Chapter Twenty-Three
Rochester, New York
Summaries of Recently Released Decisions to Be Included In the Next Issue of the Digest (uncorrected)
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ACCOUNT STATED/CONTRACT LAW
Account Stated Criteria Met
The Second Department determined plaintiff was entitled to recover under the doctrine of "account stated:"
In support of its motion for summary judgment, the plaintiff submitted monthly billing statements from 1993 to 2011, together with an affidavit from its vice-president and credit manager explaining that the billing statements were sent to the defendants in the ordinary course of business and that the defendants accepted and retained those statements without objection. The billing statements also demonstrated that the defendants had made partial payments on the account until on or about May 2010. This was sufficient to establish the plaintiff's prima facie entitlement to judgment as a matter of law on the cause of action to recover on an account stated ... . In opposition, the defendants failed to submit any evidence that would raise a triable issue of fact as to whether they received the billing statements or ever disputed the bills. National Commerce Exch of Long Is Inc v Cosmopolitan Coach Ltd, 2014 NY Slip Op 06068, 2nd Dept 9-10-14
ARBITRATION
Arbitrator's Award Which Did Not Resolve the Controversy Properly Vacated
The Second Department held the arbitrator's award was properly vacated because it was neither final nor definite and failed to determined damages. The petitioner was injured while riding in respondent-county's bus:
Although judicial review of arbitration awards is limited ..., an award will be vacated when the arbitrator making the award "so imperfectly executed it that a final and definite award upon the subject matter submitted was not made" (CPLR 7511[b][1][iii]...). An award will be vacated as indefinite or nonfinal for purposes of CPLR 7511 if it does not "dispose of a particular issue raised by the parties" ..., or " if it leaves the parties unable to determine their rights and obligations, if it does not resolve the controversy submitted or if it creates a new controversy'" ... .
Here, the arbitrator's award was neither definite nor final, as it failed to resolve the controversy submitted, to wit, the negligence of each party and the amount of damages, if any. The arbitrator did not make any specific findings of fact or credibility or dispose of the issues raised by the parties. Instead, the arbitrator pointed to a fact not in disputethat the petitioner was not wearing a seatbeltand determined that he did not need to decide whether the County was negligent. In doing so, the arbitrator failed to dispose of the controversy with which he had been charged ... .
Moreover, the arbitrator also failed to determine damages and instead referred to the parties' agreement, to which he was not privy, and awarded the petitioner "the low" sum of damages, despite finding that the petitioner was barred from recovering any damages ... . Matter of Andrews v County of Rockland, 2014 NY Slip Op 06078, 2nd Dept 9-10-14
CIVIL PROCEDURE
Class Certification Not Available When Action Seeks Payment of a Nonwaivable Penalty
The Second Department, reversing Supreme Court, determined the respondent county's request for class certification should not have been granted because the action sought payment of a penalty. The county was seeking to act on behalf of 55 other governmental agencies to recover a "hotel tax" which allegedly was not fully paid by the appellants, online sellers of hotel accommodations:
Pursuant to CPLR 901(b), "Unless a statute creating or imposing a penalty, or a minimum measure of recovery specifically authorizes the recovery thereof in a class action, an action to recover a penalty, or minimum measure of recovery created or imposed by statute may not be maintained as a class action." "However, even where a statute creates or imposes a penalty, the restriction of CPLR 901(b) is inapplicable where the class representative seeks to recover only actual damages and waives the penalty on behalf of the class, and individual class members are allowed to opt out of the class to pursue their punitive damages claims" ... . Nonetheless, the "waiver" exception to CPLR 901(b) does not apply where a penalty is mandatory and cannot be waived ... .
Here, the plaintiff cannot obtain class certification of this action because, under the plaintiff's own Hotel Tax law, it is required to recover a "penalty" of 5% of the amount of the tax allegedly due from the appellants within the meaning of CPLR 901(b), the recovery of which in a class action is not specifically authorized in the Hotel Tax law, and the imposition of which cannot be waived, as conceded by the plaintiff's representative during the deposition. Accordingly, the Supreme Court should have denied the plaintiff's motion pursuant to CPLR article 9 for class certification of this action. County of Nassau v Expedia Inc, 2014 NY Slip Op 06050, 2nd Depy 9-10-14
CIVIL PROCEDURE
Late Motion to Amend Complaint Should Have Been Granted--No Showing of Prejudice
The Second Department determined a late motion to amend a complaint should have been granted:
...[T]he plaintiff also proposed an amendment to add a cause of action which alleged facts setting forth a cognizable cause of action to recover damages sounding in intentional tort. This cause of action is not palpably insufficient or patently devoid of merit, and there is no evidence that this amendment would prejudice or surprise [defendants]... . Although the plaintiff delayed in making the motion for leave to amend, mere lateness is not a barrier to the amendmentit must be lateness coupled with significant prejudice to the other side ... . [Defendants] cannot claim significant prejudice, since the proposed amendment arises out of the same facts as those set forth in the first amended complaint ... . Accordingly, the Supreme Court should have granted that branch of the plaintiff's cross motion which was for leave to file a second amended complaint, in effect, to add a cause of action to recover damages sounding in intentional tort ... . Ciminello v Sullivan, 2014 NY Slip Op 06048, 2nd Dept 9-10-14
CIVIL PROCEDURE
60-Day Rule Did Not Apply---Failure to Submit Proposed Order Within 60 Days Did Not Constitute Abandonment of the Claim
The Second Department determined the 60-day rule with respect to the submission of orders did not apply:
22 NYCRR 202.48, entitled "[s]ubmission of orders, judgments and decrees for signature," states in pertinent part:
"(a) Proposed orders or judgments, with proof of service on all parties where the order is directed to be settled or submitted on notice, must be submitted for signature, unless otherwise directed by the court, within 60 days after the signing and filing of the decision directing that the order be settled or submitted.
"(b) Failure to submit the order or judgment timely shall be deemed an abandonment of the motion or action, unless for good cause shown."
