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Even Though the Insured Was Faultless, the “Additional Insureds” Endorsement Was Triggered—The Endorsement Covered Acts or Omissions by the Insured Which “Caused” the Underlying Injury Without Any Requirement that the “Cause” Entail Negligence—Here the Insured Was Not Negligent, but the Injury Was “Caused” by Insured’s Non-Negligent Acts—Therefore the Additional Insureds Were Covered Under the Policy

The First Department, in a full-fledged opinion by Justice Friedman, determined that the “additional insureds” endorsement in plaintiff-insurer’s policy did not have a “negligence trigger.” Therefore, even though it was demonstrated that the company insured under plaintiff-insurer’s policy was not negligent, the endorsement covered the “additional insureds” because there was a causal relationship between the insured’s acts and the underlying injury to a worker. The insured company, Breaking Solutions, was hired by the New York City Transit Authority (NYCTA) and the Metropolitan Transit Authority (MTA) to break up concrete for a subway construction project. Plaintiff-insurer, Burlington Insurance Co. insured Breaking Solutions.  The NYCTA and MTA were additional insureds under the policy. It was NYCTA’s responsibility to identify the location of electric cables and to shut off the power in the areas where Breaking Solutions was working. NYCTA failed to identify and shut off the power to a cable which was struck by Breaking Solutions’ excavation equipment resulting in an explosion. The plaintiff in the underlying personal injury action, an NYCTA employee, was injured by the explosion. The issue came down to the language of the “additional insureds” endorsement which referred only to injuries “caused” by the acts or omissions of the insured. Even though the probable intent of the drafters of the policy was to cover only “negligent” acts or omissions by the insured which “caused” the injury, the language of the endorsement could only be enforced as written. Because the worker’s injuries were “caused” by the (non-negligent) acts of the insured, the additional insureds (NYCTA and MTA) were covered under the terms of the policy:

While it is true that, because NYCTA had not warned the Breaking Solutions’ operator of the cable’s presence, Breaking Solutions’ “act[]” did not constitute negligence, this does not change the fact that the act of triggering the explosion, faultless though it was on Breaking Solutions’ part, was a cause of [the worker’s] injury. The language of the relevant endorsement, on its face, defines the additional insured coverage afforded in terms of whether the loss was “caused by” the named insured’s “acts or omissions,” without regard to whether those “acts or omissions” constituted negligence or were otherwise actionable. Burlington Ins. Co. v NYC Tr. Auth., 2015 NY Slip Op 06481, 1st Dept 8-11-15

 

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Department of Motor Vehicles Did Not Exceed Its Powers In Promulgating Regulations Re: Lifetime Revocation of Driver’s Licenses, Five-Year Stay of Relicensure, and Subsequent Five-Year Restricted License/Ignition Interlock Period for Alcohol-Related Convictions

The Third Department, in a full-fledged opinion by Justice Peters, over a two-justice dissent, determined that petitioner’s challenges to Department of Motor Vehicles’ (DMV’S) regulations re: (1) the lifetime revocation of a driver’s license for alcohol-related convictions, (2) the five-year stay of relicensure for persons with three alcohol-related convictions, and (3) the subsequent five-year period with the imposition of a restricted license and installation of ignition interlock device, were properly dismissed as nonjusticiable (petitioner not yet affected by any of them). The court went on to determine the DMV, by promulgating these regulations, did not encroach upon the powers of the legislature. The dissenters argued that some of the challenges were justiciable and the DMV in fact exceeded its powers by mandating a five-year stay of relicensure for anyone with three alcohol-related convictions within a 25-year lookback, as well as the subsequent five-year period allowing only a restricted license with the installation of an ignition interlock device. The majority explained the general principles for analyzing whether an agency has exceeded its powers:

To determine whether an administrative agency has usurped the power of the Legislature, courts must consider whether the agency: (1) “operat[ed] outside of its proper sphere of authority” by balancing competing social concerns in reliance “solely on [its] own ideas of sound public policy”; (2) engaged in typical, “interstitial” rulemaking or “wrote on a clean slate, creating its own comprehensive set of rules without the benefit of legislative guidance”; (3) “acted in an area in which the Legislature has repeatedly tried — and failed — to reach agreement in the face of substantial public debate and vigorous lobbying by a variety of interested factions”; and (4) applied its “special expertise or technical competence” to develop the challenged regulations (Boreali v Axelrod, 71 NY2d at 12-14 …).  Matter of Acevedo v New York State Dept. of Motor Vehs., 2015 NY Slip Op 06467, 3rd Dept 8-6-15

