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“Head Waiter” with Substantial Managerial Duties and “Wine Steward” Whose Duties Did Not Include Serving Customers Were Not Entitled to Share in the Servers’ and Bus Boys’ Tip Pool

The Third Department affirmed the NYS Industrial Board of Appeals’ determination that two senior restaurant employees were not entitled to share in the servers’ and bus boys’ tip pool based upon the nature of their duties—one, the “head waiter,” had substantial managerial duties, and the other, the “wine steward,” had computer-programming duties, assisted customers with the wine list, and had little to do with serving customers.  Labor Law 196-d, as interpreted by the Court of Appeals, looks at the actual duties of employees, as opposed to their titles.  Those who exercise substantial managerial responsibilities, and those who cannot be characterized as “food service workers,” cannot participate in the tip pool:

The governing statute, Labor Law § 196-d, provides that “[n]o employer or his [or her] agent . . . shall demand or accept, directly or indirectly, any part of the gratuities, received by an employee, or retain any part of a gratuity or of any charge purported to be a gratuity for an employee. . . . Nothing in this subdivision shall be construed as affecting . . . the sharing of tips by a waiter with a busboy or similar employee.” Recently, the Court of Appeals clarified that eligibility to participate in a tip pool “‘shall be based upon duties and not titles'” (Barenboim v Starbucks Corp., 21 NY3d 460, 471 [2013], quoting 12 NYCRR 146-2.14 [e]), and the Court held that “employer-mandated tip splitting should be limited to employees who, like waiters and busboys, are ordinarily engaged in personal customer service, a rule that comports with the ‘expectation[s] of the reasonable customer'” (Barenboim v Starbucks Corp., 21 NY3d at 471-472, quoting Samiento v World Yacht Inc., 10 NY3d 70, 79 [2008]; see 12 NYCRR 146-2.16 [b]; 146-3.4 [a]). Consistent with longstanding DOL policy, the Court further observed that “employees who regularly provide direct service to patrons remain tip-pool eligible even if they exercise a limited degree of supervisory responsibility” (Barenboim v Starbucks Corp., 21 NY3d at 472). The Court concluded, however, “that there comes a point at which the degree of managerial responsibility becomes so substantial that the individual can no longer fairly be characterized as an employee similar to general wait staff within the meaning of Labor Law § 196-d” (id. at 473). The Court determined that “the line should be drawn at meaningful or significant authority or control over subordinates” (id.). The Court explained that “[m]eaningful authority might include the ability to discipline subordinates, assist in performance evaluations or participate in the process of hiring or terminating employees, as well as having input in the creation of employee work schedules, thereby directly influencing the number and timing of hours worked by staff as well as their compensation” (id.). Matter of Marzovilla v New York State Indus. Bd. of Appeals, 2015 NY Slip Op 03219, 3rd Dept 4-16-15

 

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Premises Clause Prevails Over Habendum Clause in a Deed/Failure to Expressly Label Parties and Include the Parties’ Addresses Does Not Invalidate a Deed

The Third Department determined that where there is a conflict between the premises clause and the habendum clause in a deed, the premises clause prevails.  Here the premises clause clearly indicated the creation of a life estate with the remainder interest going to decedent’s only children.  The habendum clause indicated the decedent conveyed the property to “[defendant] and assigns forever.”  The court also noted that the failure to label the parties and include the parties’ addresses in a deed does not invalidate the deed, although it may preclude recording of the deed:

…[T]he rules of construction applicable to deeds provide that where there is a conflict between the provisions set forth in the premises clause and those in the habendum clause relative to the extent of the conveyance, the premises clause will control, absent a clear indication of a contrary intent elsewhere in the deed … . Here, the premises clause provides that the remainder interest in the property is conveyed to plaintiffs, and nothing in the deed other than the habendum clause suggests that decedent had a contrary intent. …

Contrary to defendant’s assertion, Real Property Law § 258 did not require the deed to expressly label plaintiffs as parties or to include their addresses. The statute does not mandate the use of the deed formats that it sets forth, but instead provides that “this section does not prevent or invalidate the use of other forms” (Real Property Law § 258). Although the failure to include a party’s address may prevent a deed from being recorded, it does not operate to invalidate the underlying conveyance … . Basile v Rose, 2015 NY Slip Op 03213, 3rd Dept 4-16-15

 

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Failed Attempt to Circumvent the Banking Law by Making a High-Cost Home Loan to a Limited Liability Company to which the Home Had Been Transferred

