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Criteria for Granting Leave to Serve a Late Notice of Claim Explained

The Second Department determined Supreme Court had properly granted plaintiff’s motion for leave to serve a late notice of claim. The infant plaintiff was injured at school and there was no doubt the school was aware of the injury, and the background of the injury, at the time it occurred.  The court included a succinct summary of the applicable analytical criteria:

General Municipal Law § 50-e(5) permits a court, in its discretion, to extend the time to serve a notice of claim … . Whether the public corporation acquired timely actual knowledge of the essential facts constituting the claim within 90 days after the claim arose or a reasonable time thereafter is seen as a factor which should be accorded great weight in determining whether or not to grant leave to serve a late notice of claim … . “In order to have actual knowledge of the essential facts constituting the claim, the public corporation must have knowledge of the facts that underlie the legal theory or theories on which liability is predicated in the notice of claim; the public corporation need not have specific notice of the theory or theories themselves” … .

Other factors a court must consider in determining whether to grant leave to serve a late notice of claim are: (1) whether the claimant was an infant or mentally or physically incapacitated; (2) whether the claimant had a reasonable excuse for the failure to serve a timely notice of claim; and (3) whether the delay would substantially prejudice the public corporation in maintaining its defense (see General Municipal Law § 50-e[5]…). The presence or absence of any one of these factors is not necessarily determinative … .  Kellman v Hauppauge Union Free School Dist, 2014 NY Slip Op 05844, 2nd Dept 8-20-14

 

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Husband, Criminally Responsible for the Death of His Mother-in-Law, Could Not Inherit the Mother-in-Law’s Estate Indirectly After the Death of His Wife

The Second Department, in a full-fledged opinion by Justice Hall, determined the husband, Brandon, who was criminally responsible for the death his mother-in-law, could not inherit the mother-in-law’s estate indirectly after the death of his wife, Deanna:

The principle that a wrongdoer may not profit from his or her wrongdoing is deeply rooted in this State’s common law. In 1889, the Court of Appeals decided the seminal case of Riggs v Palmer (115 NY 506) . In Riggs, a grandson, who had intentionally killed his grandfather in order to ensure his inheritance, was prevented from inheriting under the grandfather’s will. In reaching this determination, the Court of Appeals held that, “[n]o one shall be permitted to profit by his own fraud, or to take advantage of his own wrong, or to found any claim upon his own iniquity, or to acquire property by his own crime” (id. at 511). In short, the Riggs rule “prevents wrongdoers from acquiring a property interest, or otherwise profiting from their own wrongdoing” … . * * *

The issue here is whether the Riggs doctrine may be extended to prevent a wrongdoer from indirectly profiting from his or her own wrongdoing. More specifically, we are asked to determine whether Brandon may inherit assets of the decedent’s estate indirectly through Deanna’s estate. While it is clear that Brandon would not be able to inherit from the decedent’s estate directly, the issue of whether he may do so indirectly through Deanna’s estate is less settled. Indeed, this is an issue of first impression, as there is no appellate precedent from New York addressing whether the Riggs doctrine applies where a killer seeks to inherit assets from his or her victim indirectly through the estate of a person not implicated in the unlawful killing. * * *

Here … there is a clear causal link between the wrongdoing and the benefits sought … . But for Brandon’s killing of the decedent, the estate of Deanna would not likely include any assets from the decedent’s estate. Furthermore, since only a relatively short period of time elapsed between the decedent’s death and the death of Deanna, it is clear that Deanna’s estate would include assets traceable to the decedent. Indeed, according to [the] petition for letters of administration, Deanna’s estate consists only of funds Deanna received as beneficiary of the decedent’s retirement plan, and the expected inheritance from the decedent. Significantly, the decedent’s estate has not yet been distributed to Deanna’s estate, and no commingling of any funds between the two estates has occurred.

Under these circumstances, the Surrogate’s Court appropriately exercised its equitable powers (see SCPA 201[2]) in extending the Riggs doctrine to prevent Brandon from inheriting any portion of the decedent’s estate through the estate of Deanna … . Matter of Dianne Edwards, 2014 NY Slip Op 05873, 2nd Dept 8-20-14

 

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Golfer Assumed the Risk of Tripping on Grate in Golf-Cart Path

The Second Department determined the doctrine of primary assumption of the risk precluded a suit by a golfer who tripped on a grate in a golf-cart path:

Under the doctrine of primary assumption of the risk, “by engaging in a sport or recreational activity, a participant consents to those commonly appreciated risks which are inherent in and arise out of the nature of the sport generally and flow from such participation” … . Those risks include risks associated with the construction of the playing surface and any open and obvious condition on it … . Here, contrary to the plaintiffs’ contention, the defendants established their prima facie entitlement to judgment as a matter of law on the ground that the doctrine of primary assumption of risk applied … . Simon  v Hamlet Windwatch Dev LLC, 2014 NY Slip Op 05855, 2nd Dept 8-20-14

 

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Case Against Non-Debtor Not Entitled to Automatic Stay

The Second Department, in reversing Supreme Court’s granting of a stay, explained the circumstances when cases by and against non-debtors can be stayed under the bankruptcy law (11 USC 362(a)):

“[T]he bankruptcy court can stay actions against any party, even a non-debtor, whenever the objective of the action is to obtain possession or exercise control over the debtor’s property. Unless a case involves unusual circumstances, however, the bankruptcy court cannot halt litigation by non-debtors, even if they are in a similar legal or factual nexus with the debtor.

