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INSURANCE BROKER ENGAGED IN UNTRUSTWORTHY CONDUCT STEMMING FROM A MISLEADING AD FOR VIATICAL SETTLEMENT AGREEMENTS AND WAS PROPERLY FINED.

The Third Department determined petitioner, a licensed insurance agent/broker, had engaged in untrustworthy conduct and was properly fined. Petitioner sold so-called viatical settlement agreements involving the purchase of interests in life insurance policies of elderly and terminally ill persons. Whether the purchased interests would return a profit depended on whether the amounts paid for the policies and premiums was less than the amount the policies paid out upon death. Petitioner took out an ad which was deemed misleading and there was evidence petitioner did not inform purchasers of the risks:

Insurance Law article 21 tasks respondent’s superintendent with, among other things, the dual responsibility of “ensuring that licenses are issued only to trustworthy and competent [insurance] producers” … and disciplining any insurance producer who demonstrates untrustworthiness or incompetence … . These statutory mandates are designed “to protect the public by requiring and maintaining professional standards of conduct on the part of all insurance brokers acting as such within this state” … . * * *

… [W]e agree with respondent’s determination that the subject advertisement was misleading. As a starting point, the language at issue indeed could be read as suggesting that an investor would receive a fixed rate of return at the end of a predetermined period of time — a representation that was not universally true, as the timing of the payout was entirely dependent upon when the viator died; more to the point, the promised fixed rate of return could effectively be diminished if the viator exceeded his or her life expectancy, i.e., did not die within the “plan” period, and the investor’s profit might be eliminated altogether if he or she was required to assume responsibility for paying the premiums due.  * * *

We reach a similar conclusion with respect to the finding that respondent failed to fully disclose the risks of viatical settlements to some of his clients. … [R]espondent’s finding that petitioner acted in an untrustworthy manner in this regard stems from petitioner’s failure to “sufficiently disclose the risks in his oral presentations to some of his clients.” Without recounting the extensive testimony adduced on this point, suffice it to say that the record contains conflicting evidence as to what petitioner did or did not say to investors regarding the nature and risks of viatical settlements. Matter of Nichols v New York State Dept. of Fin. Servs., 2017 NY Slip Op 01944m 3rd Dept 3-16-17

INSURANCE LAW (INSURANCE BROKER ENGAGED IN UNTRUSTWORTHY CONDUCT STEMMING FROM A MISLEADING AD AND WAS PROPERLY FINED)/UNTRUSTWORTHY CONDUCT (INSURANCE LAW, INSURANCE BROKER ENGAGED IN UNTRUSTWORTHY CONDUCT STEMMING FROM A MISLEADING AD AND WAS PROPERLY FINED)/VIATICAL SETTLEMENT AGREEMENTS (INSURANCE LAW, INSURANCE BROKER ENGAGED IN UNTRUSTWORTHY CONDUCT STEMMING FROM A MISLEADING AD AND WAS PROPERLY FINED)

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FAILURE TO PRODUCE A COPY OF THE MAIL WATCH AUTHORIZATION REQUIRED THAT THE DETERMINATION BE ANNULLED AND EXPUNGED.

The Third Department determined the respondent did not demonstrate the mail watch which led to the charges against petitioner was properly authorized. The related evidence could not be the basis for the determination, which was annulled and expunged:

… [P]etitioner requested a copy of the mail watch authorization four times during the course of the hearing, but it was never produced and is not part of the record. Although the senior investigator testified that the mail watch was authorized by the Superintendent of the facility, the reason for its issuance and the specific facts underlying it were never disclosed and are not apparent from the record. Under these circumstances, we find that authorization for the mail watch was not established in accordance with the requirements of 7 NYCRR 720.3 (e) (1) … . Inasmuch as correspondence obtained through the unlawful mail watch was instrumental in finding petitioner guilty of solicitation and violating facility correspondence procedures, that part of the determination must ,,, be annulled … . Matter of Wilson v Commissioner of N.Y. State Dept. of Corr. & Community Supervision, 2017 NY Slip Op 01921, 3rd Dept 3-16-17