Here, the so-called 60-day rule set forth in 22 NYCRR 202.48 is not applicable because the Supreme Court's direction that the defendants submit a proposed order with respect to an award of an attorney's fee did not specify that the proposed order be settled or submitted on notice ... . Accordingly, the plaintiff's contention that the defendants abandoned their claim for an award of an attorney's fee by failing to comply with the 60-day rule is without merit. 47 Thames Realty LLC v Robinson, 2014 NY Slip Op 06051, 2nd Dept 9-10-14
CIVIL PROCEDURE
Collateral Estoppel Precluded Plaintiff's Action---Defendant's Alleged Default Irrelevant
The Second Department determined defendant's default did not preclude the dismissal of the complaint pursuant to the collateral estoppel doctrine:
"The litigant seeking the benefit of collateral estoppel must demonstrate that the decisive issue was necessarily decided in the prior action against a party," and "the party to be precluded from relitigating the issue bears the burden of demonstrating the absence of a full and fair opportunity to contest the prior determination" ... .
Here, the defendant established that the decisive issues in this case were necessarily decided against the plaintiff in the prior case, and the plaintiff failed to demonstrate that he was not afforded a full and fair opportunity to contest that prior determination. Thus, the doctrine of collateral estoppel barred the plaintiff from maintaining this action. Although the defendant allegedly defaulted in answering the complaint in the instant action, even where such a default has occurred, a plaintiff is only entitled to a default judgment if the complaint states a viable cause of action ... . Under these circumstances, the plaintiff has no viable cause of action against the defendant that would warrant entry of a default judgment against it ... . Abrahams v Commonwealth Land Tit Ins Co, 2014 NY Slip Op 06042, 2nd Dept 9-10-14
CIVIL PROCEDURE/CONTRACT LAW
Allegations of Mutual Mistake in Counterclaim and Affirmative Defense Not Made With Requisite Particularity
The Second Department determined the allegations of mutual mistake were not made with the requisite particularity and the related counter claim and affirmative defense were properly granted:
"A claim of mutual mistake is stated where the allegations indicate that the parties have reached an oral agreement and, unknown to either, the signed writing does not express that agreement" ... . Absent fraud, "the mistake shown must be one made by both parties to the agreement, so that the intentions of neither are expressed in it" ... . "A claim predicated on mutual mistake must be pleaded with the requisite particularity necessitated under CPLR 3016(b)" ..., which provides that "where a cause of action or defense is based upon misrepresentation, fraud, mistake, wilful default, breach of trust or undue influence, the circumstances constituting the wrong shall be stated in detail." Ultimately, the proponent of reformation based on mutual mistake must demonstrate the particulars of the actual agreement intended by the parties, based on the particularized allegations in the complaint... . Friedland Realty Inc v 416 W LLC, 2014 NY Slip Op 06052, 2nd Dept 9-10-14
CIVIL PROCEDURE/EVIDENCE
Hearsay Can Not Be Sole Basis for Denial of Summary Judgment Motion
The First Department explained that, while hearsay can be submitted in opposition to a summary judgment motion, it can not be the sole basis for denying the motion:
"A party opposing summary judgment may proffer hearsay evidence, but such proof may not be the sole factual basis for denying summary judgment" ... . * * * ...[D]efendant's affidavit relies only on hearsay evidence ... . The documentary evidence is to the contrary. Andron v Libby, 2014 NY Slip Op 06155, 1st Dept 9-11-14
CIVIL PROCEDURE/FRAUD/MONEY HAD AND RECEIVED/CONTRACT LAW
Elements of Fraud, Money Had and Received, and Unjust Enrichment Explained
In finding the allegations in the complaint insufficient, the Second Department explained the elements of causes of action for fraud, money had and received, and unjust enrichment:
The elements of a cause of action based on fraud are "a representation of material fact, the falsity of that representation, knowledge by the party who made the representation that it was false when made, justifiable reliance by the plaintiff, and resulting injury" ... . The misrepresentation may be in the form of an omission of a material fact ... . Although the question of what constitutes reasonable reliance is usually fact-intensive ..., where the plaintiff alleges only that the defendant omitted a material fact when making a representation to another party, the plaintiff has failed to state a cause of action against either the representor or the representee ... . * * *
"The essential elements of a cause of action for money had and received are (1) the defendant received money belonging to the plaintiff, (2) the defendant benefitted from receipt of the money, and (3) under principles of equity and good conscience, the defendant should not be permitted to keep the money"... . * * *
In a cause of action to recover damages for unjust enrichment, "[a] plaintiff must show that (1) the other party was enriched, (2) at that party's expense, and (3) that it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered" ... . The plaintiff, in his complaint, did not identify any money that was retained ... at his expense and, in any event, "[a]lthough privity is not required for an unjust enrichment claim, a claim will not be supported if the connection between the parties is too attenuated" ... . Lebovits v Bassman, 2014 NY Slip Op 06061, 2nd Dept 9-10-14
CIVIL RIGHTS LAW/MUNICIPAL LAW/BATTERY/ASSAULT/FALSE ARREST/MALICIOUS PROSECUTION/CIVIL PROCEDURE/EMPLOYMENT LAW
Law Explained Re: Suit Against Municipality and Police Officers Alleging Excessive Force
The Second Department explained the law relevant to a suit against police officers, including "John Does," and a municipality alleging the excessive use of force. A "1983" action against a municipality cannot be based solely on the actions of an employee or on the basis of respondeat superior, but an intentional tort action can. "John Does" must be identified and served within the applicable statute of limitations:
"Claims that law enforcement personnel used excessive force in the course of an arrest are analyzed under the Fourth Amendment and its standard of objective reasonableness" ... . "The reasonableness of an officer's use of force must be judged from the perspective of a reasonable officer on the scene, rather than with the 20/20 vision of hindsight'" ... . Because of its intensely factual nature, the question of whether the use of force was reasonable under the circumstances is generally best left for a jury to decide ... . If found to be objectively reasonable, the officer's actions are privileged under the doctrine of qualified immunity ... . "To recover damages for battery, a plaintiff must prove that there was bodily contact, that the contact was offensive, i.e., wrongful under all of the circumstances, and intent to make the contact without the plaintiff's consent" ... . * * *
