 3d 1048 (2016) – Last
year’s “Update” reported on the Appellate Division decision in this action [118 A D 3d
581 (1st Dept. 2014)], and a prior year’s “Update” reported on the Supreme Court
decision [N.Y.L.J., May 21, 2013, 1202604831378 (Sup.Ct. N.Y.Co.)]. In this legal
malpractice action, defendant opposes plaintiff’s motion for summary judgment and
seeks to amend its answer to add a defense of assumption of the risk, based upon the
affidavit of one of its partners that the client agreed to the deal that caused its damages
against his advice. However, in a prior related litigation, that partner was deposed, and,
as Supreme Court noted, “he testified he gave instructions for a letter agreement with
certain terms; he testified it worked; and was clear. His affidavit now says the terms
were not there; it did not work, was not clear, and that he advised against accepting it.”
Although concluding that plaintiff would not be prejudiced by defendant’s delay in
seeking the amendment, “the court’s opinion is that granting the motion – taking into
account defendant’s new theory of defense and Mr. Block’s affidavit, which starkly
contradicts his prior deposition testimony – would gravely prejudice New York’s rules-
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Stroock & Stroock & Lavan LLP
111 NY 76592344v1
based court system.” The Appellate Division affirmed. Because the affidavit in support
of the motion to amend “directly contradicts” the attorney’s earlier deposition testimony,
“the proposed amendment is patently devoid of merit.” The Court of Appeals has
modified, and essentially reversed. “While a party may not create a feigned issue of fact
to defeat summary judgment [citation omitted], contrary to plaintiff’s assertion here, the
affidavit of the attorney who represented plaintiff did not flatly contradict his prior
deposition testimony. Therefore, the affidavit should have been considered in opposition
to plaintiff’s motion.”
Genger v. Genger, N.Y.L.J., 1202769249714 (Sup.Ct. N.Y.Co. 2016)(Jaffe, J.) –
“Pleadings may be amended to conform them to the evidence before or after judgment,
‘upon such terms as may be just including the granting of costs and continuances’
[citation omitted]. The court may permit the amendment even if it ‘substantially alters
the theory of recovery’ [citations omitted]. That the judgment is summarily awarded
does not preclude such an amendment [citation omitted]. The sole consideration guiding
the court’s considerable discretion is whether the opposing party would be hindered in
preparing its case [citation omitted]. However, the liberality in granting a motion to
conform does not alter the rule that ‘a party is precluded from inequitably adopting a
position directly contrary to or inconsistent with an earlier assumed position in the same
proceeding’ [citations omitted]. Nor does it alter the law that a party is barred by res
judicata from relitigating an issue that was fully litigated.”
MOTION PRACTICE
MOTION PROCEDURE
First United Mortgage Banking Corp. v. Lawani, 147 A D 3d 912 (2d Dept. 2017) – “We
caution that a dismissal based almost entirely upon an independent Internet investigation
[by the Court], especially one conducted without providing notice or an opportunity to be
heard by any party, is improper and should not be repeated.”
Taylor v. Fashakin, 53 Misc 3d 1173 (Sup.Ct. Kings Co. 2016)(Rivera, J.) – On this
motion to dismiss the complaint, defendant’s “motion papers consist of a notice of
motion, a memorandum of law in support of the motion and six annexed exhibits. The
instant motion is unsupported by any testimony from anyone with personal knowledge of
the facts that it relies upon. Nor are there any sworn allegations of fact from anyone with
personal knowledge explaining what the six documents annexed to the motion are
purported to be. Although the memorandum of law in support of the motion is signed by
[defendant] Janet Fashakin before a notary public, it is not an affidavit. The
memorandum of law does not state that the facts alleged in the document are sworn under
penalty of perjury or that the document is true. An unsworn declaration neither made
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under penalty of perjury nor stating that the document is true is not an ‘affidavit’
[citations omitted]. Inasmuch as the facts and documents proffered to support the instant
motion are not admitted under oath by anyone with personal knowledge, the instant
motion fails to comply with the minimal requirements of CPLR 2214. It is therefore
denied without prejudice.”
Nieto v. Deveau, 51 Misc 3d 1027 (Civ.Ct. Kings Co. 2016)(Montelione, J.) – “Plaintiff
argues that Defendant’s motion should be denied as it failed to demonstrate timely
service of the Order to Show Cause. It is undisputed that Defendant’s Order to Show
Cause was served one day late. However, after oral argument, the Court granted Plaintiff
additional time to serve its opposition thereto. As such, Plaintiff’s argument that it is
prejudiced by virtue of the service of the Order to Show Cause by one day is
unpersuasive and is rejected.”
People ex rel. Schneiderman v. Ultimate Security Force, Inc., N.Y.L.J., 1202784121621
(Sup.Ct. N.Y.Co. 2017)(Jaffe, J.) – “The mode of service provided for in an order to
show cause must be followed literally and is jurisdictional in nature.” That the adversary
“received the papers or had notice of them is of no moment” if they are not served
pursuant to the dictates of the order.
Woodward v. Milbrook Ventures LLC, 148 A D 3d 658 (1st Dept. 2017) – The Appellate
Division affirms Supreme Court’s denial of defendants’ motion to change venue on the
ground that it was untimely. “Having consented to electronic filing, defendants were
required to serve their papers electronically [citation omitted], and indeed served their
demand for change of venue, together with their answer, by e-filing the documents on
July 14, 2015 [citation omitted]. Having served their demand, defendants were required
to bring their motion to change venue within 15 days, or by July 29, 2015 [citation
omitted]. However, defendants did not bring their motion until July 31, 2015, rendering
it untimely. That defendants also elected to serve their demand via United States mail did
not extend the deadline for their motion under CPLR 2103(b)(2). Because they
consented to participate in Supreme Court’s e-filing system, defendants were bound by
the applicable rules governing service.”
Oglesby v. Barragan, 135 A D 3d 1215 (3d Dept. 2016) – “Plaintiffs’ argument that they
are entitled to an extension of time for service [of process] in the interest of justice is not
properly before us [citation omitted]. As plaintiffs concede, they raised this argument for
the first time in their reply papers on the motion. Reply papers are intended to address
contentions raised in opposition to a motion and not to supplement a motion with new
arguments.”
Central Mortgage Company v. Jahnsen, 150 A D 3d 661 (2d Dept. 2017) – “Contrary to
the appellant’s contention, it was not error for the Supreme Court to consider the reply
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affidavit, which was submitted in reply to the appellant’s opposition. A party moving for
summary judgment generally cannot meet its prima facie burden by submitting evidence
for the first time in reply [citations omitted]. However, there are exceptions to this
general rule, including when the evidence is submitted in response to allegations raised
for the first time in the opposition papers or when the other party is given an opportunity
to respond to the reply papers [citations omitted]. Further, ‘the function of reply papers is
to address arguments made in opposition to the position taken by the movant’ [citations
omitted]. Here, the Supreme Court properly considered the reply affidavit because the
affidavit was offered in response to the appellant’s allegation in opposition to the motion
that the plaintiff never had possession of the note, and merely clarified the plaintiff’s
initial submissions as to its possession of the note at the time of commencement.”
Citimortgage, Inc. v. Dulgeroff, 138 A D 3d 419 (1st Dept. 2016) – “Contrary to the
motion court’s ruling, West Fork’s failure to attach the judgment of foreclosure to its
motion to intervene and to vacate the judgment is not a fatal defect. At most, the court
should have directed West Fork to supplement or resubmit its papers [citations omitted].
However, contrary to West Fork’s argument, the order on appeal need not be vacated for
failure to recite the papers on which it is based.”
Halley v. Servedio, N.Y.L.J., 1202752844157 (City Ct. Poughkeepsie 2016)(Mora, J.) –
“The rule is that where an attorney is a party to the action, the attorney must file an
affidavit, not an affirmation, in support of his papers. Specifically, the law provides that
an attorney may only file an affirmation when he is not a party to an action” [emphasis by
the Court].
L.H.M.B. v. D.A.M.Q., N.Y.L.J., 1202773784794 (Sup.Ct. N.Y.Co. 2016)(Helewitz,
Sp.Ref.) – “Knowledge of the English language, or lack thereof, is not a barrier to being
afforded the opportunity to present a matter to the court for adjudication. However
CPLR 2101(b) requires that when a paper is filed in a foreign language, it must be
accompanied by a certified translation. This same requirement of providing the court
with a certified translation applies even if the document is in English but is being filed by
a non-English speaking party. In the case at bar, the litigants do not read, write or speak
English and the service that they used to prepare their uncontested divorce papers,
knowing this, simply had them sign papers in the English language, apparently hoping
that the court would not discover that the parties did not understand, legally, what they
were signing. ‘The court has held that the absence of a translator’s affidavit, required of
foreign-language witnesses, renders the witness’s English-language affidavit facially
defective and inadmissible’ [citations omitted]. Consequently, both plaintiff’s ‘verified’
complaint and defendant’s ‘affidavit’ are legally insufficient to support the matter. Based
on the foregoing, this matter is dismissed.”
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Matter of Meighan v. Ponte, 144 A D 3d 917 (2d Dept. 2016) – A prior year’s “Update”
reported on Rosenblatt v. St. George Health and Racquetball Associates, LLC, 119 A D
3d 45 (2d Dept. 2014). There, the Second Department distinguished its earlier decision
in Tirado v. Miller, 75 A D 3d 153 (2d Dept. 2010). In Tirado, defendant moved to
quash a third-party subpoena. Nisi prius granted the motion, but on grounds different
from those urged by defendant. The Appellate Division held that, “trial courts are not
necessarily limited by the specific arguments raised by parties in their submissions,”
although “a court typically lacks the jurisdiction to grant relief that is not requested in the
moving papers.” However, “the presence of a general relief clause enables the court to
grant relief that is not too dramatically unlike that which is actually sought, as long as the
relief is supported by proof in the papers and the court is satisfied that no party is
prejudiced.” In Tirado, “the relief granted, of quashing the plaintiff’s subpoena and, in
effect, granting a protective order, is not only similar, but in fact identical, to the ultimate
relief demanded in the notice of motion, albeit on a different basis. We find that the
general relief clause in the notice of motion permitted the court to consider an alternative
ground for granting the motion, consistent with the ultimate relief that was requested, and
which was based upon material contained in the court’s own file.” The Court rejected the
argument that the Trial Court improperly acted sua sponte. “There is a critical distinction
between sua sponte relief not requested by any party, and sua sponte reasoning in
granting or denying nondispositive discovery relief that has been requested by a party.”
In Rosenblatt, on defendant’s motion for summary judgment, it relied upon plaintiff’s
unsigned and uncertified deposition transcript. Plaintiff argued that the transcript could
not be relied upon because it was “unverified.” Supreme Court, recognizing that
verification was unnecessary, nonetheless, sua sponte, concluded that, because the
transcript was uncertified, the motion must be denied. The Appellate Division reversed,
distinguishing Tirado. “The motion at issue in Tirado, which related to discovery, did
not have ‘dispositive import’ to that action [citation omitted]. By contrast, [defendant’s]
motion for summary judgment is dispositive in nature. Thus, Tirado is distinguishable
from the instant case. Here, the Supreme Court denied the subject motion for summary
judgment on a ground that the parties did not litigate. The parties did not have an
opportunity to address the issue relating to the certification of the plaintiff’s deposition
transcript, relied upon by the Supreme Court in denying that dispositive motion. The lack
of notice and opportunity to be heard implicates the fundamental issue of fairness that is
the cornerstone of due process.” For, “‘we are not in the business of blindsiding litigants,
who expect us to decide their appeals on rationales advanced by the parties, not
arguments their adversaries never made.’” Here, in Meighan, respondent moved to
dismiss this Article 78 proceeding on the ground that the petition failed to state a cause of
action. Supreme Court dismissed the proceeding on the ground that petitioner had failed
to file proof of service of the notice of petition and petition. The Appellate Division
reverses. First, “‘the failure to file proof of service is a procedural irregularity, not a
jurisdictional defect, that may be cured by motion or sua sponte by the court in its
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discretion pursuant to CPLR 2004.’” Moreover, respondent never contended “that the
proceeding should be dismissed for failure to file proof of service. As such, the parties
did not have an opportunity to address the purported failure to file proof of service, the
ground upon which the Supreme Court relied in denying the petition and dismissing the
proceeding, even though such defect is readily curable [citations omitted]. ‘The lack of
notice and opportunity to be heard implicates the fundamental issue of fairness that is the
cornerstone of due process.’”
North Oyster Bay Baymen’s Association v. Town of Oyster Bay, 150 A D 3d 865 (2d
Dept. 2017) – “Although a court ‘is generally limited to the issues or defenses that are the
subject of the motion’ if the motion is dispositive of the underlying action [citations,
including to Rosenblatt v. St. George Health and Racquetball Associates, LLC, discussed
above, omitted], a court may decide a nondispositive motion ‘upon grounds other than
those argues by the parties in their submissions’ where ‘the court’s grant or denial of
relief is confined to the specific family of relief sought in the motion’ [citing to Tirado v.
Miller, discussed above].”
Mew Equity, LLC v. Sutton Land Services, LLC, 144 A D 3d 874 (2d Dept. 2016) – On
this motion for summary judgment, moving defendants “submitted the complaint and
their answer, but did not submit the answers of the other defendants. The Mew plaintiffs,
in opposition, did not contend that this branch of the Sutton defendants’ motion should be
denied due to the Sutton defendants’ failure to fully comply with CPLR 3212(b).
Consequently, the court should not have raised the issue on the Mew plaintiffs’ behalf.”
Matter of Etna Prestige Technology, Inc. v. Long Island Railroad Company, 148 A D 3d
885 (2d Dept. 2017) – “The LIRR did not seek dismissal of the petition on the ground
that the petitioner failed to exhaust its administrative remedies and, thus, the denial of the
petition on that ground was not warranted.”
USAA Federal Savings Bank v. Calvin, 145 A D 3d 704 (2d Dept. 2016) – “In the order
appealed from, the Supreme Court granted [defendant] Ivette’s motion to stay the
foreclosure sale and granted her request, made in her reply affirmation, to vacate the
judgment of foreclosure and sale entered April 26, 2012, on condition that she pay a
certain sum of money. The court also, sua sponte, awarded related relief not requested by
the parties. The court may grant relief that is warranted pursuant to a general prayer for
relief contained in a notice of motion if the relief granted is not too dramatically unlike
the relief sought, the proof offered supports it, and there is no prejudice to any party
[citations omitted]. Here, Ivette’s application to vacate the final judgment of foreclosure
and sale, as well as the related relief awarded, sua sponte, by the Supreme Court, was
‘dramatically unlike’ the relief sought in Ivette’s motion, which only sought to stay the
impending foreclosure sale based on her pending contempt motion in the matrimonial
action. The function of reply papers is to address arguments made in opposition to the
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position taken by the movant and not to permit the movant to introduce new arguments in
support of, or new grounds or evidence for, the motion [citations omitted]. Here, Ivette’s
reply papers included new arguments in support of the motion, new grounds and evidence
for the motion, and expressly requested relief that was dramatically unlike the relief
sought in her original motion. Accordingly, those contentions, and the grounds and
evidence in support of them, were not properly before the Supreme Court. Similarly, the
court erred in, sua sponte, awarding related relief not requested by the parties.”
Messam v. Omeally, N.Y.L.J., 1202767664745 (App.Term 2d Dept. 2016) – “While oral
opposition to a motion is not prohibited per se [citation omitted], we note that a motion
court has several alternatives when confronted with a party’s failure to submit written
opposition to its adversary’s motion: the court may treat the party’s failure to submit
written opposition to its adversary’s motion as a default [citations omitted]; it may decide
not to hold the party in default and, instead, to extend that party’s time to submit written
opposition; or it may simply consider the oral arguments put forth by that party as that
party’s opposition [citation omitted]. Of course, if the court chooses not the treat the
party’s failure to submit written opposition as a default, sworn written opposition is the
preferred manner of proceeding, particularly if there is to be any meaningful appellate
review of the ensuing order. Nevertheless, in certain situations, an appellate court may
still review an order based on oral opposition alone, so long as the motion court did not
treat the party orally opposing the motion as being in default, and set forth in its order
exactly what arguments were orally presented.”
Pac Fung Feather Co., Ltd. v. Porthault NA LLC, 140 A D 3d 576 (1st Dept. 2016) – The
Court rejects the argument that the appeal is untimely, “since none of the copies of the
orders annexed to various instruments served below were stamped by a clerk with the
date and place of entry, nor did the instruments themselves draw attention to the entry
and note such a date.” Thus, service of the notice of entry – triggering the running of the
time in which to notice an appeal – was never made.
RENEWAL, REARGUMENT AND RESETTLEMENT
Matter of Quattrone v. Erie 2-Chautaudqua-Cattaraugus Board of Cooperative
Educational Services, 148 A D 3d 1553 (4th Dept. 2017) – “As a general rule, any
motion affecting a prior order, including a motion for leave to reargue a prior motion,
must be made ‘to the judge who signed’ the prior order, ‘unless he or she is for any
reason unable to hear it’ [citations omitted]. However, an exception to that statutory
mandate ‘exists where the Rules of the Chief Administrator of the Courts provide
otherwise [citations omitted], including those rules establishing and implementing the
IAS system. The IAS rules provide that ‘all motions,’ including those governed by
CPLR 2221, ‘shall be returnable before the assignment judge’ [citation omitted]. Thus,
‘by adoption of the IAS “the CPLR 2221 requirement of referral of motions to a Judge
who granted an order on a prior motion has been modified to provide for consistency
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with the mandate of the IAS that all motions in a case shall be addressed to the assigned
Judge.”’”
Rice v. Rice, 135 A D 3d 928 (2d Dept. 2016) – “CPLR 2221 does not permit reargument
of a decision made after trial and is limited to review of a court’s ruling on a prior
motion.” The appropriate remedy to set aside a decision after trial is a motion pursuant to
CPLR 4405, which must be made within 15 days of the decision.
Matter of Franco Belli Plumbing and Heating and Sons, Inc. v. New York City School
Construction Authority, 142 A D 3d 1011 (2d Dept. 2016) – “Since ‘a judgment
dismissing a CPLR article 78 petition is a final judgment terminating the proceeding,’
CPLR 2221 is not the proper procedural mechanism to address the judgment.” Rather, an
application to vacate the judgment pursuant to CPLR 5015 is required.
One Westbank, FSB v. Rodriguez, N.Y.L.J., 1202792787794 (Sup.Ct. Bronx Co. 2017)
(González, J.) – “A motion to reargue must be made within 30 days after service of a
copy of the order determining the prior motion and written notice of its entry [citation
omitted]. On June 2, 2016, defendants e-filed a copy of the May 24, 2016 Order with
Notice of Entry. Plaintiff e-filed a motion for reargument on July 5, 2016. Defendants
contend that plaintiff’s summary judgment is untimely because its 30-day period for
reargument expired on July 2, 2016. Plaintiff contends that the 30-day period was
extended pursuant to General Construction Law §20-a because July 2, 2016 was a
Saturday, the following Monday was July 4th, a holiday. General Construction Law §20-
a(1) provides that when any period of time falls on a Saturday, Sunday or public holiday,
such act may be done on the next succeeding business day. Defendants argue that no
such extension is available since Uniform Rule 202.5(d)(3)(i) provides that electronically
filed documents may be transmitted at any time of night or day to the NYCEF site. No
citation is proffered to buttress their argument. The court accordingly declines to adopt
defendants’ narrow construct. Plaintiff’s motion to reargue is deemed timely filed.”
Vanderbilt Brookland LLC v. Vanderbilt Myrtle, Inc., 147 A D 3d 1106 (2d Dept. 2017) –
“A motion for leave to reargue ‘shall be based upon matters of fact or law allegedly
overlooked or misapprehended by the court in determining the prior motion, but shall not
include any matters of fact not offered on the prior motion’ [citation omitted]. ‘Motions
for reargument are addressed to the sound discretion of the court which decided the prior
motion and may be granted upon a showing that the court overlooked or misapprehended
the facts or law or for some other reason mistakenly arrived at its earlier decision’
[citations omitted]. Contrary to the defendants’ contentions, the Supreme Court
providently exercised its discretion in granting that branch of Brookland’s motion which
was for leave to reargue, upon its determination that, in deciding the prior motion, it had
overlooked a provision of the purchase and sale agreement which prohibited the
recording of that agreement or any memorandum thereof.”
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Country Wide Home Loans, Inc. v. Dunia, 138 A D 3d 533 (1st Dept. 2016) – After
Supreme Court granted defendant’s motion – upon plaintiff’s default – to dismiss the
action for plaintiff’s failure to take steps to obtain a default judgment within a year of
defendant’s default in appearing in the action, pursuant to CPLR 3215(c), plaintiff moved
to renew, and upon renewal to deny the motion to dismiss. “The court properly denied
plaintiff’s motion since the prior order was granted on default, and the proper remedy for
plaintiff was to move to vacate the default pursuant to CPLR 5015, rather than by motion
to renew.”
Hernandez v. Nwaishienyi, 148 A D 3d 684 (2d Dept. 2017) – “‘A motion for leave to
renew shall be based upon new facts not offered on the prior motion that would change
the prior determination and shall contain reasonable justification for the failure to present
such facts on the prior motion’ [citations omitted]. The new or additional facts presented
‘either must have not been known to the party seeking renewal or may, in the Supreme
Court’s discretion, be based on facts known to the party seeking renewal at the time of
the original motion’ [citations omitted]. ‘However, in either instance, a reasonable
justification for the failure to present such facts on the original motion must be presented’
[citations omitted]. ‘Although the requirement that a motion for renewal must be based
on new facts is a flexible one, a motion to renew is not a second chance freely given to
parties who have not exercised due diligence in making their first factual presentation’
[citations omitted]. Accordingly, ‘the Supreme Court lacks discretion to grant renewal
where the moving party omits a reasonable justification for failing to present the new
facts on the original motion.’”
Barbieri v. Miles, 140 A D 3d 1692 (4th Dept. 2016) – “Although a court has discretion
to grant a motion for leave to renew ‘in the interest of justice, upon facts which were
known to the movant at the time the original motion was made,’ it may not exercise that
discretion unless the movant establishes a reasonable justification for the failure to
present such facts on the prior motion.’”
Amtrust-NP SFR Venture, LLC v. Vazquez, 140 A D 3d 541 (1st Dept. 2016) – “The court
also properly denied defendant’s motion on the ground that he offered no justification
whatsoever as to why he did not obtain the new evidence in time to submit it in
opposition to plaintiff’s original motion, and did not assert that he made any effort, let
alone a diligent effort, to obtain this new evidence, which was readily available.”
Matter of Kopicel v. Schnaier, 145 A D 3d 599 (1st Dept. 2016) – “Renewal should have
been denied where, as here, respondents offered no reasonable justification for failing to
proffer the ‘newly discovered’ evidence on the original order to show cause, when that
evidence had been in their possession for years [citations omitted]. It was further an
abuse of discretion to allow renewal where respondents used it as an opportunity to
change legal theories, after they had the court’s initial decision.”
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Trigoso v. Correa, 150 A D 3d 1041 (2d Dept. 2017) – “‘CPLR 2221(e) has not been
construed so narrowly as to disqualify, as new facts not offered on the prior motion, facts
contained in a document originally rejected for consideration because the document was
not in admissible form’ [citation omitted]. Here, Danu’s failure to provide signed copies
of the deposition transcripts with the original summary judgment motion was tantamount
to law office failure, which constituted a reasonable justification [citations omitted].
Thus, the Supreme Court properly granted that branch of Danu’s motion which was for
leave to renew.”
Commissioners of the State Insurance Fund v. NY Minute Management Corp., 143 A D
3d 407 (1st Dept. 2016) – “Even if [plaintiff] SIF was not reasonably justified in
submitting revised audit reports with its motion to renew, which it claims could only be
generated after the court’s finding on the initial motion for summary judgment that the
drivers used by defendants were independent contractors, and thus not subject to
defendants’ workers’ compensation policy with SIF, it was an appropriate exercise of the
motion court’s discretion to grant the motion to renew in the interest of justice.”
490-492 Amsterdam Avenue Housing Development Fund Corporation v. O’Neal,
144 A D 3d 585 (1st Dept. 2016) – “Even if the ‘new facts not offered on the prior
motion’ were available to plaintiff at the time [citation omitted], the court exercised its
discretion providently in granting plaintiff’s motion for renewal in the interest of justice.”
Castor v. Cuevas, 137 A D 3d 734 (2d Dept. 2016) – “What is considered a ‘reasonable
justification’ [for the failure to submit the additional facts on the original motion] is
within the Supreme Court’s discretion [citations omitted]. ‘Law office failure can be
accepted as a reasonable excuse in the exercise of the court’s sound discretion.’” Here,
“the excuse of law office failure presented by the plaintiff was reasonable under the
circumstances.”
Brannon v. O’Neill, N.Y.L.J., 1202767130133 (Sup.Ct. N.Y.Co. 2016)(Bluth, J.) –
Plaintiff failed to demonstrate a reasonable excuse for failing to provide the medical
records that are the basis of this motion to renew upon the original motion. “Plaintiff’s
counsel simply states that he somehow thought that the DHD Medical records were
already before the Court. This is not a reasonable excuse; a cursory review of plaintiff’s
own opposition papers would have shown that the DHD Medical records were not
annexed to his opposition to defendant’s cross-motion or any other documents submitted
in connection with motion practice.” Moreover, plaintiff’s reliance on CPLR 2005,
which permits “law office failure” as an excuse for a default, does not aid him. “CPLR
2005, by its express terms, only applies to motions made pursuant to CPLR 3012(d)
(motions for extension of time to appear or plead) or CPLR 5015(a)(motions to vacate a
default judgment). Here, plaintiff does not seek relief under either of these sections;
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instead, he wants to correct a deficiency in his opposition to defendant’s threshold cross-
motion.”
Priant v. New York City Transit Authority, 142 A D 3d 491 (2d Dept. 2016) – “On a
postappeal motion for leave to renew, the movant bears a heavy burden of showing due
diligence in presenting the new evidence to the Supreme Court.”
Joseph v. Baksh, 137 A D 3d 1220 (2d Dept. 2016) – “Resettlement is generally intended
to remedy clerical errors or clear mistakes in an order or judgment when there is no
dispute about the substance of what that order or judgment should contain [citation
omitted]. It may be used where the order improperly reflects the decision or fails to
include necessary recitals, but cannot be used to obtain a ruling not adjudicated on the
original motion or to modify the decision which has been made [citations omitted]. Here,
in granting the defendants’ motion to resettle the order dated July 26, 2013, the Supreme
Court improperly changed the substance of that order. Although that order stated that the
plaintiff had only raised triable issues of fact regarding certain body parts, it stated
unambiguously that ‘the motion for summary judgment is denied.’ In granting the
defendants’ motion to resettle the order, the Supreme Court changed this outcome by, in
effect, granting the motion to the extent that it related to body parts other than the
plaintiff’s left shoulder and right hip. This is not the correction of a clerical error.
Accordingly, the Supreme Court should have denied the defendants’ motion.”
Jamaica Dedicated Medical Care, P.C. v. Tri-State Consumer Insurance Co., 52 Misc 3d
12 (App.Term 2d Dept. 2016) – Civil Court should have granted “defendant’s motion
seeking to resettle the order entered September 15, 2010 so as to delete the notation on
that order stating that it was made on ‘consent’ and is ‘not appealable.’” The motion was
a proper motion to resettle, and denial was appealable, “as defendant did not seek to
change the substantive decretal portions of the September 15, 2010 order, but rather to, in
essence, correct a factual recitation of that order.”
SEALING THE FILE
People ex rel. Qui Tam “The Bayrock Qui Tam Litigation Partnership” v. Bayrock
Group LLC, N.Y.L.J., 1202780892800 (Sup.Ct. N.Y.Co. 2017)(Singh, J.) – Individual
defendants seek an order permitting them to file their tax return documents in this action
under seal. The motion is granted. “Uniform Rules for Trial Courts (22 NYCRR)
section 216.1(a) provides that ‘a court shall not enter an order in any action or proceeding
sealing the court records, whether in whole or in part, except upon a written finding of
good cause, which shall specify the grounds thereof.’” And, “‘although the term “good
cause” is not defined, a sealing order should clearly be predicated upon a sound basis or
legitimate need to take judicial action’ [citation omitted]. ‘A finding of “good cause”
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presupposes that public access to the documents will likely result in harm to a compelling
interest of the movant’ [citation omitted]. Courts have consistently granted sealing orders
when the information sought to be sealed touches on a matter traditionally treated
confidentially, such as personal medical records [citation omitted]. Like medical records,
tax returns contain confidential, sensitive information. Medical records contain private
information about our personal health. Likewise, tax records contain private information
about our personal finances. Here, defendants maintain that: a) many of the underlying
tax return documents are jointly-filed returns; and b) the privacy interests of spouses who
are not parties to this litigation are in jeopardy. Accordingly, we find that defendants
have a legitimate expectation of privacy. By contrast, the plaintiff/relator has not
adequately identified any genuine, substantial public interest that would be served by
public access to the non-public information of the defendants. Where, as here, a sealing
order preserves the confidentiality of materials involving the internal finances of a party
and are of minimal public interest, good cause has been shown for documents to be filed
under seal.”
State ex rel. Banerjee v. Moody’s Corporation, 54 Misc 3d 705 (Sup.Ct. N.Y.Co. 2017)
(d’Auguste, J.) – A qui tam action is “placed under seal at its inception” under State
Finance Law §190(2)(b). But “the law requires that a qui tam complaint be unsealed if
the State has decided to participate in the qui tam action [citation omitted] or if the
plaintiff relator intends to proceed with the action, after the State and, if applicable, local
municipality, decline to participate.” Here, “because the State and City have both
declined to participate, the issue of whether the instant matter should be under seal is
governed by the same laws as with any other action – specifically, 22 NYCRR 216.1(a).”
Under that provision, “‘confidentiality is clearly the exception, not the rule, and the party
seeking to seal court records has the burden to demonstrate compelling circumstances to
justify restricting public access.’” While anonymity of a qui tam plaintiff may be
“justified in ‘compelling situations involving “highly sensitive matters” including “social
stigmatization,” real danger of “physical harm,” or “where the injury litigated against
would occur as a result of the disclosure of the plaintiff’s identity,”’” no such showing
has been made here.
SANCTIONS
CONTEMPT
Board of Directors of Windsor Owners Corp. v. Platt, 148 A D 3d 645 (1st Dept. 2017) –
“The validity of an order underlying a contempt proceeding may not be attacked except
on the ground that the court entering it was without jurisdiction to do so or that the order
had been stayed [citations omitted]. Accordingly, defendant’s arguments designed to
collaterally attack the preliminary injunction order will not be entertained.”
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People v. John, 150 A D 3d 889 (2d Dept. 2017) – “‘“To sustain a finding of criminal
contempt based on an alleged violation of a court order it is necessary to establish that a
lawful order of the court clearly expressing an unequivocal mandate was in effect” and
the order was disobeyed by a person having knowledge of the order’ [citations omitted].
The defendant’s knowledge of the terms of the order, as opposed to mere issuance of the
order, is an essential element of the crime [citation omitted]. Here, the People presented
evidence that the defendant had knowledge of the issuance of the order of protection, and
was told generally by the Supreme Court: ‘You’re getting a full order of protection; no
contact with the complaining witness.’ However, there was no evidence that the order of
protection, which was not signed by the defendant, was ever actually given to him, or that
he was orally advised as to the contents of the order, including a handwritten condition
that he would be in violation of the order if he came within 100 yards of the complainant,
even if invited by her. Under these circumstances, viewing the evidence in the light most
favorable to the People [citation omitted], there was insufficient evidence from which a
rational jury could conclude that the defendant had written or oral notice of the contents
of the order of protection and the conduct it prohibited.”
Rush v. Save My Home Corp., 145 A D 3d 930 (2d Dept. 2016) – Supreme Court found
defendant guilty of criminal contempt, and “imposed an intermittent sentence of 10
consecutive weekends in the Nassau County Correctional Center.” The Appellate
Division reverses. “Although the Supreme Court properly found the appellant to be in
criminal contempt, the sentence imposed is invalid. The maximum punishment
prescribed for criminal contempt is a definite sentence not to exceed 30 days.” Here, “in
imposing an intermittent sentence, the Supreme Court was bound by the procedures
applicable to intermittent sentences under the Penal Law [citations omitted]. Pursuant to
Penal Law §85.00(3), a sentence of intermittent imprisonment ‘may be for any term that
could be imposed as a definite sentence of imprisonment for the offense for which such
sentence is imposed. The term of the sentence shall commence on the day it is imposed
and shall be calculated upon the basis of the duration of its term, rather than upon the
basis of the days spent in confinement, so that no person shall be subject to any such
sentence for a period that is longer than a period that commences on the date the sentence
is imposed and ends on the date the term of the longest definite sentence for the offense
would have expired.’ The sentence imposed here violates the Penal Law by extending
the incarceration of the appellant beyond the period of 30 days from the day of
sentencing.”
S.P.Q.R. Co., Inc. v. United Rockland Holding Company, Inc., 136 A D 3d 610 (2d Dept.
2016) – “A court’s power to punish for civil contempt is found in Judiciary Law
§753(A)(3) [citation omitted]. ‘To sustain a finding of civil contempt, a court must find
that the alleged contemnor violated a lawful order of the court, clearly expressing an
unequivocal mandate of which that party had knowledge, and that, as a result of the
violation, a right of a party to the litigation was prejudiced’ [citations omitted]. Here,
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contrary to the defendants’ contentions, the judgment dated January 6, 2010, only
declared the ‘courses and distances defining defendants’ property’ as reflected in two
maps; it did not contain an unequivocal mandate such as an injunction [citations omitted].
As such, the plaintiffs cannot be found in contempt of the judgment.”
Dotzler v. Buono, 144 A D 3d 1512 (4th Dept. 2016) – “A finding of civil contempt must
be supported by four elements: (1) ‘a lawful order of the court, clearly expressing an
unequivocal mandate, was in effect’; (2) ‘it must appear, with reasonable certainty, that
the order has been disobeyed’; (3) ‘the party to be held in contempt must have had
knowledge of the court’s order, although it is not necessary that the order actually have
been served upon the party’; and (4) ‘prejudice to the right of a party to the litigation
must be demonstrated’ [citation omitted]. The party seeking an order of contempt has the
burden of establishing those four elements by clear and convincing evidence [citations
omitted]. Here, we agree with defendant that plaintiff failed to establish by the requisite
clear and convincing evidence that defendant had actual knowledge of the TRO at the
time he spent the proceeds from the sale of the mobile home [citation omitted]. We reject
plaintiff’s contention that defendant’s actual knowledge of the TRO is not necessary here
because she served the TRO upon defendant’s attorney [citation omitted]. ‘Actual
knowledge of a judgment or order is an indispensable element of a contempt proceeding’
[citations omitted], and the record establishes that defendant did not receive the TRO
before he spent the proceeds from the sale of the mobile home.”
S.M.S. v. D.S., 54 Misc 3d 779 (Sup.Ct. Richmond Co. 2016)(DiDomenico, J.) – “In
order to prevail on a motion for civil contempt, the moving party must prove: (1) the
existence of a clear and lawful mandate of the court; (2) that the party alleged to have
disobeyed the Order was aware of its terms, and (3) that the moving party’s rights were
prejudiced [citations omitted]. These elements must be established by the moving party
by clear and convincing evidence [citations omitted]. While ‘willfulness’ is an essential
element for a finding of ‘criminal contempt,’ the mere act of disobedience, regardless of
motive, is sufficient to establish ‘civil contempt’ if such disobedience ‘defeats, impairs,
impedes, or prejudices the rights or remedies of a party.’ Therefore a showing of
willfulness is unnecessary for a finding of civil contempt” [emphasis by the Court].
4720 15th Avenue LLC v. Jacobson, N.Y.L.J. 1202781884338 (Sup.Ct. N.Y.Co.
2017)(Levy, J.) – In the course of seeking to enforce a judgment, plaintiff served an
information subpoena on defendant, and seeks to hold defendant in civil contempt for his
failure to comply. The subpoena is a “non-judicial” subpoena, for “what distinguishes a
judicial from a non-judicial subpoena is where it is returnable.” Judicial subpoenas “are
those returnable in a court, and non-judicial subpoenas are those which are not returnable
in a court.” A non-judicial subpoena, as here, is governed by CPLR 2308(b), which
provides that when a person fails to comply with such a subpoena, the serving party “may
move in the supreme court to compel compliance.” Thus, “in the case of judicial
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subpoenas, a person who fails to comply runs the risk of being held in contempt based
directly on that failure to comply [citation omitted]. In contrast, a person who is served
with a non-judicial subpoena cannot be held in contempt for failure to comply unless and
until a court has issued an order compelling compliance, which order has been
disobeyed.” However, upon the defendant’s failure to comply with a non-judicial
subpoena, the Court “may impose costs and a penalty, each not to exceed $50.00, as well
as damages sustained by reason of the failure to comply.”
Matter of Fitzgerald (Rahmanan), 144 A D 3d 906 (2d Dept. 2016) – “Once the party
moving to hold another party in civil contempt establishes a knowing failure to comply
with a clear and unequivocal mandate, the burden shifts to the alleged contemnor to
refute the movant’s showing, or to offer evidence of a defense, such as an inability to
comply with the order [citation omitted]. A hearing is required only if the papers in
opposition raise a factual dispute as to the elements of civil contempt, or the existence of
a defense.”
Cantalupo Construction Corp. v. 2319 Richmond Terrace Corp., 141 A D 3d 626 (2d
Dept. 2016) – “Absent certain exceptions not applicable here, civil contempt is not
appropriate for the enforcement of a monetary judgment, which can be secured under the
provisions of article 52 of the CPLR.”
Matter of Gonnard v. Guido, 141 A D 3d 649 (2d Dept. 2016) – “Judiciary Law §773
permits recovery of attorney’s fees from the offending party by a party aggrieved by
contemptuous conduct [citations omitted]. The intent of Judiciary Law §773 is to
indemnify the aggrieved party for costs and expenses incurred as a result of the contempt
[citations omitted]. Attorney’s fees that are documented and directly related to the
contemptuous conduct are generally recoverable unless they are proven excessive or
reduced by the court in a reasoned decision.”
McCarthy v. Ciano, 50 Misc 3d 861 (Sup.Ct. Putnam Co. 2015)(Grossman, J.) – The
automatic stay provided by 11 USC §362 upon the filing of a bankruptcy petition does
not stay an application for criminal contempt. Such an application comes within the
federal statute’s exception for “a criminal action or proceeding against the debtor.”
Community Preservation Corporation v. Northern Blvd. Property, LLC, 139 A D 3d 889
(2d Dept. 2016) – “The Supreme Court erred in granting the receiver’s motion to hold the
appellant in civil contempt. Pursuant to Judiciary Law §756, a contempt application must
be in writing, must be made upon at least 10 days’ notice, and must contain on its face the
statutory warning that ‘FAILURE TO APPEAR IN COURT MAY RESULT IN
IMMEDIATE ARREST AND IMPRISONMENT FOR CONTEMPT OF COURT.’
Although the receiver’s motion was in writing and complied with the 10-day notice
requirement, it did not comply with the warning requirement. As such, the court was
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without jurisdiction to punish the appellant for contempt for failing to comply with its
prior order.”
Matter of Hartwich v. Chauvin, 140 A D 3d 1336 (3d Dept. 2016) – “A CPLR article 78
proceeding is an appropriate vehicle for review of an order of contempt when the conduct
giving rise to the contempt occurred ‘in the immediate view of the court’ and, as a result,
the court summarily punished the contemnor [citations omitted]. However, relief under
CPLR article 78 is not available where the misconduct occurred outside the presence of
the court, the finding of contempt was ‘made after due warning upon a record adequate
for appellate review’ and the contemnor was afforded ‘an opportunity to purge himself or
herself of the contempt’ [citations omitted]. In such cases, the contemnor must challenge
the order of contempt by way of a direct appeal.”
OTHER SANCTIONS
Lewis, Brisbois, Bisgaard & Smith, LLP v. Law Firm of Howard Mann, 141 A D 3d 574
(2d Dept. 2016) – “New York does not recognize an independent cause of action for the
imposition of sanctions relating to frivolous actions.”
Baxter v. Javier, 140 A D 3d 683 (2d Dept. 2016) – “CPLR 8303-a provides, in pertinent
part, that where, as here, a plaintiff has commenced a ‘frivolous’ claim in an action to
recover damages for injury to property, ‘the court shall award to the successful party
costs and reasonable attorney’s fees not exceeding ten thousand dollars.’ Thus, the
plaintiff is correct that the Supreme Court erred in basing its award on both CPLR 8303-a
and 22 NYCRR part 130, and in awarding attorney’s fees and costs in excess of the
statutory limit set forth in CPLR 8303-a [citation omitted]. Similarly, the court erred in
imposing a sanction upon the plaintiff pursuant to 22 NYCRR 130-1.1. However,
contrary to the contention of the plaintiff, the Supreme Court was not limited to making
only one $10,000 award under CPLR 8303-a. The statute specifically permits an award
of up to $10,000 to ‘the successful party’ against whom a frivolous claim is asserted.
