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Owner of Rental Vehicle May Be Liable Based Upon Failure to Maintain the Vehicle

The Second Department, reversing Supreme Court, determined the Graves Amendment (which immunizes owners of rental vehicles from liability for the use of vehicles) did not apply where the complaint alleged a failure to maintain the vehicle. Because the defendant, PV Holding, did not demonstrate the alleged failure to maintain the vehicle did not result in the accident, the defendant’s summary judgment motion should have been denied:

Pursuant to the Graves Amendment (49 USC § 30106), generally, the owner of a leased or rented motor vehicle cannot be held liable for personal injuries resulting from the use of such vehicle if: (1) the owner is engaged in the trade or business of renting or leasing motor vehicles, and (2) there is no negligence or criminal wrongdoing on the part of the owner (see 49 USC § 30106[a]…). The Graves Amendment does not apply where, as here, a plaintiff seeks to hold a vehicle owner liable for the alleged failure to maintain a rented vehicle … . The PV defendants failed to establish, prima facie, PV Holding’s entitlement to judgment as a matter of law. Although the PV defendants submitted evidence showing that PV Holding was engaged in the business of renting vehicles and that regular maintenance was performed on the subject vehicle, the PV defendants failed to submit any admissible evidence to demonstrate that the accident was not caused by the condition of the vehicle as a consequence of PV Holding’s allegedly negligent failure to maintain it … . Olmann v Neil, 2015 NY Slip Op 07483, 2nd Dept 10-14-15

 

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Property Owner Not Liable for Tracked-In Rain

In finding the grant of summary judgment to defendant was proper, the Second Department explained a property owner’s liability for tracked-in rain water:

In a slip-and-fall case, a defendant moving for summary judgment has the burden of demonstrating, prima facie, that it did not create the alleged dangerous condition or have actual or constructive notice of its existence for a sufficient length of time to discover and remedy it … . A general awareness that water might be tracked into a building when it rains is insufficient to impute, to a defendant, constructive notice of the particular dangerous condition … . Moreover, a property owner is “not required to cover all of its floors with mats, nor to continuously mop up all moisture resulting from tracked-in rain” … .

Here, the defendant established its prima facie entitlement to judgment as a matter of law by presenting evidence that it did not create or have actual or constructive notice of the alleged dangerous condition. In opposition, the plaintiff failed to raise a triable issue of fact. Grib v New York City Hous. Auth., 2015 NY Slip Op 07472, 2nd Dept 10-14-15

In support of similar findings in another case, the Second Department explained:

While a “defendant [is] not required to cover all of its floors with mats, nor to continuously mop up all moisture resulting from tracked-in rain” …, a defendant may be held liable for an injury proximately caused by a dangerous condition created by water, snow, or ice tracked into a building if it either created the hazardous condition, or had actual or constructive notice of the condition and a reasonable time to undertake remedial action … .

Here, in support of their motion, the defendants submitted evidence sufficient to demonstrate, prima facie, that they did not create the alleged hazardous condition or have actual or constructive notice of it … . In opposition, the plaintiff failed to raise a triable issue of fact. “A general awareness that water might be tracked into a building when it rains is insufficient to impute to the defendants constructive notice of the particular dangerous condition”… . Murray v Banco Popular, 2015 NY Slip Op 07482, 2nd Dept 10-14-15

 

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Instructions In Will Re: Payment of Estate Taxes Properly Followed

The Second Department determined the instruction in the will that estate taxes be paid out of the residuary estate was properly followed:

All estate tax payments must be equitably apportioned among recipients of estate assets “unless otherwise provided in the will or non-testamentary instrument” (EPTL 2-1.8[c]), and such a contrary direction must be clear and unambiguous … . Although there is a strong policy favoring apportionment …, that policy gives way where the clear and unambiguous wishes of the testator direct otherwise … . Analysis begins with the general rules of will construction which provide that a court is to determine and effectuate the intent of the testator and that in doing so, it must construe his or her words according to their ordinary and natural meaning … .

