JUST RELEASED

January Page II

Summaries of Recently Released Decisions to Be Included In the Next Issue of the Digest (uncorrected)

 

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CONTRACT LAW (LOST PROFITS PROPERLY AWARDED FOR WRONGFUL TERMINATION OF SUBCONTRACT)/DAMAGES (CONTRACT LAW, LOST PROFITS PROPERLY AWARDED FOR WRONGFUL TERMINATION OF SUBCONTRACT)/LOST PROFITS (PROPERLY AWARDED AS DAMAGES FOR WRONGFUL TERMINATION OF SUBCONTRACT)

 

CONTRACT LAW, DAMAGES.

 

LOST PROFITS PROPERLY AWARDED FOR WRONGFUL TERMINATION OF SUBCONTRACT; CRITERIA EXPLAINED.

 

The Second Department determined plaintiff was entitled to lost profits as damages for the wrongful termination of a subcontract. Plaintiff had completed three of seven work items when the contract was terminated and, pursuant to the contract, would have been paid for the remaining four work items in a lump sum and would have been given additional paid work in the form of change orders. The measure of lost-profit damages for the unfinished work was the contractual lump sum minus plaintiff's anticipated costs. The measure of lost-profit damages for the change orders were the relevant amounts paid to the subcontractor who replaced plaintiff:

 

"A party may not recover damages for lost profits unless they were within the contemplation of the parties at the time the contract was entered into and are capable of measurement with reasonable certainty. The rule that damages must be within the contemplation of the parties is a rule of foreseeability. The party breaching the contract is liable for those risks foreseen or which should have been foreseen at the time the contract was made" ... . For damages to be "reasonably certain, does not require absolute certainty. Damages resulting from the loss of future profits are often an approximation. The law does not require that they be determined with mathematical precision. It requires only that damages be capable of measurement based upon known reliable factors without undue speculation" ... . Inspectronic Corp. v Gottlieb Skanska, Inc., 2016 NY Slip Op 00155, 2nd Dept 1-13-16

 

 

 

 

 

 

CONTRACT LAW (FRAUD CLAIMS NOT SPECIFICALLY MENTIONED IN ASSIGNMENT ARE NOT ASSIGNED)/ASSIGNMENTS (FRAUD CLAIMS NOT SPECIFICALLY MENTIONED IN ASSIGNMENT ARE NOT ASSIGNED)/FRAUD (FRAUD CLAIMS NOT SPECIFICALLY MENTIONED IN ASSIGNMENT ARE NOT ASSIGNED)

 

CONTRACT LAW, FRAUD.

 

ASSIGNMENT TO PLAINTIFF OF ALL RIGHT, TITLE AND INTEREST TO $626 MILLION IN RESIDENTIAL MORTGAGE-BACKED SECURITIES DID NOT SPECIFICALLY MENTION FRAUD CLAIMS; THE RIGHT TO SUE MORGAN STANLEY FOR FRAUD, THEREFORE, WAS NOT ASSIGNED TO PLAINTIFF.

 

In 2006 and 2007 plaintiff FSAM bought $626 million in residential mortgage-backed securities (RMBS) from defendant Morgan Stanley. "All right, title and interest" to those securities were then assigned to plaintiff Dexia, which paid FSAM the same amount FSAM paid Morgan Stanley. The plaintiffs, FSAM and Dexia, sued Morgan Stanley, alleging Morgan Stanley knew the RMBS were of poor quality but represented they were prudent AAA-rated securities. The First Department determined the fraud claims did not transfer to Dexia because no specific mention of them was made in the assignment. The court further determined FSAM did not have standing to assert the fraud claims because Dexia paid FSAM for them and FSAM, therefore, could not establish damages:

 

The Court of Appeals recently explained that "the right to assert a fraud claim related to a contract or note does not automatically transfer with the respective contract or note" ... . "Thus, where an assignment of fraud or other tort claims is intended in conjunction with the conveyance of a contract or note, there must be some language — although no specific words are required — that evinces that intent and effectuates the transfer of such rights" ... . "Without a valid assignment, only the . . . assignor may rescind or sue for damages for fraud and deceit' because the representations were made to it and it alone had the right to rely on them" ... .

 

We find that plaintiff FSAM's agreement to deliver "all right, title and interest" in the RMBS to the Dexia plaintiffs did not include fraud claims, since FSAM only assigned rights in the subject securities without explicitly referencing any related tort claims or the overall transaction between FSAM and defendants ... .

 

Because FSAM received from the Dexia plaintiffs the same amount it originally paid for the securities, FSAM cannot establish damages ... . Dexia SA/NV v Stanley, 2016 NY Slip Op 00122, 1st Dept 1-12-16

 

 

 

 

 

 

 

CONTRACT LAW (STATUTE OF FRAUDS DID NOT RENDER AN ORAL CONTRACT TO PAY OFF A LOAN AFTER 15 YEARS VOID)/STATUTE OF FRAUDS (ORAL CONTRACT TO PAY OFF A LOAN AFTER 15 YEARS WAS NOT VOID, CONTRACT COULD HAVE BEEN PERFORMED WITHIN A YEAR)

 

CONTRACT LAW, STATUTE OF FRAUDS.

 

ALTHOUGH THE ORAL CONTRACT CALLED FOR THE MATURATION OF A LOAN AFTER 15 YEARS, THE STATUTE OF FRAUDS DID NOT APPLY BECAUSE IT WAS POSSIBLE TO PERFORM THE CONTRACT WITHIN A YEAR.