The Second Department determined summary judgment should have been granted on defendants’ counterclaim alleging plaintiff’s violation of the Banking Law which prohibits “high-cost home loans” (Banking Law 6-1).  Plaintiff had attempted to circumvent the law by making the loan to a limited liabilIty company to which the defendants-owners had transferred the home. The Second Department determined the provisions of the Banking Law relating to “high-cost home loans” which (1) prohibited “subterfuge” to circumvent the law, (2) prohibited the consolidation of loan payments made payable in advance, (3) required certain notices, and (4) prohibited excessive points and fees, applied to the transaction in issue:

The defendants established their prima facie entitlement to judgment as a matter of law on their first counterclaim, which was to recover damages and for declaratory relief for violations of Banking Law § 6-l, which imposes limitations and prohibits certain “practices for high-cost home loans” (Banking Law § 6-l[2]). The defendants established, prima facie, that the subject loan was a “high-cost home loan” (Banking Law § 6-l[1][d]; see Banking Law § 6-l[1][f][i]-[iii]; [g][ii]…). …[U]nder the circumstances of this case, Banking Law § 6-l applies to the … loan, even though it was made to a limited liability company, and not to “a natural person” (Banking Law § 6-l[1][e][ii]). The provisions of Banking Law § 6-l apply “to any person who in bad faith attempts to avoid the application of this section by any subterfuge” (Banking Law § 6-l[3]). Here, the defendants made a prima facie showing that a representative of [plaintiff] attempted, in bad faith, to avoid the application of the statute by “subterfuge,” and that, thus, the statute applied to the Aries loan (Banking Law § 6-l[3]). Moreover, the defendants’ submissions demonstrated, prima facie, that [plaintiff] violated the provisions of Banking Law § 6-l(2) by consolidating the first 12 payments and having them “paid in advance from the loan proceeds provided to the [defendants]” (Banking Law § 6-l[2][e]); engaging in “loan flipping” (Banking Law § 6-[2][i]); making the loan “without due regard to repayment ability” (Banking Law § 6-l[2][k]); failing to provide required notices (see Banking Law § 6-l[2][e]; [2-a][a]); and financing points and fees, as defined in Banking Law § 6-l(1)(f), “in an amount that exceeds three percent of the principal amount of the loan” (Banking Law § 6-l[2][m]).  Aries Fin., LLC v 12005 142nd St., LLC, 2015 NY Slip Op 03115, 2nd Dept 4-15-15

 

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CONTRACT LAW/EVIDENCE Parol Evidence (Email) Properly Admitted to Explain Ambiguous Term in Construction Contract with a Merger Clause—Relevant Law Succinctly Explained

The Second Department determined parol evidence was properly admitted to explain the meaning of an ambiguous phrase in a construction contract with a merger clause.  The court succinctly explained the relevant law:

A written agreement that is complete, clear, and unambiguous on its face must be enforced to give effect to the meaning of its terms and the reasonable expectations of the parties, and the court should determine the intent of the parties from within the four corners of the contract without looking to extrinsic evidence to create ambiguities … . A contract is considered to be clear and unambiguous where the language used has “a definite and precise meaning, unattended by danger of misconception in the purport of the [agreement] itself, and concerning which there is no reasonable basis for a difference of opinion” … . Moreover, the parol evidence rule operates to preclude evidence of a prior or contemporaneous communication during negotiations of the agreement that contradicts, varies, or explains a written agreement which is clear and unambiguous in its terms and expresses the parties’ entire agreement and intentions … . Where a contract contains a merger clause, a court is obliged to require full application of the parol evidence rule in order to bar the introduction of extrinsic evidence to vary or contradict the terms of the writing … .

Here … parol evidence was properly admitted into evidence to explain the ambiguous phrase “cost to Owner” in the change order provision of the construction contract, inasmuch as the term “cost” was not defined, and could have various meanings, including one limited to labor and material costs without an additional markup. Accordingly, parol evidence, such as the email … stating that change orders would not include markups, which does not otherwise vary or contradict the construction contract, was permitted… . Vivir of L I, Inc. v Ehrenkranz, 2015 NY Slip Op 03152, 2nd Dept 4-15-15

 

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The Facts that a Witness Had Given a Statement to the Police and Was on the People’s Witness List Did Not Demonstrate the People Had Control Over the Witness—Request for Missing Witness Charge Properly Denied

The Second Department determined Supreme Court properly denied defendant’s request for a missing witness charge for the defendant’s roommate, who had witnessed the shooting and had given a statement to the police during the initial investigation.  The facts that the roommate had given a statement and was placed on the People’s witness list did not demonstrate control over the witness. Without evidence of such control (for example, a material witness order) a missing witness charge is not appropriate:

