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Plaintiff Could Not Show Justifiable Reliance Upon Alleged Misrepresentations in a Stipulation

The Second Department determined the plaintiff, who was seeking to vacate portions of a so-ordered stipulation in a custody matter, failed to show the stipulation was the result of fraud.  In particular, plaintiff failed to show justifiable reliance upon any alleged misrepresentation because attachments to the stipulation reflected the actual facts:

As the party seeking to set aside the stipulation, the plaintiff had the burden of showing that the stipulation was the result of fraud … . “A cause of action alleging fraud requires a plaintiff to establish a misrepresentation or omission of material fact which the defendant knew was false, that the misrepresentation was made to induce the plaintiff’s reliance, the plaintiff’s justifiable reliance on the misrepresentation or material omission, and a resulting injury” … .

In light of the attachments provided with the stipulation, the plaintiff failed to establish the element of justifiable reliance. Where the plaintiff ” has the means available to him of knowing, by the exercise of ordinary intelligence, the truth or the real quality of the subject of the representation, he must make use of those means, or he will not be heard to complain that he was induced to enter into the transaction by misrepresentations'” … . Cervera v Bressler, 2015 NY Slip Op 02441, 2nd Dept 3-25-15

 

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Tortious Interference with Contract and Unfair Competition Causes of Action Proven–Elements Explained—Punitive Damages Not Warranted–Purpose Explained

The First Department, in a full-fledged opinion by Justice Sweeney, determined that the trial judge (bench trial) properly found that JC Penney (JCP) had tortiously interfered with the exclusivity provision of a contract between Macy’s and Martha Stewart Living Omnimedia (MSLO), but that the trial judge had improperly dismissed the cause of action alleging tortious interference with the confidentiality provision of the contract and the cause of action for unfair competition. The First Department agreed with the trial judge that punitive damages were not warranted.  Macy’s had entered a contract with MSLO which gave Macy’s the exclusive right to manufacture and sell MSLO products. JCP was found to have knowingly and forcefully engaged in negotiations with MSLO which resulted in MSLO’s breaching both the exclusivity and confidentiality provisions of the Macy’s contract:

To sustain its claim of tortious interference with contract, Macy’s must prove (1) that it had a valid contract with MSLO; (2) that JCP had knowledge of Macy’s contract with MSLO; (3) that JCP intentionally induced MSLO to breach its contract with Macy’s; (4) that MSLO breached its contract with Macy’s; (5) that MSLO would not have breached its contract with Macy’s absent JCP’s conduct; and (6) that Macy’s sustained damages … .

* * * On the record before us, the evidence establishes that JCP had, as the court found, a “certainty” or “substantial certainty” that it actions would result in a breach, particularly in light of the unambiguous language of the contract requirement that all MSLO goods in the Exclusive Product Categories, including all such goods sold in any MSLO Store, had to be manufactured by Macy’s. * * *

… Macy’s alleges that JCP induced MSLO to disclose the terms of its agreement and confidential financial information. This was a violation of the confidentiality provision of the agreement. Macy’s sufficiently demonstrated that the material disclosed does not fall under any exception to the confidentiality provisions as required by law or legal processes. Further, Macy’s demonstrated that the scope of disclosure was not properly limited with respect to the information provided and the personnel receiving it. As noted, JCP sought this information almost from the inception of its discussion with MSLO. The information was tantamount to trade secrets, as JCP’s executives acknowledged. * * *

It is well settled that “the primary concern in unfair competition is the protection of a business from another’s misappropriation of the business’ organization [or its] expenditure of labor, skill, and money'” (Ruder & Finn v Seaboard Sur. Co., 52 NY2d 663, 671 [1981]…). Indeed, “the principle of misappropriation of another’s commercial advantage [is] a cornerstone of the tort” (52 NY2d at 671). Allegations of a “bad faith misappropriation of a commercial advantage belonging to another by exploitation of proprietary information” can give rise to a cause of action for unfair competition … .

