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Under Liberal Construction of Lien Law Defendant Did Not Waive Its Mechanic’s Lien by Failing to Assert Lien-Based Counterclaims and Cross Claims In Its Initial Answer

The Third Department, in a full-fledged opinion by Justice Lahtinen, determined that the defendant had not waived its mechanic’s lien by failing to assert lien-based counterclaims and cross claims it in its initial answer and therefore could amend its answer accordingly:

“The duration of a lien is prescribed by statute and the right to enforce it, like the right to file and create it, is derived therefrom” … . That statutory framework “is remedial in nature and intended to protect those who have directly expended labor and materials to improve real property at the direction of the owner or a general contractor” … . The law governing mechanic’s liens is thus liberally construed to ensure that its purpose is accomplished, and substantial compliance with its provisions is generally sufficient (see Lien Law §§ 23, 40…).

Lien Law § 44 (5) provides in pertinent part that “[e]very defendant who is a lienor shall, by answer in the action, set forth his [or her] lien, or he [or she] will be deemed to have waived the same, unless the lien is admitted in the complaint, and not contested by another defendant.” * * *

…[H]ere, at the time [defendant] made its motion to amend its answer, plaintiff’s complaint, read in conjunction with [defendant’s] answer as well as the other pleadings, constituted a sufficient substantial admission of [defendant’s] lien such that, had the matter gone to trial on those pleadings, [defendant’s] rights would have been preserved under the statutory language … . Since [defendant’s] lien rights had not been already waived as a matter of law when it made its motion to amend its answer, its proposed counterclaim and cross claims were not wholly devoid of merit. Edwards & Zuck PC v Cappelli Enters Inc, 2014 NY Slip Op 08690, 3rd Dept 12-11-14

 

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Out-Of-Possession Landlord Liability Criteria Explained

The Third Department determined an out-of-possession landlord was not liable to an employee of the tenant who slipped and fell on a loose stair tread.  Neither the terms of the lease nor a course of conduct rendered the out-of-possession landlord responsible for repairing the condition.  The Third Department explained the relevant analytical criteria:

“Generally, ‘an out-of-possession landlord who relinquishes control of the premises is not liable to employees of a lessee for personal injuries caused by an unsafe condition existing on the premises'” … . “‘Exceptions to this rule include situations where the landlord retains control of the premises, has specifically contracted to repair or maintain the property, has through a course of conduct assumed a responsibility to maintain or repair the property or has affirmatively created a dangerous condition'” … . Whittington v Champlain Ctr N LLC, 2014 NY Slip Op 08691, 3rd Dept 12-11-14

 

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Statutory Privilege Afforded Emergency Vehicles (Imposing a “Reckless Disregard” Standard for Accident-LiabilIty) Is Not Dependent Upon Whether the Emergency Lights and Siren Were Activated

The First Department determined summary judgment was properly granted to the city in a case stemming from a collision with a police car.  The evidence that the police car, which was “performing an emergency operation,” stopped at a stop sign before proceeding into the intersection where it was struck by the taxi in which plaintiff was a passenger was sufficient to demonstrate the police officer did not act recklessly.  It did not matter whether the emergency lights and siren were activated:

As the police vehicle was an authorized emergency vehicle (Vehicle and Traffic Law § 101), performing an emergency operation by “pursuing an actual or suspected violator of the law” (Vehicle and Traffic Law § 114-b), the operator was authorized to proceed through the red light, once it slowed down “as may be necessary for safe operation” (Vehicle and Traffic Law § 1104 [a],[b][2]). Thus, in order to hold the municipal defendants liable, plaintiff must demonstrate that the officer driving the police vehicle acted with “reckless disregard for the safety of others,” which requires a showing that he “has intentionally done an act of an unreasonable character in disregard of a known or obvious risk that was so great as to make it highly probable that harm would follow and has done so with conscious indifference to the outcome” … .