DISCIPLINARY HEARINGS (INMATES) (FAILURE TO PRODUCE A COPY OF THE MAIL WATCH AUTHORIZATION REQUIRED THAT THE DETERMINATION BE ANNULLED AND EXPUNGED)/MAIL WATCH AUTHORIZATION (INMATE DISCIPLINARY HEARINGS, FAILURE TO PRODUCE A COPY OF THE MAIL WATCH AUTHORIZATION REQUIRED THAT THE DETERMINATION BE ANNULLED AND EXPUNGED)

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DEFENDANT’S OMISSIONS, INCONSISTENT STATEMENTS AND LIES AFTER A ROUTINE TRAFFIC STOP JUSTIFIED THE CANINE SNIFF.

The Third Department, over a two-justice dissent, determined the motion to suppress cocaine discovered using a canine sniff after a traffic stop for tinted windows was properly denied. Enough information and inconsistencies came to the officers’ attention after the stop to warrant the dog sniff. Defendant was on parole but initially did not inform the officer of that fact, the stop was outside the county in which defendant was paroled, defendant lied about his cell phone being broken, etc.:

The prolonged diet of inconsistencies and lies provided by defendant about his travels, when coupled with his parole situation and his nervous demeanor throughout the encounter, combined to give the officers a “founded suspicion of criminality” … . This founded suspicion justified both the extension of the stop after its initial justification had been exhausted and the exterior canine sniff that followed … . … The alert gave the troopers probable cause to search the vehicle and recover the bookbag from the back seat that contained cocaine … . People v Banks, 2017 NY Slip Op 01916, 3rd Dept 3-16-17

CRIMINAL LAW (DEFENDANT’S OMISSIONS, INCONSISTENT STATEMENTS AND LIES AFTER A ROUTINE TRAFFIC STOP JUSTIFIED THE CANINE SNIFF)/SUPPRESSION (DEFENDANT’S OMISSIONS, INCONSISTENT STATEMENTS AND LIES AFTER A ROUTINE TRAFFIC STOP JUSTIFIED THE CANINE SNIFF)/TRAFFIC STOP (DEFENDANT’S OMISSIONS, INCONSISTENT STATEMENTS AND LIES AFTER A ROUTINE TRAFFIC STOP JUSTIFIED THE CANINE SNIFF)/CANINE SNIFF (DEFENDANT’S OMISSIONS, INCONSISTENT STATEMENTS AND LIES AFTER A ROUTINE TRAFFIC STOP JUSTIFIED THE CANINE SNIFF)

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NO NEED FOR ARRESTING OFFICER TO TESTIFY AT SUPPRESSION HEARING, INFERENCE OF MUTUAL COMMUNICATION APPLIED.

The First Department determined the arresting officer did not need to testify at the suppression hearing and explained the inference of mutual communication:

The arresting officer had probable cause to arrest defendant under the fellow officer rule because “the radio transmission [of] the undercover officer . . . provided details of the defendant’s race, sex, clothing, as well as his location and the fact that a positive buy’ had occurred” and defendant was the only person in the area who matched the description at the location … . Although the arresting officer did not testify at the suppression hearing, “the only rational explanation for how defendant came to be arrested . . . is that [the arresting officer] heard the radio communication [heard by the testifying officer] and apprehended defendant on that basis” … . The inference of mutual communication … does not turn on what kind of radios the officers were using, or how well the radios were working, but on the simple fact that, without hearing the radio transmission, the arresting officer would have had no way of knowing where to go or whom to arrest. People v Vidro, 2017 NY Slip Op 01975, 1st Dept 3-16-17