Here, the agreement between Macy’s and MSLO provided Macy’s with valuable exclusive rights to the Martha Stewart trademark and MSLO’s designs in the Exclusive Product Categories, which, as the court found, gave Macy’s a competitive advantage. It is conceded that the MSLO brand had significant value in the retail world, and the record shows JCP was fully aware of Macy’s commercial advantage as the exclusive distributor of these branded products. JCP’s actions in attempting to misappropriate this commercial advantage by inducing MSLO to breach its agreement falls squarely within Ruder and Finn’s definition of unfair competition … . * * *

…In order to be entitled to punitive damages, a private litigant “must not only demonstrate egregious tortious conduct by which he or she was aggrieved, but also that such conduct was part of a pattern of similar conduct directed at the public generally … . Punitive damages are “a social exemplary remedy, not a private compensatory remedy” Macy’s Inc v Martha Stewart Living Omnimedia Inc, 2015 NY Slip Op 01728, 1st Dept 2-26-15

 

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Damage to Building Caused by Silica Dust Excluded from Coverage Under “Pollutants” and “Faulty Workmanship” Policy Exclusions

The Third Department determined the insurer was entitled to summary judgment based upon the exclusions of coverage in the policy. The insured sought coverage of damage caused by silica dust disbursed throughout the insured’s building.  The Third Department held that the “pollutants” and “faulty workmanship” exclusions in the policy precluded coverage, and the “ensuing loss exception” did not apply:

“[A]n insurer seeking to invoke a policy exclusion ‘must establish that the exclusion is stated in clear and unmistakable language, is subject to no other reasonable interpretation, and applies in the particular case'” … . To determine whether a policy provision is ambiguous, courts are guided by “the reasonable expectations of the average insured upon reading the policy” … . The meaning of any part of such a policy must be determined upon consideration of the policy as a whole … . In addition, “[a]n insurance contract should not be read so that some provisions are rendered meaningless” … . Upon applying these rules of construction, if “an insurance policy’s meaning is not clear or is subject to different reasonable interpretations,” such an ambiguity must be resolved in favor of the insured … . Because we find that both policy exclusions apply to bar coverage here, we grant defendants’ motion and dismiss the complaint.

Defendants were entitled to summary judgment based on the pollution exclusion clause. Pursuant to that exclusion in the policy, defendants will not cover loss resulting from the “[d]ischarge, dispersal, seepage, migration, release or escape of ‘pollutants.'” As defined in the policy, “‘[p]ollutants’ means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, waste and any unhealthy or hazardous building materials (including but not limited to asbestos and lead products or materials containing lead).” The record contains unrebutted evidence that silica dust can cause lung disease and respiratory problems, placing such dust within the policy definition of a pollutant as “unhealthy or hazardous building material[],” as well as a “solid . . . irritant or contaminant” … . Broome County v The Travelers Indem Co, 2015 NY Slip Op 01697, 3rd Dept 2-26-15

 

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Rules of Evidence Properly Relaxed to Allow Hearsay In Proceeding to Modify Guardian’s Power to Control the Social Environment of the Incapacitated Person

In affirming the denial of a petition to modify the court-appointed guardian’s power to control the social environment of Mary WW, the incapacitated person (to compel the guardian to allow petitioner to visit Mary WW), the Third Department agreed with Supreme Court that hearsay was admissible in the proceeding:

…. [P]etitioner contends that, in denying her motion, Supreme Court improperly relied upon the hearsay statements of witnesses who had contact with Mary WW. We disagree. Although the rules of evidence are generally applicable to proceedings brought under Mental Hygiene Law article 81, Mental Hygiene Law § 81.12 (b) provides that the court may waive such rules “for good cause shown.” Here, we note that Mary WW. initially consented to the guardianship, it was recommended by the court evaluator and none of Mary WW.’s children, except for petitioner, objected. Moreover, it is undisputed that Mary WW. now suffers from severe dementia and was unable to attend the modification hearing, which occurred nearly four years after the guardianship was established. In view of this, it was necessary for other witnesses to testify concerning her interactions with petitioner. Significantly, petitioner was not prejudiced, as she was present at the hearing and denied the allegations. Under these circumstances, we find that Supreme Court had good cause for relaxing the rules of evidence and considering the hearsay statements of witnesses who had contact with Mary WW. Matter of Mary WW…, 2015 NY Slip Op 01704, 3rd Dept 2-26-15

