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A Phone Call, Even When Reduced to Writing, Does Not Satisfy the City’s “Written Notice of a Defect” Requirement

The Second Department determined the requirement that the city be notified in writing of a defect (here, a raised portion of a sidewalk) before liability for failing to repair will attach was not met.  A phone call from the abutting property owner to the municipality, even if the communication is reduced to writing, is not sufficient. The court further held that the “open request” generated by the abutting property owner’s “311” call did not constitute the city’s “written acknowledgment” of a defective condition (an alternative to the “written notice” requirement):

The City demonstrated its prima facie entitlement to judgment as a matter of law dismissing the complaint insofar as asserted against it by submitting evidence showing that no written notice of any defect was received with regard to the subject sidewalk … . In opposition, the plaintiff failed to raise a triable issue of fact. Contrary to the plaintiff’s contention, neither [the abutting property owner’s] “311” call nor the records generated by the City’s Department of Parks and Recreation (hereinafter the DPR) from that call provided the City with prior written notice of the sidewalk defect. A verbal or telephonic communication to a municipal body, even if reduced to writing, cannot satisfy the prior written notice requirement … . Nor did the “open request” generated from that “311” call, which was received by the DPR clerk on the computer system, constitute a “written acknowledgment” by the City of a defective condition … . Tortorici v City of New York, 2015 NY Slip Op 06721, 2nd Dept 9-2-15

 

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Causes of Action Seeking Monetary Damages Were Not Incidental to the Article 78 Causes of Action and, Therefore, Were Not Subject to the Four-Month Statute of Limitations

The Second Department determined certain causes of action in plaintiffs’ complaint should not have been dismissed because they were not incidental to the Article 78 causes of action which were time-barred.  Plaintiffs brought a hybrid proceeding (1) to annul a town resolution assessing taxes to pay for the town’s demolition of some of plaintiffs’ property which was deemed unsafe, and (2) seeking damages for destruction of property and interruption of plaintiffs’ business. The Second Department explained the criteria for determining whether causes of action seeking monetary damages should be deemed incidental to the Article 78 causes of action (and therefore subject to the four-month statute of limitations):

Pursuant to CPLR 7806, where a CPLR article 78 petitioner seeks damages as well as the annulment of a governmental determination, “[a]ny restitution or damages granted to the petitioner must be incidental to the primary relief sought by the petitioner, and must be such as he [or she] might otherwise recover on the same set of facts in a separate action or proceeding suable in the supreme court against the same body or officer in its or his official capacity” (CPLR 7806). “[W]here the thrust of the lawsuit is the review of an adverse . . . agency determination, with the monetary relief incidental, [the] Supreme Court may entertain the entire case under CPLR article 78” … . “Whether the essential nature of the claim is to recover money, or whether the monetary relief is incidental to the primary claim, is dependent upon the facts and issues presented in a particular case” … . Contrary to the Supreme Court’s determination, the claims asserted in the first, second, and eighth causes of action were not incidental to the plaintiffs’ CPLR article 78 challenges to the Resolution and the special tax assessment … . Therefore, these causes of action were not asserted in connection with the CPLR article 78 portion of this hybrid action/proceeding, and were not barred by the four-month statute of limitations applicable to CPLR article 78 proceedings … . Hertzel v Town of Putnam Val., 2015 NY Slip Op 06708, 2nd Dept 9-2-15

 

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Fees Owed by Seller to “Financial Advisor” Hired by Seller to Facilitate the Sale Were Excluded from the Asset Purchase Agreement (APA)—Doctrine of “De Facto Merger” Did Not Apply in Absence of “Continuity of Ownership”

The First Department, in a full-fledged opinion by Justice Friedman, over a full-fledged dissenting opinion by Justice Manzanet-Daniels, determined that the buyer of a business (TBA Buyer) did not assume the seller’s (TBA Seller’s) obligation to pay a financial advisor (Fidus) hired by TBA Seller to find a buyer and facilitate a sale. The opinion focused on the precise language of the asset purchase agreement (APA) and held that any monies owed by TBA Seller to Fidus were excluded, by the terms of the APA, from the assets and liabilities TBA Buyer purchased. Much of the opinion addresses the arguments made by the dissent. With respect to the dissent’s argument that TBA Buyer assumed TBA Seller’s obligation to pay Fidus under the “de facto merger” doctrine, the majority wrote:

