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Preventing a Party from Carrying Out Its Agreement Constitutes a Material Breach

The Third Department determined Supreme Court properly held that defendants breached the contract. Plaintiff owned a business which produced and sold aggregate stone. Plaintiff entered a lease agreement with defendants which allowed plaintiff to remove stone from a quarry on defendants’ property and required that defendants pay “rent” based upon the amount of stone removed. No stone was removed for some time. Defendants sent a letter indicating they would consider the lease null and void unless plaintiff started up the business within 90 days. The parties then entered discussions, some stone was removed and rent was paid. Thereafter, the defendants unilaterally declared the lease null and void, ordered plaintiff to remove its equipment, and prevented plaintiff from entering the property. Supreme Court found plaintiff had done enough to comply with defendants’ initial demand that plaintiff start up its business and, therefore, defendants’ actions, which prevented plaintiff from carrying out its agreement, constituted a material breach. The Third Department agreed:

“In the case of every contract there is an implied undertaking on the part of each party that he [or she] will not intentionally and purposely do anything to prevent the other party from carrying out the agreement on his [or her] part” … . In the April 1996 letter, [defendant] advised [plaintiff]  that the lease was null and void, threatened legal action if plaintiff did not “promptly” remove its equipment from the quarry, and stated that [defendant] did not consider himself bound by the lease because it was void. Two months later, defendants’ counsel advised plaintiff’s counsel that it was defendants’ position that the lease had been rescinded and that plaintiff “ha[d] no right to enter upon the property.” … “[R]efusing to permit the other party to perform is a breach of contract” … . Here, defendants’ unilateral declaration that the lease was null and void, and their threat of legal action if plaintiff did not promptly remove its equipment, followed shortly thereafter by the statement of defendants’ counsel that plaintiff had no right to enter the property, constituted a refusal to permit plaintiff to perform. Galusha & Sons, LLC v Champlain Stone, Ltd, 2015 NY Slip Op 06286, 3rd Dept 7-23-15

 

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Improper Evidence of Uncharged Offenses, a Police Officer’s Vouching for the Reliability and Credibility of the People’s Central Witness, and the Court’s Failure to Give Limiting Instructions to the Jurors after Sustaining Objections to Improper Testimony Deprived Defendant of a Fair Trial

The Third Department reversed defendant’s conviction based upon several errors including the improper presentation of evidence of uncharged crimes attributed to the defendant and a police officer’s vouching for the reliability and credibility of the confidential informant (CI), upon whose testimony the People’s case depended. The jury heard evidence of defendant’s participation in a drug offense identical to that for which he was on trial. Even though objection to the testimony was sustained and the testimony struck, no limiting instructions were given to the jury. Evidence of defendant’s sitting at a table on which were large amounts of heroin and crack cocaine was also improperly presented. Objection to that testimony was overruled. With respect to the police officer’s vouching for the credibility and reliability of the CI, the defense objection to that testimony was sustained, but no curative instructions were given to the jury:

At trial … the CI testified that defendant was not only present during [a] controlled purchase of crack cocaine, but that he had also participated in the transaction by providing the actual drugs. County Court denied defendant’s prompt motion for a mistrial, but otherwise sustained his objection and struck this portion of the CI’s testimony, without further limiting instructions to the jury. In our view, this revelation was highly prejudicial, as it related to a recent uncharged crime that was nearly identical to the sale for which defendant was on trial … . Shortly thereafter, the CI recounted that, upon entering the apartment on October 9, 2012, he had observed defendant sitting at a table “with large amounts of heroin and crack cocaine in front of him.” Although no reference to “heroin” was included in the People’s Molineux proffer, or otherwise previously disclosed, the court overruled defendant’s objection, permitting further testimony from the CI about the presence of heroin. Because defendant was not charged with possession or sale of heroin, it cannot be said that this evidence was directly related to or in any way necessary to explain his alleged possession and sale of crack cocaine such that it was inextricably interwoven into the CI’s narrative … . Significantly, the court did not attempt to cure the prejudice arising from the CI’s improper testimony by issuing an instruction either at the time of defendant’s objection or during the jury charge … . * * *

Further prejudice resulted from the People’s redirect examination of [officer] Gillis, who stated that the CI was “very reliable and very trustworthy.” After County Court overruled defendant’s objection, and characterized the testimony as “opinion,” Gillis elaborated that the CI had “never given [him a] reason to not believe anything that [the CI] is telling [him].” Allowing Gillis to vouch for the CI’s credibility was clearly improper … . The effect was compounded by the People’s summation, wherein the prosecutor surmised that law enforcement had used the CI for several years because of his reliability … . While we recognize that County Court sustained defendant’s objection, no curative instruction was issued, and we remain concerned that the prosecutor’s remark amplified the effect of Gillis’ improper vouching … . People v Nicholas, 2015 NY Slip Op 06269, 3rd Dept 7-23-15

 

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Road Washout Was Due to a Highway Design Issue for Which Adequate Remedial Planning Had Been Made—The Washout Was Not, Therefore, Caused by a Highway Maintenance Deficiency to Which the Negligence Standard Applies—State Entitled to Qualified Immunity Re: a Vehicle Accident Caused by a Sinkhole

The Third Department determined the maintenance and construction of a culvert, around which the road repeatedly washed out, was a highway design issue, for which the state was protected by qualified immunity, not a highway maintenance issue, for which a negligence standard applies. Claimant was injured when his vehicle went into a sinkhole near the culvert.