Here, the second paragraph of the decedent’s will directs that all estate taxes, “in respect to any property required to be included in my gross estate for estate tax or like purposes by any such government, whether the property passes under this Will or otherwise, without contribution by any recipient of any such property,” were to be paid out of the residuary estate. The words clearly and unambiguously reflect the decedent’s intent that his preresiduary and nontestamentary beneficiaries … are to take their property without liability for the payment of any estate taxes, regardless of whether the taxes are imposed on property and assets passing under the will or outside of the will … . Matter of Priedits, 2015 NY Slip Op 07508, 2nd Dept 10-14-15

 

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Where Equitable Relief Described in “Sole Remedy Clause” is Impossible, Monetary Damages Are Available

The First Department, in a full-fledged opinion by Justice Sweeney, in a case addressing many specific-contract-provision issues not summarized here, determined that where the sole remedy clause of a contract allows only equitable relief, and that equitable relief is impossible, monetary damages may be available. The action stems from the collapse of the residential mortgage -backed securities (RSMB) market. The complaints alleged the breach of several representations and warranties (concerning the underlying mortgages) in the mortgage loan purchase agreement (MLPA). The “sole remedy clause” in the agreement purported to limit relief to the defendant’s repurchase of defective mortgages. However repurchase of foreclosed or liquidated mortgages was impossible. In that situation, the First Department held, equity allows the imposition of monetary damages:

Under defendant’s interpretation of the “sole remedy” clause, loans that have been foreclosed upon or liquidated cannot be repurchased and, by agreeing to those provisions, plaintiff accepted the risk of loss such an event would entail. However, such an interpretation would leave plaintiffs without a remedy with respect to those loans, as their only recourse would be to commence an action for specific performance, which would be impossible to fulfill. The present state of the law does not support defendant’s contention.

New York law has long held that contracting parties are generally free to limit their remedies. “A limitation on liability provision in a contract represents the parties’ agreement on the allocation of the risk of economic loss in the event that the contemplated transaction is not fully executed, which the courts should honor” … . Therefore, by the terms of the “sole remedy” clause, the agreements limit plaintiffs to seeking an order of specific performance requiring defendant to repurchase the defective loans at the purchase price defined in those agreements, or to cure the defects in those loans.

However, specific performance is an equitable remedy. In the RMBS context, most courts have repeatedly held that “while a provision providing for equitable relief as the sole remedy’ will generally foreclose alternative relief, where the granting of equitable relief appears to be impossible or impracticable, equity may award damages in lieu of the desired equitable remedy'” … . Such a rule makes sense, for to hold otherwise would create a “perverse[]” incentive for a sponsor “to fill the trust with junk mortgages that would expeditiously default so that they could be released, charged off, or liquidated before a repurchase claim is made” … . Nomura Home Equity Loan, Inc., Series 2006-FM2 v Nomura Credit & Capital, Inc., 2015 NY Slip Op 07458, 1st Dept 10-13-15

 

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Complaint Did Not State a Cause of Action Against Mechanic Who Inspected Defendant’s Car—Plaintiff Did Not Allege the Mechanic Created or Exacerbated Any Dangerous Condition—Therefore the Complaint Did Not Allege the Mechanic Owed Plaintiff a Duty of Care

The Fourth Department, reversing Supreme Court, determined plaintiff did not state a cause of action against the mechanic who inspected the defendant’s (Golley’s) car, with which plaintiff’s motorcycle collided. Plaintiff alleged the mechanic negligently allowed Golley’s car to pass inspection. However, the complaint did not demonstrate the mechanic owed a duty of care to plaintiff by creating or exacerbating any dangerous condition in Golley’s car. The court explained the relevant law:

Here, plaintiff alleged with respect to defendant that he knowingly passed a vehicle for inspection that should not have passed, but he did not allege, either in the complaint or in opposition to the motion, that defendant created or exacerbated any dangerous condition relating to Golley’s vehicle by inspecting it. Thus, even assuming, arguendo, that defendant did not conduct a proper inspection of Golley’s vehicle, we conclude that plaintiff has failed to allege that defendant assumed a duty to plaintiff by “launch[ing] an instrument of harm since there is no reason to believe that the inspection made [Golley’s] vehicle less safe than it was beforehand … . Murray v Golley, 2015 NY Slip Op 07395, 4th Dept 10-9-15

 