Here, the officer’s uncontroverted testimony was that he came to a complete stop prior to entering the intersection. That he looked in the direction of, but did not see, the approaching taxi did not render his conduct reckless … . That issues of fact exist as to whether the police lights were on (which plaintiff saw prior to the accident, but the taxi driver testified he did not), or whether the siren was activated, is not material, as a police vehicle performing an emergency operation is not required to activate either of these devices, in order to be entitled to the statutory privilege of passing through a red light (Vehicle and Traffic Law § 1104[c]). Thus, the evidence demonstrates that the officer driving the police vehicle lawfully exercised the privilege, and appellants have produced no evidence of any other facts or circumstances which would raise a triable issue as to any reckless conduct by the officer.  Flynn v Sambuca Taxi LLC, 2014 NY Slip OP 08723, 1st Dept 12-11-14

 

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Leased Right-of-Way Was an Easement Appurtenant Which Can Only Be Extinguished by Abandonment, Conveyance, Condemnation or Adverse Possession

The Third Department determined a preliminary injunction was properly granted in an action alleging defendant’s interference with plaintiff’s leased right-of-way:

Plaintiff owns an industrial building with deeded easements located within defendant’s industrial park in the City of Schenectady, Schenectady County. Plaintiff also leases from defendant an adjoining parcel with a general right of ingress and egress. Plaintiff commenced this action seeking a declaration that its leased right-of-way entitles it to a general right of passage of commercial vehicles in connection with its heavy steel fabrication business operated on the premises. Plaintiff also seeks a permanent injunction prohibiting defendant from interfering with plaintiff’s use of the general right-of-way and compelling defendant to remove certain obstructions to its right of passage. * * *

Supreme Court did not abuse its discretion by concluding that defendant was unlikely to succeed on its claim that the metes and bounds easement conveyed to plaintiff when it purchased the building from defendant’s predecessor limits and restricts the general right of ingress and egress granted in the lease that was entered into at the same time with that same predecessor. The general right-of-way in the lease is an easement appurtenant that “may be extinguished only by abandonment, conveyance, condemnation or adverse possession” … . Inasmuch as there is no evidence that the general right-of-way was abandoned, conveyed, condemned or adversely possessed, it continues to exist, notwithstanding any easement provided for in connection with the separate conveyance of the building to plaintiff … .

Given that plaintiff has a general right of ingress and egress, defendant may only alter the passageway “so long as [plaintiff’s] right of passage is not impaired” … . Plaintiff presented photographs and an affidavit from its president establishing that defendant’s placement of steel poles along the easement’s boundaries and a locked gate at one of the entrances restricted plaintiff’s ingress and egress, thereby showing a likelihood of success on the merits of its action … . STS Steel Inc v Maxon Alco Holdings LLC, 2014 NY Slip OP 08694, 3rd Dept 12-11-14

 

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Repeated Invitations to Review 60 to 80 Banker’s Boxes of Documents In Response to a Discovery Demand Constituted Willful and Contumacious Behavior Justifying the Striking of the Complaint

The Third Department determined Supreme Court properly struck the pleadings based upon plaintiffs’ failure to comply with discovery demands.  Plaintiffs sued defendants for profits allegedly lost when plaintiffs failed to procure a printing and copying contract with the state.  The defendants sought discovery of documents related to the lost profits (alleged to be $1,500,000). Although plaintiffs supplied some relevant information, the discovery demands were repeatedly met with an invitation to review 60 to 80 banker’s boxes of documents in a warehouse:

We recognize that plaintiffs provided certain documents and that [plaintiff’s principal] appeared at a deposition. This limited cooperation does not necessarily preclude a finding of willful and contumacious behavior… . Plaintiffs had the burden to prove damages and defendants were entitled to review documents supporting the damages claim prior to trial. Notably, plaintiffs were able to create and provide annual sales summaries, but never provided the documents that were used to calculate the sales figures. The record confirms that despite Supreme Court’s frequent intervention and direction to produce the documents in a more organized fashion, plaintiffs continued to insist that their offer to have defendants sift through 60 to 80 boxes of miscellaneous business records was adequate. Indeed, plaintiffs refused to respond otherwise even after defendants narrowed their document request following [a] deposition. * * *