"A municipality is not liable under 42 USC § 1983 for an injury inflicted solely by its employees or agents" ..., or "solely upon the doctrine of respondeat superior or vicarious liability" ... . * * *
Unlike cases commenced under 42 USC § 1983, municipalities may be liable, under the doctrine of respondeat superior, for the common law torts, such as false arrest, malicious prosecution, assault, and battery, committed by their employees ... . * * *
The Town defendants demonstrated that the complaint should be dismissed insofar as asserted against the John Does by showing that the plaintiffs failed to identify the John Does and serve them with process prior to the expiration of the statutes of limitations applicable to this case. In opposition, the plaintiffs failed to raise a triable issue of fact as to whether they exercised due diligence in attempting to identify and serve the John Does such that the applicable limitations periods had tolled or were otherwise inapplicable ... . Lepore v Town of Greenburgh, 2014 NY Slip Op 06063, 2nd Dept 9-10-14
CORPORATION LAW
Shareholders' Requests for Documents for Investigation of Possible Wrongdoing by Corporation Were Facially Legitimate Under the Business Corporation Law (BCL) and Common Law--No Need for Shareholders to Bring a Shareholders' Derivative Action to Procure the Documents
The First Department determined shareholders' (petitioners') requests for documents from the respondent corporation were facially legitimate pursuant to the Business Corporation Law (BCL) and common law and disputes about the propriety of the requests should be resolved in a hearing. Supreme Court's ruling that the petitioners were required to institute a shareholders' derivative action was reversed. The shareholders were investigating whether respondent's board of directors failed to oversee wrongdoing by S & P, a credit rating agency wholly owned by respondent:
Under New York law, shareholders have both statutory and common-law rights to inspect a corporation's books and records so long as the shareholders seek the inspection in good faith and for a valid purpose ... . The statutory right supplemented, but did not replace, the common-law right ... .
Here, petitioners sufficiently showed that they were acting in good faith and for a proper purpose in seeking to enforce their common-law right to inspect respondent's books and records. Specifically, the petition alleges that petitioners seek to investigate alleged mismanagement and breaches of fiduciary duty by respondent's board of directors in failing to oversee purported wrongdoing by S & P; this alleged wrongdoing, petitioners assert, exposed respondent to substantial potential liability in multiple civil actions and investigations. These allegations form a proper basis for petitioners' request ... .
Contrary to respondent's contentions, investigating alleged misconduct by management and obtaining information that may aid legitimate litigation are, in fact, proper purposes for a BCL § 624 request, even if the inspection ultimately establishes that the board had engaged in no wrongdoing ... . Indeed, petitioners identified several reasons for making their demand, including assessment of policies that the board had implemented when issuing credit ratings and investigation of possible wrongdoing by the respondent's board of directors. Each of these purposes adequately justifies petitioners' access to certain board documents. Moreover, because the common-law right of inspection is broader than the statutory right, petitioners are entitled to inspect books and records beyond the specific materials delineated in BCL § 624(b) and (e) ... . Retirement Plan for Gen Empls of City of N Miami Beach vs McGraw-Hill Cos Inc, 2014 NY Slip Op 06154, 1st Dept 9-11-14
CRIMINAL LAW/EVIDENCE
Probation Department's Unauthorized Taking of DNA Evidence Required Suppression/Inevitable Discovery Doctrine Applied to Deny Suppression of Identification Evidence and Defendant's Statement
The Second Department determined the unauthorized taking of a buccal swap from a probationer for DNA testing required suppression of the DNA evidence. The fact that the defendant was on probation did not strip the defendant of his Fourth Amendment rights. However, because another DNA sample had been properly taken from the defendant a few days before, the identification evidence and defendant's statement should not have been suppressed pursuant to the inevitable discovery doctrine:
The hearing court properly suppressed DNA evidence as tainted since the Nassau County Probation Department (hereinafter the Probation Department) took an unauthorized buccal swab from the defendant, which was a bodily intrusion subject to the constraints of the Fourth Amendment ... . * * * The defendant's status as a probationer did not "justify departures from the customary constitutional standards that apply in other settings" ..., where, as here, it is undisputed that the provision of a DNA sample was not a condition of the defendant's probation under any statutory or judicial authority. Moreover, since the DNA sample taken from the defendant implicated his constitutional rights, we reject the People's argument that the Probation Department, in taking the unauthorized buccal swab, only committed a statutory violation that did not warrant suppression of evidence ... .
The record reveals that an authorized DNA sample was taken from the defendant in connection with another, unrelated charge only days before he was arrested on the charges at issue on this appeal. Since another DNA sample had been taken from the defendant prior to his arrest, the People established a very high degree of probability that the evidence in question would have been obtained independently of the tainted source during the normal course of police investigation ... . Accordingly, the hearing court should not have suppressed the identification evidence and the defendant's statement to the police. People v Adams, 2014 NY Slip Op 06098, 2nd Dept 9-10-14
CRIMINAL LAW
Sentence Reduced In Interest of Justice Despite Extensive Criminal Record
The Second Department, over a partial dissent, reduced the defendant's sentence in the interest of justice based upon the facts of the offense, the defendant's mental health issues, and the defendant's efforts to improve his life:
The evidence at trial showed that, although the defendant entered his neighbor's home unlawfully with the intent to commit a crime therein, no items were taken from the home, and no one was threatened or physically harmed.