“The unusual circumstances in which the bankruptcy court can stay cases against non-debtors are rare. They typically arise where there is such identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor. In other words, the automatic stay will apply to non-debtors only when a claim against the non-debtor will have an immediate adverse economic consequence for the debtor’s estate” … . Bankdirect Captial Fin v Insurance Co of State of PA, 2014 NY Slip Op 05824, 2nd Dept 8-20-14

 

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Pointing Finger and Saying “I’m Going to Shoot You” Did Not Support Harassment and Menacing Charges

The First Department determined that the allegations supporting  harassment and menacing charges were insufficient:

…[T]he accusatory instrument was insufficient as a matter of law with regard to the harassment and menacing charges. The allegation that defendant pointed his finger in a shooting motion and stated, “I’m going to shoot you,” without any indication that defendant was armed at the time, did not set forth an imminent threat of harm to the complainant. Nor were any facts alleged showing the statement should have been taken seriously … . People v Harris, 2014 NY Slip Op 05814, 1st Dept 8-14-14

 

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Arbitrator Not Precluded from Considering Punitive Damages by Provision that the Agreement Is To Be “Construed and Enforced” in Accordance with New York Law

In a full-fledged opinion by Justice Manzanet-Daniels, over an extensive dissent, the First Department determined that the provision in an agreement covering arbitration of disputes stating that the agreement is to be “construed and enforced” in accordance with New York law did not necessarily preclude the arbitrator from considering punitive damages.  The court found the language in the agreement insufficiently specific to invoke the “Garrity rule. ” Under “Garrity,” arbitrators in New York are prohibited from considering punitive damages. But the Federal Arbitration Act, which may apply here because of the involvement of interstate commerce, does not. The court also noted that participation in arbitration precludes a party from seeking a stay of arbitration pursuant to CPLR 7503. The choice of law issue is framed by the following passages:

Merely stating, without further elaboration, that an agreement is to be construed and enforced in accordance with the law of New York does not suffice to invoke the Garrity rule. The Supreme Court has made clear that in order to remove the issue of punitive damages from the arbitrators, the agreement must “unequivocal[ly] exclu[de]” the claim … . The agreement in this case, which provided only that it was to be “construed and enforced” in accordance with the law of New York, did not unequivocally exclude claims for punitive damages from the consideration of the arbitrators

From the dissent:

The core issue in this case – an appeal from an order denying petitioners’ motion to stay arbitration of claims for punitive damages – relates to the tension between New York State policy against the privatization of punitive damages and the federal policy that there is no such prohibition. Specifically, under New York State law, as expressed by Garrity v Lyle Stuart, Inc. (40 NY2d 354 [1976]), the power to award punitive damages is limited to judicial tribunals, and is not within an arbitrator’s authority… . Conversely, the federal view, as reflected in the Federal Arbitration Act (FAA),… which applies to arbitration disputes concerning interstate commerce, generally empowers arbitrators to award punitive damages, absent a contractual intent to the contrary. Unlike the majority, I find that, while the agreement here evidences a transaction involving interstate commerce, the provision stating that the agreement is to be “construed and enforced” in accordance with the laws of New York suffices to invoke the Garrity rule. Therefore, I dissent and would grant petitioners’ motion to stay arbitration of the claims for punitive damages. Matter of Flintlock Constr Servs LLC v Weiss, 2014 NY Slip Op 05818, 8-14-14

 

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Term “Entrustment” in a Policy Exclusion (In the Context of Entrustment of Property to Another) Interpreted to Encompass Entire Leased Premises

The First Department determined that preclusion of coverage for “dishonest or criminal acts” committed by persons to whom the subject property was “entrusted” encompassed the removal of fixtures from premises leased by the insured:

Plaintiffs leased the insured premises to a tenant, which converted the premises into a youth hostel, removed the kitchen cabinets and appliances to turn the kitchens into additional dormitory areas, and, when the hostel closed, did not return the cabinets or appliances … . Plaintiffs argue that the term “entrustment” in the policy pertains solely to chattels and not to fixtures … . However, in Abrams v Great Am. Ins. Co. (269 NY 90, 92 [1935]), the Court of Appeals explained that an insurance contract’s language “must be given its ordinary meaning,” and “common words” in a policy such as entrusted are not “used as words of art with legalistic implications” (id.). Accordingly, Abrams taught, when a contract indicates that the property is entrusted, it can be understood that the parties mean that possession of property is willingly “surrender[ed] or deliver[ed] or transfer[red],” to be “used for the purpose intended by the owner . . . . The controlling element is the design of the owner rather than the motive of the one who obtained possession” (id.). Here, we find that the terms of the policy at issue do not limit what can be entrusted, that property may be entrusted to another under a triple net lease agreement, and that the entrustment refers to the entirety of the premises unless otherwise specified.  Lexington Park Realty LLC v National Union Fire Ins Co of Pittsburgh PA, 2014 NY Slip Op 05817, 8-14-14