CRIMINAL LAW (NO NEED FOR ARRESTING OFFICER TO TESTIFY AT SUPPRESSION HEARING, INFERENCE OF MUTUAL COMMUNICATION APPLIED)/EVIDENCE (CRIMINAL LAW, NO NEED FOR ARRESTING OFFICER TO TESTIFY AT SUPPRESSION HEARING, INFERENCE OF MUTUAL COMMUNICATION APPLIED)/MUTUAL COMMUNICATION , INFERENCE OF (CRIMINAL LAW, NO NEED FOR ARRESTING OFFICER TO TESTIFY AT SUPPRESSION HEARING, INFERENCE OF MUTUAL COMMUNICATION APPLIED)/SUPPRESSION (CRIMINAL LAW, EVIDENCE, NO NEED FOR ARRESTING OFFICER TO TESTIFY AT SUPPRESSION HEARING, INFERENCE OF MUTUAL COMMUNICATION APPLIED)

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BUILDING RESIDENTS CAN BRING CLASS ACTION AGAINST OWNERS-MANAGERS ALLEGING NEGLIGENCE IN PREPARATION FOR SUPERSTORM SANDY.

The First Department determined the residents of a building met the requirements for a class action suit alleging negligent failure to secure the building prior to Superstorm Sandy:

The court properly concluded that plaintiffs satisfied the criteria of CPLR 901, and the factors enumerated in CPLR 902 support class certification.

It is undisputed that the building has more than 400 residential apartments above 15 floors of commercial space. Thus, the numerosity requirement is met and joinder of all class members is impracticable … .

The commonality requirement is also satisfied in that the proof at trial will consist of evidence of defendants’ efforts to prevent damage in advance of the storm and to repair damage after the storm. Since the class consists of tenants of the building, common questions predominate over individual questions concerning the amount and type of damages sustained by each class member … . Any differences in proof with respect to the applicability of the warranty of habitability in Real Property Law § 235-b as between residential tenants and commercial tenants is insufficient to overcome the significant common questions, and the court may, in its discretion, establish subclasses … .

The claims of the putative class representatives are typical of the class’s claims since each resides or leases space in the building and their injuries, if any, derive from the same course of conduct by defendants … . Moreover, the record reflects that they are sufficiently informed about the facts, have no conflicts of interest with the class they seek to represent, and are able to act as a check on counsel … . Roberts v Ocean Prime, LLC, 2017 NY Slip Op 01974, 1st Dept 3-16-17

 

CIVIL PROCEDURE (BUILDING RESIDENTS COULD BRING CLASS ACTION AGAINST OWNERS-MANAGERS ALLEGING NEGLIGENCE IN PREPARATION FOR SUPERSTORM SANDY)/CLASS ACTIONS (BUILDING RESIDENTS COULD BRING CLASS ACTION AGAINST OWNERS-MANAGERS ALLEGING NEGLIGENCE IN PREPARATION FOR SUPERSTORM SANDY)/LANDLORD-TENANT (BUILDING RESIDENTS COULD BRING CLASS ACTION AGAINST OWNERS-MANAGERS ALLEGING NEGLIGENCE IN PREPARATION FOR SUPERSTORM SANDY)/SUPERSTORM SANDY (BUILDING RESIDENTS COULD BRING CLASS ACTION AGAINST OWNERS-MANAGERS ALLEGING NEGLIGENCE IN PREPARATION FOR SUPERSTORM SANDY)

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NO EXPECTATION OF PRIVACY IN EMAIL ACCOUNT OWNED BY ATTORNEY’S EMPLOYER, THEREFORE ATTORNEY CLIENT AND SPOUSAL PRIVILEGES DID NOT APPLY, ATTORNEY WORK PRODUCT PROTECTION MAY APPLY.