Here, the plaintiff interposed frivolous claims for punitive damages against each of the
two defendants, and consequently, there are two ‘successful parties’ within the meaning
of CPLR 8303-a. Thus, each defendant is entitled to a separate award under CPLR 8303-
a of up to $10,000.”
Board of Managers of Foundry at Washington Park Condominium v. Foundry
Development Co., Inc., 142 A D 3d 1124 (2d Dept. 2016) – Last year’s “Update”
reported on Supreme Court’s decision in this matter [44 Misc 3d 550 (Sup.Ct. Orange
Co. 2014)]. Supreme Court held that, upon a finding of frivolous conduct, a Court may
award attorney’s fees as “costs,” even when the injured party will not itself be required to
pay those fees. “The purpose of the fee award was to compensate BSRB for the costs
incurred in defending itself against a frivolous action. The nature of the fee arrangement
between BSRB and its counsel does not provide a basis upon which Mr. Suarez can
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escape enforcement of the attorney’s fee award.” And “the fact that BSRB was
represented, in part, by counsel obtained and paid for by its malpractice carrier should not
inure to Mr. Suarez’s benefit.” The Appellate Division has affirmed. “While
compensatory sanctions should correspond at least to some degree to the amount of
damages, the aggrieved party is not always required to show ‘actual pecuniary loss.’”
Moreover, “an attorney such as Mr. Barone, who represents himself, may recover fees for
‘the professional time, knowledge and experience which he would otherwise have to pay
an attorney for rendering.’”
Delidimitropoulos v. Karantinidis, 142 A D 3d 1038 (2d Dept. 2016) – “A litigant’s
ability to file a notice of pendency is an ‘extraordinary privilege because of the relative
ease by which it can be obtained’ [citation omitted] and because it permits a party ‘to
effectively retard the alienability of real property without any prior judicial review’
[citation omitted]. Here, the judgment demanded in the complaint clearly would not
affect the title to, or the possession, use, or enjoyment of, any real property. Five months
prior to making the instant motion, the defendants’ counsel advised the plaintiff that the
notices of pendency were improperly filed, citing applicable case authorities, and
requested removal of the notices of pendency in order to avoid motion practice. The
plaintiff’s conduct in improperly filing the notices of pendency in the first instance, and
then refusing to cancel them in response to the defendants’ demand, was ‘completely
without merit in law and could not be supported by a reasonable argument for an
extension, modification, or reversal of existing law,’ and therefore was ‘frivolous’ within
the meaning of 22 NYCRR 130-1.1.”
Place v. Chaffee-Sardinia Volunteer Fire Company, 143 A D 3d 1271 (4th Dept. 2016) –
“Pursuant to 22 NYCRR 130-1.1(a), a court may award to any party fees and costs
resulting from frivolous conduct, i.e., conduct that is ‘completely without merit in law
and cannot be supported by a reasonable argument for an extension, modification or
reversal of existing law; or that is undertaken primarily to delay or prolong the resolution
of the litigation, or to harass or maliciously injure another; or asserts material factual
statements that are false’ [citation omitted]. Factors to consider in determining whether
the conduct undertaken was frivolous include ‘the circumstances under which the
conduct took place,’ and whether ‘the conduct was continued when its lack of legal or
factual basis was apparent, should have been apparent, or was brought to the attention of
counsel or the party’ [citation omitted]. Here, plaintiff’s conduct was clearly frivolous
inasmuch as she submitted an affidavit that disregarded a court order and, in response to a
second order, she submitted a second affidavit that contained a material falsehood. When
that conduct is viewed along with plaintiff’s failure to comply with discovery demands
and other orders, we conclude that it was an abuse of discretion for the court to refuse to
sanction plaintiff. We therefore modify the order in appeal No. 1 by granting that part of
defendants’ cross motion seeking sanction pursuant to 22 NYCRR 130-1.1, and we remit
the matter to Supreme Court for the determination of an appropriate sanction.”
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SEALING OF COURT FILES
Maxim, Inc. v. Feifer, 145 A D 3d 516 (1st Dept. 2016) – “This Court has previously held
that there is a ‘broad presumption that the public is entitled to access to judicial
proceedings and court records’ [citations omitted]. The right of public access includes
the right of the press to read and review court documents, unless those documents have
been sealed pursuant to a statutory provision or by a properly issued sealing order.”
Further, “because confidentiality is the exception and not the rule [citations omitted], ‘the
party seeking to seal court records has the burden to demonstrate compelling
circumstances to justify restricting public access.’” Here, “it appears that the motion
court sealed the second action because the parties stipulated to it. Before sealing, the
motion court should have made its own written finding of good cause, as is required by
the provisions of the Uniform Rules for Trial Courts (22 NYCRR) §216.1(a).”
Matter of Levy, N.Y.L.J., 1202754584966 (Surr.Ct. Dutchess Co. 2016)(Pagones, J.) –
“‘There is a presumption that the public has the right of access to the courts to ensure the
actual and perceived fairness of the judicial system, as the bright light cast upon the
judicial process by public observation diminishes the possibilities for injustice,
incompetence, perjury, and fraud’ [citation omitted]. Since confidentiality is the
exception, the court must make an independent determination of whether to seal court
records in whole or in part for ‘good cause’ [citation omitted]. This task involves
weighing the interests of the public against the interests of the parties [citation omitted].
The party seeking to seal documents must demonstrate compelling circumstances
[citation omitted]. A finding of ‘good cause’ presupposes that public access to the
documents at issue will likely result in harm to a compelling interest of the movant and
that no alternative to sealing can adequately protect the threatened interest [citation
omitted]. Here, the record is devoid of any justification for prohibiting disclosure of any
of the terms of the settlement other than the parties’ settlement is contingent upon an
agreement of confidentiality. While there is a strong public interest in encouraging the
settlement of private disputes, conclusory claims of the need for confidentiality of
settlement agreements are insufficient to seal a record.”
STAYING AN ACTION
Mook v. Homesafe America, Inc., 144 A D 3d 1116 (2d Dept. 2016) – “A motion
pursuant to CPLR 2201 to stay a civil action pending resolution of a related criminal
action is directed to the sound discretion of the trial court [citations omitted]. ‘Factors to
consider include avoiding the risk of inconsistent adjudications, duplication of proof and
potential waste of judicial resources. A compelling factor is a situation where a
defendant will invoke his or her constitutional right against self incrimination’ [citations
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omitted]. ‘Although the pendency of a criminal proceeding does not give rise to an
absolute right under the United States or New York State Constitutions to a stay of a
related civil proceeding there is no question but that the court may exercise its discretion
to stay proceedings in a civil action until a related criminal dispute is resolved’ [citation
omitted]. Here, this action and the criminal action against Samuel arise from the same
facts. While a stay may cause inconvenience and delay to the plaintiffs, the failure to
grant the stay would cause Samuel to ‘suffer the severe prejudice of being deprived of a
defense’ [citations omitted]. Moreover, a prior determination in the criminal proceeding
could have collateral estoppel effect in this action, thereby simplifying the issues [citation
omitted]. Accordingly, the Supreme Court providently exercised its discretion by, in
effect, granting a stay of the action insofar as asserted against Samuel pending resolution
of the related criminal proceeding against him.”
PROVISIONAL REMEDIES
ATTACHMENT
Hume v. 1 Prospect Park ALF, LLC, 137 A D 3d 1080 (2d Dept. 2016) – “Attachment is
a provisional remedy designed to secure a debt by preliminary levy upon the property of
the debtor to conserve it for eventual execution, and the courts have strictly construed the
attachment statute in favor of those against whom it may be employed [citations omitted].
In order to be granted an order of attachment under CPLR 6201(3), a ‘plaintiff must
demonstrate that the defendant has concealed or is about to conceal property in one or
more of several enumerated ways, and has acted or will act with the intent to defraud
creditors, or to frustrate the enforcement of a judgment that might be rendered in favor of
the plaintiff’ [citations omitted]. In addition to proving fraudulent intent, the plaintiff
must show a probability of success on the merits.” Here, plaintiff made an adequate
showing to warrant issuing an order of attachment, but “under the circumstances of this
case, the $500 bond fixed by the Supreme Court as an undertaking was inadequate to
protect the defendant’s interest during the pendency of this action [citations omitted],
and, accordingly, we increase it” to $2,500.
Citibank, N.A. v. Keenan Powers & Andrews PC, 149 A D 3d 484 (1st Dept. 2017) –
Having succeeded on the merits of the action, defendant “is entitled to the damages it
suffered as a result of the wrongful attachment [citation omitted]. A finding of fault is
not required to recover damages under this provision, as plaintiffs are ‘strictly liable’ for
the damages they caused [citation omitted]. Under the circumstances, we find that the
full amount of defense costs incurred by Secure Title in the underlying litigation was
recoverable as damages for plaintiffs’ wrongful attachment under CPLR 6212(e).”
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PRELIMINARY INJUNCTION
Punwaney v. Punwaney, 148 A D 3d 489 (1st Dept. 2017) – “This action concerns the
disposition of assets held in several foreign bank accounts after the death of the primary
account holder.” Plaintiff “seeks to enjoin defendants from withdrawing or transferring
funds from the accounts.” CPLR 6301 “authorizes preliminary injunctive relief enjoining
violations of the plaintiff’s rights ‘respecting the subject of the action.’ The ‘subject of
the action’ requirement is satisfied here, because plaintiff claims entitlement to a specific
fund – namely the foreign bank accounts.”
Matter of Ezrine, N.Y.L.J., 1202784574131 (Surr.Ct. N.Y.Co. 2017)(Anderson, J.) –
“This is a contested administrator’s accounting in the estate of Ivan Ezrine. At issue is
the ownership of shares of a corporation which, in turn, owns a brownstone in
Manhattan.” The objectants assert that is an estate asset. The administrator contends
that, by agreement, she became owner of decedent’s interest in the corporation.
Objectants seek to enjoin the administrator from selling the brownstone. That motion is
denied. “According to movants, a preliminary injunction is necessary because the
administrator is marketing the brownstone before their interest in the Corporation has
been adjudicated. They challenge the bona fides of the Agreement as the basis for their
position and seek to preserve the status quo pending final disposition. They argue that,
once the administrator sells the Brownstone, ‘she can use the proceeds to pay for her
expenses – with no cap – until they are completely depleted.’ Movants also claim that
the administrator is prepared to sell the brownstone below its market value. This state of
affairs, they assert, constitutes ‘irreparable harm.’” However, “the injury that movants
describe is purely a monetary one. Movants do not seek preservation of the brownstone
for their use. They do not propose that they would buy the administrator’s interest in the
brownstone in the event they prevail on their objections.” Rather, “they request a
preliminary injunction as security for the surcharge they seek in this proceeding. The law
is clear, however, that injury ‘compensable in money and capable of calculation, albeit
with some difficulty, is not irreparable harm.’”
Canales v. Finger, 147 A D 3d 549 (1st Dept. 2017) – “The IAS court did not abuse its
discretion in setting an undertaking at $250,000 for the T[emporary] R[estraining
O[rder]. Based on the record before the court, this amount was reasonably related to
defendants’ potential harm from the pendency of the TRO [citation omitted]. However,
the court erred in vacating the undertaking when it denied the preliminary injunction and
dissolved the TRO. The purpose of the undertaking is to provide a source of recovery to
the nonmovant for damages suffered from the pendency of the restraint [citation omitted].
As such, the undertaking should be reinstated, in the amount of $250,000, pending a
determination of defendants’ damages, if any, from the pendency of the TRO.”
Rose v. Egan, N.Y.L.J., 1202763654560 (Sup.Ct. N.Y.Co. 2016)(Bannon, J.) – The Court
grants plaintiffs’ motion “to preliminarily enjoin the defendant from publishing
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communications which defame or disparage them or their businesses.” These
communications are not protected by the First Amendment, and “the potential harm
caused by defendant’s continued communications is irreparable, as it is capable of
injuring Rose’s reputation in all aspects of his personal and professional life.” And, “as
detailed in Rose’s affidavit, the degree of harm to be caused to plaintiffs if the conduct
continues unabated far exceeds any which may be caused to defendant if her publication
of the offending communications is enjoined pending the trial.”
Town of Brookhaven v. MMCCAS Holdings, Inc., 137 A D 3d 1258 (2d Dept. 2016) –
“‘To obtain preliminary injunctive relief based on a violation of its zoning ordinances, a
town need not satisfy the traditional three-part test for injunctive relief, but is required
“only to show that it has a likelihood of ultimate success on the merits and that the
equities are balanced in its favor”’ [citations omitted]. Here, although the Town
ultimately may be successful in this action, it failed to demonstrate that the balance of the
equities weighed in its favor. While the harm to the defendants if the injunction is
granted would prove substantially burdensome and likely irreversible, the harm to the
Town should the injunction be denied is more remote and uncertain [citations omitted].
Indeed, the Town’s evidence suggests that the defendants have been conducting
substantial composting and mulch-processing activities on the property since at least
2007. Further, granting the injunction would disturb the status quo, rather than maintain
it.”
Zoller v. HSBC Mortgage Corporation (USA), 135 A D 3d 932 (2d Dept. 2016) – “‘A
mandatory injunction, which is used to compel the performance of an act, is an
extraordinary and drastic remedy which is rarely granted and then only under unusual
circumstances where such relief is essential to maintain the status quo pending trial of the
action.” In this action by neighbors of the subject property, seeking to compel
remediation of conditions on that property, the Court denies a preliminary mandatory
injunction, concluding that “plaintiffs failed to demonstrate that the circumstances were
of such an extraordinary nature as to warrant mandatory injunctive relief pending the
resolution of the action.”
Pureform Movement, LLC v. 2374 Concourse Associates, LLC, N.Y.L.J., 1202773324891
(Sup.Ct. N.Y.Co. 2016)(Kenney, J.) – “A Yellowstone injunction maintains the status quo
so that a commercial tenant, when confronted by a threat of termination of its lease, may
protect its investment in the leasehold by obtaining a stay tolling the cure period so that
upon an adverse determination on the merits the tenant may cure the default and avoid a
forfeiture of the lease [citation omitted]. Additionally, the very nature of this kind of
injunction is designed to ‘forestall the cancellation of a lease to afford the tenant an
opportunity to obtain a judicial determination of its breach, the measures necessary to
cure it, and those required to bring the tenant in future compliance with the terms of the
lease [citations omitted]. To obtain Yellowstone relief a tenant need not show a
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likelihood of success on the merits [citation omitted]. It can simply deny the alleged
breach of its lease [citations omitted]. Yellowstone relief is available to protect against
leasehold forfeiture, provided that the tenant has the ability to cure by means short of
vacatur in the event the tenant is found to be in default of its obligations under a lease
[citation omitted]. This rationale is in line with this State’s public policy against the
forfeiture of leases [citation omitted]. This disinclination against leasehold forfeitures
serves to promote the economy and business in our City. This public policy concern
takes on greater weight when a tenant has asserted that it will diligently and in good faith
attempt to cure the defect, but through no inaction of its own, cannot do so without the
cooperation of defendant [citations omitted]. The Court of Appeals has acknowledged
that Courts routinely grant Yellowstone relief to reflect this State’s previously described
policy against forfeiture, and the Courts have done so by accepting ‘far less than the
normal showing required for preliminary injunctive relief.’”
NOTICE OF PENDENCY
Delidimitropoulos v. Karantinidis, 142 A D 3d 1038 (2d Dept. 2016) – “A notice of
pendency may be filed only when ‘the judgment demanded would affect the title to, or
the possession, use or enjoyment of, real property' [citations omitted]. ‘When the court
entertains a motion to cancel a notice of pendency in its inherent power to analyze
whether the pleading complies with CPLR 6501, it neither assesses the likelihood of
success on the merits nor considers material beyond the pleading itself; ‘the court’s
analysis is to be limited to the pleading’s face’ [citations omitted]. Here, on its face, the
complaint does not seek relief that would affect the title to, or the possession, use or
enjoyment of, real property. The plaintiff alleges that he has an ownership interest in the
defendant Hephaistos Building Supplies, Inc., an entity that is alleged to own the
properties listed in the subject notices of pendency.” Thus, plaintiff does not claim
“ownership interest in the real property itself,” and the claims “do not support the filing
of the notices of pendency.”
Bank of America v. Riccardi, N.Y.L.J., 1202759000512 (Sup.Ct. Suffolk Co. 2016)
(Whelan, J.) – “A conveyance of premises made pursuant to a judgment of foreclosure
and sale ‘is an entire bar against each of them and against each party to the action who
was duly summoned and every person claiming from, through or under a party by title
accruing after the filing of the notice of the pendency of the action.’” And, “it is
axiomatic that a person whose conveyance or encumbrance is recorded after the filing of
a notice of pendency is bound by all proceedings taken in the action after such filing to
the same extent as if he were a party [citations omitted], and a person holding an interest
that accrued prior to the filing of a notice of pendency, but not recorded until after the
filing of such notice, is also bound.”
Stout Street Fund I, L.P. v. Halifax Group, LLC, 148 A D 3d 749 (2d Dept. 2017) –
“‘Pursuant to CPLR 6501, the filing of a notice of pendency provides constructive notice
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of an action in which the judgment demanded may affect the title to real property’
[citation omitted]. ‘The statute further provides that a person whose conveyance is
recorded after the filing of a notice of pendency is bound by all proceedings taken in the
action after such filing to the same extent as if he or she were a party’ [citations omitted].
‘A person holding an interest that accrued prior to the filing of a notice of pendency, but
not recorded until after the filing of the notice, is still so bound’ [citation omitted]. ‘In
order to cut off a prior lien, such as a mortgage, the purchaser or encumbrancer must have
no knowledge of the outstanding lien and must win the race to the recording office.’”
Deutsch v. Grunwald, 138 A D 3d 915 (2d Dept. 2016) – “‘A notice of pendency is valid
for three years from the date of filing and may be extended for additional three-year
periods upon a showing of good cause’ [citations omitted]. Here, the plaintiff failed to
establish good cause. In this regard, the plaintiff failed to sufficiently explain the period
of inactivity of more than one year prior to the filing of his motion to extend the notice of
pendency. Under these circumstances, the Supreme Court should have denied the
plaintiff’s motion.”
Sudit v. Labin, 148 A D 3d 1077 (2d Dept. 2017) – “CPLR 6513 provides that a notice of
pendency is valid for three years from the date of filing and may be extended for
additional three-year periods ‘for good cause shown.’ The general rule is that the
extension must be requested, and the extension order ‘filed, recorded and indexed,’
before expiration of the prior notice [citation omitted]. ‘This is an exacting rule; a notice
of pendency that has expired without extension is a nullity’ [citations omitted]. The
general rule does not apply, however, to an action to foreclose a mortgage on real
property. Instead, CPLR 6516(a) specifically provides, in pertinent part, as follows”: ‘In
a foreclosure action, a successive notice of pendency may be filed to comply with section
thirteen hundred thirty-one of the real property actions and proceedings law,
notwithstanding that a previously filed notice of pendency in such action or in a previous
foreclosure action has expired pursuant to section 6513 of this article.’”
ACCELERATED JUDGMENT
CPLR 3211
CitiMortgage, Inc. v. Carter, 140 A D 3d 1663 (4th Dept. 2016) – A Court’s sua sponte
“‘power of dismissal must be restricted to the most extraordinary circumstances’ [citation
omitted], such as ‘a pattern of willful noncompliance with court-ordered deadlines,’ and
no such extraordinary circumstances are reflected in the record before us [citations
omitted]. ‘Although a litigant cannot ignore court orders with impunity, we conclude that
missing a single deadline by one week does not warrant the court’s exercise of its power
to dismiss a complaint sua sponte.’”
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Matter of Sheive v. Holley Volunteer Fire Company, 145 A D 3d 1584 (4th Dept. 2016) –
“Supreme Court improvidently exercised its discretion in sua sponte dismissing the
petition. ‘Use of the sua sponte power of dismissal must be restricted to the most
extraordinary circumstances’ and no such extraordinary circumstances are present in this
case [citations omitted]. In sua sponte dismissing the petition, ‘the court deprived
petitioner of notice of what was effectively the court’s own motion for summary
judgment, thereby depriving her of her opportunity to lay bare her proof and rendering
meaningful appellate review of the propriety of the court’s determination on the merits
impossible.’”
Ray v. Chen, 148 A D 3d 568 (1st Dept. 2017) – “‘The power of a nisi prius court to
dismiss an action sua sponte should be used sparingly and only in extraordinary
circumstances’ [citation omitted]. No such circumstances are present here. In the
absence of notice that plaintiffs would be required to respond to a motion to dismiss, ‘the
court was virtually without jurisdiction to grant the relief afforded to defendant.’”
Zhao v. Liu, 136 A D 3d 1025 (2d Dept. 2016) – At the time it moved to dismiss the
complaint, defendant VisionChina “was in default for failing to answer the complaint
within the 30-day period for service of a responsive pleading [citation omitted].
VisionChina did not seek relief from its default or make any showing of a reasonable
excuse for its default. Under such circumstances, the Supreme Court properly declined to
excuse VisionChina’s default and denied the motion as untimely.”
Chase Home Finance, LLC v. Garcia, 140 A D 3d 820 (2d Dept. 2016) – When they
made their motion to dismiss for lack of standing, defendants were in default in appearing
in the action. They “did not seek an extension of time to answer or appear in this action
[citation omitted], or request an extension of time within which to serve and file a pre-
answer motion pursuant to CPLR 3211 to dismiss the complaint insofar as asserted
against them. Further, they did not attempt to show good cause for their delay, or even
address the timeliness of their motion.” Accordingly, “they waived the defense of lack of
standing,” and Supreme Court properly denied their motion to dismiss.
Fagbuyi v. Accredit Home Lenders, Inc., 140 A D 3d 1011 (2d Dept. 2016) – “Contrary
to plaintiff’s contention, under the circumstances of this case, once the Supreme Court
granted the plaintiff’s motion for leave to serve and file a second amended complaint, it
was not erroneous for the court to consider U.S. Bank’s motion [to dismiss] as being
directed against the second amended complaint.”
Landes v. Provident Realty Partners II, L.P., 137 A D 3d 694 (1st Dept. 2016) – CPLR
3211(e) provides in part that a party may move to dismiss a pleading on “one or more of
the grounds set forth” in CPLR 3211(a), but that “no more than one such motion shall be
permitted.” Here, “given that defendants had the full opportunity to raise their current
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CPLR 3211(a) arguments on their original CPLR 3211(a) motion to dismiss, the IAS
court correctly denied the motion as violative of the ‘single motion rule” of CPLR
3211(e).”
Kinberg v. Schwartzapfel, Novick, Truhowsky, Marcus, PC, 136 A D 3d 431 (1st Dept.
2016) – “Defendant’s motion, properly treated as a motion for summary judgment
[citation omitted], is not precluded by the ‘single motion’ rule [citation omitted].
Although defendant previously moved to dismiss on other grounds, a ‘preanswer motion
to dismiss based on one of the grounds set forth in CPLR 3211(a) does not effect a
waiver of the other grounds set forth in CPLR 3211(a),’ which can then be raised in
support of a motion for summary judgment dismissing the complaint.”
Lin v. Lin, 52 Misc 3d 229 (Sup.Ct. Queens Co. 2016)(Buggs, J.) – Defendant’s answer
contained the affirmative defenses of res judicata and collateral estoppel. After the
answer was stricken “for willful failure to comply with discovery demands, defendant
moved, pursuant to CPLR 3211, to dismiss the complaint on those grounds. The Court
denies the motion. “Defendant cannot now make an end run around his stricken answer
by attempting to raise those defenses in a manner blatantly contrary to statutory
directives.”
Landmark Ventures, Inc. v. Birger, 147 A D 3d 497 (1st Dept. 2017) – “‘A contractual
forum selection clause is documentary evidence that may provide a proper basis for
dismissal pursuant to CPLR 3211(a)(1).’”
Hartnagel v. FTW Contracting, 147 A D 3d 819 (2d Dept. 2017) – “‘Judicial records, as
well as documents reflecting out-of-court transactions such as mortgages, deeds,
contracts, and any other papers, the contents of which are essentially undeniable,’ qualify
as documentary evidence in proper cases; however, affidavits and letters are not
considered documentary evidence.’”
Gustavia Home, LLC v. Rutty, 2016 WL 6267961 (E.D.N.Y. 2016)(Cogan, J.) –
“Traditionally, the case law has held that, whether applied in state or federal court,
because of the possibility of an unconstitutional infringement of interstate commerce,
BCL 1312(a) required a higher degree of contact with or activity in New York than is
required for the presence of personal jurisdiction under New York CPLR 301 [citations
omitted], even though both tests use the words ‘doing business’ [citation omitted].
However, in light of the Supreme Court’s recent decision in Daimler AG v. Bauman, 134
S.Ct. 746 (2014), where the Court interpreted the due process clause as requiring
sufficiently extensive contacts to support ‘doing business’ for purposes of personal
jurisdiction such that the foreign corporation is essentially ‘at home’ in the forum, it may
be that these positions have become reversed, i.e., that BCL 1312(a) requires a lower
threshold of New York contacts before a license is required than CPLR 301 requires
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before personal jurisdiction can be found.” Thus, “no case law suggests that BCL
1312(a) requires the foreign company to be ‘at home’ in New York. Moreover, there is
some logic in requiring a lower standard of contacts to impose a licensing requirement on
a foreign litigant who voluntarily opts to sue in a New York court as opposed to a foreign
litigant who is involuntarily hailed into New York. It may be that the policy of
encouraging commerce reflected in the interstate commerce clause is less pressing than
the protection of liberty and property interests commanded by the due process clause.”
Small Step Day Care, LLC v. Broadway Bushwick Builders, L.P., 137 A D 3d 1102 (2d
Dept. 2016) – “Limited Liability Company Law §206 requires limited liability companies
to publish their articles of organization or comparable specified information for six
successive weeks in two local newspapers designated by the clerk of the county where
the limited liability company has its principal office, followed by the filing of an affidavit
with the Department of State, stating that such publication has been completed [citations
omitted]. Failure to comply with these requirements precludes a limited liability
company from maintaining any action or special proceeding in New York [citations
omitted]. Here, as the defendants correctly contend, since the plaintiff failed to comply
with the publication requirements of Limited Liability Company Law §206, it is
precluded from bringing the action.” Thus the motion to dismiss, pursuant to CPLR
3211(a)(3), was properly granted.
Insurance Company of North America v. ACCO Material Handling Solutions, Inc.,
N.Y.L.J., 1202782107977 (Sup.Ct. N.Y.Co. 2017)(Bransten, J.) – “CPLR 3211(a)(4)
provides that a party may move to dismiss one or more causes of action asserted against
him or her on the ground that ‘there is another action pending between the same parties
for the same cause of action in a court of any state.’ Whether to grant such dismissal is a
matter of discretion for the court [citations omitted]. ‘New York courts generally follow
the first-in-time rule, which instructs that the court which has first taken jurisdiction is the
one in which the matter should be determined and it is a violation of the rules of comity
to interfere’ [citations omitted]. ‘Where another action is pending, a major concern, as a
matter of comity, is to avoid the potential for conflicts that might result from rulings
issued by courts of concurrent jurisdiction’ [citation omitted]. Dismissal under CPLR
3211(a)(4) is warranted when the relief sought is ‘the same or substantially the same’
with respect to the two pending actions [citation omitted]. This criterion is not met when
‘relief demanded is antagonistic and inconsistent, or purposes of two actions are entirely
different’ [citation omitted]. Further, in order to reach dismissal, ‘it is necessary that
there be sufficient identity as to both the parties and the causes of action asserted in the
respective actions.’”
GE Oil & Gas, Inc. v. Turbine Generation Services, L.L.C., 140 A D 3d 582 (1st Dept.
2016) – “With respect to CPLR 3211(a)(4), as the service of process in the New York
action preceded the service of process in the Louisiana action, the New York court was
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the first to take jurisdiction over this matter [citation omitted]. While the application of
the first-in-time rule is discretionary and not controlling, especially where, as here, the
competing actions were commenced within a short time [citation omitted], there is
another factor that weighs heavily in favor of maintaining jurisdiction in New York: the
New York action is based solely on the loan documents, while the pending Louisiana
action includes claims related to the purported joint venture [citation omitted]. Thus, the
court also providently exercised its discretion in declining to stay the action pursuant to
CPLR 2201.”
Seneca Specialty Insurance Co. v. T.B.D. Capital, LLC, 143 A D 3d 971 (2d Dept. 2016)
– “In the context of a motion to dismiss pursuant to CPLR 3211(a)(4) on the ground of
another action pending, generally the courts of this state follow the first-in-time rule,
meaning that ‘the court which has first taken jurisdiction is the one in which the matter
should be determined and it is a violation of the rules of comity to interfere’ [citations
omitted]. While certain special circumstances may warrant deviation from this rule
[citation omitted], consideration of the relevant circumstances herein does not warrant
reversal of the Supreme Court’s discretionary determination to apply the first-in-time
rule.”
Wells Fargo Bank, N.A. v. Peña, 51 Misc 3d 241 (Sup.Ct. Kings Co. 2016)(Demarest, J.)
– “CPLR 3211(a)(4) is applicable to this action since it is undisputed that there is a
pending mortgage foreclosure action by plaintiff on the same debt [pending in New
Jersey]. Plaintiff has made its decision to foreclose on the mortgages and should not be
permitted to commence a second simultaneous action attempting to recover the same debt
before the New Jersey court has made a determination.”
Wachtell, Lipton, Rosen & Katz v. CVR Energy, Inc., 143 A D 3d 648 (1st Dept. 2016) –
Nisi prius “improvidently exercised its discretion in declining to dismiss the claim for a
declaratory judgment against defendant DVR Energy, Inc., since there is another action
pending between the parties for the same cause of action [citations omitted]. CVR’s
choice of a federal forum for its earlier filed legal malpractice action against plaintiff
(Wachtell) [citation omitted] is entitled to comity. Wachtell’s ‘use of a declaratory
judgment action to determine the viability of its defense, or the existence of merit to
CVR’s legal malpractice claim’ is an ‘unusual’ practice [citation omitted], strongly
suggestive of forum shopping, and does not warrant a deviation from the first-to-file
rule.”
IRX Therapeutics, Inc. v. Landry, 150 A D 3d 446 (1st Dept. 2017) – The Appellate
Division affirms Supreme Court’s dismissal of this action “based on the pendency of an
action in federal court in Texas concerning the same alleged contract.” Although this
action was filed first, “chronology is not dispositive, particularly since both actions are at
the earliest stages of litigation [citation omitted], and since the format of this action (i.e.,
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a declaratory judgment action) suggests that it was responsive to defendant’s threat of
litigation [citation omitted]. The record also suggests that plaintiff commenced this
action preemptively in an effort to gain a tactical advantage and deprive defendant of his
choice of forum.”
Quatro Consulting Group, LLC v. Buffalo Hotel Supply Company, Inc., 55 Misc 3d 615
(Sup.Ct. Monroe Co. 2017)(Rosenbaum, J.) – “BHS commenced its action by filing the
summons with notice in Erie County at least six days prior to Quatro commencing its
action in Monroe County. The belated verification and assignment of an index number
by the Erie County Clerk through its efiling systems should not disrupt the first-in-time
rule.” The Court rejects Quatro’s argument that “the Erie County filing was actually not
the ‘first-in-time’ since the filing of a summons with notice only, and not the complaint
does not constitute ‘another action pending,’” even though Quatro “cites several cases
from the First and Second Departments which held that CPLR 304 does not mandate
dismissal as a ‘prior action pending’ where a complaint has not been served.” For, “in
review of those cases, it is unclear why the appellate courts did not follow the clear
statutory language, that ‘an action is commenced by filing a summons and complaint or
summons with notice’ [citation omitted; emphasis by the Court]. The statute is clear that
commencement occurs with either the filing of the summons and complaint, or the filing
of a summons with notice. The Fourth Department in a factually similar case and filing
scenario made such a determination that the filing of a summons with notice was
commencement.”
Cash on the Spot ATM Services, LLC v. Camia, 144 A D 3d 961 (2d Dept. 2016) – Back
in the mid-1970’s, the Court of Appeals decided two important – and perhaps
contradictory – cases setting out the standards for the use of extrinsic material submitted
on motions to dismiss for failure to state a cause of action under CPLR 3211(a)(7). In
Rovello v. Orofino Realty Co., Inc., 40 N Y 2d 633 (1976), the Court, split 5-2, held that,
when a motion to dismiss is not converted into a summary judgment motion [CPLR
3211(c)], “affidavits may be received for a limited purpose only, serving normally to
remedy defects in the complaint, although there may be instances in which a submission
by plaintiff will conclusively establish that he has no cause of action. It seems that after
the amendment of 1973 [adding CPLR 3211(c), and the opportunity to convert a motion
to dismiss into a summary judgment motion], affidavits submitted by the defendant will
seldom if ever warrant the relief he seeks unless too the affidavits establish conclusively
that plaintiff has no cause of action” [emphasis added]. The dissenters characterized the
majority as having “ruled that on a motion to dismiss for failure to state a cause of action
pursuant to CPLR 3211 (sub. (a), par. 7), the trial court may not dismiss as long as the
complaint and the plaintiff’s affidavit, if there be any, state all the elements of a cause of
action, and that a defendant’s affidavit, clearly showing the absence of one of these
essential elements, is of no avail. In essence, the majority has abrogated the statute and
has revitalized the common law demurrer.” The dissenters urged that “a motion to
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dismiss for failure to state a cause of action is no longer, as it once was, limited to the
face of the complaint (CPLR 3211, subd. [c]). The question now is whether the plaintiff
has a cause of action, not simply whether he has stated one. Thus, the court may consider
affidavits and other extrinsic proof to determine whether a fact essential to the plaintiff’s
cause of action is lacking.” But, “today, however, this court has held that these affidavits
‘are not to be examined for the purpose of determining whether there is evidentiary
support for the pleading.’ Hence, the defendant can no longer move to dismiss under this
section no matter how conclusively he can show that the plaintiff’s cause of action,
though properly pleaded, has no basis in fact.” The following year, in Guggenheimer v.
Ginzburg, 43 N Y 2d 268 (1977), the Court – now with both Rovello dissenters joining a
unanimous decision – stated the test somewhat differently: “Initially, the sole criterion is
whether the pleading states a cause of action, and if from its four corners factual
allegations are discerned which taken together manifest any cause of action cognizable at
law a motion for dismissal will fail [citations, which did not include Rovello, omitted].
When evidentiary material is considered, the criterion is whether the proponent of the
pleading has a cause of action, not whether he has stated one, and, unless it has been
shown that a material fact as claimed by the pleader to be one is not a fact at all and
unless it can be said that no significant dispute exists regarding it, again dismissal should
not eventuate [citations, which again did not include Rovello, omitted; emphasis added].”
Since then, there has been much confusion as to the proper use to which extrinsic
evidence may be put in an unconverted motion to dismiss. Then, some 30 years later, in
Nonnon v. City of New York, 9 N Y 3d 825 (2007), in the course of a brief Memorandum
Opinion, the Court stated that, “while affidavits may be considered, if the motion has not
been converted to a 3212 motion for summary judgment, they are generally intended to
remedy pleading defects and not to offer evidentiary support for properly pleaded claims
[citation omitted; emphasis added]. By contrast, a motion for summary judgment, which
seeks a determination that there are no material issues of fact for trial, assumes a
complete evidentiary record.” The Court cited Rovello for this proposition, but did not
cite Guggenheimer. Then, in Lawrence v. Graubard Miller, 11 N Y 3d 588 (2008), the
Court of Appeals, citing Rovello, but neither Guggenheimer nor Nonnon, held that,
“affidavits submitted by a respondent will almost never warrant dismissal under CPLR
3211 unless they ‘establish conclusively that petitioner has no claim or cause of action’”
[emphasis by the Court]. More recently, in Miglino v. Bally Total Fitness of Greater New
York, Inc., 20 N Y 3d 342 (2013), the Court of Appeals held that “Bally has moved to
dismiss under CPLR 3211(a)(7), which limits us to an examination of the pleadings to
determine whether they state a cause of action. Further, we must accept facts alleged as
true and interpret them in the light most favorable to plaintiff; and, as Supreme Court
observed, plaintiff may not be penalized for failure to make an evidentiary showing in
support of a complaint that states a claim on its face [citing Rovello]. Here, the complaint
asserts that Bally did not ‘employ or properly employ lifesaving measures regarding
Miglino’ after he collapsed. Bally’s motion is supported by affidavits that contradict this
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claim, by purporting to show that the minimal steps adequate to fulfill a health club’s
limited duty to a patron apparently suffering a coronary incident – i.e., calling 911,
administering CPR and/or relying on medical professionals who are voluntarily
furnishing emergency care – were, in fact, undertaken. But, as noted before, this matter
comes to us on a motion to dismiss, not a motion for summary judgment. As a result, the
case is not currently in a posture to be resolved as a matter of law on the basis of the
parties’ affidavits, and Miglino has at least pleaded a viable cause of action at common
law.” In Basis Yield Alpha Fund (Master) v. Goldman Sachs Group, Inc., 115 A D 3d
128 (1st Dept. 2014), also reported on in a prior year’s “Update,” the issue that divided
the Court was the impact of Miglino. The majority held that “the concurrence’s
contention that this Court is limited to the pleadings, when reviewing a motion to dismiss
pursuant to CPLR 3211(a)(7), is not a completely accurate statement of the law. What
the Court of Appeals has consistently said is that evidence in an affidavit used by a
defendant to attack the sufficiency of a pleading ‘will seldom if ever warrant the relief the
defendant seeks unless such evidence establishes conclusively that plaintiff has no cause
of action’ [citations omitted; emphasis by the Court]. A CPLR 3211(a)(7) motion may be
used by a defendant to test the facial sufficiency of a pleading in two different ways. On
the one hand, the motion may be used to dispose of an action in which the plaintiff has
not stated a claim cognizable at law. On the other hand, the motion may be used to
dispose of an action in which the plaintiff identified a cognizable cause of action but
failed to assert a material allegation necessary to support the cause of action. As to the
latter, the Court of Appeals has made clear that a defendant can submit evidence in
support of the motion attacking a well-pleaded cognizable claim [citations omitted].
When documentary evidence is submitted by a defendant ‘the standard morphs from
whether the plaintiff stated a cause of action to whether it has one’ [citations omitted].
As alleged here, if the defendant’s evidence establishes that the plaintiff has no cause of
action (i.e., that a well-pleaded cognizable claim is flatly rejected by the documentary
evidence), dismissal would be appropriate.” The concurring Justice argued that “CPLR
3211(a)(1) may be invoked where it is claimed that ‘documentary evidence utterly refutes
plaintiff’s factual allegations, conclusively establishing a defense as a matter of law’
[citation omitted]. On the other hand, as recently stated by the Court of Appeals, a
motion under CPLR 3211(a)(7) ‘limits us to an examination of the pleadings to determine
whether they state a cause of action’ [citing Miglino]. Therefore, contrary to what the
majority holds today, the disclaimers and disclosures in the offering circulars and other
documents [defendant] relies upon are of no moment for purposes of this CPLR
3211(a)(7) motion. As [plaintiff] aptly argued below, there was no basis for the motion
court to consider documents outside the complaint at this stage of the proceeding.” That
same year’s “Update” also reported on the Fourth Department’s decision in Liberty
Affordable Housing, Inc. v. Maple Court Apartments, 125 A D 3d 85 (4th Dept. 2015).
There, the Court held that, in Rovello, “the Court of Appeals held that summary dismissal
is appropriate under CPLR 3211(a)(7) when the defendant’s evidentiary submissions
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‘establish conclusively that plaintiff has no cause of action.’ We now consider whether
that holding remains viable in light of the Court’s recent decision in Miglino.” Agreeing
with the majority in the First Department decision in Basis Yield, the Court concluded
that Miglino does not bar “the consideration of any evidentiary submissions outside the
four corners of the complaint.” For, “given its unqualified citation to Rovello, Miglino is
properly understood as a straightforward application of Rovello’s longstanding
framework. Miglino was ‘not currently in a posture to be resolved as a matter of law on
the basis of the parties’ affidavits’ [citation omitted] because the evidentiary submissions
were insufficiently conclusive, not because they were categorically inadmissible in the
context of a CPLR 3211(a)(7) motion.” Last year’s “Update” reported on Clarke v.
Laidlaw Transit, Inc., 125 A D 3d 920 (2d Dept. 2015), in which the Second Department
also assessed the impact of Miglino. “The plaintiff ‘may not be penalized for failure to
make an evidentiary showing in support of a complaint that states a claim on its face’
[citations omitted]. The plaintiff may stand on his or her pleading alone to state all of the
necessary elements of a cognizable cause of action, and, unless the motion to dismiss is
converted by the court to a motion for summary judgment, the plaintiff will not be
penalized because he or she has not made an evidentiary showing in support of the
complaint [citation omitted]. In light of these standards, it is clear that the defendant’s
motion should have been denied. The complaint stated a cause of action, and the
defendant’s submissions did not ‘establish conclusively that the plaintiff has no cause of
action.’” Here, in Cash on the Spot, the Second Department held that, “where a court
considers evidentiary material in determining a motion to dismiss a complaint pursuant to
CPLR 3211(a)(7), but does not convert the motion into one for summary judgment, the
criterion becomes whether the plaintiff has a cause of action, not whether the plaintiff has
stated one, and unless the movant shows that a material fact as claimed by the plaintiff is
not a fact at all and no significant dispute exists regarding the alleged fact, the complaint
shall not be dismissed.”