 

In 1998 plaintiff and defendant allegedly entered an oral agreement for a loan of $71,500 at 9% annual interest. The loan matured on December 31, 2013. When plaintiff sued for payment, the defendant sought to dismiss the complaint, arguing the statute of frauds prohibited the oral agreement because the agreement could not be performed within a year. The Second Department affirmed Supreme Court's denial of the defendant's motion, finding that it was possible the agreement could have been performed within a year:

 

Pursuant to the statute of frauds, an agreement not reduced to writing is void if, by its terms, it cannot be performed within one year of its making (see General Obligations Law § 5-701[a][1]...). Only those agreements which, by their terms, "have absolutely no possibility in fact and law of full performance within one year" will fall within the statute of frauds ... . "As long as the agreement may be fairly and reasonably interpreted such that it may be performed within a year, the Statute of Frauds will not act as a bar however unexpected, unlikely, or even improbable that such performance will occur during that time frame" ... .

 

Here, contrary to the defendant's contention, the oral agreement between the parties, by its terms, was capable of being performed within one year of its making. As such, the statute of frauds was inapplicable.  JNG Constr., Ltd. v Roussopoulos, 2016 NY Slip Op 00156, 2nd Dept 1-13-16

 

 

 

 

 

 

 

CORPORATION LAW (SHAREHOLDERS' DERIVATIVE ACTION AGAINST MORGAN STANLEY ARISING FROM BILLIONS IN HIGH-RISK TRADING LOSSES PROPERLY DISMISSED, PLAINTIFFS DID NOT DEMONSTRATE PRE-SUIT DEMAND WOULD BE FUTILE)/SHAREHOLDERS' DERIVATIVE ACTION (SHAREHOLDERS' DERIVATIVE ACTION AGAINST MORGAN STANLEY ARISING FROM BILLIONS IN HIGH-RISK TRADING LOSSES PROPERLY DISMISSED, PLAINTIFFS DID NOT DEMONSTRATE PRE-SUIT DEMAND WOULD BE FUTILE)

 

CORPORATION LAW.

 

SHAREHOLDERS' DERIVATIVE ACTION AGAINST MORGAN STANLEY ARISING FROM THE LOSS OF $6.2 BILLION FROM HIGH RISK TRADING DISMISSED; PLAINTIFFS FAILED TO DEMONSTRATE PRE-SUIT DEMAND WOULD BE FUTILE.

 

The First Department, in this shareholders' derivative action against Morgan Stanley, determined the plaintiffs did not demonstrate that a pre-suit demand upon the board of directors would have been futile.  Therefore, the action was properly dismissed (without prejudice). The lawsuit involved the so-called "London Whale" debacle where $6.2 billion was lost in high-risk trading despite public representations the group engaged in only low risk hedging. The court explained the relevant criteria for a futility demonstration:

 

Plaintiffs' claim, based on the Board's alleged failure to properly exercise its oversight duties, is premised on the theory of liability articulated in In re Caremark Intl. Inc. Derivative Litig. (698 A2d 959...). * * *

 

In Caremark cases, allegations of demand futility are analyzed under the principles set forth in Rales v Blasband (634 A2d 927, 933-934 [Del 1993]) ...). Under Rales, the plaintiff must plead particularized facts raising "a reasonable doubt that, [at] the time the complaint [was] filed, the board of directors could have properly exercised its independent and disinterested business judgment in responding to a demand" ... . To rebut the presumption of disinterestedness, the plaintiff must plead particularized facts that, if proved, would establish that a majority of the directors face a "substantial likelihood" of personal liability for the wrongdoing alleged in the complaint ... . A "mere threat" of liability is insufficient ... .

 

Here, plaintiffs failed to make the requisite showing that the board could not exercise independent business judgment because a majority of directors faced a substantial likelihood of liability for the challenged conduct. At the time plaintiffs filed their complaint, the board consisted of 11 directors. At most, plaintiffs showed that four of them — inside director Dimon and the three members of the Risk Policy Committee — faced a substantial likelihood of liability ... . "Because a majority of the directors are independent, demand is not excused"... . Wandel v Dimon, 2016 NY Slip Op 00252, 1st Dept 1-14-16

 

 

 

 

 

 

 

 

CRIMINAL LAW (SEXUAL ASSAULT REFORM ACT DOES NOT VIOLATE EX POST FACTO CLAUSE)/SEXUAL ASSAULT REFORM ACT [SARA] (1000-FOOT SCHOOL-GROUNDS NO-GO ZONE IS NOT PUNITIVE IN EFFECT AND DOES NOT VIOLATE EX POST FACTO CLAUSE)/CONSTITUTIONAL LAW (1000-FOOT SCHOOL-GROUNDS NO-GO ZONE IN THE SEXUAL ASSAULT REFORM ACT IS NOT PUNITIVE IN EFFECT AND THEREFORE DOES NOT VIOLATE EX POST FACTO CLAUSE)/EX POST FACTO CLAUSE (1000-FOOT SCHOOL-GROUNDS NO-GO ZONE IN THE SEXUAL ASSAULT REFORM ACT IS NOT PUNITIVE IN EFFECT AND THEREFORE DOES NOT VIOLATE EX POST FACTO CLAUSE)

 

CRIMINAL LAW, CONSTITUTIONAL LAW.

 

THE SEXUAL ASSAULT REFORM ACT (SARA), WHICH PROHIBITS CERTAIN SEX OFFENDERS FROM RESIDING OR TRAVELING WITHIN 1000 FEET OF A SCHOOL, DOES NOT IMPOSE PUNISHMENT AND THEREFORE DOES NOT VIOLATE THE EX POST FACTO CLAUSE.