The First Department determined nonparty Perlmutter (attorney) did not have an expectation of privacy in an email account owned by his employer, Marvel. Therefore the emails were not protected by attorney client privilege or spousal privilege. However, some emails may be protected as attorney work product:

Application of the four factors set forth in In re Asia Global Crossing, Ltd. (322 BR 247, 257 [Bankr SD NY 2005]), which we endorse … , indicates that Perlmutter lacked any reasonable expectation of privacy in his personal use of the email system of Marvel, his employer, and correspondingly lacked the reasonable assurance of confidentiality that is an essential element of the attorney-client privilege … . Among other factors, while Marvel’s email policies during the relevant time periods permitted “receiving e-mail from a family member, friend, or other non-business purpose entity . . . as a courtesy,” the company nonetheless asserted that it “owned” all emails on its system, and that the emails were “subject to all Company rules, policies, and conduct statements.” Marvel “reserve[d] the right to audit networks and systems on a periodic basis to ensure [employees’] compliance” with its email policies. It also “reserve[d] the right to access, review, copy and delete any messages or content,” and “to disclose such messages to any party (inside or outside the Company).” Given, among other factors, Perlmutter’s status as Marvel’s Chair, he was, if not actually aware of Marvel’s email policy, constructively on notice of its contents

Perlmutter’s use of Marvel’s email system for personal correspondence with his wife waived the confidentiality necessary for a finding of spousal privilege … .

Given the lack of evidence that Marvel viewed any of Perlmutter’s personal emails, and the lack of evidence of any other actual disclosure to a third party, Perlmutter’s use of Marvel’s email for personal purposes does not, standing alone, constitute a waiver of attorney work product protections … . Peerenboom v Marvel Entertainment, LLC, 2017 NY Slip Op 01981, 1st Dept 3-16-17

 

ATTORNEYS (NO EXPECTATION OF PRIVACY IN EMAIL ACCOUNT OWNED BY ATTORNEY’S EMPLOYER, THEREFORE ATTORNEY CLIENT AND SPOUSAL PRIVILEGES DID NOT APPLY)/PRIVILEGE (NO EXPECTATION OF PRIVACY IN EMAIL ACCOUNT OWNED BY ATTORNEY’S EMPLOYER, THEREFORE ATTORNEY CLIENT AND SPOUSAL PRIVILEGES DID NOT APPLY)/ATTORNEY CLIENT PRIVILEGE (NO EXPECTATION OF PRIVACY IN EMAIL ACCOUNT OWNED BY ATTORNEY’S EMPLOYER, THEREFORE ATTORNEY CLIENT AND SPOUSAL PRIVILEGES DID NOT APPLY)/SPOUSAL PRIVILEGE (NO EXPECTATION OF PRIVACY IN EMAIL ACCOUNT OWNED BY ATTORNEY’S EMPLOYER, THEREFORE ATTORNEY CLIENT AND SPOUSAL PRIVILEGES DID NOT APPLY)/ATTORNEY WORK PRODUCT (NO EXPECTATION OF PRIVACY IN EMAIL ACCOUNT OWNED BY ATTORNEY’S EMPLOYER, THEREFORE ATTORNEY CLIENT AND SPOUSAL PRIVILEGES DID NOT APPLY, ATTORNEY WORK PRODUCT PROTECTION MAY APPLY)

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ATTORNEY MISCONDUCT CLAIM UNDER JUDICIARY LAW 487 APPLIES ONLY TO COURT, NOT ARBITRATION, PROCEEDINGS.

The First Department noted that a Judiciary Law 487 claim against attorneys for misconduct does not apply to alleged misconduct in arbitration, as opposed to court, proceedings:

Plaintiff … failed to state a cause of action under Judiciary Law § 478, because the statute does not apply to attorney misconduct during an arbitral proceeding. The plain text of § 478 limits the statute’s application to conduct deceiving “the court or any party” … , and, because the statute has a criminal component, it must be interpreted narrowly … . Moreover, courts have held that the statute does not apply to conduct outside New York’s territorial borders or to administrative proceedings, observing that its purpose is to regulate the manner in which litigation is conducted before the courts of this State … .