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The Absence of Plaintiff’s (Buyer’s) Attorney’s Explicit Unconditional Approval of the Purchase Contract Invalidated the Contract, Despite Plaintiff’s Desire to Go Through with the Purchase

The Fourth Department, reversing Supreme Court, determined that an explicit (not implied) unconditional attorney approval of a real estate contract is a necessary pre-requisite for a valid contract. Here plaintiff’s attorney had approved the contract on the condition that an environmental warranty be provided by the sellers, a condition which was never met or explicitly waived. Despite plaintiff’s desire to go through with the purchase, defendant-sellers’ attorney correctly determined there was no valid contract of sale because plaintiff’s attorney never explicitly unconditionally approved it:

As the Court of Appeals has stated, “[c]larity and predictability are particularly important” in the area of law dealing with attorney approval of real estate contracts … . Here, we conclude that, although plaintiff could have unilaterally waived the environmental conditions that [his attorney] placed on his approval of the contract inasmuch as those conditions benefitted only him …, neither [of plaintiff’s attorneys] clearly and unequivocally did so. Thus, the contract was never unconditionally approved by plaintiff’s attorneys. * * *

“[C]onsiderations of clarity, predictability, and professional responsibility weigh against reading an implied limitation into the attorney approval contingency” … . If [plaintiff’s attorney] intended to waive the conditions placed … on … approval of the contract, he should have done so expressly and not left anything for inference, or he should have stated that he, as plaintiff’s counsel, unconditionally approved the contract as proposed by defendants. Because he failed to do so, we conclude that there was not a valid contract between the parties and that the court erred in directing defendants to sell the property to plaintiffs. Pohlman v Madia, 2015 NY Slip Op 07379, 4th Dept 10-9-15

 

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Criteria for Class Certification Explained (Not Met Here)

The Fourth Department determined that an action by about 1900 patients who received insulin injections at defendant hospital was properly denied class certification. The patients were notified they may have been administered insulin by insulin pens shared by more than one patient and all were offered free testing for possible blood borne disease. No one tested positive for disease. The court concluded that whether a particular patient was actually exposed and whether exposure resulted in damages would have to be determined on a case by case basis. Therefore issues common to the class did not predominate:

“[A] class action may be maintained in New York only after the five prerequisites set forth in CPLR 901 (a) have been met, i.e., the class is so numerous that joinder of all members is impracticable, common questions of law or fact predominate over questions affecting only individual members, the claims or defenses of the representative parties are typical of the class as a whole, the representative parties will fairly and adequately protect the interests of the class, and a class action is superior to other available methods for the fair and efficient adjudication of the controversy” … . The class representative “bears the burden of establishing compliance with [*2]the requirements of both CPLR 901 and 902” … .

Where, as here, no plaintiff has tested positive for the blood-borne disease to which he or she allegedly was exposed as a result of defendant’s negligence, a prerequisite to recovery is proof of actual exposure to the blood-borne disease … . The issue of actual exposure will require individualized determinations with respect to each plaintiff. Further, even if members of the proposed class could establish such actual exposure, “the extent of the damages resulting therefrom [is a] question[] requiring individual investigation and separate proof as to each individual claim” … . Thus, we conclude that, “even if there are common issues in this case, those issues do not predominate” …, and “[t]he predominance of individualized factual questions . . . renders this case unsuitable for class treatment” … . Westfall v Olean Gen. Hosp., 2015 NY Slip Op 07396, 4th Dept 10-9-15

 

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Criteria for “Interest of Justice” Extension of Time to Effect Service Explained

The Fourth Department determined Supreme Court properly allowed plaintiff an extension of time to effect service on defendant in the interest of justice.  An “interest of justice” analysis in this context does not require a showing of good cause for the extension:

Pursuant to CPLR 306-b, if service is not timely made, “the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service.” Even assuming, arguendo, that plaintiff failed to establish good cause for an extension, we conclude that the court properly granted plaintiff’s cross motion in the interest of justice. That standard “requires a careful judicial analysis of the factual setting of the case and a balancing of the competing interests presented by the parties. Unlike an extension request premised on good cause, a plaintiff need not establish reasonably diligent efforts at service as a threshold matter. However, the court may consider diligence, or lack thereof, along with any other relevant factor in making its determination, including expiration of the [s]tatute of [l]imitations, the meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff’s request for the extension of time, and prejudice to defendant” … .  Swaggard v Dagonese, 2015 NY Slip Op 07398, 4th Dept 10-9-15

