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“Special Facts Doctrine” as Applied to Fraud Allegations Explained

In an action stemming from the alleged breach of an Asset Purchase Agreement (APA), the First Department explained the applicability of the “special facts doctrine” to the related fraud allegations. There was a defense verdict. The issue was raised on appeal by the plaintiffs because the trial judge refused to instruct the jury on the special facts doctrine, an error the First Department deemed harmless. The court offered a clear description of the doctrine:

… [P]laintiffs claimed that defendants had a duty to disclose certain documents concerning alleged adverse contract information. The “special facts” doctrine holds that “absent a fiduciary relationship between parties, there is nonetheless a duty to disclose when one party’s superior knowledge of essential facts renders a transaction without disclosure inherently unfair” … . As a threshold matter, the doctrine requires satisfaction of a two-prong test: that the material fact was information peculiarly within the knowledge of one party and that the information was not such that could have been discovered by the other party through the exercise of ordinary intelligence … . Greenman-Pedersen, Inc. v Berryman & Henigar, Inc., 2015 NY Slip Op 06091, 1st Dept 7-14-15

 

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Escaped Calf Furnished the Condition or Occasion for Plaintiff’s Decedent’s Presence in the Road When She Was Struck, But Was Not the Proximate Cause of Plaintiff’s Decedent’s Being in the Road

The Fourth Department, over a dissent, determined that defendant’s motion for summary judgment should have been granted. A calf escaped from defendant farm. Plaintiff’s decedent stopped her car and got out to aid the calf.  Both plaintiff’s decedent and the calf were struck by a car when they were in the road, although there was no evidence decedent stopped her car because the calf blocked the road. The Fourth Department held that the escape of the calf did not “cause” the decedent to be in the road. Rather the escape of the calf furnished the condition or occasion for decedent to be in the road:

Although “a landowner or the owner of an animal may be liable under ordinary tort-law principles when a farm animal . . . is negligently allowed to stray from the property on which the animal is kept” …, “liability may not be imposed upon a party who merely furnishes the condition or occasion for the occurrence of the event but is not one of its causes” … . Here, in support of its motion, Drumm Farm established that any negligence on its part in allowing the calf to escape merely “created the opportunity for plaintiff to be standing [in the roadway], [but] it did not cause [her] to stand” there … . “In short, the [alleged] negligence of [Drumm Farm] merely furnished the occasion for an unrelated act to cause injuries not ordinarily anticipated” … . Importantly, plaintiff does not contend, and did not submit any evidence that would establish, that the calf’s presence in the road blocked decedent’s ability to travel in the southbound lane or otherwise forced decedent to stop her vehicle. Thus, Drumm Farm established as a matter of law that its “alleged negligent act, at most, caused the [calf to wander] out of the field, which was not the immediate cause of the accident” … , and plaintiff failed to raise a triable issue of fact in opposition … . Hain v Jamison, 2015 NY Slip Op 06074, 4th Dept 7-10-15

 

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Demand for Jury Trial Should Not Have Been Struck Despite Request for a “Declaration” in the Complaint—Crux of the Case Was a Request for Monetary Relief

The Fourth Department determined that plaintiffs’ demand for a jury trial should not have been struck. Defendants attempted to recoup alleged overpayments made to plaintiffs for ambulance services by reducing payments for ongoing services. Plaintiffs brought suit challenging defendant’s right to recoup the alleged overpayments. As part of their complaint, the plaintiffs sought “a declaration that [defendant] is not entitled to offset or recoup any funds from [p]laintiffs.” The Fourth Department held that, despite the request for a “declaration,” the crux of the lawsuit was for monetary relief and the demand for a jury trial was therefore appropriate:

… [T]he court erred in granting defendant’s motion to strike their demand for a jury trial, and we therefore modify the order accordingly. The question whether plaintiffs are entitled to a jury trial turns on whether “the underlying claims set forth in the complaint are legal rather than equitable in nature” … . Here, we conclude that plaintiffs’ request for “a declaration that [defendant] is not entitled to offset or recoup any funds from [p]laintiffs” is incidental to their request for monetary relief. “[V]iewed in its entirety, the primary character of the case is legal” … , and “the complaint contains demands and sets forth facts which would permit a judgment for a sum of money only’ “… . Canandaigua Emergency Squad, Inc. v Rochester Area Health Maintenance Org., Inc., 2015 NY Slip Op 06056, 4th Dept 7-10-15

 

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Failure to Strictly Comply with the Procedure Mandated by the State Environmental Quality Review Act (SEQRA) Required Annulment of the Town’s Negative Declaration Re: the Construction of a Casino and Resort