In any event, plaintiff failed to allege the elements of a cause of action under the statute, i.e., intentional deceit and damages proximately caused by the deceit … .  The misconduct that plaintiff alleges is not “egregious” or “a chronic and extreme pattern of behavior” … and the allegations regarding scienter lack the requisite particularity … . Doscher v Mannatt, Phelps & Phillips, LLP, 2017 NY Slip Op 01973, 1st Dept 3-16-17

 

ATTORNEYS (ATTORNEY MISCONDUCT CLAIM UNDER JUDICIARY LAW 487  APPLIES ONLY TO COURT, NOT ARBITRATION, PROCEEDINGS)/JUDICIIARY LAW 487 (ATTORNEY MISCONDUCT CLAIM UNDER JUDICIARY LAW 487 APPLIES ONLY TO COURT, NOT ARBITRATION, PROCEEDINGS)/ARBITRATION (ATTORNEY MISCONDUCT, ATTORNEY MISCONDUCT CLAIM UNDER JUDICIARY LAW 487 APPLIES ONLY TO COURT, NOT ARBITRATION, PROCEEDINGS)

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ALTHOUGH THE FIRST DEPT FELT CONSTRAINED BY COURT OF APPEALS PRECEDENT TO DISMISS THIS DOG INJURY CASE SOUNDING IN NEGLIGENCE, THE COURT FORCEFULLY ARGUED THE LAW SHOULD BE CHANGED TO ALLOW SUCH A SUIT.

The First Department, in a substantial opinion by Justice Acosta, reluctantly affirmed Supreme Court’s dismissal of the dog-injury complaint. Defendant tied his 35 pound dog to an unsecured bicycle rack which weighed five pounds. The dog ran off, dragging the rack. Plaintiff’s leg became tangled in the rack, causing him to fall. The First Department followed the Court of Appeals precedent, which allows a dog-injury suit only on vicious propensity/strict liability grounds. The opinion strongly argued the law should be changed to allow dog-injury suits based upon negligence:

Were we not … constrained … we would … permit plaintiffs to pursue their negligence cause of action. To avoid the harshness of the [Court of Appeals] rule, the recognition of the following exception would be appropriate: A dog owner who attaches his or her dog to an unsecured, dangerous object, allowing the dog to drag the object through the streets and cause injury to others, may be held liable in negligence. In these circumstances, negligence liability would be in keeping with the principles of fundamental fairness, responsibility for one’s actions, and societal expectations … — assuming a jury would deem unreasonable defendant’s failure to ensure that the rack was secured before he tied his dog to it. It is not unreasonable to expect dog owners to restrain their dogs in public unless unleashing them is safe or specifically permitted at certain times and locations, as evidenced by local leash laws (see e.g. 24 RCNY 161.05). However, the Court of Appeals has decided that local leash laws have no bearing on whether liability in negligence ought to attach … , undermining the declared public policy of those localities that have enacted such laws … And although the [Court of Appeals] reasoned that New Yorkers may expect to find unrestrained dogs in public parks … , New Yorkers certainly do not expect to find those dogs running on public roads towing large metal objects behind them. A dog owner who, without observing a reasonable standard of care, attaches his or her dog to an object that could foreseeably become weaponized if the dog is able to drag the object through public areas should not be immune from liability when that conduct causes injury. Scavetta v Wechsler, 2017 NY Slip Op 01985, 1st Dept 3-16-17

ANIMAL LAW (ALTHOUGH THE FIRST DEPARTMENT FELT CONSTRAINED BY COURT OF APPEALS PRECEDENT TO DISMISS THIS DOG INJURY CASE SOUNDING IN NEGLIGENCE, THE COURT FORCEFULLY ARGUED THE LAW SHOULD BE CHANGED TO ALLOW SUCH A SUIT)/DOGS (ALTHOUGH THE FIRST DEPARTMENT FELT CONSTRAINED BY COURT OF APPEALS PRECEDENT TO DISMISS THIS DOG INJURY CASE SOUNDING IN NEGLIGENCE, THE COURT FORCEFULLY ARGUED THE LAW SHOULD BE CHANGED TO ALLOW SUCH A SUIT)/NEGLIGENCE (DOGS, ALTHOUGH THE FIRST DEPARTMENT FELT CONSTRAINED BY COURT OF APPEALS PRECEDENT TO DISMISS THIS DOG INJURY CASE SOUNDING IN NEGLIGENCE, THE COURT FORCEFULLY ARGUED THE LAW SHOULD BE CHANGED TO ALLOW SUCH A SUIT)

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QUESTION OF FACT WHETHER NEGLIGENT WAXING WAS CAUSE OF PLAINTIFF’S FALL.