... [T]he defendant has been diagnosed with bipolar disorder, a mental illness that runs in his family, and has also been diagnosed with major depression and has struggled with drug addiction. Following the defendant's release from prison in 2009, he made positive strides in his life by participating in outpatient mental health counseling and taking medication, and enrolling in college full-time. He performed well academically, was working toward a bachelor's degree, and had plans to pursue a master's degree, and a career in youth counseling. However, the defendant experienced a setback in July 2011, one month before the instant offenses were committed, when his 28-year-old son was shot and killed, causing his depression to worsen. The instant offenses were committed during this period of his life. Nonetheless, the defendant had been living in the community for two years without incident before committing the instant offenses. While we agree with our dissenting colleague that the defendant's criminal history is extensive, such criminal history is adequately taken into consideration by the Penal Law provisions providing increased sentences for persistent violent felony offenders (see Penal Law § 70.08[2], [3]). Based on the circumstances of the defendant's commission of burglary in the second degree and his efforts at rehabilitation, a sentence of imprisonment longer than the statutory minimum of 16 years to life is unduly harsh and excessive, and we modify the sentence accordingly ... . People v Howard, 2014 NY Slip Op 06105, 2nd Dept 9-10-14
CRIMINAL LAW/APPEALS
Inadequate Waivers of Appeal Addressed In Depth---Detailed Advice to Judges Re: How to Obtain a Valid Waiver---Written Waiver Found Inadequate Here Because the Record Was Silent About Defendant's Understanding Of It
The Second Department, in an important full-fledged opinion by Justice Skelos, broadly addressed the problem of inadequate waivers of appeal, giving specific advice to judges about how to obtain a valid waiver. In the case before the court, the defendant had signed a written waiver. But because the record was otherwise silent about the defendant's understanding of the waiver, it was deemed invalid. The opinion is too comprehensive and detailed to be fairly summarized here:
Generally, ... a thorough explanation [of the waiver by the court]should include an advisement that, while a defendant ordinarily retains the right to appeal even after he or she pleads guilty, the defendant is being asked, as a condition of the plea agreement, to waive that right. Ideally, a defendant should then receive an explanation of the nature of the right to appeal, which essentially advises that this right entails the opportunity to argue, before a higher court, any issues pertaining to the defendant's conviction and sentence and to have that higher court decide whether the conviction or sentence should be set aside based upon any of those issues. The defendant should also be told that appellate counsel will be appointed in the event that he or she were indigent. The trial courts should then explain the consequences of waiving the right to appeal, i.e., that the conviction and sentence will not receive any further review, and shall be final. The trial courts must be sure to obtain, on the record, an affirmative response from the defendant that he or she understands the rights as explained, that the defendant is giving up those rights, and that the defendant is doing so voluntarily after discussing same with counsel. The mere explanation of the right to appeal and the consequences of a waiver without an affirmative response from the defendant is insufficient to effect a valid waiver ... . We are mindful of the time demands on our trial courts, which are burdened with heavy calendars, and recognize that such a thorough colloquy is not necessary in every case to secure a valid waiver of the right to appeal. Nevertheless, the benefit to be derived therefrom by defendants, who are asked to waive a fundamental right, by the People, who have bargained for a waiver of the defendant's right to appeal, and by appellate courts faced with determining the validity of such waivers, outweighs any burden imposed on the trial courts by a slight increase in the length of the plea proceedings. People v Brown, 2014 NY Slip Op 06101, 2nd Dept 9-10-14
CRIMINAL LAW/JUDGES
Justice Should Have Recused Himself---Law Clerk Married to Hearing Witness
The Second Department determined the justice who presided over a suppression hearing should have recused himself because his law clerk was married to the detective who testified at the hearing:
Here, the hearing Justice was the trier of fact, and the credibility of Detective William Wilkerson, who was married to the Justice's law clerk, was a critical issue at the hearing. The marital relationship between Detective Wilkerson and the hearing Justice's law clerk created, at a minimum, the appearance that the hearing Justice could not be impartial in assessing Detective Wilkerson's credibility. While it is true that, unlike a lay jury, a judge is "uniquely capable . . . of making an objective determination based upon appropriate legal criteria, despite awareness of facts which cannot properly be relied upon in making the decision" ..., "judges are human," and not immune from "psychological" and unconscious influences ... . Under these circumstances, the hearing Justice should have recused himself "in a special effort to maintain the appearance of impartiality" ... . People v Suazo, 2014 NY Slip Op 06114, 2nd Dept 9-10-14
ENVIRONMENTAL LAW/MUNICIPAL LAW
General Permit for Municipal Storm Water Discharge Does Not Violate Federal or State Law
The Second Department reversed Supreme Court's determination that a general permit issued by the NYS Department of Environmental Conservation (DEC) to municipalities for storm water discharge violated federal and state law. One of the principle objections to the general permit was that it did not ensure municipalities would set appropriate limits on storm water pollutants. The decision is very detailed and cannot be briefly summarized here:
The petition organized the alleged violations of state and federal law into four general groups, asserting that:
(1) the General Permit failed to ensure that small municipalities reduced their pollutant discharges to the maximum extent practicable, in violation of 33 USC § 1342(p)(3)(B)(iii) and ECL 17-0808(3)(c);
(2) the General Permit failed to ensure that small municipalities complied with state water quality standards, in violation of ECL 17-0811(5) and ECL 17-0813;
(3) the General Permit failed to ensure that small municipalities monitored their storm water discharges, in violation of 33 USC § 1318(a) and ECL 17-0815(8); and
(4) the General Permit did not provide for public participation in the permit process, in violation of 33 USC §§ 1251(e), 1342(a)(1), and 1342(j), and ECL 17-0805(1)(a)(ix). * * *
The General Permit at issue on this appeal is consistent with the scheme for general permits envisioned by the EPA, and is designed to meet the maximum extent practicable standard prescribed by 33 USC § 1342(p)(3)(B)(iii) and ECL 17-0808(3)(c). The General Permit requires entities seeking coverage to "develop, implement and enforce" a stormwater management plan designed to address pollutants of concern and "reduce the discharge of pollutants from the small MS4" to the maximum extent practicable, so as "to protect water quality, and to satisfy the appropriate water quality requirements of the ECL and the Clean Water Act" (see General Permit at 14, 95). A stormwater management plan must, inter alia, identify and describe the chosen best management practices and include measurable goals for each such practice (see General Permit at 95). The General Permit provides applicants with resources, including examples of successful stormwater management plans, a "menu" of best management practices, and suggested measurable goals (see General Permit at 95). Matter of Natural Resources Defense Council Inc New York State Dept of Envtl Conservation, 2014 NY Slip Op 06090, 2nd Dept 9-10-14
FAMILY LAW/CONTRACT LAW
Consent to Divorce In Exchange for Payments Would Violate Public Policy
In the course of a lengthy decision dealing with several other issues, the Second Department explained why an in-court stipulation was properly vacated, noting that defendant-wife's consent to the divorce in exchange for financial payments could not be consideration for the stipulated agreement because such an agreement would violate public policy:
To be enforceable, an open court stipulation must contain all of the material terms and evince a clear mutual accord between the parties (see CPLR 2104...). The 2011 on-the-record agreement was too incomplete and indefinite to be enforceable, and was merely a non-binding agreement to agree ... . The parties disagreed whether the proposal included a waiver of maintenance and they did not finalize the details of the transfer of the 1999 Trust. Other material terms were never agreed upon, and the agreement was subject to the consummation of future conditions and additional agreements.