While the general rule is that, absent a merger or consolidation, an entity purchasing the assets of another entity does not thereby acquire liabilities of the seller not expressly transferred in the sale …, a purchase-of-assets transaction may be deemed to constitute a de facto merger between seller and buyer, even if not formally structured as such, under certain conditions … . We have recognized, however, that “the essence of a merger” … is the element of continuity of ownership, which

“exists where the shareholders of the predecessor corporation become direct or indirect shareholders of the successor corporation as the result of the successor’s purchase of the predecessor’s assets, as occurs in a stock-for-assets transaction. Stated otherwise, continuity of ownership describes a situation where the parties to the transaction become owners together of what formerly belonged to each'” … . * * *

… [U]nder New York law, continuity of ownership is “the touchstone of the [de facto merger] concept” and “thus a necessary predicate to a finding of de facto merger” … . The purpose of requiring continuity of ownership is “to identify situations where the shareholders of a seller corporation retain some ownership interest in their assets after cleansing those assets of liability” … . Stated otherwise, “[t]he fact that the seller’s owners retain their interest in the supposedly sold assets (through their ownership interest in the purchaser) is the substance’ which makes the transaction inequitable” … . By contrast, where a “buyer pays a bona fide, arms-length price for the assets, there is no unfairness to creditors in . . . limiting recovery to the proceeds of the sale — cash or other consideration roughly equal to the value of the purchased assets would take the place of the purchased assets as a resource for satisfying the seller’s debts” … . Thus, “allowing creditors to collect against the purchasers of insolvent debtors’ assets would give the creditors a windfall by increasing the funds available compared to what would have been available if no sale had taken place” … .

In this case, there is no continuity of ownership between TBA Seller and TBA Buyer because, as the record establishes (and Fidus does not dispute), none of TBA Seller’s owners acquired a direct or indirect interest in TBA Buyer (and thus in the transferred assets) as a result of the asset purchase transaction … .  Matter of TBA Global, LLC v Fidus Partners, LLC, 2015 NY Slip Op 06698, 1st Dept 9-1-15

 

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Passenger in Recreational Go-Kart Assumed the Risk of Injury Caused by Being “Bumped” by Another Go-Kart

The First Department determined plaintiff, a passenger in an electric, recreational go-kart, assumed the risk of injury alleged to have been caused by the go-kart being “bumped” by other go-karts. The court noted that (1) the written waiver of liability signed by the plaintiff was void as against public policy, and (2) the go-kart operator had a written policy prohibiting intentional “bumping,” but held that the common-law assumption of risk doctrine nevertheless applied:

[The “assumption of risk”] doctrine applies to “certain types of athletic or recreational activities,” where “a plaintiff who freely accepts a known risk commensurately negates any duty on the part of the defendant to safeguard him or her from the risk'” … . While “participants are not deemed to have assumed risks resulting from the reckless or intentional conduct of others, or risks that are concealed or unreasonably enhanced” …, the concept of a “known” risk includes “apparent or reasonably foreseeable” risks inherent in the activity … .

The activity in which plaintiff engaged is a type to which the assumption of risk doctrine is appropriately applied. “In riding the go-cart, the plaintiff . . . assumed the risks inherent in the activity” … . Those risks included the risk “that the go-cart would bump into objects” … . Of course, the “apparent or reasonably foreseeable” risks inherent in go-karting also include the risk that vehicles racing around the track may intentionally or unintentionally collide with or bump into other go-karts. It is that inherent risk which “negates any duty on the part of the defendant to safeguard [plaintiff] from the risk” … . Garnett v Strike Holdings LLC, 2015 NY Slip Op 06694, 1st Dept 9-1-15

 

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Service by “Nailing” On the Day Before the Last Possible Day and “Mailing” on the Last Possible Day Was Timely