 

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Question of Fact Re: the “Hostility” Element of a Prescriptive Easement

In finding that the prescriptive easement cause of action should not have been dismissed, the Third Department explained the proof requirements:

A party claiming a prescriptive easement must show, by clear and convincing evidence, that the use of the easement was open, notorious, hostile and continuous for a period of 10 years … . Although the element of hostility is presumed upon a showing of the other elements, where “the relationship between the parties is one of neighborly cooperation and accommodation,” no such presumption arises and, rather, permission will be inferred … . “Generally, the question of implied permission is one for the factfinder to resolve” … .

Here, the evidence submitted on the summary judgment motions indicates that a neighborly relationship existed between plaintiff, individually, the Trust’s tenants and defendants’ predecessors in title. However, inasmuch as there is no evidence of express permission granted to use defendants’ property, and the relevant parties are not “related by blood or part of a select group of friends,” summary judgment dismissing the claim for a prescriptive easement on the ground that plaintiff was unable to establish hostility was not warranted … . Gulati v O’Leary, 2015 NY Slip Op 01693, 3rd Dept 2-26-15

 

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Criteria for “Charitable” Exemption to Real Property Tax for Provider of Housing for the Elderly Explained

In finding there were questions of fact about whether petitioner, a provider of housing for the elderly, qualified for the “charitable” property tax exemption pursuant to Real Property Tax Law (RPTL) 420-a, the Third Department explained the relevant criteria:

The “critical factor” in determining whether a facility used for housing the elderly qualifies for an exemption by virtue of being “charitable” is whether the facility subsidizes rent or charges less than fair market rental rates … . Consideration is given to whether the facility retains the ability to terminate a resident’s lease for nonpayment, whether residents are charged for supplemental services and the number of residents who are dependent on government benefits … . Simply providing housing for elderly low-income individuals does not constitute a charitable purpose … . Matter of The Church Aid of the Prot Episcopal Church in the Town of Saratoga Springs Inc v Town of Malta Assessor, 2015 NY Slip Op 01689, 3rd Dept 2-26-15

 

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Charitable Trust’s Challenge to Tax Foreclosure Time-Barred—Four-Month Statute of Limitations Applies to Action for Declaratory Judgment—RPTL, not the EPTL, Controls

The Third Department determined the action challenging the tax foreclosure on parcels of land owned by a charitable trust set up to hold land for Native Americans must be dismissed as time-barred.  The court further determined that County Court had subject matter jurisdiction because the matter was subject to the Real Property Tax Law (RPTL), not the Estates Powers and Trust Law (EPTL), and there was, therefore, no requirement that the Attorney General be notified of the tax foreclosure proceedings:

Under RPTL article 7, a property owner claiming to be aggrieved by an assessment of real property on the basis that the assessment is excessive, unequal or unlawful, or that the property is misclassified, may file a petition challenging the assessment, but “such a proceeding shall be commenced within thirty days after the final completion and filing of the assessment roll containing such assessment” (RPTL 702 [2]; see RPTL 704 [1]; 706 [1]). Where a party is alleging that the assessment is void — either through a challenge to the methodology of assessment or the jurisdiction of the taxing authority to assess particular property — the party may instead bring a proceeding pursuant to CPLR article 78 or a declaratory judgment action … . Both of those options are governed by a four-month statute of limitations … . The Court of Appeals has expressly rejected plaintiffs’ argument that, because the property is allegedly mandatorily exempt from taxes, the assessment is illegal and void and may be challenged at any time … . Plaintiffs concede that they had notice of the Town’s determination regarding the taxable status of the parcels, and filed a grievance to administratively challenge the tax bills when the property was first listed as not tax exempt, but they failed to appeal when the Town denied the grievance. Plaintiffs did not file any further grievances, actions or proceedings until they commenced this action more than a year after the final foreclosure proceeding was concluded. Accordingly, while an action for declaratory judgment was a proper method, the statute of limitations bars plaintiffs’ challenges to their tax assessments … . Turtle Is Trust v County of Clinton, 2015 NY Slip Op 01698, 3rd Dept 2-26-15