 

The First Department, in an extensive opinion by Justice Gische, over a dissenting opinion by Justice Kapnick, determined the Sexual Assault Reform Act (SARA), which prohibits certain sex offenders, including appellant, from residing or traveling within 1000 feet of school grounds, did not violate the federal or state constitutions. Appellant claimed there was no place he could reside in Manhattan, and no way to travel to the places he was required to visit in Manhattan, without violating the statute. SARA was enacted after appellant's conviction. Appellant argued the statute violated the prohibition against Ex Post Facto laws. The court applied the intent-effects analysis. If the intent of the legislation was to impose punishment, the statute would violate the EX Post Facto prohibition and the court's inquiry would end. But if the intent was to establish civil proceedings, the court must go on to determine whether the effect of the statute is so punitive as to negate its civil nature. After an extensive analysis, the First Department held the statute was not intended to impose punishment, and the additional restrictions the statute imposed upon appellant, who was already otherwise restricted as a parolee, did not rise to the level of punishment:

 

... [W]hile some factors favor petitioner, overall we do not find the clear proof that is necessary to support a determination that SARA is punitive in its effect. The legislature was not "masking punitive provisions behind the veneer of a civil statute" ... . Consequently, we conclude that SARA does not violate the Ex Post Facto Clause of the United States Constitution. Matter of Williams v Department of Corr. & Community Supervision, 2016 NY Slip Op 00135, 1st Dept 1-12-16

 

 

 

 

 

 

CRIMINAL LAW (WHERE THE EVIDENCE OF GUILT WAS NOT OVERWHELMING, ALLOWING EVIDENCE AT TRIAL WHICH HAD BEEN PREVIOUSLY PRECLUDED WAS REVERSIBLE ERROR)/EVIDENCE (WHERE THE EVIDENCE OF GUILT WAS NOT OVERWHELMING, ALLOWING EVIDENCE AT TRIAL WHICH HAD BEEN PREVIOUSLY PRECLUDED WAS REVERSIBLE ERROR)

 

CRIMINAL LAW, EVIDENCE.

 

WHERE THE EVIDENCE OF GUILT WAS NOT OVERWHELMING, COUNTY COURT'S ERROR IN ALLOWING EVIDENCE AT TRIAL WHICH THE COURT HAD PREVIOUSLY PRECLUDED REQUIRED REVERSAL AND A NEW TRIAL.

 

The Third Department determined it was reversible error to allow a police officer's testimony identifying defendant as a person depicted in surveillance video from a store about an hour before the robbery of which defendant was convicted. Defendant claimed he was shopping in the store at the time of the robbery. The evidence of defendant's participation in the robbery was not overwhelming. The trial judge had ruled the video could be introduced in evidence but no testimony identifying the defendant as a person depicted in the video could be offered. At trial, however, over objection, Cornell, a police officer, was permitted to identify the defendant in the video:

 

... [E]arlier in the proceedings County Court had ruled that, to the extent that the People were going to offer such surveillance footage into evidence, they were precluded from offering testimony identifying defendant in such footage. Cornell then testified on direct examination that he obtained the video surveillance footage from the store where defendant had claimed to have been shopping at the time of the robbery and described a group of five people that entered at approximately 6:20 p.m. and left at approximately 6:45 p.m., approximately one hour before the robbery. Upon the People's question, "And the group being [defendant], three women and a toddler," Cornell answered, "That's correct." Defendant objected to the question and the answer, which was overruled by County Court. Inasmuch as this testimony violated County Court's prior ruling because it identified defendant as being the individual in the video who was accompanied by three women and a toddler, it should have been precluded.

 

Based upon the record before us, County Court's evidentiary error in permitting Cornell's identification testimony of defendant in the surveillance video cannot be deemed harmless. Specifically, under the particular factual circumstances of this case, the evidence of defendant's guilt, although legally sufficient to support the jury's verdict, was not overwhelming given the lack of direct evidence linking defendant to the crime and the conflicting witness testimony regarding defendant's presence at the crime scene ... . People v Myrick, 2016 NY Slip Op 00217, 3rd Dept 1-14-16

 

 

 

 

 

 

DEFAMATION (MEDICAL PEER REVIEW AND COMMON INTEREST QUALIFIED PRIVILEGE APPLIED TO COMMENTS MADE IN CONNECTION OF TERMINATION OF PLAINTIFF'S HOSPITAL PRVILEGES)/QUALIFIED PRIVILEGE (DEFAMATION, MEDICAL PEER REVIEW AND COMMON INTEREST QUALIFIED PRIVILEGE APPLIED TO COMMENTS MADE IN CONNECTION OF TERMINATION OF PLAINTIFF'S HOSPITAL PRVILEGES)/MEDICAL PEER REVIEW QUALIFIED PRIVILEGE (DEFAMATION)/COMMON INTEREST QUALIFIED PRIVILEGE (DEFAMATION)

 

DEFAMATION.

 

HOSPITAL DEFENDANTS ENTITLED TO MEDICAL-PEER-REVIEW AND COMMON-INTEREST QUALIFIED PRIVILEGE RE: COMMENTS MADE IN CONNECTION WITH THE TERMINATION OF PLAINITFF-PHYSICIAN'S HOSPITAL PRIVILEGES.

 

The Second Department, reversing Supreme Court, determined defendant hospital and administrators were entitled to summary judgment dismissing plaintiff's defamation complaint. Plaintiff was a physician with privileges at defendant hospital. Based upon complaints about plaintiff's behavior, the hospital terminated plaintiff's hospital privileges pursuant to a recommendation of the hospital's credentials committee. The statements at issue were made before, during and after the administrative proceedings at the hospital. The Second Department determined the defendants were not entitled to absolute privilege for comments made during the meeting of the credentials committee because those proceedings were not judicial or quasi-judicial in nature. However, the defendants were entitled to qualified privilege for medical peer review proceedings pursuant to 42 USC 1111. With respect to comments made both prior to and during the meeting of the credentials committee, the Second Department found that a "qualified privilege of common interest" applied. The Second Department rejected Supreme Court's finding that plaintiff had raised a question of fact whether the defendants acted with malice (which would have removed the qualified privilege). With respect to comments made after the termination of plaintiff's hospital privileges, the Second Department found, based upon plaintiff's public comments, plaintiff was a limited-purpose public figure and there was no showing defendants' post-termination comments were made with actual malice.  Concerning the two types of qualified privilege which were found applicable, the court explained:

 

The defendants established, prima facie, that they were entitled to a qualified privilege under 42 USC § 11111(a), part of the Health Care Quality Improvement Act, which creates a qualified privilege for information provided in medical peer review proceedings concerning the competence or professional conduct of a physician, "unless such information is false and the person providing it knew that such information was false" (42 USC § 11111[a][2]...)