 

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Business Records Exception to the Hearsay Rule Established Possession of Note at the Time Foreclosure Was Commenced

The Third Department determined plaintiff bank demonstrated it had standing to foreclose by sufficient proof it had possession of the underlying note at the time the foreclosure proceeding was commenced. Proof of possession of the note was by an affidavit invoking the business records exception to the hearsay rule. The court noted that evidence a document received from another entity was filed does not qualify the documents as business records. Here, however, the affidavit included sufficient additional information to demonstrate the applicability of the exception:

While “the mere filing of papers received from other entities, even if they are retained in the regular course of business, is insufficient to qualify the documents as business records” …, such records are nonetheless admissible “if the recipient can establish personal knowledge of the maker’s business practices and procedures, or that the records provided by the maker were incorporated into the recipient’s own records or routinely relied upon the recipient in its business” … . To be admissible, these documents should carry the indicia of reliability ordinarily associated with business records … . Deutsche Bank Natl. Trust Co. v Monica, 2015  Slip Op 06453, 3rd Dept 8-6-15

 

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Failure to Adequately Describe Location of Slip and Fall Rendered Notice of Intention Jurisdictionally Defective

The Third Department determined claimant’s notice of intention was jurisdictionally defective because it did not adequately describe the location of plaintiff’s alleged slip and fall on ice and snow:

Court of Claims Act § 11 (b) requires that a notice of intention to file a claim set forth, among other things, “the time when and place where such claim arose” … . While “absolute exactness” is not necessary … a claimant must “provide a sufficiently detailed description of the particulars of the claim to enable [defendant] to investigate and promptly ascertain the existence and extent of [its] liability” … . “Failure to abide by these pleading requirements constitutes a jurisdictional defect mandating dismissal of the claim, even though this may be a harsh result” … .

Claimant’s notice of intention states that he slipped and fell on unseen ice on a sidewalk “on the campus of the State University of New York at Oneonta.” While we recognize that notices of intention are reviewed less strictly than claims …, we nevertheless find that this generalized description of the location at which claimant fell was insufficient to permit defendant to investigate its liability … . Because claimant’s notice of intention was deficient, claimant did not receive the benefit of the two-year extension and was obligated to file his claim within 90 days of its accrual … . As claimant failed to do so, his claim was properly dismissed. Sommer v State of New York, 2015 NY Slip Op 06472, 3rd Dept 8-6-15

 

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Question of Fact Whether Firefighter’s Injury Was Proximately Caused by Driver’s Negligent Operation of His Car Under the “Danger Invites Injury” Doctrine—Firefighter Was Injured Removing Injured Driver from His Car After an Accident

The Second Department determined a firefighter may be entitled to coverage under his own insurance policy’s supplementary uninsured/underinsured motorists (SUM) coverage. Plaintiff-firefighter responded to a car accident and injured his shoulder removing the injured driver, Goodman, from his car. Plaintiff recovered the limit ($25,000) of Goodman’s policy and sought to recover under his own SUM endorsement. Reversing Supreme Court, the Second Department held it could not be determined as a matter of law that plaintiff’s injury was not proximately caused by Goodman’s negligent use of his car. Plaintiff had invoked the “danger invites rescue” doctrine in support of his argument that his shoulder injury was proximately caused by Goodman’s negligence:

SUM endorsements provide coverage only when the injuries are “caused by an accident arising out of such underinsured motor vehicle’s ownership, maintenance or use” … . Factors to be considered in determining whether an accident arose out of the use of a motor vehicle include whether the accident arose out of the inherent nature of the vehicle and whether the vehicle itself produces the injury rather than merely contributes to cause the condition which produces the injury … . ” [T]he [vehicle] itself need not be the proximate cause of the injury,’ but negligence in the use of the vehicle must be shown, and that negligence must be a cause of the injury'” … . ” To be a cause of the injury, the use of the motor vehicle must be closely related to the injury'” … . “[T]he use of the underinsured vehicle must be a proximate cause of the injuries for which coverage is sought” … .