The agreement also lacked consideration ... . Accepting defendant's consent to the divorce in exchange for the financial payments would have been against public policy ... . In any event, the parties unambiguously agreed that "whether we hammer out the agreement or not, the divorce will go forward uncontested." There is no merit to defendant's claim that her decision to avoid a public trial on fault grounds constituted consideration because it would have brought up embarrassing and difficult questions for plaintiff concerning his financial dealings. Cohen v Cohen, 2014 NY Slip Op 06157, 1st Dept 9-11-14
INSURANCE LAW
"Temporary Substitute Vehicle" Not Excluded from Supplemental Uninsured/Underinsured Motorist Policy
The Second Department determined that the language of the policy did not exclude the driver (O'Brien) of a "temporary substitute" vehicle from coverage under the supplemental uninsured/underinsured motorist (SUM) policy. O'Brien, an auto mechanic, was injured when returning a customer's "loaner" car to the dealer (at the customer's request). O'Brien was named as an additional driver on the loaner vehicle agreement:
"Generally, it is for the insured to establish coverage and for the insurer to prove that an exclusion in the policy applies to defeat coverage" ... . Whether the burden of proof rests on the insured to establish coverage, or on the insurer to establish an exclusion, rests on the language of the policy (see id. ). "Where the provisions of the policy are clear and unambiguous, they must be given their plain and ordinary meaning, and courts should refrain from rewriting the agreement. The policy must, of course, be construed in favor of the insured, and ambiguities, if any, are to be resolved in the insured's favor and against the insurer" ... .
Here, State Farm bears the burden of establishing that O'Brien's use of a "substitute temporary car" was excluded from SUM benefits. The opening language of the SUM endorsement states: "This endorsement is a part of the policy. Except for the changes it makes, all other provisions of the policy remain the same and apply to this endorsement." Moreover, the opening language of the policy states: "We define certain words and phrases below for use throughout the policy. Each coverage includes additional definitions only for use with that coverage." The general definition section includes a definition of "temporary substitute car," which is to be applied throughout the policy: "Temporary Substitute Car means a car that is in the lawful possession of the person operating it and that: 1. replaces your car for a short time while your car is out of use due to its: a. breakdown; b. servicing; c. repair; d. loss; or e. destruction; and 2. neither you nor the person operating it own or have registered."
This Court has held that the purpose of a provision relating to a "temporary substitute" vehicle "is to afford continuous coverage to the insured during the period that a vehicle scheduled under the policy is out of commission, and at the same time limit the risk to the insurer to one operating vehicle at a time for a single, fair premium. Coverage for a substitute vehicle ceases when the insured vehicle is repaired and returned to its owner" ... . Here, the SUM endorsement fails to articulate any exclusion for a "temporary substitute car." Matter of State Farm Mut Auto Ins Co v O'Brien, 2014 NY Slip Op 06096, 2nd Dept 9-10-14
INSURANCE LAW
Language of Exclusion from Coverage, Including the Phrase "Arising Out Of" Was Not Ambiguous---Insurer Was Not Obligated to Defend or Indemnify Defendants
The Second Department determined the insurance policy unambiguously excluded coverage for actions stemming from the taking of property (eminent domain) and, therefore, the insurer was not obligated to defend or indemnify the defendants:
The plaintiff is an insurance carrier that insured the Village and its officials for claims arising from public officials' wrongful acts. However, the relevant insurance policy contained an exclusion for "[a]ny injury or damage arising out of or resulting from a taking that involves or is in any way related to the principles of eminent domain, inverse condemnation . . . or dedication by adverse use or by whatever name used." * * *
An insurer's contractual duty to defend is liberally construed, and is broader than the duty to indemnify ... . The duty to defend " arises whenever the allegations in a complaint state a cause of action that gives rise to the reasonable possibility of recovery under the policy'" ... . "The duty to defend is not triggered, however, when the only interpretation of the allegations against the insured is that the factual predicate for the claim falls wholly within a policy exclusion" ... .
Policy exclusions "are subject to strict construction and must be read narrowly" ..., and any ambiguities in the insurance policy are to be construed against the insurer ... . However, unambiguous provisions of insurance contracts will be given their "plain and ordinary" meaning ... .
In the context of a policy exclusion, the phrase "arising out of" is unambiguous, and is interpreted broadly to mean "originating from, incident to, or having connection with" ... . A "but-for" test applies to determine the applicability of an "arising out of" exclusion ... . In other words, if the plaintiff in an underlying action or proceeding alleges the existence of facts clearly falling within such an exclusion, and none of the causes of action that he or she asserts could exist but for the existence of the excluded activity or state of affairs, the insurer is under no obligation to defend the action ... .