…[T]he roommate was not under the People’s control at the time of trial by virtue of having provided a statement to the police during the initial investigation stage of the case. In addition, control cannot be found from the People’s placement of the roommate on their witness list, as their wish for his testimony is not indicia of having control over him. There was no material witness order. Indeed, the record contains no evidence that the People’s relationship with the defendant’s roommate gave them any more control over him at trial than the defendant may have had himself.  People v Roseboro, 2015 NY Slip Op 03192, 2nd Dept 4-15-15

 

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Defendant Who Objected to the Amount of Restitution at Sentencing Was Entitled to a Hearing Even Though the Restitution-Amount Was (Apparently) Specified in the Plea Agreement

The Second Department determined defendant, who objected at sentencing to the amount of restitution, was entitled to a hearing, even though the specific restitution-amount was (apparently) made part of the plea agreement.  The restitution was related to the “buy money” used by the police in a related drug deal.  The court explained the relevant law:

Under Penal Law § 60.27(9), a defendant may be ordered to pay restitution for funds used by law enforcement in the purchase of drugs, if certain prerequisites are met. Before a defendant may be directed to pay restitution, a hearing must be held if either: (1) the defendant objects to the amount of restitution and the record is insufficient to establish the proper amount; or (2) the defendant requests a hearing (see Penal Law § 60.27[2]…). This procedure must be followed even if the plea agreement contains a provision for a specific amount of restitution … . People v Morrishill, 2015 NY Slip Op 03187, 2nd Dept 4-15-15

 

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Defendant Alleged a Possible Defense to His Failure to Comply with an Order that He Pay Temporary Maintenance and Child Support (Inability to Work Due to Medical Problems)—Hearing Was Required Before a Civil Contempt Finding Could Be Made

The Second Department determined Supreme Court should not have held defendant in civil contempt for his failure to comply with an order that he pay temporary maintenance and child support without first conducting a hearing. The defendant’s opposition papers raised a factual dispute about whether there was a defense (inability to work due to medical problems).  In the context of a civil contempt proceeding, a question of fact about the existence a defense requires a hearing:

To prevail on a motion to hold a party in civil contempt, the movant is required to prove by clear and convincing evidence ” (1) that a lawful order of the court, clearly expressing an unequivocal mandate, was in effect, (2) that the order was disobeyed and the party disobeying the order had knowledge of its terms, and (3) that the movant was prejudiced by the offending conduct'” … . “Once the movant establishes a knowing failure to comply with a clear and unequivocal mandate, the burden shifts to the alleged contemnor to refute the movant’s showing, or to offer evidence of a defense, such as an inability to comply with the order” … . A hearing is required “if the papers in opposition raise a factual dispute as to the elements of civil contempt, or the existence of a defense” … . Lundgren v Lundgren, 2015 NY Slip Op 03135, 2nd Dept 4-15-15

 

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Although the Doctor Was Employed by the Hospital, His Employment Did Not Encompass His Medical Practice—Therefore the Hospital Was Not Liable for the Doctor’s Medical Malpractice Under the Doctrine of Respondeat Superior/$6.8 Million Verdict Against the Doctors Based Upon a Delay in Diagnosing Cancer Should Not Have Been Set Aside

The Second Department determined Supreme Court properly dismissed the complaint against the hospital in a medical malpractice case, but improperly set aside the $6.8 million verdict against the doctors.  Plaintiff alleged the doctors caused a 13-month delay in the diagnosis of cancer, which required her to have extensive surgery and reduced her chance of survival.  The suit against the hospital was based upon respondeat superior. However the employment contract between the doctor, Aloia, and the hospital related to duties other than Aloia’s treatment of patients.  Therefore the complaint against the hospital was properly dismissed after trial pursuant to CPLR 4401. The Second Department determined there was sufficient evidence to support plaintiff’s allegations and, therefore, the verdict against the doctors should stand.  “…[T]here was a valid line of reasoning and permissible inferences from which the jury could have rationally concluded that the physician defendants departed from good and accepted medical practice, and that the delay in diagnosing the injured plaintiff’s cancer proximately caused her to have a worsened prognosis or decreased 10-year survival rate:”

To be awarded judgment as a matter of law pursuant to CPLR 4401, a defendant must show that, upon viewing the evidence in the light most favorable to the plaintiff, there is no rational basis by which the jury could find for the plaintiff against the moving defendant” … . “The doctrine of respondeat superior renders an employer vicariously liable for a tort committed by an employee while acting within the scope of employment. The general rule is that an employee acts within the scope of his employment when he is acting in furtherance of the duties owed to the employer and where the employer is or could be exercising some degree of control, directly or indirectly, over the employee’s activities” … . Although the issue is usually a factual issue for the jury, “[w]here the proof on the issue of control presents no conflict in evidence or is undisputed, the matter may properly be determined as a matter of law” … .