[Plaintiff] invoked the doctrine of “danger invites rescue” to establish that Goodman’s negligent use of the underinsured vehicle proximately caused his injuries. That doctrine imposes liability upon a party who, “by his [or her] culpable act has placed another person in a position of imminent peril which invites a third person, the rescuing plaintiff, to come to his [or her] aid” … . The doctrine also applies “where the culpable party has placed himself [or herself] in a perilous position which invites rescue” … . “In order for the doctrine to apply, the rescuer must have had a reasonable belief that the person being rescued was in peril” … .

Here, [the insurer] failed to establish that [plaintiff] was not entitled to coverage under the SUM endorsement. The evidence in the record establishes that Goodman’s negligent use of his vehicle directly caused the accident that led to him being trapped and in obvious need of medical attention, which, in turn, led to Rich’s intervention and resulting injuries … . It cannot be said, as a matter of law, that Goodman’s negligent use of his vehicle was not a proximate cause of [plaintiff’s] injuries under the doctrine of danger invites rescue. Accordingly, the Supreme Court should have denied that branch of the petition which was to permanently stay arbitration. Matter of Encompass Indem. Co. v Rich, 2015 NY Slip Op 06432, 2nd Dept 8-5-15

 

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Plaintiffs, Who Provided Management Services to a Club Described in the Media as “Run by the Mafia,” Did Not Raise a Question of Fact About Whether the Remark Was “Of and Concerning” the Plaintiffs by “Innuendo”

The First Department, in a full-fledged opinion by Justice Tom, over a two-justice partial dissent, determined that the defamation claims were properly dismissed. The plaintiffs provided management services to a club, Cheetah’s, but did not own or run the club (plaintiffs provided food services and booked dancers). The club was raided by federal authorities and arrests were made based upon allegations of illegal “trafficking” of women who performed as exotic dancers at the club. A news report about the raid characterized the club as “run by the mafia.”  The defamation claims were deemed properly dismissed because the relevant remarks were directed to “Cheetah’s,” and were not, therefore, “of and concerning” the plaintiffs by “innuendo.” The dissenters argued plaintiffs had raised a question of fact whether the “run by the mafia” statement was “of and concerning” them.  The majority explained:

A plaintiff bears the burden of pleading and proving that the asserted defamatory statement “designates the plaintiff in such a way as to let those who knew him understand that he was the person meant” … . While a plaintiff may use extrinsic facts to prove that the statement is “of and concerning” him, he must show the reasonableness of concluding that the extrinsic facts were known to those to whom the statement was made … . Plaintiffs seek to state their case by innuendo. As this Court stated:

” The question which an innuendo raises, is [one] of logic. It is, simply, whether the explanation given is a legitimate conclusion from the premise stated.’ The innuendo, therefore, may not enlarge upon the meaning of words so as to convey a meaning that is not expressed” (… quoting Tracy v Newday, Inc., 5 NY2d 134, 136 [1959], affd 25 NY2d 943 [1969]).

The suggestion that the individual plaintiffs are necessarily identified as members of organized crime because they are employees of entities that provide management services to Cheetah’s — reported to be “run” by the Mafia — is simply not logical. It is based on innuendo and constitutes an attempt to enlarge the concept of managerial services to include domination and control of an organization by force, whether actual or threatened, in contravention of the rule set forth in Tracy. Three Amigos SJL Rest., Inc. v CBS News Inc., 2015 NY Slip Op 06409, 1st Dept 8-4-15

 

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Apportionment of Damages Between the City and the Contractor Who Negligently Set Up Lane Closures for Its Highway Work Was Not Supported by the Weight of the Evidence—New Trial for Apportionment of Damages Ordered/Two-Justice Dissenting Opinion Argued that Plaintiffs’ Counsel’s Vouching for His Own Credibility and Attacking the Credibility of Defense Witnesses In Summation Warranted a New Trial

The First Department, in a full-fledged opinion by Justice Manzanet-Daniels, over a two-justice dissenting opinion, determined the weight of the evidence did not support a 65%/35% apportionment of damages to the city (65%) and the contractor (35%) who set up lane closures for highway repair work. Plaintiff was severely injured in an accident which the jury found was the result of the failure to adequately warn drivers of upcoming lane closures. Because the lane closures were the responsibility of the contractor, the majority determined the 65%/35% damages apportionment was not supported the weight of the evidence and sent the matter back for a new trial on the apportionment of liability. Much of the opinion, including the entirety of the dissenting opinion, focused on the propriety of remarks made by plaintiffs’ counsel during summation (vouching for his own credibility, attacking the credibility of defense witnesses, etc.):

It is well settled that trial counsel is afforded wide latitude in presenting arguments to a jury in summation … . During summation, an attorney “remains within the broad bounds of rhetorical comment in pointing out the insufficiency and contradictory nature of a plaintiff’s proofs without depriving the plaintiff of a fair trial” … . However, an attorney may not “bolster his case . . . by repeated accusations that the witnesses for the other side are liars” …. .