Municipalities unquestionably have a duty to maintain roads in a reasonably safe condition … . With respect to highway safety and design, however, defendant is “accorded a qualified immunity from liability arising out of a highway planning decision” … . Here, the gravamen of the claim is that the 9-foot-high, 15-foot-wide oval culvert that carried the Spuytenduiveil Creek underneath Route 8 was too small and should have been replaced. Plaintiff maintains that this condition presented a maintenance and repair issue that defendant was required to address in its proprietary capacity for which basic negligence and not sovereign immunity principles apply … . * * *

In order to successfully invoke the qualified immunity defense, defendant had the burden of demonstrating that its decision with regard to the replacement of the culvert “‘was the product of a deliberative decision-making process'” … . Even with design planning issues, liability may exist where the municipality does not adequately analyze the condition or if there is no reasonable basis for its plan … . If a remedial plan is developed, “liability may result from a failure to effectuate the plan within a reasonable period of time,” but “a reasonable delay justified by design considerations [or] a legitimate claim of funding priorities would not be actionable” … .

Based upon our review of the probative evidence, we agree with the Court of Claims that the replacement of the culvert presented a design and not a maintenance issue and that defendant was entitled to qualified immunity. Evans v State of New York, 2015 NY Slip Op 06288, 3rd Dept 7-23-15

 

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Cotenant’s Exclusive Possession and Payment of Taxes and Maintenance Costs, Standing Alone, Are Not Enough to Establish Adverse Possession As Against a Cotenant/Criteria for Ouster of Cotenant Not Met

The Third Department determined that the motion to dismiss for failure to state a cause of action was properly granted. A cotenant who had resided at the property, maintained the property, and paid the taxes for over two decades, brought an action seeking exclusive ownership based upon ouster of defendant cotenant and/or adverse possession. Neither the complaint nor plaintiff’s submissions established the statutory criteria for ouster or adverse possession (Real Property Actions and Proceedings Law [RPAPL] 541) . There was no unequivocal expression by the possessory cotenant that the property was being adversely possessed, and the inclusion of the defendant cotenant’s name on a property insurance policy belied adverse possession. The court noted that exclusive possession and payment of maintenance expenses by a cotenant, standing alone, do not establish adverse possession:

The law that would have provided … plaintiff a valid legal claim with regard to the underlying property dispute is RPAPL 541, which provides that, “[w]here the relation of tenants in common has existed, the occupancy of one tenant . . . is deemed to have been the possession of the other, notwithstanding that the tenant so occupying the premises . . . has claimed to hold adversely to the other. But this presumption shall cease after the expiration of ten years of continuous exclusive occupancy by such tenant, . . . or immediately upon an ouster by one tenant of the other and such occupying tenant may then commence to hold adversely to his [or her] cotenant.” It is well settled that, “absent ouster, the period required by RPAPL 541 is 20 years of continuous exclusive possession before a cotenant may be said to acquire full title by adverse possession” … .

We reject plaintiff’s contention that she and Lindine ever ousted defendant or defendant’s parents from the property. An ouster will not be deemed to have occurred unless the possessory cotenant, either through words or actions, unequivocally expresses to the nonpossessory cotenant that the property is being adversely possessed … . * * *

Plaintiff alternatively contends that, even if no ouster has been established, she and Lindine adversely possessed the property, given their exclusive use of it for more than two decades (see RPAPL 541). In support of this argument, plaintiff emphasizes that she and Lindine paid all taxes and expenses for the property, and made all necessary repairs to its structural improvements. Defendant never visited the property during the years that plaintiff and Lindine lived there permanently and defendant’s parents, it is claimed, only did so twice. Even accepting these allegations as true, “exclusive possession and the payment of maintenance expenses by a [possessory] cotenant are[, standing alone,] insufficient to establish a claim of right for purposes of adverse possession as against a cotenant” … . Lindine v Iasenza, 2015 NY Slip Op 06275, 3rd Dept 7-23-15

 

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The Treatment of Pre-Answer Motions to Dismiss an Action for a Declaratory Judgment Explained

The Second Department explained how pre-answer motions to dismiss are handled in the context of an action for a declaratory judgment:

Generally speaking, ” [a] motion to dismiss a declaratory judgment action prior to the service of an answer presents for consideration only the issue of whether a cause of action for declaratory relief is set forth, not the question of whether the plaintiff is entitled to a favorable declaration'” … . As such, “where a cause of action is sufficient to invoke the court’s power to render a declaratory judgment . . . as to the rights and other legal relations of the parties to a justiciable controversy’ (CPLR 3001; see CPLR 3017[b]), a motion to dismiss that cause of action should be denied” … .