 

* * * With respect to [the] causes of action ... predicated upon allegedly defamatory statements made both during and prior to the Credentials Committee meeting, the defendants established, prima facie, that they were entitled to a qualified privilege of common interest ... , under state statutory law (see Public Health Law §§ 2805-j[2]; 2805-m[3]; Education Law § 6527[3], [5]), and under [the hospital's] bylaws ... . Colantonio v Mercy Med. Ctr., 2016 NY Slip Op 00147, 2nd Dept 1-13-16

 

 

 

 

 

 

 

FAMILY LAW (JUVENILE DELINQUENCY ADJUDICATION BASED ON PROVIDING OF FALSE PEDIGREE INFORMATION PROPER)/JUVENILE DELINQUENCY (ADJUDICATION BASED ON PROVIDING FALSE PEDIGREE INFORMATION PROPER)/SUPPRESSION (SUPPRESSION OF JUVENILE'S PROVIDING FALSE PEDIGREE PROPERLY DENIED)/EVIDENCE (SUPPRESSION OF JUVENILE'S PROVIDING FALSE PEDIGREE PROPERLY DENIED)

 

FAMILY LAW, EVIDENCE, JUVENILE DELINQUENCY.

 

SUPPRESSION OF JUVENILE'S PROVIDING FALSE NAME AND DATE OF BIRTH TO POLICE OFFICER PROPERLY DENIED; JUVENILE DELINQUENCY ADJUDICATION BASED UPON THE FALSE PEDIGREE INFORMATION PROPER.

 

The First Department, over an extensive dissent, determined suppression of the juvenile's giving a false name and date of birth when asked for that information by a police officer was properly denied. The juvenile was warned by the officer that providing false pedigree information would result in a false personation charge (a class B misdemeanor). The juvenile was in fact found to have committed an act which, if committed by an adult, would constitute false personation. The court further determined the sentence of probation was the least restrictive alternative consistent with the juvenile's needs. The dissent focused on the propriety of the sentence. With respect to the denial of the suppression motion, the court explained:

 

The court properly denied appellant's motion to suppress her statement to the police, in which she gave a false name and date of birth, resulting in the false personation charge (Penal Law § 190.23). The police had probable cause to believe appellant was a runaway ... . The then 14-year-old appellant, who appeared to be as young as 13, was alone in a PATH station in New Jersey, but she vaguely claimed to live in "upstate" New York. In addition, she had a bruised eye and was wearing provocative clothing, suggesting the possibility of some kind of sexual exploitation. The police were entitled to ask pedigree questions without Miranda warnings, even though an officer warned appellant, as required by the false personation statute, that providing false information would result in an additional charge ... . Matter of Christy C., 2016 NY Slip Op 00095, 1st Dept 1-12-16

 

 

 

 

 

 

 

FREEDOM OF INFORMATION LAW [FOIL] (TRADE SECRET EXEMPTION DOES NOT REQUIRE PROOF DISCLOSURE WOULD RESULT IN COMPETITIVE INJURY)/TRADE SECRETS (TO BE EXEMPT FROM FOIL DISCLOSURE, PROOF DISCLOSURE WOULD RESULT IN COMPETITIVE INJURY NOT REQUIRED)

 

FREEDOM OF INFORMATION LAW (FOIL), TRADE SECRETS.

 

TRADE SECRET EXEMPTION DOES NOT REQUIRE PROOF DISCLOSURE WOULD RESULT IN COMPETITIVE INJURY.

 

The Third Department, in a full-fledged opinion by Justice Rose, determined the exemption from disclosure under the Freedom of Information Law (FOIL) for trade secrets did not require a showing that disclosure of the trade secrets would result in substantial competitive injury. Rather, the statute, Public Officers Law 87 (2) (d), provides two distinct exemptions from disclosure: one for bona fide trade secrets and one for documents which, if disclosed, would cause substantial injury to the competitive position of the owner of the documents. Supreme Court's finding that the exemption for trade secrets did not require proof of injury to competitive position was upheld. There are strict criteria in place for determining whether information constitutes a bona fide trade secret. Applying those criteria, Supreme Court properly determined that several documents provided by petitioner (Verizon) to the Department of Public Service were exempt from FOIL disclosure as bona fide trade secrets:

 

As pertinent here, Public Officers Law § 87 (2) (d) protects from FOIL disclosure "all records" that "are trade secrets or are submitted to an agency by a commercial enterprise or derived from information obtained from a commercial enterprise and which if disclosed would cause substantial injury to the competitive position of the subject enterprise." Respondents argue that this language unambiguously indicates that the Legislature intended to create a single FOIL exemption for all types of confidential commercial information imparted to an agency — including trade secrets — and to subject all such information to the same showing of substantial competitive injury. * * *

 

Our courts have long recognized "[t]he importance of trade secret protection and the resultant public benefit" ... , and have developed a fact-intensive inquiry to determine whether specific commercial information is a bona fide trade secret worthy of such protection. First, it must be established that the information in question is a "'formula, pattern, device or compilation of information which is used in one's business, and which gives [one] an opportunity to obtain an advantage over competitors who do not know or use it'" ... . Second, if the information fits this general definition, then an additional factual determination must be made

 

"concerning whether the alleged trade secret is truly secret by considering: (1) the extent to which the information is known outside of the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken by the business to guard the secrecy of the information; (4) the value of the information to the business and its competitors; (5) the amount of effort or money expended by the business in developing the information; [and] (6) the ease or difficulty with which the information could be properly acquired or duplicated by others" ... .