The Fourth Department, with two concurring and one dissenting justice, determined that the town’s negative declaration under the State Environmental Quality Review Act (SEQRA) with respect to the construction of a casino and resort should have been annulled because the town did not strictly comply with mandated procedure. Specifically the negative declaration did not include a “reasoned elaboration” as required by the relevant regulation. A document prepared by the town’s counsel explaining the reasons for the negative declaration was never approved or adopted by the town board and therefore did not meet the statutory/regulatory “reasoned elaboration” requirement:

It is well settled that SEQRA’s procedural mechanisms mandate strict compliance, and anything less will result in annulment of the lead agency’s determination of significance … . “[L]iteral rather than substantial compliance with SEQRA is required” … . Here, 6 NYCRR 617.7 (b) (4) requires that, in making the determination of significance, the lead agency—in this case the Town Board—must “set forth its determination of significance in a written form containing a reasoned elaboration and providing reference to any supporting documentation.” We conclude that the intent of the regulation is to focus and facilitate judicial review and, of no lesser importance, to provide affected landowners and residents with a clear, written explanation of the lead agency’s reasoning at the time the negative declaration is made. We reject respondents’ contention that we should search the entire record to discern the Town Board’s reasoning as of June 12, 2014 in making the determination to issue the negative declaration. “A record evincing an extensive legislative process . . . is neither a substitute for strict compliance with SEQRA’s [written] reasoned elaboration requirement nor sufficient to prevent annulment” … . We therefore reverse the judgment and grant the petition, thereby annulling the negative declaration and vacating the site plan approval and all related resolutions. Matter of Dawley v Whitetail 414, LLC, 2015 NY Slip Op 06082 4th Dept 7-10-15

 

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Party Who Properly Withdrew a Mistaken Bid on a Public Works Project Should Have Been Allowed to Rebid

The Fourth Department determined a party (Kandey) who withdrew a mistaken bid on a public works project should have been allowed to rebid:

The court properly concluded that a rational basis supported the County’s determination that Kandey made the showing required by General Municipal Law § 103 (11) (a) when it sought permission to withdraw its mistaken bid. The court erred, however, in concluding that the County failed to comply with General Municipal Law § 103 (11) (b) when it permitted Kandey to participate in the rebid. That section provides that the “sole remedy for a bid mistake in accordance with this section shall be withdrawal of that bid and the return of the bid bond or other security, if any, to the bidder.” That is precisely what the County did here when it permitted Kandey to withdraw the mistaken bid. The statute further provides that, after the mistaken bid is withdrawn, the County “may, in its discretion, award the contract to the next lowest responsible bidder or rebid the contract,” and the County acted within the discretion extended to it under the statute when it elected to rebid the contract.

The statute is silent on the question whether a contractor that was permitted to withdraw its bid may participate in the rebid. We agree with Kandey and the County that, had the Legislature intended to forbid a contractor in Kandey’s position from participating in the rebid, it would have done so explicitly. Further, “[a] court cannot by implication supply in a statute a provision which it is reasonable to suppose the Legislature intended intentionally to omit” … . Thus, we do not interpret the statute to include an implicit prohibition against Kandey’s participation in the rebid following the withdrawal of its mistaken bid. Matter of Concrete Applied Tech. Corp. v County of Erie, 2015 NY Slip Op 06087, 4th Dept 7-10-15

 

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Claims Against the State Based Upon Recurrent Flooding Properly In Supreme Court as Opposed to the Court of Claims/Criteria for Inverse Condemnation of Property Explained (Not Met Here)

The Fourth Department, over a two-justice dissent, determined that an action against the state alleging recurrent flooding of plaintiffs’ property was properly in Supreme Court, despite the statutory requirement that claims against the state for monetary damages be brought in the Court of Claims. The Fourth Department held that the state did not demonstrate that the essential nature of the claim was to recover money. The Fourth Department further determined that the cause of action for inverse condemnation was properly dismissed, explaining the criteria:

Contrary to defendant’s contention, the court properly denied that part of its cross motion seeking summary judgment dismissing all claims for money damages. Although defendant is correct that ” claims that are primarily against the State for damages must be brought in the Court of Claims, the Supreme Court may consider a claim for injunctive relief as long as the claim is not primarily for damages’ ” (… see Court of Claims Act § 9 [2]). “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” … . Here, defendant failed to establish in support of its cross motion that the essential nature of the causes of action for negligence, continuing nuisance, and continuing trespass is to recover money damages, and thus the court properly declined to grant summary judgment dismissing those causes of action.