Gawrych v. Astoria Federal Savings and Loan, 148 A D 3d 681 (2d Dept. 2017) – “On a
motion to dismiss for failure to state a cause of action pursuant to CPLR 3211(a)(7), ‘the
sole criterion is whether the pleading states a cause of action, and if from its four corners
factual allegations are discerned which taken together manifest any cause of action
cognizable at law, a motion for dismissal will fail’ [citations omitted]. ‘The complaint
must be construed liberally, the factual allegations deemed to be true, and the nonmoving
party granted the benefit of every possible favorable inference’ [citations omitted]. ‘A
court may freely consider affidavits submitted by the plaintiff to remedy any defects in
the complaint’ [citations omitted], and upon considering such an affidavit, the facts
alleged therein must also be assumed to be true [citation omitted]. Nevertheless, ‘bare
legal conclusions and factual claims which are flatly contradicted by the record are not
presumed to be true’ [citations omitted]. Moreover, where evidentiary material is
submitted and considered on a motion to dismiss a complaint pursuant to CPLR
3211(a)(7), the question becomes whether the plaintiff has a cause of action, not whether
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the plaintiff has stated one, and unless it has been shown that a material facts as claimed
by the plaintiff to be one is not a fact at all, and unless it can be said that no significant
dispute exists regarding it, dismissal should not eventuate.”
Hartnagel v. FTW Contracting, 147 A D 3d 819 (2d Dept. 2017) – “While a court is
permitted to consider evidentiary material submitted by a defendant in support of a
motion to dismiss pursuant to CPLR 3211(a)(7), such evidence may only be considered
to determine whether the plaintiff ‘has a cause of action, not whether he has stated one’
[citations, including to Guggenheimer, omitted]. ‘Affidavits submitted by a defendant
will almost never warrant dismissal under CPLR 3211 unless they establish conclusively
that the plaintiff has no cause of action.’”
Deutsche Bank, National Trust Company v. Acevedo, N.Y.L.J., 1202752091954 (Sup.Ct.
Kings Co. 2016)(Garson, J.) – CPLR 3211(e) provides in pertinent part that when
defendant asserts lack of personal jurisdiction in the answer, based on failure to properly
serve process, that defense is waived unless defendant moves for judgment on that
ground within 60 days of serving the answer, absent a showing of “undue hardship.”
Here, “while defendant served an answer containing a defense of lack of personal
jurisdiction on August 24, 2014, more than sixty days prior to bringing the instant motion
to dismiss, the answer was rejected by plaintiff as untimely. The court notes that the
letter of rejection appears facially valid and defendant does not dispute otherwise.
Although plaintiff served a reply to defendant’s counterclaims three weeks following its
letter of rejection, there is nothing in the record indicating that plaintiff communicated to
defendant’s counsel that the answer was deemed accepted or that plaintiff would not take
proceedings toward a default judgment. Under the circumstances, plaintiff may not hold
defendant to the sixty-day limitation for seeking dismissal.”
Vandashield Ltd. v. Isaacson, 146 A D 3d 552 (1st Dept. 2017) – “Since plaintiffs
submitted no proposed amendment [to the complaint in its opposition to defendant’s
motion to dismiss], the court properly denied their request – made in a footnote in their
brief – to replead.”
TIMING OF MOTIONS FOR SUMMARY JUDGMENT
Reutzel v. Hunter Yes, Inc., 135 A D 3d 1123 (3d Dept. 2016) – In Brill v. City of New
York, 2 N Y 3d 648 (2004), the Court of Appeals held that the Legislature meant what it
said when it amended CPLR 3212(a) to provide a time limit for summary judgment
motions. That statute provides that, unless the Court sets a different date (which may not
be earlier than 30 days after Note of Issue is filed), the last date to make a dispositive
motion is 120 days after filing of the Note of Issue, unless the Court extends the time “for
good cause shown.” In Brill, the Court of Appeals held: “We conclude that ‘good cause’
in CPLR 3212(a) requires a showing of good cause for the delay in making the motion –
a satisfactory explanation for the untimeliness – rather than simply permitting
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meritorious, non-prejudicial filings, however tardy.” Berating the “sloppy practice
threatening the integrity of our judicial system,” the Court declined to permit a violation
of the statutory deadlines. Soon after, in Miceli v. State Farm Mutual Automobile
Insurance Company, 3 N Y 3d 725 (2004) the Court re-affirmed its holding. “As we
made clear in Brill, and underscore here, statutory time frames – like court-ordered time
frames [citation omitted] – are not options, they are requirements, to be taken seriously
by the parties.” A prior year’s “Update” reported on Kershaw v. Hospital for Special
Surgery, 114 A D 3d 75 (1st Dept. 2013), in which the narrowly-divided Appellate
Division disagreed about the application of the rule of Brill to a medical malpractice case
in which plaintiff had sued two different hospitals that treated him at different times,
claiming that both failed to advise and perform necessary surgery. One timely moved for
summary judgment; the other belatedly “cross-moved” for summary judgment. The
majority affirmed Supreme Court’s denial of the untimely “cross-motion,” rejecting the
argument that “there is an exception to Brill for cases where a late motion or cross motion
is essentially duplicative of a timely motion.” For, “the Court of Appeals intended no
such exception, and to the extent this Court has created one, it did so, whether knowingly
or unwittingly, by relying on precedents which predate Brill and which, if followed, will
continue to perpetuate a culture of delay.” Thus, “it is true that since Brill was decided,
this Court has held, on many occasions, that an untimely but correctly labeled cross
motion may be considered at least as to the issues that are the same in both it and the
motion, without needing to show good cause [citations omitted]. Some decisions also
reason that because CPLR 3212(b) gives the court the power to search the record and
grant summary judgment to any party without the necessity of a cross motion, the court
may address an untimely cross motion at least as to the causes of action or issues that are
the subject of the timely motion.” But in Kershaw, the “cross-motion,” in addition to
being untimely, “is not a true cross motion.” A cross-motion, made pursuant to CPLR
2215, is “‘a motion by any party against the party who made the original motion, made
returnable at the same time as the original motion.’” But this “cross-motion” was
directed at the complaint, as opposed to any cross claims, and was not made returnable
the same day as the original motion. So, “it was not a cross motion as defined in CPLR
2215.” And, “allowing movants to file untimely, mislabeled ‘cross motions’ without
good cause shown for the delay, affords them an unfair and improper advantage. Were
the motions properly labeled they would not be judicially considered without an
explanation for the delay.” Finally, “we are concerned that the respect for court orders
and statutory mandates and the authoritative voice of the Court of Appeals are
undermined each time an untimely motion is considered simply by labeling it a ‘cross
motion’ notwithstanding the absence of a reasonable explanation for its untimeliness.”
The Kershaw dissenters argued that the majority’s interpretation of Brill constitutes “an
unnecessarily rigid application of CPLR 3212(a), contravening the sound policy
considerations underlying the decision and the intent expressed by the Legislature in
amending the statute.” For, “the practice sought to be deterred in Brill is delay
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occasioned by the submission of a summary judgment motion on the eve of trial, thereby
staying proceedings to the prejudice of litigants who have applied their resources in
preparation for trial of the issues.” Here, however, “the proceedings were already stayed
by the concededly timely summary judgment motion” Thus, “the primary objective of
Brill to discourage dilatory conduct is not implicated.” The dissent agreed with the
majority that the “cross-motion” was mislabeled a cross-motion, and was untimely
pursuant to CPLR 2215. “But to reject the motion on that ground, under the facts herein,
ignores the adverse consequences of imposing an overly restrictive rule, specifically,
consequences that are especially adverse to the courts.” For, no prejudice was shown,
and “the majority thereby dispenses with the salutary aspects of summary disposition
acknowledged in Brill for no apparent purpose.” Indeed, “rote application of the
summary judgment provision, which permits the court to ‘set a date after which no such
motion may be made,’ leads to the result advocated by the majority – strict rejection of
the motion as untimely without taking into consideration the circumstances of the case,
relegating the moving party to litigating its position at trial. However, it is a well-
established rule of statutory construction that a court should avoid any interpretation that
leads to absurd and unintended consequences.” Accordingly, the dissent would hold that
“a late motion filing is properly entertained when it raises nearly identical issues to one
timely made.” And, here, both the motion and the “cross-motion” “seek dismissal of the
complaint on the identical ground – that it was not a departure from good and accepted
medical practice to forego surgery in favor of a conservative treatment plan.” By
contrast, that year’s “Update” also reported on Derrick v. North Star Orthopedics, PLLC,
121 A D 3d 741 (2d Dept. 2014), in which one defendant timely moved for summary
judgment, and another defendant untimely “cross-moved” for summary judgment. The
latter “was improperly designated a cross motion [citation omitted] and was, in fact, an
untimely motion for summary judgment [citation omitted]. However, ‘an untimely
motion or cross motion for summary judgment may be considered by the court where a
timely motion for summary judgment was made on nearly identical grounds.’” Last
year’s “Update” reported on Ezzard v. One East River Place Realty Company, LLC, 129
A D 3d 159 (1st Dept. 2015) in which, despite its earlier holding in Kershaw, the First
Department held that “although untimely, NYE&E’s motion should have been considered
insofar as it presents nearly identical issues and proof as those raised by the owner and
Solow in their joint summary judgment motion.” Here in Reutzel, the Third Department
enters the fray, and holds that, “‘a cross motion for summary judgment made after the
expiration of the deadline for making dispositive motions may be considered by the court,
even in the absence of good cause, where a timely motion for summary judgment was
made seeking relief nearly identical to that sought by the cross motion’ [citations
omitted]. Here, both [third-party defendant] Paraco’s timely motion for summary
judgment dismissing the third-party complaint and defendant’s untimely cross motion for
summary judgment on its contractual indemnification claim were premised upon
essentially the same grounds – namely, the applicability and enforceability of the
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indemnification clause at issue. Under these circumstances, Supreme Court properly
considered the merits of defendant’s cross motion.”
Rubino v. 330 Madison Company, LLC, 150 A D 3d 603 (1st Dept. 2017) – “The court
should have denied as untimely Waldorf’s cross motion for summary judgment
dismissing appellants’ contractual indemnification claim against it without considering
the merits, since the motion was filed after the applicable deadline and Waldorf failed to
show good cause for the delay [citation omitted]. Waldorf’s purported cross motion
against appellants, nonmoving parties, was not a true cross motion [citing Kershaw v.
Hospital for Special Surgery, discussed above], and did not merely raise issues ‘nearly
identical’ to those raised by plaintiffs and Mazzeo in their timely motions.”
Kritzer v. Ventura Insurance Brokerage, Inc., 50 Misc 3d 832 (Sup.Ct. N.Y.Co. 2015)
(Billings, J.) – CPLR 3212(a), “permitting the court to ‘set a date after which no such
motion may be made,’ applies only to motions for summary judgment. No authority
permits the court to abrogate CPLR 3211(e)’s provision that a motion pursuant to CPLR
3211(a)(7), failure to state a claim, ‘may be made at any time’ [citation omitted]. While
the parties themselves stipulated to a deadline for ‘dispositive motions,’ [citation
omitted], plaintiffs maintain only that that defendant’s motion pursuant to CPLR 3212(b)
is untimely under section 3212(a) and not that its motion pursuant to CPLR 3211(a)(7) is
untimely under section 3211(e). Nor do plaintiffs offer any support for simply assuming
that ‘dispositive motions’ includes a motion pursuant to CPLR 3211(a)(7). Absent any
evidentiary or legal support for such an interpretation, CPLR 3211(e)’s authorization that
a motion based on CPLR 3211(a)(7) ‘may be made at any time’ and CPLR 3212(a)’s
limitation to motions for summary judgment, ‘dispositive motions’ in this context must
be interpreted as encompassing only motions for summary judgment.”
Mills v. City of New York, 144 A D 3d 644 (2d Dept. 2016) – “Contrary to the
defendants’ contention, since the note of issue was vacated while the plaintiff’s motion
[for summary judgment] was pending, the motion was not untimely, and the Supreme
Court properly considered it.”
Cullity v. Posner, 143 A D 3d 513 (1st Dept. 2016) – The Appellate Division reverses the
granting of defendant’s motion for summary judgment. “The motion should have been
denied as untimely. The motion court’s rules required dispositive motions to be filed
within 60 days of the filing of a note of issue. Defendant filed the motion papers nine
days after the time to do so had expired, rendering the motion untimely [citations
omitted]. Defendants’ failure to address the missed filing deadline or offer, let alone
show, good cause for the delay in filing, is fatal to their motion.”
Waxman v. The Hallen Construction Co., Inc., 139 A D 3d 597 (1st Dept. 2016) – “The
motion for summary judgment should have been denied as untimely, as it was submitted
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more than 50 days after the expiration of the deadline imposed by a preliminary
conference order, and there was no showing of good cause for the late filing [citations
omitted]. The reassignment of the action to a different Justice’s part after entry of the
preliminary conference order is not good cause for the late filing, since there was no
subsequent order or directive explicitly providing for a different time limit, or stating that
the time limits of the new part’s rules would supersede the preliminary conference order.”
Bennett v. St. John’s Home, 26 N Y 3d 1033 (2015) – Last year’s “Update” reported on
the Appellate Division decision in this action [128 A D 3d 1428 (4th Dept. 2015)]. The
majority of the divided Appellate Division held that “by expressly consenting to the
timing of the motion before it was made,” plaintiff waived his challenge to the otherwise
late summary judgment motion. “While we agree with our dissenting colleague that the
court was not required to accept the express stipulation of the parties to extend the 120-
day deadline in CPLR 3212, we note that the court in fact did so in advance of the motion
[citation omitted]. Moreover, unlike our dissenting colleague, we do not view the timing
requirements applicable to motions for summary judgment as a matter of public policy
that may not be affirmatively waived by a party.” The dissenter argued that ‘‘the parties’
stipulation is insufficient to excuse a delay’ [citation omitted]. ‘Unless public policy is
violated, the parties are free to chart their own procedural course, and may fashion the
basis upon which a particular controversy will be resolved’ [citations omitted]. However,
as articulated by the legislature and the Court of Appeals, it is public policy to strictly
enforce the 120-day limit for summary judgment motions in the absence of leave of court
on good cause shown.” For, “although parties may stipulate away some statutory rights
[citation omitted], under CPLR 3212(a) and the decisions of the Court of Appeals in Brill
[v. City of New York, 2 N Y 3d 648 (2004)] and Miceli [v. State Farm Mutual Automobile
Insurance Company, 3 N Y 3d 725 (2004)], ‘the court has the exclusive authority to
extend the statutory deadline; mutual agreement of the parties without court approval will
not suffice’ [citation omitted], and the court may not approve of the delayed motion
without a showing of good cause.” The statute “does not permit courts to accept a
stipulation of the parties ‘in advance of the motion’ where there is no showing of good
cause.” The Court of Appeals has affirmed because, not surprisingly, given the
stipulation at Supreme Court, “the issue of timeliness was not preserved in Supreme
Court.” Thus, “the Court of Appeals lacks power to review either the Appellate
Division’s exercise of its discretion to reach the issue, or the issue itself.”
Zarnoch v. Luckina, 148 A D 3d 1615 (4th Dept. 2017) – “We agree with plaintiff that
the court erred in denying his pretrial cross motion to dismiss the special employment
affirmative defense as untimely under CPLR 3212(a) [citation omitted]. To the extent
that the cross motion sought relief pursuant to CPLR 3211(b), it was not subject to the
time limit for summary judgment motions under CPLR 3212(a).”
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American Transit Insurance Company v. Baucage, 146 A D 3d 413 (1st Dept. 2017) –
“Since Innovative Medical never properly filed an answer, it may not ask the court to
reach the merits of the action because CPLR 3212(a) expressly provides that a motion for
summary judgment may only be made after joinder of issue.”
SUMMARY JUDGMENT
Kolel Damsek Eliezer, Inc. v. Schlesinger, 139 A D 3d 810 (2d Dept. 2016) – “Generally,
successive motions for summary judgment are not permitted [citation omitted]. A court
may, however, properly entertain such a motion ‘when it is substantively valid and the
granting of the motion will further the ends of justice and eliminate an unnecessary
burden on the resources of the courts.’”
Dolan v. Frigidaire, N.Y.L.J., 1202753683906 (Sup.Ct. Nassau Co. 2016)(Feinman, J.) –
“It is well settled that every motion for summary judgment shall be supported by an
affidavit and a copy of all the pleadings and other available proof such as depositions and
written admissions [citation omitted]. The pleadings are a requisite part of the record of a
CPLR 3212 motion and omission of same mandates the denial of summary judgment
relief.”
Ingvarsdottir v. Bedi, N.Y.L.J., 1202785146664 (Sup.Ct. N.Y.Co. 2017)(Edmead, J.) –
“Plaintiff’s motion for summary judgment pursuant to CPLR 3212 is not barred by her
previous motion brought pursuant to CPLR 3213. CPLR 3213 provides that ‘When an
action is based upon an instrument for the payment of money only or upon any judgment,
the plaintiff may serve with the summons a notice of motion for summary judgment and
the supporting papers in lieu of a complaint.’ Inasmuch as summary relief pursuant to
CPLR 3213 is limited to an ‘instrument for the payment of money only’ whereas
summary relief pursuant to CPLR 3212 requires a searching of an entire record after the
joinder of issue, it cannot be said that this Court’s previous denial of plaintiff’s motion
under CPLR 3213 precludes or bears on the merits of plaintiff’s instant motion under
CPLR 3212.”
Messina v. Lippman, 55 Misc 3d 1 (App.Term 2d Dept. 2016) – Ordinarily, a motion for
summary judgment stays discovery pursuant to CPLR 3214(b), although “a court may
direct otherwise,” if “there were any legitimate need for discovery” during the motion’s
pendency. The stay does not apply at all here, where “plaintiff were in default in failing
to respond to defendant’s interrogatories” before the summary judgment motion was
made, and, hence, “before any stay could arise.” Civil Court should have granted
defendant’s motion to compel compliance despite the pendency of the summary
judgment motion.
Imrie v. Imrie, 145 A D 3d 1358 (3d Dept. 2016) – “‘A summary judgment motion is
properly denied as premature when the nonmoving party has not been given reasonable
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time and opportunity to conduct disclosure relative to pertinent evidence that is within the
exclusive knowledge of the movant or a codefendant’ [citations omitted]. As is relevant
to plaintiff’s claim, a party seeking reformation of a contract must establish, by clear and
convincing evidence, either that the writing at issue was executed under mutual mistake
or that there was a fraudulently induced unilateral mistake [citations omitted]. The
importance of documents and depositions that plaintiff sought but had not been provided
is readily apparent. The premise of plaintiff’s cause of action is that, in executing the
relevant insurance policy, the corporation and Erie both intended to include plaintiff as a
loss payee but that, by mutual mistake, he was omitted. Erie had exclusive knowledge of
its understanding of the intended coverage and any intended loss payees at the time of the
execution of the relevant insurance policy. Moreover, it is likely to be in exclusive
possession of any collateral documents memorializing the intended scope of the relevant
insurance policy. Further, plaintiff’s contention that Erie has exclusive possession of
employees and materials that could shed light on its intent as to the insurance policy is
patently reasonable and not merely speculation [citation omitted]. Under the
circumstances, Erie’s motion for summary judgment should have been denied without
prejudice as premature.”
Martino v. Midtown Trackage Ventures, LLC, 147 A D 3d 1040 (2d Dept. 2017) – “A
party should be afforded a reasonable opportunity to conduct discovery prior to the
determination of a motion for summary judgment [citations omitted]. Here, the
defendant Tishman Construction Corporation (hereinafter Tishman) moved, inter alia,
for summary judgment dismissing the complaint insofar as asserted against it about five
months after the plaintiff commenced this action. Under the circumstances of this case,
at this stage of the proceedings, the Supreme Court should have denied that branch of
Tishman’s motion with leave to renew after the completion of discovery.”
KNET, Inc. v. Ruocco, 145 A D 3d 989 (2d Dept. 2016) – Plaintiffs moved for summary
judgment on their claim that shares issued to defendants should be invalidated, as
allegedly issued for little or no consideration. Over defendants’ objection, the Court
directed a hearing on the motion, despite defendants’ claim to entitlement to a jury trial,
and, after the hearing, granted the motion. The Appellate Division reverses. “CPLR
3212(c), which, on a motion for summary judgment, authorizes a trial of certain issues
not related to the merits or related to damages, was not applicable here [citation omitted].
Where, as here, a triable issue of fact (except as to damages) arises on a motion for
summary judgment, the motion must be denied pursuant to CPLR 3212(b).”
Canals v. Tilcon New York, Inc., 135 A D 3d 683 (2d Dept. 2016) – “‘Generally, it is for
the trier of fact to determine the issue of proximate cause’ [citations omitted]. ‘However,
the issue of proximate cause may be decided as a matter of law where only one
conclusion may be drawn from the established facts.’”
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Rodriguez v. City of New York, 142 A D 3d 778 (1st Dept. 2016) – “In this case, we are
revisiting a vexing issue regarding comparative fault: whether a plaintiff seeking
summary judgment on the issue of liability must establish, as a matter of law, that he or
she is free from comparative fault. This issue has spawned conflicting decisions between
the judicial departments, as well as inconsistent decisions by different panels within this
Department.” A narrowly-divided Court concludes that “the original approach adopted
by this Department, as well as that followed in the Second Department, which requires a
plaintiff to make a prima facie showing of freedom from comparative fault in order to
obtain summary judgment on the issue of liability, is the correct one.” The dissenters
argued that plaintiff’s comparative negligence, unless enough to exonerate defendant
entirely, is irrelevant on this motion. For, “the comparative negligence doctrine does not
bear upon whether a defendant is liable; rather, it bears upon the extent of the defendant’s
liability, where both the defendant and the plaintiff engaged in culpable conduct resulting
in the injury” [emphasis by the Court]. Thus, “where a defendant fails to raise issues of
fact as to his or her own negligence, but succeeds in raising issues of fact as to the
plaintiff’s comparative negligence, partial summary judgment on liability with respect to
defendant’s negligence is warranted, because the defendant will be liable to the extent his
or her misconduct proximately caused the injury” [emphasis by the Court].
Kanfer v. Wong, 145 A D 3d 985 (2d Dept. 2016) – “Since there can be more than one
proximate cause of an accident, a plaintiff moving for summary judgment on the issue of
liability has the burden of establishing, prima facie, not only that the defendant was
negligent, but that the plaintiff was free from comparative fault.”
Oluwatayo v. Dulinayan, 142 A D 3d 113 (1st Dept. 2016) – “The primary issue in this
appeal is whether plaintiff, as an innocent driver, who was rear-ended by one or more
cars, is by virtue of such status, per se, entitled to summary judgment on liability against
any or all defendant drivers. Under the circumstances here, we find that plaintiff, an
innocent driver, is not entitled to summary judgment on liability against any defendant
driver because, as the party moving for summary judgment, plaintiff failed to meet his
burden to eliminate triable issues of fact as to how the accident happened and which
defendant driver was responsible for the rear end collision. Such an innocent plaintiff
driver, however, is entitled to summary judgment on his lack of culpable conduct on the
issue of liability pursuant to CPLR 3212(g).”
Lindsay-Thompson v. Montefiore Medical Center, 147 A D 3d 638 (1st Dept. 2017) – In
a concurring opinion in Pullman v. Silverman, 28 N Y 3d 1060 (2016), Judge Fahey
noted that “First Department jurisprudence” – conflicting with that of the Second
Department – provides that “if a defendant in a medical malpractice action establishes
prima facie entitlement to summary judgment, by a showing either that he or she did not
depart from good and accepted medical practice or that any departure did not proximately
cause the plaintiff’s injuries, plaintiff is required to rebut defendant’s prima facie
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showing ‘with medical evidence that defendant departed from accepted medical practice
and that such departure was a proximate cause of the injuries alleged’” [emphasis by the
Court]. Here, in Lindsay-Thompson, the First Department, citing the seminal Second
Department case with approval, holds that “because defendants failed to establish the
absence of a departure from the standard of care, plaintiffs were not required to raise a
triable issue of act as to whether there was a departure.”
Abrams v. Related, L.P., 137 A D 3d 655 (1st Dept. 2016) – Back in 2008, the Appellate
Division, Second Department, held, in Construction by Singletree, Inc. v. Lowe, 55 A D
3d 861 (2d Dept. 2008), that when a party had failed to comply with a demand for expert
disclosure pursuant to CPLR 3101(d)(1)(i), that party could not submit an expert affidavit
in opposition to a motion for summary judgment. Singletree was a quite controversial
decision. After commentators had commentated at great length about it, and after both
lower Courts and the Second Department itself had applied it in all sorts of conflicting
ways, the Second Department undertook to “clarify” Singletree, by essentially overruling
it, in Rivers v. Birnbaum, 102 A D 3d 26 (2d Dept. 2012). The Court there ultimately
concluded that accepting or rejecting the expert affidavit was a matter for the trial court’s
sound discretion. And, after Rivers, the Second Department seems to have suggested that
the best use of that discretion was to accept the affidavit [Begley v. City of New York, 111
A D 3d 5 (2d Dept. 2013)]. But, just as the Second Department was moving away from
Singletree, the First Department appeared to be adopting it, although without citing
it [Scott v. Westmore Fuel Company, Inc., 96 A D 3d 520 (1st Dept. 2012); Garcia v. City
of New York, 98 A D 3d 857 (1st Dept. 2012)]. The issue has, at last, been settled.
Effective December 11, 2015, the Legislature amended CPLR 3212(b), adding the
following language to the statute: “Where an expert affidavit is submitted in support of,
or opposition to, a motion for summary judgment, the court shall not decline to consider
the affidavit because an expert exchange pursuant to subparagraph (i) of paragraph (1) of
subdivision (d) of section 3101 was not furnished prior to the submission of the
affidavit.” The amendment applies to all summary judgment motions made in pending
actions on or after the effective date, and to all actions commenced on or after that date.
Here, in Abrams, and despite the amendment to CPLR 3212(b), the Court holds that,
“absent any excuse for noncompliance, [plaintiff’s] failure to identify his experts during
discovery, as required by defendants’ demand, warrants rejection of the experts’
affidavits” on defendant’s motion for summary judgment. The Court cited Garcia v. City
of New York, 98 A D 3d 857 (1st Dept. 2012), mentioned above, which the amendment
seemingly was intended to legislatively overrule.
Yampolskiy v. Baron, 150 A D 3d 795 (2d Dept. 2017) – “‘A party’s failure to disclose its
experts pursuant to CPLR 3101(d)(1)(i) prior to the filing of a note of issue and
certificate of readiness does not divest a court of the discretion to consider an affirmation
or affidavit submitted by that party’s experts in the context of a timely motion for
summary judgment’ [citation omitted]. Under the circumstances of this case, the
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Supreme Court properly denied the plaintiff’s cross motion to preclude the expert
materials submitted by the defendants in support of their motion for summary judgment,
as there was no evidence that the failure to disclose the experts was intentional or willful,
and there was no showing of prejudice to the plaintiff.”
Nelson v. Rosenkranz, N.Y.L.J., 1202760097615 (Sup.Ct. N.Y.Co. 2016)(Lebovits, J.) –
“In any action other than matrimonial action, ‘summary judgment may be granted in
favor of any one or more parties, to the extent warranted, on such terms as may be just.’”
Here, the Court grants defendant’s motion for “reverse summary judgment.” Plaintiff
claimed that defendant breached their agreement by failing to pay in accordance with its
terms. She sought damages and rescission to avoid her own obligations under the
agreement. Defendant moved to “withdraw that part of his verified answer denying the
breach of contract,” and to grant plaintiff judgment for the sums claimed due. The Court
grants that motion, finding that, under the circumstances, rescission was an inappropriate
remedy.
CPLR 3213
1270 Morris LLC v. Caballero, N.Y.L.J., 1202779114370 (Civ.Ct. Bronx Co. 2017)
(Kraus, J.) – The summons served on a motion for summary judgment in lieu of
complaint must be more than “the standard form summons.” Instead, “the summons
served with such motion papers shall require the defendant to submit answering papers
on the motion within the time provided in the notice of motion.” It “should not be
phrased merely to require the defendant to serve answering papers ‘within’ a certain
period; it should specifically advise the defendant to serve ‘answering papers’ at least X
days prior to the return day set by the notice of motion. The defect in failing to comply
with the statute and failing to advise the Defendant as to the requirement and time for
serving answering papers is a fatal defect requiring dismissal of the action.”
TD Bank, N.A. v. Excelsior Syndication of N.Y. LLC, N.Y.L.J., 1202755395466 (Sup.Ct.
N.Y.Co. 2016)(Freed, J.) – “A movant’s service of a summons and motion pursuant to
CPLR 3213 requires a defendant to serve answering papers by the time set forth in the
notice of motion, and ‘the minimum amount of time the plaintiff must give the defendant
to appear and oppose the motion is dependent upon the date and method of service’
which is calculated pursuant to CPLR 320 [citation omitted]. Under CPLR 320(a), unless
service is made in person, a defendant must appear within 30 days after service is
complete. Pursuant to CPLR 3213, a plaintiff may schedule a motion hearing date
beyond the minimum time and then require that responding papers be served within that
extended period, not exceeding 10 days before the return date. However, because service
is not complete until ten days after proof of service is filed with the clerk of the court
(CPLR 308[2]), ‘the minimum amount of time between service of the summons and
motion papers and the return date is 40 days.’” When “as here, defendants have not been
provided with the statutorily required time in which to respond to a motion brought
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pursuant to CPLR 3213, a court lacks the jurisdiction to hear the motion and it must be
denied without prejudice and the action must be dismissed.”
The Park Union Condominium v. 910 Union Street, LLC, 140 A D 3d 673 (1st Dept.
2016) – “Plaintiffs, a condominium and its board of managers, established that the
parties’ settlement agreement, covering claims related to defendants’ construction of the
condominium, constituted ‘an instrument for the payment of money only’ [citation
omitted] and that defendant defaulted by failing to make payment under its terms
[citation omitted]. In opposition, defendant failed to raise a triable issue as to a defense
to the instrument [citation omitted]. The agreement contained an unconditional promise
by defendant to pay plaintiffs upon the execution of releases attached to the agreement,
and it required no additional performance by plaintiffs as a condition precedent to
payment or otherwise made defendant’s promise to pay something other than
unconditional.”
Blumenstein v. Waspit Group, Inc., 140 A D 3d 620 (1st Dept. 2016) – Defendant’s
argument that the note at issue is not an instrument for the payment of money only “is
defeated by their failure to establish that the note and the deed of settlement executed
simultaneously with it were inextricably intertwined [citations omitted]. While the note
states that it was executed ‘pursuant to’ and ‘in consideration of’ the deed, it does not
state that it was ‘subject to the terms and conditions of’ the deed [citation omitted].
Nothing in the deed affects the value of the principal due under the note or otherwise
alters defendants’ obligations to pay under the note.”
PDL Biopharma, Inc. v. Wohlstadter, 147 A D 3d 494 (1st Dept. 2017) – “‘The
prototypical example of an instrument within the ambit of CPLR 3213 is of course a
negotiable instrument for the payment of money – an unconditional promise to pay a sum
certain, signed by the maker and due on demand or at a definite time’ [citation omitted].
CPLR 3213 is generally used to enforce ‘some variety of commercial paper in which the
party to be charged has formally and explicitly acknowledged an indebtedness,’ so that ‘a
prima facie case would be made out by the instrument and a failure to make the payments
called for by its terms’ [citation omitted]. A document does not qualify for CPLR 3213
treatment if the court must consult other materials besides the bare document and proof
on nonpayment, or if it must make a more than de minimis deviation from the face of the
document.’” It is true that, “generally, an unconditional guaranty qualifies as an
instrument amenable to CPLR 3213 treatment [citation omitted]. However, here, it is
unclear whether that is the case. For one thing, the documents guarantee not only
‘payment’ but also ‘performance’ of the borrower’s ‘obligations.’ The term ‘obligations’
is not defined in either of the guaranties.” Accordingly, the guarantee at issue is not
entitled to CPLR 3213 treatment.
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CPLR 3211(C) CONVERSION
Fedele v. Qualified Personal Residence Trust of Doris Rosen Margett, Dated November
14, 2001, 137 A D 3d 965 (2d Dept. 2016) – “The plaintiffs correctly contend that the
Supreme Court improperly converted that branch of the Hospital’s motion which was to
dismiss the amended complaint into a motion for summary judgment without adequately
notifying the parties pursuant to CPLR 3211(c). The plaintiffs ‘were not put on notice of
their obligation to make a complete record and to come forward with any evidence that
could possibly be considered,’ or given an opportunity to do so [citation omitted]. The
record does not establish that the plaintiffs were laying bare their proof [citations
omitted] or that either party deliberately charted a summary judgment course [citations
omitted]. Yet, the Supreme Court ‘effectively treated the motion as one for summary
judgment, which requires disclosure of all of the evidence on the disputed issues.’”
Smithers v. County of Oneida, 138 A D 3d 1504 (4th Dept. 2016) – “We reject plaintiff’s
contention that the court was required to give the parties notice that it was treating the
motion as one for summary judgment. ‘A court may treat a motion to dismiss as a
motion for summary judgment when the parties have otherwise received adequate notice
by expressly seeking summary judgment or submitting facts and arguments clearly
indicating that they were deliberately charting a summary judgment course’ [citations
omitted]. Here, plaintiff was on notice that defendant was seeking summary judgment in
the alternative and, indeed, opposed that part of the motion.”
DEFAULTS
OBTAINING A DEFAULT JUDGMENT
Cukierwar v. College Central Network, Inc., 148 A D 3d 983 (2d Dept. 2017) – “‘A
default judgment may not award relief of a different kind than that demanded in the
complaint’ [citation omitted]. Moreover, ‘at an inquest, the court may not permit
amendments of the pleadings which would broaden the scope of the inquest and increase
the amount of damages provable by the plaintiff.’”
Roy v. 81 E. 98th KH Gym, LLC, 142 A D 3d 985 (2d Dept. 2016) – “On a motion for
leave to enter a default judgment pursuant to CPLR 3215, a plaintiff is required to submit
proof of service of the summons and complaint, proof of the facts constituting the cause
of action, and proof of the defendant’s default in answering or appearing [citations
omitted]. A plaintiff must allege enough facts to enable the court to determine that a
viable cause of action exists [citations omitted]. Here, in the plaintiff’s affidavit
submitted in support of his motion, he stated merely that he suffered electrical burns
while working as an intern for a third-party defendant, the New York City Department of
Education. The plaintiff failed to allege enough facts in his affidavit to enable the court
to determine that a viable cause of action exists against” defendants. Moreover,
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plaintiff’s “amended complaint was verified only by his attorney, and not by a party with
personal knowledge of the facts. Therefore, the amended complaint, by itself, was
insufficient to enable the court to determine that a viable cause of action exists” against
defendants.
Clarke v. Liberty Mutual Fire Insurance Co., 150 A D 3d 1192 (2d Dept. 2017) –
“Plaintiffs met all of the requirements for demonstrating their entitlement to enter a
default judgment against the defendant. The affidavit of service submitted in support of
the motion constituted prima facie evidence that the defendant was properly served
through the New York State Department of Financial Services pursuant to Insurance Law
§1212 [citations omitted]. Further, since the plaintiffs’ attorney had firsthand knowledge
of the facts constituting the plaintiffs’ cause of action pursuant to Insurance Law
§3420(a)(2) against the defendant [to recover the amount of an unsatisfied judgment in a
personal injury action against defendant’s insured] and proof of the defendant’s default in
answering the complaint, the Supreme Court improperly denied the plaintiffs’ motion on
the basis that their attorney’s affirmation and the complaint verified by him did not
provide a sufficient basis upon which to grant leave to enter a default judgment against
the defendant.”
Gantt v. North Shore-LIJ Health System, 140 A D 3d 418 (1st Dept. 2016) – “Any
irregularity in the affidavit of nonmilitary service submitted on plaintiff’s motion for a
default judgment did not rise to the level of a jurisdictional defect, since defendant
Hilario never made any pretense of either being on active military duty or being a
military dependent at the time of her default.”
Avis Rent a Car System, LLC v. Forbes, N.Y.L.J., 1202777935240 (Civ.Ct. Bronx Co.
2017)(Kraus, J.) – This case presents a textbook catalogue of errors in an application for
a default judgment. First, “although the moving papers assert a copy of the affidavit of
service for the summons and complaint are annexed as Exhibit ‘A’ in fact no such proof
of service is annexed to the moving papers. Only the affidavit confirming the additional
mailing as required by CPLR 3215(g)(3) is attached. Even that mailing appears
insufficient, as Plaintiff appears to have information about a different address for the
same defendant.” Second, “no legible copy of the contract sued upon was annexed to the
moving papers. A partial copy without signatures in tiny blurred print is attached as part
of Exhibit ‘B’ but is not legible.” Third, “the non-military information is stale as it is
dated from January 2015, approximately two years prior to the motion, and prior to the
commencement of this action.” And, “to the extent that movant relies upon the printout
from the Department of Defense, the affidavit must specifically state what information
was entered for this specific search. Instead the two year old affidavit states ambiguously
that ‘pertinent information’ was provided ‘such as date of birth and/or social security
number.” Finally, “and most disturbing of all, this is apparently the second law suit that
Plaintiff has commenced against Defendant for the same cause of action,” which fact
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plaintiff did not disclose in its papers. And, in the earlier lawsuit, which was dismissed
for failure to properly serve defendant, plaintiff alleged an entirely different address for
plaintiff than the one it claims now, with no explanation. Not surprisingly, the Court
denies the motion for a default judgment.
American Transit Insurance Company v. Baucage, 146 A D 3d 413 (1st Dept. 2017) –
“Innovative Medical’s claim that plaintiff accepted its untimely answer by failing to
reject it fails, because plaintiff moved for the default judgment within 13 days of its
receipt.”
Kim v. S&M Caterers, Inc., 136 A D 3d 755 (2d Dept. 2016) – “By defaulting, the
defendant admitted ‘all traversable allegations in the complaint, including the basic
allegation of liability’ [citations omitted]. As such, the sole issue to be determined at the
inquest was the extent of the damages sustained by the plaintiffs, and the Supreme Court
erred in considering the questions of whether the defendant owed the plaintiffs a duty of
care or whether the subject accident was caused by the defendant’s conduct.”
At Last Sportswear, Inc. v. North American Textile Co., LLC, N.Y.L.J., 1202765280751
(Sup.Ct. N.Y.Co. 2016)(Bransten, J.) – “When a defendant defaults on the action, it is
deemed to have ‘admitted all traversable allegations in the complaint, including the basic
allegation of liability, but does not admit the plaintiff’s conclusion of damages’ [citations
omitted]. Here, since Plaintiff has not attached evidence substantiating the amount of
damages that it alleges against Defendant Fortunex, a damages inquest is thus necessary
to calculate the amount of damages that Defendant Fortunex owes Plaintiff.”
NYCTL 2014-A Trust v. 774 Properties LLC, 54 Misc 3d 645 (Sup.Ct. Kings Co.
2016)(Rivera, J.) – “CPLR 3215(g) sets forth when and under what circumstances notice
of an application or motion for leave to enter a default judgment must be given. It
provides that any defendant who has appeared in an action but subsequently defaults ‘is
entitled to at least five days’ notice of the time and place’ of the motion for leave to enter
a default judgment. It further provides, as relevant to the instant motion, that if more than
one year has elapsed since the default any defendant who has not appeared is entitled to
the same notice unless the court orders otherwise. The failure of the plaintiff to give
notice to the defendants of its motion for leave to enter a default judgment pursuant to
CPLR 3215(g)(1) deprives the Supreme court of jurisdiction to entertain the motion.”
Bank of New York v. Kushnir, 150 A D 3d 946 (2d Dept. 2017) – “CPLR 3215(c)
provides, with regard to default judgments, in pertinent part, that ‘if the plaintiff fails to
take proceedings for the entry of judgment within one year after the default, the court
shall not enter judgment but shall dismiss the complaint as abandoned, without costs,
upon its own initiative or on motion, unless sufficient cause is shown why the complaint
should not be dismissed.’ ‘The language of CPLR 3215(c) is not, in the first instance,
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discretionary, but mandatory, inasmuch as courts “shall” dismiss claims [citation omitted]
for which default judgments are not sought within the requisite one-year period, as those
claims are then deemed abandoned’ [citations omitted]. ‘The one exception to the
otherwise mandatory language of CPLR 3215(c) is that the failure to timely seek a
default on an unanswered complaint or counterclaim may be excused if “sufficient cause
is shown why the complaint should not be dismissed”’ [citations omitted]. ‘This Court
has interpreted this language as requiring both a reasonable excuse for the delay in timely
moving for a default judgment, plus a demonstration that the cause of action is potentially
meritorious.’”