In our view, the record demonstrates “[a] pattern of noncompliance” sufficient to support Supreme Court’s finding that plaintiffs’ conduct was willful … . Under the circumstances, we thus conclude that the court did not abuse its discretion in granting defendants’ motion and striking plaintiffs’ complaint. BDS Copy Inks Inc, v International Paper, 2014 NY Slip Op 08692, 3rd Dept 12-11-14

 

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Court Must Consider Whether Both Parties, Not Only the Bank, Have Negotiated in Good Faith in the Mandatory Pre-Foreclosure Settlement Conferences (Re: Possible Modification of the Terms of a Mortgage Subject to Foreclosure)—Under the Totality of the Circumstances, Supreme Court’s Finding that the Bank Did Not Negotiate in Good Faith Was Not Supported

The First Department, in a full-fledged opinion by Justice Andrias, determined that Supreme Court should have considered the defendant’s actions in deciding whether the parties had negotiated in good faith during the pre-foreclosure settlement conferences mandated by CPLR 3408 (a) [Subprime Residential Loan and Foreclosure Laws].  The conferences are required to ascertain whether a modification of the terms of a mortgage otherwise subject to foreclosure can be reached in a settlement. Supreme Court’s finding that the plaintiff bank did not negotiate in good faith was not warranted, in large part, because Supreme Court did not take into account the inaccurate and inconsistent information provided by the defendant during the conferences:

CPLR 3408 was enacted in 2008, as part of the omnibus “Subprime Residential Loan and Foreclosure Laws” (L 2008, ch 472, effective August 5, 2008), remedial legislation intended to assist homeowners at risk of losing their homes to foreclosure due to the subprime credit crisis (See Sponsor’s Mem., Bill Jacket (L 2008, ch 472). As part of the protections afforded to homeowners by the legislation, CPLR 3408 requires that conferences be conducted in residential foreclosure actions “for the purpose of holding settlement discussions pertaining to the relative rights and obligations of the parties under the mortgage loan documents, including, but not limited to determining whether the parties can reach a mutually agreeable resolution to help the defendant avoid losing his or her home, and evaluating the potential for a resolution in which payment schedules or amounts may be modified or other workout options may be agreed to, and for whatever other purposes the court deems appropriate” (CPLR 3408[a]).

These mandatory settlement conferences are intended to “provide an opportunity for borrowers and lenders to try to reach a solution that avoids foreclosure” (see Letter of Sen Farley, Bill Jacket, L 2008, ch 472 at 6).

CPLR 3408(f), added in 2009 as part of legislation designed to provide broader protection for homeowners (L 2009, ch 507 effective February 13, 2010), states that “[b]oth the plaintiff and defendant shall negotiate in good faith to reach a mutually agreeable resolution, including a loan modification, if possible.” “The purpose of the good faith requirement is to ensure that both plaintiff and defendant are prepared to participate in a meaningful effort at the settlement conference to reach resolution” (2009 Mem of Governor’s Program Bill, Bill Jacket, L 2009, ch 507 at 11). The language of the statute and legislative history confirm that the obligation to negotiate in good faith is intended to be a two way street, imposing reciprocal obligations on both the lender and the borrower to cooperate with the other to enable achievement of a reasonable resolution … . Towards this end, 22 NYCRR 202.12-a(c)(4) directs the court to “ensure that each party fulfills its obligation to negotiate in good faith.”

The term “good faith” is not defined in the statute. However, this Court has held that compliance with the good faith requirement of CPLR 3408 is not established by merely proving the absence of fraud or malice on the part of the lender and that “[a]ny determination of good faith must be based on the totality of the circumstances,” taking into account that CPLR 3408 is a remedial statute … .