The First Department determined there was a question of fact whether plaintiff’s slip and fall was caused by excessive wax on the floor:

Defendants established entitlement to judgment as a matter of law in this action where plaintiff alleges that she was injured when she slipped on a floor that was negligently waxed. Defendants submitted evidence showing that the floor was last waxed approximately three months before plaintiff’s fall … . In opposition, plaintiff raised triable issues as to whether “a dangerous residue of wax was present” … . She stated that after she fell, there was wax on her hands and, when she stepped on the waxy area, she saw a “scuff mark” running through a circular area, creating a “sunken stripe through the wax.” Plaintiff slid her foot back and forth on the circular patch, and felt the “accumulated, raised, substance on the floor” move with the pressure of her foot, and these actions were captured on the building’s security footage. Sanchez v Mitsui Fudosan Am., Inc., 2017 NY Slip Op 01821, 1st Dept 3-15-17

NEGLIGENCE (SLIP AND FALL, QUESTION OF FACT WHETHER NEGLIGENT WAXING WAS CAUSE OF PLAINTIFF’S FALL)/SLIP AND FALL (QUESTION OF FACT WHETHER NEGLIGENT WAXING WAS CAUSE OF PLAINTIFF’S FALL)/WAX (SLIP AND FALL, QUESTION OF FACT WHETHER NEGLIGENT WAXING WAS CAUSE OF PLAINTIFF’S FALL)

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IN THIS PROSECUTION ALLEGING DEFENDANT CELL PHONE COMPANY’S UNDERPAYMENT OF SALES TAX, DEFENDANT WAS ENTITLED TO THE SALES TAX RETURNS OF OTHER CELL PHONE SERVICE PROVIDERS.

The First Department determined defendant Sprint Communications was entitled to the state’s sales tax returns and records of other providers of mobile telecommunications voice services, but with the names of the providers redacted.  The action was brought by the state and alleged the underpayment of sales tax:

The People claim that they will use only material obtained from third-party discovery and that they have disclosed those materials to defendants. However, the fact that the People have chosen to restrict the materials they will use to prosecute defendants does not mean that defendants must restrict the materials they will use to defend themselves. Moreover, defendants cannot obtain … [the] documents from third parties.

If a document that shows another cell phone company’s or DTF’s position about debundling, etc., happens to mention the other cell phone company’s name, the People may not withhold the entire document. … Instead, the People should replace the taxpayers’ names with “Cell Phone Company No. 1” and “Cell Phone Company No. 2,” or the like. People v Sprint Communications Inc., 2017 NY Slip Op 01801, 1st Dept 3-15-17

 

TAX LAW (IN THIS PROSECUTION ALLEGING DEFENDANT CELL PHONE COMPANY’S UNDERPAYMENT OF SALES TAX, DEFENDANT WAS ENTITLED TO THE SALES TAX RETURNS OF OTHER CELL PHONE SERVICE PROVIDERS)/SALES TAX (CELL PHONE SERVICE PROVIDERS, IN THIS PROSECUTION ALLEGING DEFENDANT CELL PHONE COMPANY’S UNDERPAYMENT OF SALES TAX, DEFENDANT WAS ENTITLED TO THE SALES TAX RETURNS OF OTHER CELL PHONE SERVICE PROVIDERS)/CELL PHONE SERVICE PROVIDERS (SALES TAX, IN THIS PROSECUTION ALLEGING DEFENDANT CELL PHONE COMPANY’S UNDERPAYMENT OF SALES TAX, DEFENDANT WAS ENTITLED TO THE SALES TAX RETURNS OF OTHER CELL PHONE SERVICE PROVIDERS)

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