US Bank National Association v. Brown, 147 A D 3d 428 (1st Dept. 2017) – CPLR
3215(c) provides that unless plaintiff takes “proceedings for the entry of judgment within
one year after the [defendant’s] default,” no default judgment will be entered, and,
instead, the action will be dismissed. Here, the Court finds that plaintiff took sufficient
“proceedings” within the year. “Plaintiff made its first application for an order of
reference within the statutory time limitation. The fact that this application was denied
because plaintiff attempted to withdraw it without prejudice is of no moment, since the
statute merely requires that the party needs only to initiate proceedings, ‘and these
proceedings manifest an intent not to abandon the case.’” This “timely application ‘even
if unsuccessful’ will not result in the dismissal of the complaint ‘as abandoned pursuant
to CPLR 3215(c).’”
US Bank National Association v. Konstantinovic, 147 A D 3d 1002 (2d Dept. 2017) – “It
is enough that the plaintiff timely takes ‘the preliminary step toward obtaining a default
judgment of foreclosure and sale by moving for an order of reference’ to establish that it
‘initiated proceedings for entry of a judgment within one year of the default’ for purposes
of satisfying CPLR 3215(c).”
VACATING A DEFAULT
Hutchinson Burger, Inc. v. Bradshaw, 149 A D 3d 545 (1st Dept. 2017) – “The proper
vehicle for defendant to challenge the October 2012 order, which was granted on her
default, was a motion to vacate a default order under CPLR 5015(a)(1), and not a motion
for renewal or reargument under CPLR 2221(d) and (e).”
Henderson-Jones v. City of New York, 55 Misc 3d 401 (Sup.Ct. N.Y.Co. 2016)(Billings,
J.) – Because the individual defendant appeared and opposed the motion for leave to
enter a default judgment against him, “CPLR 5015(a)(1) is unavailable to him as a basis
for vacating the judgment. Van Orden needed to avail himself of CPLR 5015(a)(2), (3),
(4) or (5) or to appeal the judgment.”
Snyder v. Singh, 146 A D 3d 1141 (3d Dept. 2017) – After being served with the
summons and complaint in this dental malpractice action, defendant’s office called
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plaintiff’s counsel, saying that it had been ten years since defendant treated plaintiff (that
was incorrect; defendant had two patients with the same name, and was referring to the
wrong file), and defendant thereafter took no steps to respond to the complaint until
served with a copy of the motion for a default judgment. The Court concludes that
Supreme Court did not abuse its discretion in denying defendant’s cross-motion seeking
to compel acceptance of a late answer. “A defendant’s mistaken belief that it has no
liability ‘does not constitute a reasonable excuse for its default.’”
John v. Arin Bainbridge Realty Corp., 147 A D 3d 454 (1st Dept. 2017) – “‘To obtain
relief from a default judgment under CPLR 5015(a)(1), a party is required to demonstrate
both a reasonable excuse for the default and a meritorious claim or defense to the action’
[citations omitted]. However, ‘the failure of a corporate defendant to receive service of
process due to breach of the obligation to keep a current address on file with the
Secretary of State [citation omitted] does not constitute a reasonable excuse’ [citation
omitted]. Thus, the court properly denied Arin’s motion to vacate the default judgment
under CPLR 5015(a)(1). CPLR 317 provides that ‘a person served with a summons other
than by personal delivery to him or to his agent for service under CPLR 318 who does
not appear may be allowed to defend the action within one year after he obtains
knowledge of entry of the judgment upon a finding of the court that he did not personally
receive notice of the summons in time to defend and has a meritorious defense.’ No
showing of a reasonable excuse is necessary [citation omitted]. Service upon a
corporation through the Secretary of State, pursuant to Business Corporation Law §306,
is not ‘personal service’ [citation omitted]. Viewing the totality of the record, we find
that the court providently exercised its discretion to deny vacatur of the default judgment
under CPLR 317. Numerous anomalies in the record support the court’s inference that
Arin sought to deliberately avoid service.”
Top Notch Drywall Corp. v. All Mine of Orange, Inc., 55 Misc 3d 25 (App.Term 2d Dept.
2017) – “While there is no per se rule under CPLR 5015 which precludes a corporation
from establishing, as its reasonable excuse for defaulting in an action, its failure to keep
current its address on file with the Secretary of State [citation omitted], courts should
consider, as one factor in determining whether such an excuse is reasonable, ‘the length
of time for which the address had not been kept current’ [citation omitted]. Since
defendant failed to update its address on file with the Secretary of State for over 12 years,
we find that defendant has not demonstrated a reasonable excuse for its default [citations
omitted]. While relief from a default judgment may be obtained pursuant to CPLR 317
where service was made in a manner other than be personal delivery and the defaulting
party did not receive actual notice of the summons in time to defend [citations omitted],
here, the fact that the incorrect address remained on file with the Secretary of State for
over 12 years, without any explanation by defendant as to why it had not provided the
Secretary of State with its changed address, should be deemed ‘a deliberate attempt to
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avoid notice’ [citation omitted]. Consequently, defendant’s motion to vacate the default
judgment was properly denied.”
Marston v. Cole, 147 A D 3d 678 (1st Dept. 2017) – The majority here notes that “the
court may grant a motion to vacate a default on grounds of excusable default and a
showing of a meritorious defense, if the motion is made within one year after service of
the order entered on default, with written notice of its entry [citations omitted]. Marston
did not move to vacate the order entered on default until February 18, 2014, nearly 18
months after he was served with the order and requisite notice. Furthermore, in support
of his motion, Marston sought to demonstrate a meritorious defense by making a
statement directly contrary to a critical allegation in his complaint. Accordingly, the
motion court providently exercised its discretion not to vacate the default.” Two Justices
separately concurred, agreeing that Supreme Court properly denied the motion to vacate
the default because the motion was untimely, without a reasonable excuse. The
concurring Justices concluded that, in light of that conclusion, there was no need to
determine if plaintiff had made an adequate showing on the merits.
Gourvitch v. 92nd and 3rd Rest Corp., 146 A D 3d 431 (1st Dept. 2017) – “Plaintiff’s
noncompliance with the ‘additional service’ requirement of CPLR 3215(g)(4)(i) does not
warrant vacatur of the default judgment absent a showing of a reasonable excuse for the
default and a meritorious defense [citations omitted]. The motion court properly denied
vacatur on the ground that 92nd and 3rd Rest Corp.’s conclusory denial of receipt of the
summons and complaint was insufficient to rebut the presumption of service created by
the affidavit of service reflecting service through the Secretary of State.”
Matter of Limitone Enterprises, Inc. v. Walker, 139 A D 3d 951 (2d Dept. 2016) – “The
petitioners commenced this proceeding pursuant to CPLR article 78, inter alia, to compel
the respondent to rescind and annul the sale of certain real property sold pursuant to a
judgment of foreclosure and sale dated September 20, 2010, and entered, upon default, in
a related in rem tax lien foreclosure proceeding.” However, “the procedure for relief
from a default judgment generally is described in CPLR 317 and 5015(a), and,
specifically with regard to in rem tax lien foreclosure proceedings pursuant to article 11
of the Real Property Tax Law, in RPTL 1131. All of these provisions require the making
of a motion for relief in the original action.” This is, therefore, an attempt to “improperly
collaterally attack the default judgment by way of this proceeding pursuant to CPLR
article 78,” and the denial of relief is affirmed.
Deutsche Bank National Trust Company v. Karlis, 138 A D 3d 915 (2d Dept. 2016) –
Defendant here seeks to vacate his default pursuant to CPLR 5015(a)(4), contending that
the Court lacks jurisdiction over him because process was served upon him at a time
when his co-defendant was protected by the automatic stay provided for in the
Bankruptcy Law. The Court rejects that argument. “The automatic stay provided for in
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11 USC §362(a)(1) only acts to stay, among other things, ‘the commencement or
continuation, including the issuance or employment of process, of a judicial,
administrative, or other action or proceeding against the debtor’ in the bankruptcy
proceeding [citations omitted; emphasis by the Court]. ‘In general, only a debtor is
included within the protective umbrella afforded by the automatic stay that arises
pursuant to §362(a)(1). Third-party defendants or co-defendants are typically not
provided such protection.’”
Darbeau v. 136 West 3rd Street, LLC, 144 A D 3d 420 (1st Dept. 2016) – “Service upon
the LLC was complete upon service to the Secretary of State [citation omitted].
Moreover, because the LLC’s motion papers indicate that it chose to seek vacatur
pursuant to CPLR 317 and 5015(1), which presume jurisdiction, and not CPLR
5015(a)(4), it is precluded from arguing that any deficiency in service constituted a lack
of jurisdiction.”
Federal National Mortgage Association v. Zapata, 143 A D 3d 857 (2d Dept. 2016) –
“‘To extend the time to answer the complaint and to compel the plaintiff to accept an
untimely answer as timely, a defendant must provide a reasonable excuse for the delay
and demonstrate a potentially meritorious defense to the action’ [citation omitted]. ‘The
determination of what constitutes a reasonable excuse lies within the sound discretion of
the Supreme Court’ [citations omitted]. Here, Zapata’s participation in settlement
conferences and loan modification negotiations did not constitute a reasonable excuse for
his default [citations omitted]. Inasmuch as Zapata failed to demonstrate a reasonable
excuse for the default, we need not consider whether he offered a potentially meritorious
defense to the action.”
Ashley v. Ashley, 139 A D 3d 650 (2d Dept. 2016) – “A motion to vacate a judgment
pursuant to CPLR 5015(a)(1) on the ground of excusable default must be made within
one year after service upon the moving party of a copy of the judgment, with notice of its
entry [citation omitted]. Although the Supreme Court has the inherent authority to vacate
a judgment in the interest of justice even after the statutory one-year period has lapsed
[citations omitted], here, the Supreme Court providently exercised its discretion in
denying that branch of the defendant’s motion which was to vacate the judgment. The
defendant failed to present any excuse for her failure to move to vacate the judgment for
more than two years after its entry, and failed to present any potentially meritorious
defenses.”
Gage v. Village of Catskill, 144 A D 3d 1365 (3d Dept. 2016) – “In support of its motion
[to vacate its default], defendant submitted the affidavit of the Village Clerk who
acknowledged that she was served with a copy of the summons and complaint on August
20, 2013. She asserted that the summons and complaint were promptly forwarded to
defendant’s insurance agent, and defendant provided documentary evidence
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corroborating her assertion. She stated that, based on a November 2012 letter from
counsel assigned by SIC [the insurer] to represent defendant in connection with the notice
of claim and a March 2013 letter from an SIC representative regarding its counsel’s
response to plaintiff’s application to file a late notice of claim, she believed that
defendant’s legal interests were being represented by SIC’s counsel at the time that the
action was commenced. She further stated that, although she also received plaintiff’s
motion for a default judgment, she did not review its contents because, among other
things, she assumed that the motion was being handled by counsel. Defendant also
submitted the affirmation of its attorney, who averred that SIC had no record of the
summons and complaint having been received. Contrary to plaintiff’s claim, this is not a
case in which the excuse offered for the default is the insurer’s delay in responding or
interposing a defense on behalf of its insured [citations omitted]. Rather, defendant’s
default was based upon its good faith, albeit mistaken, belief that its legal interests were
being represented by SIC in the pending action, a belief that stemmed from SIC’s
involvement in the case from the time that the notice of claim was served and its
appointment of counsel to represent defendant in the litigation that followed [citations
omitted]. Under these circumstances, Supreme court providently exercised its discretion
in finding that defendant demonstrated a reasonable excuse for its failure to appear in the
action.”
Kim v. Strippoli, 144 A D 3d 982 (2d Dept. 2016) – “The record supports the Supreme
Court’s determination that the defendants had a reasonable excuse for their failure to
serve a timely answer. The defendants, who had promptly notified their insurer of the
occurrence of the accident, of the service of the summons and complaint, and of the
service of the plaintiff’s motion for leave to enter a default judgment, reasonably relied
on their insurer to interpose an answer. Within two weeks after the subject accident, the
defendants’ insurer notified the plaintiffs of the defendants’ coverage and that the
insurer’s investigation of the accident led it to believe that the defendants were not liable
to the plaintiffs. In opposition to plaintiff’s motion [for a default judgment] and in
support of their own cross motion [for an extension of time to serve and file a late
answer], the defendants submitted evidence from their insurer demonstrating that the
insurer had always intended to fully defend the claim on the defendants’ behalf, but, due
to an administrative error, the summons and complaint were not assigned to an attorney,
notwithstanding that the defendants had promptly reported the suit to the insurer. Upon
receipt of the plaintiffs’ motion, the insurer promptly assigned an attorney, who engaged
in the instant motion practice. Under these circumstances, the Supreme court properly
found that the defendants had a reasonable excuse for their default.”
CPLR 3216
U.S. Bank National Association v. Bassett, 137 A D 3d 1109 (2d Dept. 2016) – “The
Supreme Court was without power to dismiss the action on the ground of a general lack
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of prosecution since a precondition set forth in CPLR 3216 – that issue must have been
joined – was not met [citations omitted]. The defendants had not served answers in the
action so issue had never been joined.”
The Board of Managers of the Lore Condominium v. Gaetano, 139 A D 3d 550 (1st Dept.
2016) – “The motion court erred when it effectively dismissed the complaint pursuant to
CPLR 3216(a) on the basis that plaintiff failed to file a note of issue and certificate of
readiness by October 18, 2013, as required by both a preliminary conference order and a
so-ordered stipulation entered into by the parties. A condition precedent to dismissal
pursuant to CPLR 3216(a) was not satisfied, since a written demand pursuant to CPLR
3216(b)(3) was never served upon plaintiff. Although court orders signed by the parties
may constitute a written demand under CPLR 3216(b)(3) [citation omitted], the
preliminary conference order does not qualify as such because it was unsigned by the
parties [citation omitted] and it did not give plaintiff the required 90 days to serve and file
the note of issue, or state that plaintiff’s failure to timely do so would serve as a basis for
a motion to dismiss [citations omitted]. The stipulation, while signed by both parties,
also fails to qualify as a written demand, because it does not contain the requisite
statutory language.”
Deutsche Bank National Trust Company v. Cotton, 147 A D 3d 1020 (2d Dept. 2017) –
“On February 11, 2014, the Supreme Court, sua sponte, entered an order pursuant to
CPLR 3216 dismissing the instant action and directing the County Clerk to vacate the
notice of pendency ‘unless plaintiff files a note of issue or otherwise proceeds by motion
for entry of judgment within 90 days from the date hereof.’ It appears that the action was
thereafter administratively dismissed on June 5, 2014, without further notice to the
parties.” An action “cannot be dismissed pursuant to CPLR 3216(a) ‘unless a written
demand is served upon “the party against whom such relief is sought” in accordance with
the statutory requirement, along with a statement that the “default by the party upon
whom such notice is served in complying with such demand within said ninety day
period will serve as a basis for a motion by the party serving said demand for dismissal as
against him for unreasonably neglecting to proceed”’ [citations omitted]. Here, the order
dated February 11, 2014, which purported to serve as a 90-day notice pursuant to CPLR
3216, was defective in that it failed to state that the plaintiff’s failure to comply with the
notice ‘will serve as a basis for a motion’ by the court to dismiss the action for failure to
prosecute [citation omitted]. The Supreme Court thereafter erred in administratively
dismissing the action without further notice to the parties.”
US Bank National Association v. Saraceno, 147 A D 3d 1005 (2d Dept. 2017) – “The
order dated March 28, 2013, failed to constitute a valid 90-day demand under [CPLR
3216], since it did not recite that noncompliance with its terms ‘will serve as a basis for a
motion for dismissal for unreasonably neglecting to proceed’ [citations omitted].
Moreover, the court never directed the parties to show cause as to why the action should
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not be dismissed, and did not enter a formal order of dismissal on notice to the parties as
required by CPLR 3216(a) [citations omitted]. Accordingly, the ministerial dismissal,
made without notice and without benefit of further judicial review, was erroneous.”
Kamensky v. Savage, 55 Misc 3d 20 (App.Term 2d Dept. 2017) – District Court issued a
“Notice of CPLR 3216 Dismissal,” which provided: “Please be advised that more than
one year has elapsed since the joinder of issue in the above entitled action. Pursuant to
CPLR 3216, you are required to serve and file a notice of trial within ninety days of
receipt of this demand. Failure to timely comply with this demand will result in the
dismissal of the action by the Court.” Nine months later, no notice of trial having been
served or filed, the action was dismissed by the Clerk’s Office. The Appellate Term
reverses the denial of the motion to vacate the dismissal and restore the action to the
calendar. “District Court’s 90-day demand was not followed by any notice to the parties
or a formal order of dismissal.” And defendants’ motion to dismiss the action for failure
to comply with the 90-day demand should also be denied. “A condition precedent to
making a motion to dismiss on this basis is the service of a 90-day demand ‘by the party’
who ‘served said demand for dismissal.’” Since defendants did not serve the demand,
“they have failed to satisfy the precondition and, therefore, are not entitled to the
dismissal of the complaint.”
Suliman v. Rite-Aid Corporation, N.Y.L.J., 1202763654276 (Sup.Ct. Kings Co. 2016)
(Rivera, J.) – “CPLR 3216(a)(3) requires, amongst other things, that the notice be sent by
registered or certified mail. ‘It has been held that Federal Express – presumably,
therefore, any overnight service – may be used instead of the usual U.S. mails. Taking
this kind of liberty, however, in the face of a specific statutory instruction for registered
or certified mail is not wise, and should in no circumstances be tried when the statute
involved is prescribing service of process’ [citation omitted]. However, in situations
where the plaintiff has admitted to receipt of the 90-day notice, the failure to serve a
CPLR 3216 demand by registered or certified mail is a procedural irregularity and, absent
a showing of prejudice to a substantial right of plaintiff, courts should not deny, as
jurisdictionally defective, a defendant’s motion to dismiss for neglect to prosecute.”
Here, the demand was served by ordinary – rather than certified or registered – mail, and
plaintiff has defaulted on the motion to dismiss. Accordingly, “there is no reliable basis
for the Court to find that Rite Aid properly served Suliman with a demand in accordance
with the requirements of CPLR 3216(b). Accordingly, although there is no opposition to
the motion it is, nevertheless, denied without prejudice.”
Walker v. Gibbons, 137 A D 3d 483 (1st Dept. 2016) – “In this action for personal
injuries, we are satisfied that plaintiff’s failure to file a note of issue within 90 days of
defendant Arthur Gibbons’s CPLR 3216 demand was largely attributable to defendant’s
refusal to comply with the notices to take the outstanding deposition of its employee and
for an inspection of its premises [citation omitted]. Accordingly, defendant Arthur
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Gibbons’s motion to dismiss should have been denied. Also, defendants Back to
Jerusalem Pentecostal Mission and Lurena Felder Sutton’s cross motion for dismissal of
the complaint for failure to prosecute should have been denied for the additional reason
that they did not serve their own 90-day notice.”
JUDGMENT BY CONFESSION
Cash and Carry Filing Service, LLC v. Perveez, 149 A D 3d 578 (1st Dept. 2017) –
“Defendants may challenge the judgment by confession only by trial in a plenary action,
and not by motion [citation omitted]. Moreover, defendants lack standing to challenge
the affidavit of confession of judgment. An affidavit of confession of judgment pursuant
to CPLR 3218 ‘is intended to protect creditors of a defendant,’ not the defendant itself.”
Merchant Funding Services, LLC v. Volunteer Pharmacy, Inc., 55 Misc 3d 316 (Sup.Ct.
Westchester Co. 2016)(Everett, J.) – The Court here permits defendant to challenge a
judgment by confession by motion rather than requiring a separate plenary action.
“While cases dating back at least 65 years have held that a motion by ‘a judgment debtor
who seeks to set aside a judgment entered by confession, on grounds of fraud or
misconduct, must proceed by plenary action, not by motion,’ those cases ‘have so held,
on the grounds that sharply contested issues of fact should not be resolved upon
affidavits, but rather by trial in a plenary action’ [citation omitted]. In the instant case,
however, the submitted affidavits and exhibits clearly and unequivocally demonstrate that
the agreement is criminally usurious on its face, obviating the need for a superfluous
plenary action.” In particular, “by recognizing the lack of necessity for a plenary action
in cases where criminal usury is clear from the submissions attendant to a motion under
CPLR 5015(a)(3), the victims of predatory lending though such illegal loan agreements
are spared the needless cost in time and money or pursuing a plenary action, the outcome
of which would be the same.”
OFFER TO COMPROMISE OR LIQUIDATE DAMAGES
Saul v. Cahan, N.Y.L.J., 1202752649737 (Sup.Ct. Kings Co. 2016)(Demarest, J.) –
CPLR 3220 provides that “not later” than 10 days before trial, a defendant may serve
upon plaintiff an offer to allow judgment to be taken for a specified sum, if defendant
loses at trial. If the offer is accepted within 10 days, and plaintiff wins at trial, damages
will be awarded in accordance with the offer. The statute then provides that “if the offer
is not so accepted and the claimant fails to obtain a more favorable judgment, he shall
pay the expenses necessarily incurred by the party against whom the claim is asserted, for
trying the issue of damages from the time of the offer. The expenses shall be ascertained
by the judge or referee before whom the case is tried.” The issue here is whether a
defendant, whose offer was not accepted, is entitled to damages if the case was not tried.
“‘Although the plain language of the statute appears to contemplate at least the
commencement of a trial before a party could recover attorney’s fees pursuant to CPLR
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3220’ [citation omitted], the Third Department granted attorney’s fees pursuant to CPLR
3220 where a defendant obtained summary judgment dismissing a case after the joinder
of issue [citation omitted]. Accordingly, the doctrine of stare decisis requires this court
to follow the precedent of the Third Department Appellate Division until the Court of
Appeals or the Second Department Appellate Division pronounces a contrary rule.”
VOLUNTARY DISCONTINUANCE
A.K. v. T.K., 150 A D 3d 1091 (2d Dept. 2017) – “Under CPLR 3217(a), a party may
voluntarily discontinue an action without a court order by ‘serving upon all parties to the
action a notice of discontinuance at any time before a responsive pleading is served or, if
no responsive pleading is required, within twenty days after service of the pleading
asserting the claim’ [citation omitted]. ‘Where no pleadings have been served the
plaintiff has the “absolute and unconditional right” to discontinue the action by serving a
notice of discontinuance upon the defendant without seeking judicial permission’
[citations omitted]. Here, neither a complaint nor a responsive pleading was ever served
in the third action, thereby preserving the absolute and unconditional right to discontinue
by serving notice.”
Marinelli v. Wimmer, 139 A D 3d 914 (2d Dept. 2016) – “A motion for leave to
discontinue an action is addressed to the sound discretion of the court [citations omitted],
and generally should be granted unless the discontinuance would prejudice a substantial
right of another party, circumvent an order of the court, avoid the consequences of a
potentially adverse determination, or produce other improper results.” Here, “the record
supports the conclusion that the requested discontinuance was improperly sought to avoid
the consequences of a potentially adverse determination with respect to the defendants’
motion to change venue [citations omitted], as well as to prejudice the defendants’ ability
to obtain venue in a proper county.”
US Bank National Association v. Cockfield, 143 A D 3d 889 (2d Dept. 2016) – “As
pertinent to this appeal, CPLR 3217(c) provides that, unless otherwise stated in the
notice, stipulation, or order, a voluntary discontinuance is ‘without prejudice, except that
a discontinuance by means of notice operates as an adjudication on the merits if the party
has once before discontinued by any method an action based on the same cause of action’
[citation omitted]. Here, contrary to the Supreme Court’s determination and the
defendant’s assertions, the plaintiff did not seek to discontinue this action by means of
notice pursuant to CPLR 3217(c). To the contrary, the plaintiff moved for an order of
discontinuance, pursuant to CPLR 3217(b). Thus, the Court erroneously concluded that
discontinuance of the third action ‘must be with prejudice’ under CPLR 3217(c)
[citations omitted]. Instead, the Supreme Court should have exercised its discretion in
determining whether to issue an order of discontinuance, upon whatever ‘terms and
conditions the court deems proper.’”
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BILL OF PARTICULARS
Paterra v. Arc Development LLC, 136 A D 3d 474 (1st Dept. 2016) – “Defendants were
entitled to dismissal of all of plaintiff’s Labor Law claims, since plaintiff asserted the
Labor Law claims for the first time in his bill of particulars, and failed to allege them in
his complaint [citations omitted]. The purpose of the bill of particulars is to amplify the
pleadings [citation omitted], and ‘may not be used to supply allegations essential to a
cause of action that was not pleaded in the complaint’ [citation omitted]. Nor may the
bill of particulars ‘add or substitute a new theory or cause of action.’”
DISCLOSURE
MOTION PRACTICE
Jackson v. Hunter Roberts Construction Group, L.L.C., 139 A D 3d 429 (1st Dept. 2016)
– “The motion court improvidently exercised its discretion in striking the answer.
Plaintiffs’ motion was procedurally deficient, since it was not supported by an
affirmation of good faith [citation omitted]. Nor did the record show that ‘any further
attempt to resolve the dispute nonjudicially would have been futile’ [citation omitted].
Plaintiffs failed to identify any recent meaningful attempts to resolve the parties’
discovery disputes before raising them for the first time in their motion.”
Robins v. Procure Treatment Centers, Inc., N.Y.L.J., 1202785146388 (Sup.Ct. N.Y.Co.
2017)(Silver, J.) – “A party moving to compel discovery is required to submit an
affirmation that counsel for the moving party has made ‘a good faith effort to resolve the
issues raised by the motion’ with opposing party’s counsel [citation omitted]. To be
deemed sufficient, the affirmation must state the nature of the efforts made by the moving
party to resolve the issue with opposing counsel [citations omitted]. Here, Plaintiff’s
affirmation of good faith effort to resolve the dispute with Defendants does not
substantively comply with the requirements of 22 NYCRR 202.7 [citations omitted]. In
the affirmation in support of the motion, Plaintiff’s counsel stated there were good faith
efforts to proceed with disclosure, and highlighted a letter requesting discovery that was
sent to defense counsel for IBA and Procure. However, there is nothing in the letter
indicating the Plaintiff’s counsel actually conferred with defense counsel in a good faith
attempt to resolve the dispute [citations omitted]. Accordingly, the motion to compel
discovery is denied.”
SCOPE OF DISCLOSURE
Matter of Steam Pipe Explosion at 41st Street and Lexington Avenue (Tassa v. Team
Industrial Services, Inc.), 27 N Y 3d 985 (2016) – Last year’s “Update” reported on the
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Appellate Division decision in this action [127 A D 3d 554 (1st Dept. 2015)]. The
Appellate Division held that, “the words ‘material and necessary,’ as used in CPLR
3101(a) are ‘to be interpreted liberally to require disclosure of any facts bearing on the
controversy’ [citation omitted]. ‘The weight to be given evidence of other lawsuits or
claims on the issues of notice and causation, and indeed the very admissibility of such
evidence are not of concern in the context of disclosure’ [citation omitted]. In our view,
the motion court applied too harsh a standard in determining that documents concerning
the prior Diamond Shamrock incident are not discoverable. We are not concerned with
the ultimate admissibility of the evidence at trial, but with the discovery of information
concerning the prior incident, as to which a more liberal standard applies [citation
omitted]. The motion court’s reliance on cases involving the exclusion of testimony or
the evaluation of evidence submitted in opposition to a defendant’s motion for summary
judgment underscores that it applied a more restrictive standard in evaluating the
discoverability of evidence concerning Diamond Shamrock and other incidents.” The
Court of Appeals has affirmed. “The Appellate Division did not abuse its discretion in
granting the motion to compel Team Industrial Services, Inc. to produce its file related to
another action.”
Slomczewski v. Ross, 148 A D 3d 1648 (4th Dept. 2017) – “CPLR 3101(a) provides that,
‘generally, there shall be full disclosure of all matter material and necessary in the
prosecution or defense of an action, regardless of the burden of proof.’ ‘Although the
CPLR does not specifically mention the names and addresses of witnesses or create any
disclosure device for obtaining such information, it is within a court’s discretion to
require a party to disclose the names and addresses of witnesses to transactions,
occurrence, admissions and the like. Thus, a party may reasonably be required to
disclose the name and address of a witness whose identity it has learned in investigating a
case but of whom the opposing party is ignorant’ [citation omitted]. Here, in view of
defendants’ prolonged and almost complete disregard of their pretrial disclosure
obligations with regard to the identity of a known fact witness, it was reasonable for the
court to preclude the individual from testifying as a fact witness.”
INFORMAL DISCOVERY
Caminiti v. Extel West 57th Street LLC, 139 A D 3d 482 (1st Dept. 2016) – “In Arons [v.
Jutkowitz, 9 N Y 3d 393 (2007)], ‘the Court of Appeals provided the framework for
conducting discovery with regard to nonparty healthcare providers, which includes the
use of speaking authorizations’ [citation omitted]. An authorization is required because
physicians, pursuant to the Health Insurance Portability and Accountability Act of 1996
(HIPAA), ‘may not use or disclose an individual’s protected health information to third
parties without a valid authorization.’” Here, a non-physician work-site “medic,” who
examined plaintiff’s deceased and determined to call an ambulance to transport the
decedent to a hospital, fits within the broad definition of “treating physician,” and
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defendants’ motion to compel plaintiff to provide an authorization for an informal
interview with the medic is granted.
Rucinski v. More Restoration Co., Inc., 147 A D 3d 485 (1st Dept. 2017) – “Conflicting
accounts of how plaintiff’s accident took place appear in his medical records, and the
records, alone, do not clarify how the accident occurred.” Defendants therefore
“requested that plaintiff provide authorizations” pursuant to Arons v. Jutkowitz, discussed
directly above, “so that they could depose the medical providers who created the
records.” The Appellate Division affirms the denial of the motion to enforce that request.
“Here, defendants sought depositions of plaintiff’s medical providers pursuant to CPLR
3101(a)(4), not interviews.” Accordingly, “there was no need for plaintiff to provide
HIPAA-compliant authorizations.”
PRE-ACTION DISCLOSURE
Matter of Leff v. Our Lady of Mercy Academy, 150 A D 3d 1239 (2d Dept. 2017) –
“‘Before an action is commenced, disclosure to aid in bringing an action, to preserve
information or to aid in arbitration, may be obtained, but only by court order’ [citations
omitted]. ‘Disclosure to aid in bringing an action’ CPLR 3102(c) authorizes discovery
to allow a plaintiff to frame a complaint and to obtain the identity of the prospective
defendants’ [citations omitted]. However, pre-action disclosure ‘may not be used to
determine whether the plaintiff has a cause of action’ [citations omitted]. This limitation
is ‘designed to prevent the initiation of troublesome and expensive procedures, based
upon a mere suspicion, which may annoy and intrude upon an innocent party’ [citations
omitted]. ‘Where, however, the facts alleged state a cause of action, the protection of a
party’s affairs is no longer the primary consideration and an examination to determine the
identities of the parties and what form or forms the action should take is appropriate’
[citations omitted]. Accordingly, ‘a petition for pre-action discovery limited to obtaining
the identity of prospective defendants should be granted where the petitioner has alleged
facts fairly indicating that he or she has some cause of action.’”
Matter of Barillaro v. The City of New York, 53 Misc 3d 307 (Sup.Ct. Bronx Co.
2016)(Danziger, J.) – “CPLR 3102(c) provides that before an action is commenced,
disclosure to aid in bringing the action, to preserve information or to aid in arbitration,
may be obtained, but only by court order. The First Department has interpreted CPLR
3102(c) as allowing pre-action discovery in order to frame a complaint, to preserve
evidence, and to ascertain the identities of prospective defendants [citations omitted]. ‘A
petition for pre-action discovery should only be granted when the petitioner demonstrates
that he has a meritorious cause of action and that the information sought is material and
necessary to the actionable wrong [citations omitted]. The court has discretion to grant
pre-action disclosure, “to aid in bringing an action or to preserve information” in order to
assist a petitioner in framing his pleadings.’” Here, petitioner seeks production of a video
surveillance tape relating to his personal injury action. The action has not yet been
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commenced because of the condition precedent of a General Municipal Law §50-h
hearing. Hence, this application pursuant to CPLR 3102(c) for pre-action disclosure.
The Court rejects respondent’s argument that “the video is beyond the scope, boundaries
and purpose of the statute governing pre-action discovery,” since disclosure of videos,
pursuant to CPLR 3101(i), would seem to apply only “cases that are already in suit.” The
Court holds that to so limit pre-action disclosure here would put plaintiff at an unfair
disadvantage at the 50-h hearing, and grants the application.
NON-PARTY DISCLOSURE
Matter of Thomson v. Zillow, Inc., 51 Misc 3d 1050 (Sup.Ct. N.Y.Co. 2016)(Jaffe, J.) –
“An application for a protective order or to quash a subpoena issued [to a non-party]
under CPLR 3119 [for a deposition in New York in aid of an out-of-state litigation] must
comply with the rules or statutes of New York State [citation omitted], pursuant to which
the movant bears the burden of showing that the discovery sought is either ‘utterly
irrelevant’ of that the futility of uncovering anything legitimate is ‘inevitable or obvious’
[citations omitted]. If the movant meets its burden, the subpoenaing party must then
establish that the discovery sought is material and necessary, or relevant, to the
prosecution or defense of the action; it need not demonstrate that it cannot obtain the
requested discovery from other sources [citation omitted]. ‘Thus, so long as the
disclosure sought is relevant to the prosecution or defense of an action, it must be
provided by the nonparty.’” Here, “in arguing that respondents have not demonstrated
that they possess relevant information, petitioners attempt to shift the burden of proof on
their motion.”
Harden Street Medical, P.C. v. The Charter Oak Fire Insurance Company, N.Y.L.J.,
1202790388772 (Dist.Ct. Suffolk Co. 2017)(Mathews, J.) – A party to an action may not
seek to quash a subpoena served upon a non-party on the grounds of improper service,
when the non-party “accepted service of the subpoena without objection.”
EXPERT DISCLOSURE
Waldo v. Kang, 139 A D 3d 1365 (4th Dept. 2016) – “The [Supreme] Court improperly
precluded a physician from testifying at trial because of the lack of an expert disclosure.
‘Preclusion of expert testimony for failure to comply with CPLR 3101(d) is improper
unless there is evidence of intentional or willful failure to disclose and a showing of
prejudice by the opposing party’ and, here, defendants failed to provide any evidence of a
willful failure to disclose by plaintiff or any evidence of prejudice.”
Schmitt v. Oneonta City School District, 151 A D 3d 1254 (3d Dept. 2017) – “Unlike the
First, Second and Fourth Departments, this Court interprets CPLR 3101(d)(1)(i) as
‘requiring disclosure to any medical professional, even a treating physician or nurse, who
is expected to give expert testimony.’” And, “contrary to plaintiffs’ assertion, the
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transcript of [the treating physician’s] videotaped testimony cannot serve as a substitute
for the required statutory notice. Simply put, the burden of providing expert witness
disclosure and setting forth the particular details required by the statute lies with the party
seeking to utilize the expert; it is not opposing counsel’s responsibility to cull through
examination before trial testimony or, in this case, the transcript of videotaped trial
testimony to ferret out the qualifications of the subject expert, the facts or opinions that
will form the basis for his or her testimony at trial and/or the grounds upon which the
resulting opinion will be based.”
Rocco v. Ahmed, 146 A D 3d 836 (2d Dept. 2017) – Defendants “were required to
disclose ‘in reasonable detail the subject matter on which each expert is expected to
testify, the substance of the facts and opinions on which each expert is expected to testify
and a summary of the grounds for each expert’s opinion.’ Here, [defendant] Ahmed’s
expert witness disclosure only revealed expert testimony that [plaintiff] Rocco’s stroke
was not caused by his atrial fibrillation or a blood clot, but did not inform the plaintiffs
that the expert would testify that the stroke was caused by calcification. Ahmed failed to
demonstrate good cause for not disclosing the substance of his expert’s causation theory
until trial [citations omitted]. The revelation of the defendants’ causation theory at trial
prejudiced the plaintiffs’ ability to prepare for trial because they did not have adequate
time to consult or retain an expert neuroradiologist.” The Appellate Division therefore
reverses an order denying plaintiffs’ motion to set aside the verdict for defendants.
Rivera v. Montefiore Medical Center, 28 N Y 3d 999 (2016) – “The issue on this appeal
is whether the trial court abused its discretion as a matter of law in denying as untimely
plaintiff’s motion to preclude the testimony of defendant’s expert on the grounds that the
CPLR 3101(d) disclosure statement was deficient. We hold that it did not.” Plaintiff’s
deceased died at defendant hospital, allegedly as the result of a failure to properly
diagnose his illness. The autopsy report found the cause of death to be pneumonia,
complicated by diabetes. Defendant’s response to plaintiff’s expert discovery demand
stated that defendant’s expert would testify “on the issue of causation,” and the “possible
causes of the decedent’s injuries and contributing factors.” Plaintiff did not then
challenge the sufficiency of the disclosure. At trial, both the hospital treating physician
and plaintiff’s expert opined that the cause of death was either pneumonia or a cardiac
event, or both. Plaintiff then sought to preclude defendant’s expert “from giving any
testimony regarding any possible causes of the decedent’s death,” claiming that “the
disclosure statement ‘did not include any reasonable detail whatsoever as to what
possible causes’ led to decedent’s death.” The motion was denied as untimely, and the
expert testified that “the cause of death was sudden, lethal cardiac arrhythmia.” The
Appellate Division agreed that “plaintiff failed to timely object to the lack of specificity
in the expert disclosure statement and that plaintiff was not justified in assuming that the
defense expert’s testimony would comport with the autopsy report’s conclusion.” The
Court of Appeals has affirmed. “Plaintiff made her motion mid-trial immediately prior to
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the expert’s testimony. Plaintiff argues that at the time of the expert exchange, she had
no reason to object to the disclosure statement because the statement gave no indication
that defendant would challenge plaintiff’s theory of decedent’s cause of death. Assuming
defendant’s disclosure was deficient, such deficiency was readily apparent; the disclosure
identified ‘causation’ as a subject matter but did not provide any indication of a theory or
basis for the expert’s opinion. This is not analogous to a situation in which a party’s
disclosure was misleading or the trial testimony was inconsistent with the disclosure.
Rather, the issue here was insufficiency. The trial court’s ruling did not endorse the
sufficiency of the statement but instead addressed the motion’s timeliness. The lower
courts were entitled to determine, based on the facts and circumstances of this particular
case, that the time to challenge the statement’s content had passed because the basis of
the objection was readily apparent from the face of the disclosure statement and could
have been raised – and potentially cured – before trial. Accordingly, there was no abuse
of discretion as a matter of law.”
Prutzman v. Albany Medical Center, N.Y.L.J., 1202756726113 (Sup.Ct. Warren Co.
2016)(Muller, J.) – In this medical malpractice case, defendant moves to preclude
plaintiff’s expert from testifying, claiming that the expert disclosure gave insufficient
detail as to the expert’s education and employment history. The Court notes that, in
1985, when CPLR 3101(d)(1)(i) was enacted, “the Advisory Committee on the CPLR
was ‘concerned with “unique problems” that mandatory pretrial identification of expert
witnesses in malpractice cases would pose, reasoning that disclosure of the names of
expert witnesses would allow doctors impermissibly to dissuade colleagues from
testifying for plaintiffs’ [citation omitted]. An additional consideration for concealing
identity was undoubtedly the locality rule with roots long set in Pike v. Honsinger, 155
N.Y. 201 [1898] within which the Court of Appeals articulated the requirement that the
medical expert was required to possess ‘that reasonable degree of learning and skill
ordinarily possessed by physicians and surgeons in the locality where he practices’
[citation omitted]. Doubtless, a local physician testifying against a local physician was
certainly next to impossible to coordinate when faced with disclosure amongst that local
community’s practitioners. In 1985 such nondisclosure – simply the omission of a name
– carried a sufficient guarantee that an expert’s identity was effectively shielded. Since
that time, however, has come the internet of many things. Commercial internet service
providers began to emerge in the very late 1980s and by the mid 1990s their traffic went
from a trickle to a tsunami, pushing at its crest wide-ranging and easily accessible
research tools in all of the disciplines – not envisioned three decades ago – including the
fee-based service ‘Board Certified Docs’ which the plaintiff sufficiently demonstrates
would easily come close to, if not precisely landing upon, their expert’s identity if the
defense were given the further details it seeks. The Advisory Committee could not then
have been aware of these for better – or worse – advances in information technology
applications throughout this state. Being guided here, however, by the Meade [v.
Rajadhyax Dental Group, 34 A D 3d 1139 (3d Dept. 2006)] standard plaintiffs in camera
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affirmation of counsel presents proof sufficient to support a finding of the reasonable
probability that the further information sought would lead to the disclosure of the actual
identity of the expert. Until CPLR 3101(d)(1) is freed from the ether of 1985 when it was
enacted it shall remain possible for defendants to seek to preclude and for plaintiffs to
move for protective orders in which the burden to demonstrate the need for nondisclosure
must be carefully carried, as has happened here. It cannot be left unobserved that one of
the primary reasons for the 1985 legislation, far from attained in 2016 as this decision
demonstrates, was to expedite the resolution of malpractice claims in order to reduce
litigation costs [citation omitted]. Defendants’ motion to preclude is denied. Plaintiff has
sufficiently disclosed her expert’s qualifications for the limited purposes of this CPLR
3101(d)(1) analysis.”