Upon a motion to dismiss for failure to state a cause of action, a court may reach the merits of a properly pleaded cause of action for a declaratory judgment where ” no questions of fact are presented [by the controversy]'” … . Under such circumstances, the motion to dismiss the cause of action for failure to state a cause of action “should be taken as a motion for a declaration in the defendant’s favor and treated accordingly” … . North Oyster Bay Baymen’s Assn. v Town of Oyster Bay, 2015 NY Slip Op 06225, 2nd Dept 7-22-15

 

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Requirements for Preservation of Collateral (Security for a Promissory Note) Explained

In an action alleging the failure to preserve collateral which secured a promissory note, the Second Department determined summary judgment on the underlying promissory note should not have been granted because plaintiffs raised a question of fact about the commercial reasonableness of the handling of the collateral:

“Under both the common law and the Uniform Commercial Code, a secured party has a duty to exercise reasonable care in the custody and preservation of collateral in its possession. The obligation remains the same regardless of whether the secured party came into possession of the property before or after the debtor’s default” … .

“After default, a secured party may sell, lease, license or otherwise dispose of any or all of the collateral in its present condition or following any commercially reasonable preparation or processing” (UCC 9-610[a]). “Every aspect of a disposition of collateral, including the method, manner, time, place, and other terms, must be commercially reasonable” (UCC 9-610[b]). A secured party that disposes of collateral under section 9-610 is required to send to, among others, the debtor and any secondary obligor, notification of disposition (see UCC 9-611[b], [c]). Nugent v Hubbard, 2015 NY Slip Op 06226, 2nd Dept 7-22-15

 

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General Obligations Law Prohibition of Indemnification Agreements Which Exempt a Lessor from Its Own Negligence Does Not Apply to a Commercial Lease Negotiated at Arm’s Length Between Sophisticated Parties With an Insurance Procurement Requirement

The Second Department determined the lessor of a shopping center, Montauk Properties, under the terms of its lease with a supermarket, Gambar Food, was entitled to indemnification re: plaintiff’s slip and fall on a sidewalk in front of the supermarket.  Although the terms of the lease exempted the lessor from liability for its own negligence, which is a violation of General Obligations Law (GOL) 5-321, GOL 5-231 does not apply to a commercial lease negotiated at arm’s length between sophisticated parties with an insurance procurement requirement:

The lease between Montauk Properties and Gambar Food requires Gambar Food to indemnify Montauk Properties “for any matter or thing growing out of the occupation of the demised premises or of the streets, sidewalks or vaults adjacent thereto.” The plaintiff’s accident falls within the scope of this indemnification provision …, which, under its broadly drawn language, obligates Gambar Food to indemnify Montauk Properties for its own negligence. Although General Obligations Law § 5-321 provides that an agreement that purports to exempt a lessor from its own negligence is void and unenforceable, the subject indemnification provision is not rendered unenforceable by this statute. “[W]here, as here, the liability is to a third party, General Obligations Law § 5-321 does not preclude enforcement of an indemnification provision in a commercial lease negotiated at arm’s length between two sophisticated parties when coupled with an insurance procurement requirement” … . Campisi v Gambar Food Corp., 2015 NY Slip Op 06205, 2nd Dept 7-22-15

 

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“Voluntary Payment Doctrine” Explained and Applied to Preclude Recovery

The Second Department determined the “voluntary payment doctrine” precluded recovery against the defendant. Plaintiff had an agreement with a consignee that plaintiff’s liability associated with the export of fine art would be limited to $40,000. Plaintiff hired defendant to transport the fine art to the consignee, but the art was seized by customs because the documentation was incomplete. The plaintiff, despite the $40,000 liability cap, voluntarily compensated the consignee for its loss (around $240,000). Then plaintiff sued defendant for the $240,000. Because the plaintiff made that payment voluntarily, the “voluntary payment doctrine” required dismissal of the complaint:

“[T]he voluntary payment doctrine . . . bars recovery of payments voluntarily made with full knowledge of the facts, and in the absence of fraud or mistake of material fact or law” … . Here, the defendant established its prima facie entitlement to judgment as a matter of law through the submission of, among other things, a copy of the contract between the plaintiff and the consignee, which included the limitation of liability provision that capped the plaintiff’s liability to the consignee at $40,000. This demonstrated, prima facie, that the plaintiff’s payment to the consignee of anything more than $40,000 was voluntary … . Further, the defendant demonstrated, prima face, that the plaintiff recovered the full $40,000 for which it was liable to the consignee from its insurance company. Hedley’s, Inc. v Airwaves Global Logistics, LLC, 2015 NY Slip Op 06215, 2nd Dept 7-22-15