 

Inasmuch as an entity seeking to establish the existence of a bona fide trade secret must make a sufficient showing with respect to each of these factors, we agree with Supreme Court that it is wholly unnecessary and overly burdensome to require the entity to then make a separate showing that FOIL disclosure of the trade secret would cause substantial injury to its competitive position.  Matter of Verizon N.Y., Inc. v New York State Pub. Serv. Commn.2016 NY Slip Op 00239, 3rd Dept 1-14-16

 

 

 

 

 

 

 

HUMAN RIGHTS LAW (REFUSAL TO ALLOW SAME-SEX MARRIAGE ON PETITIONER'S PROPERTY CONSTITUTED AN UNLAWFUL DISCRIMINATORY PRACTICE)/CONSTITUTIONAL LAW (REFUSAL TO ALLOW SAME-SEX MARRIAGE ON PETITIONERS' PROPERTY DID NOT VIOLATE PETITIONERS' RIGHTS TO FREE EXERCISE OF RELIGION, FREE SPEECH OR EXPRESSIVE ASSOCIATION)/SAME-SEX MARRIAGE (REFUSAL TO ALLOW VIOLATED HUMAN RIGHTS LAW)/PLACE OF PUBLIC ACCOMMODATION (DEFINED FOR PURPOSES OF UNLAWFUL DISCRIMINATION UNDER THE HUMAN RIGHTS LAW)

 

 

HUMAN RIGHTS LAW, CONSTITUTIONAL LAW.

 

PETITIONERS, WHO HELD CATERED EVENTS, INCLUDING WEDDINGS, AT THEIR FARM, COMMITTED AN UNLAWFUL DISCRIMINATORY PRACTICE WHEN THEY REFUSED TO ALLOW RESPONDENTS' SAME-SEX MARRIAGE AT THE FARM.

 

The Third Department, in a full-fledged opinion by Justice Peters, determined the State Division of Human Rights (SDHR) properly found petitioners (the Giffords) discriminated against respondents (the McCarthys) by refusing to hold the McCarthys' same-sex marriage at the Giffords' farm (Liberty Ridge). The Giffords held catered events on their farm, including weddings. The Third Department held the farm was "a place of public accommodation" within the meaning of the Human Rights Law (Executive law 290 [3]) and was therefore subject to the statutory prohibition of "unlawful discriminatory practice[s]" in "a place of public accommodation." The federal and state constitutional arguments raised by the owners of the farm  (free exercise of religion, free speech, compelled speech and expressive association) were discussed in detail and rejected. SDHR's award of $1500 each to the respondents, and the imposition of a $10,000 civil penalty on the Giffords was upheld. With respect to the definition of "a place of public accommodation," the court explained:

 

Executive Law § 292 (9) "defines 'place of public accommodation, resort or amusement' inclusively and illustratively, not specifically, and sets forth an extensive list of examples of places within the statute" ... . Such term includes "establishments dealing with goods or services of any kind" and "any place where food is sold for consumption on the premises" (Executive Law § 292 [9]). Over the years, the statutory definition has been expanded repeatedly, "provid[ing] a clear indication that the Legislature used the phrase place of public accommodation 'in the broad sense of providing conveniences and services to the public' and that it intended that the definition of place of accommodation should be interpreted liberally" ... .

 

Here, Liberty Ridge's wedding facilities fall comfortably within the broad definition of "place of public accommodation." It is undisputed that petitioners open Liberty Ridge to the public as a venue for wedding ceremonies and receptions and offer several wedding-related event services in connection therewith. Indeed, the only wedding-related service that Liberty Ridge does not provide is an officiant for the wedding ceremony. The couples who contract to wed at Liberty Ridge's facilities are members of the general public who, like the McCarthys, may be attracted to the farm by its broadly disseminated advertisements and website. The fact that the wedding ceremonies occur on private property and pursuant to a written contract does not, as petitioners contend, remove Liberty Ridge's facilities from the reach of the Human Rights Law; the critical factor is that the facilities are made available to the public at large... . Matter of Gifford v McCarthy, 2016 NY Slip Op 00230, 3rd Dept 1-14-16

 

 

 

 

 

 

LABOR LAW (SUMMARY JUDGMENT ON LABOR LAW 240 (1) CAUSE OF ACTION SUPPORTED BY NON-DEFECTIVE A-FRAME LADDER WHICH FELL OVER WITH PLAINTIFF HOLDING ON TO IT AFTER PLAINTIFF WAS JOLTED WITH ELECTRICITY)

 

LABOR LAW.

 

THE FACT THAT A (NON-DEFECTIVE) A-FRAME LADDER FELL OVER WHILE PLAINTIFF HELD ON TO IT AFTER PLAINTIFF WAS JOLTED WITH ELECTRICITY JUSTIFIED SUMMARY JUDGMENT ON PLAINTIFF'S LABOR LAW 240 (1) CAUSE OF ACTION.