Conway v. Elite Towing & Flatbedding Corp., 135 A D 3d 893 (2d Dept. 2016) – “The
defendants’ expert disclosure statements sufficiently disclosed in reasonable detail the
subject matter and the substance of the facts and opinions on which the experts were
expected to testify, and a summary of the grounds for their opinions [citations omitted].
Contrary to the plaintiff’s contention, there is no requirement that the expert set forth the
specific facts and opinions upon which he or she is expected to testify, but rather only the
substance of those facts and opinions.”
Nieto v. Deveau, 51 Misc 3d 1027 (Civ.Ct. Kings Co. 2016)(Montelione, J.) – “The
failure to serve a CPLR 3101(d) notice with regard to a treating physician is not grounds
for preclusion of the physician’s expert testimony as to causation where there has been
disclosure of the physician’s records and reports, pursuant to CPLR 3121 and 22 NYCRR
202.17.”
PRIVILEGES
IN GENERAL
Matter of People v. PriceWaterhouseCoopers, LLP, 150 A D 3d 578 (1st Dept. 2017) –
“In this proceeding arising from an underlying investigation by the N[ew] Y[ork]
A[ttorney] G[eneral] into alleged fraud by respondent Exxon concerning its published
climate change information, the motion court properly found that the New York law on
privilege, rather than Texas law, applies, and that New York law does not recognize an
accountant-client privilege. We reject Exxon’s argument that an interest-balancing
analysis is required to decide which state’s choice of law should govern the evidentiary
privilege. Our current case law requires than when we are deciding privilege issues, we
apply the law of the place where the evidence will be introduced at trial, or the place
where the discovery proceeding is located [citations omitted]. In light of our conclusion
that New York law applies, we need not decide how this issue would be decided under
Texas law.”
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ATTORNEY-CLIENT PRIVILEGE
TD Bank, N.A. v. Interstate Fire Protection, Inc., N.Y.L.J., 1202756840676 (Sup.Ct.
N.Y.Co. 2016)(Helewitz, Sp.Ref.) – In this hearing to assess attorneys’ fees, plaintiff
sought to introduce heavily redacted invoices to prove the fees paid. “It is well-settled
that fee arrangements between an attorney and a ‘client do not ordinarily constitute a
confidential communication and thus are not privileged in the usual case.’” Moreover,
“the attorney-client privilege only attaches to the substance of the communication made
by the attorney to the client or the client to the attorney, not to the fact that the attorney
and the client had a communication [citation omitted]. Hence, counsel should only be
permitted to redact the legal advice appearing on the invoice, not the fact that a
conversation concerning a particular aspect of the subject litigation occurred.” Thus,
“since defendants are entitled to review the invoices to ascertain whether interviews,
conversations or correspondence with particular individuals were appropriately related to
the representation for which they were ordered to reimburse plaintiff, plaintiff’s counsel
was required to submit copies of the invoices in which only the actual communications
are redacted from the items.”
ACE Securities Corp. v. DB Structured Products, Inc., 55 Misc 3d 544 (Sup.Ct. N.Y.Co.
2016)(Bransten, J.) – “‘To the extent that the request for [legal] advice attaches business
records created in the ordinary course of business, those business records do not become
privileged because copies are also sent to counsel in connection with a request for
advice.’”
Stock v. Schnader Harrison Segal & Lewis LLP, 142 A D 3d 210 (1st Dept. 2016) – “The
primary issue on this appeal is whether attorneys who have sought the advice of their law
firm’s in-house general counsel on their ethical obligations in representing a firm client
may successfully invoke attorney-client privilege to resist the client’s demand for the
disclosure of communications seeking or giving such advice. We hold that such
communications are not subject to disclosure to the client under the fiduciary exception
to the attorney-client privilege [citation omitted] because, for purposes of the in-firm
consultation on the ethical issue, the attorneys seeking the general counsel’s advice, as
well as the firm itself, were the general counsel’s ‘real clients’ [citations omitted].
Further, we decline to adopt the ‘current client exception,’ under which a number of
courts of other jurisdictions [citations omitted] have held a former client entitled to
disclosure by a law firm of any in-firm communications relating to the client that took
place while the firm was representing that client.” For, “nothing in CPLR 4503 suggests
that consultations between a law firm, as client, and its in-house counsel, as attorney, are
not covered by the privilege.” And, “whether the fiduciary exception applies depends on
whether the ‘real client’ of the attorney from whom the fiduciary sought advice was the
beneficiary of the fiduciary relationship or, alternatively, the fiduciary in his or her
individual capacity.” The fiduciary exception “does not apply to the attorney-client
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communications of a fiduciary who seeks legal advice to protect his or her own
individual interests, rather than to guide the fiduciary in the performance of his or her
duties to the beneficiary.” The Court noted that “in recent years” the Courts of other
states “have held that the fiduciary exception to the attorney-client privilege, assuming
that the jurisdiction recognizes it, does not apply to communications between lawyers and
their firm’s in-house counsel addressing such concerns arising from the ongoing
representation of a firm client” [emphasis by the Court], as well as a similar resolution by
the American Bar Association. Thus, here, because the “attorneys were the ‘real clients’
for purposes of these attorneys’ consultation with Kipnes, the firm’s in-house general
counsel, whose time spent on the consultation was not billed to plaintiff and who never
worked on any matter for plaintiff,” the privilege applies, and the fiduciary exception
does not.
Fragin v. First Funds Holdings, LLC, N.Y.L.J., 1202765286210 (Sup.Ct. N.Y.Co. 2016)
(Bransten, J.) – “The crime-fraud exception [to the attorney-client privilege] encompasses
‘a fraudulent scheme, an alleged breach of fiduciary duty or an accusation of some other
wrongful conduct’ [citation omitted]. A party seeking to invoke the crime-fraud
exception must demonstrate that there is a factual basis for a showing of probable cause
to believe: (1) that a fraud or crime has been committed and (2) that the communications
in question were in furtherance of the fraud or crime.” The Court need not find that the
attorney “knowingly participated in [the] allegedly fraudulent conduct.” It is enough that
the documents sought in discovery “demonstrate work” by the attorney on behalf of the
client which relate to conduct by the client that fits within the exception.
ATTORNEY WORK PRODUCT
Cioffi v. S.M. Foods, Inc., 142 A D 3d 520 (2d Dept. 2016) – Last year’s “Update”
reported on Geffner v. Mercy Medical Center, 125 A D 3d 802 (2d Dept. 2015), in which
the Second Department held that, “attorney work product under CPLR 3101(c), which is
subject to an absolute privilege, is generally limited to materials prepared by an attorney,
while acting as an attorney, which contain his or her legal analysis, conclusions, theory,
or strategy [citations omitted]. ‘The mere fact that a narrative witness statement is
transcribed by an attorney is not sufficient to render the statement “work product”’
[citation omitted]. Contrary to the plaintiff’s contention, she did not meet her burden of
establishing that the audio recording of an interview she conducted with the defendant
Nicoletta Starks prior to the commencement of the instant action constituted attorney
work product. Among other things, the plaintiff failed to show that the recording
contained elements of opinion, analysis, theory, or strategy.” Similarly, here in Cioffi,
the Second Department holds that, “‘not every manifestation of a lawyer’s labors enjoys
the absolute immunity of work product. The exemption should be limited to those
materials which are uniquely the product of a lawyer’s learning and professional skills,
such as materials which reflect his or her legal research, analysis, conclusions, legal
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theory or strategy’ [citations omitted]. Here, the plaintiffs contend that materials
obtained by their attorney via requests pursuant to state and federal freedom of
information laws are privileged attorney work product. However, the material cannot be
characterized as being ‘uniquely the product of the plaintiffs’ counsel’s learning and
professional skills’ or as reflecting his ‘legal research, analysis, conclusion, legal theory
or strategy.’”
ACE Securities Corp. v. DB Structured Products, Inc., 55 Misc 3d 544 (Sup.Ct. N.Y.Co.
2016)(Bransten, J.) – To establish that documents are protected attorney work product,
the party seeking protection “must demonstrate that the documents were ‘primarily
prepared in anticipation of litigation and are, thus privileged matter.’” Here, defendant’s
“breach analysis” was not protected, even after counsel provided advice with respect to it,
because that was, “in effect, giving advice ‘about how to conduct the ordinary course of
defendant’s business,’” since defendant was contractually obligated to perform such
analyses. Thus, “neither the introduction of lawyers nor the fear of imminent litigation
converted that business function into work product.”
Peerenboom v. Marvel Entertainment, LLC, 148 A D 3d 531 (1st Dept. 2017) – Although
defendant’s e-mail correspondence with his attorney was on his employer’s computer
system, and the employer had specified that “it ‘owned’ all emails on its system,” with
the right to access and audit, “given the lack of evidence that Marvel viewed any of
Perlmutter’s personal emails, and the lack of evidence of any other actual disclosure to a
third party, Perlmutter’s use of Marvel’s email for personal purposes does not, standing
alone, constitute a waiver of attorney work product protection.” The Court, however,
held – as discussed infra – that the use of Marvel’s email in communications with
Perlmutter’s wife did waive the spousal privilege.
Miller v. Zara USA, Inc., 151 A D 3d 462 (1st Dept. 2017) – “Plaintiff lacked any
reasonable expectation of privacy in his personal use of the laptop computer supplied to
him by defendant Zara USA, Inc. (Zara), his employer, and thus lacked the reasonable
assurance of confidentiality that is fundamental to attorney-client privilege [citations
omitted]. Among other factors, Zara’s employee handbook, of which plaintiff, Zara’s
general counsel, had at least constructive knowledge [citations omitted], restricted use of
company-owned electronic resources, including computers, to ‘business purposes’ and
proscribed offensive uses. The handbook specified that ‘any data collected, downloaded
and/or created’ on its electronic resources was ‘the exclusive property of Zara,’
emphasized that ‘employees should expect that all information created, transmitted,
downloaded, received or stored in Zara’s electronic communications resources may be
accessed by Zara at any time, without prior notice,’ and added that employees ‘do not
have an expectation of privacy or confidentiality in any information transmitted or stored
in Zara’s electronic communication resources (whether or not such information is
password-protected).’ Plaintiff avers, and defendant does not dispute, however, that,
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while reserving a right of access, Zara in fact never exercised that right as to plaintiff’s
laptop and never actually viewed any of the documents stored on that laptop. Given the
lack of any ‘actual disclosure to a third party, plaintiff’s use of Zara’s computer for
personal purposes does not, standing alone, constitute a waiver of attorney work product
protections.’”
MATERIAL CREATED FOR LITIGATION
Hewitt v. Palmer Veterinary Clinic, PC, 145 A D 3d 1415 (3d Dept. 2016) – “Inasmuch
as ‘the purpose of liability insurance is the defense and settlement of claims once an
accident has arisen,’ documents contained in the insurance adjuster’s file are generally
protected by ‘a conditional immunity as material prepared for litigation’ [citations
omitted]. Accident reports that are prepared with ‘a mixed purpose and result at least in
part from the internal operations of the defendant’s business’ are not, however, exempt
from disclosure’ [citations omitted]. It is therefore incumbent upon ‘the party resisting
disclosure to, in the first instance, show that the materials sought were prepared solely for
litigation and this burden cannot be satisfied with wholly conclusory allegations.’”
Veltre v. Rainbow Convenience Store, Inc., 146 A D 3d 416 (1st Dept. 2017) – Here the
insurer’s claim file “is immune from discovery, because it was created by defendant’s
liability insurer [citation omitted], and plaintiffs failed to demonstrate either that they
could not otherwise obtain ‘a substantial equivalent’ of the material without undue
hardship [citation omitted], or that defendant waived the privilege by relying upon the
material in support of a defense.”
Curci v. Foley, 149 A D 3d 1388 (3d Dept. 2017) – Five days after the accident at issue,
defendant’s insurer’s claims representative contacted defendant, had a taped phone
conversation with him, and thereafter provided him with a transcript of that conversation.
The Appellate Division reverses the denial of defendant’s motion for a protective order
with respect to the transcript. “‘The purpose of liability insurance is the defense and
settlement of claims and, once an accident has arisen, there is little or nothing that the
insurer or its employees do with respect to accident reports except in preparation for
eventual litigation or for a settlement which may avoid litigation.’ [citation omitted]. As
such, an insurer’s file is generally protected by ‘a conditional immunity as material
prepared for litigation.’” Of course, “accident reports prepared with a mixed purpose,
however, are not exempt from disclosure.” But, here, there was “no indication that the
statement was taken for some purpose other than preparing for litigation.”
THE COMMON INTEREST “PRIVILEGE”
Peerenboom v. Marvel Entertainment, LLC, 148 A D 3d 531 (1st Dept. 2017) – The
“common interest doctrine” does not, in and of itself “constitute a source of privilege.” It
is merely an exception to the waiver rule of the attorney-client privilege.
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Ambac Assurance Corporation v. Countrywide Home Loans, Inc., 27 N Y 3d 616 (2016)
– A prior year’s “Update” reported on the Appellate Division decision in this action
[124 A D 3d 129 (1st Dept. 2014)]. The Appellate Division, rejecting a line of Second
Department cases [see, Hyatt v. State of California Franchise Tax Board, 105 A D 3d
186 (2d Dept. 2013); Hudson Valley Marine, Inc. v. Town of Cortlandt, 30 A D 3d 377
(2d Dept. 2006)], held that, “in today’s business environment, pending or reasonably
anticipated litigation is not a necessary element of the common-interest privilege. Our
conclusion holds particularly true in this case, where the parties have a common legal
interest because they were engaged in merger talks during the relevant period and now
have a completed and signed merger agreement.” To “properly understand the common-
interest doctrine, it is necessary to examine the purpose of the privilege from which it
descends – namely, the attorney-client privilege. The attorney-client privilege is ‘the
oldest among common-law evidentiary privileges’ [citation omitted]. The purpose of this
privilege ‘is to encourage full and frank communication between attorneys and their
clients and thereby promote broader public interests in the observance of law and
administration of justice.’” Further, “the ‘attorney-client privilege is not tied to the
contemplation of litigation,’ because ‘advice is often sought, and rendered, precisely to
avoid litigation, or facilitate compliance with the law, or simply to guide a client’s course
of conduct [citation omitted]. For that reason, and because of ‘the vast and complicated
array of regulatory legislation confronting the modern corporation, corporations, unlike
most individuals, constantly go to lawyers to find out how to obey the law, particularly
since compliance with the law in this area is hardly an instinctive matter.’” Accordingly,
the Appellate Division held that, “so long as the primary or predominant purpose for the
communication with counsel is for the parties to obtain legal advice or to further a legal
interest common to the parties, and not to obtain advice of a predominantly business
nature, the communication will remain privileged.” The cases holding to the contrary
“provide that when two parties with a common legal interest seek advice from counsel
together, the communication is not privileged unless litigation is within the parties’
contemplation; on the other hand, when a single party seeks advice from counsel, the
communication is privileged regardless of whether litigation is within anyone’s
contemplation. We cannot reconcile this contradiction, as it undermines the policy
underlying that attorney-client privilege.” A divided Court of Appeals has reversed.
“We hold today, as the courts in New York have held for over two decades, that any such
communication must also relate to litigation, either pending or anticipated, in order for
the [common interest] exception to apply.” Because the attorney-client privilege “shields
from disclosure pertinent information and therefore ‘constitutes an “obstacle” to the
truth-finding process,’ it must be narrowly construed.” The common interest privilege,
the majority noted, “has its roots in criminal law and, as originally conceived, ‘allowed
the attorneys of criminal co-defendants to share confidential information about defense
strategies without waiving the privilege as against third parties.’” The rationale was “that
the parties ‘had the same defense to make’ and therefore ‘the counsel of each was in
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effect the counsel of all’ [citation omitted]. Courts eventually replaced this ‘joint
defense’ doctrine, which applied to criminal codefendants, with a broader exception that
also protected communications between parties to civil litigation.” The Court declines to
extend the exception beyond that. “Disclosure is privileged between codefendants,
coplaintiffs or persons who reasonably anticipate that they will become colitigants,
because such disclosures are deemed necessary to mount a common claim or defense, at a
time when parties are most likely to expect discovery requests and their legal interests are
sufficiently aligned that ‘the counsel of each is in effect the counsel of all’ [citation
omitted]. When two or more parties are engaged in or reasonably anticipate litigation in
which they share a common legal interest, the threat of mandatory disclosure may chill
the parties’ exchange of privileged information and therefore thwart any desire to
coordinate legal strategy. In that situation, the common interest doctrine promotes candor
that may otherwise have been inhibited. The same cannot be said of clients who share a
common legal interest in a commercial transaction or other common problem but do not
reasonably anticipate litigation.” In sum, “we do not perceive a need to extend the
common interest doctrine to communications made in the absence of pending or
anticipated litigation, and any benefits that may attend such an expansion of the doctrine
are outweighed by the substantial loss of relevant evidence, as well as the potential for
abuse.” The dissenters argued that “given that the attorney-client privilege has no
litigation requirement and the reality that clients often seek legal advice specifically to
comply with legal and regulatory mandates and avoid litigation or liability, the privilege
should apply to private client-attorney communications exchanged during the course of a
transformative business enterprise, in which the parties commit to collaboration and
exchange of client information to obtain legal advice aimed at compliance with
transaction-related statutory and regulatory mandates.”
ACE Securities Corp. v. DB Structured Products, Inc., 55 Misc 3d 544 (Sup.Ct. N.Y.Co.
2016)(Bransten, J.) – “The common interest privilege has protected documents shared by
parties ‘facing common problems in pending or threatened civil litigation’ [citations
omitted]. The determination of whether two parties share a common legal interest cannot
be made categorically [citations omitted]. Indeed, the privilege may exist despite an
adversarial relationship between the two parties asserting it [citations omitted]. ‘What is
important is not whether the parties theoretically share similar interests but rather whether
they demonstrate actual cooperation toward a common legal goal.’”
Matter of San Diego Gas & Electric Company v. Morgan Stanley Senior Funding, Inc.,
136 A D 3d 547 (1st Dept. 2016) – “The common interest privilege is an exception to the
rule that the presence of a third party will waive a claim that a communication is
confidential. It requires that the communication otherwise qualify for protection under
the attorney-client privilege and that it be made for the purpose of furthering a legal
interest or strategy common to the parties asserting it [citation omitted]. We find that
Morgan Stanley and NaturEner shared a common interest in their desire to have plaintiff
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comply with its contractual obligations under the Rim Rock agreements. The fact that
respondent and defendant were in a debtor-creditor relationship did not make their
interests adverse in all matters and at all times.”
Levy v. Arbor Commercial Funding, LLC, 138 A D 3d 561 (1st Dept. 2016) – “The
motion court incorrectly determined that an alleged conversation between the parties’
counsel during a federal forfeiture proceeding involving the condominium unit at issue in
this action is rendered inadmissible by the common-interest privilege. The common
interest privilege serves as an exception to the general rule that the presence of a third
party at a communication between counsel and client will waive a claim that a
communication is confidential [citations omitted]. ‘Under this doctrine, a third party may
be present at the communication between an attorney and a client without destroying the
privilege if the communication is for the purpose of furthering a nearly identical legal
interest shared by the client and the third party’ [citation omitted]. Here, while it may be
the case that during the federal action, plaintiff and defendants sought to establish the
validity of their mortgage interests in the condominium, as well as to expedite the sale of
the condominium to limit potential investment losses, this is of no moment, because the
common interest doctrine does not create a privilege. Rather, it operates only to prevent
waiver of the attorney client privilege and is, therefore, inapplicable in this case.”
Moreover, nothing in the caselaw suggests that “communications subject to the common
interest privilege are considered privileged as between the parties themselves in a later
dispute; rather, the communications between the parties are privileged with respect to
third parties.”
Deep Woods Holdings LLC v. Pryor Cashman LLP, N.Y.L.J., 1202760626735 (Sup.Ct.
N.Y.Co. 2016)(Scarpulla, J.) – In this legal malpractice action, the Court holds that
“under New York law, ‘attorney-client privilege may not be raised to prevent disclosure
of communications relevant to the common interest of former joint clients in subsequent
litigation’” brought by one of them.
OTHER PRIVILEGES
Carothers v. Progressive Insurance Company, 150 A D 3d 192 (2d Dept. 2017) – “While
a party’s invocation of the privilege against self-incrimination can generally be used to
draw an adverse inference against that party in a civil action [citations omitted], no such
inference may be drawn when, as here, the privilege is invoked by a nonparty witness.”
Matter of Murray Energy v. Reorg Research, N.Y.L.J., 55 Misc 3d 669 (Sup.Ct. N.Y.Co.
2017)(Edmead, J.), rev’d, ___ A D 3d ___, 2017 WL 2977781 (1st Dept. 2017) – This is
an application for pre-action disclosure pursuant to CPLR 3102(c). Petitioner seeks
information from respondent as to the source of information respondent published about
petitioner, claiming the information had to come from one of its investors, in violation of
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a confidentiality agreement. Respondent claims that it is entitled to the protection of the
“Shield Law,” Civil Rights Law §79-h. Supreme Court concludes that respondent is not
a “professional journalist” entitled to the law’s protection. Respondent has some 375
subscribers, who pay from $30,000 to $120,000 per year. Those subscribers must sign
confidentiality agreements, promising to withhold the information provided by
respondent from the general public. The statute defines a professional journalist as an
individual or organization “which has as one of its regular functions the processing and
researching of news intended for dissemination to the public” [emphasis by the Court].
Respondent does not fit within the statute’s scope or purpose, and is therefore not entitled
to the privilege. The Appellate Division has reversed. The features listed by Supreme
Court “are not uncommon among, and in fact are essential to the economic viability of,
specialty or niche publications that target relatively narrow audiences by focusing on a
topic not ordinarily covered by the general news media – such as the debt-distressed
market.” And, “significantly, respondent established that its editorial staff is solely
responsible for deciding what to report on and that it does not accept compensation for
writing about specific topics or permit its subscribers to dictate the content of its
reporting. Other courts have found the extent of a publication’s independence and
editorial control to be important in determining whether to apply the Shield Law.” In
sum, “extending protection to respondent under the Shield Law is consistent with New
York’s ‘long tradition, with roots dating back to the colonial era, of providing the utmost
protection of freedom of the press’ – protection that has been recognized as ‘the strongest
in the nation’ [citation omitted]. To condition coverage on a fact-intensive inquiry
analyzing a publication’s number of subscribers, subscription fees, and the extent to
which it allows further dissemination of information is unworkable and would create
substantial prospective uncertainty, leading to a potential ‘chilling’ effect.”
Peerenboom v. Marvel Entertainment, LLC, 148 A D 3d 531 (1st Dept. 2017) –
Defendant’s communications with his wife, using his employer’s e-mail system, do not
get the benefit of the spousal privilege. “Among other factors, while Marvel’s email
policies during the relevant time periods permitted ‘receiving e-mail from a family
member, friend, or other non-business purpose entity as a courtesy,’ the company
nonetheless asserted that it ‘owned’ all emails on its system, and that the emails were
‘subject to all Company rules, policies, and conduct statements.’ Marvel ‘reserved the
right to audit networks and systems on a periodic basis to ensure employees’ compliance’
with its email policies. It also ‘reserved the right to access, review, copy and delete any
messages or content,’ and ‘to disclose such message to any party (inside or outside the
Company).’ Given, among other factors, Perlmutter’s status as Marvel’s Chair, he was, if
not actually aware of Marvel’s email policy, constructively on notice of its contents.”
Thus, “Perlmutter’s use of Marvel’s email system for personal correspondence with his
wife waived the confidentiality necessary for a finding of spousal privilege.” In addition,
the Court noted that “there is no accountant-client privilege in this state.”
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Abraha v. Adams, 148 A D 3d 1730 (4th Dept. 2017) – In this medical malpractice
action, relating to defendants’ treatment of plaintiff after she was assaulted by her
husband, defendants seek records “from the shelter for domestic violence victims where
she was living at the time of the assault.” The Court concludes that “the shelter records
are not protected by any privilege, and they are thus subject to disclosure to the extent
that they are material and necessary to the defense of the action [citations omitted]. Even
assuming, arguendo, that the records were prepared by licensed social workers, which is
not evident from the records themselves, we conclude that plaintiff waived any privilege
afforded by CPLR 4508 by affirmatively placing her medical and psychological
condition in controversy through the broad allegations of injury in her bills of particulars
[citations omitted]. Inasmuch as defendants are not seeking disclosure of the street
address of the shelter, we reject plaintiff’s contention that Social Services Law §459-h
precludes disclosure of the records. Furthermore, 18 NYCRR 452.10(a), which renders
confidential certain information ‘relating to the operation of residential programs for
victims of domestic violence and to the residents of such programs,’ does not preclude
disclosure of the records because that regulation allows for access to such information ‘as
permitted by an order of a court of competent jurisdiction [citation omitted]. That
regulation does not preclude a court from ordering disclosure of shelter records that are
material and necessary to the defense of an action.”
Estate of Savage v. Kredentser, 150 A D 3d 1452 (3d Dept. 2017) – “Education Law
§6527(3) and Public Health Law §2805-m protect from disclosure records relating to
performance of a medical or quality assurance review function or participation in a
medical malpractice prevention program [citations omitted]. The party asserting these
statutory privileges bears the burden of establishing their applicability by demonstrating
that a review procedure was in place and that the requested documents were prepared in
accordance with such procedure.” Here, “defendants failed to meet their burden of
establishing the report’s privilege. Defendants did not submit an affidavit or other
information from anyone with first-hand knowledge establishing that a review procedure
was in place or that the report was obtained or maintained in accordance with any such
review procedure.” Thus, “in short, the purpose of the Education Law and Public Health
Law discovery exclusions is to encourage a candid peer review of physicians, and thereby
improve the quality of medical care and prevent malpractice [citations omitted], but such
protections are not automatically available and do not prevent full disclosure where it
should otherwise be provided.”
Phillips v. The City of New York, N.Y.L.J., 54 Misc 3d 294 (Sup.Ct. Bronx Co. 2016)
(Danziger, J.) – Plaintiff, a special education teacher employed at a hospital, sues for
injuries caused by an assault by a patient, and seeks production of the incident report
generated by the hospital. “‘Education Law §6527(3) exempts, inter alia, incident
reports prepared pursuant to Mental Hygiene Law §29.29 from disclosure. Incident
reports are defined as “reports of accidents and injuries affecting patient health and
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welfare.” Included in such reports are any allegations of “violent behavior exhibited by
either patients or employees.”’” Here, “the court finds that a charge of assault based
upon a patient’s conduct, as alleged here, clearly and automatically falls within the
category of items deemed confidential.” And, “plaintiff’s argument that the incident
report is exempted from the privilege to the extent that it contains statements made by the
plaintiff herself is unpersuasive. Education Law §6527(3) provides, inter alia, that ‘no
person in attendance at a meeting when an incident reporting function was performed,
including the investigation of an incident reported pursuant to section 29.29 of the Mental
Hygiene Law, shall be required to testify as to what transpired thereat. The prohibition
relating to discovery of testimony, shall not apply to statements made by any person in
attendance at such meeting who is a party to an action or proceeding the subject matter of
which was reviewed at such meeting.’ Plaintiff asserts that based upon the above cited
statute and because she is a party to this action, she is entitled to disclosure of the incident
report. The court disagrees. The statute, by its own clear language, applies to situations
where the discovery sought is the ‘testimony’ of an individual and not the incident report
itself.”
Jousma v. Kolli, 149 A D 3d 1520 (4th Dept. 2017) – Hospital credentialing files “‘fall
squarely within the materials that are made confidential by Education Law §6527(3) and
article 28 of the Public Health Law’ [citations omitted]. That privilege shields from
disclosure ‘the proceedings and the records relating to performance of a medical or a
quality assurance review function or participation in a medical malpractice prevention
program.’” Although “there is an exception to the privilege, the exception is limited to
those statements made by a doctor to his or her employer-hospital concerning the subject
matter of a malpractice action and pursuant to the hospital’s quality-control inquiry into
the incident underlying the action.”
Smith v. Watson, 150 A D 3d 487 (1st Dept. 2017) – “[Supreme] Court erred in denying
defendants’ motion [to compel production of documents by nonparty New York City
Police Department] outright because of the prior denials of their requests for the same
information under the Freedom of Information Law (FOIL). ‘CPLR article 31 is not a
statute “specifically exempting” public records from disclosure under FOIL’ and ‘no
provision of FOIL bars simultaneous use of both’ CPLR 3101 and FOIL to procure
discovery [citations omitted]. The ‘public interest’ privilege did not justify the outright
denial of defendants’ motion, because the court did not engage in the requisite balancing
of the public interest in encouraging witnesses to come forward to cooperate in pending
criminal investigations against defendants’ need for the documents to defend against
plaintiffs’ claim.”
Mosey v. County of Erie, 148 A D 3d 1572 (4th Dept. 2017) – The “deliberative process
privilege” is also known as “the ‘inter-agency or intra-agency materials’ exemption under
Public Officers Law §87(2)(g)’ [citation omitted]. The question is whether that statutory
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exemption contained in the Freedom of Information Law [citation omitted] also applies to
discovery in civil actions. We conclude that it does not. Both the CPLR and FOIL
provide for disclosure of documents. The former controls discovery between litigants in
court proceedings, and the latter permits disclosure of governmental records to the public
even in the absence of litigation. ‘When a public agency is one of the litigants, this
means that it has the distinct disadvantage of having to offer its adversary two routes into
its records’ [citations omitted]. The deliberative process privilege or exemption under
FOIL seeks ‘to protect the deliberative process of the government by ensuring that
persons in an advisory role will be able to express their opinions freely to agency
decision makers’ [citation omitted]. While some courts have applied that privilege
outside the FOIL context [citations omitted], we decline to do so inasmuch as the Court
of Appeals ‘has never created nor recognized a generalized “deliberative process
privilege”’ [citation omitted]. We ‘recognize the existence of some cases which all too
casually mention the “deliberative process privilege” and purport to apply it outside the
context of a FOIL proceeding’ [citation omitted]. Nevertheless, it is also important to
recognize that ‘privileges simply do not exist in the absence of either constitutional or
statutory authority, or, when created as a matter of jurisprudence’ [citation omitted].
Although the County seeks to assert ‘the so-called “deliberative process privilege”’ in the
context of a civil litigation, ‘neither the Court of Appeals’ case law nor that of the Fourth
Department can be construed as having created a distinct “deliberative process privilege”
outside the context of a FOIL proceeding.’”
PRIVILEGE LOGS
Arkin Kaplan Rice LLP v. Kaplan, N.Y.L.J., 1202780556815 (Sup.Ct. N.Y.Co.)
(Helewitz, Sp.Ref.) – A privilege log may itself be admissible, not for the content of any
of the assertedly privileged documents, but for the information contained on the log –
here demonstrating that the attorney met with the witness on particular days. The
privilege only extends to the “substance of the communication between counsel and
client,” not to the fact that it occurred.
DEPOSITIONS
Walker v. City of New York, 140 A D 3d 739 (2d Dept. 2016) – “Although a municipality,
in the first instance, has the right to determine which of its officers or employees with
knowledge of the facts may appear for a deposition, a plaintiff may demand production of
additional witnesses when (1) the officers or employees already deposed had insufficient
knowledge or were otherwise inadequate as witnesses, and (2) there is a substantial
likelihood that the person sought for deposition possesses information which is material
and necessary to the prosecution of the case [citations omitted]. The burden is upon the
examining party to make a showing as to both factors.”
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Matter of Empire Wine & Spirits LLC v. Colon, 145 A D 3d 1157 (3d Dept. 2016) –
Although decided in the context of an administrative proceeding, the Court’s analysis
here applies equally to depositions in civil litigation. “Although a subpoena duces tecum
can be vacated in advance on the basis of privilege, a different analysis applies to a
subpoena that seeks testimony rather than documents [citation omitted]. Where, as here,
a witness has been served with a subpoena ad testificandum, ‘a claim of privilege cannot
be asserted until the witness appears before the requisite tribunal and is presented with a
question that implicates protected information’ [citations omitted]. [Witness] Flug is
entitled to invoke the attorney-client privilege if and when petitioner propounds questions
that implicate protected information, but we agree with Supreme Court that she must first
comply with the subpoena by appearing at the administrative hearing. ‘Only in this
context can an intelligent appraisal be made as to the legitimacy of the claim of
privilege.’” For, “‘a subpoena will be quashed only where the futility of the process to
uncover anything legitimate is inevitable or obvious or where the information sought is
utterly irrelevant to any proper inquiry.’”
Torres v. Board of Education of City of New York, 137 A D 3d 1256 (2d Dept. 2016) –
“CPLR 3116(a) provides that a witness may make ‘changes in form or substance’ to his
or her deposition testimony as long as such changes are accompanied by ‘a statement of
the reasons given by the witness for making them.’ A correction will be rejected where
the proffered reason for the change is inadequate [citations omitted]. Further, material or
critical changes to testimony through the use of an errata sheet is also prohibited [citation
omitted]. Here, the defendants demonstrated that the plaintiff made numerous and
significant corrections to his deposition testimony on his errata sheets. Such corrections
sought to substantively change portions of the plaintiff’s deposition testimony which
would have been in conflict with his earlier testimony at his General Municipal Law §50-
h hearing on issues concerning the basis for the defendants’ alleged negligence as alleged
in the plaintiff’s pleadings [citation omitted]. Moreover, the plaintiff’s stated reasons that
he ‘mis-spoke’ and that he was clarifying his testimony were inadequate to warrant the
corrections.”
Murillo v. The City of New York, N.Y.L.J., 1202776765237 (Sup.Ct. N.Y.Co. 2016)
(d’Auguste, J.) – CPLR 3116(a) provides that “no changes to the transcript may be made
by the witness more than sixty days after the submission to the witness for examination.”
Here, “the deadline for plaintiff’s changes was April 7, 2016, yet the explanations to
plaintiff’s EBT changes and affidavit of translation were e-filed with his first set of
opposition papers on April 12, 2016. Although the Court may extend time under CPLR
2004, such relief is appropriate only upon a showing of good cause [citation omitted].
‘Courts should be circumspect about extending the 60-day period inasmuch as “an
indication from the courts that an extension will be allowed without a strong showing of
justification will quickly evolve a dilatory attitude than can undermine the purpose of
CPLR 3116(a)’s time limit altogether”’ [citation omitted]. Even though the second
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submission is untimely by a mere few days, plaintiff failed to give any justification for
the delay in providing reasons or explanations for the EBT changes. Therefore, the
motions could be granted on this basis alone.” But, “even if the Court were to consider
the untimely errata sheets, the motions [to strike the errata sheets] are still granted. First,
some of the corrections are not accompanied by a reason or explanation for the change;
therefore, those should not be permitted.” For example, “plaintiff already attempted to
correct the March 4th date [that he testified the accident occurred] to February 4th on the
record after a lunch break – and the current attempt to now claim that he ‘misspoke’ and
change the numerous instances when he said March 4th, prior to the lunch break, to read
as if he said February 4th, are suspect at best [citation omitted]. Additionally, any
changes sought to make plaintiff’s EBT consistent with his GML 50-h testimony should
also be rejected here [citation omitted]. Further, ‘the plaintiff’s assertion in his
opposition papers that the corrections were necessitated by confusion in the translation of
his testimony by an interpreter is not supported by the record’ [citation omitted]. Moving
defendants note, and this Court agrees, that any confusion from the translation was
cleared on the record – the questions were read back to plaintiff and there is no indication
that he did not understand after the interpreter explained what was being asked.
Moreover, there is no indication from the record that the adequacy of the interpreter was
challenged by plaintiff’s counsel.”
Grant v. Fadhel, 51 Misc 3d 1009 (Sup.Ct. Kings Co. 2016)(Rivera, J.) – Defendant
attached copies of his and plaintiff’s deposition transcripts to his motion for summary
judgment. Neither had been signed or certified by the court reporter. Since defendant
failed to demonstrate that the transcript of plaintiff’s deposition had been submitted to
plaintiff for signature, that transcript was inadmissible. Similarly, inasmuch as his own
transcript was not certified, it is “not rendered admissible pursuant to CPLR 3116(a)
because it is his own.”
PRODUCTION OF DOCUMENTS
Matter of Aidin V., N.Y.L.J., 1202763864016 (Fam.Ct. Suffolk Co. 2016)(Hoffmann, J.)
– In this child neglect proceeding, respondent sought document production from Suffolk
County. The County’s policy is to respond to document requests “via compact disc.”
This, the Court finds, “poses an undue burden upon the respondent’s attorney who lacks
the technological capacity to utilize such an antiquated device.” Accordingly, the Court
directs that, until the technological capacities of the County “mirror those of the federal
courts which have successfully implemented electronic information sharing in a system
that is regularly maintained and easily accessible to all computer users,” the County
provide discovery “in paper format or by any other means acceptable to the respondent.”
McMahon v. New York Organ Donor Network, Inc., 52 Misc 3d 201 (Sup.Ct. N.Y.Co.
2016)(Bluth, J.) – “In whistleblower actions, it is often difficult to ascertain an
employer’s motivation for terminating or taking other personnel action against an
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employee. Personnel records of employees in similar positions may serve as a useful
comparison with a plaintiff’s personnel file. ‘The use of comparison evidence allows a
plaintiff to discover an employer’s intent and test the proffered reason for taking the
adverse employment action’ [citation omitted]. Comparison ‘evidence may be relevant to
the issue of intent in a case such as the instant one where plaintiff is attempting to show
that she was discharged from employment because of her whistle blowing activities’
[citation omitted]. Reviewing the performance evaluations of other employees could
allow a plaintiff to show that the employer’s stated reasons for a plaintiff’s termination
were baseless or a pretext. Plaintiff’s personnel requests are reasonable. Although
defendant provided plaintiff with information relating to probationary employees who
were terminated or resigned, plaintiff’s personnel requests relating to employees who
were not discharged are also reasonable. Comparing plaintiff’s performance evaluations
with those of other transplant coordinators, both terminated and retained, might allow
plaintiff to show that other probationary employees with similar performance evaluations
were not terminated, thereby countering defendant’s claim that plaintiff was discharged
for poor performance” [emphasis by the Court].
Berkowitz v. 29 Woodmere Blvd. Owners’, Inc., 135 A D 3d 798 (2d Dept. 2016) –
“Where discovery demands are overbroad, the appropriate remedy is to vacate the entire
demand rather than to prune it.”
Stepping Stones Associates, L.P. v. Scialdone, 148 A D 3d 855 (2d Dept. 2017) – “Many
of the 266 requests made in the defendants’ first demands for discovery were of an
overbroad and burdensome nature, and were palpably improper. Under these
circumstances, ‘the appropriate remedy is to vacate the entire demand rather than to
prune it’ [citations omitted]. Therefore, even though some of the defendants’ requests
may have sought relevant information, the Supreme Court providently exercised its
discretion in granting the branch of the plaintiffs’ cross motion which was to strike, in
their entirety, the defendants’ first demands for discovery and denying that branch of the
defendants’ motion which was to compel the plaintiffs to respond to those demands.”
Jordan v. City of New York, 137 A D 3d 1084 (2d Dept. 2016) – “The defendants’ failure
to timely challenge the plaintiff’s demand foreclosed inquiry into the propriety of the
information sought except with regard to his requests that sought privileged information,
or as to requests which were palpably improper.” Requests may be “palpably improper”
when “they seek irrelevant information, are overbroad and burdensome [citations
omitted], or fail to specify with reasonable particularity many of the documents
demanded.”
Hackshaw v. Mercy Medical Center, 139 A D 3d 798 (2d Dept. 2016) – “The Supreme
Court was not barred from entertaining Mercy’s objections to the disclosure of the
training materials for the years 2010 and 2013 because Mercy failed to assert them within
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the time prescribed by CPLR 3122, as Mercy contended that the plaintiffs’ demands for
such materials sought information that was immaterial to their claims and, therefore, were
palpably improper.”
DISCLOSURE OF SOCIAL MEDIA
D’Alessandro v. Nassau Health Care Corporation, 137 A D 3d 1195 (2d Dept. 2016) –
Last year’s “Update” reported on Forman v. Henkin, 134 A D 3d 529 (1st Dept. 2015), in
which the Appellate Division, First Department, narrowly-divided over the issue of the
burden upon the party seeking discovery of otherwise private pages of social media. The
majority held, consistent with its prior decisions dealing with both documentary and
electronic discovery, that “it is incumbent on the party seeking disclosure to demonstrate
that the method of discovery sought will result in the disclosure of relevant evidence or is
reasonably calculated to lead to the discovery of information bearing on the claims,” and
“discovery demands are improper if they are based upon ‘hypothetical speculations
calculated to justify a fishing expedition.’” Thus, “we disagree with the dissent’s
position that we should reconsider the well-settled body of case law, from both this Court
and other Departments, governing the disclosure of social media information.” For,
“although we agree with the dissent that social media is constantly evolving, there is no
reason to alter the existing legal framework simply because the potential exists that new
social network practices may surface. Furthermore, there is no dispute that the features
of Facebook at issue here (i.e., the ability to post photographs and send messages) have
been around for many years. Contrary to the dissent’s view, this Court’s prior decisions
do not stand for the proposition that different discovery rules exist for social media
information. The discovery standard we have applied in the social media context is the
same as in all other situations – a party must be able to demonstrate that the information
sought is likely to result in the disclosure of relevant information bearing on the claims
[citations omitted]. This threshold factual predicate, or ‘reasoned basis’ in the words of
the dissent, stands as a check against parties conducting ‘fishing expeditions’ based on
mere speculation.” And, “the question of whether a court should conduct an in camera
review of social media information is not presented on this appeal. The court below did
not order an in camera review, nor do the parties on appeal request any such relief.