We agree, however, with the further contention of defendant that the court erred in denying that part of its cross motion seeking summary judgment dismissing the cause of action for inverse condemnation, and we therefore modify the order accordingly. That cause of action alleged that the flooding intruded onto plaintiffs’ properties and interfered with their property rights to such an extent that it constituted “a constitutional taking requiring [defendant] to purchase the properties from plaintiffs.” It is well settled that such a “taking can consist of either a permanent ouster of the owner, or a permanent interference with the owner’s physical use, possession, and enjoyment of the property, by one having condemnation powers” … . “In order to constitute a permanent ouster, defendant[‘s] conduct must constitute a permanent physical occupation of plaintiff’s property amounting to exercise of dominion and control thereof’ ” … .

Here, defendant met its burden on its cross motion with respect to the cause of action for inverse condemnation by establishing as a matter of law that any interference with plaintiffs’ property rights was not sufficiently permanent to constitute a de facto taking … . Greece Ridge, LLC v State of New York, 2015 NY Slip Op 06072, 4th Dept 7-10-15

 

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Parking Lot Not “Suitable” for Recreational Use Pursuant to General Obligations Law 9-103—Statutory Assumption of Risk Re: Riding a Bicycle in the Parking Lot Not Available

The Fourth Department determined Supreme Court properly denied defendant’s motion for leave to amend its answer to allege a “recreational use” affirmative defense. Plaintiff’s son was injured when his bicycle struck a depressed area in defendant’s parking lot. Defendant sought to allege plaintiff’s son assumed the risk of injury because the parking lot was covered by the recreational use statute, General Obligations Law 9-103. The Fourth Department, finding that the parking lot was not “suitable” for recreational use, explained the relevant analytical criteria:

We conclude that the court properly determined that defendant’s proposed amendment patently lacks merit inasmuch as the recreational use statute does not apply to the facts of this case as a matter of law. It is undisputed that plaintiff’s son was engaged in one of the recreational activities enumerated in section 9-103, i.e., bicycle riding, when he was injured. To establish applicability of the statute, however, defendant was also required to show that its property “was suitable for the recreational activity in which plaintiff[‘s son] was participating when the accident occurred” … . “Whether a parcel of land is suitable and the immunity [of the recreational use statute] available is a question of statutory interpretation, and is, therefore, a question of law for the Court” … . Suitability is established by showing that the subject property is ” (1) physically conducive to the activity at issue, and (2) of a type that is appropriate for public use in pursuing that activity as recreation’ ” … . “A substantial indicator that the property is physically conducive to the particular activity is whether recreationists have used the property for that activity in the past; such past use by participants in the [activity] manifests the fact that the property is physically conducive to it” … . Here, defendant failed to submit any evidence that the property had been used in the past by “recreationists” for bicycle riding. Moreover, under the circumstances of this case, we conclude that the subject property is not appropriate for public use in pursuing bicycle riding as a recreational activity … . Indeed, the Court of Appeals has made clear that recreational use immunity should apply only to property that “the Legislature would have envisioned as being opened up to the public for recreational activities” … . Here, defendant failed to establish that its employee parking lot comes within the purview of that standard. Sasso v WCA Hosp., 2015 NY Slip Op 06066, 4th Dept 7-10-15

 

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Trial Judge’s Acceptance of Petitioner’s Expert’s Valuation of the Property Was Against the Weight of the Evidence—the Actual Purchase Price in a Recent Sale and the Actual Rent Should Have Been Part of the Analysis

The Fourth Department, over a dissent, determined that the trial judge’s findings re: the assessed value of a retail property (for property tax purposes) were against the weight of the evidence. Specifically, the trial judge accepted the petitioner’s (Rite Aid’s) expert’s valuation which failed to take into account the actual price paid in a recent arm’s-length sale of the property, comparable sales, the actual rent (negotiated at arm’s length) and comparable rentals:

… [A]n appellate court is empowered to make new findings of value where the trial court ” has failed to give to conflicting evidence the relative weight which it should have’ ” …, giving due deference to the trial court’s power to resolve credibility issues by choosing among conflicting expert opinions … .