 

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Law Re: Liquidated Damages Explained

The Fourth Department concluded that defendant’s papers were not sufficient to warrant summary judgment invalidating a liquidated damages provision of an agreement, but noted that plaintiff may not be able to prove the validity of the provision at trial. Liquidated damages are valid only if they bear a reasonable relationship to the loss; otherwise they constitute an unenforceable penalty. Here plaintiff sold defendant a car with the condition that the car not be re-sold for one year. Defendant sold the car two weeks after purchase and plaintiff sued to enforce the $20,000 liquidated damages provision of the “agreement not to export.”  The court explained the relevant law:

Liquidated damages are enforceable only to the extent that they comprise ” an estimate, made by the parties at the time they enter into their agreement, of the extent of the injury that would be sustained as a result of breach of the agreement’ ” … . As a general rule, a liquidated damages clause is enforceable only if the stipulated amount of damages “bears a reasonable proportion to the probable loss and the amount of actual loss is incapable or difficult of precise estimation” … . If, however, the clause provides for damages that are ” plainly or grossly disproportionate to the probable loss, the provision calls for a penalty and will not be enforced’ ” … .

Here, defendant failed to meet his initial burden of establishing as a matter of law that the amount of liquidated damages does not bear a reasonable relation to plaintiff’s actual damages. In support of his motion, defendant relied on affidavits from himself and his attorney, both of whom asserted, upon information and belief only, that plaintiff sustained no actual damages, and that the liquidated damages clause is therefore unenforceable. Defendant offered no evidence in support of those conclusory assertions, and therefore failed to meet his initial burden of proof … . Thus, the court properly denied defendant’s motion, “regardless of the sufficiency of the opposing papers” … . Although defendant may be correct in contending that plaintiff cannot establish at trial that it sustained any actual damages as a result of defendant’s breach of the Agreement, it is well settled that a party moving for summary judgment must affirmatively establish the merits of its cause of action or defense “and does not meet its burden by noting gaps in its opponent’s proof” … . Great Lakes Motor Corp. v Johnson, 2015 NY Slip Op 07394, 4th Dept 10-9-15

 

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Guilty Plea to Possession of a Weapon Charge in One County Precluded Prosecution for the Same Offense in Another County (Double Jeopardy)

The Fourth Department determined charges stemming from the possession of a weapon in two counties triggered the protection against double jeopardy:

Defendant was convicted, following a jury trial, of reckless endangerment in the first degree (Penal Law § 120.25) and criminal possession of a weapon in the second degree (§ 265.03 [3]). The charges arose from an incident in which defendant discharged a firearm into the bedroom window of an occupied, residential home in Oswego County during the early morning hours of March 5, 2012. Defendant was apprehended by the police later that day at a motel in Onondaga County, where a handgun was found in his vehicle. Prior to his trial in Oswego County Court, defendant was charged with and pleaded guilty to, in Onondaga County Court, criminal possession of a weapon in the second degree for the handgun recovered from his vehicle. * * *

It is well settled that a defendant has “the right not to be punished more than once for the same crime” … . “When successive prosecutions are involved, the guarantee serves a constitutional policy of finality for the defendant’s benefit . . . and protects the accused from attempts to secure additional punishment after a prior conviction and sentence” … . This case presents a prototypical instance of a constitutional double jeopardy violation inasmuch as defendant was prosecuted and convicted of a crime in Oswego County to which he had pleaded guilty in Onondaga County. In both instances, the charge was the same: criminal possession of a weapon in the second degree pursuant to Penal Law § 265.03 (3).

We reject the People’s contention that double jeopardy did not attach because defendant was convicted in Oswego County before he was sentenced on his guilty plea in Onondaga County. “[T]ermination of a criminal action by entry of a guilty plea constitutes a previous prosecution for double jeopardy purposes” … . People v Gardner, 2015 NY Slip Op 07363, 4th Dept 10-9-15

 

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