Here, the plaintiff established its prima facie entitlement to judgment as a matter of law by demonstrating that the remaining claims asserted by the ... defendants in the underlying federal and state-court matters all arose out of "a taking that involves or is in any way related to the principles of eminent domain, inverse condemnation . . . or dedication," a situation that is specifically excluded from coverage by the clear and unambiguous language of the policy ... . Scottsdale Indem Co v Beckerman, 2014 NY Slip Op 06071, 2nd Dept 9-10-14
INSURANCE LAW
Insurer Estopped (pursuant to Insurance Law 3420) from Disclaiming Coverage Re: Previously Incurred Defense Costs in a Personal Injury Action
The Second Department determined Insurance Law 3420(d)(2) applied and the insurer, Rutgers Casualty, was estopped from disclaiming coverage for previously incurred defense costs in connection with an underlying personal injury action:
Pursuant to Insurance Law § 3420(d), an insurance carrier is required to provide its insured and any other claimant with timely notice of its disclaimer or denial of coverage on the basis of a policy exclusion, and will be estopped from disclaiming liability or denying coverage if it fails to do so ... . Although Insurance Law § 3420(d)(2) does not apply if the underlying claim does not involve death or bodily injury ..., contrary to Rutgers Casualty's contention, this provision is applicable where, as here, the coverage the defendant seeks to disclaim is for defense costs incurred in connection with an underlying personal injury action. Accordingly, the plaintiffs made a prima facie showing of their entitlement to judgment as a matter of law, inter alia, declaring that Rutgers Casualty was estopped from disclaiming insurance coverage under the Policy by submitting evidence that it failed to provide a timely written notice of this disclaimer to Key Fat, a claimant in this litigation ... . In opposition, Rutgers Casualty failed to raise a triable issue of fact. Key Fat Corp vs Rutgers Cas Ins Co, 2014 NY Slip Op 06060, 2nd Dept 9-10-14
INSURANCE LAW/ARBITRATION/WORKERS' COMPENSATION
Failure to Comply with California Insurance Law Rendered Arbitration Clauses in Agreements Issued by a California Workers' Compensation Insurance Carrier Unenforceable
The First Department, in a full-fledged opinion by Justice Moskowitz, over a dissent, determined that the arbitration clauses within payment agreements issued by the California workers' compensation insurance carrier were not enforceable because the clauses had not been reviewed as required by California law. The agreements provided that any arbitration be under the auspices of the Federal Arbitration Act (FAA). But the court determined California's insurance law was not preempted by the FAA (pursuant to the McCarran-Ferguson Act) and, therefore, the failure to comply with California law rendered the arbitration clauses void and unenforceable:
..."[T]he McCarran-Ferguson Act was an attempt to . . . assure that the activities of insurance companies in dealing with their policyholders would remain subject to state regulation" (...see 15 USC § 1011). Courts have established a four-part test to determine whether the McCarran-Ferguson Act precludes application of a federal statute (in this case, the FAA). Under this test, a federal statute is precluded if: (1) the statute does not "specifically relate" to the business of insurance; (2) the acts challenged under the statute constitute the "business of insurance"; (3) the state has enacted laws regulating the challenged acts; and (4) the state laws would be "invalidated, impaired, or superseded" by application of the federal statute ....
...[T]he FAA does not specifically regulate the business of insurance, and an act specifically relating to the business of insurance is the only type of federal legislation that can preempt state insurance law under McCarran-Ferguson. Furthermore, application of the FAA would modify California law because it would mandate arbitration even though [the insurer] did not, as required by California law, file the payment agreements, and the payment agreements, in turn, contained the arbitration clauses. Matter of Monarch Consulting Inc v National Union Fire Ins Co of Pittsburgh PA, 2014 NY Slip Op 06158, 1st Dept 9-11-14
LABOR LAW-CONSTRUCTION LAW
Plank Used to Access Work Area Not Covered by Industrial Code---Labor Law 241(6) Action Dismissed
The First Department determined a plank used to walk on for access a work area was not "used in the construction of equipment or a temporary structure" and therefore could not be the basis of an action under Labor Law 241(6):
Insofar as the Labor Law § 241(6) claim is based on a violation of Industrial Code (12 NYCRR) § 23-1.7(e)(1), it should be dismissed. The accident occurred in an open working area, notwithstanding evidence that workers traversed the plank to get from the street to the job site ... .