 

The First Department, over an extensive concurring memorandum, reversing Supreme Court, determined plaintiff was entitled to summary judgment on his Labor Law 240 (1) cause of action. Plaintiff was standing on an A-frame ladder when he was jolted by contact with an electric wire and the ladder fell over as plaintiff held on to it. There was no evidence the ladder was defective. The majority held the fact the ladder was not secured to something, and therefore fell over while plaintiff was hanging on to it, demonstrated the failure to provide plaintiff with an adequate safety device. The concurring memorandum argued plaintiff's fall from a non-defective ladder was not enough to justify summary judgment, but rather the fall from the ladder after contact with electricity raised a question of fact about the adequacy of the safety devices provided. The majority wrote:

 

Here, plaintiff was injured when he was jolted by the electrical charge and although he hung onto the ladder, because it was not secured to something stable, it and he fell to the ground ... . The lack of a secure ladder is a violation of Labor Law § 240(1), and is a proximate cause of the accident ... . Nazario v 222 Broadway, LLC, 2016 NY Slip Op 00251, 1st Dept 1-14-16

 

 

 

 

 

 

 

 

LABOR LAW (STACKED FRAMES WHICH FELL OVER NOT AN ELEVATION RISK)/LABOR LAW (STACKED FRAMES WHICH FELL OVER SUPPORTED LABOR LAW 246 (1) CAUSE OF ACTION)

 

LABOR LAW.

 

STACKED SCAFFOLDING FRAMES WHICH TOPPLED ONTO PLAINTIFF DID NOT CONSTITUTE AN ELEVATION RISK, LABOR LAW 240 (1) CAUSE OF ACTION PROPERLY DISMISSED; LABOR LAW 241 (6) CAUSE OF ACTION, BASED UPON CODE PROVISION REQUIRING SAFE, STABLE STORAGE OF BUILDING MATERIALS, PROPERLY SURVIVED.

 

 

Scaffolding frames had been stacked vertically against a column on ground level. Plaintiff, Hebbard, was injured when he attempted to move a frame and other frames toppled onto him. The Third Department determined the accident was not the result of an "elevation risk" and therefore would not support a Labor Law 240 (1) cause of action. However the Labor Law 241 (6) cause of action was supported by an industrial code provision requiring safe, stable storage of building materials:

 

Here, Hebbard was six feet tall. The frames were about the same height as Hebbard and they were located on the same level as him. He was engaged in moving them from one place on the garage floor to another place on the same floor and did so by carrying one at a time. As he picked up one frame, other frames also located on the same level tipped over. Under the circumstances and in light of recent precedent, the Labor Law § 240 (1) cause of action was properly dismissed.

 

... Elements of a viable Labor Law § 241 (6) cause of action include "the violation of a regulation setting forth a specific standard of conduct applicable to the working conditions which existed at the time of the injury and that the violation was the proximate cause of the injury" ... . "The Industrial Code should be sensibly interpreted and applied to effectuate its purpose of protecting construction laborers against hazards in the workplace" ... .

 

The relevant regulation provides: "All building materials shall be stored in a safe and orderly manner. Material piles shall be stable under all conditions and so located that they do not obstruct any passageway, walkway, stairway or other thoroughfare" (12 NYCRR 23-2.1 [a] [1]). Hebbard v United Health Servs. Hosps., Inc., 2016 NY Slip Op 00248, 3rd Dept 1-14-16

 

 

 

 

 

 

LANDLORD-TENANT (MOTION TO VACATE EXECUTED WARRANT OF EVICTION PROPERLY GRANTED)/EVICTION (MOTION TO VACATE EXECUTED WARRANT OF EVICTION PROPERLY GRANTED)

 

LANDLORD-TENANT.

 

MOTION TO VACATE THE EXECUTED WARRANT OF EVICTION PROPERLY GRANTED.

 

The First Department, over an extensive concurrence by Justice Saxe, determined Civil Court properly granted tenant's post-eviction motion to vacate the warrant of eviction and restore the tenant to possession. The tenant was disabled and had trouble securing the emergency rental assistance to cover the arrears. Eventually the landlord was paid in full and the costs of the eviction were reimbursed. The concurrence expressed concern over the validity of the relevant precedent and the need for landlords to essentially lend money at no interest to low-income tenants "who rely on the slow process of obtaining grants and supplemental payments to cover their rent." With respect to the authority to vacate an executed warrant of eviction, the court wrote:

 

We reject the landlord's contention, premised on RPAPL 749(3), that the Civil Court lacked the authority to grant the tenant's post-eviction motion ... . "[T]he Civil Court may, in appropriate circumstances, vacate the warrant of eviction and restore the tenant to possession even after the warrant has been executed" ... . Here, the Civil Court providently exercised its discretion, as the record shows that the long-term, disabled tenant "did not sit idly by[,]" but instead made appreciable payments towards his rental arrears and "engaged in good faith efforts to secure emergency rental assistance to cover the arrears" ... . Moreover, the tenant has paid the rental arrears for the unit and the landlord's costs for the underlying proceeding ..., and the record shows that the delays in payment were, to a certain extent, attributable to others, including the landlord ... . Matter of Lafayette Boynton Hsg. Corp. v Pickett, 2016 NY Slip Op 00253, 1st Dept 1-14-16

 

 

 

 

 

 

LANDLORD-TENANT (RENTAL PERMIT FROM TOWN WAS CONDITION PRECEDENT TO LEASE)/MUNICIPAL LAW (TOWN CODE RENTAL PERMIT IS CONDITION PRECEDENT TO LEASE)/CONTRACT LAW (TOWN CODE RENTAL PERMIT IS CONDITION PRECEDENT TO LEASE)/STATUTES (TOWN CODE PROVISION REQUIRING RENTAL PERMIT CREATED A PRIVATE RIGHT OF ACTION TO RESCIND LEASE AND RECOUP RENT PAID)

 

LANDLORD-TENANT, CONTRACT LAW, MUNICIPAL LAW, STATUTES.