“While the aspirational goal of CPLR 3408 negotiations is that the parties reach a mutually agreeable resolution to help the defendant avoid losing his or her home’ (CPLR 3408[a]), the statute requires only that the parties enter into and conduct negotiations in good faith … . …[T]his Court [has] noted that “there are situations in which the statutory goal is simply not financially feasible for either party” and that “the mere fact that plaintiff refused to consider a reduction in principal or interest rate does not establish that it was not negotiating in good faith. Nothing in CPLR 3408 requires plaintiff to make the exact offer desired by [the] defendant[ ] [mortgagors], and the plaintiff’s failure to make that offer cannot be interpreted as a lack of good faith” … . * * *

…[W]e find that [defendant] has not established that, under the totality of the circumstances, plaintiff failed to engage in a meaningful effort at reaching a solution during the settlement conferences. Although plaintiff presented [defendant] with repeated requests for documentation and, at times, failed to timely comply with deadlines issued by the court, the record establishes that [defendant] created a moving target for plaintiff by repeatedly changing her alleged sources of income in her loan modification applications, and failing to disclose substantial and material liens encumbering the property. Citibank NA v Barclay, 2014 NY Slip Op 08757, 1st Dept 12-11-14

 

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Nature of a “Turn-Key” or “Design-Build” Contract Explained—Three-Year Statute of Limitations for Malpractice Applied to Defendant Architects Who Were Engaged Solely to Design, Not Build, the Renovations

In a lawsuit stemming from the failure of a building facade, the Third Department determined that the contract between plaintiff property-owner and defendant architects was not a “turn-key” or “design-build” contract, which encompassed the entire construction project, but rather was a professional services contract for the design of building renovations.  Therefore the three-year statute of limitations for professional malpractice applied. The Third Department affirmed the dismissal of the complaint, explaining the nature of a “design-build” contract:

In “turnkey” or “design-build” construction projects, “an owner contracts with one entity to both design and build the project [and t]he turnkey builder is responsible for every phase of the construction from final design through subcontracting, construction, finishing and testing” … . The design-builder generally cannot shift liability and is the “single point [of] responsibility” under a design-build contract, because it is “the [d]esign-[b]uilder [who] has the responsibility of the preliminary and construction design, the responsibility of submitting a fixed sum for the construction of the project and the responsibility for holding the contracts with its trade contractors” … . As plaintiff asserts, it follows that nearly every design-build project involves the existence of two or more contracts — at least one among the members of the design-build team and one between the design-builder and the owner. Here, however, it was not defendant, the purported design-builder, who held the separate contract with the general contractor, but plaintiff as the owner. * * *

…[W]e conclude that plaintiff’s … causes of action — alleging that defendant was negligent and breached the parties’ contract by failing to use reasonable care in rendering its professional services — essentially allege professional malpractice … . Such claims “‘come[] within the purview of CPLR 214 (6),'” which sets forth a three-year statute of limitations for nonmedical malpractice, “‘regardless of whether the theory is based in tort or breach of contract'”… . We note that “‘a claim for professional malpractice against an engineer or architect accrues upon the completion of performance under the contract and the consequent termination of the parties’ professional relationship'” … . 797 Broadway Group LLC v Stracher Roth Gilmore Architects, 2014 NY Slip Op 08689, 3rd Dept 12-11-14

 

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Court’s Failure to Inquire About a Juror’s Sleeping During Deliberations Required Reversal

The First Department reversed defendant’s conviction and ordered a new trial because the trial judge did not conduct a “probing inquiry” after being informed by jurors that a juror was sleeping during the deliberations:

The court should have conducted a “probing and tactful inquiry” … into whether, and to what extent, the juror had been sleeping, in order to determine whether this behavior rendered him grossly unqualified … . The court’s observation of jury demeanor during the supplemental instruction was not enough to resolve the issue of what was going on in the jury room, and this was not a case where reliance on a general instruction was an appropriate exercise of discretion … . Without any inquiry of the allegedly sleeping juror, or of any other juror, it is impossible to know whether the juror was innocuously dozing off from time to time, or whether he slept through so much of the deliberations that he could be deemed absent, such that the verdict was reached by a jury of 11 persons. Accordingly, we are constrained to reverse. People v Franqui, 2014 NY Slip Op 08736, 1st Dept 12-11-14

 

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Defendant’s “Agency” Defense to a Drug Sale Addressed Under a “Weight of the Evidence” Review (Defense Was Disproved Beyond a Reasonable Doubt)