Industrial Code (12 NYCRR) § 23-1.11(a) states: "The lumber used in the construction of equipment or temporary structures required by this Part (rule) shall be sound and shall not contain any defects . . . which may impair the strength of such lumber for the purpose for which it is to be used." While the plank on which DePaul slipped qualifies as dimensional lumber under the regulation, it fails to meet the other specified criteria: it was not used in the construction of equipment or a temporary structure, and no equipment or temporary structure required by Part 23 has been identified by plaintiffs. A plank fails to meet even the liberal definition of "structure" contained in Joblon v Solow ...: "any production or piece of work artificially built up or composed of parts joined together in some definite manner" (internal quotation marks omitted and emphasis added). Plaintiffs concede that the lumber was not joined together, and photographs of the location show only loose planks. Simply put, nothing had been constructed from the planks so as to come within the ambit of the regulation. Furthermore, the regulation applies only to a device required to be constructed by another provision of Part 23, as evident from subsections (b) and (c), which discuss, respectively, "[t]he lumber dimensions specified in this Part (rule)" and the nails required "to provide the required strength at all joints." Thus ...plaintiffs have failed to demonstrate that § 23-1.11(a) is applicable, and this claim was properly dismissed ... . DePaul v NY Brush LLC, 2014 NY Slip Op 06152, 1st Dept 9-11-14
NEGLIGENCE
Emergency Doctrine Explained---Bicyclist Fell In Defendant's Lane of Traffic--Question of Fact Whether Emergency Doctrine Applied
The Second Department determined there was a question of fact whether the emergency doctrine relieved the defendant driver of liability for striking plaintiff bicyclist. The bicyclist fell in defendant's lane of traffic after striking the opening door of a parked vehicle. The court explained the emergency doctrine as follows:
"The emergency doctrine holds that those faced with a sudden and unexpected circumstance, not of their own making, that leaves them with little or no time for reflection or reasonably causes them to be so disturbed that they are compelled to make a quick decision without weighing alternate courses of conduct, may not be negligent if their actions are reasonable and prudent in the context of the emergency" ... . " This is not to say that an emergency automatically absolves one from liability for his [or her] conduct. The standard then still remains that of a reasonable [person] under the given circumstances, except that the circumstances have changed'" ... . "Both the existence of an emergency and the reasonableness of a party's response thereto will ordinarily present questions of fact" ... . Mohr v Carlson, 2014 NY Slip Op 06067, 2nd Dept 9-10-14
NEGLIGENCE/EVVDENCE
Paving Over Walk Where Plaintiff Fell Justified Striking the Answer and Granting Summary Judgment on Liability
The Second Department determined that the defendant's paving over the walkway where plaintiff fell justified striking the answer and granting the plaintiff summary judgment on liability:
"The nature and the severity of the sanction [for spoliation] depends upon a number of factors, including, but not limited to, the knowledge and intent of the spoliator, the existence of proof of an explanation for the loss of evidence, and the degree of prejudice to the opposing party" ... . The determination of spoliation sanctions, whether the spoliation was intentional or negligent, lies within the broad discretion of the court ... . "The party requesting sanctions for spoliation has the burden of demonstrating that a litigant intentionally or negligently disposed of critical evidence, and fatally compromised its ability to'" prove its claim or defense ... .
Here, the Supreme Court providently exercised its discretion in striking the defendant's answer and awarding the plaintiff summary judgment on the issue of liability since the defendant paved over the walkway after receiving notice that the plaintiff intended to inspect it and after his own expert was afforded an opportunity to inspect the walkway prior to it being covered in cement ... . Lentini v Weschler, 2014 NY Slip Op 06062, 2nd Dept 9-10-14
NEGLIGENCE
Driver of Lead Vehicle Entitled to Summary Judgment in Rear-End Collision Case
The Second Department determined that the defendant driver who was struck from behind was entitled to summary judgment. The court explained the relevant law, noting that the bare allegation the lead vehicle stopped short is not enough to raise a question of fact about the negligence of the lead driver:
"A driver of a vehicle approaching another vehicle from the rear is required to maintain a reasonably safe distance and rate of speed under the prevailing conditions to avoid colliding with the other vehicle" ... . "As a general rule, a rear-end collision establishes a prima facie case of negligence on the part of the operator of the rear vehicle, thereby requiring that operator to rebut the inference of negligence by providing a nonnegligent explanation for the collision'" ... . This is true whether the lead vehicle is stopped or stopping ... .
Where the movant has established his or her entitlement to judgment as a matter of law, the burden shifts to the opposing party to provide sufficient evidence to raise a triable issue of fact as to the moving party's comparative fault ... . A bare allegation that the lead vehicle stopped short is insufficient to rebut the inference of negligence on the part of the driver of the following vehicle ... . Billis v Tunjian, 2014 NY Slip Op 06044, 2nd Dept 9-10-14
NEGLIGENCE/CIVIL PROCEDURE/CRIMINAL LAW
Guilty Plea Precluded Litigation on Liability
The Second Department noted that a guilty plea in a criminal matter (in which plaintiff was injured by the defendant) can bar the convicted defendant from litigating liability in the related civil matter under the doctrine of collateral estoppel:
...[L]iability was established in accordance with the legal principle that " [w]here a criminal conviction is based upon facts identical to those in issue in a related civil action, the plaintiff in the civil action can successfully invoke the doctrine of collateral estoppel to bar the convicted defendant from litigating the issue of . . . liability'" ... . Abdelzaher v Sallustio, 2014 NY Slip Op 06040, 2nd Dept 9-10-14
NEGLIGENCE/MUNICIPAL LAW/IMMUNITY
City's Operation of a Parking Garage is a Proprietary Not Governmental Function---City Can Be Sued For Failing to Provide Adequate Safety to Patrons
The Second Department determined a wrongful death action against the city alleging failure to provide adequate safety measures in a parking garage (owned and operated by the city) could go forward. The court determined the operation of the garage was a proprietary function and the city could therefore be sued:
The security deficiencies alleged by the plaintiffs do not involve governmental functions or arise out of a pure "exercise of discretion . . . with respect to [overall] security measures and the deployment of limited police resources" ... . The instant matter does not involve allegations of, for example, the lack of patrol cars or officers on foot patrolling the garage and the lack of general police protection ..., "mobilization of police resources for the exhaustive study of the risk of terrorist attack, the policy-based planning of effective counterterrorist strategy, and the consequent allocation of such resources" ..., participation by a teacher in supervising a playground as part of a school district's overall security system strategy ..., or a policy decision with respect to how the issue of homelessness should be addressed ... . Rather, the gravaman of the complaint is not that the City failed to properly allocate government resources and services to the public at large, which was utilizing the garage, but that it failed in its capacity as a commercial owner of a public parking garage to meet the basic proprietary obligation of providing minimal security for its garage property via lighting, alarms, cameras, and warning signs. These measures are within the normal range of security measures necessary to satisfy the duty of care owed by any landlord or commercial property owner to its tenants or invitees. In the "continuum of responsibility to individuals and society deriving from its governmental and proprietary functions," the lapses complained of encompass a failure to maintain the reasonable security measures expected of any landlord ... .