Further, the dissent is mistaken that our prior decisions in this area require a court to
conduct an in camera review in all circumstances where a sufficient factual predicate is
established. The decision whether to order an in camera review rests in the sound
discretion of the trial court, or in this Court’s discretion if we choose to exercise it.” The
dissenting Justices argued that the case law in this area was too recent to be considered
well-settled, and should be revisited. They argued that demands for discovery of social
media should be treated the same as other discovery demands, where, “assuming that the
demand is sufficiently tailored to the issues, and unless a claim of privilege is made,
normally the plaintiff must then search through those items to locate any items that meet
the demand, and provide those items. There is not usually a need for the trial court to sift
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through the contents of the plaintiff’s filing cabinets to determine which documents are
relevant to the issues raised in the litigation.” And, “there is no reason why the
traditional discovery process cannot be used equally well where a defendant wants
disclosure of information in digital form and under the plaintiff’s control, posted on a
social networking site. The demand, like any valid discovery demand, would have to be
limited to reasonably defined categories of items that are relevant to the issues raised.
Upon receipt of an appropriately tailored demand, a plaintiff’s obligation would be no
different than if the demand concerned hard copies of documents in filing cabinets. A
search would be conducted through those documents for responsive relevant documents,
and, barring legitimate privilege issues, such responsive documents would be turned
over; and if they could not be accessed, an authorization for them would be provided.”
Thus, urged the dissent, “as long as the item is relevant and responsive to an appropriate
discovery demand, it is discoverable. To the extent disclosure of contents of a social
media account could reveal embarrassing information, ‘that is the inevitable result of
alleging these sorts of injuries.’” Here, in D’Alessandro, the Second Department appears
to apply a more liberal threshold showing before permitting discovery of cellular phone
records. The Court reverses the denial of plaintiff’s motion for discovery of defendant-
driver’s cell phone records for the hour before and after the accident at issue. The
demand was “not premised on ‘bare allegations of relevancy’ [citation omitted]. Rather,
the plaintiff’s motion papers adequately demonstrated that the issue of whether the
defendant driver was using her cellular telephone at the time of the accident was relevant
to the plaintiff’s contention that the defendant driver was negligent in the operation of her
motor vehicle [citation omitted]. As such, the plaintiff’s request for the defendant
driver’s cellular telephone records was ‘reasonably calculated to lead to the discovery of
information bearing on the plaintiff’s claims’ [citation omitted], and this portion of the
plaintiff’s request for disclosure was ‘sufficiently related to the issues in litigation to
make the effort to obtain them in preparation for trial reasonable.’” The Court affirmed
Supreme Court’s denial of access to the cell phone records of the non-party husband of
defendant driver.
SURVEILLANCE VIDEOS
Koksal v. The City of New York, 55 Misc 3d 836 (Sup.Ct. N.Y.Co. 2017) (Bluth, J.) –
Plaintiff’s application to preclude defendant’s use of videos taken of plaintiff “walking
within New York County Civil Court” is granted. Rule 29.1(a) of the Rules of the Chief
Judge provides that “taking photographs, films or videotapes, or audiotaping,
broadcasting or telecasting, in a courthouse, including any courtroom, office or hallway
therefor, at any time or on any occasion, whether or not the court is in session, is
forbidden, unless permission of the Chief Administrator is first obtained.” Here, “the
City insists that the videos were taken by a private investigator and that one of the videos
shows plaintiff running down the steps of a stairwell in 111 Centre Street.” The Court
rejects defendant’s argument that, since the Rule does not provide a penalty for its
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violation, preclusion is inappropriate. For, “what purpose would the rules of the Chief
Judge serve if a violation did not have a consequence? It would not be equitable for a
party to simply ignore a rule that does not contain a penalty and use evidence obtained by
breaking a rule to the detriment of the other party.” And, “the appropriate consequence
under these circumstances is to preclude defendants from gaining an advantage through
improper means and preventing defendants from using the portions of the video at trial
that depict plaintiff inside 111 Centre Street.”
SPOLIATION
Arbor Realty Funding, LLC v. Herrick, Feinstein LLP, 140 A D 3d 607 (1st Dept. 2016)
– “It is undisputed that Arbor’s obligation to preserve evidence arose at least as early as
June 2008, when Arbor retained counsel in connection with its claims against Herrick.
However, Arbor did not issue a formal litigation hold until May 2010. As a consequence,
Arbor’s internal electronic record destruction policies, including recycling of backup
tapes, deletion of employees’ emails stored in their inboxes or sent items folders for 189
days, and erasure of employee hard drives and email accounts upon the employee’s
departure from the firm, were not suspended until May 2010. In addition, Arbor’s CEO
deleted his emails on a regular basis between June 2007 and June 2010, with the result
that only one of his emails from the relevant period was produced. Arbor produced no
emails from the relevant period from its Executive Vice President of Structured Finance,
who was involved in the transaction.” Supreme Court found this failure to be ordinary
negligence, and directed that defendant would be entitled to an adverse inference charge
at trial. Now, it has been discovered that an additional eight employees of plaintiff were
involved in the transaction at issue, as the result of the late disclosure of minutes from a
committee meeting held during the relevant time period. Defendant renewed its motion
to dismiss the complaint on spoliation grounds. The Appellate Division reverses the
granting of that motion. “Generally, dismissal of the complaint is warranted only where
the spoliated evidence constitutes ‘the sole means’ by which the defendant can establish
its defense [citation omitted], or where the defense was otherwise ‘fatally compromised’
[citation omitted] or defendant is rendered ‘prejudicially bereft’ of its ability to defend as
a result of the spoliation [citation omitted]. The record upon renewal does not support
such a finding, given the massive document production and the key witnesses that are
available to testify, including the eight additional persons identified in the minutes, on
whom Herrick had not yet served interrogatories or deposition notices at the time it filed
its renewal motion. Accordingly, an adverse inference charge is an appropriate sanction
under the circumstances [citations omitted], since it will permit the jury to (1) find that
the missing emails and other electronic records would not have supported Arbor’s
position, and would not have contradicted evidence offered by Herrick, and (2) draw the
strongest inference against Arbor.” In addition, “plaintiff shall be required to pay
discovery sanctions of $10,000 to defendant Herrick, Feinstein, LLP for its failure to
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produce the loan committee meeting minutes until after the motion court had decided the
initial spoliation motion.”
Cioffi v. S.M. Foods, Inc., 142 A D 3d 520 (2d Dept. 2016) – “The record supports the
Supreme Court’s conclusion that, at the time the Atlanta defendants destroyed the
electronic data at issue, they were parties to this litigation and knew or should have
known of the potential relevance of the data to the plaintiffs’ claims. Nevertheless, the
plaintiffs have not demonstrated that the Atlanta defendants’ destruction of the data was
willful rather than merely negligent. In addition, the plaintiffs have not demonstrated that
the destruction of the data has significantly affected their ability to prove their claims.
Accordingly, the Supreme Court providently exercised its discretion in declining to strike
the Atlanta defendants’ answer or preclude them from presenting evidence [citations
omitted]. However, contrary to the Atlanta defendants’ contention, since they knew or
should have known that the data should have been preserved, the imposition of the lesser
sanction of a negative inference was appropriate.”
Macias v. ASAL Realty, LLC, 148 A D 3d 622 (1st Dept. 2017) – “The motion court
exercised its discretion in a provident manner in ordering the lesser sanction of an
adverse inference charge. Defendant’s principal testified that the building superintendent
regularly viewed the lobby surveillance tapes, and the superintendent admitted knowing
that the video automatically erased itself approximately every two weeks. This
knowledge, coupled with the superintendent being at the scene of plaintiff’s fall in
defendant’s building immediately after it occurred, was a sufficient showing that
defendant’s destruction of the evidence was, at a minimum, negligent.”
Rokach v. Taback, 148 A D 3d 1195 (2d Dept. 2017) – Defendant’s principal “viewed a
surveillance video recording shortly [after the accident at issue] which allegedly revealed
that the plaintiff stood at the side of the vehicle as it back up and then sat down behind
the front tire, causing the vehicle to drive over her toes.” Although that principal “was
notified of an impending lawsuit by the plaintiff only two days after the incident, the
defendants took no steps to preserve the video recording, and it subsequently was
erased.” The Court concluded that “the plaintiff sustained her burden of establishing that
spoliation occurred, given that the defendants failed to preserve the surveillance video
despite their knowledge of a reasonable likelihood of litigation regarding the incident,
and the highly relevant nature of the video evidence to that litigation [citations omitted].
However, since the destruction of the evidence did not deprive the plaintiff of her ability
to prove her claim so as to warrant the drastic sanction of striking the defendants’ answer,
the appropriate sanction for the spoliation herein is to preclude the defendants from
offering any evidence in this action regarding the alleged contents of the erased
surveillance video.”
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Fischetti v. Savino’s Hideaway, Inc., N.Y.L.J., 1202791284026 (Sup.Ct. Suffolk Co.
2017)(Ford, J.) – One of defendant restaurant’s employees – and son of the owners – who
had been involved in the installation of a surveillance camera system, was present in the
restaurant at the time of plaintiff’s accident. He did not, however, review the video of the
accident. The system automatically erases footage after two weeks, and the ordinary
protocol is “to view the footage on an ad hoc basis, responding to allegations of theft or
vandalism.” Several months after the accident, plaintiff commenced this action, and her
counsel “sent a form demand letter” which did not request preservation of any evidence.
Plaintiff’s motion for spoliation sanctions is denied. “The Appellate Division has
recognized that a defendant who destroys documents in good faith and pursuant to
normal business practice should not be sanctioned unless the defendant is on notice that
the evidence might be needed for future litigation.” Here, “defendant was not on notice
of the reasonable possibility of future litigation so as to be under a duty to suspend its
regular 2 week video retention policy.”
Ferrara Bros. Building Materials Corp. v. FMC Construction LLC, 54 Misc 3d 529
(Sup.Ct. Queens Co. 2016)(Dufficy, J.) – In its defense to plaintiff’s claim that it
interfered with its contract with a third party, defendant asserted – and provided
documentary evidence – that its own contract with that third party pre-dated plaintiff’s.
Plaintiff claims that the produced document is backdated. Now, seven years into the
litigation, plaintiff seeks the “metadata” behind the document, to demonstrate when it
was created. Defendant responded that the metadata no longer exists because, at some
point during the litigation, it scrapped its computers for a new system. “The computer
was discarded during pending litigation, at a time when the defendant knew or should
have known, even absent a specific demand by the plaintiff, that the creation and
modification of the contract, via the defendant’s computer system, would bear upon the
parties’ dispute.” And, the delay in demanding the metadata does not constitute a waiver
of the right to it. Thus, here, “while the plaintiff is not entirely foreclosed from proving
its case based upon testimonial evidence, the opportunity to include a forensic analysis of
the metadata to demonstrate potentially that the defendant’s contract was created at a
time when it had notice of the plaintiff’s contract with the property developer is negated
by the destruction of the computer [citation omitted]. The plaintiff is not required to
accept that defendants’ assurances that the metadata would not add to its proof at trial.”
The Court concluded that a negative inference charge to the jury was the appropriate
sanction.
Doviak v. Finkelstein & Partners, LLP, 137 A D 3d 843 (2d Dept. 2016) – In this legal
malpractice action, plaintiffs allege that defendants, representing them in a personal
injury action, failed to convey a settlement offer that they would have accepted – and
which was substantially larger than the ultimate jury verdict. Defendants contend that
they in fact conveyed the offer, by handing the offering document to plaintiff wife, which
she handed back to defendant with her rejection. “During Mrs. Doviak’s deposition in
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this action, the defendants’ counsel handed her the original offer document. The
plaintiffs subsequently moved to impose sanctions on the defendants on the ground that
the defendants had failed to preserve the offer document for fingerprint analysis and had
made such analysis impossible.” The Court holds that “the record supports the Supreme
Court’s conclusion that the plaintiffs failed to demonstrate that the defendants
intentionally or negligently destroyed fingerprint evidence which was critical to their
case. The plaintiffs failed to demonstrate that they requested that the offer document be
tested for fingerprints, or that it be preserved for forensic testing prior to Mrs. Doviak’s
deposition, or otherwise informed the defendants of their desire to conduct fingerprint
analysis. The plaintiffs’ boilerplate demand during discovery that they be permitted to
examine original documents on request does not satisfy this requirement, nor is it
reasonable to contend that the defendants should have anticipated the plaintiffs’ desire for
forensic testing of the offer documents.” In any event, “the plaintiffs failed to
demonstrate that, by failing to preserve the offer document for forensic testing, the
defendants had fatally compromised the plaintiffs’ ability to prove their claims [citations
omitted]. Therefore, the court providently exercised its discretion in denying the
plaintiffs’ motion for sanctions for spoliation.”
Golan v. North Shore-Long Island Jewish Health System, Inc., 147 A D 3d 1031 (2d
Dept. 2017) – “A day after the decedent underwent quadruple vessel coronary artery
bypass grafting performed by [defendant] Manetta, a cardiothoracic surgeon, the
decedent experienced an acute onset of massive bleeding. Thereafter, during a second
operation to resuscitate the decedent and repair the anastomosis, Manetta observed that a
stitch had broken at the base of the knot. The stitch was discarded during the second
operation and was not sent to any laboratory for analysis. The plaintiff moved to impose
sanctions against the defendants based on spoliation of evidence, contending that the
destruction of the broken suture deprived her of vital evidence necessary to respond to
any defense claim that a defective suture or other force was the cause of the failed
anastomosis and not a departure from good medical and surgical care. In response to the
plaintiff’s motion, the defendants submitted the affirmation of a medical expert, who
opined that the defendants did not depart from the standard of care by discarding the
broken suture and that preservation of the broken suture was immaterial to determining
the cause of the failed anastomosis. Under the circumstances presented, the Supreme
Court improvidently exercised its discretion in granting the plaintiff’s motion to impose
sanctions against the defendants for the willful spoliation and destruction of evidence, as
the plaintiff failed to demonstrate that the defendants were obligated to preserve the
broken suture at the time of its destruction, that the suture was destroyed with a ‘culpable
state of mind,’ and/or that the destroyed suture was relevant to the plaintiff’s claim
[citation omitted]. In any event, the plaintiff failed to establish that the defendants were
on notice that the suture might be needed for future litigation.”
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Atiles v. Golub Corporation, 141 A D 3d 1055 (3d Dept. 2016) – Plaintiffs seek sanctions
against defendants for failure to produce video surveillance footage of the accident scene
for the two hours following the accident. “Plaintiffs failed to establish a prima facie case
for entitlement to sanctions. Although it is uncontested that defendants are not in
possession of any video of the scene of the accident for the full two-hour period after the
accident, plaintiffs failed to put forth any evidence establishing why the video was not
preserved. More specifically, the record contains no evidence related to the maintenance,
or lack thereof, of any video related to the security cameras and explanation for how the
disputed video came to be lost or destroyed. Therefore, plaintiffs failed to prove that
defendants intentionally or willfully destroyed the video while under obligation to
preserve it [citation omitted]. Accordingly, and regardless of whether plaintiffs proved
some lesser culpable mental state, they retained the burden of proving the relevancy of
the portion of the video that they did not receive.” Plaintiffs failed to establish relevancy.
Kleinberg v. 516 West 19th LLC, 138 A D 3d 549 (1st Dept. 2016) – “In light of the
record of water penetrating into plaintiffs’ units for many months and the issuance by the
Department of Buildings of violations and directives to repair the roof, the removal and
replacement of the roof does not constitute spoliation, because it ‘was not done in bad
faith to harm [third-party defendant] KNS’s litigation posture, but rather for purposes of
mitigation of damages.’”
Mahiques v. County of Niagara, 137 A D 3d 1649 (4th Dept. 2016) – The subject
accident, involving a video slot machine at a casino, occurred in December 2005.
Plaintiff commenced the action in 2007, naming a John Doe corporation as manufacturer
of the machine. In 2008, an amended complaint named defendant IGT as manufacturer.
In 2010, plaintiff requested that IGT maintain the condition of the machine, but did not
seek to examine it until 2011, at which time “IGT then informed plaintiffs that the
machine was one of several video slot machines that had been removed from the casino
in 2008 at the casino defendants’ request to create more open space in the casino, and that
the subject machine and approximately 140 other machines were scrapped in the normal
course of business in June 2008.” The Appellate Division modifies Supreme Court’s
order striking IGT’s answer. “We conclude that plaintiffs established that some sanction
is warranted because IGT negligently failed to preserve the machine, but plaintiff failed
to show that the destruction of the machine was intentional or contumacious, to warrant
the sanctions imposed by the court.” Plaintiffs “failed to establish that the machine was
destroyed before they had an opportunity to inspect it, and thus plaintiff failed to
establish that the extreme sanctions of striking IGT’s answer and granting plaintiffs
partial summary judgment on liability against IGT were warranted.” For “plaintiffs did
not request that the machine be preserved or attempt to view it in the two years after the
accident and prior to the commencement of the action [citations omitted], nor did they do
so in the ensuing year between when the action was commenced and the machine was
scrapped. Indeed, plaintiffs did not seek to examine the machine for an additional two
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years after IGT was joined as a defendant.” Nor did destruction of the machine “deprive
plaintiffs of the ability to establish their causes of action.” Accordingly, the Court
concluded that a negative inference charge was the appropriate sanction.
Scott v. Henny Penny Corporation, 54 Misc 3d 238 (Sup.Ct. Onondaga Co. 2015) –
Plaintiff was injured using a fryer manufactured by defendant. Shortly thereafter,
plaintiff retained counsel and counsel, with a professional engineer, tested the fryer.
During the testing, the fryer was damaged. And, thereafter, certain component parts
became missing. The then prospective defendant was not notified of the testing.
Defendant seeks spoliation sanctions. “Where a plaintiff negligently or intentionally
destroys or loses evidence prior to the commencement of an action, spoliation sanctions
are appropriate.” And, here, “it does not appear that plaintiff, through counsel, made any
good faith attempt to locate or preserve these component parts which were damaged
during the unnoticed inspection.” Accordingly, the appropriate sanction is “the
preclusion of any expert testimony regarding the defective nature of the subject fryer.”
Sarach v. M&T Bank Corporation, 140 A D 3d 1721 (4th Dept. 2016) – In response to
plaintiff’s application for pre-action disclosure, defendant “represented to Supreme Court
that it had voluntarily undertaken preservation of certain evidence,” and ultimately
consented to an “order of preservation.” Defendant later revealed that the materials had
not been preserved. A divided Appellate Division majority agrees with nisi prius that
defendant “wilfully failed to disclose information,” but concluded that “the court abused
its discretion in striking defendant’s answer.” Instead, since the lost evidence did not
deprive plaintiff of the ability to prove his case at trial, “we conclude that an appropriate
sanction is that an adverse inference charge be given at trial.” The dissenter found that
“willfulness” had not been “‘conclusively shown’ or established by a ‘clear showing,’ or
by ‘clear and convincing evidence,’” as prior precedent required. The dissent would have
imposed the sanction of preclusion rather than an adverse inference.
ELECTRONIC DISCLOSURE
Chan v. Cheung, 138 A D 3d 484 (1st Dept. 2016) – In recent years, the Appellate
Division, First Department, has decided a number of significant cases dealing with
Electronic Disclosure. In U.S. Bank, N.A. v. GreenPoint Mortgage Funding, Inc.,
94 A D 3d 58 (1st Dept. 2012), the Court held that “we are persuaded that Zubulake [v.
UBS Warburg LLC, 220 F.R.D. 212 (S.D.N.Y. 2003)] should be the rule in this
Department, requiring the producing party to bear the cost of production [of both ESI and
physical documents] to be modified by the IAS court in the exercise of its discretion on a
proper motion by the producing party.” For, “requiring the producing party to bear its
own cost of discovery, including the searching, retrieving and producing of ESI, supports
‘the strong public policy favoring resolving disputes on their merits’ [citing Zubulake].
The alternative of having the requestor pay ‘may ultimately deter the filing of potentially
meritorious claims’ particularly in circumstances where the requesting party is an
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individual.” Then, in Voom HD Holdings LLC v. EchoStar Satellite L.L.C., 93 A D 3d 33
(1st Dept. 2012), the Court concluded that “the Zubulake standard is harmonious with
New York precedent in the traditional discovery context, and provides litigants with
sufficient certainty as to the nature of their obligations in the electronic discovery context
and when those obligations are triggered.” Thus, “once a party reasonably anticipates
litigation, it must, at a minimum, institute an appropriate litigation hold to prevent the
routine destruction of electronic data [citation omitted]. Regardless of its nature, a hold
must direct appropriate employees to preserve all relevant records, electronic or
otherwise, and create a mechanism for collecting the preserved records so they might be
searched by someone other than the employee. The hold should, with as much specificity
as possible, describe the ESI at issue, direct that routine destruction policies such as auto-
delete functions and rewriting over e-mails cease, and describe the consequences for
failure to so preserve electronically stored evidence. In certain circumstances, like those
here, where a party is a large company, it is insufficient, in implementing such a litigation
hold, to vest total discretion in the employee to search and select what the employee
deems relevant without the guidance and supervision of counsel.” The Court rejected
defendant’s (and amicus’s) argument that “reasonably anticipates” is too vague, and that
no sanctions for destruction of electronically stored information should be imposed “in
the absence of pending litigation.” For, “to adopt a rule requiring actual litigation or
notice of a specific claim ignores the reality of how business relationships disintegrate.
Sides to a business dispute may appear, on the surface, to be attempting to work things
out, while preparing frantically for litigation behind the scenes. EchoStar and amicus’s
approach would encourage parties who actually anticipate litigation, but do not yet have
notice of a ‘specific claim’ to destroy their documents with impunity.” The Court
defined “reasonable anticipation of litigation” as “such time when a party is on notice of
a credible probability that it will become involved in litigation.” Most recently, last
year’s “Update” reported on the Court of Appeals decision in Pegasus Aviation I, Inc. v.
Varig Logistica S.A., 26 N Y 3d 543 (2015). There, Supreme Court granted plaintiff’s
motion for an adverse inference instruction at trial against defendants as a sanction for
spoliation of electronic evidence. A splintered Appellate Division reversed. The Court
unanimously agreed upon the standard – when the spoliation is intentional, or the result
of gross negligence, the adverse party need not demonstrate prejudice flowing from the
spoliation. But when the spoliation is merely negligent, the adverse party must show that
it has been harmed for sanctions to be awarded. The 3-Justice majority concluded that
defendant here was merely negligent, and that plaintiff failed to demonstrate prejudice.
“The motion court’s finding of gross negligence apparently was based on a statement by
a federal district court of the Southern District of New York that, when litigation is
anticipated, ‘the failure to issue a written litigation hold constitutes gross negligence
because that failure is likely to result in the destruction of relevant information’ [citation
omitted (emphasis by the Court)]. To the extent the district court meant by this that
failure to institute a litigation hold, in all cases and under all circumstances, constitutes
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gross negligence per se, the statement has been disapproved by the Second Circuit
[citation omitted]. The per se rule apparently articulated in [the Southern District
decision], and followed by the motion court, has never to our knowledge been adopted by
a New York state appellate court.” One Justice agreed that only ordinary negligence had
been shown, “however, because a court may, in its discretion, impose a spoliation
sanction for the negligent destruction of evidence, I disagree with the majority’s
conclusion that no sanction is warranted, and would remand for a determination as to the
extent to which plaintiffs have been prejudiced by the loss of the evidence, and the
sanction, if any, that should be imposed.” Another Justice dissented entirely, finding that
defendant’s “failure to take any meaningful steps to preserve evidence constitutes gross
negligence and therefore that the order imposing the sanction of an adverse inference
should be affirmed.” A divided Court of Appeals reversed. The majority agreed with the
Appellate Division majority that defendant was merely negligent in its spoliation of
evidence, and that when “evidence is determined to have been negligently destroyed, the
party seeking spoliation sanctions must establish that the destroyed documents were
relevant to the party’s claim or defense.” The Court found, however, that the Appellate
Division majority erred in failing to consider plaintiff’s evidence as to the relevance of
the destroyed material. And, “although the Appellate Division possesses the authority to
make findings of fact that are as broad as the trial court, in this instance, where it all but
ignored Pegasus’s arguments concerning the relevance of the documents, we conclude
that the prudent course of action is to remit the matter to Supreme Court for a
determination as to whether the negligently destroyed ESI was relevant to Pegasus’s
claims against the MP defendants and, if so, what sanction, if any, is warranted.” The
Court also disagreed with the Appellate Division majority that “a trial adverse inference
charge in an alter ego case such as this one would be ‘tantamount to granting Pegasus
summary judgment’ [citation omitted]. Such adverse inference charges have been found
to be appropriate even in situations where the evidence has been found to have been
negligently destroyed.” The dissenters in the Court of Appeals “part ways with the
majority over its determination that the MP defendants’ ‘culpable state of mind’
amounted to, at most, simple negligence.” They concluded that defendants were grossly
negligent. And, the dissenters “further disagree with the majority’s view that relevance is
not to be presumed because the evidence was not intentionally or wilfully destroyed.”
For, “‘destruction that is the result of gross negligence’ also ‘is sufficient to presume
relevance.’” The dissenters thus “would remit to the Appellate Division for consideration
of whether, in its discretion, a sanction is warranted.” Here, in Chan, a defamation
action, plaintiffs allege that defendant published a defamatory affidavit via e-mail.
“Upon receipt of correspondence, dated July 13, 2009, threatening litigation, and
certainly upon service of the complaint herein, defendant should have placed a litigation
hold on relevant electronic data in order to preserve it.” Instead, the Court found,
defendant intentionally destroyed all potentially relevant e-mails. Thus, “it is impossible
to determine the universe of recipients of the subject affidavit, and thus to determine the
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extent of damage to plaintiffs.” This conduct “warrants the sanction of striking her
pleadings.”
Gilbert v. Highland Hospital, 52 Misc 3d 555 (Sup.Ct. Monroe Co. 2016)(Doyle, J.) – In
this medical malpractice case, plaintiff claims that defendant hospital released plaintiff’s
deceased from its emergency room without her condition being evaluated by a physician.
Plaintiff seeks disclosure of the “audit trail” of the deceased’s medical records. The audit
trail is essentially metadata, which indicates, inter alia, when the records were accessed,
by who, and for how long a period. The Court concludes that, on these facts, the audit
trail is discoverable. While “system metadata” is generally not subject to disclosure,
here, “the plaintiff’s request is relevant to the allegations made in the complaint;
specifically, the allegation that the decedent was not seen or evaluated by a medical
doctor, prior to discharge.”
Matter of Nunz, 53 Misc 3d 483 (Surr.Ct. Erie Co. 2016)(Howe, J.) – In this estate
dispute, discovery is sought of the hard-drive of the computer of the attorney who drafted
the will, and then “deleted” the file relating to it. The Court finds that the discovery is
appropriate, but “given the potential harm in the forensic examination process, I am not
prepared to allow any e-discovery request predicated on the assertion that counsel ‘has a
guy who thinks he can restore the hard drive and retrieve almost all of it’ [emphasis by
the Court]. Similarly, I am not prepared to allow indiscriminate access to an attorney’s
computer where there may be attorney-client privilege issues involved, or unrelated
confidential information on it, based on the mere assertion by Morse that ‘his computer
tech guy can operate under a non-disclosure order.’ These are sensitive issues, and they
need to be carefully explored and resolved first before any forensic examination of the
computer is permitted” [emphasis by the Court]. The Court accordingly directed the
proponent of the discovery to submit an affidavit from his expert, detailing: “(1) the
expert’s name, address, qualifications and credentials; (2) the expert’s opinion regarding
the ability to retrieve the relevant ESI from Perla’s computer, including, if being sought,
what type of metadata is at issue * * *; (3) how long the process of ESI discovery and
examination of Perla’s computer would take to complete, whether it can be done at
Perla’s office, or whether some other approach or place is either necessary or desirable;
(4) what exactly the expert would need to accomplish the data retrieval; and (5) how the
expert proposes to identify and protect ESI on Perla’s computer which may be subject to
the attorney-client privilege or to other confidentiality considerations; (6) What the expert
proposes with respect to the considerations set out in the Commercial Division, Nassau
County Guidelines for Discovery of Electronically Stored Information (ESI), section C,
items 3, 5, 6, 8, 9, 11, 13 and 15 (available online at
www.nycourts.gov/courts/comdiv/PDFs/Nassau-E-Filing-Guidelines.pdf)” [emphasis by
the Court].
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Iris Mediaworks, Ltd. v. Vasisht, N.Y.L.J., 1202791048431 (Sup.Ct. N.Y.Co. 2017)
(Chan, J.) – The forensic evidence demonstrated that, at the beginning of this litigation,
defendant hacked plaintiffs’ computer system, causing its e-mails – including e-mails to
and from their counsel – to be automatically forwarded to an address that then
automatically forwarded them to defendant. “The hacking of plaintiffs’ email during
litigation can only be seen as an attempt to undermine plaintiffs’ case. It is also
indicative of Vasisht’s disregard for the judicial process. While striking a defendant’s
answer is an extreme sanction, it is warranted here as hacking plaintiffs’ email to obtain
information during litigation without going through proper discovery channels is an
egregious act and sidesteps discovery procedures.”
MEDICAL RECORDS AND EXAMINATIONS
Barber v. Franzon, N.Y.L.J., 1202773234294 (Sup.Ct. Clinton Co. 2016)(Muller, J.) –
“‘A plaintiff mother does not waive her physician-patient privilege with respect to her
own medical history, other than for that period when the infant was in utero, merely by
acting in a representative capacity in an action in which the infant is the real party in
interest [citations omitted]. In such cases, the mother will be deemed to have waived her
privilege when, by her conduct, such as by answering questions relating to her medical
history during an examination before trial, she has affirmatively placed her own medical
history into issue [citation omitted]. Even then, however, disclosure is limited to records
covering the period when the infant was in utero, unless evidence is presented that the
mother’s medical history covering other periods is relevant.’”
Greco v. Wellington Leasing Limited Partnership, 144 A D 3d 981 (2d Dept. 2016) –
“Because the plaintiff affirmatively placed her entire medical condition in controversy
through broad allegations of physical injuries and claimed loss of enjoyment of life due to
those injuries, which included impairment of her nervous system and requirement of
neurological care, the nature and severity of her previous psychiatric conditions and her
history of treatment for substance abuse are matters material and necessary to the issue of
damages [citations omitted]. However, the Supreme Court properly denied that branch of
the defendants’ motion which was to compel the production of records pertaining to the
plaintiff’s child custody status and child support payments, as they failed to establish that
such records contained information that was material and necessary in the prosecution or
defense of this action.”
Cianciullo-Birch v. Champlain Centre North LLC, N.Y.L.J., 1202760199252 (Sup.Ct.
Clinton Co. 2016)(Muller, J.) – “A claim for loss of enjoyment of life is not a separate
element of damages, but rather ‘a factor to be considered by the jury in assessing
damages for conscious pain and suffering’ [citation omitted], by weighing ‘the frustration
and anguish caused by the inability to participate in activities that once brought pleasure’
[citation omitted]. The question thus framed is whether plaintiff has waived the
physician patient privilege concerning her entire medical history – but particularly
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records pertaining to her mental health – by having alleged a loss of enjoyment of life.”
The Appellate Divisions “have not at all been uniform in their dissection of this issue.”
But, “this level of disclosure is more consistently favored than not, and this Court
therefore finds the mental health records sought are ‘material and necessary’ and likely to
‘assist preparation for trial by sharpening the issues.’” However, the Court limits the
period for which records must be produced, beginning with the “date testified to by the
plaintiff as a time of onset of her depression.”
Josphe v. Dermatology Associates of Rochester, P.C., 52 Misc 3d 528 (Sup.Ct. Monroe
Co. 2016)(Rosenbaum, J.) – Plaintiff claims that defendants’ malpractice caused
permanent scarring to her arm, resulting, inter alia, in “psychological damages and loss
of enjoyment of life.” Defendants seek “virtually all medical records from any
encounters with medical professionals over the last 20 years.” A plaintiff’s mental health
records are discoverable “where ‘her broad allegations of injury, including her alleged
limited ability to perform normal daily functions and social activities, as well as her
alleged “inability and limited ability to engage in life’s enjoyments and loss of
employment and career,” could have resulted from physical injuries sustained in the
accident, her preexisting mental condition or some combination thereof.’” Thus, the
records are, here, relevant. “However, the court is cognizant that the alleged injuries,
regardless of their significance, do not warrant a carte blanche, wholesale entitlement to
all of plaintiff’s medical records from the beginning of time. Defendants’ request for
plaintiff’s primary care records, including those almost a quarter of a century old, is
overly broad, burdensome and unlikely to lead to relevant evidence.” The Court noted
that the usual judicial response to such competing interests is “an in camera submission.”
But, “an in camera review of every file could become a monumental task. In an attempt
to creatively deal with the potential judicial backlog if these issues arise more frequently,
and to preserve judicial resources, while protecting the competing rights of the parties, a
streamlined process could reasonably resolve the competing interests and goals. In
following the guidance bestowed by the Appellate Division, regarding which cases
require an in camera review, this court implements the following process, subject to any
comments which the parties believe may be of assistance. The objected to pretreatment
(injury) records including those requested from the area hospitals shall be submitted to
the court for an in camera review. However, to assist in the process, plaintiff’s counsel
shall request a copy of the records, review them and determine which particular records
or entries they object to being disclosed. Counsel shall draft a privilege log describing
the contents of the records, their objection to the release and the legal basis thereof. In
this particular matter, the court would limit the discovery to five years prior to the alleged
negligence, but if defendants find materials in those records which would warrant further
discovery, an application can be made thereon if the parties cannot agree otherwise.”
James v. 1620 Westchester Avenue LLC, 147 A D 3d 575 (1st Dept. 2017) – A closely-
divided Appellate Division holds that “defendants did not meet their burden of showing a
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‘compelling need’ for medical records concerning HIV; they failed to submit evidence
that would establish a connection between plaintiff’s claimed HIV status and her future
enjoyment of life [citations omitted]. Similarly, defendants failed to meet their burden of
showing that ‘the interests of justice significantly outweigh the need for confidentiality’
such to permit discovery of mental health, alcohol abuse, or substance abuse records.”
For, “plaintiff’s alleged general anxiety and mental anguish from back and leg injuries do
not place her entire mental and physical health into contention.” The dissenters argued
that “plaintiff’s injuries were allegedly caused by a trip and fall on a hazardous condition
on defendant’s property, but more than just plaintiff’s physical condition is in issue; she
also alleges anxiety and mental anguish, and seeks an award of future pain and suffering,
which may incorporate a calculation of life expectancy or an assessment of enjoyment of
life.” Records “regarding any treatment plaintiff recently received for her mental health
or for alcohol or substance abuse are sufficiently relevant to satisfy the material and
necessary standard of CPLR 3101, and by putting her emotional or psychological
condition in controversy plaintiff has waived any protection applicable to such records.”
The dissent also noted that, “it may bear repeating that the discoverability of such records
does not mean they are necessarily admissible at trial.”
McMahon v. New York Organ Donor Network, Inc., 56 Misc 3d 467 (Sup.Ct. N.Y.Co.
2017)(Bluth, J.) – “The instant motion appears to raise an issue of first impression –
whether an O[rgan] P[rocurement] O[rganization] that is not covered by HIPAA must
produce medical records it obtained from a covered entity because this information is
required in order to run its organization. The reason that defendant receives medical
records is that it needs the information to process organ donations. Defendant must know
certain information about a donor’s medical history in order to ensure that a donation is
successful. However, defendant is not a covered entity and, therefore, must turn over the
requested information. Defendant failed to identify a federal regulation or case law that
would prevent this court from requiring disclosure.”
Colindres v. Carpenito, 55 Misc 3d 856 (Sup.Ct. Westchester Co. 2017)(Lefkowitz, J.) –
“Section 202.17(b)(1) of the Uniform Rules for Trial Courts (22 NYCRR) obligates a
party, who has been served with a notice for a physical examination, to provide, at least
20 days prior to the examination or other date directed by the court, reports from their
treating and examining medical providers, which shall (1) include a recital of injuries and
conditions as to which testimony will be offered at trial, and (2) set forth a description of
the injuries, a diagnosis and a prognosis. Contrary to plaintiff’s contention, the rule does
not apply ‘predominantly’ to toxic tort actions, but instead applies to all personal injury
and wrongful death actions as noted in the title of the rule, to wit, ‘Exchange of medical
reports in personal injury and wrongful death actions.’ It is undisputed that plaintiff
failed to provide a report from her treating psychologist, Ms. Henry, either prior to or
subsequent to her IME by defendants’ designated psychologist. The fact that a treating or
examining medical provider, such as here, has not drafted a report does not obviate a
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plaintiff’s obligation to provide such a report under the rules.” Moreover, “contrary to
plaintiff’s contention, the fact that defendants conducted plaintiff’s psychological IME
without first receiving a report from plaintiff’s treating psychologist did not waive
defendants’ entitlement to a medical report from plaintiff’s treating psychologist. Unlike
other items of discovery which must be affirmatively sought be a party, the exchange of
medical reports in a personal injury action, including reports of a plaintiff’s treating
medical providers, is required, without demand, by section 202.17 of the Uniform Rules
for Trial Courts (22 NYCRR). With respect to the reports of a plaintiff’s treating medical
providers, a plaintiff’s obligation under the rule to exchange such reports is triggered
when plaintiff is served with a notice fixing the time and place of a physical
examination.” The Court directed prompt exchange of a report by the treating
psychologist.
Kaous v. Lutheran Medical Center, 138 A D 3d 1065 (2d Dept. 2016) – This medical
malpractice action challenges the defendants’ conduct during the birth of the infant
plaintiff, Sophia. “The Supreme Court properly determined that the defendants were
entitled to perform genetic testing and a physical examination of Sophia. In a medical
malpractice action, where the physical condition of a party is in controversy, ‘any party
may serve notice on another party to submit to a physical, mental or blood examination
by a designated physician’ [citation omitted]. Here, the defendants challenge the
plaintiffs’ allegation that Sophia’s injuries were caused by the defendants’ purported
malpractice and not Fraser Syndrome or any other genetic predisposition. Given that
Sophia’s physical and mental condition is in dispute, the Supreme Court properly granted
those branches of the defendants’ motions which were to permit genetic testing and a
physical examination of Sophia [citation omitted]. In addition, the Supreme Court
properly granted those branches of the defendants’ motions which were for authorizations
for the medical records of Sophia’s siblings. CPLR 3101(a) provides for ‘full disclosure
of all matter material and necessary in the prosecution or defense of an action.’ The
terms ‘material’ and ‘necessary’ are liberally construed to further the disclosure ‘of any
facts bearing on the controversy which will assist preparation for trial by sharpening the
issues and reducing delay and prolixity’ [citations omitted]. Here, defendants
demonstrated that the siblings’ medical records are material and necessary by submitting
an expert affirmation explaining that these records would ensure that Sophia is properly
diagnosed and that the claimed injuries were not caused by any other genetic conditions
to which she was predisposed.”
Steinbok v. City of New York, N.Y.L.J., 1202769722634 (Sup.Ct. N.Y.Co. 2016)
(d’Auguste, J.) – The Court rejects a defendant’s attempt to limit to an attorney the
person who can accompany plaintiff to a medical examination. “A plaintiff is entitled to
have a non-attorney, colloquially known as an IME watchdog, present at an independent
medical examination.” Defendant’s proposed limitation “has been raised in multiple
prior litigations and has been specifically rejected by the Appellate Division, First
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Department in Guerra v. McBean, 127 A D 3d 462 (1st Dept. 2015).” Indeed, these very
attorneys lost that case. Thus, “it is apparent to this Court that Baker McEvoy knew that
its argument regarding the presence of a non-attorney at an IME was meritless because it
had been raised in the Guerra litigation and rejected by the Appellate Division prior to
submitting the instant motion. Accordingly, the demand served by Baker McEvoy was a
legal nullity because it contained improper conditions.” Since that demand was a nullity,
and the time to make such a demand has now expired, the Court concludes that a medical
examination has been waived.