 

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Principles of Ademption Applied to Property Transferred Out of the Estate

The Third Department found the doctrine of ademption applicable to the lifetime transfer of property which divested the testator of ownership:

[The principles of ademption] are set forth in EPTL 3-4.3, which states that “[a] conveyance, settlement or other act of a testator by which an estate in his property, previously disposed of by will, is altered but not wholly divested does not revoke such disposition, but the estate in the property that remains in the testator passes to the beneficiaries pursuant to the disposition. However, any such conveyance, settlement or other act of the testator which is wholly inconsistent with such previous testamentary disposition revokes it.” Ademption will not lightly be found under EPTL 3-4.3, which is construed strictly given that its terms permit a testator to nullify dispositions without engaging in the elaborate formalities ordinarily required to revoke his or her will, either in whole or in part … . Matter of Braunstein, 2015 NY Slip Op 01703, 3rd Dept 2-26-15

 

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Extraordinary Circumstances Justified Award of Primary Physical Custody to Nonparent–Criteria Described

In affirming Family Court’s award of primary physical custody to the grandmother, the Third Department explained the “extraordinary circumstances” criteria for awarding primary physical custody to a nonparent:

Family Court’s finding of extraordinary circumstances is supported by the record. It is clear and settled that a “parent has a claim of custody of his or her child, superior to that of all others, in the absence of surrender, abandonment, persistent neglect, unfitness, disruption of custody over an extended period of time or other extraordinary circumstances” … . “It is the nonparent’s burden to establish extraordinary circumstances and, when that burden is met, custody is determined based upon the child’s best interests” … . The pertinent factors to be considered in determining whether extraordinary circumstances exist “include the length of time the child has lived with the nonparent, the quality of that relationship and the length of time the biological parent allowed such custody to continue without trying to assume the primary parental role” … , an analysis that considers “the cumulative effect of all issues present in a given case” … . Matter of Curless v McLarney, 2015 NY Slip Op 01680, 3rd Dept 2-26-15

 

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Interpreter Working for Office of Court Administration Was an Employee, Not an Independent Contractor

The Third Department determined claimant, a Spanish interpreter working for the Office of Court Administration (OCA), was an employee, not an independent contractor, but declined to extend the holding to others similarly situated:

Whether an employer-employee relationship exists “is a factual issue for the Board to resolve and its decision will be upheld if supported by substantial evidence” … . “While no single factor is determinative, control over the results produced or the means used to achieve those results are pertinent considerations, with the latter being more important” … . We find that substantial evidence supports the Board’s decision that OCA exercised sufficient supervision, direction and control over this claimant’s work activities to establish an employer-employee relationship, but decline to extend this holding to others “similarly situated.”

During the nearly 2½ years that claimant worked at the Bronx Family Court, she was required to work a set schedule from 9:30 a.m. to 4:30 p.m. … . When first assigned to that court, she was scheduled to report for a few weeks, but it was not long before claimant was scheduled monthly in advance … . Although claimant did not have to accept assignments, once she was on the schedule, she could not take time off, nor was she allowed to send someone in her place … ; if she knew she needed time off, she was expected to tell her supervisor in advance so she would not be put on the schedule … . Upon arriving at work each morning, claimant reported to the senior court interpreter, who told her where to report. OCA set claimant’s rate of pay … and, upon reporting to the court, she was paid — by direct deposit into her personal checking account — whether or not she actually provided interpreting services … . * * * Matter of Viau…, 2015 NY Slip Op 01691, 3rd Dept 2-26-16

 

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