The Court of Appeals, affirming the 4th Department, determined that service by “nailing and mailing” the petition to invalidate a designating petition was timely. The petition was “nailed” on the day before the last possible day for service and was “mailed” on the last possible day for service:

We agree with the courts below that this proceeding was properly commenced in a timely manner. Here, there is no dispute that petitioner complied with the terms of the order to show cause by nailing the papers to the door of [respondent’s] residence on July 22, 2015 and mailing the papers to that residence by express mail on July 23. [Respondent] maintains that mailing on the last day of the statutory period was jurisdictionally defective since delivery inevitably would occur outside of the statutory period. However, where the instrument of notice has been delivered by another prescribed method within the statutory period, we have rejected such contentions concerning mailing … . Matter of Angletti v Morreale, 2015 NY Slip Op 06647, CtApp 8-26-15

 

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Doctrine of Comity Precluded New York Action Attacking Bermuda Judgment

The Second Department determined Supreme Court, under the doctrine of comity, properly dismissed the complaint attacking a foreign country judgment. Plaintiff had appeared in the Bermuda case and made no showing of fraud or a public policy violation:

Generally, the courts of this State will “accord recognition to the judgments rendered in a foreign country under the doctrine of comity,” which is “the equivalent of full faith and credit given by courts to judgments of our sister States” … . Absent some showing of fraud in the procurement of the foreign country judgment or that recognition of the judgment would do violence to a strong public policy of New York State, a party who properly appeared in the action is precluded from attacking the validity of the foreign country judgment in a collateral proceeding commenced in a New York court … .

Contrary to the plaintiff’s contention, the Supreme Court properly determined that the adjudication of his claims for compensation under employment and consulting agreements with his former employer in a winding-up proceeding that was litigated in the British Overseas Territory of Bermuda precluded the instant action against the employer, among others, to recover damages for breach of contract and fraud. The plaintiff appeared in the Bermuda proceeding by submitting his claims to the Bermuda court, and made no showing of fraud or that a public policy of this State would be violated by recognizing the Bermuda court’s rejection of his claims. Accordingly, the Supreme Court properly granted that branch of the defendants’ motion which was to dismiss the complaint based on principles of comity. Basile v CAI Master Allocation Fund, Ltd., 2015 NY Slip Op 06650, 2nd Dept 8-26-15

 

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Recovery Under the Doctrine of Quantum Meruit Was Proper—Proof of Damages Was Sufficient

The Second Department determined defendants, who did construction work without a written contract, were entitled to recover under the doctrine of quantum meruit.  The court noted that proof of damages may be based solely on oral testimony as long as the witness has knowledge of the actual costs:

The elements of a cause of action sounding in quantum merit are: (1) the performance of services in good faith, (2) the acceptance of services by the person to whom they are rendered, (3) the expectation of compensation therefor, and (4) the reasonable value of the services rendered … . Here, the trial court properly determined that the … defendants performed services in good faith, that the plaintiff accepted those services, and that the … defendants expected to be compensated therefor. The court also properly determined that the … defendants provided sufficient evidence of the reasonable value of their services. The unsigned agreement furnished evidence of such value … . In addition, the … defendants presented proposals that they submitted to the plaintiff for payment in connection with additional work that they performed, invoices and proof of payments to subcontractors, and invoices and proof of payments to suppliers of materials and equipment. The fair and reasonable value of the … defendants’ services may be properly based on evidence concerning the amount that they billed the plaintiff for such services, and the amounts that subcontractors billed them for their services and for costs of supplies and equipment … .

Moreover, “[p]roof of damages may be based solely on oral testimony as long as the witness has knowledge of the actual costs” … . The record demonstrates that the … defendants, who had 20 years of experience in construction and had built over 100 homes, had knowledge of the actual costs of the services being provided … . Therefore, the … defendants’ testimony provided further evidence of the reasonable value of the services performed … . Johnson v Robertson, 2015 NY Slip Op 06658, 2nd Dept 8-26-15

 

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Although the President of a Corporation Was Also a Member of Defendant Limited Liability Company, the Corporation and Limited Liability Were Not Shown to Be “United in Interest” Such that the “Relation-Back” Doctrine Would Apply to Allow Adding the Corporation as a Defendant After the Statute of Limitations Had Run