 

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A Defendant’s Status as an Undocumented Alien Cannot Be the Sole Ground for Imposing Incarceration As Opposed to Probation

In a case of first impression, the Second Department, in a full-fledged opinion by Justice Dillon, determined that a defendant’s status as an undocumented alien cannot constitute the sole reason for a sentence of incarceration as opposed to probation. County Court reasoned that as soon as a sentence of probation was imposed upon an undocumented alien, the defendant would be in violation of probation by virtue of his/her undocumented status. Therefore, County Court concluded, a sentence of probation was not available to any undocumented alien. The Second Department disagreed, holding that a defendant’s status as an undocumented alien can be considered in determining the appropriate sentence, but it cannot be the sole ground for imposing a sentence of incarceration. To pre-determine that an undocumented alien is not eligible for probation violates due process and equal protection, constitutional rights which are afforded undocumented aliens:

… [W]e reach two conclusions. First, courts may appropriately consider a defendant’s undocumented immigration status in imposing criminal sentences. The decision to impose or not impose a sentence of probation may legitimately be affected by factors directly related to undocumented status. Those factors include, but are not necessarily limited to, the likelihood of the defendant’s deportation during the probationary period, the defendant’s history, if any, of repeated departures from and illegal reentries into the United States, the presence or absence of family in the United States, the defendant’s employment history, and the defendant’s legal employability. Second, it is impermissible for a sentencing court to refuse to consider a sentence of probation for an undocumented defendant solely on the basis of his or her immigration status. Doing so violates the Due Process and Equal Protection clauses of the Federal and New York constitutions by treating certain defendants differently from others based upon their undocumented presence in this state. In other words, a defendant’s undocumented immigration status may be a factor a court takes into account in determining whether to include probation as part of a sentence, but such status cannot be the sole factor a court relies upon in denying a probationary sentence and in imposing a term of imprisonment instead. People v Cesar, 2015 NY Slip Op 06252, 2nd Dept 7-22-15

 

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Prosecutor’s Reasons for Challenging an Hispanic Juror Were Pretextual—New Trial Ordered

The Second Department determined the prosecutor’s proffered reason for challenging an Hispanic juror was pretextual and ordered a new trial. Two Hispanic jurors were challenged by the prosecutor. The prosecutor’s reason for challenging one of them was the juror’s alleged inability to understand questions. The Second Department determined there was no support for that reason in the record:

… [A] new trial is necessary because the prosecutor exercised one of her peremptory challenges in a discriminatory manner with respect to a Hispanic male prospective juror … . Under both state and federal law, the use of peremptory challenges in a racially discriminatory manner is prohibited … . Trial courts must follow a three-step protocol to determine whether a party has used its peremptory challenges in a racially discriminatory manner. First, the moving party contesting the peremptory challenges must allege sufficient facts to make a prima facie showing that the prospective jurors were challenged because of race … . Where the moving party makes such a prima facie showing, the burden shifts to the nonmoving party to offer a race-neutral reason for each of the disputed peremptory challenges … . If such reasons are offered, the burden shifts back to the moving party to demonstrate that the reasons, although facially neutral, are pretextual … . The third step requires the trial court to make an ultimate determination as to whether the proffered reasons are pretextual … . * * *

Contrary to the trial court’s determination, the facially race-neutral reason proffered by the prosecutor for exercising a peremptory challenge with respect to the Hispanic male prospective juror was pretextual. Although the prosecutor argued that this prospective juror had a difficult time understanding the trial court’s questions during voir dire, this claim is not borne out by the record. Rather, the record shows that the prospective juror was repeatedly asked the same question regarding his willingness to follow the law and assured the trial court more than once that he would follow the law as it was provided. While this prospective juror asked for one of the court’s questions to be repeated, and expressed that he did not understand compound questions when they were asked of him, never during the questioning by the trial court did he give a conflicting answer or state that he would not or could not follow the law. Indeed, any appearance of a lack of understanding on the part of this prospective juror is attributable to confusion caused by the manner in which the trial court intervened during the prosecutor’s questioning of the juror: while a question was pending before the juror, the court asked compound questions of him.

Moreover, the prosecutor’s failure to pursue questioning of this prospective juror, whom she purportedly believed could not follow the law, despite repeated assurances by the prospective juror to the contrary, also renders the basis for the challenge pretextual … . People v Fabregas, 2015 NY Slip Op 06253, 2nd Dept 7-22-15

 

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