Although the City failed to object to the bulk of the challenged comments during summation, the City moved for an immediate mistrial based on comments impugning defense counsel, the reference to “Wang and his gang,” and plaintiffs’ counsel’s allegedly vouching for his own credibility. We find that although some of the comments were highly inflammatory, they did not ” create a climate of hostility that so obscured the issues as to have made the trial unfair'” … . The jury had ample reason to question the testimony of Officer Pagano, lessening the danger that they were improperly influenced by plaintiff’s counsel’s remarks. Gregware v City of New York, 2015 NY Slip Op 06408, 1st Dept 8-4-15

 

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The Purchasers’ Purported Retraction of an Earlier Repudiation of the Purchase Contract Was Not “Bona Fide” Because It Imposed a Condition for the Retraction Which Was Not Contemplated by the Purchase Contract—Sellers Entitled to Keep $365,000 Downpayment Based Upon Purchasers’ Failure to Close

The First Department, over an extensive dissent by Justice Saxe, determined that the defendants, who had entered an agreement to purchase plaintiffs’ condominium, were not justified in repudiating the agreement based upon on-going “firestopping” work in the condominium-building, and, even if the agreement had been effectively repudiated, the purported retraction of the repudiation was not “bona fide.”  Therefore, the plaintiffs-sellers were entitled to keep the purchasers’ $365,000 downpayment based upon purchasers’ failure to close. The issue on appeal came down to whether the plaintiffs-sellers breached a paragraph of the agreement which required them to clear the unit of any code violations of which the plaintiffs had been notified in writing by the condominium board of managers. The majority determined no such notice had been given to the plaintiffs-sellers. The majority further determined the defendants’ purported retraction of the repudiation was not “bona fide” because it was conditioned on proof of the completion of the firestopping work, thereby imposing a condition not contemplated by the contract:

… [D]efendants point to no provision in the contract that justifies their initial purported reason for canceling the contract, which was that it threatened the safety of themselves and their children. Nor do they claim that plaintiffs somehow prevented them from learning of the firestopping issue. To the contrary, the contract itself referred expressly to a … notice from the board of managers that discussed the status of the then ongoing firestopping project. This was sufficient to place defendants on notice of a potential issue that might have given them pause to execute an agreement in which they acknowledged they were accepting the unit as is.

Because defendants had no right to insist that the firestopping issue be resolved as a condition to closing, their “retraction” of the purported repudiation was ineffective. In order to be effective, a retraction of a contract repudiation must be bona fide … . Defendants’ acceptance of plaintiffs’ offer to schedule a closing was not bona fide, because it was conditioned on plaintiffs’ provision of documents and information establishing to defendants’ satisfaction that the firestopping had been completed. We disagree with the dissent that the letter from defendants’ counsel conditionally retracting the repudiation creates an issue of fact as to whether it was bona fide. That letter unquestionably adhered to defendants’ position, which had supported the initial repudiation, that plaintiffs had a contractual obligation to ensure proper firestopping in the apartment before delivering the deed. The clear implication of the letter was that, if plaintiffs could not establish to defendants’ complete satisfaction that the firestopping work had been performed, defendants would once again refuse to close. As stated above, this position was untenable, and clearly, contrary to the dissent’s view, sought to insert an additional material term or condition into the contract. Again, nothing in the contract required plaintiffs to perform any firestopping, and plaintiffs were entitled to view defendants’ continued insistence on proof that they had done so as an justified refusal to perform under the agreement. Beinstein v Navani, 2015 NY Slip Op 06403, 1st Dept 8-4-15

 

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Defendant Should Have Been Allowed to Present Expert Evidence Re: False Confessions—Criteria Explained—New Trial Ordered