 

RENTAL PERMIT REQUIRED BY TOWN CODE WAS A CONDITION PRECEDENT TO THE LEASE; CODE PROVISION CREATED A PRIVATE RIGHT OF ACTION TO SEEK RESCISSION OF THE LEASE AND RETURN OF RENT PAID.

 

The Second Department determined plaintiffs-lessees were entitled to bring a private action (pursuant to a provision of the town code) to rescind a lease, and were entitled to rescission and return of the paid rent. After paying $216,000 to lease defendant's residential property for approximately 3 1/2 months, the plaintiffs learned defendant did not have a rental permit required by section 270 of the town code. The code provision was enacted to address overcrowding in properties rented for the summer. The Second Department held the code provision created a private right of action and the rental permit was a condition precedent to any lease. With respect to the private right of action, the court wrote:

 

Where, as here, a statute "does not explicitly provide for a private cause of action, recovery may be had under the statute only if a legislative intent to create such a right of action is fairly implied' in the statutory provisions and their legislative history" ... . This inquiry involves three factors: " (1) whether the plaintiff is one of the class for whose particular benefit the statute was enacted; (2) whether recognition of a private right of action would promote the legislative purpose; and (3) whether creation of such a right would be consistent with the legislative scheme'" ... . The third factor is often noted to be the "most important" ... . Where, as here, the legislature clearly contemplated administrative enforcement of the statute, " [t]he question then becomes whether, in addition to administrative enforcement, an implied private right of action would be consistent with the legislative scheme'"... . 

 

The plaintiffs satisfied the first and second factors here. Town Code § 270 is intended to benefit the occupants of rental properties in the Town of Southampton by requiring owners to obtain a valid rental permit as a condition precedent to the collection of rent (see Town Code § 270-13). Moreover, the legislative purpose is promoted by preventing owners from profiting from the rental of properties that are overcrowded, substandard, or otherwise violate State and Town laws.

 

The third factor, requiring that a private cause of action under a statute be consistent with the legislative scheme, has also been satisfied. As the Supreme Court correctly observed, Town Code § 270 is directed toward protecting the health, safety, and well-being of persons renting homes in the Town of Southampton. In that regard, Town Code § 270-6 requires that prior to the issuance of a rental permit, the enforcement authority must "make an on-site inspection of the proposed rental property" to ensure that the property "complies with the New York State Uniform Fire Prevention and Building Code and the Code of the Town of Southampton" (Town Code § 270-6). Although Town Code § 270 is intended to be enforced by designated Town officials and provides for penalties and fines, "without the threat of recoupment of rent, aside from the possibility of administrative enforcement, there is no incentive for a landlord to obtain a license, which is an overriding concern of the Town" ... . Ader v Guzman, 2016 NY Slip Op 00137, 2nd Dept 1-13-16

 

 

 

 

 

 

 

 

NEGLIGENCE (QUESTION OF FACT WHETHER HOTEL DEFENDANT VICARIOUSLY LIABLE FOR NEGLIGENCE OF SNOWMOBILE TOUR GUIDE UNDER APPARENT AGENCY THEORY)/AGENCY (QUESTION OF FACT WHETHER HOTEL DEFENDANT VICARIOUSLY LIABLE FOR NEGLIGENCE OF SNOWMOBILE TOUR GUIDE UNDER APPARENT AGENCY THEORY)

 

NEGLIGENCE, AGENCY.

 

QUESTION OF FACT WHETHER HOTEL DEFENDANTS WERE VICARIOUSLY LIABLE FOR THE NEGLIGENCE OF A SNOWMOBILE TOUR GUIDE UNDER AN APPARENT AGENCY THEORY.

 

The Third Department affirmed the denial of the hotel defendants' motion for summary judgment. Plaintiff was severely injured and her husband was killed when the snowmobile they were using was struck by a car. The hotel promoted snowmobile tours. All the arrangements for the tour were made by the plaintiffs and hotel personnel. The actual tour was conducted by Adirondack Snowmobile Rental (ASR). The tour guide, driving the lead snowmobile, crossed a road without waiting for plaintiff and plaintiff's decedent, who were following. Plaintiff and plaintiff's decedent were struck by a car when they attempted to cross the road. The Third Department determined plaintiff had stated a cause of action in negligence against the hotel defendants, alleging the hotel defendants were vicariously liable for the negligence of ASR under an apparent agency theory:

 

... "[I]t is fundamental to the principal/agent relationship that [a principal] is liable to a third person for the wrongful or negligent acts . . . of its agent when made within the general or apparent scope of the agent's authority" ... . To establish a negligence claim based upon an apparent agency theory, a plaintiff must show evidence of "words or conduct of the principal . . . communicated to a third party, which give rise to a reasonable belief and appearance that the agent possesses authority to [act on the principal's behalf]" ... .

 

Here, the evidence includes a screenshot of the resort's website that can be read to suggest that snowmobiling is a service provided by defendants' agents or employees, as it is listed among the winter activities available on the premises. ... [P]laintiff stated that she and decedent only dealt with the resort staff in organizing the tour and had never heard of ASR prior to the tour's commencement. Viewing this evidence in a light most favorable to plaintiff as the nonmoving party, we find that Supreme Court properly denied the portion of defendants' motion seeking dismissal of plaintiff's negligence claim based upon the doctrine of apparent agency. In our view, defendants' promotional materials, together with the testimony regarding the overall experience that defendants and their staff strive to provide for guests of the resort, create a question of fact as to whether plaintiff could have reasonably believed that ASR possessed the authority to conduct the snowmobile tour as defendants' agent ... . Taylor v The Point at Saranac Lake, Inc., 2016 NY Slip Op 00247, 3rd Dept 1-14-16

 

 

 

 

 

 

 

 