Henderson v. Ross, 147 A D 3d 915 (2d Dept. 2017) – The same defendant’s law firm as
in Steinbok, directly above, sought to similarly limit plaintiff to being accompanied by an
attorney. The limitation is here also rejected. “A plaintiff ‘is entitled to be examined in
the presence of his or her attorney or other legal representative, as well as an interpreter,
if necessary, so long as they do not interfere with the conduct of the examination
[citations omitted]. Here, the defendant failed to meet his burden of establishing that the
plaintiff’s representative would improperly interfere with the conduct of the injured
plaintiff’s physical examination.”
Vargas v. City of New York, 146 A D 3d 917 (2d Dept. 2017) – “While ‘a plaintiff will
normally be entitled to have his or her attorney present at an IME,’ ‘permission to employ
the additional measure of videotaping the examination will be granted only where the
plaintiff establishes the existence of special and unusual circumstances.” The Court cited
its decision in Bermejo v. New York City Health and Hospitals Corporation, 135 A D 3d
116 (2d Dept. 2015), reported on in last year’s “Update,” in which the Court held that, as
“appellate courts in other departments have recognized, there is no express statutory
authority for the videotaping of medical examinations, either in the discovery statute
authorizing physical examinations of parties [citation omitted] or in the court rule
governing such examinations [citations omitted]. Indeed, the Appellate Division, Third
Department, has commented that ‘authorization of videotaping was intentionally left out
of 22 NYCRR 202.17 and such intent should be accorded deference’ [citation omitted].
Requests for permission to videotape IMEs have been made on a case-by-case basis, and
‘videotaping has not been allowed in the absence of special and unusual circumstances.’”
Thus, the caselaw contemplates that “a plaintiff will normally be entitled to have his or
her attorney present at an IME, but that permission to employ the additional measure of
videotaping the examination will be granted only where the plaintiff establishes the
existence of special and unusual circumstances. The latter proposition presupposes that a
request for the court’s permission to engage in videotaping will be made. What the law
of this state does not contemplate is plaintiffs’ attorneys taking it upon themselves to
surreptitiously videotape an IME, without the knowledge of the examining physician,
without notice to the defendants’ counsel, and without seeking permission from the court.
Contrary to the assertions made by the plaintiff’s attorneys in Supreme Court,
surreptitious videotaping of IMEs, without court approval or even notice to the court or
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opposing counsel, cannot be regarded as an ‘appropriate tool’ or an activity that attorneys
should feel free to engage in ‘all the time.’” Thus, “the failure of plaintiff’s counsel to
seek and obtain the Supreme Court’s permission to videotape the second IME was, by
itself, a sufficient reason to prohibit the use of the recording at trial. Further
compounding the improper conduct of plaintiff’s counsel in making the recording
without procuring the court’s approval in advance was the failure to disclose the
recording to defense counsel prior to trial, which was a clear violation of CPLR 3101.”
The Bermejo Court directed a new IME, and sanctions against plaintiff’s counsel.
Hayes v. Bette & Cring, LLC, 135 A D 3d 1058 (3d Dept. 2016) – “While we previously
held that there is ‘no statutory authority to compel the examination of an adverse party by
a nonphysician vocational rehabilitation specialist’ (Mooney v. Osowiecky, 215 A D 2d
839, 839 [1995]), the Court of Appeals has since confirmed that the mandate for broad
disclosure is not necessarily limited by the more specific provision of the CPLR that
allows a defendant to demand that a plaintiff submit to a physical or mental examination
‘by a designated physician’ [citation omitted] where his or her medical condition is at
issue [citation omitted]. Accordingly, the circumstances of a case may allow such a
demand even in the absence of express statutory authority [citations omitted]. We agree
with the conclusion reached by the other Departments that such circumstances are not
limited to those cases where a plaintiff has retained a vocational rehabilitation expert to
establish damages, although, generally, such testing ‘might well be unduly burdensome’
[citations omitted]. We recognize that Supreme Court relied upon our prior decision in
Mooney [citation omitted] in denying the motion to compel, but the ruling in that case
should no longer be followed. Hayes placed his ability to work in controversy by
claiming that, as a result of his injuries, he suffered loss of future wages and reduced
earning capacity and by testifying at his examination before trial that his future career
opportunities were limited [citations omitted]. Further, at the time of the demand, Hayes
did not object or otherwise complain that he would be prejudiced or burdened by such
examination and no note of issue had been filed. In our view, therefore, Hayes should be
directed to appear before a vocational rehabilitation expert.”
ENFORCING DISCLOSURE ORDERS
Stewart v. Makhani, 146 A D 3d 703 (1st Dept. 2017) – “While delays in discovery are
frustrating, a trial court has the responsibility ‘to fashion an order consistent with its
obligation to bring discovery to an end as quickly as possible. Marking a case off or
striking a case during the discovery phase does not further that obligation because it only
encourages inaction by the parties and counsel in completing discovery. Ultimately,
marking a case off during discovery leads to unnecessary motion practice, loss of
valuable time for discovery, and a waste of judicial resources.’”
Luo v. Yang, 150 A D 3d 726 (2d Dept. 2017) – “‘A conditional order of preclusion
requires a party to provide certain discovery by a date certain, or fact the sanctions
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specified in the order’ [citations omitted]. Here, the so-ordered stipulation entered into
by the parties in this action functioned as a conditional order of preclusion, which became
absolute upon the defendant’s failure to comply with it [citations omitted], unless the
defendant demonstrated a reasonable excuse for failure to comply with its terms and the
existence of a potentially meritorious cause of action or defense [citations omitted]. The
defendant, who offered bare allegations of neglect by his prior counsel, failed to
demonstrate a reasonable excuse for his failure to comply with the so-ordered stipulation
[citations omitted]. Inasmuch as the defendant failed to demonstrate a reasonable excuse
for his failure to comply with the so-ordered stipulation, we need not consider whether he
offered a potentially meritorious cause of action or defense to the action.”
Viruet v. The Mount Sinai Medical Center, Inc., 143 A D 3d 558 (1st Dept. 2016) –
“Although plaintiff eventually, albeit belatedly, provided or addressed many of the
outstanding items listed in Supreme Court’s fifth and final order of discovery, she still
did not supplement the bill of particulars to articulate the basis for her malpractice claims
or demand for special damages, even though five years had passed since the
commencement of the action. She also failed to provide completed HIPAA authorization
forms. Nevertheless, ‘striking a party’s pleadings is a drastic sanction, and will generally
be made only upon a clear showing that the party’s conduct was willful and
contumacious’ [citations omitted]. The record shows that the 77-year-old plaintiff
responded to many of defendants’ discovery demands, which were extensive, spanning
10 years of medical records and other documents. Under the circumstances of this
medical malpractice case, dismissal of the action is too harsh a sanction at this point for
plaintiff’s partial failure to comply with discovery orders [citations omitted]. We,
therefore, modify to reinstate the complaint, direct plaintiff within 45 days of this order to
pay a monetary sanction of $1,500, and afford plaintiff a final opportunity to supplement
her bill of particulars and to provide complete HIPAA authorizations.”
Crooke v. Bonofacio, 147 A D 3d 510 (1st Dept. 2017) – “The court properly exercised
its discretion under CPLR 3126 by striking St. Luke’s affirmative defense of justification
because plaintiff demonstrated that the failure to produce defendant Michael Bonofacio,
who was accused by plaintiff of misconduct, for his deposition, was willful, deliberate,
contumacious, and done in bad faith [citation omitted]. Moreover, St. Luke’s failed to
provide a reasonable excuse for its failure to comply [citation omitted]. The record
shows that St. Luke’s repeatedly failed to respond to plaintiff’s inquiries about producing
Bonofacio for deposition, and neglected to disclose – until well after the instant motion
was filed – that it had terminated his employment causing him to refuse to appear.
Furthermore, it is noted that the court made efforts to limit its order by striking only the
affirmative defense that would require Bonofacio’s testimony. It did not strike the entire
answer, thereby providing St. Luke’s with other avenues of defending against plaintiff’s
claims. We note that courts are vested with broad discretion in fashioning remedies that
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are precisely tailored to the discovery abuse at issue [citation omitted], and find that the
court herein crafted an appropriate remedy.”
Arbor Realty Funding, LLC v. Herrick, Feinstein LLP, 145 A D 3d 624 (1st Dept. 2016)
– The Appellate Division modifies Supreme Court’s dismissal of the complaint.
“Although plaintiffs produced responsive material, it was imbedded in large amounts of
otherwise irrelevant documents. Over 30,000 documents were produced. The trial court
then gave plaintiffs ample time and opportunity to further produce the documents in an
electronically searchable format and to organize its responses in the form that defendant
requested them. Plaintiffs failed to comply with the court’s directions. Under these
circumstances, the trial court properly concluded that plaintiffs’ failure to comply with its
orders was willful [citation omitted]. Given, however, plaintiffs’ partial compliance and
the strong public policy in favor of disposing of cases on the merits, we find that
dismissal of the action is too severe a sanction at this time and that a less severe sanction,
of a monetary fine in the amount of $10,000 plus costs is appropriate, along with a final
30-day opportunity for plaintiffs to provide the discovery in the format ordered by the
trial court.”
Lucas v. Stam, 147 A D 3d 921 (2d Dept. 2017) – A divided Appellate Division reverses
Supreme Court’s order imposing a monetary sanction for defendants’ discovery failures,
and, instead, directs that their answers be stricken. Defendants’ counsel attempted to
excuse the misstatement that a surgical broker had left defendant hospital’s employ as
“an honest mistake.” Counsel also attempted to excuse its failure to provide the identity
of another surgical broker as “an oversight,” even though counsel had interviewed that
broker. Counsel also failed to comply with Court orders to provide certain forms, and to
submit an affidavit of compliance. “The Supreme Court properly inferred the willful and
contumacious character of the defendants’ conduct from their repeated failures over an
extended period of time, without an adequate excuse, to comply with the plaintiff’s
discovery demands and the court’s discovery orders.” And, “‘parties, where necessary,
will be held responsible for the failure of their lawyers to meet court-ordered deadlines
and provide meaningful responses to discovery demands.’” Ultimately, “in determining
the appropriate sanction to impose, we are guided by CPLR 3126, which permits courts
to, among other things, ‘order that the issues to which the information is relevant shall be
deemed resolved for purposes of the action in accordance with the claims of the party
obtaining the order’ (CPLR 3126[1]), issue a preclusion order (see, CPLR 3126[2]), or
strike a pleading (see, CPLR 3126[3]). The striking of a pleading is a drastic remedy that
may only be warranted upon a clear showing that the failure to comply with discovery
demands or court-ordered discovery was willful and contumacious [citations omitted].
Although not expressly set forth as a sanction under CPLR 3126, we have held that the
imposition of a monetary sanction under CPLR 3126 may be appropriate to compensate
counsel or a party for the time expended and costs incurred in connection with an
offending party’s failure to fully and timely comply with court-ordered disclosure
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[citations omitted]. Here, contrary to the Supreme Court’s determination, we find that the
imposition of monetary sanctions was insufficient to punish the defendants and their
counsel for their willful and contumacious conduct in failing to timely and fully respond
to discovery demands and court orders. Accordingly, the court should have granted that
branch of the plaintiff’s motion which was to strike the defendants’ answers.” The
dissenter argued that Supreme Court did not abuse its discretion in limiting the
punishment to a monetary sanction. “‘Dismissal is a harsh penalty imposed on a client
for his or her lawyer’s failures’ [citations omitted], and in certain cases, it may be
appropriate to impose a penalty upon the attorney for his or her conduct while saving the
action for the client.”
Schiller v. Sunharbor Acquisition I, LLC, 152 A D 3d 612 (2d Dept. 2017) – “Almost
four years after she commenced the action, the plaintiff moved, inter alia, pursuant to
CPLR 3126 to strike the defendants’ answer on the ground that the defendants were
willful and contumacious in their failure to respond to the plaintiff’s repeated demands
for the decedent’s entire medical record and the Supreme Court’s orders related to the
same.” The Appellate Division affirms the granting of that motion. “The striking of a
pleading may be appropriate where there is a clear showing that the failure to comply
with discovery demands or court-ordered discovery is willful and contumacious [citations
omitted]. The willful and contumacious character of a party’s conduct can be inferred
from the party’s repeated failure to comply with discovery demands or orders without a
reasonable excuse.” Moreover, here, “in an April 2013 response by the defendants to the
plaintiff’s demand for supplemental discovery, the defendants represented they were ‘not
in possession of any electronically stored medical records,’ yet the affidavit submitted by
the defendants in opposition to the motion to strike contended that the repeated failure to
provide the complete medical record to the plaintiff arose from a malfunction with the
computer system on which such medical records were stored. The defendants failed to
provide an explanation for their initial false statement in the discovery response to the
plaintiff.”
McHugh v. City of New York, 150 A D 3d 561 (1st Dept. 2017) – “The City’s and the
MTA’s unexplained noncompliance with a series of court-ordered disclosure mandates
over a period of nearly three years constituted willful and contumacious behavior,
warranting the striking of their answer [citations omitted]. Defendants’ belated
production of ‘a witness’ for deposition on behalf of all three defendants failed to satisfy
the requirements of the July 2015 order, since the witness produced was unprepared and
had knowledge only on behalf of defendant Parsons. While the court thus providently
exercised its discretion in declining to sanction Parsons, the order on appeal directing the
City and the MTA yet again to produce a witness with knowledge was insufficient.
Given the City’s and the MTA’s prolonged and willful failure to provide a ‘timely
response and one that evinces a good-faith effort to address the requests meaningfully’
[citation omitted], the striking of their answer is appropriate.”
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Muboyayi v. Quintero, 136 A D 3d 497 (1st Dept. 2016) – “After plaintiff failed to
comply with a court order mandating that his deposition be completed on March 20,
2014, and failed to provide a reasonable excuse for this failure, the court providently
exercised its discretion in issuing the conditional order of preclusion [citations omitted].
Although defendant’s counsel promptly requested that plaintiff’s counsel identify the
dates on which plaintiff would be available to complete his deposition on or before the
August 29 deadline date set by the conditional order, plaintiff’s counsel failed to respond.
Instead, it was not until August 28 that plaintiff’s counsel called defendant’s counsel and
advised him that he had unilaterally scheduled plaintiff’s deposition for the deadline date
of August 29. Defense counsel replied that he could not proceed with the deposition on
such short notice and asked for a date on or before September 12. Plaintiff’s counsel
refused and did not respond to defense counsel’s subsequent request to reschedule. On
this record, the motion court correctly determined that plaintiff’s counsel’s conduct was
egregious and that plaintiff failed to comply in good faith with the conditional order.
Accordingly, the motion court ‘applied the correct legal standards, properly considered
all the facts and circumstances of the case, and did not abuse its discretion is dismissing
plaintiff’s action pursuant to CPLR 3126(3).’”
Vaca v. Village View Housing Corporation, 145 A D 3d 504 (1st Dept. 2016) – The
Appellate Division modifies Supreme Court’s order “which granted plaintiff’s motion to
strike defendants’ answers, and directed that the answers not be reinstated unless
defendants respond to plaintiff’s discovery demands.” The Court found that “the motion
court providently exercised its discretion in issuing a conditional order striking the
answer after defendants failed to comply with numerous orders directing them to provide
discovery or an affidavit stating that a search had been conducted and the documents did
not exist [citation omitted]. An order striking the answer without giving defendants
another opportunity to ‘cure’ their discovery deficiencies would have been inappropriate
in light of plaintiff’s own discovery deficiencies and failure to provide a proper good
faith affirmation in compliance with 22 NYCRR 202.7 [citations omitted]. However, the
conditional order should provide that the motion is granted ‘unless within a specified
time the resisting party submits to the disclosure,’ and we modify solely to that effect.”
Dedushaj v. 3175-77 Villa Avenue Housing Development Fund Corporation, 135 A D 3d
421 (1st Dept. 2016) – “The record shows that defendants failed to comply with a
conditional preclusion order directing them to produce an appropriate search affidavit.
The affidavit defendants provided did not explain what efforts, if any, were made to
preserve the requested documents, nor did it indicate whether the documents were
routinely destroyed [citation omitted]. However, the sanction of precluding defendants
from denying notice of the allegedly dangerous condition on the steps in the cooperative
building owned by the corporate defendant was not proportionate to defendants’
misconduct [citation omitted]. The requested documents were not relevant to notice.
Moreover, plaintiff has not been deprived of his ability to prove his case [citation
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omitted]. The individual defendant (the president of the cooperative’s board) was
produced for deposition and plaintiff was able to obtain information from her concerning
notice and maintenance procedures. Under the circumstances, a monetary sanction is
appropriate.”
Piemonte v. JSF Realty, LLC, 140 A D 3d 1145 (2d Dept. 2016) – “When a plaintiff fails
to timely comply with a conditional order of preclusion, the conditional order becomes
absolute [citations omitted]. ‘To obtain relief from the dictates of a conditional order that
will preclude a party from submitting evidence in support of a claim or defense, the
defaulting party must demonstrate (1) a reasonable excuse for the failure to produce the
requested items and (2) the existence of a meritorious claim or defense.” When, after a
conditional order becomes absolute, defendant moves for summary judgment based upon
the preclusion, counsel need not “file a good faith affirmation pursuant to 22 NYCRR
202.7(a)(2). The plain language of 22 NYCRR 202.7(a)(2) indicates that the affirmation
requirement applies only ‘with respect to a motion relating to disclosure or to a bill of
particulars’ [citation omitted]. A motion for summary judgment is not a discovery-
related motion requiring an affirmation of good faith.”
STIPULATIONS AND SETTLEMENT
Catsiapis v. Giano, N.Y.L.J., 1202758573856 (Sup.Ct. Queens Co. 2016)(Butler, J.) –
After this action was settled in open court, the parties disputed whether its provision to
keep “this matter” confidential referred to the entire lawsuit, or merely the terms of the
settlement. “There is ambiguity as to whether the parties intended the confidentiality of
‘this matter’ to mean that only the terms of the stipulation of settlement are confidential,
or the terms of the stipulation of settlement and all allegations forming the basis of the
claim are confidential. This Court cannot reform the stipulation of settlement to conform
to what it thinks is proper. Accordingly, the branches of the motion to reform the
stipulation of settlement and compel payment and the branch of the cross motion to
compel execution of the agreements are denied. The branch of the motion to vacate the
stipulation of settlement and schedule a trial date is granted.”
GLM Medical, P.C. v. Geico General Insurance Company, 50 Misc 3d 104 (App.Term
2d 2015) – “A notation on the New York State Unified Court System eCourts public
website indicates that the matter was ‘settled’ on March 9, 2009. Approximately 3 1/2
years later, plaintiff, asserting that the case was mistakenly marked ‘settled,’ moved to
restore the action to the trial calendar.” Although “the eCourts website, of which we may
take judicial notice [citations omitted], states that this matter was settled on March 9,
2009, such a notation on the website ‘does not constitute a sufficient memorialization of
the terms of the alleged settlement so as to satisfy the open-court requirement of CPLR
2104’ [citations omitted]. Furthermore, as there is no indication that the purported
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settlement was reduced to a writing and signed by the parties, or made in open court, an
enforceable settlement agreement cannot be determined from the record before us.”
Lopez v. Muttana, 144 A D 3d 871 (2d Dept. 2016) – “Stipulations of settlement,
particularly those entered into in open court pursuant to CPLR 2104, are favored by the
courts and will not be cast aside lightly [citations omitted]. In order to be relieved of the
consequences of a stipulation, a party must establish grounds to invalidate a contract,
such as duress, fraud, mistake, or accident [citations omitted]. ‘Repudiation of an
agreement on the ground that it was procured under duress requires the showing of a
wrongful threat and the preclusion of the exercise of free will’ [citations omitted].
Moreover, an agreement which is the product of duress must be promptly repudiated
[citations omitted]. Here, the plaintiff failed to allege any unlawful or wrongful threat by
his former counsel or by the trial court that could serve as the basis for a claim of duress
[citations omitted]. In any event, even if the plaintiff had adequately alleged duress, his
substantial and inexcusable delay [of more than 18 months] in seeking to repudiate the
stipulation of settlement warranted denial of his motion.”
Azbel v. County of Nassau, 149 A D 3d 1020 (2d Dept. 2017) – The parties entered into
an unconditional settlement of this personal injury action. Thereafter, the County
Legislature “authorized the County Attorney to settle the action ‘provided that a bond
ordinance to finance such settlement is adopted by this Legislature and any borrowing
pursuant to such bond ordinance is approved by the Nassau County Interim Finance
Authority, if such approval is required.’” The bond ordinance was not approved, and, by
the time defendant paid the amount of the settlement, from a different source, the 90 days
provided for such payment under CPLR 5003-a(b) had expired. Plaintiff accordingly
sought “interest, costs and disbursements” pursuant to CPLR 5003-a(e). The Court
denies the application. While the language of the settlement agreement contained no
condition to payment by the County, “the Nassau County Administrative Code provides
that the County Attorney shall not be empowered to settle any rights, claims, demands or
causes of action against the County unless authorized by the County Legislature,” and “‘a
party that contracts with the State or one of its political subdivisions is chargeable with
knowledge of the statutes which regulate its contracting powers and is bound by them.’”
PRE-TRIAL PROCEEDINGS
Greco v. Wellington Leasing Limited Partnership, 144 A D 3d 981 (2d Dept. 2016) –
“The plaintiff’s certificate of readiness incorrectly stated that medical reports had been
exchanged, that there were no outstanding requests for discovery, and that discovery
known to be necessary had been completed, with the sole exception of ‘depositions of
certain party witnesses’ and ‘expert exchanges and discovery.’ Because this was a
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misstatement of a material fact, the filing of the note of issue and certificate of readiness
was a nullity, and the note and certificate should have been vacated.”
Florexile-Victor v. Douglas, 135 A D 3d 903 (2d Dept. 2016) – The plaintiff, acting pro
se, commenced an action for, inter alia, declaratory relief, and damages for assault. The
Court directed that, with respect to certain claims, plaintiff’s remedy was to commence
an Article 78 proceeding, and to file a petition, and a new summons and complaint.
Plaintiff failed to do so, and, eventually, the case was marked “disposed.” More than a
year later, plaintiff seeks to restore the case to the calendar. “Contrary to the [defendant]
hospital’s contention, CPLR 3404 does not apply to this pre-note of issue case [citations
omitted]. Furthermore, there was no 90-day notice pursuant to CPLR 3216, nor was
there any order directing the dismissal of the complaint pursuant to 22 NYCRR 202.27
[citations omitted]. Accordingly, the plaintiff’s motion to restore the case to the calendar
should have been granted.”
Ortiz v. Wakefern Food Corp., 145 A D 3d 1024 (2d Dept. 2016) – After discovery was
conducted, and a note of issue served and filed, “the parties agreed to strike the note of
issue and remove the action from the trial calendar. The plaintiff subsequently moved,
inter alia, to restore the action to active status, and the Supreme Court granted the
motion. Contrary to the appellants’ contentions, the plaintiff was not required to
establish his entitlement to restoration of the action under the standard applicable to
automatic dismissals pursuant to CPLR 3404. Where, as here, the note of issue has been
vacated, the case reverts to its pre-note of issue status, and CPLR 3404 is not applicable
[citations omitted]. In the absence of a 90-day demand pursuant to CPLR 3216, the
plaintiff was entitled to have the action restored to active status.”
Salatino v. Pompa, 134 A D 3d 692 (2d Dept. 2015) – “Under CPLR 3404, a case not
restored within a year after being marked off the trial calendar is deemed abandoned and
automatically dismissed for neglect to prosecute. After the plaintiff undertook little or no
action to prosecute the case during the ensuing two years after it was marked off the
calendar, the defendant moved, inter alia, to dismiss the complaint as abandoned. To
successfully oppose the defendant’s motion, the plaintiff was required to demonstrate a
potentially meritorious cause of action, a reasonable excuse for the delay in prosecuting
the action, a lack of intent to abandon the action, and a lack of prejudice to the
defendant.” Here, plaintiff failed to demonstrate any of these.
Hayes v. Village of Middleburgh, 140 A D 3d 1359 (3d Dept. 2016) – Pursuant to 22
NYCRR 202.27, “‘At any scheduled call of a calendar or at any conference if the
defendant appears but the plaintiff does not, the judge may dismiss the action.’” And,
“cases evaluating the propriety of a dismissal under 22 NYCRR 202.27 routinely
reference CPLR 5015(a)(1) [citations omitted], upon which the parties here also rely.
CPLR 5015 provides, in relevant part, that a court may vacate a judgment or order upon
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the ground of ‘excusable default, if such motion is made within one year after service of a
copy of the judgment or order with written notice of its entry upon the moving party’
[citations omitted] – provided the defaulting party demonstrates both a reasonable excuse
for the default and the existence of a potentially meritorious cause of action.” Here,
plaintiff did not move to vacate the 202.27 dismissal order until more than two years after
notice of its entry. “While it is true, as plaintiff points out, that Supreme Court retains
inherent authority to vacate its own judgment or order ‘in the interest of justice, even
where the statutory one-year period under CPLR 5015(a)(1) has expired’ [citations
omitted], plaintiff’s motion papers fail to articulate any reasonable excuse for his more
than two-year delay in bringing the underlying motion to vacate.”
Pak v. Lancaster, N.Y.L.J., 1202787244698 (Sup.Ct. Queens Co. 2017)(Modica, J.) –
Plaintiff seeks a trial preference pursuant to CPLR 3403(a)(4) on the ground that plaintiff
is 70 years of age or older. But plaintiff failed to provide any documentary proof of age,
other than his own affidavit. Accordingly, even though the motion is unopposed, it is
denied with leave to renew. For, “in the interest of protecting the rolls of litigants waiting
their turn patiently for their long-awaited ‘day in court,’ this Court, therefore, will not
take the word of the plaintiff as to his age.”
TRIAL AND JUDGMENT
JURY ISSUES
Moyal v. Sleppin, 139 A D 3d 605 (1st Dept. 2016) – “Supreme Court erred in finding
that plaintiff in this shareholders’ derivative action was entitled to a jury trial, since the
claims brought in his capacity as a shareholder were ‘derivative and therefore equitable in
nature’ [citations omitted]. Contrary to plaintiff’s contention, the motion was not
untimely, since a motion to strike a demand for a jury trial may be made at any time up to
the opening of trial [citation omitted], and we find no prejudice in defendants’ delay of a
few months, following the restoration of the case to the calendar, in making their
motion.”
Security Pacific National Bank v. Evans, 148 A D 3d 465 (1st Dept. 2017) – “The motion
court properly determined that defendant has no right to a jury trial on the triable issues
identified by this Court of a prior appeal [citation omitted]. Since both parties sought
equitable relief – that is, specific performance of their settlement agreement or injunctive
relief – defendant is not entitled to a jury trial [citations omitted]. Even if defendant now
asserts a claim for money damages, and even if she were to withdraw her equitable
claims, that would not revive or create a right to a trial by jury that was waived by
asserting equitable claims with respect to the same transaction.”
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Cicco v. Durolek, 147 A D 3d 1486 (4th Dept. 2017) – “Plaintiff appeals from an order
granting defendants’ motion for leave to serve and file a late demand for a jury trial
pursuant to CPLR 4102(e). Contrary to plaintiff’s contention, Supreme Court did not err
in granting the motion. The decision ‘whether to relieve a party from failing to timely
comply with CPLR 4102(e) lies within the sound discretion of the trial court’ [citation
omitted]. ‘The only limitation on the court’s discretion appears to be that any decision to
forgive such a waiver should not unduly prejudice the other party or parties.’” Here, no
such prejudice was shown.
People v. Bridgeforth, 28 N Y 3d 567 (2016) – “This appeal requires us to consider
whether skin color [“as a separate and distinct classification from ‘race’”] of a
prospective juror is a cognizable classification upon which a challenge to a prosecutor’s
use of peremptory strikes under Batson v. Kentucky (476 U S 79 [1986]) may be based.
We recognize the existence of discrimination on the basis of one’s skin color, and
acknowledge that under this State’s Constitution and Civil Rights Law, color is a
classification upon which a Batson challenge may be lodged.”
VERDICTS
Oh v. Koon, 140 A D 3d 861 (2d Dept. 2016) – “Absent exceptional circumstances, a
juror’s affidavit may not be used to attack a jury verdict [citations omitted]. The use of
post-discharge juror affidavits to attack the verdict is ‘patently improper’ where the
record is devoid of any evidence of external influence, juror confusion, or ministerial
error in reporting the verdict [citations omitted]. Here, the plaintiffs acknowledged that
the jury was properly charged and there was absolutely no evidence on the record of any
juror confusion regarding any issue related to the Supreme Court’s instructions. It is
undisputed that the jurors never requested a read-back of any portion of the court’s
instructions. Under these circumstances, the use of juror affidavits in an attempt to attack
the verdict is patently improper.”
Russo v. Levat, 143 A D 3d 966 (2d Dept. 2016) – “A motion pursuant to CPLR 4404(a)
to set aside a verdict and for a new trial in the interest of justice encompasses errors in the
trial court’s rulings on the admissibility of evidence, mistakes in the charge, misconduct,
newly discovered evidence, and surprise [citations omitted]. The trial court must decide
whether substantial justice has been done, and must look to common sense, experience,
and sense of fairness in arriving at a decision [citation omitted]. Here, the Supreme Court
erred in granting that branch of the plaintiff’s motion which was pursuant to CPLR
4404(a) to set aside the verdict in the interest of justice and for a new trial as to the causes
of action against Morimoto. The court’s original denial of the plaintiff’s request for a
missing witness charge as untimely was not error since it was made after the close of all
the evidence.”
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Killon v. Parrotta, 28 N Y 3d 101 (2016) – “The Appellate Division may not disregard a
jury verdict as against the weight of the evidence unless ‘the evidence so preponderated
in favor of the moving party that it could not have been reached on any fair interpretation
of the evidence’ [citation omitted]. Where the Appellate Division determines that a
verdict is against the weight of the evidence, the remedy is to remit for a new trial. By
contrast, where the Appellate Division intends to hold that a jury verdict is insufficient as
a matter of law, it must first determine that the verdict is ‘utterly irrational’ [citation
omitted]. To conclude that a verdict is utterly irrational, requiring vacatur of the verdict,
the Court must determine that ‘there is simply no valid line of reasoning and permissible
inferences which could possibly lead a rational person to the conclusion reached by the
jury on the basis of the evidence presented at trial’ [citation omitted]. ‘When it can be
said that “it would not be utterly irrational for a jury to reach the result it determined, the
court may not conclude that the verdict is as a matter of law not supported by the
evidence.”’” Here, the Appellate Division set aside a verdict for defendant and
concluded that “as a matter of law” defendant “was the initial aggressor in the physical
altercation between the parties, rendering a justification defense unavailable to defendant
during retrial of the case. We hold that the Appellate Division did not apply the ‘utterly
irrational’ test required to make that determination as a matter of law. Applying that test
to the trial evidence and in consideration of the jury instruction given, we hold that it was
not utterly irrational for the jury to find that defendant was not the initial aggressor and
that he acted in self-defense. We therefore reverse and remit to Supreme Court for
retrial.”
INTEREST
Mahoney v. Brockbank, 142 A D 3d 200 (2d Dept. 2016) – CPLR 5002 provides that, in
personal injury actions, “interest shall be recovered upon the total sum awarded,
including interest to verdict, report or decision, in any action, from the date the verdict
was rendered or the report or decision was made to the date of entry of final judgment”
[emphasis added]. Thus, when “determination of liability and damages are bifurcated,
the general rule is that prejudgment interest under CPLR 5002 runs from the date of the
‘verdict, report or decision’ as to liability, rather than from the date of the ‘verdict, report
or decision’ as to damages [citations omitted]. The rationale for this rule is that the
plaintiff’s right to recover damages became fixed in law on the date that liability was
determined. From that date forward, the defendant is considered to be in possession of
the plaintiff’s property, namely, the amount that the plaintiff is entitled to recover.” Here,
liability was fixed not by trial, but by a stipulation that had other provisions as well. And,
rules the Court, “stipulations are different.” They “are not adjudications made by a third
party, but voluntary agreements, or contracts, by which the opposing parties themselves
chart their own course in a way that makes sense for them.” And, “clearly, the legislature
did not expressly include stipulations in CPLR 5002. Had the legislature wished to
include stipulations, it easily could have done so, as it has in other statutes.”
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Accordingly, interest here runs from the damages verdict. “The plaintiff’s argument is
well-founded, but ultimately unavailing because we must apply CPLR 5002, not amend
it. As the Court of Appeals said with regard to prejudgment interest in a different context,
we ‘may not rewrite the statute to achieve more “fairness” than the Legislature chose to
enact.’”
New York State Thruway Authority v. Allied Waste Services of North America, LLC,
143 A D 3d 1145 (3d Dept. 2016) – “Prejudgment ‘interest shall be recovered upon a
sum awarded’ by virtue of, among other things, an act that interferes with ‘title to, or
possession or enjoyment of, property’ [citations omitted]. Such interest is calculated
‘from the earliest ascertainable date the cause of action existed, except that interest upon
damages incurred thereafter shall be computed from the date incurred [citations omitted].
The earliest ascertainable date a cause of action for damage to property exists is the time
at which the injury occurs [citations omitted]. The earliest date plaintiff’s cause of action
existed was March 23, 2011, as that was the date on which plaintiff sustained damages to
its bridge as a result of defendants’ negligence, despite the fact that plaintiff waited to
expend funds to make permanent repairs until after defendant paid the revised cost
estimate [citations omitted]. Inasmuch as all of the damage to the bridge was sustained
on the day of the accident and no further damages were incurred thereafter, the exception
to CPLR 5001(b) does not apply.”
Castle Restoration & Construction, Inc. v. Castle Restoration, LLC, 149 A D 3d 692 (2d
Dept. 2017) – “‘When a contract provides for interest to be paid at a specified rate until
the principal is paid, the contract rate of interest, rather than the legal rate set forth in
CPLR 5004, governs until payment of the principal or until the contract is merged in a
judgment’ [citations omitted]. Here, because the promissory note provides for interest at
a rate of 3% annually, the Supreme Court properly calculated prejudgment interest at that
rate.”
POWERS OF REFEREES
Bauer v. Special Brands NY, Inc., 138 A D 3d 1048 (2d Dept. 2016) – “Inasmuch as the
order of reference, which was made on consent, directed the referee to hear and
determine [citation omitted], rather than to hear and report on [citation omitted], the
division of legal fees, the referee possessed ‘all the powers of a court in performing a like
function’ [citation omitted], and the referee’s determination of that issue stands as the
decision of a court [citations omitted]. Consequently, the Supreme Court lacked the
authority to review the referee’s substantive determination, and any attempt to reargue
the substantive issue decided by the referee should have been directed to the referee.”
Daly v. Courten, N.Y.L.J., 1202767549454 (Sup.Ct. Kings Co. 2016)(Rivera, J.) – The
parties here stipulated to referral to a referee “to hear and determine.” Thereafter, the
parties reached a settlement agreement, providing, as pertinent, that the referee “retain
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jurisdiction to resolve any dispute in the enforcement of the settlement.” Since “a referee
appointed to hear and determine an issue has all the powers of the court in performing a
like function, including entertaining post-trial motions pursuant to CPLR article 44,” this
motion, relating to the enforcement of the settlement, must be referred to the referee.
JUDGMENTS
Matter of Pulte Homes of New York, LLC v. Planning Board of Town of Carmel,
136 A D 3d 643 (2d Dept. 2016) – “Trial courts and appellate courts have discretion
pursuant to CPLR 5019(a) to correct mistakes, defects, or irregularities so as to modify an
order or judgment [citation omitted]. ‘Where a movant seeks to change an order or
judgment in a substantive manner, rather than correcting a mere clerical error, CPLR
5019(a) is not the proper procedural mechanism to be employed, and relief should be
sought through a direct appeal or by motion to vacate pursuant to CPLR 5015(a).’”
Matter of Franco Belli Plumbing and Heating and Sons, Inc. v. New York City School
Construction Authority, 142 A D 3d 1011 (2d Dept. 2016) – “Supreme Court properly
denied that branch of the petitioner’s motion which was to vacate the judgment [entered
December 21, 2012] pursuant to CPLR 5015(a)(2). In support of its motion, the
petitioner submitted certain interrogatory responses dated May 14, 2013, and the
transcript of a deposition conducted on July 16, 2013. Those submissions did not
constitute newly discovered evidence within the meaning of CPLR 5015(a)(2) since they
were not in existence at the time the judgment was issued.”
ARTICLE 78 PROCEEDINGS
GENERAL CONSIDERATIONS
Matter of Adoui v. Commissioner of Permit and Inspection Services, 147 A D 3d 1404
(4th Dept. 2017) – “‘Should the body or officer fail either to file and serve an answer or
move to dismiss [an Article 78 proceeding], the court may either issue a judgment in
favor of the petitioner or order that an answer be submitted’ [citation omitted]. In light of
this State’s policy against annulling an administrative body’s determination on the basis
of a failure to answer the petition [citation omitted], we vacate the order insofar as it
transferred the proceeding to this Court and remit the matter to Supreme Court with
instructions to direct respondents to file an answer with the complete administrative
record.”
Matter of Tonawanda Seneca Nation v. Noonan, 27 N Y 3d 713 (2016) – A prior year’s
“Update” reported on the Appellate Division decision in this proceeding [122 A D 3d
1334 (4th Dept. 2014)]. The Appellate Division held that, “contrary to petitioner’s
contention, respondent is the duly elected Surrogate for Genesee County, a position not
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specifically delineated in CPLR 506(b)(1) and, therefore, a proceeding against him
[pursuant to CPLR Article 78] must be commenced in Supreme Court. Even if we
assume, arguendo, that respondent was elected as a County Court Judge and was
thereafter assigned to ‘be and serve as’ a Surrogate [citation omitted], petitioner is
seeking to prohibit respondent from acting in the role of Surrogate. We thus conclude
that jurisdiction remains in Supreme Court.” The Court of Appeals has affirmed. “The
determination of venue for an article 78 proceeding against a multi-bench judge turns on
the capacity in which the judge was serving when taking the challenged action.”
Matter of Clark v. Newbauer, 148 A D 3d 260 (1st Dept. 2017) – Respondent Justice
ruled, in a criminal proceeding, that the Grand Jury’s indictment of the criminal
defendant of robbery in the third degree, and failure to indict on a charge of robbery in
the first degree, acted as collateral estoppel to preclude petitioner District Attorney from
adducing evidence that the defendant was armed. Petitioner sought a writ of prohibition.
The Court grants the writ. “A writ of prohibition is an extraordinary remedy, only
available to prevent a court from either acting without jurisdiction or in excess of its
authorized powers in a proceeding over which it otherwise has jurisdiction [citations
omitted]. Prohibition is not available to review mere errors of law, even when the errors
are truly egregious [citation omitted]. ‘Although the distinction between legal errors and
actions made in excess of authority is not always easily made, abuses of power may be
identified by their impact on the entire proceeding as distinguished from an error in a
proceeding itself’ [citation omitted]. The trial court’s ruling in this case was an error that
affected the entire proceeding and thus constituted an excess of the court’s authority. The
rule prevents the People from proving the element of force required under third degree
robbery because the gun was the only evidence of force that was presented to the grand
jury.” Thus, “a writ of prohibition will lie where a trial court’s erroneous ruling affects
the proceeding in a conclusive manner, by terminating the case [citation omitted]. At bar,
although the ruling did not actually terminate the case, it effectively terminated the ability
of the People to prosecute the highest count in the indictment [citations omitted]. We
therefore find that the court’s ruling is reviewable by way of a writ of prohibition.” Of
course, “even where, as here, the remedy of prohibition is available, the decision to
prohibit is still a matter within this Court’s discretion [citation omitted]. Extraordinary
remedies, including prohibition will not lie if there is an available remedy at law [citation
omitted]. If, however, the ruling is not reviewable, that is an important consideration but
alone may not necessarily provide a basis for reviewing errors by way of a collateral
proceeding [citation omitted]. The preclusion order challenged in this petition is not
appealable, and absent the granting of this writ, the prosecution has no remedy or way to
obtain appellate review.”
Matter of Raiser & Kenniff, P.C. v. Nassau County Sheriff’s Department, 149 A D 3d
1084 (2d Dept. 2017) – Petitioner sought “to prohibit the Nassau County District
Attorney’s Office from ordering recordings of conversations of inmates housed at the
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Nassau County Correctional Facility without a subpoena issued upon notice to defense
counsel,” and “mandamus to compel the Nassau County Sheriff’s Department” to
“deliver such recordings only after receiving a properly issued subpoena.” The Appellate
Division affirms dismissal of the petition. As to the writ of prohibition, “‘the remedy is
confined to judicial or quasi-judicial action rather than to legislative, executive,
administrative or ministerial acts’ [citations omitted]. Here, the petitioner failed to
demonstrate that the conduct sought to be prohibited pertained solely to quasi-judicial
action, as opposed to an investigative function performed in an executive capacity.” As
to mandamus to compel, that “extraordinary remedy” will lie “only to compel the
performance of a ministerial act, and only where there exists a clear legal right to the
relief sought.” That was not demonstrated here.