The Second Department addressed several significant issues in a lengthy decision ordering a new trial in a murder case (which will be the defendant’s fifth trial in the matter). Although the defendant’s girlfriend had testified against the defendant in prior proceedings, she feigned a loss of memory and refused to testify in the most recent trial. County Court properly held that the girlfriend was “unavailable” within the meaning of Criminal Procedure Law 670.10 thereby allowing her prior testimony to be read into evidence. County Court should not, however, have allowed the People to amend the bill of particulars which, in response to the defendant’s alibi evidence presented in prior trials, extended the time period in which the crimes were alleged to have occurred. The focus of the decision, and the reason for reversal, was County Court’s error in excluding defendant’s expert testimony about false confessions. The confession was the principal evidence in the People’s case and was the product of seven hours of interrogation, 75 minutes of which was videotaped. The Second Department addressed the issue in depth:

Here … the proffered expert testimony was relevant to this particular defendant and the particular circumstances of the case, including the approximately seven-hour interrogation, the videotaped confession, and the lack of physical evidence or eyewitness testimony linking the defendant to the crime … .

In addition to reports from two relevant experts, the County Court was presented with a 75-minute video of the defendant’s late-night confession, taken after the defendant was in custody for almost 14 hours and interrogated for approximately 7 of those almost 14 hours. Among other things, the video shows that the defendant, whose hands were cuffed in front of him during the interview, spoke slowly and sat in a slouched position for a substantial portion of the interview. Further, the officers repeatedly employed suggestive and leading questions, fed the defendant specific details related to the crime scene, and used rapport-building techniques. * * *

Upon our consideration of the submissions and opinions of both experts, we find that the defendant made a thorough proffer that he was “more likely to be coerced into giving a false confession” than other individuals. His proffer clearly indicated that he was intellectually impaired, highly compliant, and suffered from a diagnosable psychiatric disorder, and also that the techniques used during the interrogation were likely to elicit a false confession from him … . Moreover, in light of the foregoing, the fact that no one had videotaped the nearly six hours of the interrogation that had been conducted before the confession was made raises significant concerns. People v Days, 2015 NY Slip Op 06731, 2nd Dept 9-2-15

 

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Verified Statement Demonstrated Site Contractor’s Improper Use of Funds Held in Trust for the Payment of Subcontractors—Plaintiff Subcontractor Entitled to Summary Judgment on Liability Re: Subcontractor’s Mechanic’s Lien

The Third Department affirmed Supreme Court’s grant of summary judgment to plaintiff subcontractor in plaintiff’s action against the site contractor seeking payment for completed work. Plaintiff alleged it was underpaid for its work and filed a mechanic’s lien. The general contractor withheld 1 1/2 times the amount of the lien from its payment to the site contractor.  The plaintiff demanded a verified statement from the site contractor (showing the receipt and disbursement of funds held by the site contractor in trust for subcontractors) pursuant to Lien Law 76. The verified statement submitted by the site contractor indicated a multi-million dollar discrepancy between the amount it received and the amounts paid out. Because of the discrepancy, the site contractor was found to have used the funds it held in trust for subcontractors for purposes other than the trust. Plaintiff was therefore entitled to summary judgment on liability:

Pursuant to Lien Law article 3-A, owners, contractors and subcontractors are required to maintain funds in trust in order to “provide[] protection to certain parties involved in the improvement of real property, ensuring that they will be properly compensated for their services” … . Specifically, and insofar as is relevant here, “[t]he funds received by a contractor or subcontractor. . . shall be a separate trust and the contractor or subcontractor shall be the trustee thereof” (Lien Law § 70 [2]). A trustee, in turn, is required to, among other things, maintain books or records with respect to each trust, detailing the trust assets receivable, trust accounts payable, trust funds received, trust payments made with trust assets and transfers in repayment of or to secure advances made pursuant to a notice of lending … . A beneficiary of such a trust is entitled to, among other things, “receive a verified statement setting forth the entries with respect to the trust contained in such books or records” … . “Any use of the trust funds other than the payment of claims under the contract . . . is an improper diversion of trust assets” …, and the trustee’s failure to keep the statutorily required books and records “shall be presumptive evidence that the trustee has applied or consented to the application of trust funds . . . for purposes other than a purpose of the trust” (Lien Law § 75 [4]). Anthony DeMarco & Sons Nursery, LLC v Maxim Constr. Serv. Corp., 2015 NY Slip Op 06394, 3rd Dept 7-30-15

 

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