Since the City acted in its proprietary, rather than its governmental, capacity here, we must consider the issue of whether or not the attack upon the decedent was foreseeable in light of a landlord's duty to take minimal precautions to protect its tenants and invitees from foreseeable harm ... . Here, the Supreme Court correctly determined that triable issues of fact existed as to the foreseeability of an attack upon the decedent, thus precluding the award of summary judgment to the City ... . Granata v City of White Plains, 2014 NY Slip Op 06053, 2nd Dept 9-10-14
NEGLIGENCE/MUNICIPAL LAW/IMMUNITY
County's Failure to Demonstrate Proper Maintenance of Sewer System Precluded Summary Judgment
The Second Department determined the county was not entitled to summary judgment dismissing a complaint based upon negligent maintenance of a sewer system:
A municipality is immune from liability "arising out of claims that it negligently designed [a] sewerage system" ... . However, a municipality "is not entitled to governmental immunity arising out of claims that it negligently maintained the sewerage system as these claims challenge conduct which is ministerial in nature" ... . In order for a municipality to demonstrate its prima facie entitlement to judgment as a matter of law in sewer backup cases, the municipality must show that it had no " notice of a dangerous condition,'" and that "it regularly inspected and maintained the subject sewer line" ... .
Here, although there is nothing in the record to show that the defendant County of Suffolk had prior notice of a dangerous condition in the subject sewer system, the County's proof regarding its regular inspection and maintenance of the sewer system was deficient. Gugel v County of Suffolk, 2014 NY Slip Op 06054, 2nd Dept 9-10-14
TAX LAW/CONSTITUTIONAL LAW/MUNICIPAL LAW
County Could Seek Judicial Intervention Re: the Collection of a County Hotel Tax Without Exhausting Administrative Remedies---Constitutional Underpinning of Local Tax Laws Explained
The Second Department, in determining the plaintiff county was not required to exhaust its administrative remedies (and then commence an Article 78 proceeding) in order to seek judicial review of whether the defendant has been paying the correct amount of a county hotel and motel accommodation tax, explained the underpinning of local tax law in New York:
The appellants contend that the branch of their motion which was pursuant to CPLR 3211(a)(2) to dismiss the first cause of action seeking enforcement of the Hotel Tax against them for lack of subject matter jurisdiction should have been granted because, inter alia, the Enabling Act required the plaintiff to exhaust certain administrative remedies before judicial intervention could be obtained, and that the plaintiff failed to do so.
In New York, local governments do not have an independent power to tax. The New York Constitution vests the taxing power in the State Legislature and authorizes the Legislature to delegate that power to local governments (see NY Const, art. XVI, § 1...). The New York Constitution places fundamental limitations on such delegations. The Legislature must describe with specificity the taxes authorized by any enabling statute (see NY Const, art XVI, § 1...). In turn, local governments can only levy and collect taxes within the expressed limitations of specific enabling legislation (see NY Const, art IX, § 2[c][8]...).
As a general rule, tax statutes should be strictly construed and limited to their terms, which should not be extended by implication ... . Any ambiguity in a tax law should be resolved in favor of the taxpayer and against the taxing authority ... .
Applying these principles here, contrary to the appellants' contention, the plaintiff was not required to exhaust administrative remedies before commencing this action, and judicial review is not limited to a proceeding pursuant to CPLR article 78 ... . County of Nassau v Expedia Inc, 2014 NY Slip Op 06049, 2nd Dept 9-1014
UNEMPLOYMENT INSURANCE/EVIDENCE
Failure to Subpoena Witness Required Reversal
The Third Department reversed the Unemployment Insurance Appeal Board because the putative employer, Brody, was entitled to call the claimant as a witness in a proceeding to determine whether Brody was required to make further unemployment insurance contributions. Claimant had done work for Brody and had subsequently applied for and was granted unemployment insurance benefits. Brody asked that claimant be subpoenaed to testify but the administrative law judge (ALJ) denied the request:
Brody was entitled to call claimant as a witness and, moreover, had the right to request that the ALJ issue a subpoena to compel her attendance (see Labor Law § 622 [1]; 12 NYCRR 461.4 [c]...). Claimant plainly had relevant testimony to offer as to whether an employer-employee relationship existed between her and Brody. The ALJ nevertheless declined to issue the requested subpoena, pointing out that counsel for Brody could have subpoenaed claimant directly. The failure to either issue a subpoena or to adjourn the proceedings so that counsel could do so constituted an abuse of discretion under the circumstances of this case and, thus, "we believe that the proper course is to reverse the Board's decision and remit this matter for further proceedings"... . Matter of Philip..., 2014 Slip Op 06129, 3rd Dept 9-11-14
ZONING
Denial of Variance Reversed--Criteria Explained
The Second Department determined that the zoning board's denial of an application for a variance was arbitrary and capricious:
In determining whether to grant an area variance, a zoning board of appeals is required to engage in a balancing test, weighing the benefit to the applicant against the detriment to the health, safety, and welfare of the neighborhood or community if the variance is granted (see Village Law § 7-712-b[3][b]...). A zoning board must also consider "(1) whether an undesirable change will be produced in the character of the neighborhood or a detriment to nearby properties will be created by the granting of the area variance; (2) whether the benefit sought by the applicant can be achieved by some method, feasible for the applicant to pursue, other than an area variance; (3) whether the requested area variance is substantial; (4) whether the proposed variance will have an adverse effect or impact on the physical or environmental conditions in the neighborhood or district; and (5) whether the alleged difficulty was self-created, which consideration shall be relevant to the decision of the board of appeals, but shall not necessarily preclude the granting of the area variance" (Village Law § 7-712-b[3][b]).
Here, although there was some support in the record for the conclusions of the Board of Zoning Appeals of the Incorporated Village of Muttontown (hereinafter the Board) that the petitioners' difficulty was self-created, and that the requested lot-depth variance was substantial, there was no evidence that granting the variance would produce an undesirable change in the character of the neighborhood, adversely impact on physical and environmental conditions, or otherwise result in a detriment to the health, safety, and welfare of the neighborhood or community ... . Matter of Quintana v Board of Zoning Appeals of Inc Vil of Muttontown, 2014 NY Slip Op 06092, 2nd Dept 9-10-14