It is well settled that real “[p]roperty is assessed for tax purposes according to its condition [and ownership] on the taxable status date, without regard to future potentialities or possibilities and may not be assessed on the basis of some use contemplated in the future” … . Although several methods of valuing real property are acceptable, “the market value method of valuation is preferred as the most reliable measure of a property’s full value for assessment purposes” …, because “[t]he best evidence of value, of course, is a recent sale of the subject property between a seller under no compulsion to sell and a buyer under no compulsion to buy” … . A recent sale has been characterized as evidence of the “highest rank” in determining market value … . The scope of a “market” need not be limited to the locale of the subject property and, depending on the nature of the use, it may encompass national and/or international buyers and sellers … . * * *

… [W]e conclude that the failure of petitioner’s expert to use the recent sale of the subject property as well as readily available comparable sales of national chain drugstore properties in the applicable submarket as evidence of value demonstrates the invalidity of the expert’s conclusion with respect to the sales comparison valuation … . We further conclude that the use of sales not comparable to the subject and outside of the applicable market should have been rejected by the court as unreliable … . Moreover, the failure of petitioner’s expert to use the actual rent, negotiated at arm’s length and without duress or collusion, as well as the failure to use similar rental comparables from the applicable market as evidence of value, demonstrates the invalidity of the expert’s conclusions using the income capitalization method … . Matter of Rite Aid Corp. v Haywood, 2015 NY Slip Op 06049, 4th Dept 7-10-15

Similar issues and result in Matter of Rite Aid Corp. v Huseby, 2015 NY Slip Op 06051, 4th Dept 7-10-15

 

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Defendant Entitled to Jury Instruction on Agency Defense Re: Drug Sale and Possession Charges

The Third Department determined defendant was entitled to a jury instruction on the agency defense to drug sale and possession charges. Because the request for the instruction was denied, the defendant was granted a new trial.  The Third Department explained the relevant facts and law:

“Under the agency doctrine, ‘a person who acts solely as the agent of a buyer in procuring drugs for the buyer is not guilty of selling the drug to the buyer, or of possessing it with intent to sell it to the buyer'” … . “The issue of whether a defendant is criminally responsible as a seller, or merely a purchaser doing a favor for a friend, is generally a factual question for the jury to resolve on the circumstances of the particular case” … . “A trial court must grant a request for an agency charge when, viewed in the light most favorable to the defendant, some evidence, however slight[,] supports the inference that the [defendant] was acting, in effect, as an extension of the buyer” … .

Here, defendant did not initiate the subject transactions. Rather, the CI, who was acquainted with defendant, contacted him to initiate both buys. Before the first buy, defendant said to the CI, with regard to the supplier, “when she meets me and you she’s going to sell us the eight,” which shows that defendant aligned himself with the CI on the buyer’s side of the transaction. At the time of the first buy, defendant and the CI met in defendant’s driveway and talked about defendant’s girlfriend, car and job while they waited for the supplier to arrive with the drugs. When the supplier arrived, the CI asked defendant to get the drugs from her so that he could see them before he paid, and defendant complied. Defendant retrieved nine bags of heroin from the supplier, explaining to the CI that there were “nine here cause [he was] gonna get one too”; again, he was identifying himself on the buyer’s side of the transaction. Defendant’s girlfriend testified that he did not benefit from the sales to the CI. People v Nowlan, 2015 NY Slip Op 05973, 3rd Dept 7-9-15

 

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Pre-“Padilla” Statement by Counsel that Defendant’s Plea to an “Aggravated Felony” Would Not Result in Deportation Justified a Hearing on Defendant’s Motion to Vacate Her Conviction

The Third Department determined defendant was entitled to a hearing on her motion to vacate her conviction.  Defendant alleged she was erroneously told by her attorney (pre “Padilla”) her conviction (for an “aggravated felony”) would not cause her to be deported:

… [D]efendant’s … claim that counsel affirmatively misinformed her about the plea’s deportation consequences is not dependent upon Padilla; rather, it rests upon established law at the time of her plea that defense counsel’s affirmative misrepresentation to a noncitizen regarding the deportation consequences of a contemplated guilty plea constitutes deficient performance so as to satisfy the first prong of an ineffective assistance of counsel claim … .

In her affidavit in support of the motion, defendant alleged that her counsel advised her that, although immigration authorities would be notified about her guilty plea, “he did not think anything further would happen.” In fact, the crime of rape in the third degree constitutes an “aggravated felony” that results in mandatory deportation (see 8 USC § 1101 [a] [43] [a]; § 1227 [a] [2] [A] [iii]; § 1229b [a] [3]…). Defendant further averred that, had counsel informed her that she was certain to be deported as a result of her guilty plea, she would not have pleaded guilty and would have gone to trial. As defendant sufficiently alleged that counsel provided incorrect information concerning the deportation consequences that would result from her guilty plea and that she was prejudiced as a result thereof, she was entitled to a hearing on this aspect of her CPL 440.10 motion … . People v Ricketts-simpson, 2015 NY Slip Op 05975, 3rd Dept 7-9-15

 

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