NEGLIGENCE (OPERATOR OF STUDY-ABROAD PROGRAM OWED DUTY OF CARE TO INJURED STUDENT)/DUTY OF CARE (OPERATOR OF STUDY-ABROAD PROGRAM OWED DUTY OF CARE TO INJURED STUDENT)/EVIDENCE (DEFENDANT DID NOT PROVIDE AFFIRMATIVE EVIDENCE OF ABSENCE OF CAUSATION IN ITS SUMMARY JUDGMENT MOTION, BURDEN ON THAT ISSUE NEVER SHIFTED TO PLAINTIFF)/SUMMARY JUDGMENT (DEFENSE MOTION FOR SUMMARY JUDGMENT MUST SUBMIT AFFIRMATIVE PROOF ON ISSUE OF CAUSATION OF INJURY, ABSENT AFFIRMATIVE PROOF BURDEN NEVER SHIFTED TO PLAINTIFF ON THAT ISSUE)

 

 

NEGLIGENCE, EVIDENCE, CIVIL PROCEDURE.

 

DEFENDANT, WHICH OPERATED A STUDY-ABROAD PROGRAM, OWED A DUTY OF CARE TO INJURED STUDENT; BECAUSE DEFENDANT PRESENTED NO AFFIRMATIVE PROOF ON CAUSATION IN SUPPORT OF ITS SUMMARY JUDGMENT MOTION, THE BURDEN OF PROOF ON THAT ISSUE NEVER SHIFTED TO PLAINTIFF.

 

The First Department, over a two-justice dissent, determined defendant synagogue's motion for summary judgment was properly denied. Plaintiff was a participant in a study-abroad program run by defendant in Israel. She injured her knee and alleged she was prescribed physical therapy but defendant refused to provide it (delaying and compromising recovery). The First Department held defendant owed a duty of care to plaintiff because it had agreed to provide medical care and was in the best position to protect plaintiff from injury. The court noted that defendant's attempt to place the burden on plaintiff to demonstrate a causal link between her injury and the failure to provide physical therapy must fail in the context of a defense summary judgment motion. The burden never shifted to plaintiff on that issue because the defendant did not demonstrate, through an expert affidavit, the absence of causation. [Yet another example of the need for a defendant to present affirmative proof on every relevant issue when seeking summary judgment. Without affirmative proof on a necessary issue, the burden never shifts to plaintiff.]:

 

The existence of a duty depends on the circumstances, and the issue is one of law for the court; "the court is to apply a broad range of societal and policy factors" ... .

 

In determining the threshold question of whether a defendant owes a plaintiff a duty of care, courts must balance relevant factors, "including the reasonable expectations of parties and society generally, the proliferation of claims, the likelihood of unlimited or insurer-like liability, disproportionate risk and reparation allocation, and public policies affecting the expansion or limitation of new channels of liability" ... . The parties' relationship may create a duty where it "places the defendant in the best position to protect against the risk of harm [] and [] the specter of limitless liability is not present" ... . Thus, where a defendant exercises a sufficient degree of control over an event, a duty of care to plaintiff may arise ... . 

 

Here, the parties' relationship created a duty to provide plaintiff with the necessary medical care because not only did defendant agree to do so, it was in the "best position to protect against the risk of harm" and "the specter of limitless liability [was] not present" ... . The program was not an ordinary college or study-abroad program. Indeed, the second "semester" did not take place in a university environment. Rather, it took place in Yerucham, a small town in the Negev desert, involved volunteering, and was supervised by counselors who did "[p]retty much everything," including responding to medical issues. Under the circumstances, defendant exercised a sufficient degree of control over the program to create a duty of care to plaintiff ... . Katz v United Synagogue of Conservative Judaism, 2016 NY Slip Op 00094, 1st Dept 1-12-16

 

 

 

 

 

 

 

UNEMPLOYMENT INSURANCE (INTERPRETER WAS AN EMPLOYEE)/INTERPRETERS (UNEMPLOYEMENT INSURANCE, INTERPRETERS WERE EMPLOYEES)

 

UNEMPLOYMENT INSURANCE.

 

INTERPRETER WAS AN EMPLOYEE, NOT AN INDEPENDENT CONTRACTOR.

 

The Third Department determined claimant, a Cantonese and Mandarin interpreter, was an employee of Language Services Associates, Inc. (LSA), not an independent contractor:

 

The record establishes that LSA advertises for interpreters, like claimant, to provide translation services to its clients. Interpreters are screened for their experience and, if approved by LSA following an interview, they are placed on a roster for future assignments. Clients contact LSA directly to request the services of an interpreter, at which point LSA decides who to call from its pool of interpreters. Although interpreters are free to decline assignments, there was testimony that they are not permitted to substitute someone else in their place once an assignment is accepted. LSA provides interpreters with the requisite information for accepted assignments, and interpreters are advised by LSA, not the client, of any changes in assignments. Moreover, interpreters are prohibited from accepting future assignments from a client without obtaining LSA's permission and are subject to penalties for arriving late or failing to appear for an assignment without providing LSA with notice and a reasonable explanation. LSA requires interpreters to submit invoices detailing the hours worked for each in-person interpretation assignment, pays interpreters directly and reimburses them for transportation expenses associated with assignments.

 

The record further reflects that LSA records and monitors telephone interpretation services to ensure that interpreters are adequately performing their services. To that end, LSA assigned interpreters, including claimant, to evaluate other interpreters' telephone services. Claimant herself received feedback and instructions from LSA on how to improve her services, and she conducted, at LSA's request, numerous evaluations of other interpreters' services. Based upon these evaluations, interpreters are given a rating that could affect whether an interpreter receives future assignments from LSA. Matter of Soo Tsui (Commissioner of Labor), 2016 NY Slip Op 00229, 3rd Dept 1-14-16