 

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Denial of “Defective” No-Fault Claim (on Form UB-40) Was of No Effect—Failure to Respond Within 30 Days to a Subsequent “Correct” Claim (on Form NF-5) Precluded Insurer from Raising Defenses to the Claim

The Second Department determined the insurer’s denial of a defective claim was of no effect and the insurer’s failure to respond to the valid claim within 30 days precluded raising defenses to the claim:

[The insurer] contends that the 30-day period commenced when it received the Form UB-04 in December 2011, that it timely requested verification of the claim, and that, after it received the medical records, it timely denied the claim in January 2012. [the hospital] could not commence the 30-day clock anew by submitting the same claim several months later … .

We conclude that the Supreme Court erred in denying [the hospital’s] motion for summary judgment on the complaint and in granting [the insurer’s] cross motion for summary judgment dismissing the complaint. Under our decision in Sound Shore [106 AD3d 157], the 30-day period for [the insurer] to pay or deny the claim did not begin to run until March 26, 2012, when [the hospital] submitted the Form NF-5, which contained the information needed. Because [the insurer] did not pay or deny the claim within 30 days thereafter, it was precluded from raising defenses. In other words, the defective “claim” submitted in December 2011 did not start the 30-day clock, so [the insurer’s] denial in January 2012 was of no effect … . Mount Sinai Hosp v New York Cent Mut Fire Ins Co, 2014 NY Slip Op 05779, 2nd Dept 8-13-14

 

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Insufficient Proof of an Agreement to Assume a Mortgage at the Time Deed Transferred

The Second Department determined that the writings were insufficient to demonstrate the grantee agreed to assume a mortgage at the time the deed was transferred:

General Obligations Law § 5-705 provides, in relevant part, that “[n]o grantee of real property shall be liable upon any indebtedness secured by a mortgage” unless, “simultaneously with the conveyance,” the grantee executes a writing before a notary agreeing to assume and pay the mortgage debt. Here, it is clear from the allegations in the complaint and attached exhibits that the defendants did not execute a notarized written agreement to assume the mortgage allegedly held by the plaintiff at the time the properties were conveyed … . Thus, General Obligations Law § 5-705 bars the plaintiff from recovering on the theory that the defendants agreed to assume his existing mortgage on the properties as alleged in the complaint. Furthermore, [recovery] is also barred by the statute of frauds because an agreement to answer for the debt of another must be in writing (see General Obligations Law § 5-701[a][2]). Contrary to the plaintiff’s contention, the various writings attached to the complaint, taken together, were insufficient to memorialize the existence of an agreement … . Dahan v Weiss, 2014 NY Slip Op 05767, 2nd Dept 8-13-14

 

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The Requirements of Certificates of Conformity and Authenticity (Re: the Admissibility of Out-of-State Affidavits) Explained

The Second Department, in a full-fledged opinion by Justice Dillon, reversed Supreme Court finding that an out-of-state affidavit re: the assignment of a note and mortgage was in admissible form and could therefore be considered in support of plaintiff’s summary judgment motion.  The court explained that, because the document was notarized, no “certificate of authentication” was needed, and the “certificate of conformity” which was provided was adequate under New York law:

Here, the affidavit of Josh Mills was necessary for the plaintiff to establish the assignment to it of the subject mortgage and note and the defendants’ default in payment. The primary issue on this appeal is whether Mills’s out-of-state affidavit was sworn to and conformed in a manner rendering it admissible in this state under CPLR 2309(c). * * *

The “certificate” required by CPLR 2309(c), commonly referred to in case law as a “certificate of conformity,” must contain language attesting that the oath administered in the foreign state was taken in accordance with the laws of that jurisdiction or the law of New York (see Real Property Law § 299-a[1]). A “certificate of conformity” is separate and distinct from a “certificate of authentication,” which attests to the oathgiver’s authority under the foreign jurisdiction to administer oaths … .  * * *

A combined reading of CPLR 2309(c) and Real Property Law §§ 299 and 311(5) leads to the inescapable conclusion that where, as here, a document is acknowledged by a foreign state notary, a separate “certificate of authentication” is not required to attest to the notary’s authority to administer oaths … .  * * *

Nevertheless, CPLR 2309(c) requires that even when a notary is the foreign acknowledging officer, there must still be a “certificate of conformity” to assure that the oath was administered in a manner consistent with either the laws of New York or of the foreign state. In other words, a certificate of conformity is required whenever an oath is acknowledged in writing outside of New York by a non-New York notary, and the document is proffered for use in New York litigation. * * *

Here, the Supreme Court erred in concluding that the Mills affidavit was not accompanied by a certificate of conformity, as the “Uniform, All Purpose Certificate of Acknowledgment,” appended to the Mills affidavit, substantially conformed with the template requirement of Real Property Law § 309-b and constituted a certificate of conformity. * * * Midfirst Bank v Agho, 2014 NY Slip OP 05778, 2nd Dept 8-13-14

 

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