Matter of Masullo v. City of Mount Vernon, 141 A D 3d 95 (2d Dept. 2016) – “Since the
petition raised a substantial evidence question, and the remaining points raised by the
petitioner that were determined by the Supreme Court were not objections that could
have terminated the proceeding within the meaning of CPLR 7804(g), the Supreme Court
should have transferred the entire proceeding to this Court.” Accordingly, the Appellate
Division vacated the portion of Supreme Court’s order that decided those other issues,
and will “consider de novo all of the issues raised in the petition.”
Parker v. Town of Alexandria, 138 A D 3d 1467 (4th Dept. 2016) – “‘It is “well
established that a CPLR article 78 proceeding is not the proper vehicle to test the validity
of a legislative enactment.’” Accordingly, Supreme court erred in applying the
procedural rules of Article 78 to this “hybrid” action. “Inasmuch as the cause of action
and counterclaim seek declaratory relief, the court ‘erred in issuing a judgment declaring
that those legislative enactments are invalid by using a summary procedure that pertains
only to CPLR article 78 proceedings.’”
STATUTE OF LIMITATIONS
Matter of Brennan Center for Justice at NYU School of Law v. New York State Board of
Elections, 52 Misc 3d 246 (Sup.Ct. Albany Co. 2016)(Fisher, J.) – “Where the [Article
78] petition challenges an agency’s quasi-legislative function, such as the issuance of
regulations or decisions/opinions, New York courts have consistently held the accrual
date to be the date of such promulgation or issuance rather than the date the individual
petitioner was aggrieved by such regulation or opinion’s application.”
Matter of Knavel v. West Seneca Central School District, 149 A D 3d 1614 (4th Dept.
2017) – A splintered Appellate Division concludes that petitioners’ Article 78 proceeding
is not time-barred. Petitioners are retired employees of respondent School District. The
challenged act was the determination by respondent, contained in a letter mailed on June
5, 2014, addressed to “Retirees Under age 65 carrying Blue Cross Blue Shield Health
Insurance,” and stating that “effective July 1, 2014, West Seneca Central School District
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will no longer offer Under Age 65 retirees the option of carrying their health insurance
through the active employee Blue Cross Blue Shield plan.” The Court was unanimous
that “the ‘determination to be reviewed’ in this proceeding is the decision embodied in
the undated letter sent on June 5, 2014.” What divided the Court was whether the date of
mailing, or the date of receipt, began the running of the statute of limitations. The two-
Justice plurality opinion rejected respondent’s argument that “the undated letter is
properly characterized as a ‘quasi-legislative’ decision, that actual notice is not required,
and that constructive notice by mailing was sufficient to commence the four-month
limitations period.” For, “a quasi-legislative-type administrative determination is one
having an impact far beyond the immediate parties at the administrative stage [citations
omitted]. Thus, where a quasi-legislative determination is challenged, ‘actual notice of
the challenged determination is not required in order to start the statute of limitations
clock’ [citations omitted]. The policy underlying the rule is that actual notice to the
general public is not practicable [citation omitted]. Instead, the statute of limitations
begins to run once the administrative agency’s quasi-legislative determination of the
issue becomes ‘readily available’ to the complaining party [citation omitted]. On the
other hand, where the public at large is not impacted by a determination, actual notice
commonly in the form of receipt of a letter or other writing containing the final and
binding determination, is required to commence the statute of limitations.” Here, “the
determination clearly had no impact upon the public at large.” Therefore, “we thus
conclude that respondents failed to meet their burden of establishing that the challenged
determination was ‘quasi-legislative’ and, therefore, that the ‘readily ascertainable’
constructive notice test should be applied herein.” One Justice concurred in result only.
She agreed with the dissenters that respondent’s determination “was a quasi-legislative
determination.” For, “the nature of the determination, i.e., the decision of a school
district to discontinue offering certain of its retirees enrollment access to a particular
health insurance plan, has none of the hallmarks of quasi-judicial decision-making.”
However, the concurring Justice concluded that merely placing a letter in a mailbox did
not render “the determination contained in that letter readily ascertainable to the affected
retirees on that same date. The record does not establish that respondents undertook any
other notification procedures to disseminate the subject information that would have
adequately provided petitioners with constructive notice of the District’s determination
on that date.” The two-Justice dissent argued that, “inasmuch as the nature of the action
taken by the District was quasi-legislative, the undisputed date of the determination’s
mailing is, as a matter of public policy, the accrual date.”
Matter of Granto v. City of Niagara Falls, 148 A D 3d 1694 (4th Dept. 2017) – The
majority of this divided Court holds that “it is well settled that where, as here, the
proceeding is in the nature of mandamus to compel, it ‘must be commenced within four
months after refusal by respondent, upon demand of petitioner, to perform its duty’
[citations omitted]. ‘A petitioner, however, may not delay in making a demand in order
to indefinitely postpone the time within which to institute the proceeding. The petitioner
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must make his or her demand within a reasonable time after the right to make it occurs, or
after the petitioner knows or should know of the facts which give him or her a clear right
to relief, or else, the petitioner’s claim can be barred by the doctrine of laches’ [citation
omitted]. Inasmuch as ‘the problem is one of the statute of limitations, it is immaterial
whether or not the delay causes any prejudice to the respondent’ [citations omitted].
Thus, to the extent that we held in Matter of Degnan v. Rahn (2 A D 3d 1301, 1302
[2003]) that a respondent is required to make a showing of prejudice to establish that a
proceeding in the nature of mandamus to compel is barred by the doctrine of laches, that
case is no longer to be followed. ‘The four-month limitations period of CPLR article 78
proceedings has been “treated as a measure of permissible delay in making of the
demand.’”” The dissenting Justice argued that “‘the sole test for courts to consider is
whether, under the circumstances of the case, the petitioners’ delay in making the
demand was unreasonably protracted.” And, “in my view, however, this 10-month delay
in making the demand was not so unreasonable as to deprive petitioners of their day in
court.” And, the dissent was “concerned that the majority’s decision seeks to draw a hard
and fast line rather than following long-established precedent requiring that we apply a
facts-and-circumstances test to determine whether the excuse for delay is reasonable.”
Lancman v. De Blasio, N.Y.L.J., 1202781108093 (Sup.Ct. N.Y.Co. 2017)(Bluth, J.) – In
this declaratory judgment action, plaintiffs challenge the creation of the Alliance for
Flushing Meadows-Corona Park, claiming that its license agreement with the City, and its
by-laws, violate §18-137(b) of the City Administrative Code, which “requires that there
be at least one voting board member from each overlapping City Council district and one
representative for every two abutting districts.” Defendants, claiming that the proceeding
is, in effect, one pursuant to CPLR Article 78, seeks dismissal on statute of limitations
grounds. “‘When the proceeding has been commenced in the form of a declaratory
judgment action, for which no specific Statute of Limitations is prescribed, “it is
necessary to examine the substance of that action to identify the relationship out of which
the claim arises and the relief sought” in order to resolve which Statute of Limitations is
applicable.’” Here, “the facts of the instant lawsuit do not support” defendants’
argument. For, “defendants are unable to identify a specific determination made by the
Alliance that could be raised in an Article 78 proceeding.” Indeed, “the plaintiffs are
challenging the inherent structure and funding scheme of the Alliance rather than a
distinct, discrete finding made by the Alliance.” Plaintiffs “seek a declaration that the
current by-laws and funding scheme of the Alliance violate the law. That is not in the
nature of an Article 78 proceeding and therefore, a six-year statute of limitations applies.”
ARBITRATION
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ARBITRABILITY
Matter of Monarch Consulting, Inc. v. National Union Fire Insurance Company of
Pittsburgh, PA, 26 N Y 3d 659 (2016) – “‘Arbitration is a matter of contract and a party
cannot be required to submit to arbitration any dispute which he or she has not agreed so
to submit’ [citations omitted]. As the United States Supreme Court has stated,
‘challenges to the validity of arbitration agreements can be divided into two types,’
namely, ‘challenges specifically to the validity of the agreement to arbitrate’ and
‘challenges to the contract as a whole, either on a ground that directly affects the entire
agreement (e.g., the agreement was fraudulently induced) or on the ground that the
illegality of one of the contract’s provisions renders the whole contract invalid’ [citation
omitted]. ‘Attacks on the validity of the contract, as distinct from attacks on the validity
of the arbitration clause, itself, are to be resolved “by the arbitrator in the first instance,
not by a federal or state court”’ [citations omitted]. The Supreme Court has also held that
arbitration agreements must be enforced according to their terms, and that ‘parties can
agree to arbitrate “gateway” questions of “arbitrability”’ [citations committed]. Such
‘delegation clauses’ are enforceable where ‘there is “clear and unmistakable” evidence’
that the parties intended to arbitrate arbitrability issues [citations omitted]. ‘When
deciding whether the parties agreed to arbitrate a certain matter (including arbitrability),
courts generally should apply ordinary state-law principles that govern the formation of
contracts’ [citation omitted]. Further, ‘courts treat an arbitration clause as severable from
the contract in which it appears and enforce it according to its terms unless the party
resisting arbitration specifically challenges the enforceability of the arbitration clause
itself’ [citations omitted]. This rule of severability extends to delegation clauses, which
are severable from larger arbitration provisions [citations omitted]. Thus, where a
contract contains a valid delegation to the arbitrator of the power to determine
arbitrability, such a clause will be enforced absent a specific challenge to the delegation
clause by the party resisting arbitration.”
Garthon Business Inc. v. Stein, 138 A D 3d 587 (1st Dept. 2016) – The majority of this
closely-divided Court holds that, “although this Court does not appear to have directly
addressed the issue, the other Departments have held that, where some of a group of
claims are covered by an arbitration agreement, it is appropriate to litigate the entire
group in court if all of the claims were already asserted in court and the claims not
subject to arbitration would be ‘inextricably bound together’ with the claims that are
subject to arbitration.” The dissenters argued that, under the agreement at issue, the
question of arbitrability should be decided by the arbitrators.
Skyline Steel, LLC v. PilePro LLC, 139 A D 3d 646 (1st Dept. 2016) – “Both the
arbitration clause and the JAMS rule incorporated therein confer on the arbitrators the
power to resolve arbitrability [citation omitted]. These provisions, governing the specific
issue, take precedence over the arbitration clause’s generic incorporation of the “New
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York statutes governing arbitration’ [citations omitted]. The issues of whether the parties
manifested an intent that the arbitration clause survive termination of the settlement
agreement containing it [citation omitted] and whether the agreement was induced by
fraud [citation omitted] are also to be resolved by the arbitrators.”
ARBITRATION AGREEMENTS
Wolf v. Wahba, N.Y.L.J., 1202770765837 (Sup.Ct. Kings Co. 2016)(Knipel, J.) –
Plaintiff is the widow of a former partner of defendant. She claims she was fraudulently
induced to sell her inherited interest in the partnership’s real property to defendant. The
original partnership agreement contained an arbitration provision. “Parties may not be
compelled to arbitrate unless the evidence establishes a clear, explicit and unequivocal
agreement to arbitrate.” Here, “the record shows no agreement to arbitrate signed by
plaintiff.” Accordingly the motion to compel arbitration is denied.
Resorb Networks, Inc. v. YouNow.com, 51 Misc 3d 975 (Sup.Ct. N.Y.Co. 2016)(Reed, J.)
– Defendant seeks to enforce an arbitration agreement entered into by means of an
internet “License Agreement.” “In regard to online contracts, courts look for evidence
that a website user had actual or constructive notice of the terms of using the website
[citation omitted]. Where the supposed assent to terms is mostly passive, as it usually is
online, courts seek to know ‘whether a reasonably prudent offeree would be on notice of
the term at issue’ [citation omitted], and whether the terms of the agreement were
‘reasonably communicated’ to the user.” Here, defendant has failed to make such a
showing, and the motion to compel arbitration is denied.
CPLR VS. FEDERAL ARBITRATION ACT
Johnson v. Ace Home Inspections of Upstate New York, N.Y.L.J., 1202778462427 (City
Ct. Cohoes 2017)(Marcelle, J.) – Defendant moves to stay this small claims action,
seeking $600 on a claim of negligent inspection of a roof, because the contract between
the parties provided that “in matters of dispute, the ‘client’ agrees to submit to binding
arbitration by mutually agreed upon party(s)(sic).” The Court concludes that, under New
York law, “‘the defendant cannot by “contract” deny access to small claims court without
a specific and agreed-to written waiver by the consumer.’ In other words, for an
arbitration clause to eradicate small claims jurisdiction, the parties must explicitly waive
the right to proceed in small claims court. That did not happen here – the clause has no
effect – at least under New York law.” However, “the federal issue is not so effortlessly
disposed of.” For, “to begin with, the Court cannot simply conclude that small claims
matters trump the FAA. In a brigade of cases, the Supreme Court has made it
unrelentingly clear that when state law prohibits outright the arbitration of a particular
type of claim (like small claims), the analysis is straightforward: The conflicting rule is
displaced by the FAA.” And, since the Supreme Court has held “that activities that
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‘substantially affect’ commerce may be regulated [by the FAA] so long as they
substantially affect interstate commerce in the aggregate, even if their individual impact
on interstate commerce is minimal,” the inspection here, which “facilitates the home’s
purchase,” affects commerce. “Although the FAA creates no exceptions for small
claims, under the particular circumstances of this case to enforce arbitration is to enforce
absurdity. The cost of arbitration is prohibitive in relationship to the amount of
Johnson’s claim. Johnson must spend thousands of dollars to recover hundreds – she
cannot win. Where the fee to arbitrate exceeds the maximum possible recovery, such
clauses perpetrate an irreconcilable injustice – compelling arbitration in this case does not
seem fair. Nevertheless, while this Court may express its disagreement with an Act of
Congress or a decision of the United States Supreme Court, it may not dissociate itself
from federal law. The FAA is the law of the United States and must be faithfully adhered
to [citation omitted]. It is the Court’s hope, however, that the Congress will see fit to
exempt small claims actions from the inflexible reins of the FAA. Until then, however,
the FAA controls. Arbitration will be compelled.”
WAIVER OF ARBITRATION
Trombley Painting Corp. v. Global Industrial Services, Inc., N.Y.L.J., 1202763984277
(Sup.Ct. Clinton Co. 2016)(Muller, J.) – “Defendant has waived its right to compel
arbitration under the dispute resolution provision of the Agreement. Defendant clearly
reviewed the Agreement upon commencement of the action and – rather than proceeding
with a motion to dismiss based upon plaintiff’s failure to comply with the dispute
resolution provision – defendant moved to change venue under the forum selection
clause. Then, when that motion was denied, defendant participated in a preliminary
conference, exchanged discovery and established a date for depositions. The instant
motion was not filed until one week prior to the scheduled date of depositions. These
actions are not consistent with an assertion of the right to arbitrate. Rather, defendant’s
participation in this litigation manifests its affirmative acceptance of the judicial forum.”
COMPELLING OR CHALLENGING ARBITRATION
Kindred Nursing Centers Limited Partnership v. Clark, ___ U.S. ___, 137 S.Ct. 1421
(2017) – “In the decision below, the Kentucky Supreme Court declined to give effect to
two arbitration agreements executed by individuals holding ‘powers of attorney’ – that is,
authorizations to act on behalf of others. According to the court, a general grant of power
(even if seemingly comprehensive) does not permit a legal representative to enter into an
arbitration agreement for someone else; to form such a contract, the representative must
possess specific authority to ‘waive his principal’s fundamental constitutional rights to
access he courts and to trial by jury’ [citation omitted]. Because that rule singles out
arbitration agreements for disfavored treatment, we hold that it violates the F[ederal]
A[rbitration] A[ct].” For, “a court may invalidate an arbitration agreement based on
‘generally applicable contract defenses’ like fraud or unconscionability, but not on legal
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rules that ‘apply only to arbitration or that derive their meaning from the fact that an
agreement to arbitrate is at issue’ [citation omitted]. The FAA thus preempts any state
rule discriminating on its fact against arbitration – for example, a ‘law prohibiting
outright the arbitration of a particular type of claim’ [citation omitted]. And not only
that: The Act also displaces any rule that covertly accomplishes the same objective by
disfavoring contracts that (oh so coincidentally) have the defining features of arbitration
agreements.” Justice Thomas dissented, continuing “to adhere to the view that the
Federal Arbitration Act [citation omitted] does not apply to proceedings in state courts.”
Gold v. New York Life Insurance Co., ___ A D 3d ___, 2017 WL 3026906 (1st Dept.
2017) – A narrowly divided Appellate Division concludes that employees cannot “be
obliged to arbitrate collective disputes such as class actions regarding wage disputes with
their employers,” because “that obligation would run afoul of the National Labor
Relations Act.” In so holding, the majority agreed with the United States Courts of
Appeal for the Seventh and Ninth Circuits, and disagreed with contrary holdings by the
Second, Fifth and Eighth Circuits, noting that in a more recent case, the Second Circuit,
though concluding that it was bound by its own prior precedent, “stated that if it were
writing on a clean slate, it might ‘well be persuaded’ to join the Seventh and Ninth
Circuits in finding that a waiver of collective action is unenforceable.” The dissenters
argued that the requirement of arbitration in the subject employment contracts “are
enforceable under the Federal Arbitration Act.” The question will soon become
academic, as the Supreme Court of the United States granted certiorari in Seventh and
Ninth Circuit cases on this issue for argument in the October 2017 Term.
Markowits v. Friedman, 144 A D 3d 993 (2d Dept. 2016) – “A broad arbitration
provision is separable from the substantive provisions of a contract such that the
agreement to arbitrate is valid even if the substantive provisions of the contract were
induced by fraud [citations omitted]. ‘The issue of fraud in the inducement affects the
validity of the arbitration clause only when the fraud relates to the arbitration provision
itself, or was “part of a grand scheme that permeated the entire contract.”’”
Scanomat A/S v. Boies, Schiller & Flexner, N.Y.L.J., 1202779528329 (Sup.Ct. N.Y.Co.
2017)(Freed, J.) – “Respondent’s argument that petitioner’s application [to stay
arbitration] must be denied because the latter failed to move to stay arbitration within 20
days after it was served with the D[emand]F[or]A[rbitration] is without merit. CPLR
7503(c) provides, inter alia, that a notice of intention to arbitrate or a demand for
arbitration must state that ‘unless the party served applies to stay to arbitration within
twenty days after such service it shall thereafter be precluded from objecting that a valid
agreement was not made or has not been complied with’ and that ‘an application to stay
arbitration must be made by the party served within twenty days after service upon it of
the notice or demand for arbitration, or it shall be so precluded.’ Here, it is undisputed
that petitioner did not move to stay arbitration within the 20-day period. However, the
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petition to stay arbitration was not time-barred because respondent failed to include in the
DFA the requisite statutory language warning petitioner that it had 20 days in which to
move for such a stay.” Nor did the fact that respondent had filed for arbitration and paid
both sides’ fees for arbitration before this application was made waive petitioner’s right
to seek a stay.
Matter of Allstate Insurance Company (Cappadonia), 143 A D 3d 1266 (4th Dept. 2016)
– “Although the 20-day time limit of CPLR 7503(c) does not apply if the parties never
had ‘any agreement to arbitrate’ (Matter of Matarasso [Continental Cas. Co.], 56 N Y 2d
264, 268 [1982]), the ‘Matarasso exception is inapplicable’ because ‘the contract at issue
in this case contains an arbitration provision’ [citations omitted]. Indeed, so long as the
subject insurance policy contains some type of arbitration agreement between the parties,
as it does here, an untimely stay application which ‘contends that there is no coverage
under the policy’s SUM provisions is outside the Matarasso exception.’”
BGC Notes, LLC v. Gordon, 142 A D 3d 435 (1st Dept. 2016) – A non-party to an
agreement containing an arbitration clause may be compelled to arbitrate a dispute
relating to that agreement, when it received a “direct benefit” from it. Here, as part of an
employment agreement between defendant and BGC Financial, the employer agreed to
“cause” plaintiff, a related entity, to make a loan to defendant, which would be payable if
he left the employment before expiration of the agreement’s term. The employment
agreement contained an arbitration clause, although the note agreement did not. The
Court holds that plaintiff is bound by the arbitration agreement as it “received all the
benefits that an entity ordinarily receives upon the giving of a loan [citation omitted].
Thus, BGC Notes derived benefits from the employment agreement,” and is bound by its
arbitration clause.
CONFIRMING OR VACATING THE AWARD
Matter of BMW of North America, LLC v. Burgos, 143 A D 3d 980 (2d Dept. 2016) –
“‘Under CPLR 7511, an arbitration award may be vacated only if (1) the rights of a party
were prejudiced by corruption, fraud or misconduct in procuring the award, or by the
partiality of the arbitrator; (2) the arbitrator exceeded his or her power or failed to make a
final and definite award; or (3) the arbitration suffered from an unwaived procedural
defect’ [citations omitted]. Where, as here, parties are subject to compulsory arbitration,
the award must satisfy an additional layer of judicial scrutiny – it must have evidentiary
support and cannot be arbitrary and capricious.”
Daesang Corporation v. The NutraSweet Company, N.Y.L.J., 1202788875727 (Sup.Ct.
N.Y.Co. 2017)(Ramos, J.) – “An award may be vacated under federal law only if it
violates a ground set forth in Section 10 of the Federal Arbitration Act (“FAA”) [citation
omitted]. In addition to the grounds set forth in the FAA, a court may vacate an
arbitration award ‘if it was rendered in manifest disregard of the law’ [citation omitted].
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A court must determine whether ‘the arbitrators knew of a governing legal principle yet
refused to apply it or ignored it altogether,’ and whether the governing law ignored was
‘well defined, explicit, and clearly applicable to the case’ [citation omitted]. Merely an
error or misunderstanding of the applicable law does not constitute manifest disregard
[citation omitted]. Judicial review of arbitration awards is extremely limited [citation
omitted]. An arbitration award must be upheld when the arbitrator ‘offers even a barely
colorable justification for the outcome reached.’”
Matter of Kirchhoff-Consigli Construction Management, LLC v. Mechtronics
Corporation, 144 A D 3d 682 (2d Dept. 2016) – “A party seeking to overturn an
arbitration award on one or more grounds stated in CPLR 7511(b)(1) bears a heavy
burden [citations omitted]. That party must establish a ground for vacatur by clear and
convincing evidence [citations omitted]. An award is irrational only where there is no
proof whatever to justify the award.”
Country-Wide Insurance Co. v. TC Acupuncture, P.C., 140 A D 3d 643 (1st Dept. 2016)
– “Supreme Court erred in vacating the master arbitrator’s award on the ground that the
master arbitrator mistakenly applied the wrong burden of proof to petitioner’s Mallela
defense. Even assuming, without deciding, that that the master arbitrator applied the
wrong burden of proof, the award is not subject to vacatur on that ground.”
Matter of Isernio v. Blue Star Jets, LLC, 140 A D 3d 480 (1st Dept. 2016) – “In
concluding that the arbitrator had failed to consider a contractual provision and by
drawing its own factual and legal determinations, the motion court exceeded its statutory
power of review.”
Matter of City of Buffalo (Buffalo Police Benevolent Association, Inc.), 150 A D 3d 1641
(4th Dept. 2017) – After a Buffalo police officer confessed to operating a “marijuana
‘grow operation,’” the Commissioner served charges on him and promptly terminated his
employment prior to holding a disciplinary hearing. The Collective Bargaining
Agreement provides that a disciplinary penalty may only be imposed “after a hearing
upon stated charges.” Upon the grievance filed by respondent, the arbitrator concluded
that “petitioner had violated the ‘very clear procedure’ delineated in the CBA and
awarded the officer back pay.” The Court concludes “that petitioner failed to meet its
‘heavy burden’ of demonstrating that the award should be vacated” on “public policy”
grounds. For, “a court may vacate an award on that ground ‘where strong and well-
defined policy considerations embodied in constitutional, statutory or common law
prohibit a particular matter from being decided or certain relief from being granted by an
arbitrator’ [citations omitted]. Vacatur of an award may not be granted ‘on public policy
grounds when vague or attenuated considerations of a general public interest are at stake’
[citation omitted]. The court [below] properly determined that petitioner’s proffered
public policy considerations do not preclude the relief granted by the arbitrator.
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Petitioner’s arguments in that regard constitute little more than vague considerations of a
general public interest, which are insufficient to support vacatur of an award [citations
omitted]. Although the underlying facts make the size of the award distasteful – over two
years of back pay for a police officer who allegedly confessed to committing crimes both
before and after becoming a police officer – ‘our public policy analysis cannot change
because the facts or implications of a case might be disturbing, or because an employee’s
conduct is particularly reprehensible.”
Matter of O’Flynn (Monroe County Deputy Sheriff’s Association, Inc.), 141 A D 3d 1097
(4th Dept. 2016) – The arbitration agreement contained in the relevant Collective
Bargaining Agreement provided that an arbitrator “shall review the record of the
disciplinary hearing and determine if the finding of guilt was based upon clear and
convincing evidence.” But, here, “at arbitration the arbitrator found that certain evidence,
including the chemical test results measuring [the deputy sheriff’s] blood alcohol content
at .18%, was inadmissible.” Accordingly, the arbitrator dismissed charges that had been
sustained by the hearing panel, and reduced the penalty imposed. The Court affirmed the
vacatur of the award. “Rather than comply with [the CBA’s] mandate and review the
record from the hearing, the arbitrator considered a portion of the record only, deciding to
exclude certain evidence from the review. Having failed to review that which he was
required to review, the [Supreme] court properly concluded that the arbitrator exceeded
his authority and vacated the arbitration award.”
Matter of Piller v. Schwimmer, 135 A D 3d 766 (2d Dept. 2016) – “Pursuant to CPLR
7511(b)(1)(ii), an arbitration award may be vacated if the rights of a party were
prejudiced by the partiality of the arbitrator [citation omitted]. An arbitrator designated
by parties to a private contract may have a preexisting business or social relationship with
a party to the contract, and that fact, without more, is not sufficient to disqualify the
arbitrator – particularly where that relationship is known by the ‘other side’ [citation
omitted]. Indeed, if the parties so agree, the relationship of an arbitrator to the party
selecting the arbitrator or to the matters in dispute will not disqualify the arbitrator
[citation omitted]. Thus, where a party becomes aware of a relationship between an
arbitrator and the other party or to the matters in dispute that could lead to bias, if the
party continues to participate in the arbitration, the party has waived his or her right to
object to the award on this ground.”
A&L Village Market, Inc. v. 344 Village, Inc., 140 A D 3d 804 (2d Dept. 2016) – “The
arbitrator should have disclosed to the parties that he had been the arbitrator in a prior
unrelated proceeding in which [defendant] Vested was a party [citation omitted].
Although the seller’s attorney learned of the prior arbitration from the brokers’ attorney a
week after the hearing, the seller continued to actively participate in the arbitration
process without raising any objection to the arbitrator. Under these circumstances, the
seller waived any claims related to the alleged partiality of the arbitrator [citations
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omitted]. In any event, the seller failed to establish that the prior arbitration had any
effect upon the arbitrator’s ability to be neutral in the instant matter.”
Matter of Pinkesz v. Wertzberger, 139 A D 3d 1071 (2d Dept. 2016) – The parties agreed
to arbitrate their dispute before a rabbinical court. “In an arbitration award dated May 5,
2011, the rabbinical court, inter alia, directed Wertzberger to pay Pinkesz the sum of
$425,000. In an arbitration award dated July 22, 2013, the rabbinical court, based upon
new information, directed Wertzberger to pay Pinkesz the sum of $3,750,000 regarding
the same dispute.” The Court affirms the vacatur of the later award. “After an arbitrator
renders an award, he or she is generally without power to render a new award or to
modify the original award [citations omitted]. Here, because the arbitration award dated
May 5, 2011 was final and definite within the meaning of CPLR 7511 [citations omitted],
the rabbinical court exceeded its authority in modifying the original award by rendering
the new arbitration award dated July 22, 2013.”
Matter of Woods v. State University of New York, 149 A D 3d 1358 (3d Dept. 2017) –
“‘An arbitrator’s authority extends to only those issues that are actually presented by the
parties. Thus, an arbitrator may not reconsider an award – regardless of whether the
request is couched as a clarification or modification – if the matter was not previously
raised in arbitration.”
ENFORCEMENT OF JUDGMENTS
Pensmore Investments, LLC v. Gruppo, Levey & Co., 137 A D 3d 558 (1st Dept. 2016) –
Plaintiff-judgment creditor of Hugh Levey seeks to enforce the judgment against personal
property in premises he once shared with his estranged wife Wendy Levey, and which
she now occupies. “We agree with Wendy that because Hugh was not in physical
possession of the property which is the subject of the turnover order, the enforcement
proceeding should have been brought as a special proceeding pursuant to CPLR 5225(b).
Wendy was required to have been named as a party and separately served with the
petition, because she is the one in actual possession of the disputed property [citations
omitted]. Although Pensmore did not properly name Wendy, the error could have been
cured by permitting Wendy to intervene, so long as the burden of proof remained on the
judgment creditor (Pensmore) to establish that the judgment debtor (Hugh) has an interest
in the property that is superior to the person in actual possession (Wendy).”
New York State Commissioner of Taxation and Finance v. TD Bank, N.A., 55 Misc 3d
395 (Sup.Ct. Albany Co. 2016)(Hartman, J.) – CPLR 5225(b) provides that when a
judgment creditor commences a turnover proceeding against a person in possession of
property owned by the judgment debtor, the judgment debtor must be served “in the same
manner as a summons or by registered or certified mail, return receipt requested.” The
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Court here rules that “certified mailing, return receipt requested, does not satisfy the
service requirement of CPLR 5225(b) unless the completed and signed return receipt or
other evidence shows actual delivery to a suitable person at the debtor’s last known
address.” For, “if service were deemed successfully completed by the mere mailing of
notice with a request for return receipt, regardless of whether the return receipt shows
that the notice was delivered, the requirement for a return receipt would serve no purpose,
and notice could as effectively be served by first-class mail [citations omitted]. CPLR
5225(b) contemplates that the judgment debtor may intervene. Compliance with the
return receipt requirement is necessary to ensure that the judgment debtor has reasonable
notice and the opportunity to seek intervention in the turnover proceeding. Due process
requires as much.”
Matter of Sirotkin v. Jordan, LLC, 141 A D 3d 670 (2d Dept. 2016) – The judgment
creditor here sought an order, pursuant to CPLR 5225(b), directing respondent LLC to
turn over the judgment debtor’s interest in it. Supreme Court granted the petition only to
the extent of entering an order, pursuant to Limited Liability Company Law §607,
charging the judgment debtor’s membership interest in the LLC with payment of the
amount of the judgment. The Appellate Division affirms. “Under CPLR 5201(b), ‘a
money judgment may be enforced against any property which could be assigned or
transferred, whether it consists of a present or future right or interest and whether or not it
is vested.’ A membership interest in a limited liability company is ‘clearly assignable and
transferrable,’ and, therefore, such interest is ‘property’ for purposes of CPLR article 52
[citations omitted]. Indeed, Limited Liability Company Law §603 expressly
acknowledges that ‘except as provided in the operating agreement a membership interest
is assignable in whole or in part’ [citation omitted]. In considering the remedies available
to a judgment creditor such as the petitioner under CPLR article 52, the Supreme Court
was not limited to considering the petitioner’s request for an order assigning to him
[judgment debtor] Spitzer’s membership interest in the LLC. CPLR 5240, which was
relied upon by the Supreme Court, provides, in pertinent part, that a court ‘may at any
time, on its own initiative or the motion of any interested person, and upon such notice as
it may require, make an order denying, limited, conditioning, regulating, extending or
modifying the use of any enforcement procedure’ [citations omitted]. This section grants
the Supreme Court broad discretionary power to alter the use of procedures set forth in
CPLR article 52 [citation omitted]. Limited Liability Company Law §607 expressly
provides that, on an application by a judgment creditor of a member of an LLC, ‘the court
may charge’ the debtor’s membership interest ‘with payment of the unsatisfied amount of
the judgment with interest,’ and ‘to the extent so charged, the judgment creditor has only
the rights of an assignee of the membership interest.’ Thus CPLR 5240 and Limited
Liability Company Law §607 give the court discretion, in an appropriate case, to issue a
charging order instead of, inter alia, an order assigning or turning over the judgment
debtor’s membership interest in an LLC to the judgment creditor.”
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Matter of Agai v. Diontech Consulting, Inc., 138 A D 3d 736 (2d Dept. 2016) – “Equity
will intervene to pierce the corporate veil and permit the imposition of individual liability
on owners for the obligations of their corporations in order to avoid fraud or injustice
[citation omitted]. A party seeking to pierce the corporate veil must establish that (1) the
owners exercised complete domination of the corporation with respect to the transaction
at issue, and (2) such domination was used to commit a fraud or wrong against the party
seeking to pierce the corporate veil which resulted in the injury to that party [citations
omitted]. The decision whether to pierce the corporate veil in a given instance will
depend on the circumstances of the case.” Here, petitioners established a prima facie
entitlement to piercing the corporate veil “by submitting evidence showing, inter alia,
that the appellants dominated Diontech, that Diontech did not adhere to any corporate
formalities such as holding regular meetings and maintaining corporate records and
minutes, that the appellants used corporate funds for personal purposes, and that the
appellants stripped Diontech of assets as they wound down the business, leaving it
without sufficient funds to pay its creditors, including the petitioners.”
Jackson v. Bank of America, N.A., 149 A D 3d 815 (2d Dept. 2017) – “Insofar as is
relevant here, CPLR 5222(i), which is entitled, ‘Effect of restraint on judgment debtor’s
banking institution account,’ provides that a restraining notice ‘shall not apply to an
amount equal to or less than $1,740 at the time the subject accounts were restrained
except such part thereof as a court determines to be unnecessary for the reasonable
requirements of the judgment debtor and his or her dependents’ [citation omitted]. It
further provides that if an ‘account contains an amount equal to or less than 90% of
$1,740 at the time the subject accounts were restrained, the account shall not be
restrained and the restraining notice shall be deemed void, except as to those funds that a
court determines to be unnecessary for the reasonable requirements of the judgment
debtor and his or her dependents.’” In this action seeking damages for improper restraint
of bank accounts, “the plaintiffs, pointing to the Legislature’s use of the term ‘account’ in
the singular in CPLR 5222(i), contend that CPLR 5222(i) should be applied separately to
each account. Therefore, the plaintiffs urge, even though the total balance of their
respective bank accounts was greater than $1740, BOA could not lawfully restrain any of
their accounts that contained 90% of $1,740 or less and the first $1740 of each of their
accounts containing over $1,740 was exempt from restraint or execution. BOA, pointing
to the Legislature’s use of the phrase ‘amount equal to or less than $1,740’ in the statute,
contends that the total amount in restrained bank accounts must be aggregated to
calculate the statutory exemption.” Finding the language of the statute ambiguous “as to
whether it applies to an ‘amount’ on deposit at a bank or to each ‘account’ maintained at
a bank,” the Court turns to the legislative history of the statute. And, “the legislative
history, as reflected in the bill jacket, particularly in a letter in support of the bill written
by the bill’s Assembly sponsor, Helene Weinstein, indicates that the statute applies to
each account.”
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Benzemann v. Citibank N.A., 149 A D 3d 586 (1st Dept. 2017) – “This case arises from
the retraining notices issued by defendants and the resulting restraints placed on
plaintiff’s bank accounts in 2008 and 2011.” Plaintiff’s claims for “wrongful
attachment” are dismissed. Those claims allege “that the defendants were collectively
responsible for plaintiff’s property being wrongfully restrained.” But, “plaintiff does not
plead that there was an ‘attachment’ governed by article 62 of the CPLR, but rather that
there were restraining notices issued pursuant to CPLR 5222. ‘There mere fact that
property has been subjected to some form of restraint does not serve as a basis for the
statutory claim of wrongful attachment.”
Northern Leasing Systems, Inc. v. Wells Fargo Bank, N.A., 51 Misc 3d 954 (Civ.Ct.
N.Y.Co. 2016)(Goetz, J.) – “A restraining notice [pursuant to CPLR 5222] ‘is just an
enforcement device, and it is deemed an adjunct of the action that gave rise to the
judgment and bears the caption of that action’ [citation omitted]. Therefore, the court
holds that where, as here, a judgment creditor seeks leave to serve an additional
restraining notice under CPLR 5222(c), the judgment creditor is not permitted to request
such leave by way of a special proceeding pursuant to CPLR article 4. Instead the
judgment creditor must seek leave to serve its additional restraining notice pursuant to
CPLR 5222(c) by bringing a motion in the underlying action giving rise to the
judgment.”
Southern Chautauqua County Federal Credit Union v. Moore, 54 Misc 3d 285 (Sup.Ct.
Chautauqua Co. 2016)(Sedita, J.) – “Debtors’ prisons were banned under federal law in
1833.” However, “there are some circumstances, albeit extremely limited ones, when the
deprivation of a citizen’s liberty is permissible in the course of civil litigation. A finding
of contempt is the most common example.” And, “pursuant to CPLR 5224(3)(iv), failure
to comply with an information subpoena is governed by CPLR 2308. Pursuant to CPLR
2308(a), failure to comply with a subpoena is punishable as a contempt. Pursuant to
CPLR 2308(b), the court ‘may’ issue a warrant (i.e., warrant issuance lies with the court’s
discretion) directing the sheriff to bring the alleged contemnor before the court.” Here,
the judgment creditors’ request that the judgment debtors be arrested for failure to
comply with an information subpoena is denied. For “although there is sufficient proof
to support the claim that legal documents were mailed to defendants’ last known
addresses, there is no proof that any of the defendants actually received and read the
information subpoena, the questionnaire, the notices of motion or any contempt
warnings.” And, “mailing alone is insufficient to prove the required element of
knowledge by clear and convincing evidence and plaintiffs fail to meet their burden in the
absence of additional proof that the information subpoena was signed for by the named
defendant or actually received by the named defendant.” In sum, “before sanctioning an
enterprise better suited for the Sheriff of Nottingham than the Sheriff of Chautauqua, the
court must be assured the debtor/defendant is being knowingly contemptuous. The court
is not.”
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George v. Albi, 148 A D 3d 1119 (2d Dept. 2017) – “CPLR 5240 provides the court with
broad discretionary power to control and regulate the enforcement of a money judgment
under CPLR article 52 to prevent ‘unreasonable annoyance, expense, embarrassment,
disadvantage or other prejudice’ [citation omitted]. Nevertheless, an application to quash
a subpoena should be granted only where ‘the futility of the process to uncover anything
legitimate is inevitable or obvious [citation omitted], or where the information sought is
‘utterly irrelevant to any proper inquiry’ [citations omitted]. It is the burden of the party
seeking to quash a subpoena to conclusively establish that it lacks information to assist
the judgment creditor in obtaining satisfaction of the judgment.”
Morin Boats v. Acierno, 150 A D 3d 844 (2d Dept. 2017) – “The Full Faith and Credit
Clause requires that a New York court afford the judgment of a sister State the same
credit, validity, and effect that it would have in the State that rendered it [citations
omitted]. Where, as here, the out-of-state judgment was entered upon default, the
plaintiff may proceed pursuant to CPLR 3213 for summary judgment in lieu of
complaint.”
Cerrato v. Peter T. Roach & Associates, P.C., 51 Misc 3d 39 (App.Term 2d Dept. 2016)
– Last year’s “Update” reported on the District Court’s decision in this action [N.Y.L.J.,
1202638796049 (Dist.Ct. Nassau Co. 2014)]. The District Court held that, “New York
courts will not domesticate a default judgment entered in a sister state where the sister
state did not have personal jurisdiction over the defendant.” Here, the Connecticut
plaintiff sued the New York law firm defendant in Connecticut for having made
“numerous and persistent telephone calls on her cell phone, at home and at her place of
employment” in an attempt “to collect the money alleged to be owed” to defendant’s
client, Citibank, in violation of the Federal Fair Debt Collection Practices Act. The
District Court held that although Connecticut’s long arm statute reaches to the limits of
due process, it does not grant jurisdiction on these facts. “In order for an out-of-state
attorney to be subject to the jurisdiction of the courts in Connecticut, the attorney must
engage in more than simply communicating with a Connecticut resident.” Additionally,
“traditional notions of fair play and substantial justice establish a New York State law
firm is not subject to the jurisdiction of the courts of another state relating to activities
performed in New York. If Cerrato’s premise is accepted by this Court, then any New
York attorney who makes a business related telephone call into another state would be
subject to the jurisdiction of that state. This court concludes Roach’s conduct is
insufficient both on a transaction of business basis or on a substantial justice basis to
subject it to the jurisdiction of the courts of Connecticut. Therefore, the judgment entered
in favor of Cerrato cannot be domesticated in New York.” The Appellate Term has
affirmed. For, “under Connecticut law, telephone contacts, standing alone, are generally
considered jurisdictionally insufficient to establish long-arm jurisdiction over a foreign
defendant, unless the defendant by those means purposefully avails itself of the benefits
and protections of Connecticut’s laws.” Here, “we conclude that the District Court
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correctly found that defendant had not engaged in sufficient purposeful activity in
Connecticut to be subject to jurisdiction under the transaction of business branch of
Connecticut’s long-arm statute.” Thus the Court did not reach the question whether the
exercise of jurisdiction over defendant would comport with constitutional mandates, nor
whether jurisdiction would be available under “the tort branch of the Connecticut long-
arm statute.”