Here, there was no real dispute as to the employment arrangement between Aloia and [the hospital] as set forth in the clear and unambiguous employment contract … . Aloia’s employment contract permitted him to maintain his private practice in endocrinology, as well as internal medicine and bone densitometry, outside of his employment with [the hospital]. * * *

“A motion for judgment as a matter of law pursuant to CPLR . . . 4404 may be granted only when the trial court determines that, upon the evidence presented, there is no valid line of reasoning and permissible inferences which could possibly lead rational persons to the conclusion reached by the jury upon the evidence presented at trial, and no rational process by which the jury could find in favor of the nonmoving party” … . “In considering such a motion, the trial court must afford the party opposing the motion every inference which may properly be drawn from the facts presented, and the facts must be considered in a light most favorable to the nonmovant'” … . Luna v Spadafora, 2015 NY Slip Op 03134, 2nd Dept 4-15-15

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Criteria for Common Carrier Liability for Injury Caused by a Sudden Stop Explained (Not Met Here)

In affirming the grant of summary judgment to the defendant transit authority, the Second Department explained the circumstances under which a common carrier may be liable for injuries to a passenger caused by a sudden stop:

To prevail on a cause of action alleging that a common carrier was negligent in stopping a bus, a plaintiff must prove that the stop was unusual and violent, rather than merely one of the sort of ‘jerks and jolts commonly experienced in city bus travel’… . Moreover, a plaintiff may not satisfy that burden of proof merely by characterizing the stop as unusual and violent … . There must be ‘objective evidence of the force of the stop sufficient to establish an inference that the stop was extraordinary and violent, of a different class than the jerks and jolts commonly experienced in city bus travel and, therefore, attributable to the negligence of defendant’ … . In seeking summary judgment dismissing the complaint, … common carriers have the burden of establishing, prima facie, that the stop was not unusual and violent … .  Alandette v New York City Tr. Auth., 2015 NY Slip Op 03113, 2nd Dept 4-15-15

 

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Insurer Not Estopped from Disclaiming Coverage Four Years After the Claim—No Prejudice to Insured and Disclaimer Supported by Policy Exclusion

The Second Department determined summary judgment was properly granted to the insurer, despite the passage of four years between the loss of business income claim and the disclaimer.  The policy excluded coverage for business income loss related to the “enforcement of any ordinance or law regulating the construction, use, or repair of any property.”  Although the initial business interruption was caused by vandals damaging the business premises, the delay in reopening was related to the requirement that the insureds obtain a certificate of occupancy.  The lack of a certificate of occupancy was discovered when the building inspector was alerted to the damage caused by the vandalism and the insureds were told they could not reopen until a certificate of occupancy was issued. The Second Department explained that even an unreasonable delay in disclaiming coverage (four years here) will not invalidate the disclaimer unless the insured had been prejudiced.  No prejudice was demonstrated and the disclaimer was supported by the policy exclusion:

An insurer’s delay in giving notice of disclaimer of coverage, even if unreasonable, will not estop the insurer from disclaiming unless the insured has suffered prejudice from the delay … . Since the record reveals no such prejudice, nor is any such prejudice alleged by the plaintiffs, the Merchants defendants established, prima facie, that the disclaimer was effective … . In opposition, the plaintiffs failed to raise a triable issue of fact.

Moreover, the policy of insurance here clearly and unambiguously excludes coverage for losses caused directly or indirectly by the enforcement of any ordinance or law regulating the construction, use, or repair of any property. This provision excludes coverage for losses, including business income losses, caused by the enforcement of the law and, here, it was the enforcement of the Building Code by the Town’s Building Department which prevented the plaintiff from utilizing the premises to engage in their dental business without a proper certificate of occupancy … . Accordingly, the [insurer] established, prima facie, that [it] properly disclaimed, as excluded under the terms of the policy, the loss of business income claim. In opposition, the plaintiffs failed to raise a triable issue of fact. Ira Stier, DDS, P.C. v Merchants Ins. Group, 2015 NY Slip Op 03128, 2nd Dept 4-15-15

 

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