The Third Department noted that, although the defendant did not preserve his claim his conviction was not supported by legally sufficient evidence, an appellate court will review whether a conviction is supported by proof beyond a reasonable doubt under a “weight of the evidence” review.  The Third Department then went on to find the defendant’s agency defense had been disproved by the People beyond a reasonable doubt.  The court explained the agency defense:

To the extent that defendant contends that the underlying conviction is not supported by legally sufficient evidence, we note that defendant’s generalized motion to dismiss at the close of the People’s case was insufficient to preserve his present claim, i.e., that the People failed to disprove his agency defense beyond a reasonable doubt … . Additionally, defendant, who testified upon his own behalf, failed to renew this motion at the close of all proof; accordingly, defendant’s challenge to the legal sufficiency of the evidence is not preserved for our review … . “That said, our weight of the evidence [analysis] necessarily involves an evaluation of whether all elements of the charged crime[s] were proven beyond a reasonable doubt at trial” … .

Insofar as is relevant here, “[a] person is guilty of criminal sale of a controlled substance in the third degree when he or she knowingly and unlawfully sells . . . a narcotic drug” (Penal Law § 220.39 [1]). Defendant does not dispute that he sold a narcotic drug, i.e., cocaine, to the undercover deputy on the dates in question, but contends that he acted solely as the deputy’s agent in this regard and, at best, is guilty of criminal possession of a controlled substance … . Under the agency doctrine, a person who procures drugs solely as the agent of a buyer is not guilty of either criminal sale or of possession with the intent to sell … . “[W]hether the defendant was a seller, or merely a purchaser doing a favor for a friend, is generally a factual question for the [factfinder] to resolve on the circumstances of the particular case” … . Such a determination, in turn, may hinge upon a number of factors, including “the nature and extent of the relationship between the defendant and the buyer, whether it was the buyer or the defendant who suggested the purchase, whether the defendant has had other drug dealings with this or other buyers or sellers and, of course, whether the defendant profited, or stood to profit, from the transaction” … . Notably, profit does not necessarily equate with pecuniary gain; indeed, this Court has recognized that a defendant may stand to benefit from the underlying sale when such transaction was undertaken in the hopes of receiving either assistance in getting a job … in exchange for obtaining the requested drugs. People v Robinson, 2014 NY Slip Op 08672, 3rd Dept 12-11-14

 

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Because the Presence of THC Can Be Detected Long After Marijuana Use, the People Were Not Able to Prove Defendant Used Marijuana During a One-Week Furlough

The Third Department determined that the People did not prove by a preponderance of the evidence that the defendant used marijuana when he was on furlough, thereby justifying an enhanced sentence.  THC can be detected long after marijuana-use.  The proof therefore did not establish the defendant used it during a one-week furlough:

…[W]e find merit in defendant’s argument, preserved by objection at sentencing …, that the People failed to establish at the enhancement hearing that he violated a condition of his furlough, as the proof did not demonstrate when he used marihuana, i.e., that it occurred during, rather than prior to, his furlough. When the court granted defendant a one-week furlough, it warned him that it would enhance his prison sentence to 4½ years if he were “charged with any criminal conduct” or “arrested for any reason” and that, “[w]hile you are out, if you engage in the use of any illegal drugs or alcohol and I find out about it” (emphasis added), the enhanced sentence would be imposed. At the hearing, while the investigator testified that defendant’s test was positive for THC, he was not able to estimate the date when defendant used marihuana, and conceded that it could have been months earlier; he also recounted that defendant stated, after being told of the positive test result, that “he had been smoking in the jail prior to his furlough” (emphasis added). Moreover, the reference guide for the test, which was admitted into evidence at the hearing, indicates that “[m]any factors influence the length of time required for drugs to be metabolized and excreted in the urine” and that the “general time” established for cannabinoids with “chronic use” is “less than 30 days typical.”… Defendant admitted to previously being a daily, heavy user of marihuana, and testified that he did not use marihuana during his furlough.

Given the foregoing, we find that the People did not prove by a preponderance of the evidence … and the court did not have a “legitimate basis” for concluding — that defendant used marihuana during his furlough… . People v Criscitello, 2014 NY Slip OP 08678, 3rd Dept 12-11-14

 

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