The Second Department determined plaintiffs were not entitled to amend the complaint to add a party after the statute of limitations had passed pursuant to the “relation-back” doctrine. Although the president of the party to be added, Madjek, Inc., was a member of Madjek, LLC, (a named defendant), that relationship alone was not enough to demonstrate Madjek, LLC, and Madjek, Inc. were “united in interest” such that one would be vicariously liable for the acts of the other. The court explained the “relation-back” and “united in interest” criteria:

To establish the applicability of the relation-back doctrine, a plaintiff is required to prove that: (1) both claims arose out of the same conduct, transaction, or occurrence; (2) the new defendant is united in interest with the original defendant, and by reason of that relationship can be charged with notice of the commencement of the action such that it will not be prejudiced in maintaining its defense on the merits; and (3) the new defendant knew or should have known that, but for a mistake by the plaintiffs as to the identity of the proper parties, the action would have been brought against it as well (see CPLR 203[b] …). Once a defendant has demonstrated that the statute of limitations has expired, the burden is on the plaintiff to establish the applicability of the relation-back doctrine … .

While it is undisputed that the first prong of the test has been satisfied here, the plaintiffs failed to establish that the Madjek defendants are united in interest. Defendants are united in interest only when their interest “in the subject-matter [of the action] is such that [the defendants] stand or fall together and that judgment against one will similarly affect the other” … . Defendants are not united in interest if there is a possibility that the new party could have a different defense than the original party … . Here, the only fact that the plaintiffs established in support of their contention that the Madjek defendants were united in interest was that the president of Madjek, Inc., was a member of Madjek, LLC. This fact, standing alone, is insufficient to establish that the Madjek defendants are vicariously liable for the acts of each other and, thus, is insufficient to establish that the Madjek defendants are united in interest … . Montalvo v Madjek, Inc., 2015 NY Slip Op 06661, 2nd Dept 8-26-15

 

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County Court Should Not Have Dismissed the Indictment on a Ground Not Raised by the Defendant Without Giving the People the Opportunity to Address the Issue

After reviewing the grand jury testimony, County Court dismissed the indictment on a ground (the complainant’s lack of testimonial capacity) not raised in defendant’s omnibus motion.  The Second Department reversed because the People had not been given the opportunity to address the issue:

In an omnibus motion, the defendant sought, inter alia, to dismiss the indictment on the general grounds that the grand jury proceedings were defective and that the charges were not supported by legally sufficient evidence before the grand jury. The County Court, upon its own examination of the grand jury minutes, determined, sua sponte, that there was an issue as to the complainant’s testimonial capacity, and dismissed the indictment on the ground that the complainant lacked testimonial capacity.

The County Court erred in dismissing the indictment based upon a specific defect in the grand jury proceedings not raised by the defendant, without affording the People notice of the specific defect and an opportunity to respond. A motion to dismiss an indictment pursuant to CPL 210.20 must be made in writing and upon reasonable notice to the People (see CPL 210.45[1]). Moreover, “orderly procedures require that the People be given the opportunity to address any alleged defects prior to dismissal of an indictment”… . People v Coleman, 2015 NY Slip Op 06676, 2nd Dept 8-26-15

 

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Evidence of Photo-Array Identification Properly Allowed to Counter Inference Line-Up Was Suggestive (Defendant Restrained in Line-Up)

The Second Department determined the identification of the defendant in a photo-array was properly allowed in evidence because the defendant was restrained in the line-up, which could give rise to an inference the line-up was suggestive:

Under the circumstances of this case, the Supreme Court properly allowed the admission of evidence concerning the pretrial photographic identification of the defendant made by one of the two complainants. The evidence elicited at a suppression hearing established that the defendant had to be restrained during the lineup at which the complainants identified him due to his uncooperative behavior. Since the restraint of the defendant during the lineup could give rise to an inference that the lineup was suggestive, and the lineup identification made by the complainants was therefore unreliable, the People were properly permitted to counter this inference by introducing evidence of the prior photographic identification… . People v Adamson, 2015 NY Slip Op 06672, 2nd Dept 8-26-15

 

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